Audit Committee

Minutes AUDIT COMMITTEE 20 November 2024 Meeting held at Committee Room 5 - Civic Centre, High Street, Uxbridge UB8 1UW Committee Members Present: Mr John Chesshire Councillors Nick Denys, Tony Burles, Henry Higgins, and Philip Corthorne Officers Present: Richard Ennis – Corporate Director of Finance, Andrew Macleod– Chief Accountant Claire Baker – Head of Internal Audit and Risk Assurance, Alex Brown – Head of Counter Fraud, and Ryan Dell – Democratic Services Officer Also Present: Stephen Reid, Ernst & Young Mark Rutter, Ernst & Young (virtual) 13. ELECTION OF CHAIR (Agenda Item 1) The Democratic Services Officer opened the meeting by asking if there were any nominations for Chair of the Committee. Members nominated, seconded and appointed John Chesshire as Chair. RESOLVED: That the Audit Committee appointed John Chesshire as Chair of the Committee 14. ELECTION OF VICE-CHAIR (Agenda Item 2) The Chair asked if there were any nominations for Vice-Chair of the Committee. Members nominated, seconded and appointed Councillor Nick Denys as Vice-Chair. RESOLVED: That the Audit Committee appointed Councillor Nick Denys as Vice - Chair of the Committee 15. APOLOGIES FOR ABSENCE (Agenda Item 3) Apologies were received from Councillor June Nelson. 16. DECLARATIONS OF INTEREST (Agenda Item 4) None. 17. TO CONFIRM THAT ALL ITEMS MARKED PART I WILL BE CONSIDERED IN PUBLIC AND THAT ANY ITEMS MARKED PART II WILL BE CONSIDEREDIN PRIVATE (Agenda Item 5) 18. MINUTES OF THE PREVIOUS MEETING (Agenda Item 6) RESOLVED: That the minutes of the previous meeting be agreed as a correct record. 19. EXTERNAL AUDIT UPDATE (Agenda Item 7) Officers introduced the external audit item, noting that Members were asked to approve the 2022/23 Statement of Accounts, the Audit Completion Report, and the Hillingdon Pension Fund Final Audit Results for 2022/23. EY had provided an Audit Completion report in respect of the 2022/23 accounts and explained that the 2022/23 financial s tatements consisted of the Council and Pension Fund accounts. The intention was to issue a disclaimer of opinion on the se financial statements. Importantly, following approval of the financial statements by the Committee for 2022/23, EY would move to issue the opinion, likely to be next week. EY were waiting on the National Audit Office to conclude the whole government accounts, which was understood to happen this Friday. The Ministry of Housing, Communities and Local Government had announced that the statu tory backstop date for publishing the 2022/23 Statement of Accounts was 13 December 2024. There were two amendments to the form of opinion, one was in relation to the new Code of Audit Practise that was recently issued by the National Audit Office, and the other amendment reference d a misstatement in relation to the disposal of schools. There were two schools which had been converted into academies in 2021/22 and should have been derecognised at that point. They were not and so they were incorrectly contained within the 2022/23 financial statements. Management would adjust them as part of the 2023/24 financial statements. There was a backstop date for the 2023/24 accounts of 28 February 2025. The 2023/24 Statement of Accounts was published towards the end o f June and the audit was ongoing and expected to be completed by the backstop date. The intention was to bring an audit results report to the next Committee meeting in February 2025. This would allow Members to consider the 2023/24 accounts and approve tho se financial statements in advance of the backstop date. Following approval of those accounts, EY would issue their opinion which would again be a disclaimed opinion because the opening balances would be disclaimed. To provide assurance over the closing balances within the 2023/24 financial statements, EY noted that they planned to bring an audit plan for 2024/25 to a subsequent Committee meeting. This would also contain details for the schedule for building back assurance over the next few years to build towards a clean audit opinion. Members asked if there were any particular areas of disagreement between the Council and EY, and EY noted that there were no disagreements that they needed to bring to the Committee’s attention. It was noted that the authority had experienced some challenges with changes in key officers. Members asked about any consequences of receiving a disclaimer of opinion. EY noted that there would be approximately 450 disclaimers across local government as part of the reset process. Hillingdon would not be alone in this. The Ministry of Housing, Communities and Local Government, the Financial Reporting Council and the National Audit Office had worked together on this process. EY reiterated that where an authority was subject to a disclaimer as part of the reset, it was not anticipated to reflect badly on the authority. Members asked what the PWLB was. Officers advised that t his was the Public Works Loans Board. This was where the Council obtained most of its borrowing to fund the capital programme. Members asked about the decarbonisation scheme grant amount receive d. Officers confirmed this was £13.75 million. Members inquired about the school expansion programme and officers noted that this related to projects to increase SEND places. Members asked about how the increase in value of property, plant and equipment was arrived at. Officers noted that the figures were largely driven by valuations. EY clarified this may be a question around different financial years. For the 2022/23 finan cial statements, audit work on valuations had not taken place so there was no audit query on the valuations at the date presented in the financial statements. Members clarified that their question concerned the increase in value. Officers suggested that th ey could provide additional information on this to show where the increase had come from if required. A lot of technical work went into valuations and it was not an exact science. Members noted that a process had been followed, and that although ideally the Council would not be in this position, Members were minded to approve the accounts. The Committee approved the 2022/23 Statement of Accounts. The next meeting would focus on the 2023/24 audit results. Members inquired about the relationship between t he audit process and the new government department overseeing local government performance. EY explained that the performance division was somewhat separate but may use audit results for risk assessment purposes. RESOLVED: That the Audit Committee: 1. Agreed the 2022/23 Statement of Accounts and Audit Completion Report, and the Hillingdon Pension Fund Final Audit Results Report 2022/23; and 2. Noted progress with the external audit of the 2023/24 Statement of Accounts 20. AUDIT COMMITTEE ANNUAL REPORT (Agenda Item 8) Officers introduced the Audit Committee Annual Report for 2023/24. This report had been brought to the previous meeting, and Members requested that it be brought back to the current meeting so seek the Chair’s comments, given that he was absent from the previous meeting. Officers noted that this report summarised the work of the Audit Committee for 2023/24. RESOLVED: That the Audit Committee reviewed and approved the Draft Audit Committee Annual Report for 2023/24 21. INTERNAL AUDIT PROGRESS REPORT 24-25 Q2 (Agenda Item 9) Officers introduced the Internal Audit progress report for Q2. Six reviews had been completed to the final report stage since the previous meeting. Five additional reports were currently out in draft. Of the six completed reviews, two were advisory, three had limited assurance, and one had no assurance. The advisory reviews included:  The first stage of A two -stage audit with findings to be included in the second stage  A review of a recently changed area within th e Council’s structure to identify areas of improvement. The limited assurance reviews included:  A thematic schools audit which focused on the use of SEND funding in schools. There was insufficient evidence to fully verify that funding had been spent in l ine with national guidance.  Section 202 and 204 Appeals which examined the appeals process for housing eligibility decisions. Findings related to timeliness of appeals, documentation, and feedback processes.  Overtime, expenses, and mileage – this was a joi nt review with Counter Fraud, identifying control weaknesses in policies, approval processes, and evidence for claims. The No assurance review related to asset management. This review was requested by the Director as it was a known area of improvement, hi ghlighting insufficient governance controls, policies and n o centralised asset management system. This meant that different services had different records of what assets the Council held, in particular where things were purchased or disposed of. Officers noted that several changes had been made to the audit plan due to ongoing transformations and external reviews. Some audits were postponed to 2025/26, and others were removed to avoid duplication. The plan remained flexible, with meetings scheduled in Dece mber to refresh the plan and address emerging risks. Officers highlighted that there had been a planned review of post -Oracle implementation. This has been removed as there was an external review happening instead. Officers were due to have meetings with CMT in December to start planning for next year and to look at remaining audits for this year to pick up any emerging risks. Members inquired about the insufficient evidence in the thematic schools audit. Officers noted that within their report they incl uded recommendations and outlines for what schools should include and record . This included information going to the Schools’ Forum; making sure that provision maps were clearly specifying exactly what they were claiming, and that this was in line with the national guidance; and making sure that the schools were retaining evidence. Members asked about the decision -making process for what was included in the audit plan. Officers noted that it was up to the Head of Internal Audit to decide what was included in the plan. This took into consideration the risk register; any external information; engagement with other teams; discussion with CMT; any new legislation; and referrals from the Audit Committee. Members asked about the tools available for smaller -scale investigations. Officers noted that it was flexible as to whether to do a high level or smaller scale audit. Members asked about uninspected B&Bs and the status of inspections. Officers noted that this was a known area, and it was unsurprising for it to be no assurance. This involved looking at procurement of B&Bs and looking at their documentation such as safety certificates. A lot of the issue was around documentation being stored and record keeping such as those relating to temporary accommodation placements. Members discussed the challenges of planning audit work amidst ongoing changes and suggested breaking the annual plan into halves for better flexibility. Officers noted that while the plan was annual, the tracker was continuous. A lot of things were planned up until Q3 of next year’s plan. Members noted some difficulty in keeping track of what had been agreed at the start of the year, noting that in April there were 43 pieces of audit work noted, and currently there were 34, suggesting that there was an apparent decrease in the amount of work in the plan. Officers advised that a lot of things had been moved into next year because of some of the transformational change. Although there was a smaller number of audits, lots of these went into a lot m ore detail because of the changes and transformation, and so things were taking longer. No assurance reports took longer than substantial assurance reports. Members asked if there were any areas of concern. Officers noted that there were none. The Chair noted that the KPIs were looking good. Members asked about staffing, and if there were any vacancies or any issues. Officers noted that there were no vacancies, but there was one person currently on sick leave. RESOLVED: That the Audit Committee noted the IA progress since the last Committee meeting 22. RISK MANAGEMENT & STRATEGIC RISK REPORT 24-25 Q2 (Agenda Item 10) Officers introduced the Risk Management & Strategic Risk reports for Q2. The number of new risks added to the system had slowed, w hich was expected after the initial push in Q1. Despite the slowdown, progress had been made and the number of unscored risks had reduced from 116 to 90. Unscored risks were initially added without scores to compel relevant services areas to assess and sco re them. Having 90 unscored risks at the end of Q2 was not ideal. Since the end of Q2, there ha d been a change in the structure of different teams in various directorates, which had been updated in the new risk management system. This would lead to chang e at Q3 as services with more risks have moved to different directorates. There are 11 new risks on the register related to statutory service provision, primarily due to one service reviewing its risk register and adding new risks. One new red risk related to lone working devices had been identified, with an action plan in place to address it. There were 46 risks overdue for review, and 138 risks without actions which represented 61% of all risks on the register that did not have an action. In relation to the Corporate Risk Register (red rates risks), there were two new risks added and four removed. Additional information was included under Section 3 of the report. The Strategic Risk Register was also attached to the report, and there were no significant changes. Also attached to the report was the draft Risk Management Policy, which was due to go to Cabinet in January for approval. Members asked if Directors could update the Committee as to why there were a high level of unscored risks/ risks without actions. Officers noted that they could ask directors to explain in writing, which may help in prompting the update of risk registers. Officers highlighted the ongoing changes and transformation within the organisation and asked if this had had an impact on the updating of risk registers, such as with of staff changes and other priorities taking precedence . Officers acknowledged that changes and transformations had taken priority but emphasised the importance of updating risk registers. Officers further hi ghlighted the importance of embedding risk management into the organisation, and that the organisation was currently on a journey towards this. Officers further noted that the risk appetite should be set by Cabinet, not the management team. Members asked a bout a proposed timeframe for asking Directors to update the Committee. Officers noted that they usually took an extract of data at the end of Q3, which was the end of December, though it was already part way through the current quarter. It was suggested t hat officers pull an extract at the end of December, which would leave time to receive an update before the next Audit Committee meeting in February. The Chair further emphasised the need for effective risk management, especially during times of transform ation. It was agreed that February would be a reasonable deadline, but flexibility was suggested to accommodate the organisation's ongoing development and governance improvements. Members asked for clarity on the 90 unscored risks, and officers advised th at these risks needed to be assessed for their likelihood and impact. For example, a risk that had a very large impact (over £5 million) and was very likely to happen would be scored as A1. If there were strong controls and the risk was very unlikely to ha ppy, it may be scored F4. Because these risks were unscored, the likelihood and potential impact were unknown. Any ‘red’ risks went monthly to CMT, and ‘green’ risks were more service level. The Chair noted that the system was looking much better than wh at was in place before and the presentation of information was much clearer and more useful for Members. The Chair also acknowledged that the authority was on a journey of change. The Chair acknowledged that there was a difference between housekeeping an d managing risk and while housekeeping could be delayed in the interest of managing risk, this could not go on forever. There was a need to build this into the routine of the way in which things were done. The Chair emphasised a strong message from the Committee that transformation and difficult change demonstrated the need for effective risk management. The Chair reiterated that whilst they tolerated some things not being as up to date as they should be at times, this could not last. The Chair noted some concern the risks not reviewed and actions not taken and stressed the importance of making risk management a routine part of governance. There was work to be done here, good risk management was needed when times were difficult. It was proposed to invite the Chief Operating Officer and Director of Transformation to the next meeting to provide an update on risks around transformation, and around digital transformation, and how these risks were being managed. Members agreed to request updates at the next me eting in February, emphasising the importance of risk management. The Chair noted that he was happy with the draft Risk Management Policy. The Chair referred to the use of external contractors and suggested a preference for more emphasis on the use of internal resources rather than external. RESOLVED: That the Audit Committee noted the reports and provided feedback on the content and level of assurance received 23. COUNTER FRAUD PROGRESS REPORT 24-25 Q1 (Agenda Item 11) Officers introduced the Counter Fraud progress report for Q2. The team had achieved £2.9 million in savings in Q2 across housing, social care, and revenues, bringing the year-to-date total to £6.2 million. In housing, 32 properties were recovered due to tenancy fraud, bringing the total to 62 for the year. Additionally, 14 emergency accommodation units were closed due to non - occupation. In social care, financial assessments had identified 8 cases of undisclosed assets, resulting in loss prevention savings of £205,000. This week was International Fraud Awareness Week, and various initiatives ha d been launched to promote awareness among residents and internally. Activities include d press releases, social media posts, internal communications, and a fraud awareness program with adult social care to discuss social care fraud risks. Future plans include d sustaining current performance levels and starting the planning process for the next year. Members praised the team’s efforts and asked about potential areas for future savings. Officers explained the ongoing collaboration and the focus on fraud awareness and proactive fraud detection in adult social care. Officers noted the close collaboration between teams, emphasising the importance of a joined -up approach to risk management and fraud detection. The team was focusing on potential fraud and financial risks in adult social care, with a consultancy piece currently underway to assess fraud risks across commissioned care and direct payments. Members commended the team for their work on the blue badge amnesty and asked about the enforcement process. Officers clarified that the enforcement process involved both the internal Parking Enforcement team and the Counter Fraud team. Members asked about the recruitment of a new Counter Fraud Lead Investigator, and about the team’s resources. Officers confirmed that the lead post had been recently approved and would focus on tenancy fraud recovery. On resourcing, officers noted that they were in a good position. Members asked about small busi ness rate relief and the inspection process for discounts and exemptions. Officers explained that inspectors performed necessary visits for any discounts, exemptions, or reliefs. The Committee acknowledged the progress made and the importance of sustainin g performance levels, and the Chair acknowledged the excellent work of the team. RESOLVED: That the Audit Committee: 1. Noted the Counter Fraud Progress Report for 2024/25 Quarter 2; and 2. Suggested ay comments/ amendments 24. WORK PROGRAMME (Agenda Item 14) Officers highlighted the planned upcoming training session, with the dates to be confirmed. On recruitment of a new independent Chair, officers noted that the shortlisting process had narrowed down to three final candidates to be i nterviewed. A date to hold the interviews was to be confirmed. Members requested relevant information in advance and requested the current Chair’s input. Members further suggested a pre -meet with the current Chair to help shape the process. The Chair noted that they would be happy to take part. Furthermore, highlighting that the next Committee meeting was in February, Members noted that they would not want to rush the recruitment process. Officers suggested replacing the Q4 Counter Fraud report in May by bringing the Counter Fraud Annual Report in May instead of August. This meant that the Committee would receive the Annual Report at the end of the Quarter rather than waiting until August. This was approved by Members. Members and officers thanked the Ch air, on behalf of the Council, for his seven years of service to Hillingdon. RESOLVED: That the Audit Committee: 1. Noted the dates for Audit Committee meetings; 2. Agreed to replacing the Q4 Counter Fraud update with an earlier Annual Report; and 3. Would invite the Chief Operating Officer and Director of Transformation to the next meeting to provide an update on risks around transformation, and around digital transformation, and how these risks were being managed. The meeting, which commenced at 6.00 pm, closed at 7:40 pm These are the minutes of the above meeting. For more information on any of the resolutions please contact Democratic Services 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 l ive on the Council's YouTube Channel to i ncrease transparency in decision -making, however these minutes remain the official and definitive record of proceedings.

Audit Committee – 11 February 2025 Part I – Public UPDATE ON THE 2023/24 STATEMENT OF ACCOUNTS AND EXTERNAL AUDIT Committee name Audit Committee Officer reporting Andrew Macleod, Chief Accountant; Pensions, Treasury & Statutory Accounts Papers with report 2023/24 revised draft Statement of Accounts Provisional Audit Results Report (to follow) Draft Hillingdon Pension Fund Audit Results Report Ward All HEADLINES This report provides an update on the 2023/24 Statement of Accounts audit. RECOMMENDATIONS: That the Audit Committee: 1. Note the position regarding the audit of the 2023/24 Statement of Accounts and delegate authority to the Corporate Director of Finance (in consultation with the Chair and incorporating any views from other Members of the Audit Committee) to approve the final 2023/24 Statement of Accounts and Audit Results Report on behalf of the Committee and to report back to the next Audit Committee meeting on these matters for ratification; and 2. Note the Hillingdon Pension Fund draft Audit Results Report. 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 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 Audit Committee – 11 February 2025 Part I – Public February 2025. The draft Statement of Accounts were published on 28th June 2024 and the main audit commenced 22nd July 2024. The audit has been more extensive than previous years due in part to the fact that the previous year was not fully audited, increasing testing this year including samples covering both years in certain areas . T esting work was extended up to the end of December 2024 to maximise the amount of testing that cou ld be completed , with key areas of focus being prioritised to support the building back of assurance as soon as possible following the reset of local audit. Priority has been given to regaining assurance of Balance Sheet items which forms the opening position for 2024/25. As not all areas of the audit w ere completed and given the opening balances from 2022/23 flowing into this year’s accounts were not audited, it will not be possible to obtain an unqualified audit opinion for 2023/24. EY will provide a verbal update on the provisional Audit Results Report at the Committee meeting. Their internal review is ongoing and is not yet concluded as at the date of this meeting. EY will also update on the draft Pension Fund Audit Results Report. There are a number of changes to the revised Statement of Accounts following the audit, which were republished on 30th January, including the Annual Governance Statement (AGS). The AGS had not been included in the original publication of the draft Statement of Accounts in June 2024 because it had not at that time been signed off. This requires the 30 working day statutory inspection period to be reset as the AGS is incl uded in the public inspection protocol. Unfortunately the audit cannot be completed and final audit opinion issued until after the reset public inspection period has passed, meaning that it will not be possible to conclude by the backstop date of 28th February. However it is expected that this delay will be kept to a minimum and the completion of the audit be achieved after inspection period closes on 13th March. Other Audits Grant Thornton have been appointed to conduct both the Teachers Pension End of Year Certificate and Pooling of Housing Capital Receipts audit assurance work. Th ese audits are expected to be completed by the end of January 2025. EY submitted a draft results report on the Housing Benefit Assurance Process 2022/23 to officers within the Revenues and Benefits service in December 2024. The audit has subsequently been finalised and agreed, and is expected to be signed off shortly. FINANCIAL IMPLICATIONS In September 2024 the PSAA launched a consultation on the fee scale for 20 24/25 audits. Following consultation, PSAA has published the 2024/25 scale of audit fees for bodies that have opted into its national auditor appointment scheme. The fee scale is confirmed as a 9.5% increase on the 2023/24 scale fees to cover the additional audit work required under revised standards and a contractual inflationary 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 fee values for 2024/25 are £ 433,673 for the Council audit and £92,572 for the Pension Fund. EY have advised there will be scale fee variations in respect of the 2023/24 audit but this has not yet been fully quantified at this stage. The fees for Grant Thornton in respect of the Teachers Pension and Pooling audits were within approved budget estimates. Audit Committee – 11 February 2025 Part I – Public LEGAL IMPLICATIONS The Secretary of State for Communities and Local Government delegated statutory functions (from the Audit Commi ssion Act 1998) to P ublic Sector Audit Appointments (PSAA) on a transitional basis under powers contained in the Local Audit and Accountability Act 2014. APPENDICES The 2023/24 Statement of Accounts – revised draft published 30/1/25 EY Provisional Audit Results Report 2023/24 EY Pension Fund Draft Audit Results Report 2023/24

