Audit Committee

Audit Committee – 14 May 2025 Part I – Public APPOINTMENT OF AUDIT COMMITTEE CHAIR 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 appoint its Chair for the 2025-2026 municipal year. RECOMMENDATION: That the Audit Committee appoints Mr John Chesshire as Chair of the Audit Committee for the 2025-26 municipal year. SUPPORTING INFORMATION None. BACKGROUND PAPERS None.

Audit Committee – 14 May 2025 Part I – Public APPOINTMENT OF AUDIT COMMITTEE VICE-CHAIR 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 appoint its Vice-Chair for the 2025-2026 municipal year. RECOMMENDATIONS That the Audit Committee appoints Councillor Nick Denys as Vice-Chair of the Audit Committee for the 2025-26 municipal year. SUPPORTING INFORMATION None. BACKGROUND PAPERS None.

Minutes AUDIT COMMITTEE 11 February 2025 Meeting held at Committee Room 6 - Civic Centre, High Street, Uxbridge UB8 1UW Committee Members Present: Mr John Chesshire (Chair) Councillors Nick Denys (Vice-Chair), Tony Burles, Philip Corthorne, Henry Higgins, and June Nelson 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, Matt Davis – Director of Strategic & Operational Finance Matthew Wallbridge – Chief Operating Officer Tony Zaman – Chief Executive Officer Ryan Dell – Democratic Services Officer Also Present: Ruth Plucknett, Ernst & Young Stephen Reid, Ernst & Young Mark Rutter, Ernst & Young 25. APOLOGIES FOR ABSENCE (Agenda Item 1) None. 26. DECLARATIONS OF INTEREST (Agenda Item 2) None. 27. 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 3) 28. MINUTES OF THE PREVIOUS MEETING (Agenda Item 4) RESOLVED: That the minutes of the previous meeting be agreed as a correct record. 29. TRANSFORMATION, DIGITAL & TECHNOLOGY RISK MANAGEMENT (Agenda Item 5) The Chief Operating Officer presented the Transforma tion, Digital & Technology Risk Management item, noting the importance of risk management in the context of transformation, digital, and technology. The Chief Operating Officer oversaw corporate services, including legal, HR, and technology departments. The Corporate Risk Register showed risks impacting the entire Council. Overspending was a significant risk when linked to Digital Transformation and Technology. On the Corporate Risk Register, amber risks included systems becoming unfit and outdated ICT architecture. Cybersecurity was also a concern. The Operational Risk Register identified and managed risks specific to services. This included technical risks, cyber attacks, and environmental risks (power outages, floods, fires). Technology Investment Risk s included outdated systems. Staff Risks included lack of skills and availability of talent. Supply Chain Risks included cybersecurity, data risks, and outages. Data Risks included confidentiality, integrity, availability. Cybersecurity was the biggest ris k and there were regular assessments and compliance programmes. For specific projects, risks were managed through the project lifecycle, from design to post-implementation. In terms of governance, there were regular programme boards and project boards to review risks and mitigations. Budget management was conducted by addressing overspending risks through the target operating model and savings programme. ICT and Digital risks involved managing outdated systems and cybersecurity threats. Investment planni ng ensured systems were up -to-date and integrated. Technical Controls involved monitoring infrastructure and cyber risks. Officers discussed a variety of mitigation strategies: Investment Planning involved a three -year plan for system replacements and integrations, and regular reviews to adapt to changing technologies. Technical Controls included monitoring infrastructure and cyber risks, and performance monitoring and saving schedules. Governance involved regular meetings with Cabinet Members and senio r management teams; and reporting to the public via budget reports. There was strong and robust governance to manage risks and assess their impacts. Training and awareness included training staff on cybersecurity and phishing attacks and business continuity tests. There were regular internal audits that looked at IT systems and external advice was sought. In monitoring the savings schedule, the Digital team worked closely with the Finance team. Corporate Directors were challenged on a three weekly bases around how they were delivering their savings. Members asked about the depreciation of IT equipment and the possibility of leasing instead of buying. Officers noted the rollout of new devices and explained the depreciation process and the benefits of buy ing and leasing. This related to operating systems and life cycles. Members asked about an annual update on the digital strategy. Officers confirmed the commitment to provide an annual report. Members asked about the frequency of cyber attacks and the C ouncil’s monitoring system. Officers explained the sophisticated monitoring system that tracked cyber threats and emphasised the importance of regular checks and detailed analysis. Members expressed concerns about understanding and managing digital system s. Officers agreed to provide additional training and development for Members to ensure effective use of digital tools. RESOLVED: That the Committee noted the presentation 30. EXTERNAL AUDIT UPDATE (Agenda Item 6) This item was taken before item 5. Officers introduced the external audit update. The Committee were reminded that the 2022/23 accounts were disclaimed. 2023/24 accounts were also to be disclaimed. As at 28 February only 77 opinions on Council or public sectors accounts had been issued out of 459. Only 1% of the prior year accounts were audited on time. This was a sector wide issue. Officers recognised the need to improve the capability and capacity to deal with preparing working papers. Runover from the 2022/23 disclaimed accounts had a knock on effect on the 2023/24 accounts. CIPFA were due to be engaged with as part of a finance improvement programme. Members asked about the engagement with CIPFA. A contract would be signed quickly to allow CIPFA to meet with key office rs and Members. The complexity of local authority accounts continued to grow and there were more requirements on external auditors. Officers had issued the new set of accounts in June, without the annual governance statement as this had not been signed o ff by Members or the Leader of the Council at that point. Officers had previously aimed to have the accounts disclaimed and signed off by the 28 February. This was going to be pushed back to 13 March because of a statutory scrutiny period. Key adjustments had been made around valuations, including an error by valuers on Ruislip Golf Course (officers had corrected for this) and difficulties in valuing school assets. Changes included a £3 million debtors/ creditors issue relating to the DSG, a roughly £2 mil lion difference in earmarked reserves, and a £7.5 million reduction in capital receipts reserves. Future complexities included IFRS 16 and improving the quality of working papers for external audits. Before the Committee this evening were the provisional audit results report for the 2023/24 financial year. EY’s audit was complete. This audit had been a challenging process which was linked to the 2022/23 position, and also to turnover in officers. EY noted that there were good and positive relationships wi th the finance team. EY also thanked the finance team for supporting their work. EY intended to issue a disclaimed opinion on the 2023/24 financial statements, linked to the disclaimer on the 2022 /23 financial statements. Appendix 1 of the report set out t he areas that EY had been unable to complete as part of the 2023/24 audit. The Council had not run a compliant inspection period, which had to be rerun, expiring in March. EY would look to complete their reporting and issue an opinion on the financial stat ements in March. This mean t that the Council will not have met the legislative backstop date of 28 February. Two significant weaknesses were identified: financial reporting and financial sustainability. The Council's financial sustainability was at risk due to the growing schools deficit and the need for robust forecasting. Weaknesses in the Council’s arrangements for financial sustainability and the quality of data were highlighted. Recommendations were made to address these, including improving the quality of data and ensuring robust financial forecasting. The Chair asked if EY believed that the quality of data had declined dramatically from the previous year to 2023/24 or more gradually. EY noted that it had been more gradual. It concerned bringing data up to date. Officers explained the Council’s negative DSG balances, whereby the Council had spent more supporting children than it received through the grant. 