Audit Committee

Minutes AUDIT COMMITTEE 28 August 2024 Meeting held at Committee Room 5 - Civic Centre, High Street, Uxbridge UB8 1UW Committee Members Present: Councillors Nick Denys, Tony Burles, Henry Higgins, June Nelson, and Philip Corthorne Officers Present: Richard Ennis – Corporate Director of Finance, James Lake – Director - Pensions, Treasury and Statutory Accounts, Claire Baker – Head of Internal Audit and Risk Assurance, Mark O’Halloran – Counter Fraud Manager, Tony Zaman – Chief Executive Officer, and Ryan Dell – Democratic Services Officer Also Present: Councillor Martin Goddard, Cabinet Member for Finance, (present for items 8-13) 3x Candidates for new Independent Chair of the Audit Committee (present for item 6 , one present virtually) 1. ELECTION OF CHAIR (FOR THIS MEETING) (Agenda Item 1) The Democratic Services Officer opened the meeting by asking if there were any nominations for a Chair of the meeting. Members proposed, seconded and agreed to appoint Cllr Denys as Chair of the meeting. RESOLVED: That the Audit Committee appointed Cllr Nick Denys as Chair for the current meeting 2. APOLOGIES FOR ABSENCE (Agenda Item 2) Apologies had been received from John Chesshire. 3. DECLARATIONS OF INTEREST (Agenda Item 3) None. 4. TO CONFIRM THAT ALL ITEMS MARKED PART I WILL BE CONSIDERED IN PUBLIC AND THAT ANY ITEMS MARKED PART II WILL BE CONSIDERED IN PRIVATE (Agenda Item 4) It was confirmed that item 6 would be heard in private. All other items would be heard in public. 5. MINUTES OF THE MEETING HELD ON 30 APRIL 2024 (Agenda Item 5) RESOLVED: That the minutes of the meeting held on 30 April 2024 be approved as a correct record 6. INTERVIEWS FOR THE INDEPENDENT CHAIR OF THE AUDIT COMMITTEE (Agenda Item 6) This item w as discussed as a Part II item without the press or public present as the information under discussion contained confidential or exempt information as defined by law in the Local Government (Access to Information) Act 1985. This was because it discussed ‘i nformation relating to any individual’ (paragraph 1 of the schedule to the Act). RESOLVED: That the Committee declined to recommend to Council the appointment of an Independent Chair of the Audit Committee 7. EXTERNAL AUDIT UPDATE (Agenda Item 7) This item was considered in public before item 6. The Council published the draft 2023/24 Statement of Accounts on 28 June 2024. EY were aiming to complete the 2022/23 and 2023/24 audits by the end of November and ahead of the revised backstop dates. The revised and newly proposed backstop date for financial years up to an including 2022/23 was now 13 December 2024, which had been extended from September. The field work ha d been completed for the 2022/23 Housing Benefit Assurance Process and was currently at the Partner review stage. EY expect ed this to be completed in September 2024. Members referred to ‘disclaimed’/ ‘modified’ opinions (where auditors have been unable to complete audits, they will issue a ‘disclaimed’ or ‘modified’ audit opini on) and asked if this was to be expected. Officers noted that it was. Modified opinions were expected as a result of the government measures to remedy the national audit backlog. It was noted that Hillingdon was in a similar situation to other local author ities with outstanding audits. Members noted that previous audits had been held up due to differences in valuation around PPE and national issues relating to the accounting for infrastructure and IAS19. Delays relating to infrastructure and IAS19 were unlikely to happen during the 23/24 audit, however it was expected that there would be differences in PPE valuations which would need to be managed. RESOLVED: That the Committee noted the report 8. AUDIT COMMITTEE ANNUAL REPORT (Agenda Item 8) The meeting started streaming to YouTube and it was noted t hat the private part of the meeting had just concluded. It was also noted that items 7 and 14 were conducted prior to item 6 and so were not on the public broadcast. Officers presented the draft Annual R eport of the Audit Committee for 2023/24. It had been drafted by the Head of Internal Audit on behalf of the Audit Committee and reflected their opinion of the work that had been undertaken during 2023 -24. Feeback and amendments were invited from Members. Members requested that the input of the Independent Chair of the Committee be sought. RESOLVED: That approval of the Draft Audit Committee Annual Report for 2023/24 be deferred to the next meeting. 9. INTERNAL AUDIT PROGRESS REPORT 24-25 Q1 (Agenda Item 9) Officers presented the Internal Audit Progress Report. Since the last Audit Committee meeting, 10 reports ha d been finali sed: two substantial assurance; four reasonable assurance; one advisory review in relation to Organisation Culture; one limited assurance; and two no assurance reports. The limited assurance report was around performance information. T his was a known area of improvement and it was part of the digital strategy and digital programme , looking at performance indicators, and developing a dashboard for CMT level. Services had KPIs in place, but they were not aligned with the objectives of the service or the Council’s strategic objectives. KPIs had not been reviewed or monitored consistently. Members asked about the process of repriorit ising workload when new managers requested internal audits. Officers explained the process, emphasising flexibility and the importance of obtaining necessary information. If items were being added to the plan, this was positive as people were engaging. If items were requested to come off of the plan, this would be challenged where appropriate. Members asked about the impact of zero -based budgeting. Officers noted that outcomes from zero-based budgeting were monitored and influenced the internal audit plan. The no assurance reports were around SEND Data Q uality and Uninspected B&Bs. Members asked for more detail on these. SEND Data Quality was added to the plan because there were concerns around significant overspends against the agreed targets with the Co uncil's Dedicated Schools Grant Safety Valve. Ongoing work ha d since improved processes. On B&Bs, i nsufficient evidence of checks had led to no assurance. This did not necessarily mean that those checks had not been completed . Efforts were ongoing to addre ss this. It was noted that a lot of B&Bs were used to house residents in temporary accommodation. It would be ensured during follow -ups that any recommendations were implemented. Members asked and officers clarified that they developed a plan for the ful l year, and officers were roughly where they would expect to be at this point in the year (Quarter 1). It tended to get busier at year -end. Officer tried to bring things forward into Quarter s 2 and 3. In terms of ratings, there were not usually as many lim ited and no assurance reports, however, this may be because there had been more focus on risk areas and a lot of work had been done on the risk register and increasing risk awareness. Members asked and officers further clarified that the audits were prio ritised by the risk register and ratings within it. It was the role of Internal Audit to provide assurance to the Committee that there were controls in place. Officers would also consider if there were things coming out from other Councils or if KPIs were being missed. There were a lot of different elements involved. Officers noted that they had included a paper on the new internal audit standards. These were new global standards and would create m ore oversight for the Audit Committee. More guidance was expected on the public sector focus. Further to this, Members asked when they could expect a full explanation of how this applied to Hillingdon and how it would affect Members’ role as an Audit Committee. The paper listed essential conditions which were t hings that the Audit Committee were required to do. More public sector guidance was expected in September/ October and so it as hoped that by November officers would be able to give more guidance on the rules and regulations. RESOLVED: That the Audit Com mittee noted the IA Progress since the last Committee meeting and the new Global Internal Audit Standards 10. RISK MANAGEMENT REPORT 24-25 Q1 (Agenda Item 10) The new risk management system was being rolled out across the different directorates. Positive feedback had been received and the system had be en described as easy to use. As at the end of June there were 221 risks on the system. The current total was 230. Of these, 16 were red -rated risks, and these formed the Corporate Risk Register. New Key Performance Indicators (KPIs) had been presented to the Corporate Risk Management Group on 24 June. They were responsible for implementing and managing the risk register. The Counter Fraud team had moved their risks onto the new system at the end of the quarter, which had led to an increase in the number of fraud risks. These were not new risks, just newly on the system. Risks had been added without a risk score to encourage active management and mitigation. Officers asked for feedback on things that cou ld be added to aid Members’ understanding. Members asked about the 12 risks overdue for review. The Corporate Risk Management Group and CMT were responsible for managing these risks. Red -rated risks should be reviewed monthly , if not, weekly. If any were out of date and not recently reviewed, officers from those areas could be invited to the Audit Committee to discuss. Members asked about actions being taken for high -risk items. Officers noted that items that were red on the Corporate Risk Register shoul d align with the strategic risks. Detailed actions were included in the Strategic Risk Report. The Strategic Risk Register was still in its infancy and had been aligned with the new CMT dashboard. Members noted that it would be useful, for the bigger risks , to know what actions were being taken and if item s were remaining on the register, why this was the case. This was noted as an action to be discussed outside of the meeting. On changing risk status, Members asked how risks were closed or replaced , and about accountability for this. Risks had been reviewed and split into more specific categories. Explanatory notes would be added to future reports for clarity. KPIs on closed risks were monitored through the Corporate Risk Management Group, and red-rated risks required justification for closure. Members a sked how actions were being recorded and followed -up. Actions were expected to be recorded on the new system. The Corporate Risk Management Group would challenge any lack of action. Members noted it may b e useful to include how risk ratings had changed from the previous meeting to the current meeting. It was noted that this was done for corporate risks, it listed Quarter 4 and Quarter 1. It was proposed to use colour coding to show changes. Members asked about the table of review date and rating. It was noted that the ‘Meeting Housing Need’, ‘Workforce Sufficiency’ and ‘Children’s Care Placements’ risks has been closed/ replaced. Officers noted that when items were added to the new risk management system, previous risks were reviewed. ‘Meeting Housing Need’ was a catch-all risk and so had been split into smaller risks such as decent homes, high levels of homelessness demand, and housing landlord service. Children's Care Placements was replaced with increas ing costs of external residential provision and the high need SEN placements were replaced with uncertainty of safety valve agreement. Members suggested that an explanatory note could be added to the report to explain this. Members noted that the report read “It is expected officers are taking actions to reduce the risks in practice ” and asked for some clarification on this. Officers noted that every new risk put on the new risk management system were proactively being managed. Actions were not recorded on the system. As this was a new system, the focus w as on putting the risks on it. I f risks were added and actions not taken, this would be challenged through the Corporate Risk Management Group. RESOLVED: That the Audit Committee noted the report and pro vided feedback on the content and level of assurance received 11. STRATEGIC RISK REPORT 24-25 Q1 (Agenda Item 11) Officers introduced the Strategic Risk Report, noting its alignment with the strategic objectives and the operational risk register. The report aimed to provide assurance that the objective s will be met by collating strategic risks into a simplified, public-friendly version. Key updates included the integration of KPIs on the new dashboard and risk ratings from the new risk management system. Officers highlighted that the Corporate Management Team (CMT) own ed each risk and should discuss them with the relevant Cabinet lead. A meeting with the new Corporate Director of Finance was planned. Members asked for clarity on the strategic risk of ‘ high levels of homelessness and housing needs deman d’, noting the change from the initial rating of B1 to the current rating of C2. It was noted that there were linked operation risks of legal disrepair; damp and mould; and decent homes/ thermal efficienci es. Officers explained that the strategic risk of ‘high levels of homelessness and housing needs demand ’ aligned with the strategic objective of ‘safe and strong communities’. The linked operational risks impact ed the achievement of this objective and were included in the Corporate Risk Register and the new risk management system. These were things that impacted on achieving the objective and impact ed on the risk score. The current rating incorporated the ratings of the linked operational risks. Officers elaborated on the risk scoring methodology, noting that the overall risk score was a collective assessment rather than a simple aggregation of individual scores. For example, fraud risks were scored high at a strategic level due to their potential impact , but when broken down into specific operational risks, the scores may be lower. RESOLVED: That the Audit Committee noted the Strategic Risk Report and provided feedback on the content and the level of assurance received 12. COUNTER FRAUD ANNUAL REPORT 23-24 (Agenda Item 12) Officers introduced the Counter Fraud annual report for 2023-24. This was an extremely successful year for the team. They had achieved savings of £11.2 million. The team had won the Public Finance Awards in both the Outstanding Fraud Prevention, Detection, and Recov ery category and the overall Grand Prix. The team’s success ha d led to greater national recognition, with other councils and fraud teams seeking to learn from their best practices. On housing, 103 propert ies were recovered, representing a 23% increase from the previous year and a record for the team. Additional billing in revenues amounted to around £4 million, positively impacting Council finances. Just over £300,000 in social care savings had been achieved, demonstrating an improving work stream and better relationships with Social Care. Members asked officers to pass on their congratulations to the team for their achievements. Members also commended the report and the national award. Members asked about the fraud awareness campaign mentioned in the report . Officers noted that fraud awareness was embedded through mandatory e-learning for new staff and ongoing presentations. While empirical evidence was limited, anecdotal feedback suggested the campaign was building better relationships and awareness acr oss the Council. Members asked about HMOs and methods of obtaining information via site visits. Officers noted that due to changes to the way the government had listed HMOs in terms of Council Tax, they d id not fall under the remit of the Counter Fraud team and fell under private sector housing, which would fall under the remit of the Residents’ Services Select Committee. Officers advised that when they were looking at unregistered dwellings, such as beds in sheds, their visits were all unannounced. Members and officers discussed hybrid working and people running businesses from home and the implications of this on business rates. This would have a planning element regarding the use of properties. Members asked about staffing levels. Officers confirmed the team was at full complement, noting that staff had been seconded in over the last six months to take up part of the B&B project. Members asked about blue badge fraud , noting that the figures had been consistent across the year and then dropped off to zero at year end . Officers explained that the flow of cases through the system affect ed quarterly results. Blue Badge Days of Action were resource intensive, and once these days had been conducted, items w ere referred to the criminal justice system where appropriate. RESOLVED: That the Audit Committee: 1. Noted the Counter Fraud Annual Report for 2023/24; and 2. Suggested any comments/ amendments 13 COUNTER FRAUD PROGRESS REPORT 24-25 Q1 (Agenda Item 13) Officers introduced the Counter Fraud Progress Report. The team had achieved savings of £3.3 million in Q1, marking a strong start to the year. On tenancy fraud, 30 properties were recovered, setting a new record for a single quarter. There were 34 cases ongoing within the criminal justice system. £783,000 had been generated in additional billing in quarter 1. 23 unregistered dwellings had been identified. All fraud risks had been added to the Corporate Risk Register, facilitating closer collaboration between Internal Audit and Counter Fraud teams. There were planned workshops with service areas to improve fraud risk knowledge, management and relationships. Officers noted the importance of ongoing efforts to manage and mitigate fraud risks. The Committee acknowledged the impressive results and ongoing efforts in counter fraud activities. RESOLVED: That the Audit Committee: 1. Noted the Counter Fraud Progress Report for 2024/25 Quarter 1; and 2. Suggested any comments/ amendments 14. WORK PROGRAMME (Agenda Item 14) This item was considered in public before item 6. Members referred to the training programme and suggested holding all of the training sessions in one sitting. This was agreed. It was confirmed that the Skills Matrix would be shared with new Committee Members. RESOLVED: That the Audit Committee: 1. Noted the dates for Audit Committee meetings: and 2. Made suggestions for future agenda items, working practices and/ or reviews The meeting, which commenced at 5.10 pm, closed at 8:45 pm These are the minutes of the above meeting. For more information on any of the resolutions please contact Democratic Se rvices on 01895 250636 or email: democratic@hillingdon.gov.uk. Circulation of these minutes is to Councillors, Officers, the Press and Members of the Public. The public part of this meeting was filmed liv e on the Council's YouTube Channel to increase transparency in decision -making, however these minutes remain the official and definitive record of proceedings.

Audit Committee – 20 November 2024 Part I – Public UPDATE ON THE 2022/23 STATEMENT OF ACCOUNTS AND EXTERNAL AUDIT OF THE 2023/24 ACCOUNTS Committee name Audit Committee Officer reporting Andrew Macleod, Chief Accountant; Pensions, Treasury & Statutory Accounts Papers with report 2022/23 Statement of Accounts and Audit Completion Report Ward All HEADLINES This report provides an update on the 2022/23 Statement of Accounts audit completion report and progress on the 2023/24 Statement of Accounts audit. RECOMMENDATIONS: That the Audit Committee: 1. Agree the 2022/23 Statement of Accounts and Audit Completion Report, and the Hillingdon Pension Fund Final Audit Results Report 2022/23 2. Note progress with the external audit of the 2023/24 Statement of Accounts. SUPPORTING INFORMATION The Ministry of Housing, Communities and Local Government has announced measures to tackle the backlog of local government audits and have proposed backstop dates for the publication of audited accounts:  A statutory backstop date of 13 December 2024 to clear the backlog of unaudited accounts up to and including financial year (FY) 2022/23  Five further backstops for FYs up to and including 2027/28 to allow the system to recover: 2023/24: 28 February 2025 2024/25: 27 February 2026 2025/26: 31 January 2027 2026/27: 30 November 2027 2027/28: 30 November 2028 The Government also intends to publish a list of any bodies and auditors that do not meet the backstop dates (also making clear where unaudited accounts have not been published). It is also proposed to change the deadline for the publication of ‘draft’ (unaudited) accounts from 31 May to 30 June for financial years 2024/25 to 2027/28. Audit Committee – 20 November 2024 Part I – Public In order to comply with the reset deadlines, EY had insufficient time following completion of the delayed 2021/22 audit to complete their normal audit procedures and as a result will issue a “disclaimed” audit opinion on these accounts. The government expects this will be the case with many local authority accounts continuing into future years. As such, the issuing of a disclaimed opinion should not result in the Council being unfairly judged as the opinion has resulted from the backstops, and many other local authorities will be in a similar position. EY will present their Audit Completion Report in respect of the 2022/23 accounts and the 2022/23 Hillingdon Pension Fund final Audit Results Report at the Committee meeting. Update on 2023/24 Statement of Accounts audit As noted above, the statutory deadline for the publication of audited accounts for 2023/24 is 28th February 2025. It is EY’s intention to submit their Audit Results Report to the Audit Committee meeting scheduled for 11th February 2025. The main audit commenced on 22 nd July 2024 and remains ongoing, with key areas of focus being prioritised to support the building back of assurance as soon as possible following the reset of local audit . There are several identified changes that will be required to the draft unaudited accounts following audit. EY will provide a verbal update on the progress of the 2023/24 audit at the Committee meeting. FINANCIAL IMPLICATIONS EY have advised there will be scale fee variations in respect of the 2023/24 audit . Previously a figure of £56k has been quantified relating to various issues such as additional time where audit evidence has not met requirements, larger sample sizes required because of lower materiality, mapping work during the interim audit and increased need to involve their property valuation specialists. EY have subsequently advised these fees are likely to increase further but this has not yet been quantified at this stage. In September 2024 the PSAA launched a consultation on the fee scale for 2024/25 audits. The fee scale proposals include a 9.5% increase on the 2023/24 scale fees to cover the additional audit work required under revised standards and a contractual inflati onary increase payable to audit firms for 2024/25. The new audit work relates to revised auditing standard ISA (UK) 315 (risks of material misstatement) and linked work on ISA (UK) 240 (fraud). The consultation closed in October and PSAA will publish the final fee scale by 30 November 2024. LEGAL IMPLICATIONS The Secretary of State for Communities and Local Government delegated statutory functions (from the Audit Commission Act 1998) to P ublic Sector Audit Appointments (PSAA) on a transitional basis under powers contained in the Local Audit and Accountability Act 2014. BACKGROUND PAPERS The 2022/23 Statement of Accounts EY Audit Completion Report 2022/23 EY Pension Fund Audit Results Report 2022/23