London Borough of Hillingdon Statement of Accounts for the year to 31 March 2024 1 London Borough of Hillingdon Statement of Accounts for the year ended 31 March 2024 Contents Page Leader’s Statement (to follow) 2 Narrative Report 3 Statement of Responsibilities for the Statement of Accounts 14 Independent Auditor’s Report to the Members of the London Borough of Hillingdon Nb currently unaudited 15 Statement of Accounting Policies 16 Main Financial Statements 34 Expenditure and Funding Analysis 35 Comprehensive Income and Expenditure Statement 38 Balance Sheet 39 Movement in Reserves Statement Movement in Unusable Reserves 40 42 Cash Flow Statement 43 Notes to Main Financial Statements 44 Other Financial Statements 98 Housing Revenue Account and Notes 99 Collection Fund Account and Notes 103 Pension Fund Account and Notes 107 Annual Governance Statement 141 Glossary 150 Leader’s Statement 2 To Follow Narrative Report 3 This document sets out the annual accounts of the Lond on Borough of Hillingdon for the year ended 31 March 2024. 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 gui de 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 Surrey, 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 mo re than 60 million passe ngers 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 mo re. There are also 16 libraries; 3 theatres (1 open air), 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 fi nancial management that has de livered 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 Hayes/Harlington, Ruislip/Northwood and Yiewsley/West Drayton. The new bor ough came into existence on 1 April 1965, when the new Council started work. As well as taking on the work of t he 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 flats 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 planning 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 2,500 staff inclusive of part time staff and has a population of around 305,900 (according to the 2021 Census). Hillingdon is an ethnically di verse borough with 33.3% of residents from Asian ethnic groups, 7.8% Black ethnic groups, 4.4% Mixed or Multiple ethnic groups, 48.2% White ethnic groups and 6.3% from other ethnic groups. Hillingdon is rich in wildlife and wildlife habitat, including wa terways; 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, includi ng 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 professional theatre in Hayes, The Compass Theatre in Ickenham, and various other venues. Narrative Report 4 2.2 Financial Performance General Fund The financial challenges facing the Council due to years of the Government’s austerity programme and increased demand for services continued throughout 2023/24, with this position compounded by the wider economic environment and the current level of exceptional inflation, whilst also managing ongoing legacy issues driving by the global pandemic. Councils are starting to see Central Go vernment funding increase, but this funding is still lagging behind pre-austerity levels, with 2023/24 compounded by inflation significantly ou tstripping increased funding, despite this, Hillingdon was still able to continue to maintain cash discounts against Coun cil Tax for the over 65s in receipt of this benefit on 31 March 2023 for another year in 2023/24, without impacting on fr ont-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. These are financially challenging times for local authorities to deal with, and respond to a number of significant national pressures, within a significantly reduced funding envelope. Particular pressures for Hillingdon include the increased cost of adult social care, children’s placements, homeless ness, asylum seekers and ensuring it has an experienced workforce to deliver the best services it can to its residents. Despite the challenges faced by the Counc il, of the savings target of £22,762k, £17,895k are either banked in full or classed as 'on track for delivery', while £4,867k were covered by alternative measures during 2023/24, the percentage of savings banked in 2023/24 has increased from the level achieved in 2022/23, with that year being impacted by high inflation and ongoing legacy impacts from 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 2023/24 totalled £263m, excluding those services such as schools and housing benefit, which are funded by specific funding streams. Th is net budget was supported by a combination of central government grant and locally raised Council Tax and Business Rates. The main driver for the funding increase of £12m from 2022/23 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 Government funding of £6,747k, with Business Rates generating an additional £4,054k as a result of the Council’s rating list recovering from the pandemic. This position is being offset by a reduction in one-off income of £3,409k, primarily driven by the Council’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 Council'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 £6k (£127k under spend in 2022/23) against planned expenditure budgets based on normal activities.. The General Fund balance totalled £26.8m at year-end (£26.8m in 2022/23). Underspends across the Council were mainly driven by a favourable variance against the Council’s Treasury activities, offset by pressures within Residents Services. The General Fund balance of £26.8m (£26.8m in 2022/23) plus controllable earmarked reserves of £8.3m (£20.1m in 2022/ 23) are moderately above the minimum reserve balance level set for 2024/25 of £32m. The reduction of £11.8m in controllable earmarked reserves was due to a number of net drawdowns, including £4m to support movements in inflationary pressures, £1.1m to manage costs of securing alternative social care placements in the event of supplier failure and £1m to support the impl ementation of the new financial ERP system. A new HRA acquisitions and developments reserve for £6.8m has been cr eated from the costs recovered from the Packet Boat House settlement. 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 co llectively approved the principle of a Business Rates Retention Pilot Pool for the capital. In 2020/21 the Government ended the pilo t status for the London Pool , however London Authorities continued to pool benefits without the pilo t 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 since 2021/22. Narrative Report 5 The outturn for the General Fund revenue budget is set out below:- Outturn 2023/24 General Fund Services £'000 Finance 33,071 Health and Social Care 97,373 Children, Families & Education 73,689 Property, Highways & Transport 8,932 Residents' Services 28,942 Corporate Services 25,956 Service Operating Budgets 267,964 Funding (267,970) Outturn Total (6) 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. Housing Revenue Account The Housing Revenue Account (HRA) delivered an in-year dr awdown from its HRA general balances of £0.1m. As a result, HRA general balances total £15.1m at 31 March 2024 (£15.2m 31 March 2023). In addition, the HRA holds £3.2m in the major repairs reserve (MRR) (£2.1m 2022/23) to fund future capital works. There have been 49 Right-to-Buy sales of Council dwellings as at the end of March 2024 (58 in 2022/23) 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 2 023/24 totalled £127.3m (£110.7m in 2022/23) and was funded from a range of sources. These source s of funding included grants, contributions from revenue resources, proceeds from asset sales, and prudential borrowing. An under spend of £64.9m is reported against the 2023/24 General Fund capital programme, consisting of £3.5m cost underspends and £61.4m re-phasing for various projects and programmes that are continuing into future years. Investment during 2023/24 on the General Fund totalled £66.1m and HRA £61.2m. Significant General Fund investment included a further £6.2m towards the construction of the new Platinum Jubilee Leisure Centre in West Drayton, due to be completed in 2025/26. A further £6.3m on towards installi ng solar panels on four council buildings. A further £8.6m has been contributed towards several expansion projects to increase provision for pupils with special educational needs (SEND). There was also significant spend of £8.01m highways infrastructure and street lighting. In 2023/24, new affordable housing construction within the HRA was continued at the r edevelopment of the former Maple and Poplar Day centre in Hayes to provide 34 modern homes. A further £9.7m was invested in the Hayes Estate Regeneration schemes. A further £17.7m was invested in acquisitions of numerous properties to increase the number of available Council housing stock, and £23.6m in improvements to the existing council housing stock. Narrative Report 6 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-qualit y housing to meet the need of Hillingdon’s re sidents. 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 2024, the Council holds £4.2m 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 accounts of Hillingdon First Limited are not included in these financial statements as they are not considered of sufficient materiality to require inclusion for group accounting purposes. 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, the 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. Over the period 2020-23 the Council provided financial support totalling £1,681k in the form of soft loans (ie lower than market rates) to Greenwich Leisure Limited (GLL), with whom it holds the leisure operating contract. The purpose of this was to support the contractor during the pandemic and thereby protect public service objectives in the delivery of leisure services. The opening carrying value of the loan as at 1 st April 2023 was £1,240k (in 2022/23 a total loss of £441k was recorded in the CIES representing the present value of the interest foregone over the life of the loan (£439k) and expected credit losses (£2k), resulting in a lower amor tised cost than the outstanding principal. In 2023/24 the carrying value of the loan increased by £64k to £1,304k as at 31st March 2024, due to crediting CIES £66k interest and £2k expected credit loss charge. Narrative Report 7 Treasury Management The Council takes a very prudent strategic approach in inve sting its cash balances to ensure money is invested at a very low level of risk. The strategy for investing funds fi rst considers the security of the deposit, the liquidity of investments and then the return on the investment. Having begun the financial year at 4.25%, the Bank of England’s Monetary Policy Committee (MPC) increased Bank Rate to 5.25% in August 2023 with a 3-way split in the Committee’s voting as the UK economy appeared resilient in the face of the dual headwinds of higher inflation and interest rates. Bank Rate was maintained at 5.25% through to March 2024. The Council adheres strictly to counterparties that hav e been agreed through the Treasury Management Strategy, consisting of other local authorities, in stant access funds, and institutions with a credit rating A- or above. The total investment income received this year was £4,001k (£2,392k in 2022/23). Investment income returns for the year on internally managed cash yielded 4.92% (2.13% in 2022/23). The Council also continued as part of its investment strategy to invest £15m in more strategic pooled funds that return dividends, with an average return of 4.15% (3.43% in 2022/23). Rising market interest rates in recent years have reduced the fair value of bonds held within these strategic pooled funds, and previously up to 31st March 2023, an adverse movement of £1,507k had been reported. This has improved with a gain of £438k in 2023/24 and the fair value as at 31st March 2024 is now a loss of £1,069k. The DLUHC IFRS 9 pooled investment fund statutory override for English authorities for fair value gains and losses on pooled investment funds is due to expire with effect from 1st April 2025. Under the regulations, gains and losses resulting from unrealised fair value movements relating to treasury pooled investment f unds, that otherwise must be recognised in profit or loss under IFRS 9, are not charges to the revenue account, and must be taken into an unusable reserve account. Although internal borrowing continued to be utilised duri ng the year, external borrowing was also required during 2023/24 to ensure liquidity was maintained. Overall the total loan portfolio increased by £32.5m with total loan balances at year-end of amounting to £356.2m (GF £158.6m, HRA £197.6m). New loans of £50m were taken under the HRA to take advantage of the concessionary PWLB rate for HRA capital financing, of which £20m were short term (12 months). There was no new long term General Fund borrowing with borrowing throughout the period consisting of £64m temporary local authority loans, offset by £70m which matured resulting in a net £6m reduction in temporary loans. Over the year the Council’s loan portfolio had an average inte rest rate of 3.31% (2.60% 2023/24) reflecting increases in market rates. Interest paid over the year totalled £10.26m (GF £4.87m, HRA £5.39m), an increase of £1.46m from 2023/24. Change in Accounting Practice There were no material changes to the 2023/24 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 A net gain on disposal of £6.8m has been recognised in the Comprehensive Income and Expenditure statement, comprising mainly a gain of £6.7m related to HRA Right-to-Buy sa les. 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 2023/24 there were gross capital receipts amounting to £13.8m (£8.6m in 2022/23) obtained on thirteen General Fund sites. 2.3 Non-Financial Performance Environment The council has retained its status as one of the greenest boroughs in the country after receiving 67 Green Flag Awards – the most held by any local authority. It is the eleventh year running the council has achieved the top spot for its green spaces through the national– and international – awards sc heme which recognises and celebrates most beautiful and well-managed parks in the UK and beyond. The council’s award-winning rain gardens in Eastcote, which help prevent localised flooding, were given a £12,000 makeover with hundreds of new plants during Spring 2023. During the past few winters, the plants have been affected by the cold, with some dying off. Almost 1,000 new plants have now been restored to the 15 rain gardens following the Narrative Report 8 work in May 2023, with species including hebe (a favourit e of bees), miscanthus, panicum, stipa, pennisetum and various grasses. In January 2024, a new decarbonisation programme got underway at the Civic Centre, Uxbridge with the arrival of 10 air source heat pumps, as the council continues to make strides towards its target for its operations to be carbon neutral by 2030. The Civic Centre is the first of four buildings ear marked for a carbon-reduction makeover, with the air source heat pumps and a high-capacity heat recovery cylinder delivered as part of an initiative that will see 12 more heat pumps installed on the roof of the building’s main plant room, a fu rther 12 in the goods yard, and four more at the rear of the site’s Middlesex Suite. Leisure and Culture In July 2023, works completed to transform the play area in Fassnidge Park, Uxbridge, as part of the council’s four-year £1.6 million refurbishment programme. In total, 23 playgrounds on housing estates and in parks across the borough will see their ageing play equipment replaced with modern, accessible and inclusive facilities. Also completed during summer 2023 were Albion Road playground, Hayes, where new equipment includes a three-way see-saw, fireman’s pole, an extra wide slide, double tower multi-play unit and a wheelchair-accessible roundabout, and St Peter’s Road playground in Cowley, where equipment includes a new climbing agility unit, cradle seat swing, springer, inclusive see-saw, and a junior multi-unit specifically for younger children. On Friday 29 September 2023, the council celebrated t he opening of Harmondsworth Recreation Ground’s newly renovated tennis courts. This marked the completion of a £240,000 investment programme, which saw the council invest £60,000 and secure a £181,175 grant from the Lawn Tennis Asso ciation (LTA) and the government to revitalise 15 of the borough’s tennis courts. In October 2023, the council opened an accessible cycle hub in Uxbridge which will give people with health, learning and physical conditions the opportunity to use six specially adapted cycles. The £57,000 council-funded project not only provides specialist cycles and storage facilities, but also cycling instructors who will facilitate sessions, as necessary. Schools & Children’s Services In December 2023, the council formally opened its second fully refitted and inclusive family hub in Hayes. The former ASHA Day Care Centre, near Coldharbour Lane, has been remode lled into a multifunctional site which incorporates a wide range of integrated services for families and children. The new hub includes children’s centre groups and sessions, outdoor space for play, youth services, parenting programmes, SEND support, adult education opportunities and pre and antenatal maternity support for children, young people and their families. Services can be offered in person or online, giving visitors access to counse lling, mentoring, health visitors, a sexual health clinic, baby groups and much more. Also in December 2023, the council had completed wo rk at two primary schools to enhance facilities and create additional places for children with special educationa l needs (SEND). The council has created a new and bespoke specialist resource provision (SRP) at the school, offering group and therapy rooms, classrooms for Key Stage 1 and 2, a utility space, toilets and a welcome space. This will pr ovide an additional eight students with autistic spectrum conditions (ASC) with support. The council’s Children’s Services has been judged as one of the best in England, following an ‘Outstanding’ Ofsted report in November 2023. Inspectors praised “excellent council staff” and “exceptional practice” for enhancing the lives of children and families in Hillingdon. On Friday 23 February 2024, the counc il celebrated the completion of improvem ent works at Hillside Infant School in Northwood and held an event to mark the steel frame being installed as part of school expansion works at Meadow High School in Uxbridge. The council has invested £800,000 into the installation of new flat roofs and skylights at Hillside Infant School. The new roofs will significantly reduce heat loss and deliver long-term energy savings, and the new rooflights will allow more natural light into the building. Social Care The remarkable achievements of care experienced children and young people were celebrated at the council’s fun filled and glamorous annual KICA event on Sunday 17 September 2024. Four hundred children, carers and friends were brought together to recognise the childr en and care leavers’ determination and su ccesses at the special ceremony at Stockley Marquee at Stockley Park Golf Course. Narrative Report 9 Protecting Residents Two more council car parks have been given lighting upgrade s to improve safety for visitors and make them more energy efficient. Work at the Cedars car park in Uxbridge and Blyth Road car park in Hayes completed during Summer 2023. The new 24-volt intelligent light ing system will cut energy costs and carbon emissions and tackle residents’ concerns about safety by ensuring, bright, evenly distributed light at night. People Resources The Council is continuing to recruit and develop existing staff onto apprenticeship programmes across a range of services, with 110 apprentices across the Council in 2023/24. 2.4 Risks and Opportunities With pressure on resources available increasing as a resu lt of reduced funding, demographic changes and inflation pressures there could be a risk to future service provis ion. 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. Our Business Improvement Delivery (B ID) programme aims to deliver services that resident’s value, and to identify and improve the way the Council wo rks. Reviews with services during 2023/24 to assess efficiencies and potential changes in ways of working, formed the basis of the MTFF for 2024/25 and are being facilitated and supported by the wider Transformation team. These, c oupled with longer term strategic reviews, form the Transformation programme to meet the requirements of the MTFF. The Council incorporates a number of service specific Dem and-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 2023/24, the Council utilised this budget resource for managing the impact of growing demand for Homelessness services, Waste disposal Levy, and Social Care demographic pressures. Th e Council has increased the approved budget by £9m for Demand-Led Growth in 2023/24, with demand-led services continuing to be impacted by the cost of living pressures and legacy impacts driven by the pandemic. Going forward the Council is facing a number of significant risks to its financial position such as the following: - Delivering a number of savings that are in early stages of development, including achieving the Target Operating Model as set out in the draft Cabinet budget report for consultation submitted to Cabinet in December 2024. - Further potential demand pressures that may arise, particularly arou nd social care costs and temporary accommodation. - Macro-economic headwinds including inflation and interest rates The Council has a significant Dedicated Schools Grant deficit (£50.6m) which is currently held on the Balance Sheet but not impacting on the level of general reserves. Should the statutory over-rid e preventing it from affecting general reserves be withdrawn this would result in general reserves being negative. 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 increase in the Business Rates multiplier for 2024/25, alongside releasing the benefit of the April 2023 revaluation. Following the Final Local Government Settlement for 2023/24, the Council’s grant f unding from Central Government increased by £6,747k in 2023/24 from the previous year, with the 2024/25 settlement confirming an additional £3,095k for 2024/25. The combined effect of the medium-term forecast position is a headline savings requireme nt of £51.9m over the next five years to 2028/29, with the five-year budget strategy identifying a saving programme of £33.4m, leaving a budget gap of £18.5m, which represents a challenge on a similar scal e to the £51.0m of pressures managed over the period from 2019/20 to 2023/24. In contrast to t he previous five years, when reducti ons in funding were the single largest Narrative Report 10 contributor to the budget gap, the project ed gap is very much driven by growth in expenditure as a result of the exceptional inflationary environment fore cast to last throughout 2023/24 and in to 2024/25, partially mitigated through continuation of the increased government support from 2024/25 onwards, particularly for Social Care, although there remains a lack of clarity of Government funding beyond the current Spending Review that ends on 31 March 2025. Demand-led service projections relate to Council services where the financial impacts are driven by demand levels, and in some services, the markets in which those services are procured. These items are projected to add £28,224k or approximately 21% to the 2023/24 budget for these functions from 2024/25 to 2028/29. Demand led pressures exist in the following areas in particular: - Waste disposal costs - Looked After Children services - SEND transport - Adult Social Care placements - Homelessness The budget for 2024/25 includes releasing no further funding from general balances but does propose to increase controllable balances by £1.5m per annum over the next 5 years. The current budget strategy leaves minimal controllable balances above the recommended minimum level available, to manage emerging risks. A cumulative deficit of £50.6m is shown in the accounts on the retained element of t he Schools Budget at 31 March 2024, with this balance being impacted by the suspension of the Council’s contributions to the deficit included in the Safety Valve agreement, however, the Safe ty Valve agreement with the Department for Education is 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 Ag reement 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 £51.9m over the period 2024/25 to 2028/29. 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 £18.5m still to be identified. Given the size of the budget gap going forward and size of the 2024/25 saving programme, delivery will need to be stepped up going forward. This will include the conti nued need for an expanded and accelerated BID Programme. Alongside the more strategic BID workstreams under development, the routine MTFS work streams such as zero-based budgeting and annual reviews of charging policies will continue. Looking forward the Councils Capital Programme 2024/25 to 2028/29 has an approved budget of £377m, with £104m 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 include a continuation of the Schools Expansions programme, a new le isure centre in West Drayton, Carbon Zero Initiatives, Civic Centre Transformation, street lighting replacements, expanding and im proving CCTV coverage as well as investments into technology and highways. Looking into the medium financial outlook the underlying savi ngs requirement is driven primarily by inflation, with 2024/25 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 pr ojected over this period as a result of steady growth in the Council Tax taxbase and an increase in retained Business Rates from the 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 businesses, 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 MTFS strategy. 2.6 Statements within the accounts General The movement in the Balance Sheet of £72.3m 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. Narrative Report 11 Any minor movement in the underlying IAS19 pension assumptions results in a large swing in the overall deficit position. For 2023/24 an increase in the net discount rate from 4.75% (2022-23) to 4.80% (2023-24) has reduced the value placed on the Fund's liabilities and contributed to an overall favourable impact of £77,593k in reducing the net deficit on pension assets and liabilities recognised in the Balance Sheet. The core accounting statements comprise: - Comprehensive Income and Expenditure Statement This statement reports the net cost for the year of all functions for which t he Council is responsible and demonstrates how that cost has been financed through income from taxpayers and general government grants. The income 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 £48.0m (£56.5m deficit in 2022/23) on the provision of services for 2023/24. Of this, a deficit of £64.2m relates to General Fund balances and a su rplus of £16.2m relates to the Housing Revenue Account. Additional reserve movements, including earmarked and schools shows an overall drawdown of £7.5m. To comply with statutory accounting requirements there are various item s 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 Council'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 increased by £1.9m to £119.0m in 2023/24. Within this movement there was an increase in General Fund balances of £6k and a decrease in HRA balances of £0.1m. There was a decrease in Earmarked reserves (including schools’ reserves) of £7.5m, partly due to a net dr aw down of £4.0m in the Inflation Volatility reserve to manage inflation risks. A new HRA development and acqui sitions reserve of £6.8m was created in 2023/24. Other movements included transferring unspent capital grants of £2.1m to the Capital Grants Unapplied Reserve to support future financing of capital projects. Unusable reserves increased by £99.3m to £1.468bn in 2023/24, mainly due to the decrease in the Pension Fund liability of £77.6m, reflected in the Pensions Fund increasing by the same amount, and upward movement in property values increasing the Revaluation Reserve by £48.3m. There was an increase of £5.3m 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 £7.4m. 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 2023/ 24 were £49.1m within the General Fund, adjusting the General Fund position for Council Tax purposes to a surplus of £6k. 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. The total net worth of the Council in 2023/24 was £1.587bn (£1.515bn in 2022/23). The largest items within the Balance Sheet consist of long-term assets valued at £2.182bn, net pension liabilities of £183.1m and long-term borrowing of Narrative Report 12 £246.3m. 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 balances to meet the cost of unforeseen demands or events and as a result keeps a minimum level of balances. As at 31 March 2024 the Council has £26.8m General Fund balances (£26.8m in 2022/23) and £10.1m Earmarked Reserves excluding schools’ balances, held for specific purposes (£17.1m in 2022/23). 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 equivalent s arising from both revenue and capital transactions with third parties. It excludes funds held in trust for others and the Pension Fund. There was a decrease in cash and cash equivalents in 2023/24 of £13.6m. 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 includes 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 2023/24 on HRA services of £15.4m (£9.4m in 2022/23). 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-stat utory 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 £0.1m in 2023/24 (def icit of £0.2m in 2022/23), 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 pr ecepting authorities including the Council itself. An in- year surplus of £5.5m is reported on Council Tax with a carried forward surplus of £2.3m. An in-year surplus of £10.6m is reported on Business Ra tes, creating a surplus within the carry forward balance on NNDR to £23.2m. The share of Collection Fund activity relating to the Council 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. 75% 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 benef its in future years. The activity of the Pension Fund is not incorporated within the Council’s core accounting statements. 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. Narrative Report 13 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 Counc il and Chief Executive setting out the: systems; processes; culture, and values by which the Council is directed and c ontrolled, 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 14 The Council is required to: • Make arrangements for the proper administration of its financ ial 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 e ffective 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 t he 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 2024 and its income and expenditure for the year then ended. Richard Ennis Corporate Director of Finance 30 January 2025 Accounts currently unaudited Independent Auditor’s Report 15 To Follow Statement of Accounting Policies 16 GOING CONCERN The Council is required to prepare an annual Statement of Accounts which summarises the Council’s transactions for the 2023/24 financial year and its position as at the year- end of 31 March 2024. The St atement of Accounts must be prepared in accordance with proper accounting practices as per the A ccounts and Audit Regulations 2015. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24 supported by International Financial Reporting Standards (IFRS). The accounting convention adopted in the St atement of Accounts is principally hi storical cost, modified by periodic revaluation of certain categories of non-current assets and financial instruments. The accounts are prepared on a going concern basis, assuming that the functions of the Council will continue in operational existence for the foreseeable future from the date that the accounts are approved. The main factors that underpin this assessment and consi dered below include the Council’s current financial position, projected medium-term forecast, and cashflow management proc ess in the context of the ongoing impact of inflation and other external factors affecting the wider economy. The narrative section 2.2. Financial performance contains detail of the Council’s General Fund revenue budget outturn position. The Council maintained its record of operating within budget, reporting an underspend of £6k against planned expenditure budgets before transfers to reserves. The General Fund balance totalled £26.8m at year-end. This position is being driven by a favourable variance from the Council’s Treasury activities offsetting an over spend of £3,125k within Residents Services (£425k overspend in 2022/23) Within this portfolio there are two areas that fall within the Council’s Demand-Led Growth section of the budget strategy as a result of the impacts of demographics and volatility, with these two areas being Homelessness Prevention and Waste Disposal. Homelessness Prevention continued to experience a substantial uplift in demand throughout 2023/24, with a gross pressure of £2,986k being funded from earmarked reserves. For context the Council’s prudent minimum balance on the General Fund and controllable reserves is £32m for 2024/25. As at 31 March 2024 the Council held £35.1m comprisi ng £26.8m General Fund balances and £8.3m controllable reserves. The 2024/25 budget and five-year budget strategy was reported to Cabinet in February 2024. The General Fund budget for 2024/25 has been prepared in the context of a five-year strategy, which incorporates the impact of a comprehensive review of capital investment plans and strategic savi ngs programme in the context of challenging economic circumstance globally, nationally and locally. With 2024/25 bei ng the final year in the current Spending Review period and with no indication from Government on local authority funding from 2025/26 and beyond, there remains a significant amount of risk within the Council’s funding position whils t the sector awaits an update from Government. The Council continues to operate in a high inflationary environment whilst residents deal with cost-of-living pressures, with the Council also continuing to see legacy impacts from the pandemic impacting on demand for Council services. To mitigate pressures, the Council has identified a significant saving programme for 2024/25, with the Council including savings initiatives totalling £15.8m. As in previous years, savings proposals for the forthcoming financial year are specific in nature, with medium-term plans struct ured around wider strategic approaches to transformation of local services. Proposals have been developed within the themes of Service Transformation, Effective Procurement, Digital Strategy, Workforce, Managing Demand and Income Generation & Commercialisation and Zero Based Reviews. During 2024/25 the Council has updated budget strategy projections against funding, inflation, demand led growth and corporate items, with this refresh setting out a budget gap for 2025/26 of £39.0m, rising to a cumulative impact of £62.1m by 2029/30. To date, the Council has identified savings of £32.6m in 2025/26, leaving a budget gap of £6.4m, with savings in later years increasing to a cumulative total of £65.2m by 2029/30 (including £5m Target Operating Model savings in 2025/26, rising to £25m by 2029/30). Reserves are forecast to reduce to £19.8m by the end of 2025/26, before increasing to £29.8m by 31 March 2030. The Target Operating Model incorporates a full review of ev ery service and how it operates, building on the work that started in the Zero-Based Budgeting reviews that set the groundwork for budget strategy development in 2024/25. The delivery of Target Operating Model savings are essential for the financial future of the Council. The Council has not needed to request Exceptional Financial Support [EFS] from Government and is working hard to resolve its own financial pressures. Given the pressures and scale of financial savings, the Council’s financial position is very challenging and whilst this is a national issue and systematic failure, it is the Council’s responsibility to ensure Statement of Accounting Policies 17 strong financial management to avoid this risk crystallising. If the savings are not delivered in broad terms EFS cannot be ruled out as is the case with many local authorities. The Council proactively manages its cashflow, maintaining a dai ly forecast of available funds and ensuring that liquid cash and deposits of at least £10m are available at all time s. Together with the reprofiling of funding and payments to government, this has continued to ensure that inflationary pr essures have been managed within the available cash envelope. This minimum level of liquid cash is held in a combination of UK banks, Money Market Funds and HM Treasury’s Debt Management Account Deposit Facility (DMADF), with addi tional deposits of around £15m held in Strategic and Long Dated Pooled Funds accessible within four working days. The Council’s cashflow forecasts project to maintain at least £10m in liquid cash and deposits at 31 March 2024 through to 31 March 2026. Liquid deposits are supplemented by the Council’s ability to borrow short-term from other local authorities and ultimately borrowing from the Public Works Loans Board could be secured within five working days. The Council continues to retain significant borrowing he adroom against the Capital Financing Requirement and would therefore have no operational or gover nance barriers to securing borrowing at short notice if required. The latest forecasting of capital financing requirements is that these are in line with budget projections and a strategy is in place to secure all required borrowing over the medium-term. It is therefore noted that there is headroom within the General Fund to absorb the estimated financial impact of inflation in the short to medium-term with the Council proactively managing its financial position to make provision for actual and potential risks as part of the MTFS and budget monitoring processes. Furthermore, the Code requires that local authorities prepare their acc ounts on a going concern basis, as they can only be discontinued under statutory prescription. For these reasons, the Council does not consider that there is material uncertainty in respect of its ability to continue as a going concern for the foreseeable future. The going concern period of assessment is twelve months from the authorisation date of the financial statements. CAPITAL 1. Property, Plant and Equipment Assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others for administration purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. Recognition All expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis in the accounts, provided that the asset yields benefits to the Council for a period of more than one year and the cost of the item can be measured reliably. This excludes expenditure on routine repairs and maintenance of non-current assets that is charged directly to service revenue accounts when incurred. Measurement Assets are initially measured at cost, comprising: • The purchase price; • Any costs attributable to bringing the asset to the location and condition necessar y for it to be capable of operating in the manner intended by management; and • The initial estimate of the costs of dismantling and removi ng the item and restoring the site on which it is located. The Council does not capitalise borrowing costs incurred whilst assets are under construction. The cost of assets acquired other than by purchase is deemed to be its fair value unless the acquisition will not increase the cash flows of the Council. In the latter case, the cost of the acquisition is the carrying amount of the asset given up by the Council. Assets are then carried in the balance sheet valued on t he basis recommended by CIPFA and in accordance with the Statements of Asset Valuation Principles and guidance note s issued by the Royal Institut ion of Chartered Surveyors (RICS). Property, Plant and Equipment are included in the balance sheet on the following basis: Statement of Accounting Policies 18 • Community assets and assets under construction are included in the balance sheet at historic cost less impairment. • Dwellings are carried at fair value, determined using the basis of existing use value for social housing. • Surplus assets are measured at fair value, estimate d at highest and best use from a market participant’s perspective. • All other asset classes are measured at fair value in its existing use. For land, buildings and assets which are not held for the purpose of generating ca sh flows, the fair value represen ts the amount that would be paid for the asset in its existing use. Where there is no market-based evidence of fair value due to the specialised nature of the asset, the asset is valued at its depreciated replacement cost. • Plant and machinery forming an integral part of the proper ty is included in the valuation of the buildings. Other plant, machinery, vehicles and mobile units have been given a value on the basis of historical costs as a proxy for current value. Assets included in the Balance Sheet at fair value are re-v alued regularly to ensure that their carrying amount is not materially different from their fair value at the year-end, but as a minimum, assets are valued every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains (exceptionally, gains might be credited to the Comprehensive Income and Expenditu re Statement where they arise from the reversal of a revaluation loss previously charged to a service). Where decreases in value are identified, the revaluation loss is accounted for as follows: • Where there is a balance of revaluation gains for the as set in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to t he amount of the accumulated gains) with any excess written down against the relevant service line in the Comprehensive Income and Expenditure Statement. • Where there is no balance in the Revaluation Reserv e or an insufficient balance, the carrying amount of the asset is written down against the relevant servic e line in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve contains revaluation gains recogn ised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. A de minimis value of £10k has been set for capital purchas es. This limit also applies to valuations. De minimis expenditure is charged to revenue but, where permissible and appropriate, it is financed as though it were capital expenditure. The Council only includes maintained schools in its asset regi ster and only where it owns or controls the assets; this includes foundation schools. Academies are external to local authorities and are not included. The Council does not own or control Voluntary Aided school assets as they are owned by the Diocese or Church of England and the value of these assets are not included in the Council’s Balance Sheet. The equity investment in the 100% wholly owned subsidia ry of Hillingdon First Limited is classified as capital expenditure. Impairment / Revaluation Loss An impairment review of all assets is undertaken at the end of each financial year. Losses arising from an impairment or revaluation loss are written off against any revaluation gain attributable to the relevant asset in the Revaluation Reserve, with any excess charged to the relevant se rvice revenue account in the Comprehensive Income

