Agenda item

To receive the annual report from Chair of the Audit and Standards Advisory Committee.  The report covers the work of both the Audit & Standards Advisory Committee as well as the Audit & Standards Committee for the municipal year 2025-26.

Members are asked to note that the report has been prepared independently by the Chair of the Audit & Standards Advisory Committee.

David Ewart, as Chair, introduced the Annual report produced as Chair of the Audit & Standards Advisory Committee which covered the work of both the Advisory and Audit & Standards Committee during the 2025-26 Municipal Year, in line with the requirements and principles set out within CIPFA’s Position Statement regarding Audit Committees.

In noting the report was the fourth annual report produced under the current requirements David Ewart (as Chair) highlighted the following as key issues identified through the work undertaken across both Committee’s during 2025-26:

·            Thanks were recorded to members of the previous committee for their work during the year, and to the independent members for their continued support.

·            The high and increasing level of risks being faced by the Council and across local government as a whole, given the continuing pressures on local authority finances and need to ensure robust system of governance and financial control were maintained.

·            The Council’s financial resilience and sustainability. Whilst noting that Brent remained in a relatively good position with regard to financial sustainability, with an adequate (albeit reducing) level of reserves, it was recognised that the Council had not been able to contain expenditure within budget during 2024-25.  In commending the efforts made to ensure Brent had been one of the few authorities to have the external audit of its accounts signed off before the backstop date, the Committee had noted there remained a number of ongoing issues which may lead to future problems in terms of the Council’s financial resilience.  These included ongoing pressures on demand for Council services (which had been recognised as a key issue by the External Auditors in their annual (Value for Money) report and accompanying recommendations for action) along with level of external debt given the impact of higher interest rates.

·            The Council’s governance and internal control arrangements.  Whilst confirmed as sound within both the External Auditor’s Value for Money report for 2024-25 (with the exception of their findings concerning Financial Sustainability and the improvements in the Housing service) and Head of Internal Audits report and opinion issued in June 2025 a number of areas had been identified for ongoing review particularly in relation to the continuing need (whilst recognising the improvements made) to address the ‘second line’ of defence (i.e. the monitoring and reporting of information and data, by management, in respect of the effectiveness of the ‘first line’ of defence) and implementation of internal audit recommendations/actions and need to address the management of Housing Compliance, following the Council’s self-referral to the Housing Regulator.  In addition, the Committee had also noted the recommendations made by the Corporate Peer Challenge focussed around strengthening the Council’s financial management in relation to development of the Medium-Term Financial Strategy (MTFS), use and restoring of General Fund and Housing Revenue Account (HRA) reserves to sustainable levels and financial processes to improve income generation, productivity, and efficiency.

·            The focus on delivery of the Internal Audit Plan and move towards a more agile and risk-focused model, ensuring that assurance activity remained aligned to the Council’s evolving risk profile while maintaining appropriate coverage of core systems.

·            The available resource within the Internal Audit function for 2025-26 which it was noted comprised an estimated 700 days spread across delivery of the Internal Audit Plan with the function continuing to operate a co-sourced model, with a portion of the plan (approx. 200 days) delivered through these arrangements and recognised as providing a number of benefits, including an in-depth understanding of the Council, its strategies and objectives, and it’s governance, risk management and control processes via the in-house team; increased flexibility and resilience in the resourcing of the function; access to specialist resource, such as IT/Cyber specialisms as well as increased benchmarking opportunities with other Councils who call off the same framework.

·            The continuing need for both Committees to review and improve their own performance, to further improve the Council’s risk management.  As part of this process, a self-assessment had been completed by members at the end of 2025-26 with had identified the implementation gap, the capacity of Internal Audit and the lateness and scale of reports as ongoing areas of concern, together with proposals for improvement, including widening engagement beyond the Corporate Director of Finance and Resources and closing follow-up loops more effectively.  Members were advised that these areas would be subject to ongoing discussion and reflection as part of the longer-term development of the Committee.

Comments were then invited from the Committee, with the following issues raised:

·            Recognising the importance in being able to maintain the level of audit resource, details were sought on any benchmarking undertaken with other London boroughs. Officers confirmed that informal benchmarking placed Brent in the lower-middle range in terms of audit resource compared with other London authorities.  Given the ongoing scale and complexity of the Council’s operations members were reminded that the focus of the Internal Audit Plan had therefore been adjusted to provide a more agile risk-based and flexible approach enabling the function to balance the need to provide assurance over core systems and controls while responding to emerging risks, organisational priorities and management requests within available resources.

·            Reflecting on the outcome of the self-assessment and comments regarding the need to develop a wider focus beyond Finance & Resources members advised they were keen to explore how this approach could be developed.  In response, the Chair felt it important to recognise the activity already undertaken in this respect, which had included undertaking a range of deep dive reviews enabling engagement on specific issues and with a wider range of officers with specific examples provided ion relation to housing compliance, AI and the Procurement Strategy, which it was hoped to be able to continue moving forward.

With no further comments raised, the Committee welcomed the report which was felt to provide a good summary of the activity undertaken and in thanking all members and officers involved for their ongoing support in the work across both Committees it was RESOLVED to note the contents of the Annual Report ahead of it being presented to Full Council on 6 July 2026.