91 Councils had such negative balances due to high needs. The government had allowed these negative balances not to impact the Council's ability to fund other services. The statutory override was due to cease in a year’s time, but officers expected it to be extended and national solutions to come forward. Government had introduced the safety valve agreement to help Councils lower their deficits via grants, but the Council's safety valve grant had been paused pending further information. Discussions were ongoing with the DfE. Officers noted that the Office for Budget Responsibility recognised that th ere needed to be a national solution. The funding provided to local authorities for special educational needs had not been sufficient. Members asked about the impact of the safety valve suspension on the Council's services and budget. Efforts were ongoin g to reduce the deficit, and discussions were ongoing with the DfE. The Chair noted that there had been an expectation to complete by the backstop date and asked why this had not occurred. It was noted that a prioritisation piece was being conducted as no t all of the work would be completed. In this regard, the audit did not complete. Extra resources were put on to the audit in order to maximise the amount of work completed by the backstop date. Members asked how much money was received at the start of t he safety valve agreement, and if this would be backdated. Officers noted that there was an expectation that it would be backdated. Officers would confirm the exact figure owed. It was noted that the Council was putting in £4million a year towards this out of capitalisation receipts, subject to MHCLGs agreement. Members asked about repeated issues in valuations year on year. EY noted that the challenge related to assurance over external valuations. Ruislip Gol f Course was a good example, valued at around £3million in the previous year and £18million this year. There was a control recommendation in the report about this. This was also related to data quality. EY presented their pension fund audit plan to the April Committee, and the audit had been carried out in accordance with that plan, with one difference which related to the updating of materiality based on the year end accounts. The audit was substantially complete. Three larger differences had been identified. The first related to updating investmen t asset valuations. This was where more up to date fund manager reports c ame in after the production of the financial statements. This was a standard timing difference. The second related to the recording of investment income where there was an unidentified error and so did not match the fund manager valuation. The third related to a new investment with Blackstone which was incorrectly disclosed as level 2 and should have been level 3. The Chair noted a line in the report that read “If we are not satisf ied with the Council’s response to our recommendations, or the implementation of that response, we will consider exercising our further powers by making formal statutory recommendations” and asked what this meant. EY noted that as an appointed external aud itor, there were a number of statutory powers which are available to them . This included the public interest report or the making of statutory recommendations. Given the significance of the financial challenges facing the authority, then EY will consider t he degree of progress, and the pace of progress made. Statutory recommendations would place specific obligations on the authority. It was reiterated that there was a good relationship with EY. RESOLVED: That the Audit Committee: 1. Noted the position regar ding the audit of the 2023/24 Statement of Accounts and delegated 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. Noted the Hillingdon Pension Fund draft Audit Results Report. 19. RISK MANAGEMENT & STRATEGIC RISK REPORTS Q3 (Agenda Item 7) Officers introduced the risk management and strategic risk reports for Q3. The number of risks had increased to 250, with red risks rising from 14 to 20. The number of unscored risks had decreased significan tly from 90 to 31. Of these, 26 had original risk scores but not current risk scores. Actions had been set to address this. 23 new risks had been identified, six of which relate d to financials due to the Council's financial pressures. Only three risks had been closed. The timescale for how long risks remained in the system without movement was being monitored. A new graph had been included in the report to track this, with further development planned for the next quarter update. 61 risks were overdue fo r review, up from 48 at the end of quarter 2. This included seven graduated risks and 36 overdue actions. Automated emails were sent to risk owners. A governance board was being established to hold people accountable for updating risks. On the Corporate R isk Register , s even red rated risks had been added, and one removed. The largest risks include d balancing the budget in the short and medium term. There was a new A1 risk relating to insurance valuations due to poor asset data . Discussions were ongoing reg arding CMT reviewing the risk registers and strategic risks and around setting up the new governance board. The Chair suggested that the Committee could send a letter to colleagues who had overdue risks or red risks without actions. It was proposed that t he Chief Executive could take this forward and report back to the Committee. The need for better engagement with the risk management process was emphasised. It was also suggested that the Chair could take this forward. Members asked about the implementati on of lead responsibility for risk management. Officers explained that each risk had a risk officer who received automated emails to update risks. There were also risk champions within each directorate. Officers were working on establishing a Directorate and Governance Group to take this forward. Officers noted that the focus on transformation and financial pressures may lead to less attention on routine risk management tasks. Officers emphasised the need to balance these priorities. The Chair reiterated the importance of managing risks effectively. RESOLVED: That the Audit Committee note d the reports and provide feedback on the content and level of assurance received. 20. INTERNAL AUDIT STRATEGY, CHARTER AND PLAN (Agenda Item 8) Officers addressed the strategic risk register. Risks had remained consistent with previous reports, but new KPIs had been included. A new dashboard had been developed with more KPI information. These indicators ha d been integrated into the strategic risk report to ensure consistency and accuracy. Officers explained that data was extracted directly from the risk management system to ensure accuracy. This data was reviewed by the Corporate Management Team prior to being presented to the Audit Committee. The Chair highlighted the ongoing financial risks and the Committee's concern about these issues. Internal Audit Charter New global internal audit standards required compliance by 01 April. The Internal Audit Charter had been updated to reflect these standards, including more information on the role of the Audit Committee and senior management. The Charter ensured the independence of internal audit and include d guidance from the Institute of Internal Auditors (IIA) and the Chartered Institute of Public Finance and Accountancy (CIPFA). Officers noted that additional changes would be made to the Charter based on new guidance. The Chair emphasised the importance of the Audit Committee's role in supporting internal audit. Members inquired about the roles and expectations in the up dated charter. Officers clarified that the majority of the charter reflected existing practices, with additional focus on independence and support from the Audit Committee. Internal Audit Strategy Officers presented the Internal Audit Strategy for the ne xt three years. The strategy focused on compliance with global internal audit standards, key financial controls, governance, transformation, and digital initiatives. Officer s highlighted the importance of data quality in internal audits. The strategy would be updated as needed based on emerging risks and priorities. The Chair expressed approval of the Internal Audit Strategy and emphasised the need for strong business cases to ensure financial benefits. Members raised concerns about the volume of data an d its usability. Officers explained the pyramid of data approach, focusing on key indicators at the top and detailed data at lower levels. Members asked about the construction of dashboards and performance indicators. Officers explained that the business intelligence team sources data from various systems and external sources. Internal Audit Plan Officers introduced the Internal Audit Plan which was risk -based and divided into quarters. Officers explained th at quarter one was relatively fixed, while qua rters three and four were more likely to change based on emerging risks and priorities. The plan included data quality audits for each directorate, spread throughout the year. The plan would be tracked and monitored through progress reports. The Chair no ted their satisfaction with the plan and encouraged the Committee to approve it. The Chair emphasised the importance of focusing on key risk areas and adapting the plan as needed. RESOLVED: That the Audit Committee: 1. Noted the IA Strategy and Charter; and 2. Approved the IA plan for 2025/26 21. INTERNAL AUDIT PROGRESS REPORT Q3 (Agenda Item 9) Officers introduced the Internal Audit progress report for quarter 3. Officers highlighted the completion of three reasonable assurance reports, two advisory repo rts, two limited assurance reports and one no assurance report since