London Borough of Hillingdon Statement of Accounts for the year to 31 March 2023 1 London Borough of Hillingdon Statement of Accounts for the year ended 31 March 2023 Contents Page Leader’s Statement 2 Narrative Report 4 Statement of Responsibilities for the Statement of Accounts 15 Independent Auditor’s Report to the Members of the London Borough of Hillingdon 16 Statement of Accounting Policies 19 Main Financial Statements 36 Restatement of 2021/22 Comparatives 37 Expenditure and Funding Analysis 38 Comprehensive Income and Expenditure Statement 40 Balance Sheet 41 Movement in Reserves Statement Movement in Unusable Reserves 42 44 Cash Flow Statement 45 Notes to Main Financial Statements 46 Other Financial Statements 103 Housing Revenue Account and Notes 104 Collection Fund Account and Notes 108 Pension Fund Account and Notes 112 Annual Governance Statement 144 Glossary 154 Leader’s Statement 2 1. Leader’s Statement Introduction by Councillor Ian Edwards, Leader of the Council Welcome to Hillingdon’s Statement of Accounts for 202 2/23, which shows the council's financial performance in delivering high quality services to residents during the year and outlines the council’s financial standing at 31 March 2023. The Council has maintained frontline servic es to residents, with an approach based on sound financial management and continues to put residents first. Residents saw an increase of 0.9 per cent applied to their Council Tax for 2022/23, with the small rise maintaining Hillingdon’s approach of one of the lowest rates of Council Tax in Outer London . In addition, the Council also levied the Social Care Precept at 1 per cent. This 1.9 per cent increase represented a reduction from the proposed 2.8 per cent presented in the consultation budget, with the Council choosing to lower the increase to support residents during the cost -of-living crisis. The Council continues to offer Council Tax discounts for those aged over 65 on 31 March 2022, with a further safety net available for all residents facing financial difficulty in the form of the Council Tax Reduction Scheme that the Council offers. The Council was able to do this whilst all frontline services were maintained despite government funding increasing at a rate lower than inflation and an increasing demand for services from a growing population. Our people, our environment and our heritage continue to be at the heart of what we do, key achievements for the last financial year include:  As the cost-of-living crisis continued to impact our residents, the Council offered support through administering Government schemes and supported low -income households with local discretionary schemes. Support to residents included the energy bill discount, cost of living payments, winter fuel payments, Council Tax rebate, Household Support Fund, free school meal vouchers, the Holiday Activities and Food Programme.  Hillingdon welcomed people fleeing war-torn Ukraine and helped to coordinate the delivery of the Government’s Homes for Ukraine scheme, providing accommodation and support to those coming to the UK from Ukraine, with many residents signing up to the scheme and the Council working with partners to offer a package of support.  2022/23 saw the third year of a programme aimed at helping people with a learning disabil ity or autism find a full-time job, with the Council working in partnership with DFN Project SEARCH, hosting a Transition to Work programme for people aged 17-24, offering the opportunity for work experience and the chance to develop skills and gain confidence over a year-long placement. The programme is run in partnership with Orchard Hill College and Hillingdon Autistic Care and Support (HACS).  October 2022 saw the opening of a brand -new adult education centre in Uxbridge, with a new state of the art education centre opened in the heart of Uxbridge. It boasts five 50 square metre teaching classrooms, a multi - purpose workshop classroom (for arts, crafts and floristry), office space and has a dedicated, fully accessible entrance within the Civic Centre.  In December, the Council celebrated the first year of the Uxbridge Family Hub, which brings under one roof all the support a family may need and provides more accessible services to families and young people, with over 20,000 visits in the first year of op eration. Having closer working relationships with other services has had an extremely positive effect for families and we’re looking to expand this approach across the borough in the future.  And finally , four more green spaces were awarded a green flag st atus, with the Council once again being recognised for its outstanding parks and open spaces. The new additions bring the borough’s total to 67 awards (66 of which are maintained by the council) – this is the most flags held by any local authority for the tenth year running. As the country continues to emerge from the pandemic, the Council was able to use Government funding (Additional Restrictions Grant) to support local businesses recover from the pandemic and help future proof the local economy, with funding being used to support businesses which are developing new innovative technology, creating jobs, growing the local economy and helping to tackle climate change. This Statement of Accounts clearly demonstrates Hillingdon’s commitment to putting its residents first, which has led to another year of tremendous effort to support residents during the pandemic alongside avoiding the need to implement any cuts or reductions to frontline services, general balances of £26. 8 million held and further earmarked reserves set aside to deal with the impact exceptional inflation, alongside further resilience for demand volatility risk, with additional Leader’s Statement 3 funds earmarked for member initiatives, project work and other generic risk cover. Whilst this resilience provides a level of cover for Hillingdon, the exceptional inflationary environment is continuing to have an impact on the Council’s financial position and is the main driver for the Council’s saving requirement in the short-term, which is a position facing the whole of the Local Government sector. As ever, Hillingdon will continue to protect front line services and target transformational efficiency within the Council’s budget strategy. Cllr Ian Edwards Leader of the Council Narrative Report 4 This document sets out the annual accounts of the London Borough of Hillingdon for the year ended 31 March 202 3. The accounts are in the format for local authority accounts set by the Chartered Institute of Public Finance and Accountancy (CIPFA). The purpose of this narrative report is to provide a guide to the most significant matters reported in the financial statements. Included within this document are a number of technical terms that are specific to local government finance and a glossary has been provided to assist the understanding of the financial statements. 2.1 Organisational overview and external environment Hillingdon, situated on the western edge of Greater London, is the second largest London borough, covering a total area of about 42 square miles. It is just 14 miles from central London and bordered by the counties of Buckinghamshire, Hertfordshire and Sur rey, as well as the London Boroughs of: Hounslow, Ealing and Harrow. Hillingdon is home to Heathrow, one of the world's busiest airports, which normally caters for more than 60 million passengers a year. The borough, Hillingdon, has some of the best sports and fitness facilities in London including: Hillingdon Sports and Leisure Complex with 50 metre indoor competition pool; leisure pool; outdoor lido; 100 station gym; athletics stadium and 400 metre running track; 3G floodlit pitches, sports hall and more. There are also 17 libraries; 2 theatres, and over 200 green spaces covering approximately 1,800 acres, including Ruislip Woods; the Nature Reserve, and Lido. The Council's vision is ‘Putting Our Residents First’. This underpins its actions and decision -making process and is achieved by applying the following themes: Our People - Putting our residents first and at the heart of all that we do, promoting civic pride. Our Natural Environment - We will protect and enhance the borough's natural environment. Our Built Environment - We will continue to improve our buildings, roads and footways and ensure that new buildings fit with the surrounding environment. Financial Management - Maintain the solid approach to financial management that has delivered our success to-date and which will be vital going forward. The London Borough of Hillingdon was one of the 32 London Boroughs created by the London Government Act 1963. It was formed by the amalgamation of the Borough of Uxbridge and the Urban Districts of Ha yes/Harlington, Ruislip/Northwood and Yiewsley/West Drayton. The new borough came into existence on 1 April 1965, when the new Council started work. As well as taking on the work of the four previous district authorities, the Council became responsible for local services such as education, libraries, and children's services. These had previously been run by the Middlesex County Council, which ceased to exist on 1 April 1965. Hillingdon's purpose-built Civic Centre opened its doors to the public in 1977. The London Borough of Hillingdon provides care and support to older people in residential nursing homes and for youngsters in residential children's and foster homes. The Council provides housing through ownership and maintenance of over 10,000 houses and fl ats held for Council tenants. The Council maintains a large proportion of the road networks within the borough, as well as collecting waste from homes and businesses. In addition, the Council runs a number of refurbished public libraries; deals with planni ng applications, and provides sports and leisure facilities. Instead of reducing services, the Council has made steps to invest in facilities available to residents because of sound financial management and a comprehensive Capital programme. The Council employs approximately 2,528 staff, 2,760 inclusive of casual staff and has a population of around 305,900 (according to the 2021 Census). Hillingdon is an ethnically diverse borough with 51.8% of residents from black and minority ethnic groups. Hillingdon is rich in wildlife and wildlife habitat, including waterways; lakes; meadows, and nature reserves. Ruislip Woods has been designated London's first National Nature Reserve; whist nearby Ruislip Lido boasts 60 acres of water. The borough also offers a host of sporting activities, including sports centres, many with newly refurbished gyms and two exceptional 18-hole and one 12-hole golf courses, including a championship standard course at Stockley Park. The arts and entertainment thrive, with The Beck profes sional theatre in Hayes, The Compass Theatre in Ickenham, and various other venues. Narrative Report 5 2.2 Financial Performance General Fund The financial challenges facing the Council due to years of the Government’s austerity programme, increased demand for services continued throughout 2022/23, with this position compounded by the wider economic environment and the current level of exception al inflation, whilst also managing ongoing legacy issues driving by the global pandemic. Councils are starting to see Central Government funding increase, but this funding is still lagging behind pre -austerity levels, with 2022/23 compounded by inflation s ignificantly outstripping increased funding, despite this, Hillingdon was still able to continue to maintain cash discounts against Council Tax for the over 65s in receipt of this benefit on 31 March 2022 for another year in 2022/23, without impacting on f ront-line services to the public. In addition, the Council was able to manage significant increases in demand for services and keep fees and charges significantly cheaper than neighbouring boroughs on a per capita basis. Despite the challenges faced by t he Council, of the savings target of £13,346k, £11,781k are either banked in full or classed as 'on track for delivery', while £1,565k were covered by alternative measures during 2022/23, the percentage of savings banked in 2022/23 has increased from the l evel achieved in 2021/22, with that year being impacted by the pandemic. This balancing of local demand for services and financial constraints has been successfully managed through the Council’s Business Improvement Delivery (BID Transformation) Programme . The Council’s net revenue budget for 2022/23 totalled £251m, excluding those services such as schools and housing benefit, which are funded by specific funding streams. This net budget was supported by a combination of central government grant and loca lly raised Council Tax and Business Rates. The main driver for the funding increase from 2021/22 includes locally generated income from Council Tax, which was budgeted to grow by £6,261k as a result of the Council Tax increase, with a further increase in G overnment funding of £6,474k, with Business Rates generating an additional £4,054k as a result of the Council’s rating list recovering from the pandemic, with this position being offset by a reduction in one -off income of £3,409k, primarily driven by the C ouncil’s ability to reduce the reliance of Earmarked Reserves. Throughout the year, monthly budget monitoring reports were reviewed by Cabinet, enabling corrective action to be taken in response to emerging pressures, whilst continuing to deliver on the C ouncil's priorities for residents. Strong financial management, coupled with an ambitious BID Transformation Programme, delivered an improved position against budget at outturn. General Fund revenue budgets reported an overall underspend of £127k against planned expenditure budgets based on normal activities. As a result, this underspend led to an increase in the Council’s General Balances. The General Fund balance totalled £26.8m at year-end. Underspends across the Council were mainly driven by a favourable variance against the Council’s Treasury activities, offset by pressures within Housing, Parking Services and Education Services. Since April 2013, local authorities have been able to retain a proportion of business rate growth income from their area, until 2017/18 this proportion was 50% retention, with 30% of this value retained locally by the Council. In November 2017, Leaders of London local authorities collectively approved the principle of a Business Rates Retention Pilot Pool for the capital. In 2020/21 the Government ended the pilot status for the London Pool, however, London Authorities continued to pool benefits without the pilot status, but benefit from maximising the top -up and tariff system. However, due to the impact of the pandemic on the London-wide rating list, the pool made a small loss, the decision was therefore taken not to pool Business Rates across the capital in 2021/22 or 2022/23. Narrative Report 6 The outturn for the General Fund revenue budget is set out below:- Outturn 2022/23 Service Allocation and Rounding EFA - Total Net Expenditure Charged to GF Balances General Fund Services £'000 £'000 £'000 Finance 24,930 (1) 24,929 Health and Social Care 94,113 2,541 96,654 Children, Families & Education 68,889 (2,538) 66,351 Property, Highways & Transport 10,667 0 10,667 Residents' Services 30,382 (748) 29,634 Corporate Services 25,348 746 26,094 Service Operating Budgets 254,329 0 254,329 General Contingency 500 (500) 0 Unallocated Budget Items (3,909) 3,909 0 Funding (251,047) (3,409) (254,456) Outturn Total (127) 0 (127) Prior Year Drawdown 0 0 Total (127) 0 (127) Details on how the General Fund outturn position for management decision-making links through to the Comprehensive Income and Expenditure Statement (CIES) surplus for the year, in accordance with accounting standards, can be seen in the Expenditure and Funding Analysis (EFA) note which precedes the CIES. The table below provides a reconciliation between the General Fund overview shown in the Council’s budget revenue outturn and the opening position reported in the Expenditure & Funding Analysis (EFA) as required by the CIPFA Code. The monthly budget monitoring reports separately on areas of different funding streams such as General Balances, Housing Revenue Account, and other reserve movements. Revised Budget Outturn Outturn Variance General Fund Services £'000 £'000 £'000 Finance 25,405 24,930 (475) Health and Social Care 94,308 94,113 (195) Children, Families & Education 68,456 68,889 433 Property, Highways & Transport 10,940 10,667 (273) Residents' Services 29,957 30,382 425 Corporate Services 25,390 25,348 (42) Service Operating Budgets 254,456 254,329 (127) General Contingency 500 500 0 Unallocated Budget Items (3,909) (3,909) 0 0 Total Net Expenditure 251,047 250,920 (127) Funding (251,047) (251,047) 0 Net Total 0 (127) (127) Note: in accordance with local authority accounting practice, income and favourable variances in the table above and elsewhere in these accounts are shown as bracketed figures. Corporate Operating Budgets and Corporate Funding have been combined as Corporate Budgets for the purpose of the EFA. Narrative Report 7 Housing Revenue Account The Housing Revenue Account (HRA) delivered an in-year drawdown from its HRA general balances of £0.2m against the budgeted drawdown of £0.3m. As a result, HRA general balances total £15.2m at 31 March 2023 (£15.4m 31 March 2022). In addition, the HRA hold s £2.1m in the major repairs reserve (MRR) (£7.1m 2021/22) to fund future capital works. There have been 58 Right-to-Buy sales of Council dwellings as at the end of March 2023 (50 in 2021/22) which resulted in a gain on sale of assets when comparing the sale price to the Social Housing value in the Council's accounts. Capital Investment The Council’s programme of capital investment for 2022/23 totalled £110.7m (£78m in 2021/22) and was funded from a range of sources. These sources of funding included grants, contributions from revenue resources, proceeds from asset sales, and prudential borrowing. An under spend of £30.1m is reported against the 2022/23 General Fund capital programme, consisting of £3.8m cost underspends and £26.3m re-phasing for various projects and programmes that are continuing into future years. Investment during 2022/23 on the General Fund totalled £47.9m and HRA £62.8m. Significant General Fund investment included a further £9.6m towards the construction of the new Platinum Jubilee Leisure Centre in West Drayton, due to be completed in 2024/25. A further £3.4m h as been contributed towards several expansion projects to increase provision for pupils with special educational needs (SEND). There was also significant spend on highways infrastructure and street lighting, and the extension of Uxbridge mortuary which was completed in 2023. In 2022/23, new affordable housing construction within the HRA was completed at a five unit development at Moorfield Road, Cowley and six unit development at Nelson Road, Uxbridge. Works commenced on site for the redevelopment of the former Maple and Poplar day centre in Hayes to provide 34 modern homes. A further £28.1m was invested in acquisitions of numerous properties to increase the number of available Council housing stock, and £16.0m in improvements to the existing council housing stock. Investment Strategy The Council lends money to, and has a 100% shareholding in one subsidiary, Hillingdon First Ltd. This is classed as an "Investment for Service Purposes". The objective is to deliver a financial return to the Council and provide housing and or a commercial unit for sale or rent. This will be achieved by generating long-term sustainable revenue streams through the delivery of high -quality housing to meet the need of Hillingdon’s residents. The Hillingdon First Ltd shareholder agreement and memorandum of association sets out in detail the governance arrangements and provides details of the operating framework, controls and reporting requirements. As at 31 March 2023, the Council holds £ 6.8m in equity at fair value in Hillingdon First Limited, an investment made in 2019/20. The council intends to make further loans as necessary and in accordance with the council’s treasury management and investment strategies. The main risk when making service loans is that the borrower will be unable to repay the principal lent and/or the interest due. While one of the risks of investing in shares is that they fall in value meaning that the initial outlay may not be recovered. To limit these risks, upper limits on the sums invested in each category have been set. Furthermore, t he Council is protected against any loss through a charge over the assets of Hillingdon First Ltd. The Council assesses the risk of loss before entering into and whilst holding service loans. The Council aligns loan durations with each specific development. A specific loan agreement will be drawn up for each development using the agreed schedule as a framework. Hillingdon First Ltd will be required to provide full development scheme details to the Shareholder Committee (acting on behalf of the Council as shareholder) before the loan facility can be drawn down for specific expenditure on that development. Narrative Report 8 Treasury Management The Council takes a very prudent strategic approach in investing its cash balances to ensure money is invested at a very low level of risk. The strategy for investing funds first considers the security of the deposit, the liquidity of investments and then the return on the investment. Th e Bank of England increased the official Bank Rate to 4.25% during the financial year. From 0.75% in March 2022, the Monetary Policy Committee (MPC) pushed through rises at every subsequent meeting over the period, with recent hikes of 50bps in December an d February and then 25bps in March, taking Bank Rate to 4.25%. This resulted in a substantial increase on the levels being achieved in the short-term money markets where rates achievable were only marginally lower compared to other medium -term duration dep osit options. The Council adheres strictly to counterparties that have been agreed through the Treasury Management Strategy, consisting of other local authorities, instant access funds, and institutions with a credit rating A - or above. Investment income returns for the year on internally managed cash yielded 2.13% (0.09% 2021/22). The Council also continued as part of its investment strategy to invest £15m in more strategic pooled funds that return dividends. The total investment income received this year was £2,392k excluding losses on strategic pooled funds. The Council continued to utilise internal borrowing throughout the year to fund capital expenditure, however, some external borrowing was required during 2022/23 to ensure liquidity was maintained. £10m of new PWLB debt was taken out and £45m of the £70m maturing temporary local authority loans were replaced during the period, resulting in a closing balance in March of £75m of local authority loans (£100m in 2021/22). The Council continued its use of temporary borrowing as a result of changes to the Treasury Management Strategy to reflect the need to borrow from broader sources. Over the year the Council’s loan portfolio had an average rate of 2.60% (2.47% 2021/22). The portfolio decreased by £33.17m as a result of £10m new PWLB borrowing, £18.17m of naturally maturing longer term debt and replacing £45m of the £70m maturing local authority borrowing with new local authority loans leaving a balance at year- end of £323.67m (GF £172.60m, HRA £151.07m). Change in Accounting Practice There were no material changes to the 2022/23 Code resulting in any meaningful alteration in accounting policies. The adoption of IFRS16 Leases is mandatory for local authorities from 1 st April 2024, and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Property, Plant and Equipment Profit on disposal of £9.1m has been recognised in the Comprehensive Income and Expenditure sta tement; of which £6.9m related to profits on Right -to-Buy sales. However, this profit is an accounting profit only, as social housing is accounted for in the balance sheet at 25% of its market value to comply with social housing valuation methodology in London, as a result replacement of these housing units would be more expensive. In 2022/23 there were capital receipts amounting to £8.6m obtained on ten General Fund sites. 2.3 Non-Financial Performance Environment Fourteen new wildflower verges have been created in the borough as the Council once again joined the eco-friendly ‘No Mow May’ initiative. This brings the total number of colourful nature-friendly verges in Hillingdon to 52, with a further 32 wildflower me adows created in parks and open spaces across the borough. ‘No Mow May’ is organised by wildlife conservation charity Plantlife and championed by hundreds of organisations and gardeners throughout the UK. As per the full Council meeting in January 2020 a commitment was made to become carbon neutral across the Council services by 2030. Acting on the declaration, a strategic climate action plan was created and adopted in July 2021. Since adopting the plan in July 2021, the Council started to incorporate the objectives into the plans and operations of the Council services. One example being the implementation and incorporation of Low Carbon Supplier Charter and Low Carbon Procurement Policy into all new Procurements. In October 2022 the Council was awarded a grant from the Public Sector Decarbonisation Scheme. This allowed surveys to be undertaken to determine work to deliver emission reducing solutions for the Civic Centre, Winston Churchill Hall, Hillingdon Leisure Centre and Highgrove Leisure centre. The Council has once again been recognised for its outstanding parks and open spaces, after four more have received prestigious Green Flag Awards. The awards – which celebrate the most beautiful and well -managed outdoor spaces nationally and internationally – were given to Rosedale Park in Hayes, Moorhall Recreation Ground in Harefield, Narrative Report 9 Rockingham Recreation Ground in Uxbridge and Hillingdon House Farm in Uxbridge. The new additions bring the Borough’s total to 67 awards (66 of w hich are maintained by the council) – this is the most flags held by any local authority for the tenth year running. Leisure and Culture A new outdoor gym has been installed at The Closes thanks to the council’s popular Chrysalis scheme. The facility, which replaces the previous worn-down gym, was formally opened on Tuesday 26 July 2022. The new gym is situated at the northern end of the recreation ground and was installed during May and June 2022 at a cost of £40,000. As well as refurbishing the outdoor gym at The Closes, the Council has installed four new gyms since the start of the year, bringing the borough’s total to 37. Works to Hillingdon Sports and Leisure Complex (HSLC) in Uxbridge and Highgrove Pool and Fitness Centre in Ruislip were completed in autumn 2022. Facilities at both locations have now been redesigned, upgraded and refurbished to provide modern equipment. Schools & Children’s Services Hillingdon was ranked first in the capital for offering children their parents’ first preference and top in West London across all preferences during Primary National Offer Day in April 2022. The Council processed 3,603 primary school applications, with 9 4 per cent offered their first preference, 99.1 per cent were offered a place at one of their top three preferred primary schools, and 99.5 per cent were offered a place at one of their top six preferred primary schools. These were well above the London av erages of 87.9 per cent for first preferences, 96.7 per cent for top three preferences and 98.04 per cent for top six preferences. A brand-new £875,000 state -of-the-art adult education centre opened in Uxbridge, on Wednesday 19 October 2022. The new centre has been repositioned at the council’s Civic Centre and replaced Brookfield Adult Learning Centre. Social Care In February 2022, the Council pledged its support to those fleeing the devastating conflict in Ukraine, offering them a warm welcome to Hill ingdon and borough life. Since then, 433 guests have been sponsored in Hillingdon under the Homes for Ukraine scheme. The Kids in Care Awards (KICA) took place on Sunday 9 October at Stockley Marquee at Stockley Park Golf Club and was a chance to recognis e the many and varied achievements of some amazing young Hillingdon residents. The afternoon ceremony to honour children and young people in care saw 117 children and young people receive awards from the Mayor of Hillingdon, Cllr Becky Haggar. They were nominated by the people who play an important role in their lives, such as foster carers, personal advisers, teachers, and independent reviewing officers. On Thursday 6 October 2022, one of the Council’s social workers, Kelly Johns, won best children and fa milies social worker award at the prestigious National Children & Young People Awards. Protecting Residents New parking controls to tackle seasonal parking issues close to Ruislip Lido have now gone live. The measures prevent non-residents from parking in specific residential streets close to the award -winning leisure spot, which draws huge crowds of visitors from across north-west London each summer – particularly during spells of very warm weather. Inspectors have accredited another five Council owned car parks with Park Mark Safer Parking awards following an inspection in August 2022. This brings the total number of car parks in the borough with accreditation to 31. The Park Mark Safer Parking scheme, which is run by the British Parking Association on behalf of the Association of Chief Police Officers, is a national standard for UK car parks that have low crime and measures in place to ensure the safety of people and vehicles. Eight new Vehicle Activated Signs (VAS) have been installed by the council on roads most likely to be affected by HS2. The VAS devices – financed by the HS2 Road Safety Fund – have been fitted on local roads after the Council introduced new speed limits. Narrative Report 10 People Resources The Council is continuing to recruit and develop existing staff onto apprenticeship programmes across a range of services, with 99 apprentices across the Council in 2022/23. 2.4 Risks and Opportunities With pressure on resources available increasing as a result of reduced funding , demographic changes and inflation pressures there could be a risk to future service provision. The Hillingdon Improvement Programme (HIP) is aimed at delivering a range of key improvements to the way the Council works and improving services to our residents. Since its introduction, it has delivered impressive savings across the Council and championed a variety of initiatives. Strong financial management and a commitment to putting our residents first, are at the core of the HIP programme and underpins all projects. Ou r Business Improvement Delivery (BID) programme aims to deliver services that resident’s value, and to identify and improve the way the Council works. Reviews with services during 2022/23 to assess efficiencies and potential changes in ways of working, formed the basis of the MTFF for 2023/24 and are being facilitated and supported by the wider Transformation team. These, coupled with longer term strategic reviews, form the Transformation programme to meet the requirements of the MTFF. The Council incorporates a number of service specific Demand -Led Growth assumptions into its budget to provide for areas of expenditure where there is a greater degree of uncertainty or are subject to demographic pressures. In 2022/23, the Council utilised this budget resour ce for Impact of Welfare Reform on Homelessness; Waste disposal Levy, and Social Care demographic pressures. The Council has increased the approved budget by £9m for Demand -Led Growth in 2023/24, continues to be impacted by legacy impacts driven by the pan demic. 2.5 Looking Ahead – Strategy and Resource allocation Looking into the medium financial outlook, the underlying savings requirement is driven primarily by inflation as a result of the extreme inflation rates being experienced nationally and globally; with further pressures being driven by demand- led pressures, and capital financing costs. An uplift in funding is projected over this period as a result of steady growth in the Council Tax taxbase alongside an increase in Retained Business Rates as a result of an expected increase in the Business Rates multiplier up to 2024/25. Following the 2022 Spending Review, the Council’s grant funding from Central Government grew by £6,747k in to 2022/23, with 2021/22 being the first multi-year announcement from the Government since the pandemic, however, the funding settlement continued to be a one-year settlement. The combined effect of the medium -term forecast position is a headline savings re quirement of £55.4m over the next five years to 2027/28, with the five -year budget strategy identifying a saving programme of £45.7m, leaving a budget gap of £9.7m, which represents a challenge on a similar scale to the £53.3m of pressures managed over the period from 2018/19 to 2022/23. In contrast to the previous five years, when reductions in funding were the single largest contributor to the budget gap, the projected gap is very much driven by growth in expenditure as a result of the exceptional inflationary environment forecast to last throughout 2023/24 and into 2024/25, partially mitigated through continuation of the increased government support from 2023/24 onwards, although there remains a lack of clarity of Government funding beyond the current Spending Review that ends on 31 March 2025. The budget for 2023/24 includes releasing no further funding from general balances, but is supported by the release of £1.5m in 2023/24 from the locally held COVID -19 reserve to fund the legacy impact of the pande mic across the Collection Fund. The current budget strategy leaves sufficient general balances above the recommended minimum level available, to manage emerging risks. A cumulative deficit of £2 1.9m is shown in the accounts on the retained element of the Schools Budget at 31 March 2023 with the Council’s Safety Valve agreement with the Department for Education set to ultimately recover the deficit. This deficit primarily relates to funding as determined under the Department for Education’s national funding formula, failing to keep pace with growing demand for high needs placements for pupils with Education, Health and Care Plans, following introduction of the 2014 Children and Families Act. The Council’s Medium Term Financial Strategy continues to be developed on the Safety Valve Agreement that the Council has entered with the Department for Education (DfE) following Cabinet’s ratification of the agreement at Cabinet in March 2022. Based on the current medium-term outlook, there is a residual savings requirement of £24.9m over the period 2024/25 to 2027/28. Some of this savings requirement has been established through expected funding increases, predominantly within Council Tax and a multi -year saving programme, leaving a remaining budget gap of £9.7m still to be identified. Given the size of the budget gap going forward and size of the 2023/24 saving programme, delivery will need to be stepped up going forward. This will include the continued need for an expanded and accelerated BID Programme. Narrative Report 11 Alongside the more strategic BID workstreams under development, the routine MTFF work streams such as zero-based budgeting and annual reviews of charging policies will continue. Looking forward the Councils Capital Programme 2023/24 to 2027/28 has an approved budget of £369m, with £81m to be funded from prudential borrowing after prioritising use of grants and third -party funding, maximising application of developer contributions and where possible using capital receipts. Specific projects on the Capital Programme inc lude a continuation of the Schools Expansion s programme , a new leisure centre in West Drayton, street lighting replacements, expanding and improving CCTV coverage as well as investments into technology and highways. Hillingdon First Limited, the Council’s wholly owned property development company, completed its first construction project in early 2021 with the first flats sold during April 2021. Following the successful completion of this first scheme, and commencement of a second development in Cowley, the company will seek to identify further sites and deliver high quality homes within the borough. Looking into the medium financial outlook the underlying savings requirement is driven primarily by inflation, with 2023/24 and 2024/25 being forecast to remain particularly high compared to recent trends, with further pressures coming from demand-led pressures and capital financing costs. An uplift in funding is projected over this period as a result of steady growth in the Council Tax taxbase and an increase in retained Business Rates from the forecast increase in the multiplier in 2024/25. This increase in funding is not guaranteed, particularly with the uncertainty in the increase in the taxbase for Council Tax as the high inflation environment continues to impact on the construction industry and high interest rates continue to impact mortgages. These drivers also impact on the stability of the Business Rates rating list and their impact on industry and local businesse s, as well as the long -term impact of the pandemic and the changes the pandemic has had on everyday life, hence there is a risk that the savings requirement will be higher than that stated in the current MTFF strategy. 2.6 Covid-19 Hillingdon Council is committed to Putting Residents First. From the start of the Covid -19 pandemic, the Council has proactively provided advice, support and assistance to residents, businesses and schools to help keep residents safe and minimise the impact of changes to everyday life from the restrictions that have had to be put in place to help protect residents’ health. This includes setting up and running test lateral flow test sites, organising and delivering food parcels to vulnerable residents, administering grants to support local businesses and working with a wide range of commercial, voluntary and charitable organisations to put in place measures to protect health, such as social distancing markers outside shops and schools and the provision of Personal Protective Equipment (PPE) to care providers and schools. As we find ourselves moving into a post -pandemic era, and learning to live with COVID -19, the legacy issues that the Council continues to face, the additional costs of COVID-19 totalled £68.1m by 31 March 2023 in relation to the Council’s response to the pandemic and after accounting for specific Government Grant funding streams, with £15m of this falling within 2022/23. Government funding for the pandemic ceased in 2021/22, however, the Coun cil included £9.8m in the Budget Strategy to manage legacy issues across demand-led growth areas, with a further £1.5m planned release from local funding set aside for the pandemic to fund legacy issues within taxation collection, beyond this, £3.7m was al so released from these reserves to fund new and emerging pressures from the pandemic. This position leaves local reserves held for the pandemic at £1.6m at 31 March 2023, with the majority of these funds committed in the Council’s budget strategy for 2023/24, leaving little headroom to fund and new and emerging issues. 2.7 Statements within the accounts General The movement in the Balance Sheet of £434.5m in year largely consists of reductions to net liabilities related to defined benefit pension schemes and increases to long term assets due to a combination of valuation movements and additions and enhancements to the asset base from capital expenditure in year. Any minor movement in the underlying IAS19 pension assumptions results in a large swing in the overall deficit position. For 2022/23 an increase in the net discount rate has reduced the value placed on the Fund's liabilities and contributed to an overall favourable impact. Narrative Report 12 The core accounting statements comprise: - Comprehensive Income and Expenditure Statement This statement reports the net cost for the year of all functions for which the Council is responsible, and demonstrates how that cost has been financed through income from taxpayers and general government grants. The inc ome and expenditure is split by Council service. The surplus or deficit on this account represents the amount by which income is greater than, or less than expenditure. The statement shows a deficit of £56.5m (£57.2m deficit in 2021/22) on the provision of services for 2022/23. Of this, a deficit of £30.5m relates to General Fund balances and a surplus of £9.4m relates to the Housing Revenue Account. Additional reserve movements, including earmarked and schools shows an overall drawdown of £35.4m. To co mply with statutory accounting requirements there are various items that are accounted for through the Comprehensive Income and Expenditure Statement such as depreciation, revaluation and impairment losses, and losses on disposal. These items are removed for the purposes of Council Tax setting as they are accounting items and do not affect the funding of services, as a result these items of expenditure are reversed out of the General Fund Balance in the Movement in Reserves Statement. Movement in Reserves Statement This statement reconciles the outturn on the Comprehensive Income and Expenditure Statement to the balance on the Council reserves, established by complying with relevant statutory provisions, showing the true economic cost of providing the Co uncil's services. The statement splits the Council’s reserves into usable and unusable balances, and shows movement to and from them during the year. Usable reserves are those that can be applied to fund expenditure or reduce local taxation. Unusable reserves are those balances over which the Council has no direct control, which arise from differences in accounting and statutory reporting requirements. Usable reserves decreased by £36. 6m from £153.7m in 2021/22 to £117.1m in 2022/23. Within this movement there was an increase in General Fund balances of £0.1m and a decrease in HRA balances of £0.2m. There was a decrease in Earmarked reserves (including schools’ reserves) of £35.4m , partly due to a reduction of £16.1m in the Business Rates reserve relating to the timing lag in the business rates system and the Government’s decision to announce an extension of the Retail, Hospitality and Leisure Relief in 2021/22 after the Council set the 2021/22 budget, resulting in the Council accruing a business rates surplus in that year that was paid back to Government in 2022/23. In addition to this, significant movements within earmarked reserves included a further £12.2m released to fund the legacy impacts associated with the pandemic, to fund impacts on funding within the collection fund and increased demand for services, including a continued impact on Social Care service deliver y and impacts on fees and charges income as a result of a slow recovery from the pandemic in certain areas. Other movements included a drawdown of the Major Repairs Reserve of £5.1m to finance the HRA capital programme and £8.5m being added to the Capital Receipts Reserve from property sales including Right to Buy . There was also a drawdown of £4.6m from the Capital Gr ants Unapplied Reserve to support financing of the new West Drayton leisure centre under construction. Unusable reserves increased from £940.4m in 2021/22 to £1. 397bn in 2022/23, mainly due to the decrease in the Pension Fund liability of £355.6m, reflect ed in the Pensions Fund increasing by the same amount, and upward movement in property values increasing the Revaluation Reserve by £ 68.7m. There was an increase of £ 15.9m in the Capital Adjustment Account partly due to capital expenditure in year financed from capital grants and contributions. The Collection Fund Adjustment Account increased by £15.4m. To support the Movement in Reserves Statement, Note 4 to the accounts shows the Adjustments between Accounting Basis and Funding Basis under Regulations. This note reverses the items of income and expenditure that are required to be credited or charged to the Comprehensive Income and Expenditure Statement, that do not affect the General Fund balance for Council Tax purposes. Total adjustments for 2022/23 were £30.6m within the General Fund, adjusting the General Fund position for Council Tax purposes to a surplus of £0.1m. Balance Sheet This shows balances and reserves at the Council’s disposal at year -end, together with its long-term indebtedness, net current assets employed in its operations and summarised information on non -current assets held. It excludes funds held in trust for others and Pension Fund assets that are reported in the separate Pension Fund accounts. Narrative Report 13 The total net worth of the Council in 2022/23 was £1,528.6m (£1,094.1m in 2021/22). The largest items within the Balance Sheet consist of long -term assets valued at £2,109 .9m, net pension liabilities of £260.6m and long -term borrowing of £232.7m. The main contributors to the movement came from the reduction in pension liabilities, and the increase in value of Plant Property and Equipment. The Council maintains reserve bal ances to meet the cost of unforeseen demands or events and as a result keeps a minimum level of balances. As at 31 March 2023 the Council has £26.8m General Fund balances and £17.1m Earmarked Reserves (excluding schools’ balances) held for specific purposes. Further details on Earmarked Reserves can be seen in Note 5 to the accounts. Cash Flow Statement This summarises all movements in cash and cash equivalents arising from both revenue and capital transactions with third parties. It excludes funds held in trust for others and the Pension Fund. There was an increase in cash and cash equivalents in 2022/23 of £12.7m. Supplementary accounting statements comprise: Housing Revenue Account (HRA) Comprehensive Income and Expenditure Statement There is a statutory duty to account separately for Local Authority housing provision. The HRA Income and Expenditure Statement shows in detail the income and expenditure on HRA services included in the Council Comprehensive Income and Expenditure Statement. It inclu des the major elements of Council housing revenue expenditure on maintenance; administration; capital financing costs, and major income sources such as rents. There was a surplus in 2022/23 on HRA services of £9.4m (£1.3m deficit in 2021/22). Statement of Movement on the Housing Revenue Account Balance This shows how the HRA Income and Expenditure Statement surplus or deficit for the year reconciles to the movement on the Housing Revenue Account balance for the year. It shows income and expenditure that is credited or charged to the HRA balance by statute or non -statutory practices, to reconcile the amounts charged to Housing tenants. For example, revaluation gains and losses on Council dwellings and gains/losses on disposal of asset are reversed. Overall, the HRA was in deficit by £0.2m in 2022/23 (surplus of £0.2m in 2021/22), after adjustments made in the Statement of Movement on the HRA Balance and transfers to the Major Repairs Reserve. Collection Fund Revenue Account The Collection Fund is a separate account into which amounts raised from local taxation are paid through Council Tax and Business Rates, and from which payments are made to precepting authorities including the Council itself. An in - year surplus of £0.3m is reported on Council Tax with a carried forward deficit of £3.2m. An in-year surplus of £ 51.9m is reported on Business Rates, creating a surplus within the carry forward balance on NNDR to £12.6m. The share of Collection Fund activity relating to the C ouncil is reflected in the main statement of accounts, with the remainder being treated as agency activity on behalf of the Greater London Authority and Central Government. 77% of Council Tax and 30% of Business Rates activity relates to the London Borough of Hillingdon. Pension Fund Accounts These show contributions to the Council’s Pension Fund for members during the year, together with pensions and other benefits paid from it, movements in investments during the year and the financial position of the Fund at the end of the year. These accounts do not include any liabilities relating to payment of pensions and benefits in future years. The activity of the Pension Fund is not incorporated within the Council’s core accounting statements. Narrative Report 14 This document also includes the following: - Notes to the Accounts The notes provide further explanation of figures contained in the core and supplementary accounting statements. The notes to the accounts include the Expenditure Funding Analysis , which precedes the core financial statements of this document to help the flow of information. Statement of Accounting Policies The accounts are produced in line with a set of policies and principles and can only be understood fully with awareness of these accounting policies. Annual Governance Statement This statement is a report from the Leader of the Council and Chief Executive setting out the : systems; processes; culture, and values by which the Council is directed and controlled, and its activities through which it accounts to, engages with, and leads the community. The framework enables the Council to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate cost-effective services. Glossary of Terms The glossary provides a definition of key terms used to aid understanding the accounting statements. Statement of Responsibilities for the Statement of Accounts The Council is required to: • Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Council that officer is the Corporate Director of Finance: • Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; and • Approve the Statement of Accounts. Corporate Director of Finance Responsibilities The Corporate Director of Finance is responsible for the preparation of the Council’s Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 ('the Code'). In preparing this statement of accounts the Corporate Director of Finance has: • Selected suitable accounting policies and then applied them consistently; • Made judgements and estimates that were reasonable and prudent; and • Complied with the Local Authority Code. The Corporate Director of Finance has also: • Kept proper accounting records that were up to date; and • Taken reasonable steps for the prevention and detection of fraud and other irregularities. Corporate Director of Finance Approval of Accounts I certify that these accounts present a true and fair view of the financial position of the London Borough of Hillingdon, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in United Kingdom (‘the Code’), as at 31 March 2023 and its income and expenditure for the year then ended. Richard Ennis Corporate Director of Finance 20 November 2024 Independent Auditor’s Report 16 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF LONDON BOROUGH OF HILLINGDON Disclaimer of opinion We were engaged to audit the financial statements of the London Borough of Hillingdon for the year ended 31 March 2023. The financial statements comprise the:  Movement in Reserves Statement,  Movement in Unusable Reserves Statement,  Comprehensive Income and Expenditure Statement,  Balance Sheet,  Cash Flow Statement,  the related notes, including The Statement of Accounting Policies, the Expenditure and Funding Analysis and Notes to the Main Financial Statements 1 to 45,  Housing Revenue Account Income and Expenditure Statement, the Movement on the Housing Revenue Account Statement, and the related notes 1 to 8,  Collection Fund Account, and the related notes 1 to 3 The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23 as amended by the Update to the Code and Specifications for Future Codes for Infrastructure Assets (November 2022). We do not express an opinion on the accompanying financial statements of the London Borough of Hillingdon . Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. Basis for disclaimer of opinion The Accounts and Audit (Amendment) Regulations 2024 (Statutory Instrument 2024/907) which came into force on 30 September 2024 requires the accountability statements for this financial year to be approved not later than 13th December 2024. We completed the audit of the financial statements for the year ended 31 March 2022 in September 2023 and issued our audit opinion on 28 September 2023. The backstop date and the wider requirements of the local audit system reset meant we did not have the required resources available to complete the detailed audit procedures that would be needed to obtain sufficient appropriate audit evidence to issue an unmodified audit report on the 2022/23 financial statements. Therefore, we are disclaiming our opinion on the financial statements. Matters on which we report by exception Notwithstanding our disclaimer of opinion on the financial statements, performed subject to the pervasive limitation described above, we have nothing to report in respect of whether the annual governance statement is misleading o r inconsistent with other information forthcoming from the audit or our knowledge of the Authority. We report to you if:  we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014 (as amended)  we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014 (as amended)  we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014 (as amended)  we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014 (as amended)  we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014 (as amended) Independent Auditor’s Report 17  we are not satisfied that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2023. We have nothing to report in these respects. Responsibility of the Corporate Director of Finance As explained more fully in the Statement of Responsibilities for the Statement of Accounts set out on page 15, the Corporate Director of Finance is responsible for the preparation of the Statement of Acc ounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23 as amended by the Update to the Code and Specifications for Future Codes for Infrastructure Assets (November 2022), and for being satisfied that they give a true and fair view and for such internal control as the Corporate Director of Finance determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Corporate Director of Finance is responsible for assessing the Authority’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Authority either intends to cease operations, or has no realistic alternative but to do so. The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements. Auditor’s responsibilities for the audit of the financial statements Our responsibility is to conduct an audit of the Authority’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report. However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. We are independent of the Authority in accordance with the ethical requirements that ar e relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and the Code of Audit Practice 2024 and we have fulfilled our other ethical responsibilities in accordance with these requirements. Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources We have undertaken our review in accordance with the Code of Audit Practice 2024, having regard to the guidance on the specified reporting criteria issued by the Comptroller and Auditor General in January 2023, as to whether the London Borough of Hillingdon had proper arrangements for financial sustainability, governance and improving economy, efficiency and effectiveness. The Comptroller and Auditor General determ ined these criteria as those necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the London Borough of Hillingdon put in place proper arrangements for securing economy, efficiency and effectiveness in its use of re sources for the year ended 31 March 2023. We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the London Borough of Hillingdon had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. We are required under Section 20(1)(c) of the Local Audit and Accountability Act 2014 (as amended) to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

