The Audit Committee of Havering Council was scheduled to meet to discuss internal audit progress, risk management, and treasury management. The committee was also expected to review the minutes from their meeting held on 8 July 2025¹.

Half Year Treasury Update

The committee was scheduled to discuss the Mid-Year Treasury Management Report 2025/26, covering the period from 1 April 2025 to 30 September 2025. The report noted that the Chartered Institute of Public Finance and Accountancy's (CIPFA) Treasury Management Code (Tm Code) requires authorities to report on treasury management performance to the full council twice per year.

The report included several key highlights:

• The investment portfolio's weighted average rate of return was 4.70%.
• Current investments totalled £79.5m, yielding 4.26%, consisting of deposits placed with the Government Debt Management Office and a number of local authorities.
• The council's debt totalled £606.5m, fixed at an average rate of 3.70%, with an average duration of 12.1 years.
• Treasury activities remained within the treasury limits and prudential indicators.

The report also included an economic update, noting that the Bank of England cut interest rates from 4.50% to 4% between April and September. It also stated that MUFG Corporate Markets expected interest rates to fall over the next few years.

The report stated that the council's investment priorities are security of capital, liquidity and yield, and that it aims to achieve the optimum return on its investments, but that it is considered appropriate to keep investments short term to cover cash flow needs.

The report stated that the average weighted level of funds available for investment during the first half of the year was £123.7m. The authority outperformed its benchmark by 60 bps², with a £2.9m investment interest earned. The authority's budgeted investment return for 2025/26 is £1.25m, and performance for the year to date is £1.65m above budget.

The report detailed the council's capital expenditure plans, and noted that as a result of slippage in the capital programme, cash balances have remained higher than forecast and borrowing has been delayed. It is anticipated that further borrowing will be undertaken during this financial year to re-finance maturing PWLB³ debt in February and March 2026.

Risk Management Update

The committee was scheduled to receive an update on the strategic risk register and significant governance issues from the Annual Governance Statement. The council's strategic risk register and the Annual Governance Statement (AGS) were attached as appendices for review.

The strategic risk register is regularly reviewed, with risks regularly scheduled for discussion and updated at Executive Leadership Team (ELT) meetings. A summary version of the current strategic risk register was provided, including current likelihood and impact scoring of the risks based on assessment by the risk owner and ELT.

The 2024/25 AGS was reported to the April 2025 Audit Committee. The significant issues raised in the 2024/25 Annual Governance Statement are set out in detail in the action plan.

The strategic risk register currently has 11 risks, including:

• External Inspection Requirements
• Financial Resilience
• Potential harm to people we owe a duty of care
• Failure to deliver strategic corporate priorities set out in the Corporate Plan
• Loss of Organisational Capacity and Knowledge
• Organisational Culture, Governance and Capability
• Regeneration
• Severe Weather and Environmental change
• Significant operational disruption to the Council's critical services
• Technology: Cyber Security
• Technology: ICT Resilience and Legacy Systems

The significant governance issues action plan included:

• Delivery of a balanced budget 2025/26
• Council's ability to successfully end the existing onesource IT shared service with LBN by 31st December 2025
• Procurement: Weaknesses in the governance arrangements for procuring goods and services
• Inadequate judgement outcome of Starting Well's Social Care Department following Ofsted's Inspection of Local Authority Children's Services (ILACS) in December 2023
• A number of control failures have been identified towards the end of 2024/25 across three service areas

Internal Audit Progress

The committee was scheduled to receive a report summarising the cumulative outcomes of audit and counter fraud work, including actions taken by management in response. Limited assurance reports issued since the last Audit Committee were included as appendices.

The report noted that the Accounts and Audit Regulations require the council to undertake an effective internal audit to evaluate the effectiveness of its risk management, control and governance processes.

The Internal Audit Plan is designed as a dynamic, risk-based framework that remains adaptable throughout the year, ensuring that emerging risks and changing priorities are addressed promptly.

The report included a Power BI⁴ desktop report on the 2025/26 audit plan.

The report included a list of audits that had been completed, were underway, or had not started. It also included a summary of limited assurance reports.

A final internal audit follow up report on procurement processes was also included. A review of consultant engagement undertaken in 2023/24 identified recurring risks in procurement practices across the council. This resulted in a limited assurance opinion and included three high priority recommendations to address the identified issues. This report provided a follow-up assessment of the progress made in implementing those recommendations, with a focus on improving governance, transparency, and compliance within procurement processes. The overall audit opinion remained limited on the basis that whilst progress has been made, such as the drafting of revised Contract Procedure Rules and the proposal to introduce a formal procurement board, these changes have not yet been fully approved or implemented.