the last meeting. On advisory reports, one related to culture and was focused on the perception of culture across the organisation, interviewing staff members, and reviewing actions taken since the All Staff Survey. Findings indicated a consistent perception of culture, with no significant negativity despite ongoing transformation. The other advisory report related to directorate governance , due to limited capacity within directorates to focus on governance areas. The review aimed to develop a framework and proposals for improving governance at the directorate level. The no assurance report related to rent arrears. There were issues with poor documentation, lack of collaboration betwee n services, and poor management oversight. Actions were being taken to address these issues. On limited assurance reports, one related to HRA rent arrears. Similar issues as rent arrears, with actions already being taken to address them. The other limite d assurance report related to Contract Management Oversight. This focused on preparing for the Procurement Act and ensuring contracts are up to date and monitored. Six reports were currently in draft. Officers were finalising terms of reference for community safety and the safety valve audits. The looked after children audit ha d been shifted to Q1 of the next year. Members asked about the addition of the Rural Activity Garden Centre review. Officers explained that it was a high-level advisory review to understand the activities and future development of the Rural Activity Garden Centre. Members inquired about the data quality report and its findings. Officers explained that the report from July of the previous year had four high findings, particularly ar ound linking between systems. These were currently still due for review. Officers emphasised the importance of addressing the high number of no and limited assurance reports. Officers also h ighlighted the need for management to proactively address issues rather than waiting for audit reports. Members expressed concern about the number of no and limited assurance reports but acknowledged the importance of identifying and addressing issues. Members highlighted the importance of taking staff survey results seriously and improving governance during times of transformation. Members asked for clarification on the implementation of lead responsibility for risk management. Officers noted the role of risk officers and the establishment of a Directorate and Governance Group. Officers emphasised the need to balance priorities between transformation and routine risk management tasks. RESOLVED: That the Audit Committee noted the IA Progress since the last Committee meeting 22. COUNTER FRAUD OPERATIONAL PLAN 2025/26 (Agenda Item 10) Officers introduced the Counter Fraud Operational Plan for 2025 to 2028. Officers noted closer alignment between the Counter Fraud and Internal Audit teams, which had made a significant difference. Both reviewed the other’s plans bef ore presenting them to the Corporate Management Team, and subsequently to the Audit Committee. Officers noted that the report gave the Committee a strategic and operational overview of the service's approach. The fraud risk assessment had been refreshed, with 27 risks listed. The plan was fully risk -based, focusing on three main areas: housing, social care, and revenue. Officers explained that low -level fraud activity and non -fraud related work were being transferred back to service areas, allowing the t eam to focus on higher -risk areas. Bespoke projects in social care around direct payments and care were now included. The work plan was data -driven, with reviewed KPIs and increased targets. The capital target for 2025/26 had been set at £8.8 million, a 1 0% increase from the previous year. Appendix D of the report outlined the methodology for recording savings. Members noted lower-risk fraud work being passed back to service areas and asked if there was a checklist of actions to complete. Officers noted that there were various meetings to discuss this. Officers were also looking at digital methods of improving this. Training and support would be offered where necessary. Members asked about staffing levels, and if the team had enough capacity to meet increased targets. Officers noted that they did have the necessary staff. The Chair acknowledged the ambitious plan and targets and expressed confidence in the team’s ability to exceed previous targets and achieve the necessary savings. RESOLVED: That the Audit Committee: 1. Noted the Counter Fraud Annual Operational Plan for 2025/26; and 2. Suggested any amendments/ comments. 23. COUNTER FRAUD STRATEGY 2023-2028 (Agenda Item 11) This item was taken before item 10. Officers presented the Counter Fraud Strategy. The strategy was being presented for input and feedback from the Audit Committee before being presented to Cabinet for formal approval in March. The core fundamentals of the strateg y have been in place since 2017, and included a risk-based appro ach, partnership and engagement, protection and deterrence, and innovation and modernisation. Those fundamentals remained in the reviewed and updated strategy. Innovation and modernisation were a key focus moving forward. Governance around this included weekly stand up meetings. New technologies were being looked into in a move towards going paperless. Digital processes were being looked into to support efficiencies. The Chair acknowledged the effectiveness of the strategy to date and noted that the Committee were happy to endorse it. RESOLVED: That the Committee: 1. Noted the Counter Fraud Strategy 2025 to 2028; and 2. Suggested any amendments/ comments prior to submission to Cabinet for approval. 24. COUNTER FRAUD PROGRESS REPORT Q3 (Agenda Item 12) Officers introduced the Counter Fraud progress report for quarter 3. The team had achieved £2.5 million in savings for Q3, bringing the year -to-date total to just over £9 million. 28 properties had been recovered, bringing the year-to-date total to 90. Officers expected to surpass 100 properties by the time of the annual report. There were currently 128 live cases under investigation, with a sustained 40 -50% increase in cases since COVID. Nine emergency accommodation units had been closed for non- occupation, saving £172,000. Officers had conducted activities during International Fraud Awareness Week and started an awareness programme in adult social care, engaging over 100 staff members. The team had been shortlisted for the Local Exce llence award, and the Counter Fraud Manager for Housing had been shortlisted for Pioneer of the Year. The awards ceremony was due to be held on 12 March 2025. Future plans included reviewing the operating model of counter fraud and adapting to the authority's financial challenges. The savings target had increased by 10%, with a focus on high -risk areas of fraud and transferring low -level cases back to services. There had been a small reduction in resources by three FTEs, with one vacancy never filled. Thi s will create capacity for other work in social care and ensure the service remained lean, efficient, and effective. Members asked about the turnaround time for recovered properties to be reallocated. Officers explained that the process involve d the repairs department and the Council's allocation policy and added that the void turnaround has been audited and KPIs were monitored. Members inquired about learning from identified cases to tighten processes moving forward. Officers explained that the fraud tea m work ed closely with the relevant departments to address issues and improve processes. Weekly tracking of issues and monthly meetings with the responsible officers helped resolve operational problems. Members raised concerns about beds in sheds and unlis ted properties. Officers explained that the focus was on identifying properties that should be paying Council Tax and referring other issues to the appropriate services, i.e. Private Sector Housing and Planning. Members congratulated the team on the four prosecutions related to Blue Badge fraud. Members emphasised the importance of maintaining an efficient and effective service, despite the need for savings. Officers assured that the new operating model was efficient and effective, and any changes in the future will be discussed. Members emphasised the importance of investing in the Counter Fraud team to save money for the Council. Officers agreed and stated that they were comfortable with the current structure and would discuss any future investment opportunities. The Chair congratulated the Counter Fraud team on their achievements. RESOLVED: That the Audit Committee: 1. Noted the Counter Fraud Progress Report for 2024/25 Quarter 3; and 2. Suggested any comments/ amendments. 25. WORK PROGRAMME (Agenda Item 13) Officers highlighted a provisional date of 20 March for the next Member training session, subject to Member availability. RESOLVED: That the Audit Committee noted the dates for Audit Committee meetings. The meeting, which commenced at 5.10 pm, closed at 7:55 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 filme d live on the Council's YouTube Channel to increase transparency in decision -making, however these minutes remain the official and definitive record of proceedings.