London Borough of Hillingdon Completion Report for Those Charged with Governance Year ended 31 March 2023 13 November 2024 The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited. A list of members’ names is available for inspection at 1 More London Place, London SE1 2AF, the firm’s principal place of business and registered office. Ernst & Young LLP is a multi-disciplinary practice and is authorised and regulated by the Institute of Chartered Accountants in England and Wales, the Solicitors Regulation Authority andother regulators. Further details can be found at http://www.ey.com/UK/en/Home/Legal. 13 November 2024 Dear Audit Committee Completion Report for Those Charged With Governance Attached is our Completion Report for Those Charged With Governance. The purpose of this report is to provide the Audit Committee of the London Borough of Hillingdon (the Council) with a detailed completion report covering our approach and outcomes of the 2022/23 audit. Given that Statutory Instrument (2024) No. 907 “The Accounts and Audit (Amendment) Regulations 2024” (the SI) imposes a backs top date of 13 December 2024 by which date we are required to issue our opinion on the financial statements, we have considered whether the time constraints imposed by the backstop date mean that we cannot complete all necessary procedures to obtain sufficient, appropriate audit evidence to support the opinion and fulfil all the objectives of all relevant ISAs (UK). This decision is in line with ISA 20 0: Failure to Achieve an Objective 24. If an objective in a relevant ISA (UK) cannot be achieved, the auditor shall evaluate whether this prevents the auditor from achieving the overall objectives of the auditor and thereby requires the auditor, in accordance with the ISAs (UK), to modify the auditor's opinion or withdraw from the engagement (where withdrawal is possible under applicable law or regulation). Failure to achieve an objective represents a significant matter requiring documentation in accordance with ISA (UK) 230 (Revised June 2016) (Ref: Para. A77 & A78). Taking the above into account, for the year ended 31 March 2023 we have determined that we cannot meet the objectives of the ISAs (UK) and we anticipate issuing a disclaimed audit report. In completing our work for this audit year we have taken into account Statutory Instrument (2024) No. 907 “The Accounts and A udit (Amendment) Regulations 2024” and Local Authority Reset and Recovery Implementation Guidance (LARRIGs). We have also taken into account the requirements of the Local Audit and Accountability Act 2014, the National Audit Office’s 2020 Code of Audit Practice, the Statement of Responsibilities issued by Public Sector Audit Appointments (PSAA) Ltd, auditing standards and other professional requirements. Audit Committee London Borough of Hillingdon Hillingdon Civic Centre 225-226 High St Uxbridge UB8 1UW The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited. A list of members’ names is available for inspection at 1 More London Place, London SE1 2AF, the firm’s principal place of business and registered office. Ernst & Young LLP is a multi-disciplinary practice and is authorised and regulated by the Institute of Chartered Accountants in England and Wales, the Solicitors Regulation Authority and other regulators. Further details can be found at http://www.ey.com/UK/en/Home/Legal. The Audit Committee, as the Authority’s body charged with governance, has an essential role in ensuring that it has assurance over both the quality of the draft financial statements prepared by management and the Council ’s wider arrangements to support the delivery of a timely and efficient audit. We will consider and report on the adequacy of the Council’s external financial reporting arrangements and the effectiveness of the Audit Committee in fulfilling its role in those arrangements as part of our assessment of value for money arrangements, and consider t he use of other statutory reporting powers to draw attention to weaknesses in those arrangements where we consider it necessary to do s o. We draw Audit Committee members’ and officers’ attention to the Public Sector Audit Appointment Limited’s Statement of Responsibilities (paragraphs 26-28) which clearly set out what is expected of audited bodies in preparing their financial statements. This report is intended solely for the information and use of the Audit Committee and management, and is not intended to be and should not be used by anyone other than these specified parties. Yours faithfully Stephen Reid Partner For and on behalf of Ernst & Young LLP Enc. Confidential — All Rights Reserved Contents Public Sector Audit Appointments Ltd (PSAA) issued the “Statement of responsibilities of auditors and audited bodies”. It is available from the PSAA website. The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and audited bodies. It summarises where the different responsibilities of auditors and audited bodies begin and end, and what is to be expected of the audited body in certain areas. The “Terms of Appointment and further guidance (updated July 2021)” issued by the PSAA (https://www.psaa.co.UK/managing-audit-quality/terms-of-appointment/terms-of-appointment-and-further-guidance- 1-july-2021/) sets out additional requirements that auditors must comply with, over and above those set out in the National Audit Office Code of Audit Practice (the Code) and in legislation and covers matters of practice and procedure which are of a recurring nature. This report is made solely to the Audit Committee and management of the London Borough of Hillingdon. Our work has been undertaken so that we might state to the Audit Committee and management of the London Borough of Hillingdon those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the Audit Committee and management of the London Borough of Hillingdon for this report or for the opinions we have formed. It should not be provided to any third-party without our prior written consent. Executive Summary01 Appendices05 Value for Money 04 Work Plan02 Results and Findings 03 London Borough of Hillingdon – Completion report for TCWG 5 Executive Summary01 Confidential — All Rights Reserved Executive Summary – System wide context London Borough of Hillingdon – Completion report for TCWG 6 Timely, high-quality financial reporting and audit of local bodies is a vital part of the democratic system. It supports good decision making by local bodies and ensures transparency and accountability to local taxpayers. There is general agreement that the backlog in the publication of audited financial statements by local bodies has grown to an unacceptable level and there is a clear recognition that all stakeholders in the sector need to work together to address this. Reasons for the backlog across the system have been widely reported and include: • Lack of capacity within the local authority financial accounting professions • Increased complexity of reporting requirements within the sector • Lack of capacity within audit firms with public sector experience • Increased regulatory pressure on auditors, which in turn has increased the scope and extent of audit procedures performed. DLUHC (now MHCLG) has worked collaboratively with the FRC, as incoming shadow system leader, and other system partners to dev elop and implement measures to clear the backlog. Statutory Instrument (2024) No. 907 “The Accounts and Audit (Amendment) Regulations 2024” (the SI), togeth er with the updated NAO Code of Audit Practice 2024 and the Local Authority Reset and Recovery Implementation Guidance, which have all been developed to ensu re auditor compliance with International Standards on Auditing (UK) (ISAs (UK)), consist of three phases: • Phase 1: Reset involving clearing the backlog of historic audit opinions up to and including financial year 2022/23 by 13 Dec ember 2024. • Phase 2: Recovery from Phase 1 in a way that does not cause a recurrence of the backlog by using backstop dates to allow assu rance to be rebuilt over multiple audit cycles. • Phase 3: Reform involving addressing systemic challenges in the local audit system and embedding timely financial reporting a nd audit. As a result of the system wide implementation of backstop dates we anticipate issuing a disclaimed audit opinion on the Council ’s 2022/23 financial statements. The proposed disclaimer of the Council’s 2022/23 financial statements impacts the audit procedures that we have planned and undertaken to gain assurance on the 2022/23 financial statements and the form of the audit report. Context for the audit – Ministry for Housing, Communities and Local Government (MHCLG) and Financial Reporting Council (FRC) measures to address local audit delays Confidential — All Rights Reserved Executive Summary – Local context London Borough of Hillingdon – Completion report for TCWG 7 Local Background and Context The position at this Council has developed over recent years, with increasing delays to the publication of unaudited and audited financial statements. The main reasons for the Council’s financial statements not being prepared, audited and signed to date include: • The post pandemic timelines resulted in audit teams trying to move delayed audits on to completion, whilst finance teams were trying to catch up, deal with current priorities and plan for the future. This used a significant amount of our finite audit resource, leading to a lack of capacity to move onto the 2022/23 audit year; • In addition, there were a number of new technical issues and challenges to address during this period including accounting fo r infrastructure assets and taking into account the results of the 2022 triennial valuation of the Hillingdon Pension Fund which led to delays in the completion of t he 2021/22 audit. The statutory deadline by which local authorities were required to publish draft 2022/23 financial statements for public insp ection under the Accounts and Audit Regulations 2015 was 31 May 2023. The Council did not meet this deadline, commencing the inspection period for its draft 2022 /23 financial statements on 10 November 2023. As explained by management, the Council made a conscious decision not to finalise and publish the draft 2022/2 3 financial statements until the audit of the 2021/22 financial statements was concluded. The audit report on the 2021/22 financial statements was issued on 2 8 September 2023. Due to the timing of completion of the 2021/22 audit and delayed publication of the draft 2022/23 financial statements, we as sessed that we did not have the audit resources necessary to perform the 2022/23 audit before the anticipated backstop date. Confidential — All Rights Reserved Executive Summary – Report structure and work completed London Borough of Hillingdon – Completion report for TCWG 8 Report structure and work completed This report covers the work we have completed to meet the requirements of the International Standards on Auditing (ISAs) UK and the Local Audit Reset and Recovery Implementation Guidance (LARRIGs) along with the National Audit Office’ Code of Audit Practice (NAO Code). It has been split into the following sections. Section 1 – Executive Summary – this section setting out the national and local context and the structure of our report. Section 2 – Work Plan – We have completed the following planning tasks: ► Required independence procedures; ► Set a level of materiality; ► Issued letters of inquiry to Management, Those Charged with Governance, the Head of Internal Audit and the Monitoring Officer ; ► Updated our understanding of the business, including through review of responses to inquiry letters, minute review and in dis cussion in our internal planning meeting; ► Identified significant, inherent and other areas of higher risk or focus; ► Considered any other matters that may require reporting to regulators or which may result in a modification to the audit repo rt e.g. non-compliance with laws and regulations, objections, significant weaknesses in arrangements for value for money or any matters that may result in the use of the auditor’s powers. Section 3 – Results and findings - Work completed to issue the disclaimer, findings and results: ► Review of the financial statements; ► Consideration of any matters that came to light during our planning and review procedures in relation to laws and regulations , fraud, related parties, litigation and claims, significant changes to contracts and systems or service organisations, which we report as appropriate; ► Reporting on any other matters that may require the use of the auditor’s powers, formal reporting or a modification to the auditor’s report e.g. non-compliance with laws and regulations, objections, significant weaknesses in arrangements for value for money or any matters that may res ult in the use of the auditor’s powers. Section 4 – Value for money reporting ► The value for money commentary covering the year to 31 March 2023. Section 5 - Appendices Work Plan02 Confidential — All Rights Reserved London Borough of Hillingdon – Completion report for TCWG 9 Confidential — All Rights Reserved Work Plan – Audit Scope London Borough of Hillingdon – Completion report for TCWG 10 This Completion Report covers the work that we performed in relation to: ► Our audit opinion on whether the financial statements of the Council give a true and fair view of the financial position as a t 31 March 2023 and of the income and expenditure for the year then ended; and ► Our commentary on your arrangements to secure value for money in your use of resources for the year to 31 March 2023. We include further details on value for money in Section 4. We will also review and report to the National Audit Office (NAO), to the extent and in the form required by them, on the Cou ncil’s Whole of Government Accounts return. Our audit will also include the mandatory procedures that we are required to perform in accordance with applicable laws and a uditing standards. When planning the audit we take into account several key inputs: ► Strategic, operational and financial risks relevant to the financial statements; ► Developments in financial reporting and auditing standards; ► The quality of the Council's systems and processes; ► Changes in the business and regulatory environment; and ► Management’s views on all of the above. Given that Statutory Instrument (2024) No. 907 “The Accounts and Audit (Amendment) Regulations 2024” imposes a backstop date of 13 December 2024 by which date we are required to issue our opinion on the financial statements , we have considered whether the time constraints imposed by the backstop date mean that we cannot complete all necessary procedures to obtain sufficient, appropriate audit evidence to support the opinion and fulfil a ll the objectives of all relevant ISAs (UK). This decision is in line with ISA 200: Failure to Achieve an Objective 24. If an objective in a relevant ISA (UK) cannot be achieved, the auditor shall evaluate whether this prevents the auditor from achieving the overall objectives of the auditor and thereby requires the auditor, in accordance with the ISAs (UK), to modify the auditor's opinion or withdraw from the engagement (where withdrawal is possible under applicable law or regulation). Failure to achieve an objective represents a significant matter requiring docum entation in accordance with ISA (UK) 230 (Revised June 2016) (Ref: Para. A77 & A78). Taking the above into account, for the year ended 31 March 2023 we have determined that we cannot meet the objectives of the ISAs (UK) and we anticipate issuing a disclaimed audit report. Audit scope Confidential — All Rights Reserved Work Plan - Materiality London Borough of Hillingdon – Completion report for TCWG 11 Planning materiality Materiality for the year ended 31 March 2023 has been set at £15.6m, which represents 1.8% of 2022/23 gross expenditure on provision of services. Performance materiality Audit differences £15.6m £7.8m Performance materiality for the year ended 31 March 2023 has been set at £7.8m, which represents 50% of planning materiality. £0.78m We will report all uncorrected misstatements relating to the primary statements greater than £0.78m for the year ended 31 March 2023. Other misstatements identified will be communicated to the extent that they merit the attention of the Audit Committee. Materiality In order to ascertain the significance of issues in the draft financial statements we have set materiality based on the 2022/ 23 financial year. We considered updating this materiality for any key changes or known factors from that year but did not identify any. We determined that our audit p rocedures would be performed using a materiality of £7.8m. This level of materiality remains appropriate for the actual results for the financial year. These materiality levels have been set based on the Council’s financial statements. These levels are being used to assess our response to any issues identified in the Council’s financial statements. Confidential — All Rights Reserved Work Plan – Significant, inherent and other risk areas London Borough of Hillingdon – Completion report for TCWG 12 The following ‘dashboard’ summarises the significant accounting and auditing matters identified as part of our planning work. It seeks to provide Those Charged with Governance with an overview of our initial risk identification for the year. Audit risks and areas of focus Risk/area of focus Risk identified Change from PY Details Misstatement due to fraud or error Fraud risk No change in risk or focus As identified in ISA 240, management is in a unique position to perpetrate fraud because of its ability to manipulate accounting records directly or indirectly and prepare fraudulent financial statements by overriding controls that would otherwise appear to be operating effectively. Risk of inappropriate capitalisation of revenue expenditure Fraud Risk No change in risk or focus Under ISA 240 there is a presumed risk that revenue may be misstated due to improper revenue recognition. In the public sector, this requirement is modified by Practice Note 10 issued by the Financial Reporting Council which states that auditors should also consider the risk that material misstatements may occur by the manipulation of expenditure recognition. We have assessed the risk is most likely to occur through the inappropriate capitalisation of revenue expenditure. Valuation of land and buildings valued under the depreciated replacement cost (DRC) method and the existing use value (EUV) method Significant Risk No change in risk or focus As at 31 March 2023, the Council has significant DRC and EUV assets. Valuation of these assets involves higher risk estimates due to the significant assumptions and judgments involved in their valuation, which triggers the use of experts by management and EY likewise. These estimates give scope for material errors, thus we identified a significant risk on the valuation of these assets. Valuation of Council dwellings Inherent risk No change in risk or focus The carrying amount of Council dwellings represents a significant balance in the Council’s accounts and it is being revalued by management’s external specialists on an annual basis. The valuation approach for social housing involves estimates and assumptions, which has led us to identify an inherent risk on the valuation assertion. Derecognition of infrastructure assets upon subsequent expenditure/ replacement Inherent risk Changed from significant to inherent risk We identified this as a significant risk in the 2021/22 audit due to the issue raised by the NAO Local Government Technical Group that some local authorities were not writing out the gross cost and accumulated depreciation on highways infrastructure when a major component had been replaced or decommissioned. The CIPFA Code has since been amended to incorporate a temporary relief for certain reporting on infrastructure assets, which can be applied from the 2021/22 Code up to and including the 2024/25 Code. The Council applied this relief in 2021/22, and although we did not report any findings in this respect, we do consider that there is a remaining inherent risk as this is an issue that the Council needs to remain focussed on to ensure proper arrangements are in place when the temporary relief is discontinued. Confidential — All Rights Reserved Risk/area of focus Risk identified Change from PY Details Pension liabilities and the IAS 19 valuations Inherent risk No change in risk or focus The Local Authority Accounting Code of Practice and IAS 19 require the Council to make extensive disclosures within its financial statements regarding its membership of the Local Government Pension Scheme. Accounting for this scheme involves significant estimation and judgement and therefore management engages an actuary to undertake the calculations on their behalf. ISAs (UK) 500 and 540 require us to undertake procedures on the use of management experts and the assumptions underlying fair value estimates. Work Plan – Significant, inherent and other risk areas London Borough of Hillingdon – Completion report for TCWG 13 Confidential — All Rights Reserved Work Plan - Independence In addition, during the course of the audit, we are required to communicate with you whenever any significant judgements are made about threats to objectivity and independence and the appropriateness of safeguards put in place, for example, when accepting an engagement to provide non-audit services. We ensure that the total amount of fees that EY and our network firms have charged to you and your affiliates for the provisi on of services during the reporting period, analysed in appropriate categories, are disclosed. London Borough of Hillingdon – Completion report for TCWG 14 The FRC Ethical Standard 2019 and ISA (UK) 260 ‘Communication of audit matters with those charged with governance’, requires us to communicate with you on a timely basis on all significant facts and matters that bear upon our integrity, objectivity and independence. The Ethical Standard, as revised in December 2019, requires that we communicate formally both at the planning stage and at the conclusion of the audit, as well as during the course of the audit if appropriate. The aim of these communications is to ensure full and fair disclosure by us to those charged with your governance on matters in which you have an interest. Required communications Planning stage Final stage ► The principal threats, if any, to objectivity and independence identified by Ernst & Young (EY) including consideration of all relationships between you, your affiliates and directors and us; ► The safeguards adopted and the reasons why they are considered to be effective, including any Engagement Quality review; ► The overall assessment of threats and safeguards; and ► Information about the general policies and process within EY to maintain objectivity and independence ► In order for you to assess the integrity, objectivity and independence of the firm and each covered person, we are required to provide a written disclosure of relationships (including the provision of non- audit services) that may bear on our integrity, objectivity and independence. This is required to have regard to relationships with the entity, its directors and senior management, its affiliates, and its connected parties and the threats to integrity or objectivity, including those that could compromise independence that these create. We are also required to disclose any safeguards that we have put in place and why they address such threats, together with any other information necessary to enable our objectivity and independence to be assessed; ► Details of non-audit/additional services provided and the fees charged in relation thereto; ► Written confirmation that the firm and each covered person is independent and, if applicable, that any non-EY firms used in the group audit or external experts used have confirmed their independence to us; ► Details of any non-audit/additional services to a UK PIE audit client where there are differences of professional opinion concerning the engagement between the Ethics Partner and Engagement Partner and where the final conclusion differs from the professional opinion of the Ethics Partner; ► Details of any inconsistencies between FRC Ethical Standard and your policy for the supply of non -audit services by EY and any apparent breach of that policy; ► Details of all breaches of the IESBA Code of Ethics, the FRC Ethical Standard and professional standards, and of any safeguards applied and actions taken by EY to address any threats to independence; and ► An opportunity to discuss auditor independence issues. Confidential — All Rights Reserved Work Plan - Independence Overall, we consider that the safeguards that have been adopted appropriately mitigate the principal threats identified and w e therefore confirm that EY is independent and the objectivity and independence of Stephen Reid, your audit engagement partner and the audit engagement team have not been compromised. London Borough of Hillingdon – Completion report for TCWG 15 Overall Assessment We highlight the following significant facts and matters that may be reasonably considered to bear upon our objectivity and i ndependence, including the principal threats, if any. We have adopted the safeguards noted below to mitigate these threats along with the reasons why they are considered to be effective . However we will only perform non-audit services if the service has been pre-approved in accordance with your policy. A self interest threat arises when EY has financial or other interests in your company. Examples include where we have an inv estment in your company; where we receive significant fees in respect of non-audit services; where we need to recover long outstanding fees; or where we enter into a business relatio nship with you. At the time of writing, there are no long outstanding fees. We believe that it is appropriate for us to undertake those permitted non-audit/additional services set out in Section 5.40 of the FRC Ethical Standard 2019 (FRC ES), and we will comply with the policies that you have approved. None of the services are prohibited under the FRC ES and the services have been approved in accordance with your policy on pr e-approval. In addition, when the ratio of non-audit fees to audit fees exceeds 1:1, we are required to discuss this with our Ethics Partner, as set out by the FRC ES, and if nec essary agree additional safeguards or not accept the non- audit engagement. We will also discuss this with you. At the time of writing, the current ratio of non-audit fees to audit fees is expected to be well below a 1:1 ratio, see Appendix B. No additional safeguards are required. A self interest threat may also arise if members of our audit engagement team have objectives or are rewarded in relation to sales of non-audit services to you. We confirm that no member of our audit engagement team, including those from other service lines, has objectives or is rewarded in relation to s ales to you, in compliance with Ethical Standard part 4. There are no other self interest threats at the date of this report. Self interest threats Self review threats arise when the results of a non-audit service performed by EY or others within the EY network are reflected in the amounts included or disclosed in the financial statements. There are no self review threats at the date of this report. Self review threats Partners and employees of EY are prohibited from taking decisions on behalf of management of your company. Management threats may also arise during the provision of a non-audit service in relation to which management is required to make judgements or decision based on that work. There are no management threats at the date of this report. Management threats Other threats, such as advocacy, familiarity or intimidation, may arise. There are no other threats at the date of this report. Other threats Confidential — All Rights Reserved Work Plan - Independence London Borough of Hillingdon – Completion report for TCWG 16 EY Transparency Report 2024 Ernst & Young (EY) has policies and procedures that instil professional values as part of firm culture and ensure that the highe st standards of objectivity, independence and integrity are maintained. Details of the key policies and processes in place within EY for maintaining objectivity and independence can be found in our annual Transparency Report which the firm is required to publish by law. The most recent version of this Report is for the year ended 30 June 2024: EY UK 2024 Transparency Report | EY UK Confidential — All Rights Reserved Results and findings03 London Borough of Hillingdon – Completion report for TCWG 17Confidential — All Rights Reserved Confidential — All Rights Reserved Results and findings London Borough of Hillingdon – Completion report for TCWG Our audit work is substantially complete. The following items relating to the completion of our audit procedures were outstanding at th e date of this report: ► Completion of subsequent events procedures; and ► Receipt of a signed management representation letter. Given that the audit process is still ongoing, we will continue to consider existing and new information which could influenc e our final audit opinion, a current draft of which is included at the end of this section. Status of the audit 18 We identified three audit differences which remain uncorrected within the 2022/23 financial statements: ► Field End Junior School and Hermitage Primary School converted from authority-maintained schools to academies during 2021/22. Land and buildings associated with these schools should have been derecognised at the point of conversion, however the Council did not record these disposals until 20 23/24. As a result, PPE is overstated at 31 March 2023 by £28.5m due to the incorrect inclusion of these schools within the Council’s assets. Management have indicated this matter will be corrected within the 2023/24 financial statements currently being audited. ► Note 14 to the financial statements provides details on the Council’s financial instruments. Within this note, the Council discloses lease receivable balances of £13.6m as at 31 March 2022. The corresponding amounts within the audited 2021/22 statements total £0.3m, therefore there is a £13.3m variance between the comparators included in the 2022/23 financial statements and the amounts disclosed in the prior period. There is no variance on the amounts reported on t he Balance Sheet or in other supporting notes. ► Note 42 to the financial statements includes details of the timing of the repayments of the Council’s borrowings. Within this disclosure, the amounts repayable within 12 months as at 31 March 2022 are stated as £97.6m. The corresponding amount within the audited 2021/22 statements was £96.4m, therefore t here is a £1.2m variance between the comparator included in the 22/23 financial statements and the amount disclosed in the prior period. There is no variance on t he amounts reported on the Balance Sheet or in other supporting notes. Audit differences Value for Money Our value for money (VFM) work is complete and reported in Section 4 of this report. We identified no risks of significant weaknesses in arrangements. Other Reporting Issues We have reviewed the information presented in the Annual Governance Statement for consistency with our knowledge of the Council . We have no matters to report as a result of this work. We have completed the procedures required by the National Audit Office (NAO) on the Whole of Government Accounts. We have no matters to report as a result of this work. Confidential — All Rights Reserved Results and findings London Borough of Hillingdon – Completion report for TCWG 19 We have a duty under the Local Audit and Accountability Act 2014 to consider whether to report on any matter that comes to ou r attention in the course of the audit, either for the Council to consider it or to bring it to the attention of the public (i.e. “a report in the public interest”). We did not identify any issues which required us to issue a report in the public interest. Other powers and duties In our audit planning we identified a number of key areas of focus for our audit of the financial statements of the London Borough of Hillingdon We concluded we would disclaim the audit and therefore have not completed detailed audit testing on these areas but instead have reported any matters that came to light from the work we did complete. We request that you review these and other matters set out in this report to ensure: ► There are no further considerations or matters that could impact these issues; ► You concur with the resolution of the issue; and ► There are no further significant issues you are aware of to be considered before the financial report is finalised There are no matters, other than those reported by management or disclosed in this report, which we believe should be brought to the attention of the Audit Committee. Areas of audit focus During the audit, we did not identify any significant deficiencies in internal control. In addition, we have not identified any observations or improvement recommendations in relation to management’s financial processes and controls to bring to the Audit Committee’s attention. Control observations Further to our review of independence in section 2 of this report we have not identified any issues to bring to your attentio n.. Independence Confidential — All Rights Reserved Results and findings London Borough of Hillingdon – Completion report for TCWG Other matters 20 As required by ISA (UK) 260 and other ISAs specifying communication requirements, we must tell you significant findings from the audit and other matters if they are significant to your oversight of the Council’s financial reporting process. They include the following: ► Significant qualitative aspects of accounting practices including accounting policies, accounting estimates and financial sta tement disclosures; ► Any significant difficulties encountered during the audit; ► Any significant matters arising from the audit that were discussed with management; ► Written representations we have requested; ► Expected modifications to the audit report; ► Any other matters significant to overseeing the financial reporting process; ► Findings and issues around the opening balance on initial audits (if applicable); ► Related parties; ► External confirmations; ► Going concern; ► Consideration of laws and regulations; and ► Group audits Other than the matters reported elsewhere in this report, we have no matters to bring to your attention. Confidential — All Rights Reserved Results and findings - Audit Report Our opinion on the financial statements INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE LONDON BOROUGH OF HILLINGDON Disclaimer of opinion We were engaged to audit the financial statements of the London Borough of Hillingdon for the year ended 31 March 2023. The financial statements comprise the: • Movement in Reserves Statement, • Movement in Unusable Reserves Statement, • Comprehensive Income and Expenditure Statement, • Balance Sheet, • Cash Flow Statement, • the related notes, including The Statement of Accounting Policies, the Expenditure and Funding Analysis and Notes to the Main Financial Statements 1 to 45, • Housing Revenue Account Income and Expenditure Statement, the Movement on the Housing Revenue Account Statement, and the related notes 1 to 8, • Collection Fund Account, and the related notes 1 to 3 The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23 as amended by the Update to the Code and Specifications for Future Codes for Infrastructure Assets (November 2022). We do not express an opinion on the accompanying financial statements of the London Borough of Hillingdon. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. Basis for disclaimer of opinion The Accounts and Audit (Amendment) Regulations 2024 (Statutory Instrument 2024/907) which came into force on 30 September 2024 requires the accountability statements for this financial year to be approved not later than 13th December 2024. We completed the audit of the financial statements for the year ended 31 March 2022 in September 2023 and issued our audit opinion on 28 September 2023. The backstop date and the wider requirements of the local audit system reset meant we did not have the required resources available to complete the detailed audit procedures that would be needed to obtain sufficient appropriate audit evidence to issue an unmodified audit report on the 2022/23 financial statements. Therefore, we are disclaiming our opinion on the financial statements. Matters on which we report by exception Notwithstanding our disclaimer of opinion on the financial statements, performed subject to the pervasive limitation described above, we have nothing to report in respect of whether the annual governance statement is misleading or inconsistent with other information forthcoming from the audit or our knowledge of the Authority. We report to you if: • we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014 (as amended) • we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014 (as amended) • we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014 (as amended) • we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014 (as amended) • we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014 (as amended) London Borough of Hillingdon – Completion report for TCWG 21 Draft audit report Confidential — All Rights Reserved Results and findings - Audit Report Our opinion on the financial statements • we are not satisfied that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2023. We have nothing to report in these respects. Responsibility of the Corporate Director of Finance As explained more fully in the Statement of Responsibilities for the Statement of Accounts set out on page 15, the Corporate Director of Finance is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23 as amended by the Update to the Code and Specifications for Future Codes for Infrastructure Assets (November 2022), and for being satisfied that they give a true and fair view and for such internal control as the Corporate Director of Finance determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Corporate Director of Finance is responsible for assessing the Authority’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Authority either intends to cease operations, or has no realistic alternative but to do so. The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements. Auditor’s responsibilities for the audit of the financial statements Our responsibility is to conduct an audit of the Authority’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report. However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. We are independent of the Authority in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and the Code of Audit Practice 2024 and we have fulfilled our other ethical responsibilities in accordance with these requirements. Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources We have undertaken our review in accordance with the Code of Audit Practice 2024, having regard to the guidance on the specified reporting criteria issued by the Comptroller and Auditor General in January 2023, as to whether the London Borough of Hillingdon had proper arrangements for financial sustainability, governance and improving economy, efficiency and effectiveness. The Comptroller and Auditor General determined these criteria as those necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the London Borough of Hillingdon put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2023. We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the London Borough of Hillingdon had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. We are required under Section 20(1)(c) of the Local Audit and Accountability Act 2014 (as amended) to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. London Borough of Hillingdon – Completion report for TCWG 22 Draft audit report Confidential — All Rights Reserved Results and findings - Audit Report Our opinion on the financial statements Certificate We certify that we have completed the audit of the accounts of the London Borough of Hillingdon in accordance with the requirements of the Local Audit and Accountability Act 2014 (as amended) and the Code of Audit Practice issued by the National Audit Office. Use of our report This report is made solely to the members of the London Borough of Hillingdon, as a body, in accordance with Part 5 of the Local Audit and Accountability Act 2014 (as amended) and for no other purpose, as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority and the Authority’s members as a body, for our audit work, for this report, or for the opinions we have formed. Stephen Reid (Key Audit Partner) Ernst & Young LLP (Local Auditor) London Date The following footnote does not form part of our Auditor’s Report. Additional information related to the disclaimer of opinion is set out in our Completion Report for Those Charged with Governance dated 13 November 2024, available on the Authority’s website, which includes further explanations about the implementation of the statutory instrument which led to the disclaimer of our opinion on the financial statements. London Borough of Hillingdon – Completion report for TCWG 23 Draft audit report Confidential — All Rights Reserved Value for Money04 London Borough of Hillingdon – Completion report for TCWG 24Confidential — All Rights Reserved Confidential — All Rights Reserved VFM – Executive Summary In undertaking our procedures to understand the Council’s arrangements against the specified reporting criteria, we identify whether there are risks of significant weakness which require us to complete additional risk-based procedures. AGN 03 sets out considerations for auditors in completin g and documenting their work and includes consideration of: • our cumulative audit knowledge and experience as your auditor; • reports from internal audit which may provide an indication of arrangements that are not operating effectively; • our review of the Council’s committee reports; • meetings with key officers; • information from external sources; and • evaluation of associated documentation through our regular engagement with the Council’s management and the finance team. We completed our risk assessment procedures and did not identify any significant weaknesses in the Council's VFM arrangements . As a result, we have no matters to report by exception in our audit report. Risks of Significant Weakness 26London Borough of Hillingdon – Completion report for TCWG Confidential — All Rights Reserved VFM – Executive Summary Our value for money commentary for 2022/23 is set out over the following pages. Our commentary summarises our understanding o f the arrangements at the Council based on our evaluation of the evidence obtained in relation to the three reporting criteria (see table below) throughout 202 2/23. In accordance with the NAO’s 2020 Code, we are required to report a commentary against the three specified reporting criteria. The table below sets out the three reporting criteria, whether we identified a risk of significant weakness as part of our planning procedures, and whether we h ave concluded that there is a significant weakness in the body’s arrangements. Reporting 27 Reporting Criteria Risks of significant weaknesses in arrangements identified? Actual significant weaknesses in arrangements identified? Financial sustainability: How the Council plans and manages its resources to ensure it can continue to deliver its services No significant risks identified No significant weakness identified Governance: How the Council ensures that it makes informed decisions and properly manages its risks No significant risks identified No significant weakness identified Improving economy, efficiency and effectiveness: How the Council uses information about its costs and performance to improve the way it manages and delivers its services No significant risks identified No significant weakness identified London Borough of Hillingdon – Completion report for TCWG Confidential — All Rights Reserved Value for Money Commentary No significant weakness identified 28 Financial Sustainability: How the Council plans and manages its resources to ensure it can continue to deliver its services The Council is required to have arrangements to ensure proper resource management and the primary responsibility for these arrangements and reporting on the design and operation of these arrangements via the annual governance statement rests with management. The Council identifies all the significant financial pressures that are relevant to its medium term plans through its Medium Term Financial Forecast (‘MTFF’), which is the financial plan for the Council and it contains the funding strategy for delivering the Council’s objectives for a forward looking period of four years. As part of the MTFF process, the Council engages with its directorates and bodies outside of the organisation, such as the Society of London Treasurers (SLT), the Deputy Treasurers Group (DTG) and the Association of Directors of Adult Services (ADASS), where regular discussion, information sharing and benchmarking supplements local intelligence. Monthly budget monitoring reports are used to identify and address short term financial pressures. This is the process of comparing actual and forecast expenditure and income throughout the financial year, both through budget monitoring and at the point of committing expenditure. It involves identifying variances, pressures and risks while taking prompt action to prevent budget pressures or to bring pressures that have arisen back under control by identifying savings and income opportunities. As noted in the 2022/23 budget outturn report, £11.8 million of the £13.4 million savings planned for 2022/23 were banked in full by 31 March 2023 and no savings were reported as being at risk of non-delivery over the medium term. The February 2023 MTFF shows a savings proposal of £20.8 million for 2023/24, a significant increase from the £9.6 million which was identified in February 2022. The increase is driven by inflation, along with other updates on demand-led growth and corporate items. As per the 2023/24 budget outturn report at month 10, there are a number of potential risk areas and pressures which need to be managed to deliver the planned outturn. The current year position is reliant on a number of one-off mitigations and balance sheet measures, such as the release of £3,622k from specific Earmarked Reserves projected to meet this potential pressure. This reflects the significant demand-led pressures which are being experienced across the sector. As at February 2023, a total of £24.9 million of savings measures were planned for the period 2024/25 until 2027/28, which increased by 25% to £31.3 million for the same period in the February 2024 MTFF. This increase in the savings requirements year on year shows the continuously increasing pressures on the Council’s finances in the context of a challenging economic environment both in terms of exceptional cost inflation pressures, the impact of cost-of-living pressures and the continuing legacy of COVID-19. In this context, the elected members need to consider their priorities and objectives in decision making and to ensure that these drive the budget process and support the Council in achieving its efficiency targets and in delivering required savings. London Borough of Hillingdon – Completion report for TCWG Confidential — All Rights Reserved Value for Money Commentary No significant weakness identified 29 Financial Sustainability: How the Council plans and manages its resources to ensure it can continue to deliver its services (continued) The Dedicated Schools Grant (‘DSG’) had a £23.5 million deficit brought forward from 2021/22, which only reduced slightly to £21.9 million by the end of 2022/23. The DSG monitoring position reported for 2023/24 Month 9 is an in-year overspend of £12.8 million when compared to the budgeted position, which reflects the ongoing pressures of High Needs placements. As per the March 2024 update from the Department for Education (‘DfE’), the Council’s Dedicated Schools Grant ‘Safety Valve’ Agreement was placed ‘under review’ and it confirms that no DSG funding was paid by the DfE to the Council in 2023/24. Based on current reserve level forecasts, the Council is reliant on maintenance of the statutory override until a new deficit funding plan is agreed and in place. The identified financial risks, along with the Council’s broader operations risks, are summarised in a corporate risk register (‘CRR’), which is updated on a continuous basis and it is discussed at the Council meetings. The Audit Committee monitors and reviews, but not directs, the Council’s risk management arrangements, including regularly reviewing the corporate risk register (giving reference to the directorate risk registers) and seeking assurances that action is being taken on strategic risk related issues. As at February 2024, the Head of Internal Audit was in the process of developing a Strategic Risk Report to align the risks from the CRR to the Strategic Objectives within the Council’s 2022-2026 Strategy. Conclusion: Based on the work performed, the Council had proper arrangements in place in 2022/23 to enable it to plan and manage its resources to ensure that it can continue to deliver its services London Borough of Hillingdon – Completion report for TCWG Confidential — All Rights Reserved Value for Money Commentary No significant weakness identified 30 Governance: How the Council ensures that it makes informed decisions and properly manages its risks The Council is required to have arrangements in place to ensure proper risk management and the primary responsibility for these arrangements and reporting on the design and operation of these arrangements via the annual governance statement rests with management. The Council published their draft 2022/23 financial statements for audit on 10 November 2023, which is not in line with the Accounts and Audit Regulations 2015 (i.e. 31 May 2023). It did, however, publish a notice advising the reason for non-publication, which was in line with the aforementioned regulations. The Council advertised and held an inspection period for members of the public from 10th of November 2023 until the 21st of December 2023. The Annual Governance Statement was published alongside the accounts on 10 November 2023 and it was available throughout the inspection period. As explained by management, the Council made a conscious decision not to finalise and publish the draft 2022/23 accounts until the 2021/22 accounts had been audited and fully signed off. CIPFA recognised the significant challenges CFOs and their finance teams were facing with regards to publishing the 2022/23 accounts by the 31st of May and encouraged senior leaders to take a considered and transparent approach. Management explained that the delay in publication of the 2022/23 accounts was due to the timing of completing the 2021/22 audit (28 September 2023) and published this on their website, thus we do not consider this to be a significant weaknesses in proper arrangements for supporting its statutory reporting requirements. We validated that the 2022/23 draft financial statements were arithmetically correct, agreed to the data in the general ledger, and prepared in line with the content required by the CIPFA Code. The Council has carried out bank reconciliations during the year. Therefore, based on these procedures appropriate arrangements for financial reporting were in place during 2022/23. During our 2021/22 audit, we identified and reported within our Audit Results Report a number of adjusted and unadjusted errors across the financial statements. We considered whether this represents a risk of significant weakness in the proper arrangements to ensure there are proper processes in place to have relevant, accurate and timely information to support statutory financial reporting requirements. The Council accepted that improvements were needed in those areas and this was reported to the Audit Committee. We did not consider those findings to indicate a weakness in the proper arrangements at the Council and we will revisit those recommendations during our 2023/24 audit of the financial statements. The Council maintains a Corporate Risk Register (‘CRR’), which summarises operational and financial risks and is presented to the Audit Committee on a quarterly basis. It also maintains an adequate and effective internal audit function as required by the Accounts and Audit Regulations 2015. A risk based internal audit plays a central and essential role in maintaining a sound system of internal control at the Council. Chief officers are required to give proper consideration to internal audit recommendations and to respond, accordingly. The Counter Fraud Team (‘CFT’) at the Council undertakes regular activities to detect and resolve external fraud against the Council. London Borough of Hillingdon – Completion report for TCWG Confidential — All Rights Reserved Value for Money Commentary No significant weakness identified 31 Governance: How the Council ensures that it makes informed decisions and properly manages its risks (continued) Through the monthly budget monitoring process, the financial position of each department is reviewed in detail by the Corporate Director of Finance with dedicated monthly meetings with each Corporate Director to ensure that issues and actions emerging from the monitoring process are dealt with and reflected in the MTFF as appropriate. The outputs from this process are presented to Cabinet on a monthly basis, alongside informal briefing to the Cabinet Member for Finance and other portfolio members as appropriate. During January 2024, the Council embarked on a corporate wide Zero Based Budgeting (‘ZBB’) exercise. Senior managers, along with budget managers, are reviewing their services in detail to create alternative and improved options for operational delivery. This review will seek feedback from services across the Council following the Zero Based Budgeting process, and confirm whether services have any further concerns in relation to achieving their 2024/25 budget and what actions have been put in place to monitor and mitigate these concerns. The ZBB will also inform the CFT for the upcoming financial year and highlight any opportunities within other service areas for CFT activity. Conclusion: Based on the work performed, the Council had proper arrangements in place in 2022/23 to make informed decisions and properly manage its risks. Confidential — All Rights Reserved Value for Money Commentary No significant weakness identified 32 Improving economy, efficiency and effectiveness: How the Council uses information about its costs and performance to improve the way it manages and delivers its services The Council is required to have arrangements in place to ensure proper governance and the primary responsibility for these arrangements and reporting on the design and operation of these arrangements via the annual governance statement rests with management. We have held regular (at least monthly) meetings with management throughout the audit process, reviewed minutes of key meetings and attended most Audit Committees, during the period since our initial assessment of the proper arrangements for informed decision making. There have been no indications of fundamental failures in the proper arrangements considered in our initial risk assessment. The effectiveness of the Council's interventions and the quality of its services is monitored through the preparation of regular performance reports showing progress towards goals and targets set in the budget and business plans. Key areas are highlighted for decision-makers to take corrective action if necessary. The Council puts in place key performance indicators (‘KPIs’) to monitor internally and externally produced services. Reports compiling KPIs are submitted to the Senior Management Teams, the Corporate Management Team and members to support transparency and resource allocation to address challenges. The Council ensures that external companies who deliver services have an understanding of expected contract performance and monitoring takes place throughout the contract period. Alongside the governance structures, the Council’s monthly budget monitoring processes and the