Hillingdon Pension Fund Audit Results Report Year ended 31 March 2024 17 January 2025 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. 17 January 2025 Dear Committee Members 2023/24 Audit Results Report We are pleased to attach our Audit Results Report, summarising the status of our audit for the forthcoming meeting of the Audit Committee. We will update the Committee at its meeting scheduled for 11 February 2025 on further progress to that date and explain the remaining steps to the issue of our final opinion. The audit is designed to express an opinion on the 2023/24 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 suppor ting this process This report is intended solely for the information and use of the Pension Committee and Audit Committee, Board of Directors a nd 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 11 February 2025. Yours faithfully Debbie Hanson Partner For and on behalf of Ernst & Young LLP Encl Audit Committee London Borough of Hillingdon Uxbridge UB8 1UW Confidential — All Rights Reserved Contents Independence Independence07 Appendices Appendices08 Assessment of Control Environment Assessment of Control Environment 05 Executive Summary Executive Summary 01 01 Areas of Audit Focus Areas of Audit Focus02 Audit Report Audit Report03 Audit Differences Audit Differences04 Other Reporting Issues Other Reporting Issues 06 Hillingdon Pension Fund Audit results report 3 A picture containing computer Description automatically generated A picture containing text, indoor, computer, keyboard Description automatically generated 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/audit- quality/statement-of-responsibilities/)).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 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 Hillingdon Pension Fund in accordance with the statement of responsibilities. 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 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. Executive Summary01 {68}: 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 Outline Audit Planning Report presented to the 30 April 2024 Audit Committee meeting, we provided you with an overview of our audit scope and approach for the audit of the financial statements. We have carried out our audit in accordance with this plan, with the following exception: ► Changes in materiality - in our Outline Audit Planning Report, we communicated that our audit procedures would be performed using a materiality of £11 .8 million which represents 1% of net assets in the 2022/23 draft statement of accounts. Following the publication of the draft statement of a ccounts for 2023/24, we have revised the materiality level based on net assets in this updated period of £1,358 million. This results in updated materiality of £13.58 million, pe rformance materiality of £10.18 million and threshold for reporting misstatements of £679K. Scope update 5 Status of the audit Our audit work in respect of the Pension Fund financial statements and our opinion is substantially completed. The following items relating to the completion of our audit procedures were outstanding at the date of this report. ► Conclusion procedures including; final review of Annual Report and Accounts; update of our subsequent events procedures to th e date of our opinion; and receipt of a signed accounts and letter of representation. . Audit differences We have identified the following audit differences, which have been adjusted by management: ► Understatement of investment asset valuations in the financial statements of £4.1 million, due to the provision of more up to date valuations subsequent to the production of the financial statements. ► A misstatement between investment income and profit and loss on disposal of investments and changes in market value of £3.4 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, but we note that the same error occurred in 2022/23; ► A new investment of £19.2 million with Blackstone was incorrectly disclosed as Level 2 but, due to unobservable inputs, shoul d have been Level 3;. ► 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 Outline Audit Planning Report we identified a number of key areas of focus for our audit of the financial statements of the Pension Fund. This report sets out our observations and status 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 sum marised below. Areas of audit focus 6 Fraud Risk Findings & Conclusions Misstatements due to fraud or error We carried out procedures to address fraud risks as set out in our Audit Plan, including testing journal entries and considering estimates for evidence of management bias. Using data analytics is central to our approach. We also performed a reconciliation between the financial statements, the fund manager reports and the custodian reports to address the risk of manipulation of investment income. As part of our investment income testing, we found an understatement of investment income of £3.4 million, as one distribution reinvested by the LCIV MAC fund was not identified by the custodian. As a result, this income was incorrectly recorded in the Pension Fund’s accounts. We noted a misstatement of income from the same fund manager and same investment in the prior year. Given that this issue has recurred, management should have exercised greater diligence in their preparation of the financial statements, as they were already aware of the possibility of reinvestment of this investment income by this fund manager. We are satisfied that this misstatement was a result of error and not an indication of management override or fraud. We have noted no other significant matters to bring to your attention. Significant risk Findings & Conclusions Valuation of Level 3 investments We carried out procedures as set out in our Audit Plan to ensure that these investment valuations are supported and that estimation processes, including assumptions made, are materially accurate. We have completed our work in this area and identified audit differences in the valuation of Level 3 investment assets of 4.1 million. These differences were due to more up-to-date valuation reports from the investment fund managers that were not available to the Pension Fund at the time of preparation of the draft financial statements. We have no other significant matters to bring to your attention. Classification of Level 2 and Level 3 investments We carried out procedures as set out in our Audit Plan to ensure that the assessment of investments as Level 2 or Level 3 are in line with the Fair Value hierarchy. Our work in this area identified an error in the classification of investments between Level 2 and Level 3 of £19.2 million. This was a new investment in 2023/24 and had been incorrectly classified as Level 2 when, as there were no observable inputs, it should have been classified as Level 3. We recommend that greater diligence is applied in the classification of fair value hierarchies to minimize the risk of such audit findings in the future. Confidential — All Rights Reserved Executive Summary (cont’d) Hillingdon Pension Fund Audit results report Areas of audit focus 7 Area of audit focus / Inherent risk Findings & Conclusions IAS 26 – Actuarial present value of promised retirement benefits We carried out procedures as set out in our Audit Plan to gain assurance over the IAS 26 actuarial statement and the associated disclosure of the actuarial present value of promised retirement benefits as a note to the accounts. We have completed our work in this area and have no significant matters to bring to your attention. Confidential — All Rights Reserved Executive Summary (cont’d) Hillingdon Pension Fund Audit results report 8 Control observations Independence Please refer to Section 07 for our update on Independence. We have no issues we need to bring to your attention subject to co mpletion of our audit procedures. During the course of the audit, we have identified the following control observations which we wish to bring to your attentio n: • As noted above, as part of our investment income testing, we have found an understatement of investment income of £3.4 millio n, as one distribution reinvested by the LCIV MAC fund was not identified by the custodian. As a result, this was not correctly recorded in the Pension Fund’s accounts. We noted the same misstatement in the prior year with the same fund manager and the same investment. Given that this issue has recurred, manage ment should have exercised greater diligence in the preparation of the financial statemeets, as they were already aware of the possibility of reinvestment of investment income by this fund manager. • Our audit of fair value hierarchies of the Pension Fund’s assets which are measured at fair value identified an error in clas sification of investments in Level 2 which should have been Level 3 of £19.23 million. Although there is an element of judgment in the fair value hierarchy classificati on, strengthening controls around the identification and documentation of observable and unobservable inputs used in valuations would minimise the risk of such err ors and audit findings in the future. Further detail on control observations is included in Section 05 Confidential — All Rights Reserved Areas of Audit Focus02 Hillingdon Pension Fund Audit results report 9Confidential — All Rights Reserved {68}: Confidential — All Rights Reserved Areas of Audit Focus Misstatements due to fraud or error Fraud Risk We undertook our standard procedures to address fraud risk, which included: • 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. We have also: • Undertaken a review of reconciliations of the financial statements to the fund manager and custodian reports and investigated any reconciling differences; • For investment income, we agreed the reconciliation between fund managers and custodians back to the source reports, which included evidencing the investment income achieved; • Re-performed the detailed investment note using the reports we have acquired directly from the custodian or fund managers; and • Checked the reconciliation of holdings included in the Net Assets Statement back to the source reports. 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) 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 identified the risk of manipulation of investment income as the most likely way that management would seek to override controls. . What is the risk, and the key judgements and estimates? What are our conclusions Hillingdon Pension Fund Audit results report 10 Our response to the key areas of challenge and professional judgement We have not identified any evidence of management override generally or in relation to investment income journals. We have noted an error regarding the recording of investment income – an understatement of investment income of £3.4 million- as a result of one distribution being reinvested by the LCIV MAC fund not identified by the custodian. As a result, this was not correctly recorded in the Pension Fund’s accounts. We are satisfied this was a result of error and was not an indication of management override or fraud. . Confidential — All Rights Reserved Areas of Audit Focus Valuation of complex investments (including level 3 investments) Significant Risk 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 2024. 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 2024; • 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. 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? 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 4.1 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 of the draft financial statements. Refer to Section 04 for more detail on audit differences. 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. Confidential — All Rights Reserved Areas of Audit Focus (cont’d) Classification of level 2 and level 3 investments Significant risk We : • Gained an understanding of the Pension Fund’s approach to classification and the nature of its investments and worked with the Pension Fund to agree the proposed classifications early in the audit process; • Assessed the significance of market inputs used in the hierarchy valuation as well as the sources of the inputs; • Confirmed the basis of the valuation of each class of investment asset and assessed whether it is appropriate; • Obtained quoted prices directly from independent sources and compared these with the Pension Fund’s assessment of observable market inputs ( bid market price, current yields, and closing bid price) to confirm correct classification; • Tested that accounting entries related to valuation have been correctly processed in the financial statements. The classification of investments using the fair value hierarchy requires the accurate identification of observable and unobservable inputs and requires a high level of professional judgement. The assessment of Fair Value hierarchies can be subjective and includes an element of judgement. There have been reclassifications in the fair value hierarchies of the pension fund assets as a result of the audit in the last two years. In 2022/23, the reclassification was £64 million from Level 2 to Level 3 and in 2021/22 it was £47.8 million. We have, as a result, raised this from an inherent risk to a significant risk. What is the risk, and the key judgements and estimates? Our response to the key areas of challenge and professional judgement Hillingdon Pension Fund Audit results report 12 We have completed our work on Level 2 and Level 3 asset classification We have noted an error around the fair value classification of one investment of £19.2 million. This investment (in Blackstone) was a new investment made during the year and the client was already aware that this investment should be classified as Level 3. Nevertheless, they erroneously classified it as Level 2 in the first version of the statement of accounts. Therefore, we consider that this misstatement was not due to a lack of judgment but rather a lack of due diligence in the preparation of the accounts. What are our conclusions Confidential — All Rights Reserved Areas of Audit Focus (cont’d) IAS 26 – Actuarial present value of promised retirement benefits Inherent risk We consider the valuation of IAS 26 to be of a higher degree of inherent risk because of the level of estimation uncertainty resulting from the calculation using a number of underlying assumptions. The actuary is required to make assumptions on salary increases, discount rates, pension rates, scheme member longevity and other variables. While IAS 26 does not inform the primary statements, there is stakeholder interest in this disclosure due to its nature. What is the risk, and the key judgements and estimates? Our response to the key areas of challenge and professional judgement What are our conclusions Hillingdon Pension Fund Audit results report 13 We have completed our work on IAS 26 disclosures and our mandatory procedures on management and auditor specialists. We identified some discrepancies between the disclosures and the Actuary’s report. These have been corrected by Management. 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 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. Confidential — All Rights Reserved Audit Report03 Hillingdon Pension Fund Audit results report 14Confidential — All Rights Reserved {68}: Confidential — All Rights Reserved Audit Report - draft Our opinion on the financial statements Hillingdon Pension Fund Audit results report 15 Draft audit report Confidential — All Rights Reserved Audit Report (cont’d) Hillingdon Pension Fund Audit results report 16 Our opinion on the financial statements Confidential — All Rights Reserved Audit Report (cont’d) Hillingdon Pension Fund Audit results report 17 Our opinion on the financial statements Confidential — All Rights Reserved Audit Report (cont’d) Hillingdon Pension Fund Audit results report 18 Our opinion on the financial statements Confidential — All Rights Reserved Audit Differences04 Hillingdon Pension Fund Audit results report 19Confidential — All Rights Reserved {68}: Confidential — All Rights Reserved Audit Differences In the normal course of any audit, we identify misstatements between amounts we believe should be recorded in the financial s tatements and the disclosures and amounts actually recorded. These differences are classified as ‘known’ or ‘judgemental’. Known differences represent items that can be accurat ely quantified and relate to a definite set of facts or circumstances. Judgemental differences generally involve estimation and relate to facts or circumstances that are uncertain or open to interpretation. Hillingdon Pension Fund Audit results report 20 Summary of adjusted differences Identified audit differences 31 March 2024 (£’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 (4,111) 4,111 ► 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 (3,384) 3,384 Overall financial statement impact: (4,111) 4,111 Disclosure misstatements Note 14: Fair value investment disclosures; Misclassification of £19.2 million relating to level 2 assets ( Blackstone) which should be classified as level 3. We identified some other disclosure misstatements which have been corrected by management. Confidential — All Rights Reserved Assessment of Control Environment05 Hillingdon Pension Fund Audit results report 21Confidential — All Rights Reserved {68}: 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 controls 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 two 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 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) Recommendation • Management should strengthen controls around the identification and of observable and unobservable inputs used in valuations. This would minimise the risk of such errors and audit findings in the future. 2) Weaknesses in the procedures in place for the Pension Fund to identify the income reinvested by fund managers not identified by the custodian. (Moderate) Recommendation • Management should exercise diligence when recognizing the investment income from fund managers who have the practice of reinvesting the income distribution The table below provides an overview of the ‘high’ ‘moderate’ and ‘low’ rated observations we have from the 2023/24 audit. High Moderate Low Total Open at beginning of 2023/24 0 1 0 1 New points raised in 2023/24 0 1 0 1 Total open recommendations 0 2 0 2 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 22 Confidential — All Rights Reserved Other Reporting Issues06 Hillingdon Pension Fund Audit results report 23Confidential — All Rights Reserved {68}: Confidential — All Rights Reserved Other Reporting Issues Hillingdon Pension Fund Audit results report 24 Consistency of other information published with the financial statements, including the Annual Governance Statement We must give an opinion on the consistency of the financial and non-financial information in the Pension Fund Statement of Accounts 2023/24 with the audited financial statements Please refer to section ‘Status of Audit’ in Executive Summary section. Our final review of the Annual Report is still pendin g, but we have no matters to report in respect of consistency of this information at this stage. 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 Pension fund 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 matters As required by ISA (UK&I) 260 and other ISAs specifying communication requirements, we must tell you significant findings fro m the audit and other matters if they are significant to your oversight of the Authority’s financial reporting process. We have no other matters to report. Confidential — All Rights Reserved Other Reporting Issues (cont’d) Hillingdon Pension Fund Audit results report 25 ISA (UK) 315 (Revised): Identifying and Addressing the Risks of Material Misstatement ISA 315 is effective from FY 2022/23 onwards and is the critical standard which drives the auditor's approach to the followin g areas: • Risk Assessment • Understanding the entity's internal control • Significant risk • 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 the revised standard is t o: • 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 performed the following procedures: 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. • We reviewed the following processes for all five relevant IT applications: • Manage vendor supplied changes • Manage security settings • Manage user access • Manage entity-programmed changes • Job scheduling and managing IT process 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 Independence07 Hillingdon Pension Fund Audit results report 26Confidential — All Rights Reserved {68}: 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 Pension Fund Audit results report 27 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 2023 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 28 Services provided by Ernst & Young Current Year 2023/24 Current Year 2023/24 Prior Year 2022/23 Proposed fee £ Planned fee £ Proposed fee £ Scale Fee – Code work 81,688 81,688 24,954 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 5,000 TBC TBC Additional fee with respect to testing of triennial membership data submissions NA NA 8,700 Total fees TBC TBC TBC There are no services provided by EY from 1 April 2023 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 Note 1 – We have identified a number of in year risks in our Audit Plan which will required additional work and fee. ISA 315 work will result in an additional fee as this is not currently reflected in the PSAA scale fee. Our current estimate for this is £5,000. The final fee for 2022/23 has yet to be determined by PSAA. Confidential — All Rights Reserved Appendices08 Hillingdon Pension Fund Audit results report 29Confidential — All Rights Reserved {68}: 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. The statement of responsibilities serves as the formal terms of engagement between the PSAA’s appointed auditors and audited bodies Planning and audit approach Communication of: • The planned scope and timing of the audit • Any limitations on the planned work to be undertaken • The planned use of internal audit • 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, April 2024 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 This Audit results report, Feb 2025 meeting of the Audit Committee. Hillingdon Pension Fund Audit results report 30 Required communications with the Audit Committee Confidential — All Rights Reserved 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 This Audit results report, Feb 2025 meeting of the Audit Committee. 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 This Audit results report, Feb 2025 meeting of the Audit Committee. 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. This Audit results report, Feb 2025 meeting of the Audit Committee. Hillingdon Pension Fund Audit results report 31 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 Fraud (cont.) • 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. This Audit results report, Feb 2025 meeting of the Audit Committee. 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 This Audit results report, Feb 2025 meeting of the Audit Committee. 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, integrity, 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 integrity, objectivity and independence and the appropriateness of safeguards put in place. Audit Planning Report, April 2024. This Audit results report, Feb 2025 meeting of the Audit Committee. External confirmations • Management’s refusal for us to request confirmations • Inability to obtain relevant and reliable audit evidence from other procedures. We have received all requested confirmations. Consideration of laws and regulations • Subject to compliance with applicable regulations, matters involving identified or suspected non-compliance with laws and regulations, other than those which are clearly inconsequential and the implications thereof. Instances of suspected non - compliance may also include those that are brought to our attention that are expected to occur imminently or for which there is reason to believe that they may occur • Enquiry of the audit committee into possible instances of non-compliance with laws and regulations that may have a material effect on the financial statements and that the audit committee may be aware of We have not identified any material instances or non compliance with laws and regulations. Hillingdon Pension Fund Audit results report 33 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 Significant deficiencies in internal controls identified during the audit • Significant deficiencies in internal controls identified during the audit. This Audit results report, Feb 2025 meeting of the Audit Committee. Written representations we are requesting from management and/or those charged with governance • Written representations we are requesting from management and/or those charged with governance This Audit results report, Feb 2025 meeting of the Audit Committee. 34 Appendix A - Required communications with the Audit Committee (cont’d) Material inconsistencies or misstatements of fact identified in other information which management has refused to revise • Material inconsistencies or misstatements of fact identified in other information which management has refused to revise This Audit results report, Feb 2025 meeting of the Audit Committee. Auditors report • Key audit matters that we will include in our auditor’s report • Any circumstances identified that affect the form and content of our auditor’s report This Audit results report, Feb 2025 meeting of the Audit Committee. Hillingdon Pension Fund Audit results report Confidential — All Rights Reserved Appendix B – Management representation letter The management representation letter as shown below is draft and may be subject to change Management Rep Letter Hillingdon Pension Fund Audit results report 35 Management representation letter Confidential — All Rights Reserved Appendix B – Management representation letter The management representation letter as shown below is draft and may be subject to change Management Rep Letter Hillingdon Pension Fund Audit results report 36 Management representation letter Confidential — All Rights Reserved Appendix B – Management representation letter The management representation letter as shown below is draft and may be subject to change Management Rep Letter Hillingdon Pension Fund Audit results report 37 Management representation letter Confidential — All Rights Reserved Appendix B – Management representation letter The management representation letter as shown below is draft and may be subject to change Management Rep Letter Hillingdon Pension Fund Audit results report 38 Management representation letter Confidential — All Rights Reserved Appendix B – Management representation letter The management representation letter as shown below is draft and may be subject to change Management Rep Letter Hillingdon Pension Fund Audit results report 39 Management representation letter Confidential — All Rights Reserved Appendix B – Management representation letter The management representation letter as shown below is draft and may be subject to change Management Rep Letter Hillingdon Pension Fund Audit results report 40 Management representation letter EY | Building a better working world EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets. 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Audit Committee – 11 February 2025 Part I – Public RISK MANAGEMENT REPORTS Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report Q3 Risk Management Report Strategic Risk Report Ward All The Q3 Risk Management Report presents to the Audit Committee a summary of the Council’s risks from the Risk Management System at the end of December 2024. The Risk Report focuses on 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 December. The Strategic Risk Report focuses on the strategic risks potentially impacting on the Council’s Strategic Objectives , aligning them to the Corporate Risk Register and the Council’s key performance indicators, to provide assurance the risks are being managed effectively. RECOMMENDATION: That the Audit Committee note the reports and provide feedback on the content and level of assurance received. SUPPORTING INFORMATION None BACKGROUND PAPERS None