Audit Committee – 14 May 2025 Part I – Public EXTERNAL AUDIT UPDATE: FINAL 2023/24 ACCOUNTS AND PROCESS FOR AUDITING THE 2024/25 ACCOUNTS Committee name Audit Committee Officer reporting Pete Carpenter; Director Pensions, Treasury & Statutory Accounts Papers with report Appendix 1 – 2023/24 Final Statement of Accounts Appendix 2 – 2023/24 Final Audit Results Report Appendix 3 – Pension Fund Audit Planning Report for 2024/25 Ward All HEADLINES This report provides the final 2023/24 Statement of Accounts and Audit Results Report and sets out the high level process for the Audit of the 2024/25 Accounts. RECOMMENDATIONS: That the Audit Committee: 1. Note the final position regarding the Statement of Accounts and Audit Results Report for 2023/24 for ratification; 2. Note the high-level process that will be followed regarding the delivery and audit of the 2024/25 Accounts; and 3. Note the draft plan for the Audit of the 2024/25 Pension Fund Accounts. SUPPORTING INFORMATION The Ministry of Housing, Communities and Local Government has announced measures to tackle the backlog of local government audits and have proposed backstop dates for the publication of audited accounts. These are set out in the following table: 2024/25: 27 February 2026 2025/26: 31 January 2027 2026/27: 30 November 2027 2027/28: 30 November 2028 The backstop legislation has resulted in significant numbers of Councils receiving “Disclaimer Opinions” due to time constraints and number of audits required to be delivered to comply with the legislation resulting in Auditors collectively not having the time to complete Audits and therefore issue “Disclaimer Opinions”. A total of 216 disclaimed audit opinions have been issued by auditors to local government bodies because of the “final” backstop date for the 2023 -24 financial year . This is 47.1% of all local government Audits in England. Audit Committee – 14 May 2025 Part I – Public Conclusion of the 2023/24 Statement of Accounts Audit The Audit Committee on the 11 February 2025 delegated 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 Rep ort on behalf of the Committee and to report back to the next Audit Committee meeting on these matters for ratification. Following the additional public consultation period the 2023/24 Statement of Accounts was signed off on the 27 March 2025. The revised public inspection period closed on 13 March. The updated Accounts are attached for reference. The Council received a “Disclaimer Opinion”. In terms for the 2023/24 Audit Results Report, any changes to the initial report that the Committee received in February are highlighted in blue. The main changes that the External Auditor highlights are:  The changes to Appendix A reflecting the final status of work pre-signing;  The observations around the AGS which led to the small delay in signing;  Switch of the misstatement in relation to Hillingdon First from uncorrected to corrected (reflecting this being adjusted); and  Management responses being added to the control recommendations. Significant work, in terms of testing and reflected in the updated blue text , was undertaken in relation to the Assurance ratings set out in Appendix A. This work is not lost and will be built on as part of the 2024/25 audit process. The 2024/25 Audit Process The 2024/25 Audit is not initially looking to rebuild the Councils position following two years of “Disclaimer Audits”. It will be very much transaction based to assure on what happened during the 2024/25 financial year . External Auditors are still awaiti ng an updated auditing framework from the Government which will set out how they need to proceed in “rebuilding the Council’s position when the have “Disclaimer Opinions”. EY will provide a verbal at the Committee meeting on this and the planning they have been undertaking for the 2024/25 audit of the Council’s accounts. Initial planning for the 2024/25 Pension Fund Audit has been completed , and this is attached for review and comment. Unmodified opinions received were for the years 2022/23 and 2023/24 Other Audits Grant Thornton have completed both the 2023/24 Teachers Pension End of Year Certificate and Pooling of Housing Capital Receipts audit assurance work. No major issues have arisen from these audits. EY have completed the Housing Benefit Assurance Process 2022/23 audit and submitted to the Department for Work and Pensions on 05 February 2025. Audit Committee – 14 May 2025 Part I – Public FINANCIAL IMPLICATIONS In September 2024 the PSAA launched a consultation on the fee scale for 2024/25 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 r equired 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 in February that there would be scale fee variations in respect of the 2023/24 audit. This has not yet been fully quantified. The final fee for the 2022/23 HBAP audit is £111,885 which is a significant increase on the previous year. The main reason for the increase in fees is due to the significant level of extending testing required for the 2022/23 audit compared to the previous year. The fees for Grant Thornton in respect of the Teachers Pension and Pooling audits were within approved budget estimates. LEGAL IMPLICATIONS The Secretary of State for Communities and Local Government delegated statutory functions (from the Audit Commission Act 1998) to P ublic Sector Audit Appointments (PSAA) on a transitional basis under powers contained in the Local Audit and Accountability Act 2014. BACKGROUND PAPERS NIL. APPENDICES Appendix 1 – 2023/24 Final Statement of Accounts Appendix 2 – 2023/24 Final Audit Results Report Appendix 3 – Pension Fund Audit Planning Report for 2024/25

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 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 15 Statement of Accounting Policies 25 Main Financial Statements 43 Expenditure and Funding Analysis 44 Comprehensive Income and Expenditure Statement 47 Balance Sheet 48 Movement in Reserves Statement Movement in Unusable Reserves 49 51 Cash Flow Statement 52 Notes to Main Financial Statements 53 Other Financial Statements 107 Housing Revenue Account and Notes 108 Collection Fund Account and Notes 112 Pension Fund Account and Notes 116 Annual Governance Statement 149 Glossary 159 Leader’s Statement 2 1. Leader’s Statement Introduction by Councillor Ian Edwards, Leader of the Council Welcome to Hillingdon’s Statement of Accounts for 2023/24, which shows the council's financial performance in delivering high quality services to residents during the year and outlines the council’s financial standing at 31 March 2024. The Council has maintained frontline services to residents, with an approach based on sound financial management and continues to put residents first. Residents saw an increase of 2.99 per cent applied to their Council Tax for 2023/24, with the rise maintaining Hillingdon’s approach of one of the lowest rates of Council Tax in Outer London. In addition, the Council also levied the Social Care Precept at 2 per cent. The Council offers a safety net for residents facing financial difficulty in the form of the Council Tax Reduction Scheme. The Council was able to do this whilst all frontline services were maintained despite government funding increasing at a rate lower than inflation and an increasing demand for services from a growing population. Our people, our environment and our heritage continue to be at the heart of what we do, key achievements for the last financial year include: • As the cost-of-living crisis continued to impact our residents into 2023/24, the Council continued to offer support through administering Government schemes and supported low-income households with local discretionary schemes. Support to residents included the cost of living payments, winter fuel payments, Household Support Fund, free school meal vouchers, the Holiday Activities and Food Programme. • During October 2023, the council inaugurated an accessible cycle hub in Uxbridge. This hub offers specially adapted cycles for individuals with health, learning, and physical conditions. The project, funded by the council, not only provides storage facilities for these specialist cycles but also offers cycling instructors to facilitate sessions as needed. • 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. • December 2023 saw the opening of a second fully refitted and inclusive family hub in Hayes. The former ASHA Day Care Centre, near Coldharbour Lane, has been remodelled into a multifunctional site which incorporates a wide range of integrated services for families and children. • 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 earmarked 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 further 12 in the goods yard, and four more at the rear of the site’s Middlesex Suite. • The Council has once again retained the top spot for it’s green spaces with the borough’s total coming to 67 awards (66 of which are maintained by the council) – this is the most flags held by any local authority for the eleventh year running. This Statement of Accounts clearly demonstrates Hillingdon’s commitment to putting its residents first, which has led to another year of tremendous effort to support residents during the cost of living crisis. As at 31 March 2024 general balances of £26.8 million are held and further earmarked reserves set aside for member initiatives and risk cover. Whilst this resilience provides a level of cover for Hillingdon, the inflationary environment and demand led and demographic pressures are continuing to have an impact on the Council’s financial position and is the main driver for the Council’s saving requirement in the short to medium term, which is a position facing the whole of the Local Government sector. Hillingdon will continue to protect front line services and target transformational efficiency within the Council’s budget strategy. Cllr Ian Edwards Leader of the Council Narrative Report 3 This document sets out the annual accounts of the London Borough of Hillingdon for the year ended 31 March 202 4. The accounts are in the format for local authority accounts set by the Chartered Institute of Public Finance and Accountancy (CIPFA). The purpose of this narrative report is to provide a guide to the most significant matters reported in the financial statements. Included within this document are a number of technical terms that are specific to local government finance and a glossary has been provided to assist the understanding of the financial statements. 