Hillingdon Pension Fund Final Audit Results Report Year ended 31 March 2023 12 November 2024 The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited. A list of members’ names is available for inspection at 1 More London Place, London SE1 2AF, the firm’s principal place of business and registered office. Ernst & Young LLP is a multi-disciplinary practice and is authorised and regulated by the Institute of Chartered Accountants in England and Wales, the Solicitors Regulation Authority andother regulators. Further details can be found at http://www.ey.com/UK/en/Home/Legal. 12 November 2024 Dear Audit Committee/Pension Committee Members, 2022/23 Final Audit Results Report We are pleased to attach our Final Audit Results Report, summarising the status of our audit and the remaining steps to the issue of our final opinion for the forthcoming meeting of the Audit Committee. This report provides an update to our Provisional Audit Results Report presented to the Committee at its meeting on 30 April 2024. The audit is designed to express an opinion on the 2022/23 financial statements and address current statutory and regulatory requirements. This report contains our findings related to the areas of audit emphasis, our views on Hillingdon Pension Fund’s accounting policies and judgements and material internal control findings. Each year sees further enhancements to the level of audit challenge, the exercise of professional judgement and the quality of evidence required to achieve the robust professional scepticism that society expects. We thank the management team for supporting this process. This report is intended solely for the information and use of the Pension Committee, Audit Committee and management. It is not intended to be and should not be used by anyone other than these specified parties. We welcome the opportunity to discuss the contents of this report with you at the Audit Committee meeting on 20 November 2024. Yours faithfully Debbie Hanson Partner For and on behalf of Ernst & Young LLP Encl Hillingdon Pension Fund Confidential — All Rights Reserved Contents Public Sector Audit Appointments Ltd (PSAA) issued the “Statement of responsibilities of auditors and audited bodies”. It is available from the PSAA website (https://www.psaa.co.uk/managing-audit- quality/statement-of-responsibilities-of-auditors-and-audited-bodies/psaa-statement-of-responsibilities-of-auditors-and-audited-bodies-upto-2022-23/). The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and audited bodies. It summarises where the different responsibilities of auditors and audited bodies begin and end, and what is to be expected of the audited body in certain areas. The “Terms of Appointment and further guidance from July 2021” issued by the PSAA sets out additional requirements that auditors must comply with, over and above those set out in the National Audit Office Code of Audit Practice (the Code) and in legislation, and covers matters of practice and procedure which are of a recurring nature. This report is made solely to the Audit Committee and management of London Borough of Hillingdon Council and Hillingdon Pension Fund in accordance with our engagement letter. Our work has been undertaken so that we might state to the Audit Committee and management of Hillingdon Pension Fund those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the Audit Committee and management of London Borough of Hillingdon Council and Hillingdon Pension Fund for this report or for the opinions we have formed. It should not be provided to any third-party without our prior written consent. Independence07 Appendices08 Assessment of Control Environment 06 Executive Summary01 Areas of Audit Focus02 Audit Report03 Audit Differences04 Other Reporting Issues 05 Hillingdon Pension Fund Audit results report 3 Executive Summary01 Confidential — All Rights Reserved Hillingdon Pension Fund Audit results report 4 Confidential — All Rights Reserved Executive Summary Hillingdon Pension Fund Audit results report In our Provisional Audit Planning Report presented to the 30 April 2024 Audit Committee meeting, we provided you with a overview of our update to audit scope and approach for the audit of the financial statements. There have been no other changes in scope of the audit subsequent to the issue of our previous report. Scope update 5 Status of the audit In our Provisional Audit Results report presented to the 30 April 2024 Audit Committee meeting, we indicated that the testing of membership numbers was still outstanding. All the evidence to support the completion of this testing has subsequently been received and we have been able to conclude o ur testing. Our conclusions in relation to this testing are on page 20 of this report. The following items relating to the completion of our audit procedures remain outstanding at the date of this report: • Completion of subsequent events procedures up to the date of our audit report; • Receipt and check of a signed accounts and a signed letter of management representation. A current draft of our audit opinion is included in Section 03 of this report. Audit differences We have identified the following audit differences which have been adjusted. There are no changes to the differences previous ly reported in our Provisional Audit Results Report in April 2024: ► Understatement of investment asset valuations in the financial statements of £2.7 million, due to the provision of more up to date valuations. ► A misstatement between investment income and profit and loss on disposal of investments and changes in market value of £4.3 m illion. This was mainly due the fact that the distribution by LCIV MAC Fund was processed as a cash distribution rather than a re-investment of dividends. Management did not identify this error because the year-end valuation matched that of the fund manager. ► Differences in relation to the fair value hierarchy classification of investments. The classification was based on previous y ear's (2021/22) classification. The fund manager had not informed management of any changes in valuation techniques from the previous year and as a result management did not make any changes to the classification. There was no net impact on the financial statement investment disclosures as the two differences between level 2 and level 3 netted to zer o. The gross adjustment is £64.3 million. ► Other minor audit differences in the financial statement disclosures. For further information on audit differences refer to Section 04 of this report. Confidential — All Rights Reserved Executive Summary (cont’d) Hillingdon Pension Fund Audit results report In our Provisional Audit Plan, we identified a number of key areas of focus for our audit of Hillingdon Pension Fund. This report sets out our observations and the status of our work in relation to these areas, including our views on areas which might be conservative and areas where there is potential risk and exposure. Our consideration of these matters and others identified during the period is explained within the ‘Areas of Audit Focus’ section of this report and summarised below. Areas of audit focus 6 Fraud risks Findings & conclusions Misstatements due to fraud or error (management override) We carried out procedures to address this risk as set out in our Provisional Audit Plan, including identifying risks, considering controls and their effectiveness, testing journal entries and testing estimates for evidence of management bias. We have completed our work in this area and have no matters to bring to your attention. Misstatement due to fraud or error (incorrect posting of investment valuation journals) We carried out our planned audit procedures to address the risk related to incorrect posting of investment valuation journals. This included a reconciliation between the fund manager reports and the custodian reports to address the risk of manipulation of investment asset valuations. We have completed our audit procedures and have identified an audit difference of £2.7 million that understated the investment asset valuations as reported in the Pension Fund’s Financial Statements compared to the value reported by the fund manager. This misstatement was due to more up to date valuations by the fund managers, as noted below, and is not an indication of fraud. Significant risk Findings & conclusions Incorrect valuation of unquoted (Level 3) investments We undertook additional procedures, as described more fully in Section 02 of this report, to gain assurance over the material accuracy of the year-end valuation of the Pension Fund’s Level 3 complex investments, which are inherently more difficult to value. We have completed our work in this area. We identified an understatement of £2.7 million in the valuation of investment assets. This is due to differences in values reported by the fund managers compared to the figures included in the financial statements. This was due to the fund managers having more up to date information on the asset valuations compared to the custodian at the time the Pension Fund prepared its financial statements. Higher inherent risk Findings & conclusions IAS26 disclosure – Actuarial present value of promised retirement benefits We carried out procedures to address this risk as set out in our Provisional Audit Plan. We have completed these procedures and have no matters to bring to your attention. Confidential — All Rights Reserved Executive Summary (cont’d) Hillingdon Pension Fund Audit results report 7 During the course of the audit we have identified the following control observations which we wish to bring to your attention: • Weakness in the review controls with regards to disclosure of membership numbers as a result of the processing of the backlog unprocessed records, which led to the incorrect disclosure in the Pension Fund accounts submitted for audit. There remains a backlog in processing new members and therefore we recommend that management undertake a detailed review of the new joiners listing to ensure members are disclosed in the correct categor y going forward. We would also recommend that management review year-end membership numbers to ensure movements in numbers can be explained relative to the con tributions received for the year. • Our audit of fair value hierarchies of the Pension Fund’s assets which are measured at fair value identified a re -classification of investments from level 2 to level 3 of £62.3 million. Although there is an element of judgment in the fair value hierarchies classification, strengthening controls around the identification and documentation of observable and unobservable inputs used in valuations would minimise the risk of such audit findings in the future. • Weaknesses in the procedures in place for the Pension Fund to obtain declarations of interests from Members of the Pension s Committee and the Audit Committee. Two out of the five required declarations were not initially obtained by management and were also not on the Pensi on Fund/Council website. Although these were subsequently provided, the failure to obtain such declarations on a timely basis exposes the Pension Fund to the risk that they may not be able to obtain the required declarations retrospectively, for example If a member resigns before the declaration is received. In this situation, management would not have sufficient audit evidence to confirm if the member engaged in related party transactions and alternative audit proce dures would need to be performed. Further detail on control observations is included in Section 06 Control observations Please refer to Section 07 for our update on Independence. Independence Confidential — All Rights Reserved Areas of Audit Focus02 Hillingdon Pension Fund Audit results report 8Confidential — All Rights Reserved Confidential — All Rights Reserved Areas of Audit Focus Misstatements due to fraud or error • We enquired of management about risks of fraud and the controls put in place to address those risks. • We gained an understanding of the oversight given by those charged with governance of management’s processes over fraud. • We considered the effectiveness of management’s controls designed to address the risk of fraud. • We tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in preparing the financial statements. • We reviewed accounting estimates for evidence of management bias. • We evaluated the business rationale for any significant unusual transactions. • We utilised our data analytics capabilities to assist with our work, including journal entry testing. We assessed journal entries for evidence of management bias and evaluated for business rationale. There is a risk that the financial statements as a whole are not free of material misstatements whether caused by fraud or error. As identified in ISA (UK and Ireland) 240, management is in a unique position to perpetrate fraud because of its ability to manipulate accounting records directly or indirectly and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. We identify and respond to this fraud risk on every audit engagement. We have considered where this risk specifically manifests itself and this is in the posting of investment valuation journals. This consideration is set out on the next page. What is the risk? Our response to the key areas of challenge and professional judgement Our procedures to address this risk are complete. We have not identified any material weaknesses in controls or evidence of material management override. We have not identified any instances of inappropriate judgements being applied. We did not identify any evidence of management bias in relation to accounting estimates. Our journal testing did not identify any journal entries without a valid business purpose. We did not identify any other transactions during our audit which appeared unusual or outside Hillingdon’s Pension Fund’s normal course of business. What are our conclusions? Hillingdon Pension Fund Audit results report 9 What judgements we focused on? The risk of management override at Hillingdon Pension Fund is mainly through the possibility that management could override controls and manipulate financial transactions which intend to adjust the Pension Fund’s Fund Account or Net Asset Statement. This could be done through manipulation of manual adjustments, including via manual journals, in the preparation of financial statements or through management bias in accounting estimates. Confidential — All Rights Reserved Areas of Audit Focus Misstatements due to fraud or error: Incorrect posting of investment valuation journals • We performed a reconciliation to test the agreement of the Pension Fund’s investment asset holdings as at 31 March 2023, including asset values, to source reports from the Pension Fund’s custodian and individual fund managers. • We tested any significant reconciling amounts between the investment asset valuations as reported in the Pension Fund’s Net Asset Statement compared to the custodian’s investment report as of 31 March 2023. As identified in ISA (UK and Ireland) 240, management is in a unique position to perpetrate fraud because of its ability to manipulate accounting records directly or indirectly and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. We identify and respond to this fraud risk on every audit engagement. We have considered the key areas where management has the opportunity and incentive to specifically override controls that could affect the Pension Fund’s Financial Statements. We have identified the main risk to be the incorrect posting investment valuation journals. What is the risk? Our response to the key areas of challenge and professional judgement What are our conclusions? Hillingdon Pension Fund Audit results report 10 What are the key judgement? The posting of incorrect investment valuation journals at year end to the Pension Fund’s general ledger would impact the performance and funding level of the Pension Fund’s investment assets as reported in the Net Asset Statement. We have completed our procedures in relation to investment valuation journals. We have not identified any indication of management override in relation to investment journals Refer to Section 04 for more detail on audit differences. Confidential — All Rights Reserved Areas of Audit Focus Valuation of complex investments (including level 3 investments) For a sample of Level 3 investments we: • Reviewed the basis of valuation for property investments and other unquoted investments and assessed the appropriateness of the valuation methods used; • Where available, reviewed the latest audited accounts for the relevant fund managers and ensured there are no matters arising that highlight material differences in the reported funds valuation within the financial statements; • If the latest audited accounts are issued at a different date compared to the reporting date of the Pension Fund, we performed a roll forward procedures to support the valuation of the investments as of 31 March 2023. These included benchmark indexation for similar assets and analysis of cash movements in the gap period as well as gaining an understanding of what the Pension Fund has done to assess how the valuations are still materially correct as at 31 March 2023 • Performed analytical procedures and checked the valuation output for reasonableness against our own expectations; • Obtained and reviewed internal control reports for fund managers to identify any internal control issues which could impact on valuations and assessed whether these would have an impact on the valuations provided by the fund managers; • Reviewed investment valuation disclosures to verify that significant judgements supporting the valuation of level 3 investments have been disclosed in the Pension Fund’s financial statements. The Fund’s investments include unquoted investment vehicles such as private equity and pooled property funds. We have identified the valuation of these investments, which are classified as complex investments, as an area of specific risk. Judgements are taken by the Fund Managers to value those investments whose prices are not publicly available. The material nature of the investments means that any error in judgement could result in a material valuation error. Market volatility means such judgments can quickly become outdated, especially when there is a significant time period between the latest available audited information and the fund year end. Such variations could have a material impact on the financial statements. These investment types made up 15% of the fund’s total net assets as per the 2022/23 draft account. As these investments are more difficult to value, we have assessed the valuation of these investments as a significant risk, as even a small movement in the assumptions could have a material impact on the financial statements What is the risk? Our response to the key areas of challenge and professional judgement What are our conclusions? Level 3 investment asset valuations, including the net asset values of each of the individual underlying investments funds. We also considered the potential changes in values where the date of valuation information where is not coterminous with the Pension Fund’s year end date of 31 March 2023. What judgements are we focused on? Hillingdon Pension Fund Audit results report 11 We have completed our audit procedures related to this risk. We identified audit differences in the valuation of Level 3 investment assets. In total, these audit differences understate the Pension Fund’s investment asset value by £2.7 million. These differences were identified based on more up to date valuation reports from the investment fund managers that were not available to the Pension Fund at the time of preparation the draft financial statements. In addition, we identified a reclassification misstatement between Level 2 and Level 3 investment of £64,3 million. We were satisfied that the Pension Fund’s disclosures of significant judgements surrounding the valuation of Level 3 investments were appropriate Refer to Section 04 for more detail on audit differences. Confidential — All Rights Reserved Areas of Audit Focus (cont’d) Hillingdon Pension Fund Audit results report 12 IAS 26 disclosure – Actuarial present value of promised retirement benefits The Fund’s IAS 26 calculation shows that the present value of promised retirement benefits amount to £1,457 million as at 31 March 2023 (£1,965 million as at 31 March 2022). The figure is subject to complex estimation techniques and judgements by the Actuary, Hymans Robertson. The estimate is based on a roll-forward of data from the previous triennial valuation in 2022, updated where necessary, and has regard to local factors such as mortality rates and expected pay rises along with other assumptions around inflation and investment yields when calculating the liability. There is a risk that the valuation uses inappropriate assumptions to value the liability as at the 31 March 2023. What is the risk/area of focus What did we do? We have: • Evaluated whether the IAS26 disclosure is in line with the relevant standards and consistent with the valuation provided by the Actuary. • Engaged EY Pensions to review the roll forward procedures associated with the IAS 19 reports for the London Borough of Hillingdon which makes up 84% of the total pension fund asset and supports the our IAS 26 disclosures work. • Evaluated and placed reliance on EY Pension’s and PwC’s review of the underlying pension IAS19 assumptions used by the actuary, which also support the IAS26 figures. • Assessed the competence of management experts, Hymans Robertson as the Pension Fund’s actuary. • Performed audit procedures to assess the accuracy of membership numbers provided to the actuary and included in the 31 March 2022 Triennial Report We have not identified any issues from these procedures. Confidential — All Rights Reserved Audit Report03 Hillingdon Pension Fund Audit results report 13Confidential — All Rights Reserved Confidential — All Rights Reserved Audit Report - draft Our opinion on the financial statements INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF LONDON BOROUGH OF HILLINGDON ON THE PENSION FUND’S FINANCIAL STATEMENTS - DRAFT Opinion We have audited the Pension Fund (“the Fund”) financial statements for the year ended 31 March 2023 under the Local Audit and Accountability Act 2014 (as amended). The pension fund financial statements comprise the Fund Account, the Net Assets Statement and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23. In our opinion the pension fund financial statements: • give a true and fair view of the financial transactions of the Fund during the year ended 31 March 2023 and the amount and disposition at that date of its assets and liabilities; and • have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below. We are independent of the Council as administering authority for the Pension Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and the Comptroller and Auditor General’s AGN01, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Corporate Director of Finance’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the authority’s ability to continue as a going concern to [insert date - at least 12 months from the date of the audit report]. Our responsibilities and the responsibilities of the Corporate Director of Finance with respect to going concern are described in the relevant sections of this report. However , because not all future events or conditions can be predicted, this statement is not a guarantee as to the authority’s ability to continue as a going concern. Other information The other information comprises the information included in the Statement of Accounts 2022/23, other than the financial statements and our auditor’s report thereon. The Corporate Director of Finance is responsible for the other information contained within the Statement of Accounts 2022/23. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. Hillingdon Pension Fund Audit results report 14 Draft audit report Confidential — All Rights Reserved Audit Report (cont’d) Please note our opinion could be affected by items still pending as noted in section 1 Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Matters on which we report by exception We report to you if: • we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014 (as amended); • we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014 (as amended); • we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014 (as amended); • we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014 (as amended); or • we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014 (as amended). We have nothing to report in these respects Responsibility of the Corporate Director of Finance As explained more fully in the Statement of Corporate Director of Finance’s Responsibilities set out on page 50, the Corporate Director of Finance is responsible for the preparation of the Council’s Statement of Accounts, which includes the pension fund financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2022/23, and for being satisfied that they give a true and fair view. The Corporate Director of Finance is also responsible for such internal control as the Corporate Director of Finance determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Corporate Director of Finance is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Administering Authority either intends to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with Corporate Director of Finance . Hillingdon Pension Fund Audit results report 15 Our opinion on the financial statements Confidential — All Rights Reserved Audit Report (cont’d) Please note our opinion could be affected by items still pending as noted in section 1 Our approach was as follows: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Fund and determined that the most significant are the Local Government Pension Scheme Regulations 2013 (as amended), and The Public Service Pensions Act 2013. • We understood how the Fund is complying with those frameworks by making enquires of the management. We corroborated this through our reading of the Pension Board minutes, through enquiry of employees, and through the inspection of other information. • Based on this understanding, we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved making enquiries of the management for their awareness of any non-compliance of laws or regulations, inspecting correspondence with the Pensions Regulator and review of minutes. • We assessed the susceptibility of the Fund’s financial statements to material misstatement, including how fraud might occur by considering the key risks impacting the financial statements and documenting the controls that the Fund has established to address risks identified, or that otherwise seek to prevent, deter or detect fraud. Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk. • In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any identified significant transactions that were unusual or outside the normal course of business. These procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. • To address our fraud risk we tested the consistency of the investment asset valuations from the independent sources of the custodian and the fund managers to the financial statements. • The Fund is required to comply with The Local Government Pensions Scheme regulations, other legislation relevant to the governance and administration of the Local Government Pension Scheme and requirements imposed by the Pension Regulator in relation to the Local Government Pension Scheme. As such, we have considered the experience expertise of the engagement team including the use of specialists where appropriate, to ensure that the team had an appropriate understanding of the relevant pensions regulations to assess the control environment and consider compliance of the Fund with these regulations as part of our audit procedures. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the members of London Borough of Hillingdon, as a body, in accordance with Part 5 of the Local Audit and Accountability Act 2014 (as amended) and for no other purpose, as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the London Borough of Hillingdon and its members as a body, for our audit work, for this report, or for the opinions we have formed. Debbie Hanson (Key Audit Partner) Ernst & Young LLP (Local Auditor) Luton Date Hillingdon Pension Fund Audit results report 16 Our opinion on the financial statements Confidential — All Rights Reserved Audit Differences04 Hillingdon Pension Fund Audit results report 17Confidential — All Rights Reserved Confidential — All Rights Reserved Audit Differences (cont’d) We have detailed in this section the identified audit differences which has been adjusted by management Identified audit differences 31 March 2023 (£’000) Effect on the current period: Net assets (Decrease)/Increase OCI Debit/(Credit) Fund Account Debit/(Credit) Assets current Debit/ (Credit) Assets non- current Debit/ (Credit) Liabilities current Debit/ (Credit) Liabilities non- current Debit/ (Credit) Errors Known differences: ► Investment assets: Understatement of level 3 investment valuation due to timing difference compared to investment fund manager reports (2,684) 2,684 ► Investment income: Recognition of investment income incorrectly accounted for as a profit on loss on disposal of investment ► Profit and losses on disposal of investments and changes in market value of investments as noted above 4,285 (4,285) Overall financial statement impact: (2,684) 2,684 Disclosure misstatements Note 14: Fair value investment disclosures; Misclassification of £0.985 million relating to level 2 assets (Nuveen Retail Warehouse Fund) which should be classified as l evel 3. Misclassification of £63.290 million relating to level 2 assets ( AEW UK Core Property Fund Plus) which should be classified as level 3. Note 14: Realised loss of £4.333 million relating to private equity was incorrectly accounted for as an unrealised loss Membership disclosure Hillingdon Pension Fund Audit results report 18 Summary of audit differences Confidential — All Rights Reserved Other Reporting Issues05 Hillingdon Pension Fund Audit results report 19Confidential — All Rights Reserved Confidential — All Rights Reserved Other Reporting Issues Hillingdon Pension Fund Audit results report 20 Consistency of other information published with the financial statements We must give an opinion on whether other information published in the Pension Fund Annual Report together with the audited fi nancial statements is consistent with the financial statements We have no inconsistencies to draw to your attention. In addition, we also perform procedures to ensure the consistency of the Pension Fund accounts with the version presented in the full Annual Statement of Accounts of the London Borough of Hillingdon. We have no inconsistencies to draw to your attention. Other powers and duties We have a duty under the Local Audit and Accountability Act 2014 to consider whether to report on any matter that comes to ou r attention in the course of the audit, either for the Authority to consider it or to bring it to the attention of the public (i.e. “a report in the public interest” ). We also have a duty to make written recommendations to the Authority, copied to the Secretary of State, and take action in accordance with our responsibilities under the Local Audit and Accountability Act 2014. We had no reason to exercise these duties in relation to Hillingdon Pension Fund. Other matters As required by ISA (UK&I) 260 and other ISAs specifying communication requirements, we must inform you of significant finding s from the audit and other matters if they are significant to your oversight of the Fund’s financial reporting process. We have undertaken additional testing this year to provide assurance on the Pension Fund membership data that was submitted t o the actuary for the 31 March 2022 triennial valuation of the Pension Fund. In total, we sample tested 25 member records, checking information back to sour ce evidence to verify the data points contained in the Pension Fund’s membership system were accurate. Based on the testing performed we are satisfied that: • The control environment and quality of membership data is satisfactory based on the testing we performed. • We have only identified one actual data point error out of 25 items tested as part of work (where we could not confirm the da te of birth to external evidence) • Where complete evidence could not be provided, we are satisfied that further compensatory checks have been undertaken by the actuary and it would not be reasonable to conclude that the data point could not be supported. We are only required to conduct procedures on the triennial membership submission once every three years. Therefore, there is an additional fee this year for completion of these procedures. This is set out in Section 07 of this report. Confidential — All Rights Reserved Other Reporting Issues Hillingdon Pension Fund Audit results report 21 Other matters (Continued) There have been delays in the completion of the audit this year due to issues with the reconciliation of membership numbers, mainly related to the processes related to the clearing of the historical backlog. This impacted the audit of membership contributions, as the difference between our expectation and the amount recorded in the Pension Fund accounts exceeded our allowable threshold. We performed additional testing on the unprocessed leavers which resulted in the reclassification of members from active to deferred. Management have correctly updated the disclosure for membership numbers. There will be an additional audit fee associated with the additional time it has taken the audit team to progress the audit as the result of these issues. This additional audit fe e is set out in Section 07 of this report. Except for our observations on the control environment, as set out in Section 06 of this report, we have no other matters to report. Confidential — All Rights Reserved Other Reporting Issues Hillingdon Pension Fund Audit results report 22 ISA (UK) 315 (Revised): Identifying and Addressing the Risks of Material Misstatement ISA 315 revised is effective from financial year 2022/23 onwards and is the critical standard which drives the auditor's appr oach to the following areas: • Risk assessment • Understanding the entity's internal control • Significant risks • Approach to addressing significant risk (in combination with ISA 330) The International Auditing & Assurance Standards Board (IAASB) concluded that whilst the existing version of the standard was fundamentally sound, feedback determined that it was not always clear, leading to a possibility that risk identification was not consistent. The aims of th e revised standard is to: • Drive consistent and effective identification and assessment of risks of material misstatement • Improve the standard's applicability to entities across a wide spectrum of circumstances and complexities ('scalability’) • Modernise ISA 315 to meet evolving business needs, including: • how auditors use automated tools and techniques, including data analytics to perform risk assessment audit procedures; and • how auditors understand the entity's use of information technology relevant to financial reporting. • Focus auditors on exercising professional scepticism throughout the risk identification and assessment process. We set out the findings and conclusions from our work to implement ISA 315 in the table below. Audit Procedures Audit findings and conclusions We obtained an understanding of the IT processes related to the IT applications of the Fund. The Fund has two relevant IT applications for the purposes of ISA 315 risk assessment. We performed procedures to determine if there are typical controls missing or control deficiencies identified and evaluated the consequences for our audit strategy. When we have identified controls relevant to the audit that are application controls or IT - dependent manual controls, where we do not gain assurance substantively, we performed additional procedures to assess: • Manage entity-programmed changes IT process • Manage vendor supplied changes • Manage security settings • Manage user access • Job scheduling and managing IT process. Our work in this area is complete. Based on the procedures performed, no significant issues were identified in our review of the various processes, including the design and implementation effectiveness of relevant controls around the financial statement close process. We have not tested the operation of any controls through this review. Confidential — All Rights Reserved Assessment of Control Environment06 Hillingdon Pension Fund Audit results report 23Confidential — All Rights Reserved Confidential — All Rights Reserved Assessment of Control Environment Financial controls As part of our audit of the financial statements, we obtained an understanding of internal control sufficient to plan our audit and determine the nature, timing and extent of testing performed. Although our audit was not designed to express an opinion on the effectiveness of internal control, we are required to communicate to you significant deficiencies in internal control. During the course of the audit we have identified three areas of weakness in relation to the Pension Fund’s control environment. We have summarised these weakness and associated recommendations (along with the risk rating) below: 1) Weakness in the review controls with regards to the disclosure of membership numbers in relation to the capturing of information related to the backlog of unprocessed records. (Moderate). Recommendations • Management should review the membership numbers provided by the administrator for reasonableness in comparison to prior year. • Management should ensure the correct categorisation of members captured in the current year relating to the backlog of unprocessed records. • As part of management’s quality review process for the preparation of the financial statements, management should review the relationship between the movement in membership numbers and contributions and have supporting working papers explaining where there are disparities. 2) Weakness in the identification and documentation of observable and unobservable inputs used in valuations of level 2 and Level 3 investments. This was also reported in the prior year. (Moderate) Recommendations • Management should strengthen controls around the identification and of observable and unobservable inputs used in valuations. This would minimise the risk of such audit findings in the future. 3) Weaknesses in the procedures in place for the Pension Fund to obtain declarations of interests from Members of the Pensions Committee and the Audit Committee. (Low) Recommendations • Management should review the processes it has in place to obtain declarations of interest from members. The table below provides an overview of the ‘high’ ‘moderate’ and ‘low’ rated observations we have from the 2022/23 audit. High Moderate Low Total Open at beginning of 2022/23 0 1 0 1 New points raised in 2022/23 0 1 1 2 Total open recommendations 0 2 1 3 A weakness which does not seriously detract from the internal control framework. If required, action should be taken within 6–12 months. Matters and/or issues are considered to be of major importance to maintenance of internal control, good corporate governance or best practice for processes. Action should be taken within six months. Matters and/or issues are considered to be fundamental to the mitigation of material risk, maintenance of internal control or good corporate governance. Action should be taken either immediately or within three months. Key: Hillingdon Pension Fund Audit results report 24 Confidential — All Rights Reserved Independence07 Hillingdon Pension Fund Audit results report 25Confidential — All Rights Reserved Confidential — All Rights Reserved Independence, Relationships, services, related threats and safeguards We are not aware of any inconsistencies between Ernst & Young (EY)’s policy for the supply of non-audit services and FRC Ethical Standard. We are not aware of any apparent breach of that policy. We confirm that, in our professional judgment, EY is independent, our integrity and objectivity is not compromised, and we ha ve complied with the FRC Ethical Standard. We confirm that your engagement team (partners, senior managers, managers and all others involved with the audit) and others within the firm, the firm and network firms have complied with relevant ethical requirements regarding independence. Confirmation Hillingdon plc Audit results report 26 EY has policies and procedures that instil professional values as part of firm culture and ensure that the highest standards of objectivity, independence and integrity are maintained. Details of the key policies and processes in place within EY for maintaining objectivity and independence can be found in our annual Transparency Report which the firm is required to publish by law. The most recent version of this Report is for the year end 28 June 2024: and can be found here: EY UK 2024 Transparency Report. EY Transparency Report 2024 The FRC Ethical Standard requires that we provide details of all relationships between Ernst & Young (EY) and the Fund, and i ts members and senior management and its affiliates, including all services provided by us and our network to the Fund, its members and senior management and its affiliates, and other services provided to other known connected parties that we consider may reasonably be thought to bear on the our integrity or objectiv ity, including those that could compromise independence and the related safeguards that are in place and why they address the threats. There are no relationships from 1 April 2022 to the date of this report which we consider may reasonably be thought to bear o n our independence and objectivity. Relationships Confidential — All Rights Reserved Hillingdon Pension Fund Audit results report 27 Services provided by Ernst & Young Current Year 2022/23 Current Year 2022/23 Prior Year 2021/22 Proposed fee £ Planned fee £ Proposed fee £ Scale Fee – Code work 24,954 24,954 16,170 Additional fees for changes in work required to address professional and regulatory requirements and scope associated with risk and specific in year risks – Note 1 30,000 to 40,000 8,784 29,322 Additional fee for the provision of IAS19 assurance letters (2021/22) - Note 2 NA N/A 6,000 Additional fee with respect to testing of triennial membership data submissions – Note 3 8,700 5,500 0 Total fees 63,654 to £73,654 39,238 51,492 There are no services provided by EY from 1 April 2022 to the date of this report, which we consider may reasonably be thought to bear on our independence and objectivity. The table includes a summary of the fees due to EY in line with the disclosures set out in FRC Ethical Standard and in statut e. Full details of the services that we have provided, and the related threats and safeguards are included below. We highlight in the table below the most significant services that may be reasonably considered to bear upon our integrity, o bjectivity and independence. Independence, Relationships, services, related threats and safeguards Confidential — All Rights Reserved Hillingdon Pension Fund Audit results report 28 Note 1 – We do not believe that the current scale fee reflects the changes in the audit market and increases in regulation since the m ost recent PSAA tender exercise. For 2021/22 and 2022/23, we have therefore proposed increases to the scale fee to take into account a number of risk factors including: Procedures performed to address the risk profile of the Pension Fund; Additional work to address increase in Regulatory Standards; Client readiness and IT su pport for data analytics. For 2022/23 PSAA have increased the base scale fee, but in our view, this still does not fully cover the additional work requ ired and we will therefore be submitting a further proposed increase for 2022/23 for determination by PSAA. The fee variation (excluding the fee for IAS19 assurances) f or 2021/22 has been determined by PSAA as £29,322. For reference, the scale fee for the 2023/24 Hillingdon Pension Fund audit, as set by PSAA under the new loc al government sector audit contract, is £81,688. The proposed additional fee range for 2022/23, includes additional procedures in relation to the following areas: ➢ additional testing of level 3 investment valuations, ➢ review by EY Pensions team to support procedures performed on the IAS 26 (actuarial present value of promised retirement bene fits) disclosure ➢ Additional work by EY Pensions on the roll forward estimate of the net pension liability for 2022/23. We leverage this work, which is normally undertaken as part of the Council audit, to gain assurance over the IAS 26 processes and resulting disclosures. ➢ Going concern assessment and disclosures, ➢ Work to meet the requirements of the revised auditing standard ISA 540 (going concern) and ISA 240 (fraud assessment) ➢ Additional work to meet the requirements of ISA 315 (audit risk assessment, including IT risks). We have to perform additional risk assessment procedures to understand the Pension Fund’s use of IT applications and controls. The estimated fee for this work is between £4,000 and £6,0 00 ➢ Inefficiencies in the execution of the audit due to incorrect membership numbers, ➢ Additional audit procedures on investment disclosures as the result of identified audit differences As the 2022/23 audit is in not yet fully concluded, we are not yet able to confirm the final fee for the specific additional procedures and identified risk areas as noted above. Our estimated additional fee with respect to the above areas is between £30,000 and £40,000. The final audit fee will be submitted to management and determined by PSAA. Note 2 – We planned to charge an additional fee of to take into account the work required to respond to IAS19 assurance requests from admitted body auditors for 2021/22. As the audit of the London Borough of Hillingdon for 2022/23 is not being undertaken, we have not been asked to pro vide similar assurances for 2022/23. Note 3 - We will charge an additional fee of £8,700 with respect to detailed testing of the triennial membership submission to the actuary. We perform this testing on a triennial basis based on when the actuary conducts a full valuation of the Pension Fund. This work supports the assurance we need to obtain in relation to the IAS26 disclosures in the pension fund accounts, as well as any IAS19 assurance letters. The fee for this will be finalised now the work is complete. We expect the final fee to be higher than planned due to additional work we have had to undertake in this area. Fees for the membership testing are not sub ject to determination by PSAA. Independence, Relationships, services, related threats and safeguards Confidential — All Rights Reserved Appendices08 Hillingdon Pension Fund Audit results report 29Confidential — All Rights Reserved Confidential — All Rights Reserved Appendix A - Required communications with the Audit Committee There are certain communications that we must provide to the Audit Committees of UK entities. We have detailed these here tog ether with a reference of when and where they were covered: Our Reporting to you Required communications What is reported? When and where Terms of engagement Confirmation by the audit committee of acceptance of terms of engagement as written in the engagement letter signed by both parties. The statement of responsibilities serves as the formal terms of engagement between the PSAA’s appointed auditors and audited bodies Our responsibilities Reminder of our responsibilities as set out in the engagement letter. Audit planning report 7 November 2023 Planning and audit approach Communication of the planned scope and timing of the audit, any limitations and the significant risks identified. When communicating key audit matters this includes the most significant risks of material misstatement (whether or not due to fraud) including those that have the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. Audit planning report 7 November 2023 Significant findings from the audit • Our view about the significant qualitative aspects of accounting practices including accounting policies, accounting estimates and financial statement disclosures • Significant difficulties, if any, encountered during the audit • Significant matters, if any, arising from the audit that were discussed with management • Written representations that we are seeking • Expected modifications to the audit report • Other matters if any, significant to the oversight of the financial reporting process Audit planning report 7 November 2023 Hillingdon Pension Fund Audit results report 30 Required communications with the Audit Committee Confidential — All Rights Reserved Appendix A - Required communications with the Audit Committee (cont’d) Our Reporting to you Required communications What is reported? When and where Going concern Events or conditions identified that may cast significant doubt on the entity’s ability to continue as a going concern, including: • Whether the events or conditions constitute a material uncertainty related to going concern • Whether the use of the going concern assumption is appropriate in the preparation and presentation of the financial statements • The appropriateness of related disclosures in the financial statements Provisional Audit results report – 19 April 2024 Final Audit Results Report – November 2024 Misstatements • Uncorrected misstatements and their effect on our audit opinion, unless prohibited by law or regulation • The effect of uncorrected misstatements related to prior periods • A request that any uncorrected misstatement be corrected • Material misstatements corrected by management Provisional Audit results report – 19 April 2024 Final Audit Results Report – 12 November 2024 Hillingdon Pension Fund Audit results report 31 Confidential — All Rights Reserved Our Reporting to you Required communications What is reported? When and where Fraud • Enquiries of the audit committee to determine whether they have knowledge of any actual, suspected or alleged fraud affecting the entity • Any fraud that we have identified or information we have obtained that indicates that a fraud may exist • Unless all of those charged with governance are involved in managing the entity, any identified or suspected fraud involving: a. Management; b. Employees who have significant roles in internal control; or c. Others where the fraud results in a material misstatement in the financial statements. • The nature, timing and extent of audit procedures necessary to complete the audit when fraud involving management is suspected • Matters, if any, to communicate regarding management’s process for identifying and responding to the risks of fraud in the entity and our assessment of the risks of material misstatement due to fraud • Any other matters related to fraud, relevant to Audit Committee responsibility. Provisional Audit results report – 19 April 2024 Final Audit Results Report – 12 November 2024 Related parties Significant matters arising during the audit in connection with the entity’s related parties including, when applicable: • Non-disclosure by management • Inappropriate authorisation and approval of transactions • Disagreement over disclosures • Non-compliance with laws and regulations • Difficulty in identifying the party that ultimately controls the entity Provisional Audit results report – 19 April 2024 Final Audit Results Report – 12 November 2024 Hillingdon Pension Fund Audit results report 32 Appendix A - Required communications with the Audit Committee (cont’d) Confidential — All Rights Reserved Our Reporting to you Required communications What is reported? When and where Independence Communication of all significant facts and matters that bear on EY’s, and all individuals involved in the audit, objectivity and independence. Communication of key elements of the audit engagement partner’s consideration of independence and objectivity such as: • The principal threats • Safeguards adopted and their effectiveness • An overall assessment of threats and safeguards • Information about the general policies and process within the firm to maintain objectivity and independence Communications whenever significant judgements are made about threats to objectivity and independence and the appropriateness of safeguards put in place. For public interest entities and listed companies, communication of minimum requirements as detailed in the FRC Revised Ethical Standard 2019: • Relationships between EY, the company and senior management, its affiliates and its connected parties • Services provided by EY that may reasonably bear on the auditors’ objectivity and independence • Related safeguards • Fees charged by EY analysed into appropriate categories such as statutory audit fees, tax advisory fees, other non-audit service fees • A statement of compliance with the Ethical Standard, including any non -EY firms or external experts used in the audit • Details of any inconsistencies between the Ethical Standard and Fund’s policy for the provision of non-audit services, and any apparent breach of that policy • Where EY has determined it is appropriate to apply more restrictive rules than permitted under the Ethical Standard • The audit committee should also be provided an opportunity to discuss matters affecting auditor independence Audit planning report 7 November 2023 and Provisional Audit results report – 19 April 2024 Final Audit Results Report – 12 November 2024 External confirmations • Management’s refusal for us to request confirmations • Inability to obtain relevant and reliable audit evidence from other procedures. We have