RISK MANAGEMENT REPORT Q3 2024/25 31 December 2024 HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q3 2024/25 2 CONTENTS The key contacts in connection with this document are: Claire Baker Head of Internal Audit and Risk Assurance 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 Q3 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 250 total risks recorded on the Risk Management System at the end of December 2024. This is an increase from 227 risks at the end of September, and a positive indication the system is being used to record new risks as they emerge. 2.2 There were 20 red rated risks on the risk register (an increase from 14 at the end of September), which are shown on the corporate risk register in section three of this report. 2.3 There were 31 unscored risks at the end of the quarter. This is a significant decrease from 90 at the end of September, when this was raised as an area of concern. 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 largest number of unscored risks were in the Homes and Communities and Corporate Services Directorates. Further investigation has highlighted that 18 of the 31 unscored risks have been marked as reviewed on the risk management system but not scored, and 26 had an original risk score recorded but not a current risk score. This indicates the risk owners are aware of the risks but may not be aware they are required to add a current risk score, the Head of Risk Assurance will contact the r isk owners directly to highlight the requirement and ensure they are scored before the next Audit Committee meeting. HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q3 2024/25 4 2.5 The Finance Directorate continues to have the highest number of risks per directorate at the end of Q3. 2.6 During November the Directorate risk registers in the risk management system were updated to reflect the new Directorate structures and titles. As further restructures take place within the new directorates the risk registers and risks will be re - allocated to ensure they are escalated through the correct reporting lines. 2.7 During Q 3 there were 23 new risks added to the risk register, including three red rated risks highlighted in Section 3 of this report. 2.8 In particular there was an increase in the number of Financial risks, including two of the three red rated risks, which is consistent with the Council ’s current financial position. 2.9 During Q3 only 3 risks have been closed on the system. These were all unscored risks which were closed as tolerated . Due to the low number of risks closed we have also analysed the length of time ris ks remain on the system. Some risks may be difficult to mitigate, especially when they are caused by external factors, and therefore stay on the register for a long time. However, most risks should be addressed, reduced to a tolerated level and then closed. 182 177 207 189 295 309 308 216 5 2 1 1 0 50 100 150 200 250 300 350 RED AMBER GREEN Not Set Average of Number of Days Open Max. of Number of Days Open Min. of Number of Days Open HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q3 2024/25 5 2.10 At the end of Q3 there were 61 risks overdue for review on the system. This is a negative increase from 48 risks overdue at the end of Q 2, however may have been impacted by the Christmas period . Seven of these w ere red rated risks which should have been reviewed monthly. 2.11 A new Governance Board is currently being established which will monitor these KPIs and help ensure the high number of overdue risks are addressed. 2.12 At the end of Q 3 there were also 153 risks on the system without actions assigned to them (61.2% of all risks). This is an increase from 138 risks at the end of Q 2 (61% of all risks). 2.13 This included ten red rated risks did not have actions recorded . It is expected officers are taking action s to reduce the risks in practice, however these are not documented on the Risk Management system and therefore cannot be monitored. 2.14 Finally, at the end of the quarter there were 38 actions overdue for review, a slight increase from 31 at the end of Q2. However, as the number of risks without actions have increased this is another indication risk owners are not being held accountable for ensuring their risks are proactively managed. HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q3 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 Q3 seven new risks were added to the CRR and one was removed. The seven that were added related to: • PROPER0006: Insurance Valuations – There is a risk a property may not be valued correctly due to poor asset data leading to a low or no insurance payout if the asset is damaged. • PLANRE0008: The Planning, Building Control and Land Charges System is unsupported and unfunded from Jan 2027 which could lead to a loss of data. • LANDB0020: Affordable Housing Funding Risk due to outstanding action plan required for GLA Funding. • FINMAN0007: Insufficient capacity in the finance team to meet demand for support from budget managers. • PLANRE0010: Delivery of Carbon Neutrality by 2030 due to lack of service delivery of actions • PROPER0001: Disposal Programme high risk due to the volume of disposals still in progress • PLANRE0015: Unable to spend S106 funding on time due to delays on identifying and progressing projects 3.3 The Home to Schools Transport risk was removed from the CRR as it was reduced from red to amber at the end of November. This was reduced following action by the service to identify future demand and optimise routes to meet this demand. 3.4 Red rated risks should be reviewed monthly however nine of the risks have not been reviewed in December, including two that have not been reviewed since June. These will be raised with the relevant Risk Owner and Corporate Director to ensure they are addressed before the next Audit Committee meeting. 4. FORWARD PLAN 4.1 Over the next quarter the Head of Internal Audit will focus on supporting the development of the new Governance Board to ensure it has the necessary risk information to proactively review the risk register and hold officers accountable for risk management. 4.2 The Head of Internal Audit will also continue to monitor the use of the new Risk Management System on behalf of the Audit Committee and follow up on the overdue and unscored risks with the relevant Risk Owner and Corporate Director to ensure they are addressed. HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q3 2024/25 7 APPENDIX A: SUMMARY OF CORPORATE RISKS AS AT Q3 2024 CRR Risk: 2024/25 Q1 2024/25 Q2 2024/25 Q3 Rating 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 16/12/2024 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 13/11/2024 Static B1 3 LANDB0004 - Decent Homes Non-Compliance (12/04/2024) Static B1 19/09/2024 Static B1 02/12/2024 Static B1 4 LANDB0011 - Housing Landlord Service - Not Meeting Regulatory Requirements (29/06/2024) New A2 29/06/2024 Static A2 29/06/2024 Static A2 5 TECH0001 - Cyber Security (17/06/2024) Static C1 17/06/2024 Static C1 27/12/2024 Static C1 6 LANDB0019 - Lone-working devices - no visiting officers within housing have lone working devices. (17/09/2024) - 17/09/2024 New B2 11/12/2024 Static B2 7 PENS0014 - Failure of employers to deliver accurate and timely employee administration information (30/05/2024) New A3 29/08/2024 Static A3 02/12/2024 Static A3 8 TRSA0003 - Liquidity Risk (10/06/2024) New D1 17/09/2024 Static D1 16/12/2024 Static D1 9 HESAFE0001 - Non-compliance with the Civil Contingencies Act 2004 (13/06/2024) - 17/09/2024 New D1 31/12/2024 Static D1 10 PROCUR0002 - Financial Resilience of Contracts (12/03/2024) Decrease C2 23/09/2024 Static C2 10/12/2024 Static C2 11 LANDB0003 – Decarbonisation (12/04/2024) Static C2 19/09/2024 Static C2 02/12/2024 Static C2 12 HOUSNE0001 - High Levels of Homelessness Demand (29/06/2024) New C2 29/06/2024 Static C2 29/06/2024 Static C2 13 CHILSC0012 - Increasing cost of external residential provision and reduced internal resilience (25/06/2024) Increase C2 26/09/2024 Static C2 26/09/2024 Static C2 14 PROPER0006 - Insurance Valuations (15/04/2024) - - - 04/11/2024 New A1 LIKELIHOOD Very High (A) (7) (4) (15) (1) (14) High (B) (6) (2) (3) Significant (C) (10) (11) (12) (13) (17) (18) (5) (16) Medium (D) (8) (9) (19) (20) Low (E) Very Low (F) Small (4) Medium (3) Large (2) Very Large (1) IMPACT HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q3 2024/25 8 15 PLANRE0008 - Planning, Building Control and Land Charges System (Ocella) unsupported and unfunded from Jan 2027 (26/11/2024) - - - 26/11/2024 New A2 16 LANDB0020 - Affordable Housing Funding Risk (02/10/2024) - - - 02/10/2024 New C1 17 FINMAN0007 - Insufficient capacity to meet support demand (13/06/2024) - - - 07/11/2024 New C2 18 PLANRE0010 - Delivery of Carbon Neutrality by 2030 (24/12/2024) - - - 24/12/2024 New C2 19 PROPER0001 - Disposal Programme (15/04/2024) - - - 04/11/2024 New D1 20 PLANRE0015 - Unable to spend S106 funding on time (27/12/2024) - - - 27/12/2024 New D1 - DIRECC0005 - Home to School Transport Static C2 08/08/2024 Static C2 Reduced to D3 (30/11/2024) HILLINGDON COUNCIL RISK MANAGEMENT REPORT Q3 2024/25 9 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 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. Households in TA (Target <1300) 1441 (Nov) Tenancies in TA (Target <1320) 1453 (Nov) Nightly cost of paid Accommodation (Target <£1.6m) £1.7m (Nov) Tenancies over £100 a night (Target <190) 218 (Nov) In TA over 6months (Target <1050) 1159 (Nov) % Prevented coming into TA (Target >14%) 2.9% (Nov) Housing Supply – all sources (Target >60) 57 (Nov) 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: 20/12/2024 Target Rating: E1 Next Review Date: 20/02/2025 Change: Static Risk Description Primary Controls Key Performance Indicators Ability to deliver the budget savings in 2025/26 and 2026/27 and the need to mitigate against overspending in 2024/25. This risk primarily arises from the significant reductions in funding from Central Government over many years whilst at the same time Government 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 inflation and wider demand-led and demographic pressures on statutory and non statutory services. Inadequate supply in areas such as temporary housing are putting significant pressures on the Councils budget. The Council continues to prioritise universal services for the benefit of wider residents alongside significant provision of demand led adults and children's services. All these factors increase the potential that the Council will be unable to meet its statutory obligation to set and operate within a balanced budget and require Exceptional Financial Support from Government, and therefore the Council must deliver significant transformation alongside and the Target Operating Model work to avoid this and resolve these significant challenges. • 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. TBC Actions: Review Date: ZBB and Star Chambers SMM leadership team cascades Spending control panel Leadership and culture financial focus Robust financial challenge Richard Ennis, 20/02/2025 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: 30/12/2024 Target Rating: D3 Next Review Date: 30/03/2025 Change: Static Risk Description Primary Controls 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. Cyber Threats (Target <240) 189 (Nov) Phishing Threats (Target <3500) 3340 (Nov) 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: 14/01/2025 Target Rating: E3 Next Review Date: 14/04/2025 Change: Static Risk Description Primary Controls 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. TBC 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. Matthew Kelly 17/03/2025 Strategic Objective: Thriving, healthy households - Children, young people, their families and vulnerable adults and older people live healthy, active and independent lives. Strategic Risk: 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 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 High Cost Residential Placements (Target <19) 22 (Nov) Number of UASC (Target TBC) 71 (Oct) Mother & Baby Placements (Target <5) 6 (Oct) Looked After Children (Target TBC) 315 (Nov) Referrals (Target TBC) 603 (Nov) Private of Voluntary Placements (Target <27) 28 (Oct) New Foster Care Households (Target 1 per month) 1 (Oct) Referrals in 12months of previous referral (Target <60) 76 (Nov) CP Plans within 12months of previous plan (Target 0) 0 (Nov) Number of EHCPs (Target <3400) 3455 (Nov) EHCNA requests (Target <65) 52 (Oct) Final EHCP Issued in 20 weeks (Target >85%) 100% (Nov) EHCNA Agreed to Assess (Target <50%) 62% (Oct) Agreed to Issue (Target >95%) 71% (Oct) 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 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. Number of Contacts (Target <4500) 3648 (Nov) Number of Referrals (Target <600) 603 (Nov) No Further Action (Target >1250) 601 (Nov) Info and advice Given (Target >50) 16 (Nov) Residents in Home Care (Target <1300) 1247 (Nov) Placement Costs (Target TBC) £2.9m (Nov) Active Services (Target <5150) 5357 (Nov) Average Cost of Placements (Target TBC) £5,396 (Nov) Hours of Support Given (Target <53) 54.6 (Nov) 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: 07 February 2025 Sandra Taylor: 2 November 2026 Sandra Taylor: 07 February 2025 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

Audit Committee – 11 February 2025 Part I – Public INTERNAL AUDIT STRATEGY, CHARTER AND PLAN Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report Internal Audit Draft Strategy 2025-2028 Internal Audit Charter Internal Audit Plan Ward All HEADLINES The attached draft Internal Audit Plan presents the Audit Committee with the current proposed Internal Audit (IA) activity for the 2025/26 financial year. The plan takes into consideration the key risks facing the Council and any alternative sources of assurance available in relation to these risks. It also takes into consideration the available resources within the IA team to ensure we are focusing on providing the best value for money. The plan presented covers a twelve-month period based on the IA Team’s ongoing audit tracker. Our ongoing tracker allows us to allocate time for reviews later in the year , or even into future years, and manage our available capacity most effectively. For example, we are already blocking out time in 2026/27 to review compliance against processes being implemented during 2025/26. The plan has also been presented to the Corporate Manageme nt Team to ensure it reflects any planned changes. It will be under continuous review as new risks emerge, alternative sources of assurance are identified or resources change. Therefore, those audits currently proposed for Q3 and Q4 are not fixed and likely to change throughout the year. Any changes to the plan will be reported through the Progress Report to the Audit Committee. Also attached are the Draft Internal Audit Strategy for 2025 - 2028 and Internal Audit Charter. These are requirements under the Global Internal Audit Standards and define the purpose, authority, responsibilities and priorities of the Internal Audit team. They have both been updated to reflect the updated requirements from the Standards, and the template Charter provided by the Institute of Internal Auditors. RECOMMENDATIONS: That the Audit Committee: 1. Notes the IA Strategy and Charter; and 2. Approves the IA plan for 2025/26 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 Audit Committee – 11 February 2025 Part I – Public the borough of Hillingdon. BACKGROUND PAPERS None

HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 1 INTERNAL AUDIT CHARTER 1. Purpose of this Charter 1.1 The Local Government Accounts and Audit Regulations 2021 require every local authority to undertake an effective IA to evaluate the effectiveness of its risk management, control and governance processes, taking into account the Institute of Internal Auditors (IIA) Global Internal Audit Standards and UK Public Sector Application Note. 1.2 In accordance with the Global Internal Audit Standards the purpose, authority and responsibility of the internal audit activity must be formally defined in an Internal Audit (IA) Charter. 1.3 The Hillingdon Council IA Charter defines the purpose, authority and responsibility of the IA Service within the Council. The Charter establishes the Head of IA's (HIA's) position within the Council including the nature of the HIA's functional reporting relationships. The Chart er authorises access to records, personnel and physical properties relevant to the performance of engagement and defines the scope of IA activities. 1.4 The HIA is responsible for applying this IA Charter and ensuring it is maintained in line with the Global Internal Audit Standards. This IA Charter shall be reviewed and presented to the Audit Committee for approval. The Charter will be reviewed every three years, or sooner if significant changes have been made by the Corporate Management Team (CMT) to ensure that it remains relevant to the needs of the Council. 2. Internal Audit Purpose 2.1. IA is defined in the IIA Global Internal Audit Standards as “ an independent, objective assurance and advisory service designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management, and control processes.” 2.2. The purpose of the internal audit function is to strengthen the Council’s ability to create, protect, and sustain value by providing the Audit Committee and Senior Management with independent, risk -based, and objective assurance, advice, insight, and foresight. IA is not responsible for control systems and managing risks, responsibility for effective internal control and management of risks rests with the management of the Council. 2.3. The Internal audit function is most effective when: • Internal auditing is performed by competent professionals in conformance with The IIA’s Global Internal Audit Standards and Public Sector Application Note. • The internal audit function is independently positioned with direct accountability to the Audit Committee HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 2 • Internal auditors are free from undue influence and committed to making objective assessments. 3. Scope of Internal Audit 3.1. The scope of internal audit activities includes all activities conducted by the Council. 3.2. The HIA will provide an Annual HIA Opinion Statement for the Council through the Audit Committee. The HIA opinion statement will cover the three core areas below and be in line with the Global Internal Audit Standards: • Risk Management - Risk Management is the process of identifying, quantifying and managing the risks that the Council faces in attempting to achieve its objectives. • Corporate Governance - Corporate governance is the system of rules, practices and processes by which the Council is directed and controlled. • System of Internal Controls - The system of internal control is a process for assuring achievement of the Council’s objectives in operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies. It incorporates both financial and nonfinancial systems. 3.3. To enable full discharge of its duties, the HIA and the IA service has authority to: • Have right of direct access to the Chair of the Audit Committee , the Chief Executive, External Audit, the Leader of the Council and all other Members • Have unrestricted access to all Council functions, records, property and personnel required to plan and undertake audit assignments necessary to fulfil its scope • Obtain assistance, where necessary, from Council officers and contractors involved in the subject of audit engagements. 3.4. The IA activity will remain free from interference by any element in the Council, including matters of audit selection, scope, procedures, frequency, timing, or report content to permit maintenance of a necessary independent and objective mental attitude. Internal auditors will have no direct operational responsibility or authority over any of the activities they review. Accordingly, internal auditors will not engage in any activity that may impair their judgement or objectivity. 3.5. The IA service will also provide advisory services to management as appropriate for the Council. Before any advisory work is agreed, the HIA will ensure that IA has the appropriate skills, resources and approval to undertake the review. The HlA will also ensure that appropriate sa feguards are in place to preserve objectivity in areas subject to future IA activity. 3.6. IA will exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors must make a balanced assessment of all the relevant circumstances and not be unduly influenced by their own interests or by others in forming judgements. HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 3 3.7. When the auditors receive confidential information, it shall be kept confidential at all times, except as required by law or as provided for in regulatory, ethical or other professional declarations. 4. HIA Roles and Responsibilities Ethics and Professionalism 4.1. The HIA and IA team have responsibility to undertake their work at all times in accordance with the Global Internal Audit Standards , the UK Public Sector Application Note and the IIA’s Code of Ethics. Those members of the IA team who have membership of professional bodies will also comply with the relevant requirements of that organisation. 4.2. The HIA will ensure that internal auditors: • Conform with the Global Internal Audit Standards, including the principles of Ethics and Professionalism: integrity, objectivity, competency, due professional care, and confidentiality. • Understand, respect, meet, and contribute to the legitimate and ethical expectations of the Council and be able to recognise conduct that is contrary to those expectations. • Encourage and promote an ethics-based culture in the Council • Report behavior that is inconsistent with Council’s ethical expectations, as described in applicable policies and procedures. Objectivity 4.3. The HIA will ensure that the internal audit function remains free from all conditions that threaten the ability of internal auditors to carry out their responsibilities in an unbiased manner, including matters of engagement selection, scope, procedures, frequency, timing, and communication. If the HIA determines that objectivity may be impaired in fact or appearance, the details of the impairment will be disclosed to appropriate parties. 4.4. Internal auditors will maintain an unbiased mental attitude that allows them to perform engagements objectively such that they believe in their work product, do not compromise quality, and do not subordinate their judgment on audit matters to others, either in fact or appearance. 4.5. Internal auditors will have no direct operational responsibility or authority over any of the activities they review. Accordingly, internal auditors will not implement internal controls, develop procedures, install systems, or engage in other activities that may impair their judgment, including: • Assessing specific operations for which they had responsibility within the previous year. • Performing operational duties for the Council or its affiliates. • Initiating or approving transactions external to the internal audit function. HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 4 • Directing the activities of any employee that is not employed by the internal audit function, except to the extent that such employees have been appropriately assigned to internal audit teams or to assist internal auditors. 4.6. Internal auditors will: • Disclose impairments of independence or objectivity, in fact or appearance, to appropriate parties and at least annually, such as the HIA, Audit Committee, management, or others. • Exhibit professional objectivity in gathering, evaluating, and communicating information. • Make balanced assessments of all available and relevant facts and circumstances. • Take necessary precautions to avoid conflicts of interest, bias, and undue influence. Managing the Internal Audit Function 4.7. The HIA has the responsibility to: • Develop a risk -based internal audit plan that considers the input of the Audit Committee and senior management. Discuss the plan with the Audit Committee and senior management and submit the plan to the Audit Committee for review and approval. • Review and adjust the internal audit plan, as necessary, in response to changes in Council’s business, risks, operations, programs, systems, and controls. • Communicate with the Audit Committee and senior management if there are significant changes to the internal audit plan. • Communicate the impact of resource limitations on the internal audit plan to the Audit Committee and senior management. • Ensure internal audit engagements are performed, documented, and communicated in accordance with the Global Internal Audit Standards and the UK Public Sector Application Note. • Follow up on all ‘high’ and ‘medium’ risk rated audit findings to confirm the implementation of agreed action plans and communicate the results to the Audit Committee and senior management. • Ensure the internal audit service collectively possesses or obtains the knowledge, skills, and other competencies and qualifications needed to meet the requirements of the Global Internal Audit Standards and fulfill the internal audit mandate. • Identify and consider trends and emerging issues that could impact Council and communicate to the Audit Committee and senior management as appropriate. • Consider emerging trends and successful practices in internal auditing. • Establish and ensure adherence to methodologies designed to guide the internal audit function. HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 5 • Ensure adherence to Council’s relevant policies and procedures unless such policies and procedures conflict with the internal audit charter or the Global Internal Audit Standards. Any such conflicts will be resolved or documented and communicated to the Audit Committee and senior management. • Coordinate activities and consider relying upon the work of other internal and external providers of assurance and advisory services. If the HIA cannot achieve an appropriate level of coordination, the issue must be communicated to senior management and if necessary escalated to the Audit Committee. Communication with the Audit Committee and Senior Management 4.8. The HIA will report quarterly to the Audit Committee and senior management . This includes reporting on: • The internal audit function’s mandate. • The internal audit plan and performance relative to its plan. • Internal audit budget and resource requirements • Significant revisions to the internal audit plan and budget. • Potential impairments to independence, including relevant disclosures as applicable. • Results from the quality assurance and improvement program, which include the internal audit function’s conformance with The IIA’s Global Internal Audit Standards and action plans to address the internal audit function’s opportunities for improvement. • Significant risk exposures, control issues, and other areas of focus for the Audit Committee that could interfere with the achievement of the Council’s strategic objectives. • Results of assurance and advisory reviews • Management’s responses to risk that the internal audit function determines may be unacceptable or acceptance of a risk that is beyond the Council ’s risk appetite. Management of Engagements 4.9. Internal auditors will: • provide a detailed Terms of Reference for each review establishing the engagement's objective, key risks, and scope. • promptly communicate findings and conclusions to management, proposing recommendations to address any identified weaknesses. • obtain and record sufficient evidence to support their conclusions and engagement results. • issue a balanced, clear and concise summary report following the review , including a management action plan setting out the agreed actions to address the findings identified. HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 6 • Submit a quarterly IA progress report to CMT and the Audit Committee summarising IA performance and work carried out in the period. • Submit an Annual IA report to CMT and the Audit Committee including the statutory HIA opinion statement on the Council's internal control, risk management and corporate governance arrangements. 5. Audit Committee & Senior Management Responsibilities Audit Committee Oversight 5.1. To establish, maintain, and ensure that the Council’s internal audit function has sufficient authority to fulfill its duties, the Audit Committee will: • Discuss with the HIA and senior management the appropriate authority, role, responsibilities, scope, and services (assurance and/or advisory) of the internal audit function. • Ensure the HIA has unrestricted access to and communicates and interacts directly with the Audit Committee, including in private meetings without senior management present. • Discuss with the HIA and senior management other topics that should be included in the internal audit charter. • Participate in discussions with the HIA and senior management about the “essential conditions,” described in the Global Internal Audit Standards, which establish the foundation that enables an effective internal audit function. • Review and approve the internal audit charter with the HIA to consider changes affecting the service, such as the employment of a new HIA or changes in the type, severity, and interdependencies of risks to the Council. • Approve the risk-based internal audit plan. • Provide input to senior management on the appointment and removal of the HIA, ensuring adequate competencies and qualifications and conformance with the Global Internal Audit Standards. • Provide input to senior management on the HIA’s performance. • Receive communications from the HIA about the internal audit function including its performance relative to its plan. • Ensure a quality assurance and improvement program has been established and review the results annually. • Make appropriate inquiries of senior management and the HIA to determine whether scope or resource limitations are inappropriate. Senior Management 5.2. In order to be effective, the IA service requires the full co -operation of senior management. 5.3. Senior management will keep the IA service abreast of significant proposed changes in processes, systems, newly identified significant risks and all suspected or detected fraud or corruption. Senior management will also ensure HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 7 that the IA service has access to sufficient information and resources in order to deliver the internal audit plan as directed by the Audit Committee. 6. Organisation Position & Reporting Relationships 6.1. The HIA will be positioned at a level in the organisation that enables IA services and responsibilities to be performed without interference from management, thereby establishing the independence of the IA function. 6.2. The HIA will report functionally to the Audit Committee and administratively (for example, day -to-day operations) to the Director of Finance . This positioning provides the organisational authority and status to bring matters directly to senior management and the Audit Committee without interference, and supports the internal auditors’ ability to maintain objectivity. 6.3. The HIA will confirm to the Audit Committee, at least annually, the organisational independence of the IA function. If the governance structure does not support organisational independence, the HIA will document the characteristics of the governance structure limiting independence and any safeguards employed to achieve the principle of independence. The HIA will disclose to the Audit Committee any interference internal auditors encounter related to the scope, performance, or communication of internal audit work and results. The disclosure will include communicating the implications of such interference on the IA function’s effectiveness and ability to fulfil its mandate. Changes to the Mandate and Charter 6.4. Circumstances may justify a follow -up discussion between the HIA, Audit Committee, and senior management on the IA Mandate or other aspects of the IA Charter. Such circumstances may include but are not limited to: • A significant change in the Global Internal Audit Standards. • A significant reorganisation within the organisation. • Significant changes in the HIA, Audit Committee, and/or senior management. • Significant changes to the Council’s strategies, objectives, risk profile, or the environment in which the Council operates. • New laws or regulations that may affect the nature and/or scope of IA services. 7. Quality Assurance Quality Assurance Improvement Programme (QAIP) 7.1. The HIA will develop, implement, and maintain a quality assurance and improvement program that covers all aspects of the internal audit function. The program will include assessments of the internal audit function’s conformance with the Global Internal Audit Standards, as well as performance measurement to assess the internal audit function’s progress toward the achievement of its objectives and promotion of continuous improvement. 7.2. Annually, the HIA will communicate with the Audit Committee and senior management about the internal audit function’s quality assurance and improvement program, including the results of internal assessments (ongoing HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 8 monitoring and periodic self -assessments) and external assessments. External assessments will be conducted at least once every five years by a qualified, independent assessor or assessment team. Reporting Internal Audit Performance 7.3. A summary of actual IA performance against targeted performance will be reported to CMT and the Audit Committee as part of the quarterly IA progress reports. These results will allow all stakeholders to measure the performance and robustness of the IA team and also provide an indicator on how effectively the Council is at managing its risks. 7.4. Key performance Indic ators (KPIs) will be agreed with the CMT and Audit Committee. Any IA KPIs set will need management co-operation to enable them to be achieved, IA can influence the results, but they cannot completely control them. It is therefore important that interpretation of the IA KPIs is not taken in isolation, as other factors should be taken into account.