2.1 Organisational overview and external environment Hillingdon, situated on the western edge of Greater London, is the second largest London borough, covering a total area of about 42 square miles. It is just 14 miles from central London and bordered by the counties of Buckinghamshire, Hertfordshire and Sur rey, as well as the London Boroughs of: Hounslow, Ealing and Harrow. Hillingdon is home to Heathrow, one of the world's busiest airports, which normally caters for more than 60 million passengers a year. The borough, Hillingdon, has some of the best sports and fitness facilities in London including: Hillingdon Sports and Leisure Complex with 50 metre indoor competition pool; leisure pool; outdoor lido; 100 station gym; athletics stadium and 400 metre running track; 3G floodlit pitches, sports hall and more. There are also 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 financial management that has delivered our success to -date and which will be vital going forward. The London Borough of Hillingdon was one of the 32 London Boroughs created by the London Government Act 1963. It was formed by the amalgamation of the Borough of Uxbridge and the Urban Districts of Hayes/Harlington, Ruislip/Northwood and Yiewsley/West Dray ton. The new borough came into existence on 1 April 1965, when the new Council started work. As well as taking on the work of the four previous district authorities, the Council became responsible for local services such as education, libraries, and childr en'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 plan ning 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 diverse 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 waterways; lakes; meadows, and nature reserves. Ruislip Woods has been designated London's first National Nature Reserve; whist nearby Ruislip Lido boasts 60 acres of water. The borough also of fers a host of sporting activities, including sports centres, many with newly refurbished gyms and two exceptional 18-hole and one 12-hole golf courses, including a championship standard course at Stockley Park. The arts and entertainment thrive, with The Beck 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 Government funding increase, but this funding is still lagging behind pre -austerity levels, with 2023/24 compounded by inflation significantly outstripping increased funding, despite this, Hi llingdon was still able to continue to maintain cash discounts against Council Tax for the over 65s in receipt of this benefit on 31 March 2023 for another year in 2023/24, without impacting on front -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, homelessness, 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 Council, 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. This 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 implementation of the new financial ERP system. A new HRA acquisitions and developments reserve for £6.8m has been created 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 collectively approved the principle of a Business Rates Retention Pilot Pool for the capital. In 2 020/21 the Government ended the pilot status for the London Pool, however London Authorities continued to pool benefits without the pilot status but benefit from maximising the top -up and tariff system. However, due to the impact of the pandemic on the London-wide rating list the pool made a small loss, the decision was therefore taken not to pool Business Rates across the capital 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 drawdown 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 2023/24 totalled £127. 3m (£110.7m in 2022/23) and was funded from a range of sources. These sources of funding included grants, contributions from revenue resources, proceeds from asset sales, and prudential borrowing. An under spend of £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 installing 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 redevelopment 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 -quality housing to meet the need of Hillingdon’s residents. The Hillingdon First Ltd shareholder agreement and memorandum of association sets out in detail the governance arrangements and provides details of the operating framework, controls and reporting requirements. As at 31 March 202 4, 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 loan s (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 pand emic 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 (i n 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 amortised 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 investing its cash balances to ensure money is invested at a very low level of risk. The strategy for investing funds first considers the security of the deposit, the liquidity of investments and then the return on the investment. 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 have been agreed through the Treasury Management Strategy, consisting of other local authorities, instant access funds, and institutions with a credit rating A - or above. 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 funds, 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 during 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 loa ns. Over the year the Council’s loan portfolio had an average interest 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 sales. However, this profit is an accounting profit only, as social housing is accounted for in the balance sheet at 25% of its market value to comply with social housing valuation methodology in London, as a result replacement of these housin g units would be more expensive. In 202 3/24 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 scheme 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 favourite 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 earmarked 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 further 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 the 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 gr ant from the Lawn Tennis Association (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 remodelled 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 counselling, mentoring, health visitors, a sexual health clinic, baby groups and much more. Also in December 2023, the council had completed work at two primary schools to enhance facilities and create additional places for children with special educational 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 provide 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 council celebrated the completion of improvement 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 children and care leavers’ determination and successes 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 upgrades 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 intellig ent lighting 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 result of reduced funding, demographic changes and inflation pressures there could be a risk to future service provision. The Hillingdon Improvement Programme (HIP) is aimed at delivering a range of key improvements to the way the Council works and improving services to our residents. Since its introduction, it has delivered impressive savings across the Council and championed a variety of initiatives. Strong financial management and a commitment to putting our residents first, are at the core of the HIP programme and underpins all projects. Our Business Improvement Delivery (BID) programme aims to deliver services that resident’s value, and to identify and improve the way the Council works. Reviews with services during 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, coupled with longer term strategic reviews, form the Transformation programme to meet the requirements of the MTFF. The Council incorporates a number of service specific Demand -Led Growth assumptions into its budget to provide for areas of expenditure where there is a greater degree of uncertainty or are subject to demographic pressures. In 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. The 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 around 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 -ride 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 funding 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 requirement 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 rep resents a