Audit Committee – 20 November 2024 Part I – Public AUDIT COMMITTEE ANNUAL REPORT FOR 2023/24 Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit Papers with report Draft Audit Committee Annual Report for 2023/24 Ward All HEADLINES This draft report summarises the work of the Audit Committee during 202 3/24 and how it has undertaken its responsibilities for reviewing the key areas within its remit. In line with good governance, the Audit Committee should ensure that the wider Council is aware of the breadth and extent of the work completed by the Committee on its behalf. This draft report contains the information that is proposed to be presented to Council, so that it can be assured that the Audit Committee is acting appropriately on its behalf. This report was presented to the previous meeting and has been updated with the Chair’s amendments. RECOMMENDATION: That the Audit Committee reviews and approves the Draft Audit Committee Annual Report for 2023/24 and/ or suggests any amendments that should be made, where necessary, before the report is presented to Council. SUPPORTING INFORMATION None. BACKGROUND PAPERS None.

DRAFT ANNUAL REPORT OF THE AUDIT COMMITTEE 2023/24 Report Distribution  Audit Committee: 28th August 2024  Council: TBC 2024 HILLINGDON COUNCIL AUDIT COMMITTEE ANNUAL REPORT 2023/24 2. 1. INTRODUCTION 1.1 In line with best practice guidance, the Audit Committee is required to submit an annual report to Council outlining the Committee’s activities over the previous year. This report summarises the work o f the Audit Committee during 2023/24 and how it has undertaken its responsibilities for reviewing the key areas within its remit. Specifically, these include:  Internal Audit  External Audit  Counter Fraud  Risk Management  Financial reporting process of the Statement of Accounts. 1.2 In compliance with the Accounts and Audit (Amended) (England) Regulations 2021 the Audit Committee has reviewed the effectiveness of the systems of internal control by receiving regular reports from these areas above that contribute to the control framework. This report provides an opportunity for Council Members to review the work of the Audit Committee and comment on its contribution and performance. 2. Key Activities of the Audit Committee 2.1 The Terms of Reference (ToR) of the Committee are attached at Appendix A. These were last amended at the Council meeting held on 11 May 2017, following an Internal Audit review of the Effectiveness of the Audit Committee. 2.2 During the 2023/24 municipal year the Audit Committee met on four occasions: 27 April 2023, 8 August 2023, 22 November 2023 and 12 February 2024. 2.3 Membership and attendance of the Audit Committee comprised as follows: Member Name Member Appointment 2023/24 Meeting Attendance Mr John Chesshire (Independent Chairman) Initially appointed on 2 November 2017 to present Attended all four meetings Cllr Reeta Chamdal Appointed May 2022 to present Attended all four meetings Cllr Tony Burles Appointed May 2022 to present Attended all four meetings Cllr Nick Denys Appointed May 2022 to present Attended April 23, November 23 and February 24 Cllr Henry Higgins Appointed August 2023 – present Attended all four meetings (April 2023 as a Substitute) Cllr June Nelson Appointed August 2023 - present Attended November 23 and February 24 Cllr Stuart Mathers Non-Member Attended in April 2023 as a Substitute Cllr Kishan Bhatt Non-Member Attended in August 2023 as a Substitute 2.4 The current Independent Chairman has over 24 years’ experience in the public and private sectors working in the internal audit, risk management, business improvement and governance fields. HILLINGDON COUNCIL AUDIT COMMITTEE ANNUAL REPORT 2023/24 3. 2.5 The role delegated by the Council to the Audit Committee is to provide independent assurance over the governance, risk management and the system of internal control in operation at the Council. The Audit Committee has fulfilled this role by undertaking the following key activities: a) Oversight of Internal Audit  The Audit Committee oversaw the activity of the Council’s Internal Audit service to assist it in its role of monitoring the internal control, risk management and governance arrangements of the Council's operations. During 2023/24, the Audit Committee revie wed the 20 22/23 Annual Internal Audit Report and Head of Internal Audit Opinion Statement , the 2023/24 Annual Internal Audit Plan, and quarterly progress reports and operational plans;  The Audit Committee also reviewed the key findings from Internal Audit reviews and sought explanations from the Head of Internal Audit about the recommendations emanating from ‘Limited’ or ‘No’ assurance audits.  The Audit Committee continued to monitor the performance of the Internal Audit Service. The Committee has received assurances from the Head of Internal Audit that all actions from the External Quality Assessment of the Internal Audit Service, completed at the end of 2022/23, were confirmed to have been completed during 2023/24. The Audit Committee is satisfied that Internal Audit is effective and adds value to the Council. b) Oversight of External Audit  The Committee has reviewed the activity of the Council’s External Auditors (Ernst & Young) to assist it in its role of monitoring the internal control, risk management and governance arrangements of the Council's operations. The Committee has received and considered the external audit plan, progress updates and reviewed EY performance.  The Committee confirmed the completion of the 2021/22 annual accounts audit and acknowledged the ongoing national delays in relation to the 2022/23 accounts audit which are consistent with other local authorities. The Committee also monitored the completion of the draft V alue for Money and Pension Fund audit results for 2022/23, which were presented in April 2024. The Audit Committee is satisfied with the Council’s External Audit arrangements during 2023/24 c) Prevention and Detection of Fraud and Corruption  The Council operates a zero-tolerance policy towards all fraud and corruption. The Counter Fraud Team (CFT) is embedded into all major fraud risks across the three largest areas of expenditure Revenues, Social Care and Housing. The team conducts proactive and reactive counter fraud activity to highlight fraud, loss and error. This minimises the Council’s exposure to fraud and maximises its preventative savings.  The National Fraud Initiative (NFI), is embedded in practice in the CFT through detecting potential fraud by matching electronic data sets within and between public and private sector bodies. Relevant service areas across the Council review HILLINGDON COUNCIL AUDIT COMMITTEE ANNUAL REPORT 2023/24 4. the initial data matches and then refer them to the CFT for investigation (where appropriate to do so).  The Audit Committee has received consolidated quarterly progress reports from the CFT, a detailed 2023/24 Annual Plan and Annual Report for 2022/23. The team has responsibility for the oversight of the effectiveness of the Council’s policies and procedures to prevent and detect fraud and corruption.  In 2023/24 the CFT had achieved a number of successful outcomes including a total of c£11.2m in loss prevention savings across Council services. These savings included the recovery of 103 council properties due to tenancy fraud. The Audit Committee is satisfied with the effectiveness of the Council’s counter fraud arrangements during 2023/24. d) Risk Management & Corporate Governance  The Audit Committee monitored the implementation of the new Risk Management system and processes throughout 2023/24 as part of the Committee's role to independently assess the Council's corporate risk management arrangements.  They received quarterly risk management reports , including the Corporate Risk Register, and a new Strategic Risk Report in February 2024 . These provided assurance that action was being taken on risk related issues.  The Audit Committee also oversee the production of the Council’s Annual Governance Statement (AGS). The AGS for 2022/23 was drafted and submitted to External Audit during the year, however as the 2022/23 audit of the annual accounts has been delayed the final accounts were not presented to the Committee during the year. The Audit Committee is satisfied that the Risk Management arrangements enable it to provide sufficient challenge to officers around the identification and management of the key risks to the Council. e) Approval of Financial Accounts  Throughout 2023/24 the Audit Committee was provided with audit progress reports on the Council’s annual statement of accounts for 202 1/22. This included considering whether appropriate accounting policies have been followed in relation to the 2022/23 accounts.  Due to national delays finalising the audit of the 2022/23 annual accounts the Audit Committee had not received the final audit of the accounts by the end of 2023/24. This will be taken forward during 2024/25. 3. Conclusion 3.1 The Audit Committee considers that it has continued to make a significant contribution to ensuring that the key elements of the governance framework are given proper consideration and are appropriately challenged. It will continue to develop this role and contribute to strengthen internal control, risk management and governance throughout the authority. HILLINGDON COUNCIL AUDIT COMMITTEE ANNUAL REPORT 2023/24 5. APPENDIX A: AUDIT COMMITTEE TERMS OF REFERENCE The Constitution defines the Terms of Reference for the Audit Committee as: The Audit Committee’s role is to:  Review and monitor the Council’s audit, governance, risk management framework and the associated control environment, as an independent assurance mechanism;  Review and monitor the Council’s financial and non-financial performance to the extent that it affe cts the Council’s exposure to risk and/or weakens the control environment;  Oversee the financial reporting process of the Statement of Accounts. Decisions in respect of strategy, policy and service delivery or improvement are reserved to the Cabinet or delegated to Officers. Internal Audit 1) Review and approve (but not direct) the Internal Audit Strategy to ensure that it meets the Council's overall strategic direction. 2) Review, approve and monitor (but not direct) Internal Audit’s planned programmes of work, paying particular attention to whether there is sufficient and appropriate coverage. 3) Through quarterly Internal Audit summary reports of work done, monitor progress against the Internal Audit Plan and assess whether adequate skills and resources are available to provide an effective Internal Audit function. Monitor the main Internal Audit recommendations and consider whether management responses to the recommendations raised are appropriate with due regard to risk, materiality and coverage. 4) Make reco mmendations to the Leader of the Council and Cabinet Member for Finance on any changes to the Council’s Internal Audit Strategy and plans. 5) Review the Annual Report and Opinion Statement and the level of assurance this provides over the Council’s corporate governance arrangements, risk management framework and system of internal controls. 6) Consider reports dealing with the activity, management and performance of internal audit services. 7) Following a request to the Corporate Director of Finance and, subject to the approval of the Leader of the Council or Cabinet Member for Finance, to request work from Internal Audit. External Audit 8) Receive and consider the External Auditor’s annual letter, relevant reports and the report to those charged with governance. 9) Monitor management action in response to issues raised by External Audit. 10) Receive and consider specific reports as agreed with the External Auditor. 11) Comment on the scope and depth of External Audit work and ensure that it gives value for money, making any recommendations to the Corporate Director of Finance. HILLINGDON COUNCIL AUDIT COMMITTEE ANNUAL REPORT 2023/24 6. 12) Be consulted by the Corporate Director of Finance over the appointment of the Council’s External Auditor. 13) Following a request to the Corporate Director of Finance and, subject to the approval of the Leader of the Council or Cabinet Member for Finance, to commission work from External Audit. 14) Monitor arrangements for ensuring effective liaison between Internal Audit and External Audit, in consultation with the Corporate Director of Finance. Governance Framework 15) Maintain an overview of the Council’s Constitution in respect of contract procedure rules and financial regulations and, where necessary, bring proposals to the Leader of the Council or the Cabinet for their development. 16) Review any issue referred to it by the Chief Executive, Corporate or Executive Director, any Council body or external assurance providers including inspection agencies. 17) Monitor and review (but not direct) the authority’s risk management arrangements, including regularly reviewing the corporate risk register and seeking assurances that appropriate action is being taken on managing risk. 18) Review and monitor Council strategy and policies on anti -fraud and anti -corruption including the ‘Raising Concerns at Work’ policy making any recommendatio ns on changes to the Leader of the Council and relevant Corporate / Executive Director. 19) Oversee the production of the authority’s Annual Governance Statement and recommend its adoption. 20) Review the Council’s arrangements for corporate governance and make recommendations to the Corporate Director of Finance on suggested actions to improve alignment with best practice. 21) Where requested by the Leader of the Council, Cabinet Member for Finance or Corporate Director of Finance, provide recommendations on the Coun cil’s compliance with its own and other published standards and controls. Accounts 22) Review and approve the annual statement of accounts. Specifically, to consider whether appropriate accounting policies have been followed and whether there are concerns arising from financial statements or from the external auditor that need to be brought to the attention of the Council. 23) Consider the external auditor’s report to those charged with governance on issues arising from the external audit of the accounts. Review and reporting 24) Undertake an annual independent review of the Audit Committee’s effectiveness and submit an annual report to Council on the activity of the Audit Committee.

