The Audit and Risk Management Committee meeting, held on Monday 14 September 2026, focused on the outcomes of internal audits and the approval of the 2025-26 City Fund and Pension Fund statements of accounts. Key decisions included recommending the approval of the City Fund Statement of Accounts to the Finance Committee, authorizing the Chamberlain to approve the Pension Fund Statement of Accounts, and consideration of audit findings reports.

Internal Audit Quarter 1 Update

The committee received an update on internal audit work for the first quarter of 2026-27. Seven final reports had been issued, with no limited assurance outcomes. Matthew Lock, Group Chief Internal Auditor, highlighted that while seven audits were completed, one output was a piece of advice and guidance on the new procurement policy, not a standard audit. He also noted that 113 internal audit recommendations were open, with 90 not yet due for follow-up. A dashboard was circulated to members detailing recommendations with revised implementation dates, revealing that some of the oldest recommendations were significantly past their original agreed implementation dates. The committee discussed the need for intervention on these outstanding actions, with a particular focus on issues within the Barbican Centre and Barbican Estate. It was agreed that the committee would revisit areas such as Barbican Centre ticketing system access governance, Barbican Estate repairs and maintenance, and fire safety. The committee also discussed project and programme budget monitoring, with officers explaining that a new framework for programme and project management, including financial management, was being implemented.

City Fund and Pension Fund Statement of Accounts, and Audit Findings Report 2025-26

The committee considered the audited 2025-26 City Fund and Pension Fund Statements of Accounts, along with the Audit Findings Reports from external auditors Grant Thornton. The audit opinion for the City Fund was anticipated to be unmodified, indicating that the accounts give a true and fair view. However, several audit adjustments were made, resulting in a £20.5 million decrease in the Surplus on Provision of Services. These adjustments included reclassifications of long-term investments, corrections to gain on disposal disclosures, and misclassifications of grant income.

Grant Thornton representatives highlighted that some adjustments related to capital assets and that staffing in that area had been discussed with management. A control point was raised regarding the City Corporation's departure from CIPFA Code requirements in its property revaluation programme, although it was deemed not to result in a material misstatement. Findings around IT applications also noted minor improvement areas concerning segregation of duties for developers.

For the Pension Fund, the audit was substantially complete with an anticipated unmodified audit opinion. Materiality levels had increased slightly due to higher asset valuations. No adjusted misstatements were identified in the financial statements, with the only matter being a minor disclosure amendment regarding estimation uncertainty. Two new recommendations were raised concerning an unreconciled bank account difference and improving the reconciliation of pension and membership figures.

The Value for Money (VfM) assessment noted that a significant weakness in financial statements concerning the low balance of the Housing Revenue Account (HRA) reserve from the previous year had been removed. However, a new significant weakness was identified in the area of economy, efficiency, and effectiveness, stemming from the City Corporation's self-referral to the Regulator of Social Housing, which resulted in a C3 rating for serious failings in delivering safety and quality standards. The Authority was taking prompt action to address these findings, but the weakness would persist until improvements were demonstrated to the Regulator. Three improvement recommendations were raised for financial sustainability and one for economy, efficiency, and effectiveness.

The committee resolved to recommend the approval of the 2025-26 City Fund Statement of Accounts to the Finance Committee, and to authorize the Chamberlain to approve the 2025-26 Pension Fund Statement of Accounts. Authority was also delegated to the Chamberlain, in consultation with the Chair and Deputy Chair, to approve any material changes to the financial statements before the signing of the audit opinion by Grant Thornton. The committee considered the Audit Findings Reports and approved the management representation letters for both the City Fund and Pension Fund. The Auditor's Annual Report was also considered.