DRAFT INTERNAL AUDIT STRATEGY 2025 to 2028 Internal Audit Strategy 2025-2028 1. 1. INTRODUCTION 1.1 This document sets out the approach we have taken to develop the Internal Audit Strategy for the next three years. This is a high-level document, which sets out how the Internal Audit (IA) service will be delivered and developed over the next three year period. The Internal Audit Charter underpins this S trategy and describes the purpose, authority, responsibility and position of the IA Service within the London Borough of Hillingdon (LBH). 1.2 The IA Operational Plan provides detail of how this Strategy translates into a detailed workplan, and is continuously updated and presented to the Audit Committee quarterly for review. 1.3 Our Vision / Mission Statement 1.3.1 We aspire to be recognised as an efficient and valued service that helps the Council to achieve its strategic objectives by consistently providing a professional, robust and independent service, adding value and building strong relationships with key stakeholders. 1.3.2 During this period of significant change we aim to undertake a range of risk based assurance and advisory services to deliver key improvements to the way the council works and help improve services to our residents. 1.3.3 In delivering this mission, we will: • Produce and deliver a risk-based IA plan which compl ies with the Institute of Internal Auditors’ Global Internal Audit Standards and Public Sector Application Note. • Provide the statutory Head of IA's annual opinion statement on the Council's internal control, risk management and corporate governance arrangements • Provide progress reports to the Corporate Management Team (CMT) and the Audit Committee on a quarterly basis which highlight any identified significant deficiencies or potential areas for improvement in the Council's internal control, risk management and corporate governance arrangements • Support and suitably challenge the key assumptions and judgements taken by management, through IA's assurance and advisory services, to ensure they are appropriate and in accordance with the relevant policies, guidelines and professional standards. 1.4 Developing the Internal Audit Strategy 1.4.1 To develop this Strategy, we have considered the following: • The core objectives of LBH and the specific risks that can impact on the achievement of those objectives • The IA requirements under the Global Internal Audit Standards and Public Sector Application Note. • The Corporate Management Team’s transformation priorities and ongoing changes across the Council. • The content of Council’s risk register and assurance framework to understand the risks faced and the controls in place to manage those risks • An analysis of the risks, strengths, weaknesses, opportunities and threats to the IA Service. 1.4.2 The IA Strategy will be reviewed every three years, and also adjusted whenever significant changes occur. Factors that may prompt a more frequent review of th is strategy include significant changes to the Council’s strategy, policies or legal requirements, significant stakeholder changes, or any significant findings from an assessment of the IA service. Internal Audit Strategy 2025-2028 2. 2. KEY ROLES OF INTERNAL AUDIT 2.1 Assurance 2.1.1 Internal Audit provides independent assurance that an organi sation’s risk management, governance, and internal control processes are operating effectively. 2.1.2 As LBH is a large, complex organisation IA undertake a risk-based approach to identifying potential areas for review. By focusing on providing assurance in the highest risk areas, it ensures the service provides the best value for money with their available resources. 2.1.3 Each area reviewed is allocated an assurance rating based on the effectiveness of the risk management, governance and internal controls processes in place in relation to the potential risks under review. Where areas of improvement are identified IA work with the relevant officers to develop an action plan to address the findings raised. 2.2 Advisory 2.2.1 IA coverage will include a range of advisory work to provide independent advice to management where there are known areas of improvement . Advisory work will usually involve problem solving, and informing process design or internal control issues, to help management enhance services. This may also include certification of grant claims and training to improve the implementation of new controls. 2.2.2 Although the responsibility for managing change and maintaining internal control lies with management, early audit advice can help prevent subsequent costly and inconvenient amendments to new or revised systems and developments. Appropriate controls will ensure that the provision of advice does not lead to a loss of audit independence. 2.3 Risk Assurance 2.3.1 Whilst the responsibility for identifying and managing risks belongs to management, IA monitors these processes to provide assurance that risks are being managed effectively. An annual report is presented to CMT and the Audit Committee which includes the HIA's statutory opinion statement on the Council's risk management arrangements. This role is further defined within the Internal Audit Charter. 2.3.2 Our assessment of the Council's risk maturity at the time of this Strategy is RISK AWARE. As such, limited assurance can be placed on the risk management framework to drive the IA workplan. Th erefore, IA will take into consideration their wider audit knowledge and experience of the Council to undertake their own risk assessment process. 2.4 Corporate Governance 2.4.1 Similar to risk management, the responsibility for corporate governance rests with management. However, IA has a role to play in evaluating and helping to improve governance processes. This includes communicating risk and control information, promoting appropriate ethics and values within the organisation, and supporting effective performance management and accountability. 2.4.2 The Annual IA report presented to the CMT and the Audit Committee includes the HIA's statutory opinion statement on the Council's corporate governance arrangements. This role is further defined within the Internal Audit Charter. 3. INTERNAL AUDIT KEY PRIORITIES 3.1 Global Internal Audit Standards 3.1.1 In January 2024 the Institute of Internal Audit ors (IIA) published new Professional Standards for Internal Auditors . These replaced the International Professional Practice Internal Audit Strategy 2025-2028 3. Framework, which was the foundation of the UK Public Sector Internal Auditing Standards (the PSIAS). 3.1.2 From the 1 April 2025 Auditors working in the UK public sector must follow the requirements of the new Global Internal Audit Standards, subject to the interpretations and additional requirements set out in a CIPFA Application Note. The IA team have an ongoing Quality Improvement Action Plan to ensure these standards are embedded throughout their work, any areas of non -compliance with the standards will be escalated through the Audit Committee. 3.2 Key Financial Controls 3.2.1 In line with other local authorities the Council has experienced significant financial pressures over the last decade. Providing assurance over key financial controls , and how the Council maximises the best value for money , is a key priority area for IA. This includes increased focus on overarching financial governance, as well as providing assurance in relation to savings projects and the operation of day-to-day financial controls. 3.3 Governance & Transformation 3.3.1 Given the significant transformation projects planned across the Council there are potential risks in relation to the delivery and monitoring of these projects. Many authorities have projects which struggle to deliver the benefits that are expected of them, often having major knock-on effects with other areas. IA can provide assurance on projects through the entire life cycle of change, from project feasibility through to benefits realisation reviews. 3.4 Digital & Technology Audits 3.4.1 These reviews of the ICT infrastructure and associated systems, software applications, and hardware that underpin the Council’s operations. The IA team does not currently hold the professional IT Audit Qualification (CISA) but with the ongoing increase in the automation of processes and controls, this is an area of growth in assurance requirements. As a result, we will ensure that these skills are a key area of development for IA staff over the next three years. 3.5 Data Quality and Data Analytics 3.5.1 The council’s focus on digit isation will also increase the access to operational data for Internal Audit, allowing greater data analytics and automated controls testing. This will improve the efficiency and timeliness of reviews, as there is less reliance on services to provide manual information, and improve the effectiveness of sample testing by identifying anomalies through data analytics. 3.5.2 However, the council’s increased reliance on data and automated reporting also creates new areas of review for IA. These include providing assurance over the accuracy of any performance reports by testing the quality of the data in the source system and recalculating performance indicators to ensure they have been calculated correctly. 3.6 Contracts and Procurement 3.6.1 With the large number of contracts in operation across the Council, IA will continue to have an increased focus on contract related assurance audits. This will include reviews of the procurement process, as well as contract management arrangements for the significant/ high value contracts. 3.7 Counter Fraud and Corruption 3.7.1 Whilst IA has a responsibility to give due regard to the possibility of fraud and corruption as part of its work, the Council’s Counter Fraud Team (CFT) is the lead assurance provider for the Council in this area. The IA Service will continue to work closely with the CFT and any issues relating to potential fraud or irregularity identified by IA will be referred for investigation. Internal Audit Strategy 2025-2028 4. 3.7.2 This approach over the last two years has been proven to be more effective in the management of fraud risks and collaboration. It also provides an efficient use of resource s in both teams and a greater opportunity to minimise the Council's fraud losses. 4. MEASURES OF SUCCESS 4.1 At a time when all areas of the Council are being urged to deliver better and more efficient services, it is absolutely right that IA can itself demonstrate improvements in its services and is seen to be adding value to the Council. This will be achi eved through the delivery of the IA Strategy and ongoing Quality Improvement Programme monitored by the Audit Committee. 4.2 IA set performance measures annually, which will be approved by the Corporate Management Team (CMT) and the Audit Committee. A summary of actual IA performance against the targeted performance are reported to CMT and the Audit Committee and included in the quarterly IA progress report s. This performance reporting cycle will allow all stakeholders to measure the ongoing performance, robustness and value of the IA Service at Hillingdon and evidence achievement of our aim /mission statement. 5. PROVISION OF THE IA SERVICE 5.1 Internal Audit Reporting 5.1.1 In agreement with those charged with governance (CMT and the Audit Committee), the Head of Internal Audit ( HIA) will determine the way in which IA reviews are conducted and how any findings identified are reported. Reports will be balanced, clear, concise and constructive and will be approved by the HIA before they are issued. 5.1.2 The HIA will provide a written annual report to those charged with governance to support the Council's Annual Governance Statement. The annual report will provide the statutory opinion on the overall adequacy and effectiveness of the Council's system of internal control, risk management and corporate governance arrangements. 5.1.3 The next three years are expected to be significant period of change, challenge and risk within Local Government and many local authorities are facing exceptional financial, health and social care pressures. The IA team will support the Council in any way it can, including working flexibly with services , and providing proactive assurance over any areas of emerging high risk. 5.2 Internal Audit Staffing 5.2.1 The IA Team’s greatest asset are its staff , and the resourcing structure focuses on robust business continuity and succession planning by ‘growing our own’ . We will continue to professionally train and develop all our staff . I t is our intention that over the life of this strategy we will only need to recruit Trainee Internal Auditors into the service. As such, when a member of staff decides to leave the employment of the Council, an existing member of staff should be in a strong position to obtain promotion. 5.2.2 We also recognise that in order to continually add value to the Council we will need to diversify our skill base to ensure that emerging assurance needs are met through the IA Service. As such the IA Team will look to increase training in data analytics, and digital and technology audits. 5.3 Digital Innovation 5.3.1 Finally, over the next three years the IA Service will also use the Council’s increased digital resources to improve the efficiency and effectiveness of the service. This includes automated monitoring of key systems, data analytics and dashboards , and computer- assisted audit tools & techniques.

INTERNAL AUDIT PLAN January 2025 HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 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. THE INTERNAL AUDIT PLANNING PROCESS 3 3. THE INTERNAL AUDIT PLAN OVERVIEW 4 4. THE DETAILED INTERNAL AUDIT PLAN 6 5. INTERNAL AUDIT SKILLS AND RESOURCES 10 APPENDIX A - INTERNAL AUDIT DEFINITIONS 12 APPENDIX B - INTERNAL AUDIT KEY PERFORMANCE INDICATORS 13 HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 3. 1. INTRODUCTION 1.1 The Role of Internal Audit 1.1.1 The Local Government Accounts and Audit Regulations 2021 require every local authority to undertake effective Internal Audit (IA) to evaluate the effectiveness of its risk management, control and governance processes, in line with the Global Internal Audit Standards and CIPFA Public Sector Application Note. 1.1.2 IA provides an objective opinion to the Council on whether the control environment, corporate governance arrangements and risk management framework are operating effectively, which is essential in helping the Council achieve its corporate objectives and realise its vision for the borough of Hillingdon. 1.1.3 The IA service at Hillingdon apply a risk -based approach to determine the priorities of the IA activity. This means that IA gives greater assurance to the Council because it is based on the key risks to the organisation’s objectives. As a result, we will not just be commenting on whether the controls operate, but whether they are the right controls to achieve the overall aims of the service. 1.2 The Purpose of the Internal Audit Plan 1.2.1 The Global Internal Audit Standards require the Head of Internal Audit (HIA) to create an internal audit plan that supports the achievement of the Council’s objectives. The plan should be discussed with the Audit Committee and Senior Management and approved by the Audit Committee. 1.2.2 The IA work undertaken throughout the year is a crucial component of the HIA’s annual opinion statement. In order to deliver this assurance, it is vital for the organisation to have a comprehensive plan which prioritises the limited resources of the IA team to maximise the risk-based coverage , whilst also adapting to new emerging risks, organisational changes and other sources of assurance. 2. THE INTERNAL AUDIT PLANNING PROCESS 2.1 The Approach to IA Planning in 2025/26 2.1.1 In developing the risk -based annual IA Plan the HIA has considered the organisation’s governance, risk management, and control processes. Key sources taken into consideration when developing this plan include: • Council Strategy – The IA Plan was reviewed against the Council Strategy for 2022-2026, to ensure the plan is aligned to the Council’s key priorities for the period. • IA Strategy & Charter – This IA Plan is aligned to the wider draft 2025-2028 Internal Audit Strategy and IA priorities. It is also aligned on the agreed IA purpose, scope and responsibilities as outlined in the IA Charter. • Risk Registers – The HIA considered the Council’s risk management arrangements and reviewed the risk management system to establish the key risks facing the Council. Where reviews align to specific corporate risks this is noted in the detailed plan below. • CMT Transformation Priorities – Due to the significant transformation programme planned for 2025/26 th is IA Plan has been developed to avoid HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 4. duplicating work in areas already under review, whilst also providing assurance over the effectiveness of the transformation programme where appropriate. • Performance Dashboards – The HIA considered how the Council monitors their performance, and the r eliability and integrity of both operational and financial information. Where performance information was available potential risk areas were considered for inclusion in the IA Plan. • Senior Management – Senior managers from across the Council are regularly consulted on the ongoing IA plan, including members of Corporate Management Team (CMT), to identify any emerging risks or changes facing their services. • Audit Committee – Any comments from members of the Audit Committee will be reflected in the IA plan after the draft is presented at the Audit Committee meeting on the 11 February 2025. • External Assurance Providers – The Council’s external auditors are invited to discuss any matters of concern and to identify any areas where they may consider IA work to inform their own risk assessment. The HIA has also taken into consideration the results of other external reviews including CQC and Ofsted inspections. • Wider IA Knowledge – The IA Plan also reflects the cumulative knowledge of the IA team in relation to emerging risks facing the Council, including the wider strategic issues and regulatory changes emerging elsewhere that could impact on local government. 2.2 Variations to the Plan 2.2.1 The IA team keep the programme under continuous review during the year to ensure the coverage has the flexibility to respond to the dynamic environment in which the Council operates. This approach helps make sure IA resources are directed in a more flexible and targeted manner to maximise the benefit to our stakeholders. 2.2.2 Where changes are made during the year they will be agreed with the relevant Director and reported to the Audit Committee. Any areas that are delayed or cannot be completed due to capacity restraints will be recorded on the ongoing tracker to ensure they are not forgotten. 2.3 Internal Audit Resources 2.3.1 IA work for the year is determined by the number of days available based on the capacity in the IA Team. Reviews are prioritised to ensure the key risks facing the Council are given sufficient IA attention. The HIA is confident the current resources are sufficient to deliver the plan and meet the IA requirements under the Global Internal Audit Standards. Further information on the IA Team and capacity is included in Section 5 of this report. 3. THE 2025/26 INTERNAL AUDIT PLAN OVERVIEW 3.1 Key Elements of the IA Plan 3.1.1 The Internal Audit Plan for 2025/26 is outlined over the next few pages. This includes the following key elements: • Planned Assurance Reviews - Risk-based reviews that provide assurance to the Audit Committee and senior management that key risks to the achievement HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 5. of objectives are being effectively mitigated , and control arrangements are operating as expected. • Planned Advisory Reviews - The planned risk-based reviews will include some advisory work where there are known areas of improvement and additional support is required, these will take into consideration other internal and external support to ensure we avoid any duplication. • Grant Claims – Several grant certifications and sign offs are required by IA during the year on behalf of the Council, including the Housing Benefits Subsidy and Supporting Families claims. • Ad-hoc Advisory – As well as planned advisory reviews there is a further allocation of days for unprogrammed advisory to allow the team to respond to urgent requests for advice. • Follow up – Throughout 202 5/26 the IA team will continue to follow up on recommendations raised in prior year reports to ensure they are implemented and embedded effectively. They are also looking to develop digital dashboards to increase awareness of outstanding recommendations and improve accountability within services and directorates. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 6. 4. THE DETAILED 2025/26 INTERNAL AUDIT PLAN QUARTER ONE REF. AUDIT TITLE CRR DESCRIPTION Cross Directorate Reviews (X) X1 Business and Financial Plans STRAF 0002 This review will consider the Council’s Business and Financial plans for 2025/26. Including how they are aligned to the Council’s wider strategic objectives, and whether performance monitoring and governance arrangements have been established to ensure the plans are achieved. X2 Target Operating Model STRAF 0002 This audit will review the process for developing the Target Operating Model and savings programme . Including how individual proposals were collated, reviewed and approved , to ensure they are realistic, achievable and potential risks are mitigated. Directorate: Homes & Communities (H) H1 Data Quality: Homes and Communities LANDB 0004 & LANDB 0011 Data quality reviews will be completed for each directorate throughout the year. They will provide assurance over the quality of performance data produced by agreeing information back to source evidence, and confirm whether performance reports are focused on the Council ’s priority areas and statutory requirements. H2 Housing H&S Requirements LANDB 0011 This will be a c ompliance based review testing the Council’s compliance with Health and Safety Requirements within Housing. It will be aligned with the Data Quality review to confirm whether this compliance is accurately monitored and reported. Directorate: Place (P) P1 Project Management - Civic Centre Project PLANR E0010 The Civic Centre Project is a large ongoing project involving many services across the Council . This review will assess the governance arrangements in place for the project, including how progress, costs and potential risks are being monitored. P2 Corporate Estate To provide assurance over the Council’s management of corporate properties and meeting requirements as a corporate landlord. Including meeting health and safety standards whilst developing actions to minimise costs where possible. P3 Greenspaces STRAF 0002 This is the first of two service level reviews to support them to deliver changes. Including reducing costs, maximising income , and identifying new ways of working. This will include benchmarking against other local authorities or other services where the data is available. Directorate: Corporate Services (S) S1 Agency Expenditure & Checks STRAF 0002 This review will include analysing the agency usage across the Council to ensure it provides value for money, and confirm what pre -employment checks were undertaken for agency workers and how their performance is monitored. Directorate: Finance (F) F1 Project Management - Oracle Project This review will focus on the ongoing implementation action plan and learning from the Oracle project after it was rolled out in April 2024. It will consider whether the original expected benefits from the system have been achieved , and how any further actions required to fully embed the system are being monitored. F2 Income Generation STRAF 0002 This review will analyse the income received against budget across the Council, and test a sample of areas to confirm whether we are maximising the potential income. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 7. QUARTER TWO REF. AUDIT TITLE CRR DESCRIPTION Cross Directorate Reviews (X) X3 Budget Delivery STRAF 0002 & FINMA N0007 Following the budget monitoring review in 2024/25 these days have been included in the plan to allow for a deep dive into any areas of risk identified early in 2025/26. This will include confirming action plans are put in place to improve budget performance and alternative savings proposals identified where necessary. Directorate: Adult Social Care & Health (A) A1 Social Care Charges STRAF 0002 To test compliance with the Council’s policies and procedures in relation to social care charges, including financial assessments and debt recovery. Directorate: Children’s Services (C) C1 Schools Pre- employment Checks Following the review of Council pre-employment checks in 2024/25 this review will test pre-employment checks undertaken within a sample of schools. C2 Data Quality: Children's This review will assess how we get assurance the Council is meeting their statutory duties in relation to Children's Social Care, including reviewing any performance reports to confirm whether they cover statutory requirements and performance data can be agreed to supporting evidence. Directorate: Homes & Communities (H) H3 Temporary Accommodation Action Plan HOUSN E0001 This review will provide assurance over the implementation of the Temporary Accommodation Action Plan and the m onitoring arrangements in place to ensure the expected outcomes are achieved. Directorate: Place (P) P4 Data Quality: Place Data quality reviews will be completed for each directorate throughout the year. They will provide assurance over the quality of performance data produced by agreeing information back to source evidence, and confirm whether performance reports are focused on the Councils priority areas and statutory requirements. P5 Highways STRAF 0002 This is the second of two service level reviews to support them to deliver changes. Including reducing costs, maximising income, and identifying new ways of working. This will include benchmarking against other local authorities or other services where the data is available. Directorate: Corporate Services (S) S2 Cabinet Engagement This review will test compliance and awareness of the Scheme of Delegation and assess how Cabinet Members are engaged in key operational matters where appropriate. Directorate: Finance (F) F3 Income Generation: Business Rates STRAF 0002 Following the Income Generation audit in Q1 this review will be a deeper dive into Business Rates. Including how different services collaborate and share information to support Business Rates collection. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 8. QUARTER THREE REF. AUDIT TITLE CRR DESCRIPTION Cross Directorate Reviews (X) X4 Corporate Policies and Procedures This review was delayed from the 2024/25 IA Plan. It will review the governance processes in place for Corporate Policies and Procedures to confirm whether they are monitored, reviewed and approved appropriately. X5 Transformation and Change Governance STRAF 0002 To provide assurance over the governance arrangements in place to monitor the transformation priority action plans. Including ensuring there are clear roles and responsibilities, action plans and performance monitoring. Directorate: Adult Social Care & Health (A) A2 Data Quality: Adult Social Care This review will assess how we get assurance the Council is meeting their statutory duties in relation to Adult Social Care, including reviewing any performance reports to confirm whether they cover statutory requirements and performance data can be agreed to supporting evidence. Directorate: Children’s Services (C) C3 Multiagency Working CHILSC 0012 To assess how the Council’s Children’s Social Care services work effectively with other partnership organisations to improve outcomes and value for money. C4 Housing and Social Care Collaboration CHILSC 0012 This review will focus on the collaboration and information sharing between housing and children’s social care in relation to the housing pipeline for care leavers and Section 17. To assess whether the process is efficient for residents and minimising costs to the Council. Directorate: Homes & Communities (H) H4 B&B & HRA Arrears STRAF 0002 This will be a compliance based review to follow up on the recommendations from the 2024/25 IA Reviews of B&B and HRA Rent Arrears. Including how services are working collaboratively to minimise future arrears. Directorate: Place (P) P6 Planning PLANR E0008 This review will consider whether further action can be taken in relation to new developments to ensure we are maximising affordable housing within the borough. This will include testing the approval processes for major new developments. Directorate: Corporate Services (S) S3 Emergency Planning HESAF E0001 This review will focus on the strategic oversight of our Emergency Planning arrangements. S4 HR Information Following the action undertaken by the Human Resources service in 2024/25 to improve data quality in relation to staffing structures, this review will test the new arrangements in place to ensure the data continues to be accurate. Directorate: Finance (F) F4 Key Financial Controls This compliance -based review will test the effectiveness of key financial controls. This review will be aligned to the work of External Audit to ensure we complement and don’t duplicate their work. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 9. QUARTER FOUR REF. AUDIT TITLE CRR DESCRIPTION Cross Directorate Reviews (X) X6 Contract management PROCU R0002 This review will follow up on the findings from the Contract Management review completed in 2024/25 and test a sample of contracts to ensure appropriate contract management arrangements are in place. Directorate: Homes & Communities (H) H5 Tenant Engagement LANDB 0011 To provide assurance over the Council’s processes for engaging with Housing Tenants, including consulting on key decisions as well as monitoring and addressing any complaints received. H6 Anti-Social Behaviour This service level review will consider compliance with statutory requirement s, case management and monitoring arrangements . This will also include benchmarking against other local authorities where the data is available. Directorate: Corporate Services (S) S5 Gifts, Hospitality & Conflicts of Interest PROCU R0002 To provide assurance over the gifts and hospitality and the conflicts of interest process. Including assessing how the registers are updated, reviewed, and monitored across the directorates. S6 Data Quality: Corporate Services Data quality reviews will be completed for each directorate throughout the year. They will provide assurance over the quality of performance data produced by agreeing information back to source evidence, and confirm whether performance reports are focused on the Councils priority areas and statutory requirements. S7 Integrated Front Door This review will assess the effectiveness of the Residents Hub once it has had time to become more embedded. To provide assurance the new service is achieving the expected outcomes and action plans are in place to address any areas of improvement. ONGOING AUDIT WORK REF. AUDIT TITLE CRR DESCRIPTION TIMING Other Internal Audit Work - Grant Claims - Several grant certifications and sign offs are required by IA during the year on behalf of the Council, including the Housing Benefits Subsidy and Supporting Families claims. Q1 - Q4 - Ad Hoc Advisory - These days will be used for urgent requests for advice and support to improve systems and processes, mitigate risk and enable the achievement of objectives. Q1 - Q4 - Recommendation Follow up - All High and Medium recommendations raised by Internal Audit will be followed up as they become due to ensure they have been implemented effectively. Q1 - Q4 HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 10. ALIGNING TO THE STRATEGIC OBJECTIVES As part of the Internal Audit planning process the proposed reviews have been aligned to the Councils Strategic Objectives for 2022-2026. This summary is intended to provide assurance the plan will support the Council to achieve these core objectives. (1) Safe and Strong Communities Anti-Social Behaviour; Tenant Engagement; Temporary Accommodation Action Plan; Housing H&S Requirements (2) A Thriving Economy Highways; Income Generation: Business Rates; Emergency Planning (3) A Digital-enabled, modern well-run council Data Quality Reviews ; Cabinet Engagement ; Agency Expenditure & Checks; Transformation & Change Governance ; Business and Financial Planning ; Target Operating Model; Budget Delivery (4) Thriving, healthy households Children’s Multiagency Working (5) A green and sustainable borough Greenspaces; Corporate Estate 5. INTERNAL AUDIT SKILLS AND RESOURCES 5.1 In line with the Global Internal Audit Standards, the Head of Internal Audit appointed is professionally qualified and suitably experienced, whilst the IA team collectively possess the knowledge, skills and other competencies required to perform their responsibilities. 5.2 The capacity within the in-house IA team has decreased over the last twelve months as part of a planned reduction . To improve our ability to segregate duties within the team we have not replaced the IA Manager and instead promoted internally to a new structure of two Principal Auditor s. We also have two Internal Auditor s and two Internal Audit Apprentices who are all undertaking professional qualifications. 5.3 Taking into consideration the study time required for apprenticeships and other duties undertaken by the team, the calculated total available IA time for 202 5/26 is 897 IA Days. 5.4 We are confident that there will be sufficient IA resources available to meet the skills and resource requirements needed to deliver the 2025/26 risk-based IA Plan. If there is any change in the available resources the IA Plan will be revised to ensure reviews are prioritised appropriately, and additional external resources will be commissioned where required. 5.4 We continue to invest in the training and development of all our staff, including identifying opportunities for further development in associated areas of assurance. IA TEAM CAPACITY PLAN Based on the current workforce the calculated total available IA time for 2025/26 is 931 IA days. This is consistent with 2024/25 even though the team was reduced by two posts during the year. This was a planned staffing reduction, and the capacity for IA work has been protected by reducing the non-audit work completed by the team. For example, reducing the time required for risk assurance work through the use of the risk management system introduced in 2024/25. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 11. Type of IA Work 2025/26 Planned 2024/25 Days 2023/24 Days 2022/23 Days 2021/22 Days 2020/21 Days Assurance & Advisory Audits 754 740 703 942 942 713 Grant Claims 75 92 65 43 43 43 Ad-Hoc Advisory 50 50 15 66 66 60 Recommendation Follow-Up 40 36 40 40 40 25 Facilitation 12 12 20 9 9 9 931 Days 930 Days 843 Days 1,100 Days* 1,100 Days* 850 Days * Planned dates from the IA Plan but due to the reduction in capacity during the period the actual IA days are estimated to be lower. SONAL PATEL HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 12. APPENDIX A - INTERNAL AUDIT DEFINITIONS 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 recommendation 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 recommendation 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 recommendation 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 i ncludes 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. Control Environment: The systems of governance, risk management and internal control. Key elements include establishing and monitoring the authority’s objectives, facilitating policy and decision-making, ensuring compliance with established policies and procedures, financial management, and performance management. Risk Appetite: The amount of risk that the Council is prepared to accept, tolerate, or be exposed to at any point in time. Residual Risk: The risk remaining after management takes action to reduce the impact and likelihood of an adverse event, including control activities in responding to a risk. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2025/26 13. APPENDIX B - INTERNAL AUDIT KEY PERFORMANCE INDICATORS The Key Performance Indicators (KPIs) for IA quarterly reporting to CMT and the Audit Committee in 2025/26 are set out below: KPI Category Performance Measure 2025/26 Target KPI 1 Timeliness: IA 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% KPI 2 Timeliness: IA & Management The final terms of reference for the review to be agreed before the planned fieldwork start date. 80% KPI 3 Timeliness: IA & Management Fieldwork to be completed withing two months of the opening meeting, unless agreed with the relevant Review Sponsor. 80% KPI 4 Timeliness: IA Draft Reports to be issued three weeks after the end of fieldwork meeting with the key contact 80% KPI 5 Timeliness: IA Annual IA Plan delivered to draft report stage by 31st March, unless agreed with Review Sponsor 90% KPI 6 Timeliness: IA Annual IA Plan delivered to final report stage by 31st March, unless agreed with Review Sponsor 80% KPI 7 Timeliness: Management Draft management responses to be received two weeks after the draft report is issued 80% KPI 8 Timeliness: Management Review Sponsor to approve the management responses two weeks after the updated report is issued. 80% KPI 9 Quality HIGH and MEDIUM risk IA recommendations completed within the original timescale 80% KPI 10 Quality IA folders with fully completed compliance checklists identified through quarterly spot checks 90% 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