challenge on a similar scale to the £51.0m of pressures managed over the period from 2019/20 to 2023/24. In contrast to the previous five years, when reductions in funding were the single largest Narrative Report 10 contributor to the budget gap, the projected gap is very much driven by growth in expenditure as a result of the exceptional inflationary environment forecast to last throughout 2023/24 and into 2024/25, partially mitigated through continuation of the incr eased 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 the 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 Safety Valve ag reement 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 Agreement that the Council has entered with the Department for Education (DfE) following Cabinet’s ratification of the agreement at Cabinet in March 2022. Based on the current medium-term outlook, there is a residual savings requirement of £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 continued 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 pro gramme, a new leisure centre in West Drayton, Carbon Zero Initiatives, Civic Centre Transformation, street lighting replacements, expanding and improving CCTV coverage as well as investments into technology and highways. Looking into the medium financial outlook the underlying savings 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 projected 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 st ability 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 the 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 surplus 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 items that are accounted for through the Comprehensive Income and Expenditure Statement such as depreciation, revaluation and impairment losses, and losses on disposal. These items are removed for the purposes of Council Tax setting as they are accounting items and do not affect the funding of services, as a result these items of expenditure are reversed out of the General Fund Balance in the Movement in Reserves Statement. Movement in Reserves Statement This statement reconciles the outturn on the Comprehensive Income and Expenditure Statement to the balance on the Council reserves, established by complying with relevant statutory provisions, showing the true economic cost of providing the Council's servi ces. 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 draw down of £4.0m in the Inflation Volatility reserve to manage inflation risks . A new HRA development and acquisitions 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 f or 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 equivalents arising from both revenue and capital transactions with third parties. It excludes funds held in trust for others and the Pension Fund. There was 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 -statutory practices, to reconcile the amounts charged to Housing tenants. For example, revaluation gains and losses on Council dwellings and gains/losses on disposal of asset are reversed. Overall, the HRA was in deficit by £0. 1m in 202 3/24 (deficit of £0.2m in 202 2/23), 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 precepting 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 Rates, 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. 7 5% 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 accoun ts do not include any liabilities relating to payment of pensions and benefits in future years. The activity of the Pension Fund is not incorporated within the Council’s core accounting statements. 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 Council and Chief Executive setting out the : systems; processes; culture, and values by which the Council is directed and controlled, and its activities through which it accounts to, engages with, and leads the community. The framework enables the Council to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate cost-effective services. Glossary of Terms The glossary provides a definition of key terms used to aid understanding the accounting statements. Statement of Responsibilities for the Statement of Accounts 14 The Council is required to: • Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Council that officer is the Corporate Director of Finance: • Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; and • Approve the Statement of Accounts. Corporate Director of Finance Responsibilities The Corporate Director of Finance is responsible for the preparation of the Council’s Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2020/21 ('the Code'). In preparing this statement of accounts the Corporate Director of Finance has: • Selected suitable accounting policies and then applied them consistently; • Made judgements and estimates that were reasonable and prudent; and • Complied with the Local Authority Code. The Corporate Director of Finance has also: • Kept proper accounting records that were up to date; and • Taken reasonable steps for the prevention and detection of fraud and other irregularities. Corporate Director of Finance Approval of Accounts I certify that these accounts present a true and fair view of the financial position of the London Borough of Hillingdon, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in United Kingdom (‘the Code’), as at 31 March 2024 and its income and expenditure for the year then ended. Richard Ennis Corporate Director of Finance 26 March 2025 Audit Committee Certificate for the Approval of the Accounts John Chesshire, Audit Committee Chair Signed on behalf of London Borough of Hillingdon AUDIT COMMITTEE 26 March 2025 Independent Auditor’s Report 15 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE LONDON BOROUGH OF HILLINGDON Disclaimer of Opinion We were engaged to audit the financial statements of the London Borough of Hillingdon ('the Authority') for the year ended 31 March 2024. The financial statements comprise the: • Movement in Reserves Statement; • Movement in Unusable Reserves Statement; • Comprehensive Income and Expenditure Statement; • Balance Sheet; • Cash Flow Statement; • related notes, including the Statement of Accounting Policies, the Expenditure and Funding Analysis and Notes to the Main Financial Statements 1 to 45; • Housing Revenue Account Income and Expenditure Statement, the Movement on the Housing Revenue Account Statement, and the related notes 1 to 9; and • Collection Fund Account and the related notes 1 to 3 The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2023/24. We do not express an opinion on the accompanying financial statements of the Authority. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. Basis for disclaimer of opinion The Accounts and Audit (Amendment) Regulations 2024 (Statutory Instrument 2024/907) which came into force on 30 September 2024 required any outstanding accountability statements for years ended 31 March 2015 to 31 March 2023 to be approved not later than 13 December 2024 and the accountability statements for the year ended 31 March 2024 to be approved not later than 28 February 2025 ('the backstop date'). The audit of the financial statements for the year ended 31 March 2023 for the London Borough of Hillingdon was not completed for the reasons set out in our disclaimer of opinion on those financial statements dated 28 November 2024. Due to the disclaimer of opinion on the prior year, delays in receiving draft financial statements and associated audit evidence and the limited time between the backstop dates we did not have the required resources available to complete the detailed audit procedures that would be needed to obtain sufficient appropriate audit evidence to issue an unmodified audit report on the Authority's financial statements for the year ended 31 March 2024. In addition, the financial statements as approved by the London Borough of Hillingdon for the year ended 31 March 2023 included property, plant and equipment belonging to two schools which converted to academy status during the year ended 31 March 2022 . These assets should have been derecognised by the Authority at the point the schools converted to academy status, but remained within the financial statements overstating property, plant and equipment at 31 March 2023 by £28.7 million. The Authority has derecognised these assets from the opening balances as at 1 April 2023 presented within the financial statements for the year ended 31 March 2024, but has not restated the prior period information. Independent Auditor’s Report 16 Therefore, we are disclaiming our opinion on the financial statements. Matters on which we report by exception Notwithstanding our disclaimer of opinion on the financial statements we have nothing to report in respect of whether the annual governance statement is misleading or inconsistent with other information forthcoming from the audit, performed subject to the pervasive limitation described above, or our knowledge of the Authority. We report to you if: • we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014 (as amended); • we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014 (as amended); • we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014 (as amended); • we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014 (as amended); or • we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014 (as amended) We have nothing to report in these respects. In respect of the following, we have matters to report by exception: • we are not satisfied that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2024. We report to you if we are not satisfied that the Authority has put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2024. On the basis of our work, having regard to the Code of Audit Practice 2024 and the guidance issued by the Comptroller and Auditor General in November 2024, we have identified the following significant weaknesses in the Authority's arrangements for the year ended 31 March 2024. Significant weaknesses in arrangements In relation to financial sustainability Our judgement on the nature of the weakness we have identified We have observed evidence which leads us to conclude that there is a significant weakness in the Authority's arrangements to identify and manage risks to its financial resilience and ensure it can continue to deliver services in a sustainable manner, including having insufficient reserves available to absorb its dedicated schools grant (DSG) deficit when the current statutory override ends. The evidence on which our view is based We have formed our view on the Authority's arrangements having Independent Auditor’s Report 17 • Reviewed the Authority's medium term financial forecasts (MTFFs) for the periods 2023/24 - 2027/28 and 2024/25 - 2028/29, budget outturn report for 2023/24 and monthly budget monitoring reporting both during and following the financial year under audit; • Compared the financial health of the Authority against its peers, including via inspection of the Authority's scoring in the publicly available CIPFA Financial Resilience Index; • Made enquiries of management and those charged with governance of the Authority. The impact on the London Borough of Hillingdon The deterioration in the Authority's financial position increases the risk that the Authority will need to identify, develop and implement significant savings plans in order to maintain current levels of service provision. The Authority may need to reassess the services it provides and how it funds those services and take difficult decisions in the context of its financial position. Inaccurate forecasting of demand for services and the costs of providing them increases the risk that the Authority will continue to overspend against its budget, further depleting its already low level of reserves. The actions the Authority needs to take to address the weakness We make the following recommendations to the Authority to address this significant weakness in the Authority's arrangements: 1. We recommend that the Authority builds upon the steps already taken to control its expenditure to identify specific deliverable savings over the short term and medium term (next 12-24 months) to protect its limited remaining reserves in the context of the forecast levels of funding. 2. We recommend that the Authority reviews its service delivery models to ensure that they are efficient, represent value for money and achieve the outcomes required for the resources invested. Where opportunities to improve service delivery models are identified, the Authority should develop detailed plans for implementation of service delivery transformation and how the up-front transformation costs will be funded. 3. We recommend that the Authority seeks to balance its schools budget to prevent further growth in its Dedicated Schools Grant (DSG) deficit. In the absence of confirmed alternative arrangements, the Authority should also perform scenario planning for how it would manage the impact of the current deficit on its financial position when the current statutory override ends in March 2026. 4. We recommend that the Authority review its financial forecasting processes to understand why significant financial pressures, over and above those anticipated and reflected in the Authority's annual budget, emerge and ensure future forecasting reflects the lessons learned. In relation to governance Our judgement on the nature of the weakness we have identified We have observed evidence which leads us to conclude that there is a significant weakness in the

London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 18 March 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. 18 March 2025 Dear Audit Committee Members 2023/24 Final Audit Results Report We are pleased to attach our Final Audit Results Report, summarising the conclusions of our audit for the Audit Committee. Where we have updated our report from the provisional Audit Results Report issued on 5 February 2025 we highlight these changes in blue text . Changes primarily relate to updating the status of audit procedures which were graded ‘yellow’ in the Provisional Audit Results Report and some minor changes to the wording of our value for money recommendations. 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 the London Borough of Hillingdon (‘the Council’)’s accounting policies and judgements and material internal control findings. This report considers the impact of Government proposals, which have now been enacted through secondary legislation, to clear the backlog in local audit and put the local audit system on a sustainable footing. The proposals recognise that timely, high-quality financial reporting and audit of local bodies is a vital part of our democratic system. Not only does it support good decision making by local bodies , by enabling them to plan effectively, make informed decisions and manage their services, it ensures transparency and accountability to local t axpayers. All stakeholders have a critical role to play in addressing the audit backlog. The Audit Committee, as the Council’s body charged with governance, has an essential role in ensuring that it has assurance over both the quality of the draft financial statements prepared by management and the Council’s wider arrangements to support the delivery of a timely and efficient audit. We will consider and report on the adequacy of the Council’s external financial reporting arrangements and the effectiveness of the Audit Committee in fulfilling its role in those arrangements as part of our assessment of Value for Money a rrangements and consider the use of other statutory reporting powers to draw attention to weaknesses in those arrangements, where we cons ider it necessary to do so. Given that Statutory Instrument 2024/907 “The Accounts and Audit (Amendment) Regulations 2024” (“SI 2024/907”) imposes a backstop date of 28 February 2025 by which date we are required to issue our opinion on the financial statements, we have considered w hether the time constraints imposed by the backstop date mean that we cannot complete all necessary procedures to obtain sufficient, app ropriate audit evidence to support the opinion and fulfil all the objectives of all relevant ISAs (UK). We have also taken into account SI 2024/907 and Local Authority Reset and Recovery Implementation Guidance Notes issued by the National Audit Office and endorsed by the Financial Reporting Council, together with the requirements of the Local Audit and Accountability Act 2014, the National Audit Office’s 2024 Code of Audit Practice, the Statement of Responsibilities issued by Public Sector Audit Appointments (PSAA) Ltd, auditing standards and other professional requirements. Audit Committee London Borough of Hillingdon Hillingdon Civic Centre 225-226 High St Uxbridge UB8 1UW The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited. A list of members’ names is available for inspection at 1 More London Place, London SE1 2AF, the firm’s principal place of business and registered office. Ernst & Young LLP is a multi-disciplinary practice and is authorised and regulated by the Institute of Chartered Accountants in England and Wales, the Solicitors Regulation Authority and other regulators. Further details can be found at http://www.ey.com/UK/en/Home/Legal. As reported in our 2022/23 Completion Report for Those Charged with Governance, we issued a disclaimed audit report on the Co uncil’s financial statements for 2022/23 under these arrangements to reset and recover local government audit. Although we have commenced some work to rebuild assurance ahead of the 2023/24 backstop date, we have not obtained sufficient evidence to be able to con clude that the financial statements are free from material and pervasive misstatement. Taken together with the requirement to conclude o ur work by the 2023/24 backstop date, the lack of evidence over these movements and balances mean we are unable to conclude that the 202 3/24 financial statements are free from material and pervasive misstatements. We therefore anticipate issuing a disclaimed 2023/24 audit opinion. We draw the attention of Audit Committee members and officers to the Public Sector Audit Appointment Limited’s Statement of Responsibilities (paragraphs 26-28) which clearly set out what is expected of audited bodies in preparing their financial statem ents (see Appendix F). This report is intended solely for the information and use of the Audit Committee, and management, and is not intended to be and should not be used by anyone other than these specified parties. Yours faithfully Stephen Reid Partner For and on behalf of Ernst & Young LLP Enc Confidential — All Rights Reserved Contents Independence08 Appendices09 Assessment of Control Environment 06 Executive Summary01 Areas of Audit Focus02 Value for Money03 Audit Report04 Audit Differences 05 Other Reporting Issues 07 London Borough of Hillingdon Final Audit Results Report 4 Public Sector Audit Appointments Ltd (PSAA) issued the “Statement of responsibilities of auditors and audited bodies”. It is available from the PSAA website (https://www.psaa.co.uk/managing-audit- quality/statement-of-responsibilities-of-auditors-and-audited-bodies/statement-of-responsibilities-of-auditors-and-audited-bodies-from-2023-24-audits). 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 the London Borough of Hillingdon in accordance with the statement of responsibilities. Our work has been undertaken so that we might state to the Audit Committee and management of the London Borough of Hillingdon those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the Audit Committee and management of the London Borough of Hillingdon for this report or for the opinions we have formed. It should not be provided to any third-party without our prior written consent. Executive Summary01 Confidential — All Rights Reserved London Borough of Hillingdon Final Audit Results Report 5 Confidential — All Rights Reserved Executive Summary London Borough of Hillingdon Final Audit Results Report 6 Timely, high-quality financial reporting and audit of local bodies is a vital part of our democratic system. It supports good decision making by local bodies and ensures transparency and accountability to local taxpayers. There is general agreement that the backlog in the publication of audited financial statements by local bodies has grown to an unacceptable level and there is a clear recognition that all stakeholders in the sector need to work together to address this. Reasons for the backlog across the system have been widely reported and include: • Lack of capacity within the local authority financial accounting profession; • Increased complexity of reporting requirements within the sector; • Lack of capacity within audit firms with public sector experience; • Increased regulatory pressure on auditors, which in turn has increased the scope and extent of audit procedures performed. MHCLG (formerly the Department for Levelling-Up, Housing and Communities (DLUHC)) has worked collaboratively with the FRC, as incoming shadow system leader, and other system partners, to develop and implement measures to clear the backlog. SI 2024/907, together with the updated National Audit Office Code of Audit Practice 2024 and the Local Authority Reset and Recovery Implementation Guidance, have all been developed to ensure auditor c ompliance with International Standards on Auditing (UK) (ISAs (UK)). The approach to addressing the backlog consists of three phases: ► Phase 1: Reset involving clearing the backlog of historic audit opinions up to and including financial year 2022/23 by 13 Dec ember 2024; ► Phase 2: Recovery from Phase 1, starting from 2023/24, in a way that does not cause a recurrence of the backlog by using back stop dates to allow assurance to be rebuilt over multiple audit cycles. The backstop date for audit of the 2023/24 financial statements is 28 February 2025; a nd ► Phase 3: Reform involving addressing systemic challenges in the system and embedding timely financial reporting and audit. As reported in our 2022/23 Completion Report for Those Charged with Governance to the Audit Committee we issued a disclaimed audit report on the Council’s financial statements for 2022/23 under these arrangements to reset and recover local government audit. Although we have commence d limited work to rebuild assurance ahead of the 2023/24 backstop date, we have not obtained sufficient evidence to have reasonable assurance over all clo sing balances. As a result of the 2022/23 disclaimed audit report, we do not have assurance over the brought forward balances from 2022/23 (the opening balances). This means we do not have assurance over 2023/24 in-year movements and some closing balances. We also do not have assurance over the 2022/23 comparative a mounts disclosed in the 2023/24 financial statements. Taken together with the requirement to conclude our work by the 2023/24 backstop date, the lack of evidence over these movements and balances mean we are unable to conclude that the 2023/24 financial statements are free from material and pervasive missta tement of the financial statements. We therefore anticipate issuing a disclaimed 2023/24 audit opinion. A summary of the assurances we have gained from our 2023/24 audit procedures is set out at Appendix A. Context for the audit – Ministry for Housing, Communities and Local Government (MHCLG) and Financial Reporting Council (FRC) measures to address local audit delays Confidential — All Rights Reserved Executive Summary London Borough of Hillingdon Final Audit Results Report 7 Scope update In our Provisional Audit Planning Report presented at the 30 April 2024 Audit Committee meeting, we provided you with an over view of our audit scope and approach for the audit of the financial statements. We carried out our audit in accordance with this plan, with the following exceptions: ► In our Provisional Audit Planning Report, we communicated that our audit procedures would be performed using a materiality of £15.6 million as 1.8% of the Council’s unaudited gross expenditure for 2022/23. We updated our planning materiality assessment using the draft 2023/24 Statement of Accounts and have also reconsidered our risk assessment. Based on our materiality measure of 1.8% of gross expenditure, we have updated our overall materiality assessment to £16.2 million. This results in updated performance materiality, at 50% of overall materiality, of £8.1 million, and an updated t hreshold for reporting misstatements of £0.8 million; and ► In our Provisional Audit Planning Report, we communicated that we had completed our initial VFM risk assessment for planning purposes and had not identified any significant risks regarding the Council’s ‘proper arrangements’ to secure economy, efficiency and effectiveness in its use of resources. We also reported that our VFM risk assessment is an iterative process and would be updated throughout the audit. We have subsequently identified tw o significant VFM risks in relation to:  Financial sustainability; and  The quality of Council information (including impact on the Council’s ability to support the external audit). Further details in relation to these risks, including our response to the identified risks and our conclusions on whether the Council had proper arrangements to secure economy, efficiency and effectiveness in its use of resources are set out in Section 3; In addition, we have encountered difficulty in performing our audit procedures due to a combination of poor quality working p apers and supporting information being provided by the Council and capacity limitations within the Council’s finance team. Due to the implementation of the backstop date of 28 February 2025 for the completion of the audit, we agreed with management that both Council and audit resources would be prioritised on those account areas which contribute the most towards the rebuilding of assurance following the disclaimed 2022/23 audit report. Consequently, we have not been able to com plete all of our planned procedures and have not obtained sufficient assurance to enable conclusion, notwithstanding the lack of assurance over the brought forward balances from 2022/23, to enable conclusion on whether the Council’s 2023/24 financial statements are free from material misstatement. A summary of the assurances we have gained from our 2023/24 audit procedures, along with those areas where we have not been able to gain the planned assurance, is set out at App endix A. We therefore anticipate issuing a disclaimed 2023/24 audit opinion. A summary of our approach to the audit of the balance sheet including any changes to that approach from the 2021/22 audit (no detailed procedures over the balance sheet were performed as part of the 2022/23 audit) is included in Appendix B. Please refer to Section 8 for our update on independence. Independence Confidential — All Rights Reserved Executive Summary London Borough of Hillingdon Final Audit Results Report 8 Status of the audit As set out on the previous page, we have not been able to complete all of our planned procedures and have prioritised completion of audit procedures over thos e account areas which contribute the most towards the rebuilding of assurance following the disclaimed 2022/23 audit report. Our provisional Audit Results Report reported that the performance of our audit procedures in relation to prioritised account areas was substantially complete, ho wever our internal review procedures over this work remained ongoing and that should our internal review procedures identify the need for further work to enable c onclusion on an account area this work would not be performed and we would conclude that we have not been able to obtain the necessary assurance. Further details on those account areas where we have been able to complete our audit procedures, including internal review procedures, and those account areas where we have not b een able to complete our audit procedures are set out in Appendix A. Whilst we have not been able to complete our audit procedures over a number of areas, where some audit work was able to be co mpleted we will consider as part of our 2024/25 audit whether this can be leveraged as part of the rebuilding of assurance. In addition, the following items relating to the completion of our audit are outstanding at the date of this report: ► