The Audit Committee of Hackney Council is scheduled to convene on Thursday 29 October 2026. The meeting's agenda includes a review of the unaudited statement of accounts for the 2025/26 financial year, an update on the external audit progress, and a discussion on the Chief Executive's risk register.

Unaudited Statement of Accounts 2025/26

The committee will be presented with the unaudited Statement of Accounts for the financial year 2025/26. This document provides a comprehensive overview of the Council's financial performance and position, including various accounting statements such as the Movement in Reserves Statement, Comprehensive Income and Expenditure Statement, and the Balance Sheet. It also includes the Housing Revenue Account, Collection Fund, and Pension Fund accounts. A key item for consideration is the Annual Governance Statement, which outlines how the Council has complied with its adopted Code of Governance and details any significant governance issues that arose during the year. The report highlights four areas identified as having significant governance issues: financial pressures and uncertainty, residual ICT and cyberattack impacts, responsive repairs overspend, and housing disrepair and damp/mould. Actions to address these issues have been identified and included within the Annual Governance Statement. The committee is recommended to approve the Council's unaudited 2025/26 Statement of Accounts, subject to the completion of the external audit, and to consider and approve the Annual Governance Statement.

External Audit Update

An update on the progress of the external audit for the 2025/26 financial year will be provided by the Council's external auditors, Forvis Mazars LLP. The report indicates that fieldwork for the Council's audit is expected to be completed by the end of November 2026, with the Pension Fund audit fieldwork anticipated to conclude by mid-November 2026. To date, no misstatements have been identified, and no matters are expected to require a modification of the audit opinion. The report notes two control deficiencies identified during the Council audit: a legacy system issue that overwrote user IDs and an instance of circumvention of authorisation controls. For the Pension Fund audit, a control deficiency was noted regarding two fund managers who could not provide controls assurance reports. The auditors are also reviewing the Council's Value for Money arrangements, with a draft commentary expected by the end of November 2026. One objection to the 2025/26 accounts was received during the public inspection period but was deemed ineligible for further consideration. Audit fees for 2025/26 are currently £585,000 for the Council audit and £80,000 for the Pension Fund audit, with potential increases anticipated for PPE and Investment Property valuations, Value for Money work, IFRS 16, and triennial valuation data testing.

Chief Executive's Directorate Risk Register

The committee will receive an update on the key risks facing the Chief Executive's Directorate. These include ensuring timely legal advice is sought and followed, lawful and transparent decision-making, proper recording of key decisions, meeting statutory publication dates for agendas and reports, and the effective conduct of Council meetings. Risks related to the borough's Community Strategy 2018-2028 remain high due to ongoing economic uncertainty, cost of living pressures, and potential government funding reforms. The report highlights risks associated with the Council's strategic partnership working and its capacity to deliver new cross-cutting priorities, particularly in light of the closure of voluntary and community sector organisations. The impact of the Cost of Living Crisis on the directorate is also a concern, with a Poverty Reduction Oversight group established and a policy for implementing the Crisis and Resilience Fund agreed. Risks associated with the Corporate Transformation Programme, including sufficient organisational capacity and the realisation of benefits, remain high, with decisions on the Corporate Voluntary Redundancy scheme expected in October 2026. Communication and engagement risks focus on ensuring relevant information reaches a diverse range of residents and that their feedback influences decisions. Workforce risks centre on the Council's capacity to deliver services effectively after years of austerity and ensuring the workforce reflects the diverse community. Risks for Culture, Libraries, and Heritage include the potential decline in customer service due to ageing facilities and inadequate maintenance of building stock.

Corporate Risk Update

An overview of the Council's Corporate Risks will be presented, showing the current risk score with mitigations, direction of travel, previous score, and target risk. The scorecard indicates nine red risks and seven amber risks. The fragile economy and intensified financial pressures are noted as significant influences, impacting service costs, funding, and demand. While the recent Local Government Finance settlement has provided some clarity, the risk of economic worsening and strain on resources remains. The Corporate Transformation Programme is highlighted as an important control measure. Risks related to Special Educational Needs (SEND) have been de-escalated from the Corporate register due to central government funding from 2028.

Corporate Risk Strategy and Policy

The committee will be asked to approve and ratify the revised Corporate Risk Management Policy and Strategy. These documents outline the framework for managing risk within the Council and the approach to be taken. The Policy defines 'what' the Council does to manage risk, while the Strategy details 'how' this will be achieved. Changes have been made to reflect internal and external developments, but the overall approach remains consistent. The documents are reviewed biennially, with the last review in October 2024. The strategy emphasizes that risk management is aligned with corporate aims and objectives, and outlines a seven-step process: knowing priorities, defining risks, scoring risks, treating risks, compiling a database and register, monitoring and reporting, and reviewing risks. The Council's risk appetite is also detailed, indicating a considered and controlled approach to risk-taking, with specific appetites for finance/commercial, compliance/legal, safety, service delivery, and reputation.

Treasury Management Update

The committee will receive an update on treasury management activities for the financial year 2025/26 and a quarterly update for July to September 2026. The 2025/26 report highlights economic uncertainty, volatility in financial markets, and a reduction in the Bank of England's base rate to 3.75%. The Council's Capital Financing Requirement (CFR) was £797.8m as of 31 March 2026. Investment balances reduced from £44m to £23m, with an investment return of 3.81%. The Council maintained compliance with its Prudential Indicators and Treasury Management Code of Practice. The update for July to September 2026 notes continued economic uncertainty, with GDP growth of 0.5% in Q2 2026 and inflation at 3.1%. The Bank of England maintained the Bank Rate at 3.75%. The Authority's external borrowing stands at £352m, and investment balances increased to £29m by the end of September 2026. The report confirms compliance with Prudential Indicators and the CIPFA Treasury Management Code.

Audit and Anti-Fraud Progress Report

A progress report on the Audit and Anti-Fraud Service for the period 1 April to 30 September 2026 will be presented. This report details work undertaken, progress with implementing audit recommendations, and developments within the service. Key performance indicators show 17% of planned audits completed or at draft report stage, with an average of 13.6 working days between fieldwork end and draft report issuance. Post-audit survey results indicate high client satisfaction. The report details progress on implementing high and medium priority recommendations, with 66% of high-priority recommendations fully implemented and 82% of medium-priority recommendations fully implemented. Statistical information on anti-fraud investigations is provided, including referrals, cases closed, and estimated financial losses from fraud, totalling £1,405,413 from key areas of enquiry. The report also covers matters referred from the whistleblowing hotline, RIPA authorisations, POCA investigations, and the proactive counter-fraud plan. Developments within Internal Audit include compliance with Global Internal Audit Standards (GIAS) and a recent external quality assessment concluding the service 'generally conforms'.