Audit Committee – 11 February 2025 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 None.

INTERNAL AUDIT PROGRESS REPORT 30 January 2025 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 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 5 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 January 2025 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, eight reviews were completed to final report stage. These include: • Three REASONABLE assurance report s: Decent Homes Standards , Pre-employment checks (Eploy), and Personal Appraisals. • Two ADVISORY reviews: Organisation Culture (Part Two) This review collated officers' perceptions on the working environment at Hillingdon Council and assessed the action taken since the All-Staff Survey in February 2024, including officers' perception of the actions undertaken. We invited 209 officers to participate in our survey and webinars. Overall feedback on working at Hillingdon was positive, however there were no clear action plans to address the findings from the All-Staff Survey. This was reflected in our survey results as 53% of officers were uncertain whether their directorate took the staff survey results seriously . However, it was acknowledged the development of formal action plans was impacted when the Head of HR left the Council, and the new lead had only recently been appointed at the time of this review. Progress was also potentially impacted by the increased focus on other council-wide priorities during 2024/25, including the Zero Based Budgeting exercise. Directorate Governance Effective corporate governance provides the foundation for informed decision -making, resource allocation and accountability. This review focused on the governance arrangements in place at a Directorate level. Including reviewing whether directorate plans were in place, and formal governance meetings held. We confirmed all directorates held regular Senior Management Team meetings. However these were increasingly focused on council-wide initiatives during 2024/25, for example the Zero-Based Budgeting (ZBB) exercise and Challenge Sessions , which impacted on the ir capacity to review core governance reports and the evidence available for this review . Therefore, this review was adapted to focus on suggested governance arrangements moving forward. The increased focus on ZBB and Challenge Sessions is understandable given the significant financial challenges the Council is facing and the fast-paced changes required. However, the reliance on informal discussions and ad -hoc reporting in relation to key governance topics could create gaps in regular oversight. Since the beginning of the year there has also been a number of key changes to the Corporate Management Team, including a new Director of Finance, Director of Transformation and Monitoring Officer. This has increased the focus on governance arrangements going forward to embed formal arrangements across the directorates. HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 4. • Two LIMITED assurance reports and one NO assurance report: B&B Rent Arrears (No Assurance) This review assessed the processes in place regarding the B&B rent arrears, including the arrear’s prevention and recovery mechanism s and the quality of data recorded on NEC Housing. We identified 11/30 cases had a lack of clear notes to confirm the actions taken throughout the arrears process, and none had key documents, for example arrears letters, stored. We also identified three cases where the rent account was not set up in a timely manner , and three that had been closed incorrectly leading to large arrears building. Collaboration between services is a key area of improvement . We tested a sample of 13 cases and identified there was a lack of clarity in relation to the roles, responsibilities and requirements of the different teams involved in managing rent arrears which had impacted on the effectiveness of the individual teams. Finally, we assessed the management oversight controls in place pertaining to B&B arrears. We confirmed there are seven arrears’ targets covering both Temporary Accommodation and the Housing Revenue Account (HRA). These targets are reported and tracked through weekly reports however there were no clear actions documented to show how the target will be achieved. HRA Rent Arrears (Limited) This audit was completed following the B&B rent arrears review, to assess the processes for collecting Housing Revenue Account (HRA) rent arrears and how services share information across the Council to help prevent future arrears. Internal Audit obtained six relevant policy and procedure documents and noted all required updates at the time of the review. Ten arrears cases were then reviewed, including eight fixed tenancies and two non -secure cases, and we found significant deviations from the policies leading to inconsistencies in how the cases were handled. Management oversight was also found to be insufficient , primarily due to a lack of appropriate financial, operational, and reporting KPIs, as well as inaccuracies identified in the weekly performance report. However, during the fieldwork we noted t here were si gnificant ongoing changes to the team's structure, processes, and management information. Therefore, changes were already be ing taken to address the recommendations highlighted in the management action plans. Contract Management Oversight (Limited) The Council currently hold around 2500 contracts which must be effectively managed to ensure best value for money is achieved, and contracts are renewed or re-procured before their current end date. The Procurement Act 2023, due to be implemented in February 2025, also includes new obligations in relation to contract management. For example, a requirement to publish performance indicators for contract s over £5m and issue poor performance notice s if a supplier breaches a contract . This highlights the need for consistent and effective contract management oversight across the Council. This review focused on assessing the overarching monitoring arrangements in relation to contract management, including how directorates and services monitor their key contracts, and what guidance is provided to contract managers to ensure there are consist ent standards across the services. There is a centralised contract register that can be extracted from the Oracle Finance system, however it did not provide details on the individuals responsible for managing each contract. We also reviewed separate contract registers maintained within directorates and noted they were not consistent with the central register in Oracle, leading to inconsistent information and unnecessary duplication is both registers are updated. It was also identified that overarching contract monitoring is not conducted consistently within the directorates , and was not a frequent agenda item for directorate Senior Management Team meetings. This would help to ensure directorate oversight for contracts within the directorate, highlighting any due for review and potential savings opportunities. Finally, we distributed a survey to potential contract managers , five confirmed they were uncertain if they were a contract manager, and out of 25 potential contract managers only eight confirmed they had received training or guidance on contract management. HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 5. 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 3 Supported Families return, the Housing Benefits Grant Claim, and the Mayors Charity Account. For details of the grant claims and ad hoc consultancy reviews please see Appendix B. Changes to the Internal Audit Workplan Since the last Audit Committee the following three reviews have been moved from the 2024/25 Plan into 2025/26: Post Oracle Implementation There has been a change of key officer for this review, and action taken to re-establish the project board and clear any ongoing issues with the implementation. T his review has been delayed slightly to Q1 2025/26 to avoid duplicating the ongoing internal review and will focus on the new action plan and monitoring arrangements. Savings Programme This review has been scoped but delayed until Q1 to allow further work on the Target Operating Model and Saving programme for 2025/26. This has been re named Target Operating Model in the 2025/26 IA Plan. Corporate Policies and Procedures Due to the significant changes and new directorate structure this review was delayed to Q3 2025/26 to allow new structures and processes to become embedded and further work to take place on the arrangements in place for corporate governance. Since the last Audit Committee meeting the following three reviews were also added to the plan: RAGC This high-level advisory review was requested by CMT to support the Rural Activities Garden Centre and summarise the current service and potential opportunities going forwards. Housing Follow up The Director for Homes and Communities has asked us to do a high -level follow up review on the findings from the Uninspected B&Bs report, to assess the work already undertaken during Q4. This will also be followed up during 2025/26. Looked After Children This review was requested during our 2025/26 planning but brought forward at the request of the Director for Children’s Services. The scope of the review is currently being agreed and will be completed during Q4 if agreed with the relevant service. 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 66/77 (86%) management actions due to have been implemented were marked as verified or complete. Eleven were marked as overdue and new implementation dates were set when these will be followed up again. 4. FORWARD LOOK Over the next quarter the IA team will look to finalise all fieldwork for the 2024/25 reviews and draft the Annual Audit Report and Head of Internal Audit Opinion. We will also begin planning and fieldwork for the reviews proposed in Q1 of the 2025/26 Internal before the next Audit Committee meeting. 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 January 2025 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: ADVISORY - - - - 24.S15 Overtime, Expenses & Mileage Payments Final report issued 08 November 2024 LIMITED 5 2 - - 24.S18 B&B Rent Arrears Final report issued 17 January 2025 NO 3 2 - - 24.S01 Organisation Culture (Part Two) Final report issued 19 December 2024 N/A: ADVISORY - - - - 24.S13 HRA Rent arrears Final report issued 17 January 2025 LIMITED 1 3 1 - 24.S05 Decent Homes Standards Final report issued 17 January 2025 REASONABLE - 2 1 - 24.F03 Contract Management Oversight Final report issued 21 January 2025 LIMITED 1 2 - - 24.X01 Directorate Governance Final report issued 22 January 2025 N/A: ADVISORY 2 3 - - HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 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.S03 Pre-employment checks (Eploy) Final report issued 27 January 2025 REASONABLE - 3 - - 24.S16 Personal Appraisals Final report issued 30 January 2025 REASONABLE - 3 1 - 24.P03 Leasehold Management & Service Charges Draft report issued 10 January 2025 TBC once final report issued 24.C03 Schools Admissions Draft report issued 15 November 2024 TBC once final report issued 24.A02 Transport provider Draft report issued 06 December 2024 TBC once final report issued 24.C02 Schools Finances (Part Two) Draft report issued 14 January 2025 TBC once final report issued 24.S02 Mandatory Training & Induction Report Drafting TBC once final report issued 24.D05 Hillingdon First Card Report Drafting TBC once final report issued 24.F06 Budget Monitoring Report Drafting TBC once final report issued 24.D03 Cyber Security (2) Fieldwork TBC once final report issued 24.P02 Capital Programme Fieldwork TBC once final report issued 24.S08 Emergency Evacuation Procedures Fieldwork TBC once final report issued 24.A01 Commissioned & Direct Payments Fieldwork TBC once final report issued 24.F04 Debtors Fieldwork TBC once final report issued 24.S11 HRA Acquisitions Fieldwork TBC once final report issued 24.F02 Key Financial Controls (Cash Handling) Fieldwork TBC once final report issued 24.S10 Security (Documentation Security) Fieldwork TBC once final report issued 24.P01 Community Safety Planning TBC once final report issued 24.C01 Safety Valve Plan (Part 2) Planning TBC once final report issued 24.C05 Looked After Children Planning TBC once final report issued Total Number of IA Management Actions Raised 21 47 16 1 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 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 24.G1 Supported Families Q2 Complete - Memo Issued 24.G1 Supported Families Q3 Complete - Memo Issued 24.G2 Housing Benefit Grant Complete 24.G3 Mayors Charity Accounts Complete 24.G4 Bus Subsidy Grant Claim Complete 24.Z02 Business continuity plans Complete 24.Z03 TSM Technical Requirements Complete 24.Z04 Rural Activities Garden Centre Fieldwork 24.Z05 Housing Follow Up Fieldwork HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 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 - 8 - - - - - - - - CLOSED 20.A03 Cemeteries: Bereavement Service and Ground Maintenance 2 4 - - - - - - - - 2 4 Due March 2025 20.A06 Estates - Lease Management 1 1 - 1 - - 1 - - - - - New Date: June 2025 20.A31 Exclusions or Education Cases for Vulnerable Young People - 4 - 3 - - - - - - - 1 Due March 2025 21.A07 Fostering Service - 3 - 3 - - - - - - - - CLOSED 22.A39 Stronger families HUB 1 1 1 1 - - - - - - - - CLOSED 22.A42 Fraud prevention controls in tendering & contacts - 4 - 2 - - - - - - - 2 Due April 2025 22.A43 Registrars cash handling - 1 - 1 - - - - - - - - CLOSED 22.A45 Adult social care referrals and assessment - 2 - 1 - - - 1 - - - - New Date: April 2025 22.A58 Merrimans Respite Care Unit - 1 - 1 - - - - - - - - CLOSED 22.C59 Care Leavers Allowances 1 1 - - 1 1 - - - - - - 22.P52 Trading Standards POCA 1 2 - 2 - - - - - - 1 - Due April 2025 23.A04 Contract Management - 3 - - - 3 - - - - - - 23.A06 Neglect (Adults) - 2 - 2 - - - - - - - - CLOSED 23.C04 Neglect (Children's) - 2 - - - 2 - - - - - - 23.F01 Risk Management 1 5 1 4 - - - - - - - 1 Due March 2025 23.F04 Oracle Programme - 1 - - - - - 1 - - - - New Date: April 2025 23.P01 Private Sector Housing - 1 - 1 - - - - - - - - CLOSED 23.P02 Capital Programme 1 2 - - - - - - - - 1 2 Due March 2025 23.P03 Parking Service Income - 3 - - - 3 - - - - - - 23.P05 Climate Action 1 1 - - - - - - - - 1 1 Due March 2025 23.P06 Facilities Management - 3 - - - - - 3 - - - - New Date: October 2025 23.S01 IT Application - ContrOCC - 2 - - - - - - - - - 2 Due January 2025 23.S02 Workforce Planning, Establishment & Recruitment 2 2 2 1 - - - 1 - - - - New Date: March 2025 23.S12 Social Housing Applications 1 1 1 - - 1 - - - - - - HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 10. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation 23.F02 Payment Card Data Security Standard (PCI DSS) 1 - 1 - - - - - - - - - CLOSED 23.P11 Building Control Action Plan - 1 - - - 1 - - - - - - 23.F07 Fleet Damage - 4 - 1 - - - - - - - 3 Due March 2025 23.S13 Pool Cars 2 3 1 2 - - 1 1 - - - - New date: 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 - - - - - - - - CLOSED 24.D02 Cyber Security (1) - 3 - 3 - - - - - - - - CLOSED 24.S15 Overtime, Expenses & Mileage Payments 5 2 - - - - - - - - 5 2 Due March 2025 24.S17 Section 202 & 204 Appeals review - 3 - 1 - 2 - - - - - - 24.P4 Asset Management 2 2 - - - 2 2 - - - - - New date: March 2025 SUBTOTAL 28 90 7 43 1 15 4 7 - 0 16 25 TOTAL 118 50 16 11 0 41 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2025 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% 87% 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% 86% 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 January 2025 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 – 11 February 2025 Part I – Public COUNTER FRAUD ANNUAL OPERATIONAL PLAN FOR 2025/26 Committee name Audit Committee Officer reporting Alex Brown, Head of Counter Fraud Papers with report Counter Fraud Annual Operational Plan for 2025/26 Ward All HEADLINES The attached report presents the Audit Committee with the planned Counter Fraud approach and activity for the forthcoming financial year and seeks to:  Provide assurance to all key stakeholders that the risk of fraud is being managed effectively;  Demonstrate the Council’s commitment to good governance through minimising the risk of fraud; and  Set out the Counter Fraud Teams planned activity in line with risk. RECOMMENDATIONS: That the Audit Committee: 1. Notes the Counter Fraud Annual Operational Plan for 2025/26; and 2. Suggests any amendments/comments. SUPPORTING INFORMATION The Counter Fraud Team supports the Councils risk and governance arrangements by taking a zero-tolerance approach to fraud and corruption. In order to deliver this assurance, the Counter Fraud team produce an Annual Operation Plan detailing activity across high risk areas of fraud. The plan is formulated based on the Counter fraud Strategy, Fraud Universe and tak es into consideration, both, the IA Plan and strategy. BACKGROUND PAPERS The Counter Fraud Teams holds various background statistical management documents in relation to the production of the Counter Fraud Annual Operational Plan 2025/26.

COUNTER FRAUD ANNUAL OPERATIONAL PLAN 2025/26 31st March 2025 HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 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. THE COUNTER FRAUD STRATEGIC APPROACH 3 3. THE FRAUD UNIVERSE 4 4. THE COUNTER FRAUD PLAN 2025/26 4 5. COUNTER FRAUD SKILLS & RESOURCES 5 6. COUNTER FRAUD REPORTING 5 7. MEASURING COUNTER FRAUD PERFORMANCE 6 8. ACKNOWLEDGEMENT 6 APPENDIX A – FRAUD, LOSS & ERROR RISK ASSESSMENT 7 APPENDIX B - OPERATIONAL WORK PLAN 2025/26 10 APPENDIX C – COUNTER FRAUD TEAM KPI’s 13 APPENDIX D – COUNTER FRAUD OUTCOMES METHODOLOGY 14 HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 3. 1. INTRODUCTION The Role of the Counter Fraud Team 1.1 The Counter Fraud Team (CFT) is responsible for delivering the Counter Fraud Strategy and Annual Operational Plan to ensure that the Council meets its statutory objectives in relation to fraud and corruption. The Annual Operational Plan gives key stakeholders an overview of the CFT operational activity for the coming financial year, as well as a summary of the key fraud risks the Council faces. 1.2 As well as a range of counter fraud activities, the CFT has historically conducted a range of other types of investigative work which do not necessarily have a criminal or fraud element to them i.e. revenue inspections, disciplinary investigations, other loss prevention work, etc. It also includes preventative work such as fraud awareness training, advising management on fraud risks and counter fraud controls as well as ensuring the Council has up-to-date and appropriate investigation policies and procedures. The Purpose of the Counter Fraud Annual Operational Plan 2025/26 1.3 The Annual Operational Plan 2025/26 outlines the Council's approach to effectively tackle both the internal and external risk of fraud through its planned counter fraud activity. This planned approach is produced based upon the fraud landscape set out within the ‘Fraud Universe’, to ensure th at CFT resources are effectively deployed into areas of the highest fraud risk. The Annual Operational Plan also features a variety of proactive and reactive activity including investigative, project and verification work. 2. THE COUNTER FRAUD STRATEGIC APPROACH 2.1 The published Counter Fraud Strategy for 2022-25 details the approach and core principles of how the CFT will tackle and combat fraud and corruption and will remain unchanged for the refreshed 2025 to 2028 strategy . It also highlights the CFT’s strategic objectives and provides assurance to key stakeholders by setting out how the Council’s exposure to fraud is minimised. 2.2 The main principles of the Counter Fraud Strategy are:  Risk Based Approach – The deployment of resources into the highest areas of fraud risk based upon the fraud universe and the risk assessment process.  Partnership & Engagement – Communicating with service areas and key stakeholders to understand the risks the Council faces whilst creating a counter fraud culture. Offer support to stakeholders by undertaking work streams to identify fraud.  Prevent, Detect, Pursue & Deter – The cornerstone of the counter fraud approach, with a focus on prevention, as preventative measures are more effective than cure.  Innovation & Modernisation – A focus on delivering an efficient and effective counter fraud service through greater use of technology and data. 2.3 To ensure the CFT can operate effectively in preventing, detecting, and pursuing fraud, a wide range of policies are in place providing a corporate framework to support staff. These corporate policies outline the Council’s approach to countering fraud and corruption. Further details on these policies are included on the Hillingdon Council website. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 4. 3. THE FRAUD UNIVERSE 3.1 In line with the Counter Fraud Strategy, the CFT deploys a risk -based approach which is embedded into all forms of counter fraud activity, including the triaging of referrals. Specifically, a risk assessment is carried out assessing the available evidence to ensure resources are allocated effectively. 3.2 During the risk assessment process, the CFT will score the assessment based on the following categories:  Financial risk – What is the potential value of the fraud? What impact does it have on the Council and its residents?  Reputational risk – How does this damage the Councils reputation? How would residents and the wider public perceive the referral if the Council took no action?  Operational risk – How does this allegation, if true effect the day to day running of the Council? Is there a need to strengthen processes to mitigate fraud?  Systemic risk – Is this a new or emerging risk based on environmental, Social or economic factors? Is this a fraud risk we will likely continue to be exposed to? Do we need to change working practices to combat the risk? 3.3 The Fraud Universe for the Council and the Counter Fraud Team’s risk assessment of those risks are set out in Appendix A . This highlights pressures faced by the Council which includes national and local influences. The impact created by the significant rise in the cost of living, continues to create a perfect storm for opportunistic fraud to thrive. 3.4 As the fraud landscape within the public sector is ever changing, it is important that the CFT keeps up to date with industry news and communicates with key stakeholders to recognise the pressures and risks the Council will encounter. This will give the CFT the ability to adapt and combat the changing fraud risk landscape. 4. THE COUNTER FRAUD PLAN 2025/26 4.1 Set out in Appendix B, is the draft Counter Fraud Annual Operational Plan for 2025/26. The plan has been devised in liaison with key stakeholders and takes into consideration the Risk Assessment/Fraud Universe as set out at in Appendix A. The planned operational activity covers proactive and reactive work across a wide range of fraud risks, whilst also retaining the flexibility for the CFT to tackle any emerging risks. 4.2 The plan explains the work the CFT will carry out by fraud risk and includes outcomes achieved previously in these areas, as well as the overall risk assessment rating. The plan for 2025/26 includes a variety of activity, which is listed below by type:  Criminal Investigations – Investigations that have a criminal element undertaken by qualified investigators. These investigations normally fall within services areas, where a fraud is alleged to have taken place by a person or business accessing services or funds. Typically, the CFT will investigate offences relating to fraud, theft, bribery and forgery but may where it is in the interest of the Council and its residents, investigate other offences.  Civil Investigations – These investigations are often where the burden of proof for criminal proceedings cannot be met, or it is not in the public interest to prosecute. These matters are dealt with by way of compliance and may require civil pro ceedings to bring the case to a resolution. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 5.  Disciplinary Investigations – At times key stakeholders in conjunction with HR may require the assistance of the CFT in disciplinary matters. The Special Investigations Unit is well equipped to pursue these cases where required to do so.  Verifications – A workstream conducted by the CFT to verify the eligibility of service users before accessing a particular scheme. These verification workstreams are embedded into processes within Housing and Social Care. This type of work is the core function behind the CFT’s preventative measures.  Proactive Projects – A series of projects conducted throughout the financial year, targeting the highest risk areas within the Council to drive down fraud, loss and error.  Data Matching – Exercises designed to identify fraud, loss or error by matching internal and external data sets. Returned matches are analysed to verify the veracity of the potential outcomes identified.  Consultancy Work – Upon request the CFT can carry out a review of service processes highlighting recommendations to improve fraud controls. 4.3 Another key feature of the 25/26 plan is for the continued collaborative approach to risk between Internal Audit (IA) and the CFT. The CFT will work in conjunction with Internal Audit to identify areas of fraud risk and control weaknesses. Both teams can then deploy resources effectively to improve risk through mitigation and activity. 5. COUNTER FRAUD SKILLS & RESOURCES 5.1 Every member of staff in the Counter Fraud Team is either professionally qualified in counter fraud or is actively studying for a relevant professional qualification supported by the Council. This helps to ensure that the CFT provides a fully professional and effective service. A skills matrix approach is also used as part of monthly one to one meeting as well as at 6 monthly performance reviews. 5.2 In 2024/25 the HCF has reviewed the resources required for the CFT to operate effectively to meet its strategic objectives and deliver the operation work plan for 2025/26. A new structure is currently under consultation and an update will be available in future progress reports. In addition, the CFT are also operating with some interim arrangem ents relating to the increased fraud risks within Housing. These arrangements are to continue with a permanent arrangement under consideration. 6. COUNTER FRAUD REPORTING 6.1 The CFT reports its progress to Corporate Management Team (CMT) and the Audit Committee (AC) on all matters of counter fraud activity on a quarterly basis. These reports provide an update on performance against KPIs, strategic and operational objectives and delivery against the financial loss prevention target for the year. In addition to this, an annual report is presented to CMT and AC providing a summary overview of counter fraud activity for the financial year including a detailed analysis on team performance and outcomes. This enables CMT and the AC to hold the Head of Counter Fraud to account. 6.2 The CFT also liaises with services managers on an ongoing basis to ensure regular dialogue in relation to counter fraud activities (where appropriate) as well as delivery of service level agreements. This high level of engagement plays a significant part in the CFT meeting its core principles set out in the Counter Fraud Strategy. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 6. 7. MEASURING COUNTER FRAUD PERFORMANCE 7.1 As the CFT is a support function that works closely with the majority of service areas across the Council, there are a wide range of stakeholders to satisfy, as well as key stakeholders such as CMT and the AC. 7.2 To monitor counter fraud performance across service areas, outcomes and objectives a suite of KPIs were refreshed and agreed in the Counter Fraud Strategy 2022-25. Regular updates on performance against these KPIs will be provided in each quarterly progress report and are updated yearly and set out in Appendix C. 7.3 The Counter Fraud Strategy 2022-25 sets out nine strategic objectives for the CFT to pursue, which includes the financial loss prevention target for the year. Taking into consideration the change in fraud landscape and the team’s performance in 2024/25 and the methodology used to calculate outcomes (Appendix D), the financial loss prevention target for 2025/26 has been set at £8.8m. This target is subject to resourcing arrangements being agreed for the continuation of the B&B fraud work. It is also worth noting the V OA have a backlog of cases which in turn, is slowing outcomes for revenues maximisation. 8. ACKNOWLEDGEMENT 8.1 The CFT would like to take this opportunity to formally record its thanks for the co-operation and support it has received from the Council’s management as part of the risk-based planning process. Alex Brown APCIP Head of Counter Fraud 31st March 2025 HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 7. APPENDIX A – FRAUD, LOSS & ERROR RISK ASSESSMENT The fraud risks specific to LBH are set out below, which is a summary of the organisational Fraud Risk Assessment (the Fraud Universe) for the Council. Fraud Risk Area Fraud, Loss & Error Risk Assessment General Fraud Risks  Increased financial pressure associated with the rise in the cost of living on individuals and concerns over money and fear of redundancy due to economic climate leading to higher likelihood and pressure to commit fraud by those internally and externally.  Increased demand within services leading to reduced due diligence over operational matters and overriding of controls creating a greater opportunity for fraud.  An increase in vacancies due to a challenging recruitment market leads to lack of resources and impacts the operation of preventative controls, decreased monitoring activity and increasing risk of fraud going undetected.  Decreased face -to-face meetings with service users, less verification of original documentation with reliance on scanned or copies of documentation. More provision of services remotely leading to higher likelihood of fraud not being detected.  An inflated recruitment market, leading to a higher number of vacancies with a heavy reliance on agency. A lack of due diligence with a priority of meeting resourcing demands, leaving the organisation exposed to recruiting unsuitable candidates.  The negative impact of the rise in the cost of livi ng and inflation on residents and businesses , leads to a greater risk of non -payment for services, increasing the Council’s debt and reduces the opportunity for recovery.  Decrease in support from back-office services due to lean operating models requiring front lines services to perform additional tasks leading to reduced resources to carry out due diligence within processes creating a greater opportunity for fraud to thrive.  Fast pace and significant transformational change to meet budget pressu res and provide efficient modern services sees process change with limited consideration to fraud risk and control.  Poor data quality in services used for decision making at a strategic or operational level can leave departments susceptible to fraud or loss. IT & Procurement of Goods and Services  An increased need to win government contracts because of financial pressures on businesses due to the cost of living leading to the fraudulent manipulation of procurement processes.  Higher financial pressure on Council contractors creating increased desire to maximise profit from contracts leading to higher likelihood of misrepresentation of services, goods and materials supplied.  Increased cyber-crime activity nationally and globally and the higher likelihood of a cyber-attack against the Council such as ransomware, malware, viruses, tap jacking, quishing and a continually adapting external cyber -threat environment. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 8. Fraud Risk Area Fraud, Loss & Error Risk Assessment  Demand to shift more of Council activities onto online platforms to access services can expose the organisation to programmed bots that break into user accounts to redirect payments/refunds, steal contact information and other harmful activities that could also lead to negative GDPR and reputational ramifications.  A reduction in oversight for contract management due to front line demand led pressures, creating an envir onment for contractors to commit fraud through claiming additional income and sub-standard services, goods or materials. Port Authority  Higher numbers of Unaccompanied Asylum Seekers (UAS) approaching the Council compared to non -port authorities, leading to greater levels of fraudulent approaches to the Council for services.  Increases in services used by individuals where service provision is subject to immigration status, leading to more likelihood of misrepresentation of circumstances to access services where there is No Recourse to Public Funds (NRPF). Statutory Duty to Provide Social Housing  Higher levels of housing need and homelessness claims in the borough linked to ongoing cost of living pressures, leading to increased levels of fraud within housing.  Public perception of a vailability of low -cost social housing leads to greater numbers of individuals seeking housing from the Council and the opportunity to misrepresent circumstances within the process to obtain housing fraudulently.  Increased pressure on housing services requiring greater use by the Council of temporary accommodation. With the likelihood of the accommodation used being outside of the borough which in turn reduces the ability to monitor use and occupation and increases likelihood of misuse going undetected. Social Care Provider  High costs of social care provisions lead to greater pressure to misrepresent circumstances in relation to assets and income in the financial assessment process.  Inability of vulnerable individuals to properly manage Direct Payments meaning greater involvement of family members and third parties to manage payments, leading to increased risk of opportunistic mis appropriation of funding by a third party.  Absence of appropriate financial controls or appropriate monitoring, leading to the increased risk of unwarranted Direct Payments expenditure and misappropriation of funding.  Access to Council services by individuals subject to immigration status checks leads to risk of misrepresentation of status to access services where there is NRPF. Revenue Collection Authority  High cost of rateable value of business premises leads to the risk of fraudulent misrepresentation of circumstances to take advantage of reliefs.  Pressure to reduce individual costs against the cost of Council Tax leads to the wrongful claiming of single person discount and/or other exemptions and discounts, leading to lost revenue across a large number of residential addresses. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 9. Fraud Risk Area Fraud, Loss & Error Risk Assessment  Increases in the cost of living leads to residents misrepresenting their circumstances in order to qualify for the Council Tax Reduction scheme.  Council Tax and Business Rates costs leads to the risk of deliberate avoidance of co mpletion of new build properties by developers and owners meaning lost revenues for the Council. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 10. Appendix B - Counter Fraud Annual Operational Work Plan 2025/26 Set out below is the draft Counter Fraud Annual Operational Work Plan for the key proactive projects and investigative work due to be conducted in 2025/26. Counter Fraud Activity Planned Work Outcomes 2024/25 Risk Tenancy Fraud & Housing Investigations The CFT will continue to detect illegal sub -letting and non-occupation of Council properties as referred by colleagues and residents. This also includes false applications for housing, assignment and succession. The CFT will also recover properties in case s where Housing Services have faced challenges in their investigations to gain lawful possession of Council properties. 90 properties recovered, £6,300k notional savings HIGH Social Housing & Temporary Accommodation Residency Checks A risk -based approach to tenancy residency checks working with the Housing team and using tenancy fraud data to identify hotspots. This will be delivered as part of proactive projects work. Social Housing & Temporary Accommodation In-House Data Matching Proactive project work utilising data from internal systems to identify instances of illegal sub-letting and non-occupation of Council properties. Housing Right to Buy (RTB) The CFT will continue to provide a risk -based verification service of all RTB applications to identify fraud and where appropriate actively investigate applications found to contain suspected misrepresentation. 3 applications closed, 3 cases referred to Legal for prosecution HIGH B&B Residency Checks The CFT will continue with proactive residency checks on all emergency B&B accommodation. The checks will identify suspected non-occupation and sub-letting of emergency housing, and false applications. 31 cases closed, £589k in loss prevention savings HIGH Social Care S.17 Emergency Funding Desk based checks to confirm eligibility of applicants requiring emergency accommodation and support from Social Care. An annual proactive project identifying suspected subletting or non -occupation of accommodation provided by the Council. N/A HIGH Unaccompanied Asylum Seeking Children (UASC) Status Checks The embedded Onsite Immigration Official will periodically check the status of all UASC clients, this helps identify those who's status allows them to access national scheme funding and no longer require funding by the Council. £202k loss prevention savings identified HIGH UASC Project An annual proactive project identifying suspected sub- letting or non-occupation of accommodation provided by the Council. A referral process is in place for cases of misrepresentation to be passed to the CFT for investigation. N/A HIGH HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 11. Counter Fraud Activity Planned Work Outcomes 2024/25 Risk Direct Payments Proactive project work utilising data to identify instances of funds not being used appropriately, and or misrepresentation of circumstances in order to access funding towards care costs. New Project HIGH Commissioned Care Proactive project work utilising data to identify instances of services not being provided and overpayments. New Project HIGH Revenues Inspections and Investigations In 202 5/26 the CFT will continue to deliver all inspections for Business Rates and Council Tax and develop an investigative approach to Business Rates and Council Tax avoidance and illegal evasion. 5373 inspections conducted in 2024/25 HIGH Revenue Maximisation Proactive project work utilising data to identify previously unlisted or modified domestic or commercial properties that are not paying the correct amount of tax or rates. £1m of previously uncollected NNDR identified HIGH Council Tax Discounts & Exemptions A proactive desk top data review of discounts and exemptions utilising data matching and in-house data. All discounts found to be fraudulent will be referred to the Revenues Team for removal of discounts/exemptions and investigated for fraud where appropriate by the CFT. Joint working with the Department for Work and Pensions to identify and pursue Council Tax Reduction fraud investigations. £152k in loss prevention savings HIGH Social Care Financial Assessments The CFT will continue to verify all applicants who apply for Social Care funding via Financial Assessments to ensure eligibility. The CFT will conduct a proactive project with the Financial Assessment Team to identify loss prevention savings during the ann ual review process and review all NRPF service users immigration status to assess eligibility to access public funds. £380k of loss prevention identified HIGH London Counter Fraud Hub Working in conjunction with other London based local authorities to create proactive data matching exercises to identify fraud and error in known risk areas leading to loss prevention outcomes. 22 properties recovered, (included in the property recovery total above) MEDIUM 'Beds in Sheds' - Unregistered Residential Dwellings The Revenues Investigations Unit will identify unlawful and unregistered residential dwellings in order that properties are brought within Council Tax banding and evasion pursued as investigations. Any enforcement action on planning issues will be referred to Planning Enforcement and Housing Standards. 66 cases identified, revenue of £78k MEDIUM HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2025/26 12. Counter Fraud Activity Planned Work Outcomes 2024/25 Risk National Fraud Initiative Main Exercise (NFI) The NFI is a bi -annual data -matching exercise covering nationwide public bodies. Matching has been received from the 24/25 main exercise and will be processed into 25/26. Additional matching is expected in the second half of the year including Adult Social Care data which will support internal data -matching which has been planned. Not provided in 24/25 MEDIUM Blue Badge Referrals As part of the CFT’s reactive capabilities, allegations of Blue Badge misuse will be risk assessed , and CFT resources deployed where appropriate. 11 Criminal prosecutions. £1.5k in fines issued and £4k in prosecution costs awarded LOW Fraud Awareness & Engagement The CFT will continue to provide a program of fraud awareness internally to champion a counter -fraud culture and encourage service provider engagement over fraud risks. This will include a refreshed fraud awareness campaign including whistleblowing, money laundering and bribery concerns. This will also include periodic social media communications released to the public to promote awareness and raise the profile of counter fraud activity within the borough. Delivered 8 awareness sessions N/A London Borough of Hillingdon Counter Fraud Annual Operational Work Plan 2025/26 13. APPENDIX C – Counter Fraud Team KPI’s 2025/26 The updated KPI’s for the CFT are set out in the table below. The KPI’s have been reviewed and updated to ensure team performance can be measured against all key areas of the service delivery. For clarity the KPIs that have been removed are listed in the table below. CFT KPIs Rationale 1. Housing Allocations completed within the target date set by Housing. As per the review of the CFT’s operating model this work will be undertaken by Housing in 2025/26. CFT KPIs 2025-26 Actual 2024/25 Performance 2025/26 Annual Target 1. Percentage of fraud referrals risk assessed within 3 working days 99% 95% 2. Verification work timescales for completion: a. Right to Buy case completed within 28 working days 98% 95% b. Financial Assessments completed within 2 working days** 100% 95% c. Section 17 reviews completed within 7 working days 100% 95% 3. Investigation plans completed within 5 working days of case allocation 100% 95% 4. Tenancy fraud referrals received resulting in property recovery 69% 40%* 5. Investigations resulting in loss prevention/financial saving outcome 47% 45%* 6. Revenues Inspections completed within 10 working days of referral date 99% 95% * = An increase in KPI target compared to 2024/25 ** = An improved turnaround time from 7 days to 2 days. London Borough of Hillingdon Counter Fraud Annual Operational Work Plan 2025/26 14. APPENDIX D – Counter Fraud Team Outcomes Methodology The latest Fraud valuations are set out in the table below. All fraud valuations have been reviewed to ensure they are proportionate, justifiable, reasonable, are following a sound methodology and give key stakeholders quantifiable data on the team’s performance. Service Area Counter Fraud Activity Methodology of Loss Prevention Valuation Housing Homeless applications and/or emergency accommodation closed Average cost of accommodation per night x average length of stay* Council property or temporary accommodation recovered Tenancy Fraud Forum calculation** Right to Buy application closed Value of the discount offered during the Right to Buy process First time Buyer Grant recovered Value of the grant received Social Care Section 17 application and/or accommodation closed Average cost of accommodation per night x average length of stay* Financial assessment application closed or amended Value of the amendment to the financial assessment or the value of the contribution for 1 year for any closed financial assessments Disabilities Facilities Grant application closed or amended Value of the grant received Unaccompanied Asylum Seeker accommodation and/ or application closed Cost of accommodation and/or subsistence to the Council for 1 year*** Direct Payment amended or closed Value of the amendment or the value of the direct payment for 1 year plus any backdated calculations Revenues Council Tax Reduction amended or closed Value of the amendment or value of 1 year’s benefit plus any backdated calculations Council Tax discount or exemption cancelled Value of 1 year’s discount/exemption plus any backdated calculations Housing benefit overpayment Value of overpayment Bed in Shed or Annexe identified 1 year’s value of additional Council Tax income plus any backdated billing London Borough of Hillingdon Counter Fraud Annual Operational Work Plan 2025/26 15. * = Average weekly cost against average length of support. This figure fluctuates but has been provided by the Council's Business Performance Team. ** = A national formula to calculate the value of tenancy fraud which takes into consideration cost of emergency accommodation, court costs, investigator costs, void costs and length of time the fra ud has been committed. *** = Cost of accommodation and subsidence per week for one year. This figure is a prudent estimate as the Council can and does often support asylum seeking children until they are 25 years old. **** = NNDR operates under a business rates retention model with the Council keeping 15% of income. Identification of unlisted business or residential property 1 year’s value of additional income plus any backdated billing****

Audit Committee – 11 February 2025 Part I – Public COUNTER FRAUD STRATEGY 2025 to 2028 Committee name Audit Committee Officer reporting Alex Brown, Head of Counter Fraud Papers with report Counter Fraud Strategy 2025 to 2028 Ward All HEADLINES The attached report presents the Audit Committee with the Counter Fraud Strateg y for 2025 to 2028 which sets out the planned approach for the next three years and seeks to:  Define the strategic approach that the Counter Fraud Team (CFT) will take in effectively managing the various risks of fraud faced by the Council by full implementation of a risk- based Counter Fraud Strategy; and  Demonstrate the Council's commitment to a zero-tolerance approach to fraud. RECOMMENDATIONS: That the Committee: 1. Notes the Counter Fraud Strategy 2025 to 2028; and 2. Suggests any amendments/comments prior to submission to Cabinet for approval. SUPPORTING INFORMATION The Council's Fraud Universe forms a large part of the counter fraud strategic approach. The overarching aim of the strategy is to embed a risk-based approach to counter fraud activity and ensure that counter fraud is seen as a key part of the Council's risk management processes. The approach is to achieve this by working towards four key objectives:  Risk Based Strategic Overview;  Partnership & Engagement;  Prevent, Detect, Pursue & Deter; and  Innovation & Modernisation. Implications on related Council policies None How this report benefits our governance arrangements and residents The Counter Fraud Strategy 2025 to 2028 reinforces the Council's governance arrangements in relation to the prevention of financial loss, fraud and corruption, and gives confidence to residents over the proper administration of public funds. Audit Committee – 11 February 2025 Part I – Public BACKGROUND PAPERS The Counter Fraud Team holds various background statistical management documents in relation to the production of the Counter Fraud Strategy 2025 to 2028.

COUNTER FRAUD STRATEGY 2025 to 2028 March 2025 HILLINGDON COUNCIL COUNTER FRAUD STRATEGY Contents The key contacts in connection with this document are: Alex Brown Head of Counter Fraud t: 01895 556811 e: abrown@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. INTEGRATION OF APPROACH WITH IA 4 3. DEFINING FRAUD & CORRUPTION 4 4. STRATEGIC AIMS & OBJECTIVES 5 5. CORPORATE FRAMEWORK 7 6. COUNTER FRAUD TEAM APPROACH 8 HILLINGDON COUNCIL COUNTER FRAUD STRATEGY 3. 1. Introduction Anti-Fraud and Anti-Corruption - Vision and Priorities 1.1 Hillingdon Council is the second largest London Borough and a port authority with the UK's main international travel hub within its boundaries. This means that it is faced with significant challenges in ensuring that public finances are protected from fraud and corruption. Fraud is an ever-evolving pressure on public sector organisations, with those engaged in it always looking for opportunities to exploit system weaknesses to gain access to money , valuable information or benefit. It is the Council's duty to prevent this wherever it can, ensuring that fraud risk is understood, actively prevented and appropriate action taken against those who commit it. 1.2 The impact of f raud and corruption threatens the prosperity of the London Borough of Hillingdon (LBH) and its residents, with the potential to erode confidence in the Council as an institution. Fraud removes money from essential Council services and reduces the Council's ability to help those in the borough most in need. The effects of fraud are often compounded by its link to Organised Crime Groups (OCGs) and the negative impact on the community with increased levels of related crime. This makes counter fraud work a crucial activity for the Council. 1.3 The Council's vision is 'putting our residents first'. Combating fraud and corruption within its services fully supports this vision. Our priorities are to fully implement a 'zer o-tolerance' approach to fraud and a Council where fraud and corruption is unable to thrive due to an organisational environment that is hostile to fraud and its causes. To ensure that LBH is fully fraud-aware and enabled, the Council will prevent fraud through front line defence s, advanced and early detection, as well as appropriate fraud deterrents. The Purpose of the Counter Fraud Strategy 2025 to 2028 1.4 The Counter Fraud Strategy 2025-28 sets out the Council's approach to effectively manage both the internal and external risk of fraud and corruption against the Council and the services it provides over the next three years. LBH has a responsibility to residents for the prevention and detection of fraud and corruption . The Counter Fraud Strateg y sets out how LBH will meet this requirement and supports the Council's vision by ensuring there are robust safeguards against the unlawful loss of taxpayer funds. The Role of the Counter Fraud Team 1.5 The Counter Fraud Team (CFT) is the service responsible for delivering the Counter Fraud Strategy and ensuring that the Council meets its objectives in relation to fraud and corruption. The CFT supports the Corporate Director of Finance in discharging their statutory duty as section 151 officer ensuring “local authority shall make arrangements for the proper administration of their financial affairs.” 1.6 As well as a range of counter fraud activities, the CFT has historically conducted a range of other types of investigative work which do not necessarily have a criminal or fraud element to them i.e. revenue inspections, disciplinary investigations, etc. The work that the CFT carries out is set out within this Counter Fraud Work Plan. It includes preventative work such as fraud awareness training, advising management on fraud risks/fraud prevention controls and ensuring the Council ha s up-to-date and appropriate investigation policies and procedures. HILLINGDON COUNCIL COUNTER FRAUD STRATEGY 4. 2. Integration of approach with Internal Audit 2.1 An element of the overall counter fraud strategic approach since August 2017 has been to achieve collaboration between the work of Internal Audit (IA) and the work of the CFT. This remains an important feature of the ongoing counter fraud strategy due to the benefits of an IA service and CFT that are fully integrated and risk-based, whilst remaining as two distinct functions. 2.2 The nature of work of both IA and the CFT mean a natural alignment can be found in the provision of assurance around risk management. It is intended that through this integration, a counter fraud culture and awareness of fraud will be more easily embedded across the organisation. 2.3 The key elements of this approach include:  A coordinated IA and CFT annual planning process which is monitored and continuously reviewed;  Flexibility of approach on cases of suspected fraud where there are elements falling across both remits;  Shared view of fraud risks across the Council and a joined-up approach to risk assurance where fraud risk exists;  IA and CFT utilisation of each other's work, focussing resource towards the highest risk areas providing a greater level of context for investigations and IA reviews;  Shared understanding of the emergence of new fraud risks across the Council and within the public and private sector; and  A greater level of assurance to Audit Committee/all Members and Senior Managers that fraud risks are being managed appropriately. 2.4 This approach has been proven to be more effective in the management of fraud risks. It also provides an efficient use of resource in dealing with fraud and a greater opportunity to minimise the Council's fraud losses. 3. Defining Fraud & Corruption 3.1 The term ‘ fraud’ commonly includes activities such as theft, deception, bribery, forgery, extortion, conspiracy and money laundering. These include, but are not limited to, the specific offences in the Fraud Act 2006. Fraud can be an attempted or actual act committed against the Council and/or its partners. 3.2 Fraud was defined in law for the first time ever with the introduction of the Fraud Act 2006. Fraud essentially involves a dishonest misrepresentation, failure to disclose information or abuse of position, with the intent to make a personal gain for oneself and/or create a loss for another. 3.3 Corruption is ‘the offering, giving, soliciting, or acceptance of an inducement or reward, or showing any favour or disfavour , which may influence any person to act improperly’. It is primarily an offence under the Bribery Act 2010, although there are other related offences under the Prevention of Corruption Act 1906. HILLINGDON COUNCIL COUNTER FRAUD STRATEGY 5. 4. Strategic Aims & Objectives 4.1 The fraud and corruption risks faced by the Council are varied and span across all service areas. Fraud risk is highly sensitive to local and national factors with new challenges in preventing and detecting fraud emerging frequently. Increases in the emergence of new fraud risks is well documented during a local or national crisis or emergency, meaning that the cost of living crisis continues to create new fraud risks for the Council to consider and respond to. 4.2 The aim of our strategic approach is to embed all elements of good practice in counter fraud into the existing governance arrangements for the Council to help achieve LBH's Counter Fraud Strategic Objectives . This will provide assurance to elected Members and Senior Managers that the Council's exposure to fraud risk is minimised. 4.3 The Counter Fraud Strategic Objectives for LBH are as follows: 1. Maximise loss prevention within council services through effective counter fraud activity; 2. Limit the opportunity for instances of fraud and corr uption across the Council through effective prevention measures; 3. Create a strong deterrent effect to fraud and corruption; 4. Improve the Council's reputation across all stakeholders through the visibility of effective counter fraud activities; 5. Improve the Council's overall governance arrangements; 6. Reinforce an organisational culture of zero-tolerance to fraud; 7. Embed and support an organisation-wide fraud risk awareness; 8. Achieve the CFT yearly Operational Work Plan; and 9. Deliver financial savings and loss prevention across council services in line with the yearly financial target. 4.4 To achieve these desired outcomes /strategic objectives, we consider there to be four key elements to this strategy per Table 1 below. Table 1 ~ Strategic Elements HILLINGDON COUNCIL COUNTER FRAUD STRATEGY 6. Risk-Based Strategic Fraud Overview:  Supporting and assisting an o rganisation-wide approach to fraud risk management (Fraud U niverse). I nternal and external data and information is used intelligently and effectively to identify and fully define the key areas of fraud risk for the Council. Changes to these risks are continually monitored and the fraud risks updated in line with a current analysis.  Implementation of a robust risk assessment model to grade fraud referrals before the deployment of counter fraud resources. The model will assess a variety of risks to the Council including the systemic, operational, reputation and financial risk , alongside intelligence gathering to corroborate allegations. This will ensure the effective use of resources within the investigative process, across a wide range of fraud risks.  Ensuring the implementation and maintenance of appropriate counter fraud policies, processes and practices as part of a corporate framework to underpin all counter fraud measures and the effective use of deterrents. Partnership & Engagement:  Building and maintaining strong working relationships with counter fraud stakeholders, obtaining buy-in from residents and colleagues in order to drive a strong counter fraud culture and promote ownership of fraud issues, whilst enhancing the reputation of the CFT.  Integration of Counter Fraud and IA functions to inform fraud risk assessment methodology, counter fraud planning and internal control recommendations.  Collaborating with our enforcement partners, including the police, enforcement officers and agencies to enhance investigation activities, lawfully share intelligence and maximise counter fraud outcomes.  Work jointly with council colleagues on the design and implementation of counter fraud projects, investigation activity and counter fraud controls, to embed a collaborative approach and enhance the counter fraud environment within the Council. Prevent, Detect, Pursue & Deter:  Embed fraud awareness through an ongoing programme of training and fraud risk control review, championing the implementation and maintenance of ef fective counter fraud controls.  Deter fraud through fraud awareness campaigns focussing on key stakeholder groups including, staff, residents and partner organisations.  Ensure regular communication on fraud referral and whistleblowing processes and fraud issues, both internally and externally to encourage and maintain levels of fraud and corruption reporting.  Identifying fraud, corruption and financial loss through a programme of targeted proactive counter fraud projects, targeting the highest fraud risk areas within the Council, as informed by the Fraud Universe.  Robust and lawful intelligence led investigation of suspected cases of fraud and corruption in line with council policy and professional good practice, and the application of appropriate sanctions and prosecutions where proportionate and necessary. Innovation & Modernisation:  Utilising existing and new technology to enhance and progressively modernise case management, intelligence gathering and investigative capabilities.  Streamline operational processes to drive efficiencies, identify smarter ways of working and innovative counter fraud practices aimed at delivering enhanced outcomes. HILLINGDON COUNCIL COUNTER FRAUD STRATEGY 7.  Introduce digitally driven processes to reduce the departments carbon footprint , whilst providing an effective and efficient Counter Fraud Service.  Explore enhancements in data analytics and artificial Intelligence to support preventative measures and to identify instances of fraud, loss or error. Analytics will also contribute to the fraud risk profile of the Council, as well as providing key fraud statistics for proactive counter fraud initiatives.  Implementation of council-wide data warehousing and data matching, utilising available information sharing , whilst working with internal and external partners, to deliver increased financial savings across all service areas, identify new fraud and error and enhance data management. 5. Corporate Framework 5.1 This strateg y is part of a n established corporate framework of interrelated policies and procedures covering the main elements of the Council's approach to countering fraud and corruption. These include:  Enforcement & Sanctions Policy;  Whistleblowing Policy;  Fraud Response Plan;  Anti-Bribery Policy;  Anti-Money Laundering Policy; and  Surveillance & RIPA Policy. 5.2 It is the responsibility of the Head of Counter Fraud , Borough Solicitor and Director of Community Safety & Enforcement to ensure this framework is reviewed and updated where necessary for compliance with statutory requirements and best practice in counter fraud and anti-corruption. 5.3 Clear information on the Council's approach to combating fraud and error and the relat ed procedures will be regularly communicated with all council staff. Clear lines of communication are available for staff and residents to ensure there are no barriers to raising concerns about fraud and corruption. These include:  Dedicated 'report a fraud' telephone hotline;  Fraud reporting form available to members of staff and members of the public via the Council's website and internally on SharePoint with clear guidance;  Anti-Money Laundering reporting with clear guidance for staff on when to report; and  Fraud Awareness e-Learning package - recommended for all new staff (although it is Management’s responsibility to implement/monitor this). 5.4 Staff responsibilities in relation to fraud, corruption and money laundering reporting are contained within the staff Code of Conduct and relevant policies. All staff are required to report suspected fraud, corruption and/or money laundering under all circumstances. Failure to do so will be considered a breach of the staff Code of Conduct and may lead to action under the Council's Disciplinary Policy and Procedure. HILLINGDON COUNCIL COUNTER FRAUD STRATEGY 8. 6. The Counter Fraud Team Approach 6.1 The CFT has implemented a risk-based approach to all counter fraud work. This methodology is in line with CIPFA's counter fraud and corruption strategy for local government 'Fighting Fraud & Corruption Locally 2020'. It helps ensure that the CFT's resources are consistently deployed in an effective manner to help LBH achieve its overall Counter Fraud Strategic Objective of 'Maximising Loss Prevention'. 6.2 To hold to account the Head of Counter Fraud and the CFT in relation to its performance, a set of key performance indicators (KPI’s) have been introduced. The KPI’s not only assess the team’s performance against counter fraud activity but also against other investigative work such as revenues inspections and financial assessments. These KPI’s are reviewed each year and updated as part of annual planning. 6.3 Alongside KPI’s the team’s success is measured against its financial performance as part of its strategic objectives. Financial performance is reported to key stakeholders including the Audit Committee and CMT on a quarterly basis. 6.4 For transparency on how the CFT calculates its financial outcomes, the annual workplan includes the methodology set for fraud valuations. This list of valuations is not exhaustive, as throughout any financial year the CFT will adapt to combat any new emerging fraud risks. 7. Acknowledgement 7.1 The CFT would like to take this opportunity to formally record its thanks for the co-operation and support it has received from the Council’s management as part of the process for setting this strategy. Alex Brown APCIP Head of Counter Fraud 1st March 2025

Audit Committee – 11 February 2025 Part I – Public 2024/25 QUARTER 3 COUNTER FRAUD PROGRESS REPORT Committee name Audit Committee Officer reporting Alex Brown, Head of Counter Fraud Papers with report 2024/25 Quarter 3 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 3 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 3; 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 3 31st December 2024 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 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 Q3 4 4. COUNTER FRAUD PERFORMANCE IN Q3 8 5. FORWARD LOOK 8 APPENDIX A - CFT Q3 KPI & ACTUAL PERFORMANCE 10 APPENDIX B - CFT 2024/25 FINANCIAL PERFORMANCE 11 APPENDIX C – GLOSSARY OF TERMS 12 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 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 3 (Q3) period (1st October to 31st December 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 Q3. 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 Q3 the CFT has increased its activity in areas of high risk, in particular Housing. A variety of reactive work and proactive projects were undertaken which has led to financial savings of c£2.5m bringing the year-to-date total to c£9m. Some of the proactive project work is still ongoing and further loss prevention savings are likely to be identified in Q4. 2.2 The majority of the CFT’s work in Q 3 has been undertaken in the area of Housing , in particular, reactive investigative work due to tenancy fraud. Currently the team are investigating 128 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 3, leading to the team recovering 28 properties at a notional saving of c£1.9m. In addition to reactive work the team have undertaken proactive projects relating to possible tenancy fraud highlighted from gas and electric checks as well as a bungalow residency project. 2.3 The CFT’s work in combatting fraud risk s within B&B emergency accommodation has continued in Q3. A programme of proactive visiting is in place to identify any possible non- occupation or subletting B&B accommodation. In Q3 the CFT has investigated a number of cases which has led to the closure of 9 emergency accommodation placements, providing savings of c £172k. 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 During Q3 the CFT as part of international fraud awareness week commenced a programme of awareness sessions within Adult Social Care. In total 6 sessions were delivered with 77 staff members attending. These sessions discussed fraud risks in social care and provided staff with the tools to spot and report fraud. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 4. 2.5 Following the success of the CFT winning two awards at the Public Finance Awards 2023, the HCF and management team nominated the service for the Public Sector Counter Fraud Awards 2025. The team have been shortlisted in the category for local excellence. The nomination was based on the team’s multi -discipline approach that led to c£1 1.2m of savings in 2023/24. Entries were deliberated by a panel of experts and the CFT have been shortlisted for the prestigious award alongside other fraud teams . In addition, Laura Piggott Counter Fraud Manager for Housing has been shortlisted for the Female Pioneer of The Year Award in recognition of her fight against tenancy fraud. The award ceremony is due to take p lace in March 2025 and an update will be available at the next committee meeting. 3. COUNTER FRAUD ACTIVITY IN QUARTER 3 3.1 Housing Fraud 3.1.1 In Q3 t he CFT has continued its proactive work within Housing, recovering a further 28 properties. This brings the total number of properties recovered this financial year to 90, resulting in notional savings of c£6.3m. The se results highlight how important , and successful it is to use data matching tools and raising awareness internally and externally to key stakeholders. 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 82% 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 Q3* Total* £k/value** Abandonment 0 0 0 0 £0 Deceased 10 7 5 22 £1,540k NFI Fraud Hub 9 6 7 22 £1,540k Non-Occupation 9 8 10 27 £1,890k Sub-Let 0 7 5 12 £840k Wrongful Succession 2 4 1 7 £490k Total Properties Recovered 30 32 28 90 £6,300k * As at end of Q3 (31st December 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 128 cases relating to tenancy fraud . The team have been granted 6 possession orders following legal proceedings, which are awaiting enforcement action, and a further 30 criminal and civil cases are currently with our legal team. 3.1.4 In Q3 the CFT led a proactive project to undertake unannounced residency visits to properties where electrical and gas safety works were overdue, and access had proven difficult. It is the Council’s responsibility as the landlord to ensure that our housing stock is maintained and that we are doing everything we can to engage with our tenants and residents, whilst meeting our statutory duties and obtaining access to properties. The collaborative approach involved various departments across Housing with the project likely to highlight potential cases of non-occupation, abandonment, and sub-let. 3.1.5 Over a period of 2 weeks unannounced visits were made to 107 properties, of which a total of 22 properties resulted in successful engagement. The project has highlighted 6 cases of non-occupation and sub-let, which are currently under investigation. The project will continue, with further outcomes and savings expected to be available for the Q4 report. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 5. 3.1.6 Working collaboratively with departments within Housing, it was highlighted that there is a demand for age restricted bungalows, in order to facilitate downsize r applications. This in turn would make larger family sized properties available , ensuring council stock is being used effectively. In Q3 the CFT has un dertaken a project to conduct residential checks on the bungalow stock within the borough. The purpose of the project was to highlight potential cases of non-occupation or sub-letting. In total 207 properties have been visited so far, of which 14 cases have been highlighted for potential non-occupation and 30 cases are undergoing further enquiries. 3.1.7 The ongoing pressures in the current economic climate continue to cause an increase in demand for housing and the need for Bed and Breakfast emergency accommodation. In Q3 the CFT has closed 9 emergency accommodation units due to non-occupation, resulting in savings of c£ 172k. This brings the total closed this financial year to 31. A further 14 cases have been opened and are undergoing further enquiries. 3.1.8 The CFT carries out verification checks on all Right to Buy 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 Q3 the CFT have 7 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. 3.1.9 In Q3 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. 3.1.10 In Q3 the CFT completed 286 verification checks on applicants who have registered for social housing. Outlined in Table 2 below, the team successfully closed 8 housing register applications due to reasons including non-occupation, or applicants 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 Q3* Total Total number of cases reviewed 281 376 286 943 % Identified by CFT for rejection 25% 19% 24% 23% Total number of applications closed 4 3 8 15 * As at end of Q3 (31st December 2024). 3.1.11 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 Q3 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 Q3, as detailed in Table 3 over the page , the CFT has conducted 1,437 inspections, with 1,427 (99%) visited within the 10-day KPI target. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 6. Table 3 ~ Revenues Inspections Performance 2023/24 Revenues Inspections Q1 Q2 Q3 Total for 24/25 Total number of inspections completed 1,807 2,055 1,437 5,299 Percentage within 10 day target 99% 99% 99% 99% *As at end of Q3 (31sr December 2024). 3.2.2 During Q3 the CFT has identified a further 25 previously unlisted properties made up of ‘Beds in Sheds'. As a result, an additional c£25k 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. 3.2.3 Pro-active investigation and monitoring by the CFT in the programme of Internal Revenues Maximisation has identified five instances of new properties or properties with previously unknown improvements which has generated £136,852 in additional Business Rates billing. 3.2.4 During Q 3 the CFT ha s continued to receive reports from the programme of External Revenues Maximisation . This has identified one business premise with previously unknown improvements providing additional billing of £130,662, with further outcomes expected in Q4 from cases already referred to the Valuation Office Agency. 3.3 Social Care 3.3.1 With preventive controls and reactive process es in place across fraud risks within Social Care, Q3 marks a successful quarter for the team with c£86k 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 prev ention work , verifications within Financial Assessments ha ve continued throughout Q 3, with the team conducting 176 financial assessment verifications, 17 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 Q3 the team concluded 3 cases where service users had failed to supply correct details of their income and capital. 3.3.4 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. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 7. Table 4 ~ Section 17 Verification Cases 2024/25 Section 17 Cases Q1 Q2 Q3* 2024/25 Total number of cases reviewed 3 2 31 36 Total number verified as accurate 1 1 23 25 Total number of cases closed 2 1 0 3 Total number of cases under further checks 1 0 8 9 Loss Prevention Savings 0 0 0 0 * As at end of Q3 (31st December 2024) 3.4 Blue Badge 3.4.1 During Q3 the CFT carried out a successful Blue Badge amnesty allowing residents to return badges which should not have been in circulation without facing any repercussions. This was advertised in the Hillingdon People magazine and on council social media channels in collaboration with the Communications Team, which was subsequently also pick ed up by local media outlets. This led to the return of 14 Blue Badges preventing potential misuse of these badges. 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 3 with the successful prosecution of 1 Blue Badge case leading to a total of £731 in prosecution costs and fines. Further cases are due to be heard in court, with outcomes expected to be reported in Q4. 3.5 Onsite Immigration Official 3.5.1 During Q3 the team’s Onsite Immigration Official has continued to proactively undertake loss prevention activity in the area of Children’s Social Care. Working collaboratively with the Children’s Resources Finance Team, this proactive approach has resulted in c£14k in loss prevention savings . Cases are identified where a change in the service user’s immigration status enables the service user to be supported with making a claim for benefit. In return, these claims allow for the cost of providing accommodation to each service user to be funded by the welfa re system. 6 cases remain under review, with further savings expected to be reported in Q4. 3.6 London Counter Fraud Hub 3.6.1 The CFT is recognised as a leading member of the London Counter Fraud Hub (LCFH). 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 7 council properties have been recovered and returned to use as a result of information provided by the LCFH during Q3. 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. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 8. 3.7.2 Primary matches from the 2024/25 National Fraud Initiative exercise were released late in Q3 and the review and investigation of these is expected to begin in Q4 with results to follow. 3.7.3 In addition to the main NFI exercise there is an annual data match investigating instances of Single Person Discount (SPD) fraud, the data was received for this during Q1. The CFT has allocated resource to reviewing and investigating these matches, which has generated savings of £21,211 in additional billing during Q 3 with further results from this match expected throughout the year. 3.8 Other Counter Fraud Activities 3.8.1 During Q3 the CFT has commenced a pilot project supporting the Adult Social Care (ASC) and Finance teams recover ASC outstanding debt by visiting residents to discuss recovery options and establish payment plans. This activity has led to the additional recovery of c£8k in initial payments and c£3k in monthly payment plans being set up allowing further debt to be recovered. 3.8.2 During Q3 the CFT has provided a series of organised fraud awareness training sessions for staff in Adult Social Care with 77 staff attending from various teams with additional sessions planned in Q4 . Along with improved fraud awareness this has also helped to identify and clarify areas of risk to be explored further. 4. COUNTER FRAUD PERFORMANCE IN Q3 4.1 Attached at Appendix A is Table 5 which sets out the Q3 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 Q3 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 KPIs are above targeted performance. The management team are pleased that all KPIs 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 in Q4 will continue to focus its resources into areas of high fraud and financial risk 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. 5.2 As part of the CFT’s proactive activity the team will continue its projects in Housing to identify tenancy fraud through different work streams. These projects will see an increase in investigations during Q4, as well as the continuation of visits. 5.3 In Q4 the bi-annual NFI data matches will be released for analysis. The CFT will deploy resources to scrutinise these fraud matches and release other matches relating to data cleansing to service areas. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 9. 5.4 Following the review of the operational workplan for 2025/26 and the Counter Fraud Strategy for 2025-2028. The HCF has also looked at the operating model to deliver both the plan and the strategy . With digital enhancements a key focus of the strategy , work has begun on improving processes and the use of data. In addition, the plan is now focused on areas of high value with some low-risk fraud work and non-fraud related work returning to services. 5.5 This model will lead to a small reduction in staff (3.0FTE) but also create capacity to increase its fraud activity in areas of risk such as social care. The HCF is confident that the new operating model will be in place for 2025/26 and the service will still deliver financial savings in line with current performance. 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 31st December 2024 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 10. APPENDIX A: Table 5 - CFT KPIs and Actual Performance * As at end of Q3 (31st December 2024). CFT KPIs Target Q1 Q2 Q3* 24/25* 23/24 1. Percentage of fraud referrals risk assessed within 3 working days 95% 100% 99% 100% 99% 99% 2. Verification work timescales for completion: a. Housing Allocations completion within the target date set by Housing 95% 100% 100% 100% 100% 99% b. Right to Buy case completion within 28 working days 95% 100% 96% 100% 98% 100% c. Financial Assessments completion within 7 working days 95% 100% 100% 100% 100% 100% d. Section 17 reviews completion within 7 working days 95% 100% 100% 100% 100% 100% 3. Investigation plan completion within 5 working days of case allocation 95% 100% 100% 100% 100% 98% 4. Tenancy fraud referrals received resulting in property recovery 30% 64% 67% 82% 71% 46% 5. Investigations resulting in loss prevention/financial saving outcome 40% 47% 45% 49% 47% 48% 6. Revenue inspections completed within 10 working days of referral date 95% 99% 99% 99% 99% 99% HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 11. APPENDIX B: Table 6 - CFT 2024/25 Financial Performance * As at end of Q3 (31st December 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 £1,960,000 £0 £6,300,000 Other savings/loss prevention £172,171 £272,844 £173,054 £0 £618,069 Social Care Section 17 and UASC** £0 £0 £0 £0 £0 Financial Assessments £72,585 £205,112 £86,840 £0 £364,537 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 £16,120 £0 £79,144 Council Tax Reduction & arrears £4,551 £4,027 £15,772 £0 £24,350 Unlisted Buildings £31,758 £21,817 £25,256 £0 £78,831 Housing Benefit Overpayments £12,750 £18,648 £17,831 £0 £49,229 NNDR £784,844 £4,492 £267,514 £0 £1,056,850 Blue Badge Simple Caution & Financial Penalty £2,512 £2,258 £731 £0 £5,501 Immigration Officer Housing Homelessness Applications** £0 £0 £0 £0 £0 Social Care Savings £108,480 £79,514 £14,560 £0 £202,554 Totals Loss Prevention Savings £360,196 £560,351 £273,241 £0 £1,193,788 Notional Savings £2,779,867 £2,262,466 £2,205,218 £0 £7,247,551 Cashable Savings £176,892 £72,551 £98,490 £0 £347,933 Costs awarded and penalties £2,512 £2,258 £731 £0 £5,501 Total £3,319,467 £2,897,626 £2,577,681 £0 £8,794,774 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2024/25 Quarter 3 12. 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 pu blic 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 Valu e (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 3 13. 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 destitute 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 – 11 February 2025 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 14 May 2025 will start at 18:00. Meetings Room 14 May 2025 CR5 28 August 2025 TBC 18 November 2025 TBC 10 February 2026 TBC 28 May 2026 TBC

WORK PROGRAMME Audit Committee 2025 2026 Meeting Month Nov Feb Feb/ Mar May Aug Nov Feb May Meeting Date 20 11 TBC 14 28 18 10 28 Member training 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 (CB) Corp. Dir. of Finance Head of Counter Fraud EY Head of Internal Audit Corp. Dir. of Finance Head of Counter Fraud Appointment of Chair X X Appointment of Vice-Chair X X Interviews for Independent Chair of the Audit Committee X External Audit item X X X X X X X Audit Committee Annual Report 23/24 24/25 Risk Management Annual Report X Risk Management Report 24/25 Q2 24/25 Q3 24/25 Q4 25/26 Q1 25/26 Q2 25/26 Q3 25/26 Q4 Corporate Risk Register Strategic Risk Report 24/25 Q2 24/25 Q3 24/25 Q4 25/26 Q1 25/26 Q2 25/26 Q3 25/26 Q4 Internal Audit Annual Report 24/25 25/26 Internal Audit Charter X X Internal Audit Plan X Internal Audit Progress Report 24/25 Q2 24/25 Q3 25/26 Q1 25/26 Q2 25/26 Q3 Counter Fraud Annual Report 24/25 25/26 Counter Fraud Operational Plan 25/26 Counter Fraud Progress Report 24/25 Q2 24/25 Q3 25/26 Q1 25/26 Q2 25/26 Q3 Counter Fraud Strategy 2025-2028 X MHCLG Letter - Local Audit Strategy X IA Assurance Review of Contract Management Oversight - TBC REQUEST BY CTTEE: Transformation, Digital & Technology Risk Management X Work Programme X X X X X X X 2025/2026