Audit Committee – 20 November 2024 Part I – Public INTERNAL AUDIT PROGRESS REPORT Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report Internal Audit Progress Report Ward All HEADLINES The attached Progress Report presents the Audit Committee with a summary of the Internal Audit (IA) work covered since the last Committee meeting. It also provides an opportunity for the Head of Internal Audit to highlight to the Audit Committee any significant issues that they need be aware of that have arisen since the last IA Progress Report. Further, it enables the Audit Committee to hold the Head of Internal Audit to account on delivery of the IA work plan, and Officers to account for managing risk and control weaknesses identified during the course of IA activity. RECOMMENDATION: That the Audit Committee notes the IA Progress since the last Committee meeting SUPPORTING INFORMATION IA provides an independent appraisal and consultancy service that underpins good governance, which is essential in helping the Council achieve its strategic objectives and realise its vision for the borough of Hillingdon. BACKGROUND PAPERS NIL.

INTERNAL AUDIT PROGRESS REPORT 8 November 2024 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 2. CONTENTS The key contacts in connection with this document are: Claire Baker Head of Internal Audit cbaker@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. SUMMARY OF INTERNAL AUDIT ACTIVITY 3 3. FOLLOW UP OF MANAGEMENT ACTIONS 4 4. FORWARD LOOK 5 APPENDIX A: IA REVIEWS 6 APPENDIX B: IA AD HOC CONSULTANCY & GRANT CLAIM VERIFICATION REVIEWS 8 APPENDIX C: FOLLOW UP OF MANAGEMENT ACTIONS 9 APPENDIX D: KEY PERFORMANCE INDICATORS 11 APPENDIX E: ASSURANCE LEVELS AND ACTION RISK RATINGS 12 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 3. 1. INTRODUCTION The Role of Internal Audit Internal Audit (IA) provides an independent assurance and consultancy service that underpins good governance, essential in helping the Council achieve its corporate objectives and realise its vision for the borough of Hillingdon. It is also a requirement of the Accounts and Audit (Amendment) Regulations 2021 that the Authority undertakes an effective IA to evaluate the effectiveness of its risk management, internal control and corporate governance processes, taking into account the UK Public Sector IA Standards. The Purpose of the Internal Audit Progress Report This progress report presents the Council’s Corporate Management Team (CMT) and Audit Committee with summary information on all IA work completed since the last Audit Committee meeting. In addition, it provides an opportunity for the Council's Head of Internal Audit (HIA), to highlight any significant issues which have arisen from IA work. 2. SUMMARY OF INTERNAL AUDIT ACTIVITY Internal Audit are continuing to progress a number of reviews in the 2024/25 IA workplan. Since the last Audit Committee meeting, six reviews were completed to final report stage. These include: • two ADVISORY reviews: Schools Finances Part 1, where a formal report will be issued at the end of the Part 2 review which is currently ongoing, and Telecare (Intelligent Lilli) which was designed as an advisory review to identify areas of improvement following the recent changes in the service. • Three LIMITED assurance reports and one NO assurance report relating to the following areas: Asset Management (Corporate Properties) (No Assurance) This review was added to the plan following a request from the Corporate Directorate as it was a known area of improvement. We confirmed there was a lack of appropriate governance controls in place , including no Asset Management Strategy or policies and procedures in place, and no centralised asset management system or register. Without a centralised asset management system or asset register we found there was inconsistent information and collaboration between different services across the Council, with services receiving information at different times when assets are purchased or disposed of. However, Internal Audit did acknowledge initial steps had already been taken by the services to improve the asset management arrangements. Including plans in place to procure an asset management system, and to improve the governance arrangements by forming an Asset Management Board to improve collaboration and oversee the necessary improvements. Thematic Schools Audit (Limited) This review assessed the arrangements in place within schools to ensure they are spending their allocated Special Educational Needs (SEN) funding appropriately. We looked at a sample of four schools, with a sample of five students per school, however the findings will be shared with all schools. We reviewed the most recent termly review and provision map for each of the students and confirmed the schools had arrangements in place for matching SEN support to the individual child’s needs , and identifying the specific provision required from the school. The schools then reviewed the effectiveness of the support provided through statutory annual reviews, including monitoring the outcomes against their Education and Health Care Plans (EHCPs). However, although the sufficiency of provision was assessed via the child’s outcomes and annual review, insufficient evidence was available to verify the funding received had been spent in line with the EHCP and national High Needs Funding 2023 – 2024 Operational Guidance. In particular in relation to the allocation of Teaching Assistants (TAs) as there was no evidence to reconcile actual TA time against the agreed provision. HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 4. Section 202 & 204 Appeals (Limited) Section 202 of the Housing Act 1996 gives applicants the right to appeal and request a review of any decision regarding their eligibility for assistance. This audit reviewed the appeals process, including how feedback was provided to Housing Officers regarding overturned appeals. We tested 27 appeals from the Council’s tracker spreadsheet, including eight overturned cases, and found 13 did not adhere to the Regulation 9 timelines and we were unable to verify compliance with Regulation 9 in 11 cases. We also identified gaps in the evidence maintained , for instance 18 cases had insufficient sou rce documentation uploaded to the case file , and none of the overturned cases had documentation detailing how the reviewing officer arrived at their decision or evidence of documented feedback to highlight any areas of improvement with the original decision. Overtime, Expenses & Mileage Payments (Limited) This review focused on testing a sample of overtime and expense payments to confirm whether they have been approved and processed in line with the Council’s policy. The Business Intelligence Team separately analysed Overtime and Expenses payments over the last three years , and this analysis was used to avoid duplicating the work of the BI team. This review was also completed as a joint review with Counter Fraud due to the potential fraud risks associated with overtime and expense claims. No fraudulent overtime or expense claims were identified through this review . However, control weaknesses were identified, including unclear policies that lead to inconsistent interpretations across teams, poor approval processes that were often after the overtime or expenses had been incurred, and insufficient evidence attached to individual claim forms which prevented effective scrutiny of the appropriateness of the expenditure. Four further reviews are at a draft report stage and should be finalised before the next Audit Committee. For details of these reviews please see Appendix A. Since the last Audit Committee IA has also completed grant claim verification work for the Q 2 Supported Families return, the Bus Subsidy Grant Claim and significant work towards the Housing Benefits Grant Claim. Work has also been completed on the review of Business Continuity Plans. For details of the grant claims and ad hoc consultancy reviews currently planned for 2024/25 please see Appendix B. Changes to the Internal Audit Workplan Since the last Audit Committee there has been increased focus across the Council on new ways of working, service redesign and innovation linked to the budget setting process. This has led to a number of changes to the Internal Audit Plan to avoid duplicating other planned transformation work in high-risk areas, and to avoid reviewing areas which are known to be changing or where previous plans have been postponed for higher priority projects. Due to the ongoing changes across the Council the following reviews have been removed from the plan: Waste Services has been replaced by a review of the Capital Programme as it was a higher priority area, Digital Inclusion and Devise Usage have been postponed until 2025/26 as the planned areas for the review are still being implemented , and Social Care Charges, Utilisation of Housing Stock and Private Sector Housing Procurement have been delayed until 2025/26 as there are significant projects starting in these area to address known areas of improvement. 3. FOLLOW UP OF MANAGEMENT ACTIONS The table in Appendix C outlines the agreed management actions followed up since the last Audit Committee meeting. Actions are marked as verified once IA have received evidence to demonstrate the action has been fully implemented. Once all actions from an individual report are verified the report is marked closed and will be removed from the tracker. In total 62/70 (89%) management actions due to have been implemented were marked as verified or complete. Three were marked as not complete and a new implementation dates are being set when these will be followed up again. At the time of this report five were marked as unknown as we have not received confirmation from the responsible officer. During the quarter there has been a number of organisational changes and HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 5. several responsible officers have left the Council . Meetings are being arranged with the relevant services to agree a new responsible officer. 4. FORWARD LOOK Over the next quarter the IA team will continue to focus on fieldwork for the 2024/25 reviews and adapting the plan as new priorities emerge through the ongoing transformation work across the Council. We will also start to develop our Internal Audit Plan for 2025/26. IA would like to take this opportunity to formally thank all staff throughout the Council with whom IA had contact. There are no other matters that the HIA needs to bring to the attention of the CMT and Audit Committee at this time. HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 6. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation APPENDIX A: IA REVIEWS IA Ref. IA Review Area Current Status Assurance Level Actions & Risk Rating H M L O 23.S04 Organisation Culture Final report issued 03 July 2024 N/A: ADVISORY - - - - 23.C03 SEND Data Quality Final report issued 30 July 2024 NO 4 1 1 - 23.C06 Thematic Schools Audit Final report issued 28 October 2024 LIMITED - 3 1 1 23.F04 Oracle Programme Final report issued 28 May 2024 REASONABLE - 1 - - 23.A08 ARCH Social Work Outputs Final report issued 13 June 2024 SUBSTANTIAL - - - - 23.A06 Neglect (Adults) Final report issued 11 July 2024 REASONABLE - 2 2 - 23.P09 Uninspected B&Bs Final report issued 2 August 2024 NO 2 3 1 - 23.P10 Statutory Servicing, Engineering & Maintenance Contracts Final report issued 22 July 2024 SUBSTANTIAL - - 1 - 23.S08 Performance Information Final report issued 31 July 2024 LIMITED 1 3 - - 24.D02 Cyber Security (1) Final report issued 26 June 2024 REASONABLE - 3 2 - 24.S07 Voids processes Final report issued 06 August 2024 REASONABLE - 5 3 - 24.P04 Asset Management (Corporate Properties) Final report issued 08 October 2024 NO 2 2 - - 24.S17 Section 202 & 204 Appeals Final report issued 16 September 2024 LIMITED - 4 2 - 24.A03 Telecare (Intelligent Lilli) Final report issued 25 October 2024 N/A: ADVISORY - - - - 24.C02 Schools Finances (Part One) Memo completed 25 October 2024 N/A - - - - 24.S15 Overtime, Expenses & Mileage Payments Final report issued 08 November 2024 LIMITED 5 2 - - 24.S18 B&B Rent Arrears Draft report issued 22 October 2024 TBC once final report issued 24.S16 Personal Appraisals Draft report issued 21 October 2024 TBC once final report issued 24.X01 Directorate Governance Draft report issued 07 October 2024 TBC once final report issued 24.S01 Organisation Culture (Part Two) Draft report issued 06 November 2024 TBC once final report issued 24.C03 Schools Admissions Report Drafting TBC once final report issued 24.S03 Recruitment & Pre-employment checks (Eploy) Report Drafting TBC once final report issued HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 7. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation IA Ref. IA Review Area Current Status Assurance Level Actions & Risk Rating H M L O 24.P03 Leasehold Management & Service Charges Report Drafting TBC once final report issued 24.S13 HRA Rent arrears Fieldwork TBC once final report issued 24.A02 Transport provider Fieldwork TBC once final report issued 24.A01 Commissioned & Direct Payments Fieldwork TBC once final report issued 24.S05 Decent Homes Standards Fieldwork TBC once final report issued 24.D05 Hillingdon First Card Fieldwork TBC once final report issued 24.F03 Contract Management Oversight Fieldwork TBC once final report issued 24.F04 Debtors Planning TBC once final report issued 24.P02 Capital Programme Planning TBC once final report issued 24.S02 Mandatory Training & Induction Planning TBC once final report issued 24.F06 Budgetary Controls Planning TBC once final report issued 24.S11 HRA Acquisitions (Previously Temporary Accommodation) Planning TBC once final report issued 24.S10 Physical Security Planning TBC once final report issued 24.F02 Key Financial Controls Planning TBC once final report issued 24.C01 Safety Valve Plan (Part 2) Planning TBC once final report issued 24.F01 Post Oracle Implementation Planning TBC once final report issued 24.P01 Community Safety Planned for Q3 2024 TBC once final report issued 24.D03 Cyber Security (2) Delayed to Q4 2024 TBC once final report issued 24.X03 Savings Programme Delayed to Q4 2024 TBC once final report issued 24.X04 Corporate Policies and Procedures Delayed to Q4 2024 TBC once final report issued 24.S08 Emergency Evacuation Procedures Planned for Q4 2024 TBC once final report issued Total Number of IA Management Actions Raised 14 29 13 1 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 8. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation APPENDIX B: IA AD-HOC CONSULTANCY & GRANT CLAIM VERIFICATION REVIEWS IA Ref. IA Review Area Current Status 24.G1 Supported Families Q1 Complete - Memo Issued 12 June 2024 24.G1 Supported Families Q2 Complete - Memo Issued 12 June 2024 24.G1 Supported Families Q3 Planned for Q3 24.G1 Supported Families Q4 Planned for Q4 24.G2 Housing Benefit Grant Fieldwork 24.G3 Mayors Charity Accounts Planned for Q4 24.G4 Bus Subsidy Grant Claim Complete 24.Z02 Business continuity plans Complete 24.Z03 TSM Technical Requirements Complete HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 9. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation APPENDIX C: IA FOLLOW UP OF MANAGEMENT ACTIONS Ref Review Number of Actions Current Status of Actions: Comments Verified Completed Overdue Unknown Not Due H M H M H M H M H M H M 19.A01 Schools Payroll Arrangements - 8 - 4 - 4 - - - - - - 20.A03 Cemeteries: Bereavement Service and Ground Maintenance 2 4 - - - - - - - - 2 4 Due March 2025 20.A06 Estates - Lease Management 1 1 - 1 - - - - - - - 1 Due November 2024 20.A31 Exclusions or Education Cases for Vulnerable Young People - 4 - 3 - - - - - - - 1 Due March 2025 21.A03 ICT Service Desk - 2 - 2 - - - - - - - - CLOSED 21.A06 Transport Contract Management - 1 - 1 - - - - - - - - CLOSED 21.A07 Fostering Service - 3 - - - 3 - - - - - - 21.A14 Birth Registration Service - 3 - 3 - - - - - - - - CLOSED 21.A16 Procurement – Contract Compliance Management 1 1 1 1 - - - - - - - - CLOSED 22.A39 Stronger families HUB 1 1 - - 1 1 - - - - - - 22.A42 Fraud prevention controls in tendering & contacts - 4 - 2 - - - - - - - 2 Due April 2025 22.A43 Registrars cash handling - 1 - - - 1 - - - - - - Change of officer 22.A45 Adult social care referrals and assessment - 2 - 1 - - - - - - - 1 Due January 2025 22.A46 Colham road - 2 - 2 - - - - - - - - CLOSED 22.A58 Merrimans Respite Care Unit - 1 - - - 1 - - - - - - 22.C59 Care Leavers Allowances 1 1 - - 1 1 - - - - - - 22.P52 Trading Standards POCA 1 2 - 2 - - 1 - - - - - New Date: April 2025 23.A04 Contract Management - 3 - - - 3 - - - - - - 23.A06 Neglect (Adults) - 2 - 1 - - - 1 - - - - New Date TBC 23.C04 Neglect (Children's) - 2 - - - 2 - - - - - - 23.F01 Risk Management 1 5 1 4 - - - - - - - 1 Due March 2025 23.F03 Effectiveness of the Pension Committee - 2 - 2 - - - - - - - - CLOSED 23.F04 Oracle Programme - 1 - - - - - 1 - - - - New Date: January 2025 23.P01 Private Sector Housing - 1 - - - 1 - - - - - - HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 10. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation 23.P02 Capital Programme 1 2 - - - - - - - - 1 2 Due March 2025 23.P03 Parking Service Income - 3 - - - 2 - - - 1 - - 23.P05 Climate Action 1 1 - - - - - - - - 1 1 Due March 2025 23.P06 Facilities Management - 3 - - - - - - - - - 3 Due October 2024 23.S01 IT Application - ContrOCC - 2 - - - - - - - - - 2 Due January 2025 23.S02 Workforce Planning, Establishment & Recruitment 2 2 - - - - - - 2 1 - 1 Due March 2025 23.S10 Homeless Housing Applications 1 1 1 1 - - - - - - - - CLOSED 23.S12 Social Housing Applications 1 1 1 - - 1 - - - - - - 23.F02 Payment Card Data Security Standard (PCI DSS) 1 - - - - - - - 1 - - - Change of officer 23.P11 Building Control Action Plan - 1 - - - 1 - - - - - - 23.F07 Fleet Damage - 4 - 1 - - - - - - - 3 Due March 2025 23.S13 Pool Cars 2 3 - - 2 2 - - - - - 1 Due March 2025 23.C03 SEND Data Quality 4 1 - - - - - - - - 4 1 Due March 2025 23.D02 Performance Information - 3 - - - - - - - - - 3 Due March 2025 23.S14 Uninspected B&Bs 2 3 - - - - - - - - 2 3 Due March 2025 24.S07 Void Process - 5 - - - - - - - - - 5 Due October 2024 24.D02 Cyber Security (1) - 3 - - - - - - - - - 3 Due December 2024 SUBTOTAL 23 95 4 31 4 23 1 2 3 2 10 38 TOTAL 118 35 27 3 5 48 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 11. APPENDIX D: INTERNAL AUDIT KEY PERFORMANCE INDICATORS The Key Performance Indicators (KPIs) for IA quarterly reporting to CMT and the Audit Committee in 2024/25 are set out below: KPI Performance Measure Target 2023/24 Current Status KPI 1 Planning to be initiated at least six weeks before the planned fieldwork start date to allow the relevant service to prepare documents and ensure staff availability. 80% 82% 83% KPI 2 Draft Reports to be issued three weeks after the end of fieldwork meeting with the key contact 80% 83% 100% KPI 3 Final Reports to be issued one week after the final approval received from the Audit Sponsor. 80% 100% 100% KPI 4 Annual IA Plan delivered to draft report stage by 31st March 90% 91% TBC KPI 5 Annual IA Plan delivered to final report stage by 31st March 80% 76% TBC KPI 6 Initial documentation requests outlined at the planning meeting to be received by the audit fieldwork start date. 80% 80% 82% KPI 7 Final approval of the management responses to be received two weeks after the updated report is issued 80% 77% 85% KPI 8 HIGH and MEDIUM risk IA Management Actions completed within the agreed timescale 80% 65% 89% KPI 9 HIGH and MEDIUM risk IA Management Action where positive management action is proposed 95% 100% 100% KPI 10 Client Satisfaction Rating from Feedback Questionnaires 85% 85% 100% Key for future reporting on actual KPI performance: • RED = currently this performance target is not being met (significantly [>5%] short of target performance). • AMBER = currently not meeting this performance target (just short [<5%] of target performance). • GREEN = currently meeting or exceeding this performance target HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT October 2024 12. APPENDIX E: ASSURANCE LEVELS AND ACTION RISK RATINGS ASSURANCE LEVEL DEFINITION SUBSTANTIAL There is a good level of assurance over the management of the key risks to the Council objectives. The control environment is robust with no major weaknesses in design or operation. There is positive assurance that objectives will be achieved. REASONABLE There is a reasonable level of assurance over the management of the key risks to the Council objectives. The control environment is in need of some improvement in either design or operation. There is a misalignment of the level of residual risk to the objectives and the designated risk appetite. There remains some risk that objectives will not be achieved. LIMITED There is a limited level of assurance over the management of the key risks to the Council objectives. The control environment has significant weaknesses in either design and/or operation. The level of residual risk to the objectives is not aligned to the relevant risk appetite. There is a significant risk that objectives will not be achieved. NO There is no assurance to be derived from the management of key risks to the Council objectives. There is an absence of several key elements of the control environment in design and/or operation. There are extensive improvements to be made. There is a substantial variance betwe en the risk appetite and the residual risk to objectives. There is a high risk that objectives will not be achieved. FINDING RATING DEFINITION HIGH The finding relates to a significant threat that impacts the Council’s corporate objectives. i.e. a high number of key business risks remain unidentified and/or unmanaged as control systems do not exist and/or do not operate effectively. The risk requires senior management attention as soon as possible as it may result in the breakdown of part/whole of the service. MEDIUM The finding relates to a potentially significant threat that impacts on either corporate or operational objectives. This includes weaknesses in the control systems that are not considered serious but may have some impact on the service. The risk requires management attention and should be addressed within six months to ensure full compliance with expected controls. LOW The finding relates to a minor threat that impacts on operational objectives, this includes non -compliance with best practice or local procedures, and minimal impacts on the Service's reputation or budget. The risk may be tolerable in the medium term but management should take action within the next year to improve the control framework to ensure full compliance with expected controls. OBSERVATION This includes any items Internal Audit would like to highlight that may not directly relate to a finding. This includes notable performance and innovative controls that should be shared with others, potential concerns raised during the audit that are outside the scope of the review and will be considered separately, and any areas of improvement that had already been addressed by management at the time of the review.

Audit Committee – 20 November 2024 Part I – Public RISK MANAGEMENT REPORTS Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report Q2 Risk Management Report Strategic Risk Report Draft Risk Management Policy Ward All The Q2 Risk Management Report presents to the Audit Committee a summary of the Council’s risks from the Risk Management System at the end of September 2024. This includes key performance indicators to support the Committee gain assurance risks are being managed effectively across the Council and mitigating actions are being implemented. The report also includes a summary of the Council’s red rated risks, also known as the Corporate Risk Register as at the end of September. The Strategic Risk Report aligns the Strategic Objectives of the Council with the Corporate Risks from the Corporate Risk Register that could impact on those objectives. Due to ongoing changes to the Corporate Management Team the Strategic Risks within this report will be reviewed before the next Audit Committee. Finally, the draft Risk Management Policy has been updated to reflect the new risk management system and remove incorrect references. This has been shared with the Committee for review and is on the Cabinet forward agenda for approval in January. RECOMMENDATION That the Audit Committee note the reports and provide feedback on the content and level of assurance received. SUPPORTING INFORMATION None BACKGROUND PAPERS NIL.

RISK MANAGEMENT REPORT Q2 2024/25 30 September 2024 HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q2 2024/25 2 CONTENTS The key contacts in connection with this document are: Claire Baker Head of Internal Audit cbaker@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. DIRECTORATE RISK REGISTER UPDATE 3 3. CORPORATE RISK REGISTER UPDATE 6 4. FORWARD PLAN 6 APPENDIX A: SUMMARY OF CORPORATE RISK REGISTER 7 APPENDIX B: RISK SCORING METHODOLOGY 9 HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q2 2024/25 3 1. INTRODUCTION 1.1 Hillingdon Council has a statutory responsibility to ensure arrangements are in place for managing risks. Risk management is about managing opportunities and threats to objectives to help create an environment of “no surprises”. It is a crucial element of good management and a key part of corporate governance. Although r isks can never be entirely eliminated , proportionate and targeted action can be taken to reduce risks to an acceptable level. 1.2 Managing risk should be viewed as a mainstream activity and something that is an integral part of everyday management. Risk Management involves the early identification of risks, assessing their potential consequences, and determining the most effective way to reduce the likelihood and/or impact of the risk. The Council’s Risk Management P olicy provides a framework to ensure there are clear roles, responsibilities and methodologies for identifying, recording and managing risks. 1.3 This report summarises the Council’s Risk Register as at the end of the quarter and outlines the work undertaken during the quarter to improve risk management arrangements. It is designed to support the Audit Committee to monitor and review (but not direct) the authority’s risk management arrangements, as per the Committee’s terms of reference. 2. DIRECTORATE RISK REGISTER UPDATE 2.1 There were 227 total risks recorded on the Risk Management System at the end of September 2024. This is only a slight increase from 221 risks at the end of June, and consistent with expectations now the system has been rolled out. 2.2 There were 14 red rated risks on the risk register (a decrease from 16 at the end of June) , which are shown on the corporate risk register in section four of this report. 2.3 There were 90 unscored risks at the end of the quarter (a decrease from 116 at the end of June) . The large number at the end of June related to the Counter Fraud risks that were transferred onto the risk management system at the end of the quarter. These should have been reviewed and scored by the relevant service during quarter two, and therefore it is concerning there are a large number outstanding at the end of September. All risks should be scored in line with the Council’s Risk Scoring Methodology (see Appendix A) to ensure they are escalated and monitored appropriately. 2.4 The high number of unscored risks at the end of the quarter has been raised with the Corporate Risk Management Group and Corporate Management Team. If there continues to be a large number outstanding at the end of the next quarter a more detailed breakdown will be provided to the next Audit Committee to highlight individual services that have not taken action to address these risks. HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q2 2024/25 4 2.5 The Place Directorate had the highest number of risks per directorate at the end of Q 2. Finance had the highest number of risks at the end of June as a large proportion of the fraud risks added to the system related to Services within the Finance Directorate. However many of these risks were reviewed and closed as expected during Q2. 2.6 During Q2 t here was a large increase in the number of Statutory Service Provision risks . Including six amber rated risks. 2.7 Three of these six amber risks relate to Community Safety & Enforcement following a review of their risk register by the service, t wo relate to insufficient workforce capacity within different teams, and one relates to sourcing children’s care placements. 2.8 There has also been an increase in financial risks, which is consistent with the overall financial position of the Council. 2.9 During Q2 8 risks have been closed on the system. This includes five unscored fraud risks which were reviewed by the relevant service and closed as tolerated, and one red rated risk relating to publishing the draft statutory accounts by the deadline which was closed when the accounts were published. 1 6 2 2 1 5 2 1 1 2 0 1 2 3 4 5 6 7 8 9 10 11 12 Statutory Service Provision Financial Health & Safety (including Building Safety) Workforce Non-Statutory Service Provision New Risks by Risk Category RED AMBER GREEN Not Set 1 1 1 5 0 1 2 3 4 5 6 7 8 9 10 11 12 Financial Fraud, Loss and Error Health & Safety (including Building Safety) IT & Technology Non-Statutory Service Provision Statutory Service Provision Closed Risk by Risk Category Red Amber Green Not Set HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q2 2024/25 5 2.10 At the end of Q 2 there were 48 risks overdue for review on the system. This is a significant increase from 12 risks overdue for review at the end of Q1 . Six of these were red rated risks which should be reviewed every month. 2.11 All risks overdue for review are highlighted through the Corporate Risk Management Group and Corporate Management Team. 2.12 At the end of Q 2 there were also 138 risks on the system without actions assigned to them (61% of all risks) . However, this is a slight improvement from 183 risks at the end of Q1 (83% of all risks). 2.13 This included five red rated risks did not have actions recorded (an improvement from nine at the end of Q1) . It is expected officers are taking action s to reduce the risks in practice, however these are not documented on the Risk Management system. 2.14 Finally, at the end of the quarter there were 31 actions overdue for review, an increase from three at the end of Q1. Three of the se actions were allocated to red rated risk s, this was reviewed and marked as complete following the end of the quarter. 2.15 Although there are some areas of improvement required to ensure all risks are updated and mitigated through actions, there has been a positive level of engagement in the new system and directorate/services taking ownership of their risks. The Head of Internal Audit will continue to work with services to ensure the system is fully embedded. 0 2 10 14 1 2 0 3 1 0 3 7 0 2 2 1 0 2 4 6 8 10 12 14 16 18 Children's Services Directorate Finance Directorate Place Directorate Central Services Directorate Digital & Intelligence Services Directorate Adult Services and Health Directorate Overdue for Review by Directorate Not Set GREEN AMBER RED HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q2 2024/25 6 3. CORPORATE RISK REGISTER UPDATE 3.1 The Council’s Corporate Risk Register (CRR) is an essential part of the Council’s Risk Management arrangements. The CRR includes any operational risks from the Risk Management System graded 'red' due to their potential likelihood and impact. 3.2 During Q2 two new risks were added to the CRR and four were removed. The two that were added related to: • Insufficient lone working devices creating a health and safety risk for officers when undertaking visits out in the community. This was a new risk added to the system and action has been taken to purchase devices which will reduce this risk before the next Audit Committee meeting. • non-compliance with the civil contingencies act. This was an existing risk in the system but increased to red during Q2 as the Emergency Planning Team has been reduced to one officer, creating a lack of resilience and reduced of resources to assist in an emergency. 3.3 The four risks that have been removed from the CRR, include: • Community DOLs, which has been reduced to Amber following actions by the team to review the resources required to meet the demand. • Maintained Schools Funding, which has been reviewed and the rating removed. This may mean the risk has reduced however it may have also been removed incorrectly. This will be raised with the relevant risk owner to ensure it is re-scored before the next Audit Committee. • EHM Data, which has been reduced to amber following the work undertaken between the SEND Team and Finance Team to improve data quality. • Failure to publi sh the draft account s, which was closed once the draft accounts were published in line with the required timeframe. 3.4 Red rated risks should be reviewed monthly however seven of the risks had not been reviewed in September and therefore were considered overdue for review. The risks overdue for review were raised through the Corporate Risk Management Group. 4. FORWARD PLAN 4.1 Over the next quarter the Head of Internal Audit will continue to monitor the use of the new Risk Management System on behalf of the Audit Committee and provide additional training where requested to ensure it is embedded effectively. 4.2 The Key Performance Indicators will also continue to be shared with the Corporate Risk Management Group and Corporate Management Team. HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q2 2024/25 7 APPENDIX A: SUMMARY OF CORPORATE RISKS AS AT Q2 2024 CRR Risk: 2024/25 Q1 2024/25 Q2 Review Date Rating Review Date Rating 1 STRAF0002 - Ability to Deliver a Balanced Budget in the Short and Medium Term 15/05/2024 Increase A1 22/08/2024 Static A1 2 FINMAN0005 - Uncertainty over the Safety Valve Agreement and impact if it is not held by DfE 15/05/2024 New D1 10/07/2024 Increase B1 3 LANDB0004 - Decent Homes Non-Compliance 12/04/2024 Static B1 19/09/2024 Static B1 4 LANDB0011 - Housing Landlord Service - Not Meeting Regulatory Requirements 29/06/2024 New A2 29/06/2024 Static A2 5 TECH0001 - Cyber Security 17/06/2024 Static C1 17/06/2024 Static C1 6 LANDB0019 - Lone-working devices - no visiting officers within housing have lone working devices. - - 17/09/2024 New B2 7 PENS0014 - Failure of employers to deliver accurate and timely employee administration information 30/05/2024 New A3 29/08/2024 Static A3 8 TRSA0003 - Liquidity Risk 10/06/2024 New D1 17/09/2024 Static D1 9 HESAFE0001 - Non-compliance with the Civil Contingencies Act 2004 - - 17/09/2024 New D1 10 PROCUR0002 - Financial Resilience of Contracts 12/03/2024 Decrease C2 23/09/2024 Static C2 11 LANDB0003 - Decarbonisation 12/04/2024 Static C2 19/09/2024 Static C2 12 DIRECC0005 - Home to School Transport 20/06/2024 Static C2 08/08/2024 Static C2 13 HOUSNE0001 - High Levels of Homelessness Demand 29/06/2024 New C2 29/06/2024 Static C2 14 CHILSC0012 - Increasing cost of external residential provision and reduced internal resilience 25/06/2024 Increase C2 26/09/2024 Static C2 - LEARN0001 - Community DOL 18/06/2024 Static C2 Decreased to D3 - FINMAN0016 - Maintained Schools Funding 21/06/2024 Static D1 Decreased to Unscored - FINMAN0003 - The risk that our child level data in EHM may not be correct 22/04/2024 New B1 Decreased to D3 - TRSA0004 - Failure to publish draft accounts within statutory deadline 10/06/2024 New A3 Closed 25/07/2024 LIKELIHOOD Very High (A) (7) (4) (1) High (B) (6) (2) (3) Significant (C) (10) (11) (12) (13) (14) (5) Medium (D) (8) (9) Low (E) Very Low (F) Small (4) Medium (3) Large (2) Very Large (1) IMPACT HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q2 2024/25 8 APPENDIX B: RISK SCORING METHODOLOGY

