This meeting looks at the council's accounts and its financial strategy for the year 2025-26. It also includes a number of updates on the Council's Corporate Anti-Fraud Team and progress on Internal Audits.

Audited Accounts

The external auditor, Ernst & Young, is expected to issue a disclaimer of opinion on the Council's accounts for 2021-22 and 2022-23. The reason provided for this is the tight deadline for signing off the accounts by 13 December 2024, set out in The Accounts and Audit (Amendment) Regulations 2024.

The audit of the 2021/22 financial statements for Council was not completed for the reasons set out in our opinion on those financial statements dated 12 December 2024.

The backstop date and the wider requirements of the local audit system reset meant we did not have the required resources available to complete the detailed audit procedures that would be needed to obtain sufficient appropriate audit evidence to issue an unmodified audit report on the 2021/22 financial statements. Therefore, we are disclaiming our opinion on the financial statements.

[...The basis for their opinion for 2022-23 is as follows...]

As a result of the delays to the previous year’s audit together with the wider requirements of the local audit system reset, we did not have the required resources available to complete the detailed audit procedures that would be needed to obtain sufficient appropriate audit evidence to issue an unmodified audit report on the 2022/23 financial statements before the 13 December 2024 backstop date. Therefore, we are disclaiming our opinion on the financial statements

The Committee delegated authority to approve the final accounts to the Strategic Director of Resources, Rob Manning, and the Chair of the Audit and Governance Committee, Councillor Jack Phipps.

The accounts for both years show that the Council's largest single liability is staff pensions. In 2022-23, the net cost of services was £228 million and the council spent £114.9 million on its capital programme. The report pack also discusses the council's investments in companies that provide public services, like 60 Bricks Limited and More Homes Waltham Forest LLP. The Council has previously stated that both are integral to meeting the council's house building commitments.

60 Bricks Limited have completed c299 homes as part of Phase 1 programme and expecting to build 5,000 new houses in Waltham Forest over the next 5 years.

More Homes Waltham Forest has also been established in partnership with Mears Housing Management to provide temporary rented accommodation for homeless households

Treasury Management Strategy

The report pack contains the proposed Treasury Management Strategy, Minimum Revenue Provision Policy Statement and Annual Investment Strategy for 2025-26.

The Council is currently under-borrowed, meaning that it has not fully funded its borrowing need (the Capital Financing Requirement) with loan debt, and has instead been using cash from reserves as a temporary source of funding.

The Assistant Director of Pensions & Treasury, Debbie Drew, and the Treasury Manager, Zainab Roberts, are recommending that the committee recommend to Full Council that they approve the Treasury Management Strategy Statement and Annual Investment Strategy for 2025-26.

The report pack says that the key factors that will influence the Council's borrowing strategy are the expected fall in interest rates, the cost of borrowing from the PWLB, and the fact that the discounted Public Works Loan Board Housing Revenue Account lending rate is due to expire in March 2026. The Council has previously stated in its manifesto that they will keep council tax as low as possible and will lobby for more funding from central government.

The report pack contains the proposed Minimum Revenue Provision (MRP) policy for 2025-26, which takes into account the changes to statutory guidance that will come into effect on 1 April 2025. The proposed policy will see the Council using the Asset Life Method for calculating MRP for all unsupported borrowing¹. This method charges the cost of capital assets to revenue over the period in which the assets are expected to provide benefit.

Corporate Anti-Fraud Team Progress Update

The report pack contains a progress report from the Corporate Anti-Fraud Team (CAFT).

From 1 April 2024 to 31 December 2024 CAFT recovered 43 social housing properties and prevented 4 Right-To-Buy applications that were deemed to be fraudulent. It also investigated 39 cases of potential fraud by employees and issued 5 written warnings, 2 cautions and prosecuted one employee. The Council has pledged in their manifesto to take a zero-tolerance approach to fraud.

In addition to its core work, CAFT is undertaking a number of proactive projects including a joint project with the National Fraud Initiative (NFI) to target potentially polygamous employees and data matching of housing tenants with Airbnb hosts. The report pack says that CAFT also seized 179 Blue Badges and successfully prosecuted 47 people for blue badge fraud. The council's current guidance for Blue Badge applications can be found here: https://www.walthamforest.gov.uk/parking-streets-and-transport/disabled-parking/apply-blue-badge.

Internal Audit Progress Update

The report pack contains a progress update on the Internal Audit Plan for 2024-25.

The report pack says that 19% of the planned audits had been finalised by 6 January 2025, with a further 35% being in fieldwork or review. The remaining 46% of audits were either booked, being scoped, deferred, or cancelled.

There were three audits finalised since the last committee meeting, with limited assurance² being provided on Downsell Primary School, Cemeteries and Home Care Client Billing. The Council's last Ofsted inspection for Children's services took place in January 2022, and the report judged that services had significantly improved since the previous inspection in 2015.

The report pack also contains a briefing note on the introduction of the Global Internal Audit Standards (GIAS), which will come into effect in January 2025. The GIAS will require Internal Audit to make changes to its service provision and to produce an Internal Audit Mandate and a revised Charter that are aligned to the GIAS requirements.

The briefing note states that a majority of GIAS requirements may already be in place, but that arrangements may need to be formalized to show compliance.