The Audit Committee of Hertfordshire Council met on Thursday 4 December 2025. The committee discussed the Hertfordshire Fire and Rescue Authority's Annual Statement of Assurance, the 2024/25 audit update for the council and pension fund, treasury management, risk management, and the shared internal audit service.

Hertfordshire Fire and Rescue Authority Annual Statement of Assurance

The committee received the draft Statement of Assurance for Hertfordshire Fire and Rescue Authority (HFRS) for 2024/25. John Boulter, Head of Governance and Finance, presented the document. Councillor Roberts raised a concern about attendance times, noting that performance had fallen in three out of four categories compared to the previous year, with 65 occasions where the target attendance time was missed. John Boulter explained that in many of these instances, the delay was only by seconds, and that the average attendance time for the first fire engine was just over seven minutes. Alex Woodman, Executive Director and Chief Fire Officer, added that any delay is a frustration and that duty principal officers are made aware of every delay. Councillor Graham inquired about the proliferation of Houses of Multiple Occupation (HMOs) and the associated fire risks. Alex Woodman responded that HFRS works closely with district councils on HMOs, focusing on communal areas. Councillor Chris Lloyd asked for clarification on the drop in fire safety interventions and how to ensure higher levels in the future, and noted the positive drop in sickness levels. John Boulter confirmed that fire safety inspections are part of a three-year cycle and that they are on track. Alex Woodman added that the dip in fire safety interventions was related to engagement with young people and referrals. Councillor Liz Needham questioned the demographic breakdown on page 26 of the Statement of Assurance, noting a discrepancy in the male/female percentages and a significant change between 2023-24 and 2024-25. She also asked how the failure rate for getting to incidents on time compared to the national average. John Boulter stated he would need to ask a colleague for the demographic information and would share the national average statistics afterwards. The committee was asked to approve the Statement of Assurance, subject to the numbers on page 26 being checked and amended.

2024/25 Audit Update

Tim Cutler, partner from KPMG, presented the audit update for the 2024/25 financial year, reporting very good progress. KPMG is optimistic about removing the disclaimer that was reported last year. John Boulter, Head of Governance and Finance, detailed the findings, noting a misstatement on the valuation of land and buildings, which has been adjusted, and that no issues had been identified regarding management override of controls. He also highlighted that testing on the valuation of local government pension scheme liabilities was largely complete, with some issues arising due to two pension reports, requiring management to change some balances in the accounts. Councillor Chris Lloyd raised concerns about old data on the ledger and asked if this would be reviewed during the year. John Boulter confirmed that recommendations would be followed up as part of interim work. Councillor Lloyd also questioned the classification of staff contracts not being signed as 'green'. John Boulter explained that from an external audit perspective, the focus is on material misstatements. Councillor Saul Jacob asked for the reasons behind the disclaimed opinions given in previous years. Tim Cutler and Stephen Watson explained this was due to a backlog of work in the local government sector, exacerbated by COVID-19 and regulatory changes. Councillor John Graham expressed frustration with the previous auditors, Ernst & Young. Councillor Roberts asked about the potential cost of the Build Back Better Assurance work. Tim Cutler stated that the cost would be fully disclosed when they return in February. The committee noted the good progress towards the completion of the 2024/25 audit and the limited number of audit adjustments and recommendations.

Pension Fund 2024/25 Draft Audit Report

Tim Cutler of KPMG presented the draft audit report for the Pension Fund, reporting that the audit had gone very well and they were hopeful of a completely unmodified opinion this year. The only significant audit risk identified was management override of controls, with similar control weaknesses to the authority. However, some unapproved journals over the £500k threshold were noted as a control deficiency. Rob Winterton, Finance Manager, confirmed that a journal parking post process had been brought in from April 2025. The committee was asked to note the Pension Fund's 2024/25 draft audit report.

Mid-Year Report on the Treasury Management Service and Prudential Indicators 2025/26

Kate Iles, Finance Manager, presented the mid-year report on the Treasury Management Service. She explained that treasury management is conducted within the framework of SIPFA's Treasury Management Code of Practice. The report detailed investment activity, borrowing, and performance against agreed indicators. Investments are diversified, with liquidity maintained through money market funds and instant access bank accounts. The council had undertaken new long-term borrowing of £20 million and restructured £91 million of commercial loans, achieving a discount of £16 million, which will provide an annual revenue benefit of £1.6 million. Total borrowing at the end of September was £558 million, with the majority with the Public Works Loan Board (PWLB). Councillor Saul Jacob asked about the borrowing ceiling and how Hertfordshire compared to other counties. Kate Iles stated that Hertfordshire is fairly average and has capacity, but may reach the ceiling over the next four years due to the high needs deficit impacting reserves. Councillor John Graham asked about the budget for treasury management, particularly regarding investments in local infrastructure. Kate Iles explained that liquidity is key, and they tend to invest in money market funds and the Debt Management Office. Councillor Chris Lloyd raised concerns about the SEND deficit and what was being done to persuade the government to address it. Stephen Watson, Vice-Chair of the Council, confirmed that there had been significant lobbying from the council and partners, and that there had been some movement in the recent budget announcements, but the detail was still awaited. Councillor Richard Roberts echoed these concerns about the impact of the SEND deficit on borrowing capacity. The committee was asked to note the Treasury Management End of Year report.