Strategic Objective Strategic Risk Current Risk Rating HLBC0005: High Levels of Homelessness and Housing Needs Demand C2 HLBC0006: Ability to Deliver a Balanced Budget in the Short and Medium Term B1 HLBC0007: Digital Transformation & Cyber Security B3 HLBC0008: Resilience of Contractors D2 HLBC0009: Meeting Care Placements and SEND Support C1 HLBC0010: Adult Social Care Demand D2 No Strategic Risks Recorded N/A No Strategic Risks Recorded N/A STRATEGIC RISK REGISTER Strategic Objective: Safe and strong communities - Hillingdon is a safe place with resilient, strong communities with access to good quality, affordable housing. Strategic Risk: HLBC0005: High Levels of Homelessness and Housing Needs Demand Cllr Lead: Cllr S Tuckwell Initial Rating: B1 Linked Operational Risks: CRR Rating Exec Lead: Dan Kennedy Current Rating: C2 LANDB0006: Legal Disrepair – HRA C3 Date Added: 01/11/2023 LANDB0005: Damp and Mould C3 Last Review: 21/06/2024 Target Rating: E2 LANDB0004: Decent Homes/ Thermal efficiencies B1 Next Review Date: 21/09/2024 Change: Static Risk Description Primary Controls Sources of Assurance Key Performance Indicators The buoyant housing market and increased housing regulations has led to a decreased supply of affordable housing, whilst Welfare Reforms and inflation has led to an increase in homelessness and housing demand. The lack of affordable housing puts significant pressure on the Council's finances and ability to meet its statutory responsibilities in this area, however inadequate housing can lead to a detrimental impact on the health, wellbeing, and educational attainment of residents. The risk is also increased due to Heathrow Airport located within the borough leading to significant numbers of individuals seeking asylum within the area. • The Council has implemented a programme of new developments and buying back former 'Right to Buy' (RTB) and vacant properties. • As part of the Council’s transformation programme we are implementing, additional measures to help reduce demand on services. This includes providing more intensive advice and signposting at an earlier stage. • Decent homes improvement programmes are in place and a significant fire safety works programme is nearing completion. Level 1: Housing Action plan Level 2: Housing Steering Group Reports, Housing Board, KPIs Level 3: Internal Audit review into Decent Home Standards Homelessness Advice this month: 501 5 decrease from last month Housing Supply this month: 29 9 increase from last month Actions: Review Date: Transformation programme in place to review the delivery of the project plan. Key actions: - acquire 300 additional social rented LBH homes by 31 March 2025 - increase procurement of Private Rented Sector accommodation by 31 March to reduce B&B numbers to 233 (budget plan) - review / implement changes to the homelessness pathway and triage process Dan Kennedy: 16 September 2024 Strategic Objective: A digital-enabled, modern, well-run council - We are a well-run, sustainable council with sound financial management, achieving positive outcomes for residents. Strategic Risk: HLBC0006: Ability to Deliver a Balanced Budget in the Short and Medium Term Cllr Lead: Cllr. M. Goddard Initial Rating: C1 Linked Operational Risks: CRR Rating Exec Lead: Richard Ennis Current Rating: B1 None Date Added: 01/11/2023 Last Review: 17/10/2024 Target Rating: E1 Next Review Date: 17/12/2024 Change: Increasing Risk Description Primary Controls Sources of Assurance Key Performance Indicators This risk arises from the significant reductions in funding from Central Government whilst at the same time increasing the burden on Local Authorities. This is against a backdrop of increasing expectations from Residents, the legacy impact of Covid-19, high baked in interest rates , inflation and wider demand-led and demographic pressures on statutory services. This increases the potential that the Council will be unable to meet its statutory obligation to set and operate within a balanced budget, and moving forward more increased transformation savings targets will need to be delivered. The Council ended 2023/24 with usable reserves of £35.2m only slightly above the recommended minimum and lower than forecast when setting the 2024/25 budget. The cumulative DSG deficit now stands at circa £60m which is greater than the usable reserves. • Governance arrangements for the Council’s Business Transformation Programme have been agreed by the Leader of the Council. Business Transformation projects are now captured in one place to help ensure they are all closely aligned to the MTFF. • Budget holders engaged in budget setting process and ongoing budget monitoring. Level 1: MTFF Level 2: Monthly budget monitoring reports Level 3: Internal Audit of the budget monitoring arrangements TBC Actions: Review Date: ZBB and Star Chambers SMM leadership team cascades Spending control panel Richard Ennis, 17/12/2024 Strategic Objective: A digital-enabled, modern, well-run council - We are a well-run, sustainable council with sound financial management, achieving positive outcomes for residents. Strategic Risk: HLBC0007: Digital Transformation & Cyber Security Cllr Lead: Cllr. M. Goddard Initial Rating: B3 Linked Operational Risks: CRR Rating Exec Lead: Matthew Wallbridge Current Rating: B3 None Date Added: 01/11/2023 Last Review: 19/09/2024 Target Rating: D3 Next Review Date: 19/12/2024 Change: Static Risk Description Primary Controls Sources of Assurance Key Performance Indicators ICT systems becoming unfit to meet the Council’s needs, due to insufficient momentum, collaboration or funding to implement the digital transformation programme. This impacts on service delivery, staff morale and governance arrangements due to poor data quality. Outdated ICT architecture and poor security also increases the risk of ransomware, malware, viruses and external cyber-threats. These can lead to data breaches and potential reputational, operational, and financial damage if attacks to our network are successful and the Council’s ICT systems are adversely affected for a significant time-period. • Digital and Intelligence Directorate digital transformation programme. Level 1: Level 2: Hillingdon Information Assurance Group (HIAG) programme of work Level 3: Cyber360 assessment scheduled for 2024/25 Email demand this month: 10k 1k increase from last month Phone demand this month: 83k 2k increase from last month Actions: Review Date: None Strategic Objective: A digital-enabled, modern, well-run council - We are a well-run, sustainable council with sound financial management, achieving positive outcomes for residents. Strategic Risk: HLBC0008: Resilience of Contractors Cllr Lead: Cllr. I. Edwards Initial Rating: D2 Linked Operational Risks: CRR Rating Exec Lead: Tony Zaman Current Rating: D2 PROCUR0002 - Financial Resilience of Contracts C2 Date Added: 01/11/2023 Last Review: 13 June 2024 Target Rating: E3 Next Review Date: 13 September 2024 Change: Static Risk Description Primary Controls Sources of Assurance Key Performance Indicators The risk that key suppliers/contractors are suddenly unable to provide an expected service and there are insufficient business continuity arrangements in place to deliver alternative arrangements. This results in a serious disruption to the service, impacting on residents, and potentially significant unplanned costs whilst alterative providers are sourced. • Contract management arrangements within each service to monitor suppliers and identify any who may potentially be at risk of failure through the monitoring of their ongoing performance. Level 1: contract management arrangements at a service level Level 2: Level 3: Internal Audits into contract management Actions: Review Date: Ongoing procurement transformation programme, including strengthening the training for contract managers to raise any concerns in relation to potential concerns with contractors. Andy Evans: 11/10/2024 Strategic Objective: Thriving, healthy households - Children, young people, their families and vulnerable adults and older people live healthy, active and independent lives. Strategic Risk: HLBC0009: Meeting Care Placements and SEND Support Cllr Lead: Cllr. S. O’Brien Initial Rating: C1 Linked Operational Risks: CRR Rating Exec Lead: Julie Kelly Current Rating: C1 None Date Added: 24/01/2024 Last Review: 18/09/2024 Target Rating: D2 Next Review Date: 24/01/2025 Change: Static Risk Description Primary Controls Sources of Assurance Key Performance Indicators Market conditions and the outsourcing of placements has reduced the availability for children and inflated the price. Although there is a smaller number of children requiring care, there is an increased complexity of needs and a reduction in post Covid numbers of foster carers equipped to meet the needs of children with complex needs. The change to regulatory requirements for 16-17 year olds is also likely to reduce further availability for this group • Participation in the regional development of plans aimed at better meeting the demand. • Review of the existing placements to ensure age-appropriate placements and maximising inhouse provision. • Joined Pan London Vehicle that leads the development of a London Secure Home • SEND Sufficiency plan developed, including improved projections and forecasting of need and improved rigour to use more local mainstream provision where appropriate so only the most complex have high cost INMSS placements. • Substantial increase of placements through building more SRPs, DUs, assessment base and improving local SEND provision Level 1: Level 2: Monitoring placement requests through HARP and Complex HARP and High-Cost panel. Level 3: SEN Placement Costs this Month: £2.9M £7k increase from last month LAC Placement Costs this month £2M £513k decrease from last month Actions: Review Date: 1. Two new properties registered with Ofsted, and support for semi-independent providers to register with Ofsted 2. Brokerage transformations projects with ASC, reviewing the Fostering offer and identify additional residential beds 3. Review of the existing placements to ensure age-appropriate placements and maximising inhouse provision. 4. DSG Recovery Programme including banding and OAP Review and placement analysis across all provisions. Completed 28/06/2024 Completed 28/06/2024 Completed 28/06/2024 Abi Preston: 11/01/2025 Strategic Objective: Thriving, healthy households - Children, young people, their families and vulnerable adults and older people live healthy, active and independent lives. Strategic Risk: HLBC0010: Adult Social Care Demand Cllr Lead: Cllr. J. Palmer Initial Rating: D2 Linked Operational Risks: CRR Rating Exec Lead: Sandra Taylor Current Rating: D2 None Date Added: 01/11/2023 Last Review: 1 August 2024 Target Rating: E2 Next Review Date: 22 March 2025 Change: Static Risk Description Primary Controls Sources of Assurance Key Performance Indicators This risk arises from the increasing demand across Adult Social Care services due to changing demographics in the population, the transition of children into adult social care, and the raised expectations from residents for high quality social care services. This is all within the context of the major changes to the legislative framework including the Care Act, Better Care Fund and Deprivation of Liberty Safeguards. This increase in demand is impacting on the Council’s ability to provide the statutory services within the available resources and funding available. • Work to develop a new social care 'front door’ using AI to answer calls for social care and first level triage has proved successful. • A full upgrade of the client system will take place on 9th January,2024 to improve data and monitoring of the demand. • Targeted early intervention through reablement and the introduction of 'Intelligent Lilli' to give better insights into care needs address demand through the front door for adults. Additionally, the development of reablement for people with mental health needs is being worked up. • Work with NHS partners is ongoing to address acuity following issues that have escalated following the pandemic. • Intensive work on the BCF and reviewing and aligning system funding and priorities to ensure that these address the needs of residents in the community. Level 1: BCF and community based review of spending with GT Level 2: Output data from reablement & intelligent Lilli and ASCOF measure of still at home 91 days later Level 3: Completion of the upgrades to the client system ASC Placement Costs this month: £9.7M £3.6m Increase from last month Actions: Review Date: 1. Progress the transformation of the front door, but increasing the capability and presence of third sector providers to support residents before they enter social care 2. Submit a fully complete BCF Assurance document within the required timelines 3. Implement and monitor the outputs of Intelligent lilli pilot. Sandra Taylor: 1 November 2024 Sandra Taylor: 2 November 2026 Sandra Taylor: 1 November 2024 LIKELIHOOD RISK SCORE Greater than 90% This Week Very High (A) A4 (6) A3 (12) A2 (18) A1 (24) 70% to 90% Next Week / This Month High (B) B4 (5) B3 (10) B2 (15) B1 (20) 50% to 70% This Year Significant (C) C4 (4) C3 (8) C2 (12) C1 (16) 30% to 50% Next Year Medium (D) D4 (3) D3 (6) D2 (9) D1 (12) 10% to 30% Next 5 Years Low (E) E4 (2) E3 (4) E2 (6) E1 (8) Less than 10% Next 10 Years Very Low (F) F4 (1) F3 (2) F2 (3) F1 (4) IMPACT Small (4) Medium (3) Large (2) Very Large (1) Financial: Up to £250k £250k - £1million £1million - £5million Over £5million Service Provision: Slightly reduced Service suspended short term Service suspended long term / statutory duties not delivered Health & Safety: First Aider required Broken Bones/Illness Loss of life / Major illness Major loss of life / large scale major illness Workforce: Negative morale Some hostility / minor non cooperation Industrial action Mass staff leaving Reputation: Minor Letters Adverse local media Adverse national publicity Remembered for years Government Relations: Poor assessment Service taken over temporarily Service taken over permanently

Risk Management Policy (DRAFT: October 2024) RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 2 1. INTRODUCTION 1.1 The London Borough of Hillingdon (LBH) has a statutory responsibility to ensure arrangements are in place for managing risks. Risk management should be embedded into the culture of the organisation, with members and officers recognising that risk management is part of their role. 1.2 Risk Management is about managing opportunities and threats to objectives and in doing so helps create an environment of “no surprises”. It is a crucial element of good management and a key part of corporate governance. Risks can never be entirely eliminated but proportionate and targeted action should be taken to reduce risks to an acceptable level. 1.3 Managing risk is part of everyday business for the Council and is a process that involves; the early identification of risks, assessing their potential consequences and determining the most effective way to reduce the likelihood and/or impact of the risk. This policy and guidance provides a framework to ensure: • Clear accountabilities and well defined roles and responsibilities for managing risks • Employees have the knowledge and skills to identify and manage risks • Risks are identified at an early enough stage and their likelihood and impact on Council business is accurately assessed and appropriate action is taken to mitigate the potential risk • Decisions are taken having considered relevant risks • The impact of risk management is evaluated. 1.4 The Chief Executive, the Corporate Management Team (CMT), Senior Management Teams (SMTs), Members of the Audit Committee, Members of Cabinet and Full Council should be familiar with this policy and guidance. This document applies to all employees of the Council, with the exception of schools as they are required to put in place their own local risk management arrangements. 2. PURPOSE 2.1 The Council is committed to providing high quality services in the most efficient and cost effective way that puts its residents first. The management of risk is a core element of corporate governance to ensure the Council's priorities for improvement as well as day to day services are delivered as expected. For the purpose of this policy and guidance , risk is considered to mean anything that will , or has the potential to , adversely affect the achievement of Council objectives and/ or disrupt day-to-day operational service delivery. 3. RISK MANAGEMENT FRAMEWORK 3.1 To ensure effective risk management, the Council will: • Incorporate risk management into service improvement and everyday management arrangements • Identify, assess and manage risks so as to minimise the potential costs and disruption to services caused by undesired events • Raise employee awareness of risk management through promotion, training, performance management and review RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 3 • Make informed decisions based on a balance between risk and the benefits that may be realised from opportunities for service improvement • Encourage innovation and improvement through taking calculated and well managed risks to improve services for residents • Support the Annual Governance Statement in relation to the authority’s system of internal control, corporate governance arrangements and risk management framework • Work in partnership to manage risks. 3.2 Risks should be recorded, escalated and communicated as appropriate. At a Service and Directorate level, risks should be escalated to SMT leads for consideration, and where appropriate escalated to Corporate Directors for discussion with CMT. Cabinet Members and the Leader of the Council must be informed of all Strategic and Corporate risks as well as any key risks appearing in the Directorate Risk Registers, with a decision sought on the recommended mitigating action, where appropriate. 3.3 The Council’s approach to risk management requires managers and staff to undertake the following steps: 1) Risk Identification 2) Risk Analysis & Evaluation 3) Risk Response 4) Risk Monitoring & Review 5) Risk Reporting 4. RISK MANAGEMENT CYCLE Risk Identification 4.1 There are many different types of risks that could affect Council business. These include risks to the Council’s finances, the delivery of services, the health and safety of staff and residents, and anything that affects the reputation of the Council. Managers must ensure they, and their teams, are alert to risks and consider how risks could affect service delivery and service improvement. 4.2 The annual planning and ongoing performance review process as part of the Council’s corporate governance arrangements is also an opportunity to identify potential risks to service delivery or achieving the service objectives. Managers and their teams are expected to discuss any potential and emerging risks as they are identified. Risk Analysis & Evaluation 4.3 Officers must use the Council’s risk management scoring methodology to assess a risk (refer to Appendix A). The assessment of a risk is based on a combined score from the likelihood of the risk occurring and the impact in the event that the risk is fully realised. The risk scoring methodology shows the risk criteria in use to guide officers when assessing the likelihood/impact of the risk and the score the assessment will produce. 4.4 All risks must be recorded in the Council’s risk management system. The risk assessment will lead to the risk being graded either ‘red’, ‘amber’ or ‘green’. Those risks with the greatest likelihood and/or the greatest impact to Council business will be graded ‘red’. ‘Red’ graded risks will be escalated to CMT to be regularl y reviewed and lead officers must prioritise actions to minimise the Council's exposure to these risks. ‘Amber’ graded risks should be escalated to Directorate SMT to be regularly reviewed and actions monitored at a Directorate RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 4 level. ‘Green’ graded risks should be managed at a local level and reviewed through service level team meetings and action plans. 4.5 Managers can record project specific risks as part of service risk register or in a separate project risk register on the risk management system. Where risks impact on more than one service area the relevant Heads of Service should agree which service will lead on the risk, or whether it would be more appropriate to add two separate linked risks. Risk Response 4.6 Managers must agree and take ac tion to mitigate the impact and /or likelihood of all risks to an acceptable level. The action to be taken and the lead senior officer accountable to progress the action must be recorded on the risk management system. 4.7 Managers should consider all options available when identifying actions to mitigate or prevent a risk. Actions for Amber and Red rated risks should be agreed with CMT or the relevant SMT, these could include agreeing not to proceed with a proposal which has significant risks attached to it. For example, the cost of proceeding with a proposed service improvement may outweigh the benefits to be realised and therefore the proposal may have to be reconsidered. 4.8 A risk may be removed from the risk register where it is no longer thought necessary to keep it under review or where the risk has been terminated. A justification should be added to the risk record on the risk management system to document why the risk is no longer required. Typically this will be because the mitigating actions have been fully implemented and the residual risk is considered acceptable. Risk Monitoring & Review 4.9 All risks must be regularly reviewed and the risk management system updated as required. There are governance arrangements for monitoring and reviewing risks ( refer to Appendix B). This includes: • As a minimum, a quarterly review of corporate (‘red’ rated) and directorate (‘amber’ rated) risks by the Directorate SMTs and CMT • A quarterly review of the strategic and corporate risks by senior managers through the Corporate Risk Management Group (CRMG), see Appendix D for terms of reference. • A quarterly review of the strategic and corporate risks by the Leader of the Council , Cabinet Member for Risk and Audit Committee. Risk Reporting 4.11 All red rated risks are presented to CRMG and the Audit Committee on a quarterly basis. Key performance indicators relating to the effectiveness of the Council’s risk register and risk management arrangements are also presented to CRMG and the Audit Committee on a quarterly basis. A summary of the Risk Management arrangements over the year is included in the annual Risk Management Report. Risk Appetite 4.12 Risk appetite is the phrase used to describe how much risk the Council is prepared to take in pursuit of its objectives. Due to its diverse range of services the Council does not have a single risk tolerance and the appetite for risk will vary between different risk categories. 4.13 Considering and setting risk appetite enable s the Council to optimise its risk taking and accepting calculated risks by enabling risk -reward decision making. Equally, it reduces the likelihood of unpleasant surprises. Risk targets should be determined for each risk based on the overarching risk appetite. RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 5 4 ROLES AND RESPONSIBILITIES 5.1 It is the responsibility of all employees to identify and manage risk effectively. The following roles and responsibilities underpin effective officer leadership for risk management. Further information about the wider roles and responsibilities for risk m anagement and the governance arrangements for reviewing and mitigating risks can be found in Appendix B. 5.2 Directors/Deputy Directors • Are accountable for effective risk management in their Directorate • Provide leadership within their Directorate for risk management • Ensure that arrangements for identifying, mitigating and reviewing risks are working effectively and in line with relevant policies, procedures and guidelines • Review and update the risks for the Directorate with the relevant Lead Member on a quarterly basis. 5.3 Heads of Service/Service Managers • Must actively identify and take action to mitigate any risks which could affect service delivery and service improvement • Bring significant (rated amber or red) or escalating risks to the attention of the Directorate SMT • Ensure that staff within each of the service areas understand and are alert to all potential risks • Ensure that members of staff attend relevant and appropriate training • Provide regular updates on risk management as required. 5.4 All Staff • All members of staff have a responsibility to identify, assess and manage risks effectively in their job , report risks to their managers and to work within the appropriate risk management process. 5 Wider Risk Management Arrangements Service and Financial Planning 6.1 Risk management is part of service and financial planning. Managing strategic risks is a core responsibility for senior managers in close liaison with Elected Members. The annual planning process requires services and directorates to consider and report risks that may affect or arise from service improvement and financial budget proposals. The Council's capital programme includes risk management as part of the criteria used to allocate resources. Project Management 6.2 Hillingdon has a Council-wide approach to project management. The management of risks is seen as one of the key requirements for delivering successful projects. Where a project management approach is required, the risks to achieving the project are monitored throughout the life of the project. RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 6 Contractual Arrangements 6.3 Risks identified through the contract management process are recorded and managed for individual service providers and kept under review as part of the Council’s contract management framework. 7. Promotion, Training and Support 7.1 To support the development of a robust approach to risk management in the Council, all managers are encouraged to complete the e -learning ris k management module. The Corporate Risk Management Group will monitor training and support for risk management and provide further information/ briefings on risk management as and when needed. 7.2 Training on risk management for Elected Members and the Independent Chair of the Audit Committee is facilitated by the Risk Assurance team. This is provided on an individual basis through the induction process, as part of the annual Member Development Day , or as a specific session within the corporate Training & Development Plan co-ordinated by Democratic Services. 8. Review Cycle 8.1 The Council's Risk Management P olicy and Guidance will be updated periodically (as and when required) and be subject to a detailed review every 3 years to ensure it is up to date with best practice in this area. The next detailed review is planned for September 2027. RISK MANAGEMENT POLICY & GUIDANCE VERSION 1 (October 2024) 7 APPENDIX A. RISK SCORING METHODOLOGY LIKELIHOOD RISK SCORE Greater than 90% This Week Very High (A) A4 (6) A3 (12) A2 (18) A1 (24) 70% to 90% Next Week / This Month High (B) B4 (5) B3 (10) B2 (15) B1 (20) 50% to 70% This Year Significant (C) C4 (4) C3 (8) C2 (12) C1 (16) 30% to 50% Next Year Medium (D) D4 (3) D3 (6) D2 (9) D1 (12) 10% to 30% Next 5 Years Low (E) E4 (2) E3 (4) E2 (6) E1 (8) Less than 10% Next 10 Years Very Low (F) F4 (1) F3 (2) F2 (3) F1 (4) IMPACT Small (4) Medium (3) Large (2) Very Large (1) Financial: Up to £250k £250k - £1million £1million - £5million Over £5million Service Provision: Slightly reduced Service suspended short term Service suspended long term / statutory duties not delivered Health & Safety: First Aider required Broken Bones/Illness Loss of life/Major illness Major loss of life/large scale major illness Workforce: Negative morale Some hostility/minor non cooperation Industrial action Mass staff leaving Reputation: Minor Letters Adverse local media Adverse national publicity Remembered for years Government Relations: Poor assessment Service taken over temporarily Service taken over permanently RISK MANAGEMENT POLICY & GUIDANCE VERSION 1 (October 2024) 8 Appendix B: Corporate Governance of Risk Management RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 9 Appendix C: Risk Management Roles & Responsibilities Elected Members The Leader of the Council • To review significant risks on a quarterly basis (or otherwise through direct contact with Cabinet Members) and provide feedback to officers as appropriate. The Cabinet • To promote risk management and take risk management issues into account when making decisions • To receive annual Audit Committee reports on the risk management framework • As portfolio holders, to review the relevant Risk s on the Council’s Register with Corporate Directors at least quarterly. Cabinet Member for Risk Management • To specifically champion risk management within the Council and to provide leadership on the issue amongst Elected Members • To ensure that risk management is given due consideration in Cabinet discussions • To attend Audit Committee meetings as required to present on the risk management arrangements Audit Committee • To periodically review the Council’s Risk Management policy, guidelines and framework • To review the effectiveness of the risk management arrangements at least quarterly • To review significant risks (Corporate and Strategic risks) on a half yearly basis, or at such frequency as it considers necessary and provide feedback to officers as appropriate • To report to Full Council annually providing assurance that the risk management process is operating effectively, and reporting concerns on specific risks on an exception basis. All Service Policy and Overview Committees • To oversee the application of risk management principles within their specific service areas • To review the management of risks within individual services where appropriate. Full Council • Full Council has ultimate responsibility for risk management within Hillingdon and this responsibility is exercised via the Audit Committee. Full Council will need to consider the annual report from the Audit Committee. RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 10 Officers Corporate Management Team (CMT) • CMT has overall responsibility for the operation of the agreed risk management approach within the Council’s business operations • To give due consideration to risk management in strategic decision making and performance management, and ensure that advice to Cabinet and other member bodies takes full account of risk management considerations • To review all significant risks at least quarterly, ensuring that all emerging risks have been identified and appropriate actions are being taken, and report comprehensively to the Leader of the Council • To periodically review the Council’s risk management policy, guidelines and the effectiveness of the risk management arrangements. Corporate Director of Finance (CMT Risk Management Lead) • To act as the champion of risk management within the Council’s management structure • To lead on the development of the Council’s risk management framework • To ensure that the risk management strategy and framework meet appropriate standards of best practice • Operational responsibility for the implementation of the risk management strategy and framework • Co-ordination of the Corporate Risk Management Group Directors/Deputy Directors/Heads of Service • Are accountable for effective risk management in their Directorate/Service • Provide leadership within their Directorate/Service for risk management • Nominate a risk champion at SMT level who will co-ordinate and promote risk management within the Directorate • Ensure that arrangements for identifying, mitigating and reviewing risks are working effectively and in line with relevant policies, procedures and guidelines • Review and update the risks for the Directorate with the relevant Lead Member on a quarterly basis Service Managers • Actively identify and take action to mitigate any risks which could affect service delivery and service improvement • To bring significant or escalating risks to the attention of the Directorate SMT • Ensure that staff within their service areas understand and are alert to potential risks • Ensure that members of staff attend relevant and appropriate training • Provide regular updates on risk management as required Corporate Risk Management Group (CRMG) • To share good practice on risk management and to promote risk management across the authority • To meet on a quarterly basis to raise or discuss material risk management issues and ensure matters identified are appropriately progressed • To report to CMT on risks and risk management issues RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 11 Risk Champions (representative from each Directorate) • To promote risk management within their Directorate • To provide support on risk management issues within their Directorate • To ensure that the risk management framework is being applied within their Directorate • To ensure appropriate reporting to SMT's and CRMG Internal Audit & Risk Assurance • To provide independent and objective assurance on the risk management process and the controls in place to mitigate risks • To provide an Internal Audit Plan that is based on a reasonable evaluation of risk and to provide an annual assurance statement to the Council based on work undertaken in the previous year • Production of reports for CMT, the Leader of the Council and Audit Committee on the operation of the risk management process and the current status of the high-level corporate risks All Staff (whether permanent or temporary) • Have a responsibility to ensure that they are aware of this policy and to ensure risks are identified and managed in line with relevant policies, procedures and guidelines; and • Are to undertake training as required. RISK MANAGEMENT POLICY AND GUIDANCE VERSION 1 (October 2024) 12 Appendix D CORPORATE RISK MANAGEMENT GROUP TERMS OF REFERENCE 1. Purpose 1.1 The Corporate Risk Management Group (CRMG) is responsible for ensuring good practice in risk management as well as promoting risk management across the Council. 1.2 CRMG will ensure significant risks that may impact on the Council's objectives are appropriately identified, analysed, managed and reported to Corporate Management Team and Members on a quarterly basis. 2. Key Responsibilities 2.1 The key responsibilities of the CRMG are to: • Ensure there is consistent reporting and management of risks across the Council by monitoring and enforcing compliance against the Risk Management Policy and agreed risk management arrangements. • Raise awareness and promote the Council's risk management arrangements, including monitoring the delivery of risk management training, guidance and communications to ensure they are embedded effectively. • Review the Strategic and Red rated risks recorded in the Corporate and Strategic Risk Registers to ensure they reflect the actual risks facing the organisation, including risks identified or presented by external agencies, significant partnerships and advisors. • Review the Amber rated risks recorded in the Directorate Risk Registers and note any potentially increasing risks that should be considered for escalation to a red rating and included on the Corporate Risk Register. • The CRMG will ensure all risks presented to them have been comprehensively reviewed and consider if appropriate actions have been identified and implemented in line with the expected implementation timeline. 3. Members of the Corporate Risk Management Group 3.1 The Group will be chaired by the Corporate Director of Finance or in his absence the Head of Internal Audit and Risk Assurance. 3.2 Other members of the Group will include representatives from each of the Directorates. Relevant Group members are responsible for making arrangements for another officer to attend and deputise on their behalf if they are unable to attend a CRMG meeting. They may also request other officers to attend if they would aid the discussion of key risks. 3.4 Other Cabinet and Council Members may also be invited to attend based on the risks under discussion, subject to consultation with the Cabinet Member for Risk Management. 4. Frequency of Meetings 4.1 CRMG meetings will be held quarterly. 5. Review of Terms of Reference 5.1 Membership of CRMG and the Terms of Reference will be reviewed annually.

