The Hertfordshire County Council Audit Committee met to discuss the draft accounts, treasury management, governance, risk, and fraud-related matters. The committee approved the Annual Governance Statement 2024/25 and Code of Corporate Governance 2025/26 and agreed to a risk focus report on the shortage of social care workforce for the next meeting. The committee also noted reports on the draft accounts and audit update, treasury management, risk management, anti-fraud measures, internal audit progress, and whistleblowing.

• Draft Accounts and Audit Update

  The committee noted the publication of the draft statement of accounts for 2024/25, which were published on the council's website on 30 June, meeting the statutory deadline. The accounts cover both the council's activities and the Huffshire Pension Fund. The audits of both Hertfordshire County Council and the Pension Fund have started.

  Two notable additions to the accounts this year are the adoption of IFRS 16[^2] and the accounting for the Dedicated Schools Grant (DSG) deficit. Due to a DSG deficit, the council is using a statutory override[^3] until 2028, accounting for it as a negative unusable reserve in the balance sheet.

  Matthew Nendick, Finance Manager, confirmed that the council had received another allocation of the new homes bonus[^4] which had been built into the budget for 2025/26, but that there was nothing beyond that as it was being assessed on a year-to-year basis.

  Richard Harbord, Independent Person, noted that the fair funding consultation document states that the new homes bonus will cease this year.

  The committee agreed to note the publication of the draft accounts and the statement of accounting policies, and that there may be a need for an additional meeting in the autumn to formally sign off the accounts.

  [^2]: IFRS 16 is an international accounting standard concerning leases. It requires lessees to recognise assets and liabilities for most leases on their balance sheets. [^3]: A statutory override is a temporary measure implemented by the government to allow local authorities to manage deficits in their Dedicated Schools Grant (DSG) accounts without impacting their general fund balance. [^4]: The New Homes Bonus was a grant paid by central government to local councils to incentivise building new homes in their areas.

• Treasury Management End of Year Report

  The committee noted the Treasury Management end of year report. Kate Iles, Finance Manager, explained that treasury management is conducted within the framework of the Chartered Institute of Public Finance and Accountancy's (CIPFA) Treasury Management Code of Practice, requiring the council to approve a treasury management strategy before each financial year.

  The report included an economic review provided by Arlene Close, the council's Treasury Management Advisor, noting volatility in interest rates and gilt yields. The council has continued to operate a diversified investment portfolio, maintaining liquidity through money market funds and instant access bank accounts, alongside fixed-term deposits with the Government's Debt Management Office. The council holds £29 million in long-term strategic pooled funds, with a market value of £27.2 million at the end of March, representing a capital loss of £1.8 million. This loss does not currently impact the general fund due to a statutory override until March 2029.

  The council undertook new borrowing of £135 million during the year to fund its capital programme, primarily from the Public Works Loan Board (PWLB). The borrowing portfolio is kept under review for restructuring opportunities.

  Councillor John Graham was pleased that the council had managed to get rid of £9.4 million of Lobo loans[^5].

  Councillor Saul Jacob asked if there were any concerns regarding the county defaulting on any loans in the near to medium term. Scott, who was not named with a title, assured the committee that this would not be something that the council would ever entertain.

  The council is currently in discussions with the lender of some of its commercial loans to restructure them, which will be reported in the next treasury update.

  [^5]: A LOBO loan is a type of complex financial instrument used by local authorities in the UK. LOBO stands for Lender Option Borrower Option.

• Annual Governance Statement and Code of Corporate Governance

  The committee approved the Annual Governance Statement for 2024/25 and the updated Code of Corporate Governance for 2025/26. Chris, who was not named with a title, reminded the committee that the Code of Corporate Governance sets out the standing arrangements for the council's governance framework, while the Annual Governance Statement is the annual review of that framework. The review concluded that the framework is reasonable and fit for purpose, while identifying governance issues outlined in the report.

  The chair drew the committee's attention to section 4.30 of the statement, regarding the external audit and the fact that the Audit AUI decided not to complete the audit, which is why there was a disclaimer of opinion.

• Risk Management Update

  The committee agreed that the next risk focus report would be on the shortage of social care workforce in the whole sector.

  The risk management update contained information on the updated risk management framework and the council's corporate risks. The number of risks has been reduced from 37 to 18, themed for easier understanding. The report also simplifies risk descriptions and changes reporting structures.

  Councillor Penelope Hill asked about the risk of a shortage of social care workforce, referencing a lack of foster carers mentioned at Full Council. She also asked when the impact of national insurance changes would be seen.

  Councillor Liz Needham asked about the reduction of risk regarding insufficient funding of SEND, given increased spending.

  Councillor Graham suggested that the audit committee should see the reconciliation of the previous risk management framework with 37 risks to the new framework with 18 risks.

  Councillor Roberts suggested that the committee should have a look at health and safety within the 12 month cycle.

• Anti-Fraud Report 2024/25

  The committee noted the Anti-Fraud Report 2024/25. Nick Jennings, Head of Shared Anti-Fraud Service, presented the annual report, highlighting high levels of fraud detected, with fraud prevented exceeding losses. The report covered the shared anti-fraud service's activities and the council's anti-fraud plan.

  Councillor Needham asked if councillors could access the anti-fraud training and what kind of fraud entails special guardianship orders.

  Councillor Crystal asked if fraud alerts are sent to members.

  Councillor Hill asked about plans for AI-related fraud and the impact of reduced days for adult social care.

  Councillor Graham asked if the council has the right resources in the anti-fraud team.

  The committee agreed that members should be sent the bi-monthly report.

• Delivery of the 2025/26 Anti-Fraud Plan

  The committee noted the report on the delivery of the 2025/26 Anti-Fraud Plan. Nick Jennings reported that the service was very busy and that there had been an increase in polygamous working[^6].

  [^6]: Polygamous working is where an individual holds multiple employment positions simultaneously without the knowledge or consent of all employers.

• SIAS Internal Audit Progress Report

  The committee noted the SIAS Internal Audit Progress Report. Darren, who was not named with a title, presented the report, providing details of reports issued, plan changes, progress on implementing audit recommendations, and performance in delivering the audit plan.

  The committee noted the outcomes of 15 completed projects, including 11 assurance projects and four grant or funding certifications. There are six reports currently in draft status. The committee approved in-year plan changes, including deferring the section 151 and SIL audit to quarter one of 2026/27, removing two grant certification activities, and adding a new audit on pensions administration.

  There is one limited assurance audit, relating to purchase cards, with three medium priority recommendations. There are four medium priority recommendations that are over 12 months overdue.

  Councillor Graham said that the report was very comprehensive and that Darren had done a good job in keeping the committee informed.

• Whistleblowing Annual Report 2024/25

  The committee noted the Whistleblowing Annual Report. Chris, who was not named with a title, presented a summary of the council's whistleblowing procedure and activity during the year. There has been a steep increase in the number of whistleblows received, although in absolute terms it is still not particularly high. About half of the reports relate to employment matters, bullying and harassment, which are dealt with under different policies.

  Councillor Needham asked what the procedure was for whistleblowing.