Risk Management Update

Fiona Timms, Risk & Insurance Manager, presented the risk management update. The number of corporate risks has been consolidated from 18 to 11, with risks now categorised under overarching financial, workforce, and safeguarding themes. Three risks are currently not at their target score: climate change and achieving net zero, large-scale development in Hertfordshire, and sustaining improvements in SEND. Councillor Chris Lloyd expressed surprise that the risk of financial instability due to insufficient SEND funding had been moved to a directorate level rather than kept at a corporate level. Scott Crudgington, Director of Law and Governance, explained that there is a new consolidated risk for financial instability across the whole council, but acknowledged the materiality of the SEND element and agreed to take the feedback back to the Strategic Management Board (SMB). Councillor Stuart Roberts raised concerns about the risk associated with Local Government Reorganisation (LGR), asking about the specific concerns such as recruitment, retention, cost, and final outcome. Scott Crudgington explained the risk focuses on organisational capacity and the work required to transition services. He confirmed that there is no direct financial assistance from the government for this organisational demand, and the council would ultimately bankroll the changes, expecting future savings to pay for the transition. The committee was asked to agree to have a risk-focused report on local government reform at their March meeting. Amendments were proposed to separate cyber attack as a significant risk, with other IT risks managed at a senior management board level, and to review the SEND risk.

Risk Focus Report – Health and Safety Corporate Risk

James Ottery, Health and Safety Manager, presented the risk focus report on the corporate risk relating to health and safety. The current risk score is 12, which is significant, with a likelihood of 'possible' and an impact of 'high'. This risk is likely to remain at this level due to the complex nature of the council's operations. Controls are in place to mitigate risks, reflecting the 'Plan-Do-Check-Act' cycle. Councillor Chris Lloyd focused on schools and council staff, noting an increase in verbal and physical violence, and asked what support would be provided to frontline staff. James Ottery acknowledged the shift in behaviours, particularly since the pandemic, and stated that most reported incidents arise from those the council supports. Councillor Stuart Roberts asked for reassurance that findings from health and safety audits, including one significant management failure, had been appropriately dealt with. James Ottery confirmed that all audits falling below baseline are revisited and action plans tracked to completion. The committee was asked to note the actions and controls being undertaken to mitigate the risk of health and safety incidents.

SIAS Internal Audit Progress Report

Darren Williams, Head of Shared Internal Audit Service (SIAS), presented the progress report on the internal audit plan. He highlighted that 50% of the planned audit days had been delivered, with 46% of projects completed to draft report stage. Two in-year amendments to the audit plan were proposed: an increase in the budget for the Ombudsman Referrals audit and the cancellation of the SEND assurance mapping audit due to alternative assurance being available. No new limited assurance opinions or high priority recommendations had been made. Councillor Richard Roberts thanked the team for their work and asked what the one recommendation would be if they could only give one area for focus. Darren Williams explained that they are undertaking horizon scanning and will have a firmer answer in March when the audit plan is presented. Councillor Stuart Roberts noted the issue of unsigned staff contracts, which had been raised by external auditors, and suggested it might be an area for future audit focus. Darren Williams confirmed that recruitment and payroll are audited cyclically and that this would likely be included in next year's plan. The committee was asked to note the progress report and approve the proposed amendments to the audit plan.

SAFS Progress Report

Nick Jennings, Head of Shared Anti-Fraud Service (SAFS), presented the progress report on the delivery of the Anti-Fraud Plan for 2025/26. He highlighted the delivery of 10 training sessions and the issuance of executive reports where system weaknesses were identified. A briefing paper on the new 'Failure to Prevent Fraud' offence under the Economic Crime and Corporate Transparency Act 2023 had been issued to senior leadership teams. Reactive work had seen 193 fraud allegations received, with 43 cases under investigation and an estimated £1.4 million in losses recorded. Proactive work included the National Fraud Initiative (NFI) exercise, which identified £592,000 in fraud, error, and savings. SAFS also manages the County Council Tax Review framework, which is expected to deliver over £4.5 million in new revenue across all councils. Councillor John Graham congratulated the team on winning the 'Excellence in Protecting the Public Purse Award' at the Institute for Rating Revenue and Valuation conference. Chris Wood, Head of Assurance Services, added that SAFS had also won an award for 'Excellence in Partnership Working' at the Public Finance Awards. Councillor Chris Lloyd highlighted the proactive work with students on money-muling as particularly worrying and thanked SAFS for their efforts. The committee was asked to note the activity undertaken by SAFS and congratulate the team on their awards.

Annual Governance Statement Mid-Year Update

Chris Wood, Head of Assurance Services, presented the mid-year update on the Annual Governance Statement (AGS). He reported that out of ten significant governance issues identified, three were completed, and seven remained outstanding. He noted that the AGS compliance with the CIPFA SOLACE Delivering Good Governance framework had been validated by KPMG. The committee was asked to note the progress updates on the actions to address the significant governance issues.

Future Work Programme

The committee was asked to agree its future work programme, including the HCC and Pensions Audit 2024/25 completion and responses, and the 2025/26 updates for February 2026. The March 2026 meeting would include the Annual Report of the Audit Committee, SIAS and SAFS audit plans and progress reports, a risk management update, a risk focus report, and updates on HCC and Pensions audits for 2025/26. A risk focus report on Local Government Reorganisation was also proposed for the March meeting.

The meeting concluded with no further Part I business and no Part II business.