The Governance and Assurance Committee of Redbridge Council was scheduled to discuss the council's audited statement of accounts for the 2024/25 financial year and the proposed Treasury Management Strategy for 2026/27. The meeting's agenda also included a review of the audit results report for the 2024/25 financial year.

2024/25 Statement of Accounts and Audit Results Report

The committee was scheduled to consider the 2024/25 Statement of Accounts, which was expected to be accompanied by an Audit Results Report. The report pack indicated that Ernst & Young (EY), the council's external auditors, anticipated issuing a disclaimed audit opinion for the 2024/25 financial year. This was due to EY not having obtained sufficient evidence to provide reasonable assurance over all closing balances. The report highlighted four key risks identified during the audit process: one concerning the council's financial sustainability, two related to governance issues, and one arising from the Ofsted SEND inspection.

EY's Audit Results Report, provided as Appendix A to the committee's papers, detailed significant weaknesses identified in the council's arrangements for securing economy, efficiency, and effectiveness in its use of resources. These weaknesses were categorised under three reporting criteria: financial sustainability, governance, and improving economy, efficiency, and effectiveness.

Under the financial sustainability criterion, the report noted that the council had overspent in 2024/25, was forecasting significant overspends for 2025/26, and had identified increasing budget gaps for 2026/27 and beyond. The report indicated that the council would need to seek Exceptional Financial Support from the Ministry of Housing, Communities and Local Government (MHCLG) to balance the 2026/27 budget.

In terms of governance, the report highlighted the council's continued failure to meet statutory deadlines for publishing its financial statements, with the 2024/25 accounts being issued significantly after the 30 June 2025 deadline. This was attributed to long-standing weaknesses in the financial reporting process, including challenges with capital valuation, staff turnover, and the migration of asset records to manual spreadsheets. The report also noted weaknesses in the council's whistleblowing arrangements, including the absence of a clear line of responsibility and a lack of consistent, transparent processes for managing cases.

Regarding improving economy, efficiency, and effectiveness, the report referenced the Ofsted joint area inspection of the Redbridge Local Area Partnership's Special Educational Needs and/or Disabilities (SEND) services. The inspection revealed widespread and systemic failings, leading to significant concerns about the experiences and outcomes for children and young people with SEND. The council, in conjunction with the Redbridge Local Area Partnership, had prepared a priority action plan to address these issues.

The report also detailed numerous adjusted differences identified during the audit, which Management proposed to adjust in the financial statements. These adjustments related to various areas, including the Revaluation Reserve, Property, Plant and Equipment (PPE), Investment Property, Private Finance Initiative (PFI) overlays, and reclassifications of income and assets. Disclosure misstatements were also identified in areas such as pension disclosures, employee expenditure, impairment losses, and PFI notes.

The auditors, EY, noted that they had not been able to complete all planned audit procedures due to delays in receiving key working papers and responses to queries, as well as issues with the completeness and accuracy of underlying working papers and disclosures. This significantly impacted their ability to obtain assurance over various account areas, including long-term assets, creditors, and employee benefits expenses.

The committee was recommended to note the Auditor's Audit Results Report and the issue of a disclaimed audit opinion for the financial year 2024/25, approve the Audited Statement of Accounts for 2024/25, and approve the Letters of Representation for both the Council and the Council's Pension Fund.

Treasury Management Strategy 2026/27

The committee was also scheduled to review the proposed Treasury Management Strategy for 2026/27. This strategy encompasses the council's borrowing and debt repayment requirements, its annual investment strategy, and prudential indicators for capital and treasury management. The report highlighted that the council's treasury activities are governed by statutory requirements and the CIPFA Code of Practice in Treasury Management.

The strategy outlined the council's current treasury position, including its actual borrowing and investment figures as of 31 March 2025 and 31 December 2025. It also projected the council's external debt and Capital Financing Requirement (CFR) for the period 2025/26 to 2030/31. The report included proposed prudential indicators for treasury management, such as the authorised limit for external debt and the operational boundary, as well as limits on the maturity structure of borrowing and interest rate exposures.

The strategy also detailed the Minimum Revenue Provision (MRP) Policy Statement for 2026/27, outlining how the council plans to repay its accumulated capital expenditure. The borrowing strategy for 2026/27 emphasised a cautious approach, with a focus on monitoring interest rates and adopting a pragmatic approach to changing circumstances. It also outlined the various sources from which the council could undertake borrowing, including PWLB, Municipal Bond Agency, and local authorities.

The Annual Investment Strategy for 2026/27 was also part of the discussion, setting out the council's policies for managing its investments with a priority on security, liquidity, and then yield. This included criteria for selecting counterparties based on credit ratings and diversification across asset classes. The strategy also addressed the implications of the IFRS 16 accounting standard for leased assets and the council's approach to investments longer than 365 days.

The committee was recommended to support the proposed Treasury Management Strategy for 2026/27.