Audit Committee – 20 November 2024 Part I – Public 2024/25 QUARTER 2 COUNTER FRAUD PROGRESS REPORT Committee name Audit Committee Officer reporting Alex Brown, Head of Counter Fraud Papers with report 2024/25 Quarter 2 Counter Fraud Progress Report Ward All HEADLINES The attached report presents the Audit Committee with summary information on all Counter Fraud work covered in relation to 2024/25 Quarter 2 and assurance in this respect. It also provides an opportunity for the Head of Counter Fraud to highlight to the Audit Committee any significant Counter Fraud issues that have arisen which they need to be aware of. Further, the report enables the Audit Committee to hold the Head of Counter Fraud to account on delivery of the Counter Fraud Plan and facilitates in holding management to account for managing issues identified during the course of the Counter Fraud Team activity. RECOMMENDATIONS: That the Audit Committee: 1. Notes the Counter Fraud Progress Report for 2024/25 Quarter 2; and 2. Suggests any comments/ amendments. SUPPORTING INFORMATION The Counter Fraud Team supports the Council in meeting its statutory responsibility under section 151 of the Local Government Act 1972 for the prevention and detection of fraud and corruption. The work of the team underpins the Council’s commitment to a zero toleranc e approach to fraud, bribery, corruption, and other irregularities, including any money laundering activity. BACKGROUND PAPERS The Counter Fraud Team holds various background research documents in relation to the Counter Fraud Plan.

Counter Fraud COUNTER FRAUD Report to Audit Committee: 2024/25 Quarter 2 30th September 2024 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 2. Contents The Counter Fraud key contacts in connection with this report are: Alex Brown Head of Counter Fraud t: 01895 556811 e: abrown@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. EXECUTIVE SUMMARY 3 3. COUNTER FRAUD ACTIVITY IN Q2 4 4. COUNTER FRAUD PERFORMANCE IN Q2 8 5. FORWARD LOOK 9 APPENDIX A - CFT Q2 KPI PERFORMANCE 10 APPENDIX B - CFT Q2 FINANCIAL PERFORMANCE 11 APPENDIX C – GLOSSARY OF TERMS 12 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 3. 1. INTRODUCTION The Role of the Counter Fraud Team 1.1 The Counter Fraud Team (CFT) supports the Council in meeting its statutory responsibility under section 151 of the Local Government Act 1972 for the prevention and detection of fraud and corruption. The work of the CFT underpins the Council’s commitment to a zero- tolerance approach to fraud, bribery, corruption, and other irregularit ies, including any money laundering activity. 1.2 As well as counter fraud activity, there is also a range of preventative work that the team is responsible for carrying out. This includes fraud awareness training and ensuring the Council have up-to-date and appropriate investigation policies and procedures. The Purpose of the Counter Fraud Progress Report 1.3 The Counter Fraud Progress Report provides the Council’s Corporate Management Team (CMT) and Audit Committee with summary information on all counter fraud work carried out during the Quarter 2(Q2) period (1st July to 30th September 2024). In addition, it provides an opportunity for the Head of Counter Fraud (HCF) to highlight any significant issues arising from the counter fraud work in Q2. 1.4 The progress report also highlights to CMT, the Audit Committee and other key stakeholders, the performance of the CFT in meeting its strategic and operational objectives (as set out in the Counter Fraud Strategy 2022 to 2025), which provides an opportunity for the HCF to be held to account in this respect. 2. EXECUTIVE SUMMARY 2.1 In Q2 the CFT has focused its efforts into areas of high fraud risk . Officers have deployed across business critical areas such as Housing, Revenues and Social Care maximising opportunities to reduce fraud and provide financial savings. In total during Q2 the CFT has accumulated loss prevention, actual savings and notional savings of c£2 .9m. This brings the year to date total to c£6.2m. 2.2 The majority of the CFT’s work in Q 2 has been undertaken in the area of Housing , in particular, reactive investigative work due to tenancy fraud. Currently the team are investigating 120 cases of Housing fraud which is consistent with previous quarters. In addition to these ongoing cases a large number of investigations have concluded in Q 2, leading to the team recovering 32 properties at a notional saving of c£2.2m. The high number of properties recovered in the second quarter is consistent with f irst quarter performance and demonstrates the CFT are on track to deliver a significant amount of property recovery in line with previous years. 2.3 The CFT’s work into combatting fraud risk within B&B emergency accommodation has continued in Q2. A programme of proactive visiting is in place to identify any possible non- occupation or subletting B&B accommodation. In Q2 the CFT have investigated a number of cases which has led to the closure of 14 emergency accommodation providing savings of c£267k. This work is vital to reduc ing the pressures on a frontline demand led service and making available accommodation for those in need. 2.4 The CFT has a dedicated sub team that proactively investigates cases relating to revenues and the collection fund, as well as undertaking council tax and business rates inspections. In Q2 the team focused on identifying properties that should be rated for Council Tax such as beds in sheds and Annexes . In total 18 cases were added to the Council Tax Base and bills sent to respective charge payers to the value of c£21.8k. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 4. 2.5 During Q2 the Management team have been working closely with the Councils Communications Team in preparation for International Fraud Awareness Week (w/c 18th November). The comms package will include a variety of press releases on the work of the team as well as raise awareness on fraud risks to residents. In addition, Fraud Awareness presentations have been arranged with services to create an internal culture of spotting and reporting fraud. More information on the campaign will be available in Q3 reporting. 2.6 As part of the CFT’s preventative approach a variety of verification processes are in place across service areas whereby residents can access some form of funding, support or accommodation. These processes are in place to ensure applicants meet the eligibility criteria of each scheme before services are rendered. In Q 2 the financial assess ment verification process has highlighted numerous applicants that have failed to declare funds or assets which if undetected would have meant the Councils financial contribution towards their care would have been significantly higher. In total 8 cases were highlighted with savings of c£205k identified. 3. COUNTER FRAUD ACTIVITY IN QUARTER 2 3.1 Housing Fraud 3.1.1 The CFT has had another impressive quarter, recovering 32 properties to Housing. This again is t he highest number of properties recovered in a quarter, generating a notional saving of c£ 2.2m.It is worth noting that though the CFT use a notional saving as this is industry standard, the actual loss prevention in this area is the avoidance of emergency accommodation costs which is c£ 608k. These positive results stem from high quality referrals and data matching exercises that the CFT have undertaken and shows that tenancy fraud is continuing to be of high risk to the Council. 3.1.2 The Key Performance Indicator (KPI) 4 (refer to Table 5 in Appendix A) requires the CFT to recover 30% of properties associated with tenancy fraud referrals. This quarter the CFT has achieved an exceptional 67 % of tenancy fraud referrals resulting in property recovery. As per Table 1 below, the case type of property recovery shows that non- occupation is still the highest area of tenancy fraud risk. Table 1 ~ Housing Tenancy Fraud Cases Case Type Q1 Q2* Total* £k/value** Abandonment 0 0 0 £0 Deceased 10 7 17 £1,190k NFI Fraud Hub 9 6 15 £1,050k Non-Occupation 9 8 17 £1,190k Sub-Let 0 7 7 £490k Wrongful Succession 2 4 6 £420k Total Properties Recovered 30 32 62 £4,340k * As at end of Q2 (30th September 2024). ** Tenancy Fraud Forum valuation. 3.1.3 Tenancy fraud is still the highest fraud risk faced by the Council , with the CFT currently investigating 120 cases relating to tenancy fraud . The team have been granted 14 possession orders following legal proceedings, which are awaiting enforcement action, and a further 19 criminal and civil cases are currently with our legal team. 3.1.4 In Q2 the team have also continued with proactively identifying cases of unknown deceased tenants with the assistance of the NFI Fraud Hub. The details of this work can be found in subsection 3. 6 of this report. This work, though not classed as fraud, has continued to contribute to the number of properties recovered. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 5. 3.1.5 The ongoing pressures in the current economic climate continue to cause an increase in demand for housing and the need for Bed and Breakfast (B&B) emergency accommodation. In Q2 the CFT has closed 14 emergency accommodation units due to non -occupation, resulting in savings of c£ 267k. This brings the total closed this financial year to 22 accommodation units. A further 12 cases have been opened highlighting concerns of suspected non-occupation. 3.1.6 The CFT carries out verification checks on all Right to Buy (RTB) applications submitted to the Council , to provide assurance that those who apply are eligible for the significant discount and that the funds used for the purchase abide by money laundering regulations. In Q2 the CFT have 6 cases under investigation for suspicion of sub-letting and non- occupation, with 3 cases referred to our Legal department to instigate criminal proceedings based on fraud offences . The CFT ha s also closed a further 2 RTB application s at verification stage due to the failure to provide financial information. 3.1.7 In Q2 the CFT completed 374 verification checks on applicants who have registered for social housing. Outlined in Table 2 below, the team successfully closed 3 housing register applications due to reasons including non-occupation, or they have been found to already be adequately housed. Without the CFT's enhanced verification checks, these applicants may have been successful in obtaining a council property that they were not entitled to. Table 2 ~ Housing Tenancy Verification Cases Housing Tenancy Verification Cases Q1 Q2* Total Total number of cases reviewed 281 374 655 % Identified by CFT for rejection 25% 19% 22% Total number of applications closed 4 3 7 * As at end of Q2 (30th September 2024). 3.1.8 KPI 2a (refer to Table 5 in Appendix A) targets an outcome of 95% of housing allocation verifications to be completed within the target date set by the Housing department. In Q2 the team has successfully achieved 100% of verifications being completed within their target date. 3.2 Revenues Fraud & Inspections 3.2.1 In the area of Revenues, t he CFT has continued to maintain a high level of performance and again exceeded their KPI target (refer to Table 5 at Appendix A). In Q2, as detailed in Table 3 below, the CFT has conducted 2,055 inspections, with 2,047 (99%) visited within the 10-day KPI target. Table 3 ~ Revenues Inspections Performance 2023/24 Revenues Inspections Q1 Q2* Total for 24/25 Total number of inspections completed 1,807 2055 3862 Percentage within 10 day target 99% 99% 99% *As at end of Q2 (30th September 2024). 3.2.2 During Q2 the CFT has identified a further 18 previously unlisted properties made up of ‘Beds in Sheds'. As a result, an additional c£21k of loss prevention savings has been identified following the issue of revised Council Tax bills to the liable parties. Throughout the financial year the CFT will continue to work with other Council departments to identify beds in sheds and take appropriate action. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 6. 3.2.3 During Q 2 the CFT have continued to receive reports from the programme of External Revenues Maximisation . This has identified one business premise s with previously unknown improvements and one previously unlisted residential property providing additional billing of £4,491. Though outcomes in this area have been lower compared to previous quarters a significant amount of work is currently with the Valuation Office (VOA) awaiting decision. 3.3 Social Care 3.3.1 With preventive controls and reactive process es in place across fraud risks within Social Care, Q2 marks a successful quarter for the team with c£213k in loss prevention savings identified. These positive outcomes have predominantly stemmed from the verification process in Financial Assessments. 3.3.2 In line with the CFT’s risk-based loss prevention work within Financial Assessments has continued throughout Q 2, with the team conducting 168 financial assessmen t verifications, 16 of which are undergoing further checks . The verification process is designed to identify anomalies, such as hidden capital or assets prior to financial support being administered and to provide assurance that on ly eligible app licants are provided support. 3.3.3 Due to the sizeable financial cost to the Council in providing financial assistance in meeting service users care costs, the CFT is strategically placed to utilise the teams’ analytical capabilities to identify f raud, loss and error within the financial assessment verification process. During the course of Q2 the team concluded 8 cases where service users had failed to supply correct full details of their income and capital as part of their financial assessment leading to savings of c£205k. 3.3.5 Section 17 of the Children’s Act 1989 places a duty on the Council to safeguard and promote the welfare of children in need. Section 17 support offers a range of services that includes providing accommodation and/or financial assistance to eligible appl icants. The CFT undertake verification checks for all Section 17 applicants who approach Social Care. Table 4 over the page, illustrates the outcomes derived from the preventive measures in place that ensure services provided are only accessed by those who meet the eligibility criteria. Table 4 ~ Section 17 Verification Cases 2024/25 Section 17 Cases Q1 Q2* 2024/25 Total number of cases reviewed 3 2 5 Total number verified as accurate 1 1 2 Total number of cases closed 2 1 3 Total number of cases under further checks 1 0 1 Loss Prevention Savings 0 0 0 * As at end of Q2 (30th September 2024) 3.4 Blue Badge 3.4.1 In response to resident concerns in specific areas the CFT conducted 3 proactive Blue Badge operations across the borough during Q2 . Two of these operations were conducted jointly with the local Metropolitan Police Safer Neighbourhood Teams demonstrating the CFT’s commitment to partnership working. Officers reported positive feedback from residents for the visible joint operations. Over the course of all 3 operations, CF officers inspected 102 badges and seized 10 badges due to suspected misuse. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 7. 3.4.2 The team’s commitment to ensuring that Blue Badge holders can continue to access the parking facilities on offer across the borough was further demonstrated in Q 2 with the successful prosecution of 4 Blue Badge case s leading to a total of £1,600 in prosecution costs awarded to the Council and over c£650 in fines issued to offenders. A further 13 cases are due to be heard in court, with outcomes expected to be reported in Q3. 3.5 Onsite Immigration Official 3.5.1 During Q2 the teams OSIO has continued to proactively undertake loss prevention activity in the area of Childrens Social Care. Working collaboratively with the Childrens Resources Finance Team, this proactive approach has resulted in c£80k in loss prevention savings. Cases are identified where a change in the service user’s immigration status enable s the service users to be supported with making a claim for benefit. In return, these claims allow for the cost of providing accommodation to each service users to be funded by the welfare system. A further 5 cases remain under review, with savings expected to be reported in Q3. 3.6 London Counter Fraud Hub 3.6.1 The CFT is recognised as a leading member of the London Counter Fraud Hub. The hub is designed to bring London Boroughs together, sharing data to identify fraud, loss or error . This innovative approach will also use the power of data to uncover cross borough frauds. 3.6.2 The unique capabilities of the LCFH are now embedded in the CFT and this is producing referrals automatically every two weeks identifying cases where the Council may not be aware of tenants passing away. This has maximised loss prevention by ensuring that cases are identified at an early stage. A total of six council properties have been recovered and returned to use as a result of information provided by the LCFH during Q2. 3.6.3 The CFT have taken a leading role in an innovative pilot data match to identify possible fraudulent cross -border cases in the Homes for Ukraine Scheme which has provided significant assurance in this scheme at Hillingdon as no new cases have been identified. 3.7 National Fraud Initiative 3.7.1 The National Fraud Initiative (NFI) is a data matching exercise co-ordinated by the Cabinet Office and conducted every 2 years. The NFI matches data from over 1,300 organisations, including councils, the Police, hospitals and almost 100 private companies to identify potential fraud and error. 3.7.2 Data for the 2024/25 National Fraud Initiative exercise has been collated and submitted to the NFI in line with statutory requirements and subsequent referrals are expected in Q4. 3.7.4 In addition to the main NFI exercise there is an annual data match investigating instances of Single Person Discount (SPD) frau d and the data was received for this during Q1. The CFT have allocat ed resource to reviewing and investigating these matches, which has generated savings of £33,764 in additional billing during Q2 with further results from this match expected throughout the year. 3.8 Other Counter Fraud Activities 3.8.1 Recruitment for a new Counter Fraud Lead Investigator commenced during Q2 to provide an additional resource to further support to the CFT managers in the area of Housing Fraud. The selection process is expected to be completed during Q3. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 8. 3.8.2 New working groups have been established with other teams in the Housing Department to improve processes and procedures. This will also provide additional assurance that the risk of tenancy fraud is being mitigated as effectively as possible. 4. COUNTER FRAUD PERFORMANCE IN Q2 4.1 Attached at Appendix A is Table 5 which sets out the Q2 performance by the CFT against the nine KPIs. Also attached at Appendix B is Table 6 which provides an overview of the financial performance of the team in Q2 within each of the main areas of counter fraud activity. The CFT’s financial performance should be considered against a target of £8m for 2024/25. 4.2 The CFT has achieved a consistent level of performance across KPI’s throughout the quarter. The details of this are that 9 out of 9 KPI’s are above targeted performance. The management team are pleased that all KPI’s have been met and will be working closely with the team to ensure this level of performance is sustained. 5. FORWARD LOOK 5.1 The CFT will be marking International Fraud Awareness Week during Q3 with internal and external communications campaigns to raise awareness of the work of CFT and the fraud risks faced by the Council. As part of this programme an extensive internal fraud awareness campaign will also begin during Q3 with all staff in Adult Social Care being required to attend a fraud awareness training. 5.2 The CFT in Q3 will continue to focus its resources into areas of high fraud and financial risks which includes its work in housing. The effective deployment of resources provides a high return of investment for the Council in areas of loss prevention and actual cashable savings. 5.3 As part of the teams planning process for the next financial year, the CFT management will complete a review of its methodology into how savings are recorded. The plan is to provide new ways of recording outcomes that are focused on cashable savings or loss prevention. This is so CMT and the Audit Committee can clearly see the impact CFT are having on budgets across the Council. 5.4 In addition, the HCF will also start to formulate a workplan for 2025/26 in liaison with the Corporate Director of Finance which will also be focused on areas of cashable and loss prevention savings. This will include re-aligning its priorities based on the financial budget pressures the Council is facing to maximise the financial impact of the CFT. This review will see low level fraud risk and/or non-financial work transferred back to service areas. This will give the flexibility for the service to take on new areas of risk including fraud related work in Adult Social Care. 5.5 To support the Council with its in year budget pressures the CFT will be working with Adult Social Care and Transactional Finance on a project to improve debt recovery. The team will be providing assistance in collecting money owed from service users that have not paid for services rendered. In addition, the team will also review opportunities for data matching in this area and provide early intervention support in the financial assessment process. 5.6 The CFT would like to take this opportunity to formally record its thanks for the co-operation and support it has received from the management and staff of the Council during this quarter. There are no other counter fraud matters that the HCF needs to bring to the attention of CMT or the Audit Committee at this time. Alex Brown Head of Counter Fraud 30th September 2024 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 9. APPENDIX A: Table 5 - CFT KPIs and Actual Performance CFT KPIs Target Q1 Q2* 24/25* 23/24 1. Percentage of fraud referrals risk assessed within 3 working days 95% 100% 99% 99% 99% 2. Verification work timescales for completion: a. Housing Allocations completion within the target date set by Housing 95% 100% 100% 100% 99% b. Right to Buy case completion within 28 working days 95% 100% 100% 100% 100% c. Financial Assessments completion within 7 working days 95% 100% 100% 100% 100% d. Section 17 reviews completion within 7 working days 95% 100% 100% 100% 100% 3. Investigation plan completion within 5 working days of case allocation 95% 100% 100% 100% 98% 4. Tenancy fraud referrals received resulting in property recovery 30% 64% 67% 65% 46% 5. Investigations resulting in loss prevention/financial saving outcome 40% 47% 45% 46% 48% 6. Revenue inspections completed within 10 working days of referral date 95% 99% 99% 99% 99% * As at end of Q2 (30th September 2024). HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 10. APPENDIX B: Table 6 - CFT 2024/25 Financial Performance * As at end of Q2 (30th September 2024). ** Average weekly cost against average length of support. This figure fluctuates but has been provided by the Council's Business Performance Team. Work Area Description Quarter 1 Quarter 2* Quarter 3 Quarter 4 2024/25* Housing Right to Buy discounts £0 £0 £0 £0 £0 Property Recovery (notional savings) £2,100,000 £2,240,000 £0 £0 £4,340,000 Other savings/loss prevention £172,171 £272,844 £0 £0 £445,015 Social Care Section 17 and UASC** £0 £0 £0 £0 £0 Financial Assessments £72,585 £205,112 £0 £0 £277,697 SGO £0 £0 £0 £0 £0 Direct Payments £0 £0 £0 £0 £0 Other £7,290 £8,415 £0 £0 £15,705 Revenues Single Person Discount £22,527 £40,497 £0 £0 £63,024 Council Tax Reduction & arrears £4,551 £4,027 £0 £0 £8,579 Unlisted Buildings £31,758 £21,817 £0 £0 £53,575 Housing Benefit Overpayments £12,750 £18,648 £0 £0 £31,398 NNDR £784,844 £4,492 £0 £0 £789,336 Blue Badge Simple Caution & Financial Penalty £2,512 £2,258 £0 £0 £4,770 Immigration Officer Housing Homelessness Applications** £0 £0 £0 £0 £0 Social Care Savings £108,480 £79,514.20 £0 £0 £187,995 Totals Loss Prevention Savings £360,196 £560,351 £0 £0 £920,547 Notional Savings £2,779,867 £2,262,466 £0 £0 £5,042,333 Cashable Savings £176,892 £72,551 £0 £0 £249,443 Costs awarded and penalties £2,512 £2,258 £0 £0 £4,770 Total £3,319,467 £2,897,626 £0 £0 £6,217,093 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 11. APPENDIX C - Glossary of Terms Beds in Sheds: 'Beds in Sheds' is the term used to describe habitable outbuildings, or annexes to private properties being utilised without the awareness of the Council or the Valuation Office Agency (VOA). Blue Badge: A Blue Badge provides parking concessions and helps people with non-visible and visible disabilities or health conditions park closer to their destination. The Blue Badge enables holders to park in designated disabled person’s parking bays either on the public highway or privately owned car parks. In addition, badge holders can park on single or double yellow lines for up to 3 hours. Direct Payments: The Council are responsible for administering direct payments to service users who have been assessed as needing care and support services. The payments are made to allow applicants to access care to meet their social care needs, such as support with living tasks and social activities. Disabled Facility Grants: The council offers a range of financial support schemes for people with disabilities, such as the Disabled Facilities Grant (DFG). The DFG is a means tested scheme that allows eligible applicants to receive financial support to make adaptations to their home, if they, or someone living at the property is disabled. Financial Assessments: The Council is under a financial and legal obligation to carry out this means tested assessment for each service user. The Financial Assessment (FA) identifies whether the applicant(s) is eligible to receive funding towards their care costs. Fraud Hub: Utilising the existing Cabinet Office infrastructure and systems, most London based local authorities have agreed to upload internally held data sets for proacti ve data matching exercises. These regularly agreed upon exercises will lead to the identif ication of possible fraud, loss or error. National Fraud Initiative : The National Fraud Initiative (NFI) is a data matching exercise co - ordinated by the Government Cabinet Office and conducted every 2 years. There is also an annual review of claimants in receipt of Single Persons discount data that is matched against the Electoral Roll data. The NFI matches data from over 1,200 organisations, including councils, the police, hospitals and almost 100 private companies to identify potential fraud and error. New Homes Bonus: The New Homes Bonus (NHB) is a grant that is paid by central government to incentivise local housing growth. Onsite Immigration Enforcement Official: The Onsite Immigration Enforcement Official (OSIO) provides enhanced access to Home Office data for the purpose of assessing cases involving immigration issues and for assisting in a range of counter fraud work. Right to Buy: The Right to Buy (RTB) process is a statutory scheme whereby a tenant(s) can apply to purchase their property at a significant discount from its market value. There are strict conditions that must be met by the applicant(s) if they are to qualify for the discount. Revenue Maximisation: The use of internally held data and the utilisation of external data partners to identify previously unlisted commercial and domestic properties , along with identifying commercial properties that have undertaken modifications or improvements that would result in the revaluation of its Rateable Value (RV). Commercial enti ties are under no obligation to inform Council Tax as to when they have started tra ding or if their RV needs to be recalculated. The Council will only retain 15% of the identified rates. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 2 12. Section 17: The CFT provides assurance and mitigate the risk of fraud within Children’s Social Care, in particular the allocation of emergency accommodation provided under Section 17 of the Children’s Act 1989. The verification process seeks to validate a family’s reason for approach as well as their financial circumstances, as applicants claim to be destitu te and requiring accommodation and or financial support. The CFT conducts verification checks on all applicants approaching the Council. Small business Rates Relief : The Small Business Rates Relief (SBRR) scheme is designed to reduce the amount of business rates payable by small businesses. This reduction is available to ratepayers who occupy a property with a rateable value of no more than £15,000. Tenancy Fraud Forum Valuation: As of the 2022/23 financial year, the CFT will be using the new Tenancy Fraud Forum valuation for property recovery. Working in conjunction with the London Boroughs’ Fraud Investigators’ Group (LBFIG) a new formula has been created to determine how much tenancy fraud costs. The formula considers the annual average temporary accommodation cost per family, the average duration for tenancy fraud, as well as the average investigation, legal and void costs. The agreed calculation for tenancy fraud within the borough is now valued at £56k per property (Previously £18k). The new calculation allows Hillingdon Council to accurately calculate financial savings by factoring in local figures. Unaccompanied Asylum-Seeking Children: Unaccompanied Asylum-Seeking Children (UASC) are children and young people who are seeking asylum in the UK but have been separated from their parents or carers. Whilst their asylum claim is processed, they are cared for by the Council and provided with accommodation and or financial support.

Audit Committee – 20 November 2024 Part I – Public WORK PROGRAMME 2024/25 Committee name Audit Committee Officer reporting Ryan Dell, Democratic Services Papers with report None Ward All HEADLINES This report is to enable the Audit Committee to review planned meeting dates and the forward programme. RECOMMENDATIONS That the Audit Committee: 1. Notes the dates for Audit Committee meetings; and 2. Makes suggestions for future agenda items, working practices and/ or reviews. SUPPORTING INFORMATION The meeting on 18 November 2024 will start at 17:10. Meetings Room 11 February 2025 CR6 14 May 2025 CR5

WORK PROGRAMME Audit Committee 2025 Meeting Month Aug Nov Nov Feb Feb/ Mar May Meeting Date 28 6 20 11 TBC 24 Member training a) Role of the Audit Committee b) Statutory Accounts a) Corporate Governance b) Risk Management c) Internal Audit d) Anti-Fraud and Anti- Corruption Pre-meet (17:00-17:10) Head of Internal Audit Corp. Dir. of Finance Head of Counter Fraud Appointment of Chair Appt of Chair of current meeting X Appointment of Vice-Chair X Interviews for Independent Chair of the Audit Committee X External Audit item X X X X Audit Committee Annual Report 23/24 23/24 Risk Management Annual Report Risk Management Report 24/25 Q1 24/25 Q2 24/25 Q3 24/25 Q4 Strategic Risk Report 24/25 Q1 24/25 Q2 24/25 Q3 24/25 Q4 Internal Audit Annual Report 24/25 Internal Audit Charter X Internal Audit Plan X Internal Audit Progress Report 24/25 Q1 24/25 Q2 24/25 Q3 Counter Fraud Annual Report 23/24 Counter Fraud Operational Plan 25/26 Counter Fraud Progress Report 24/25 Q1 24/25 Q2 24/25 Q3 24/25 Q4 Work Programme X X X X 2024/2025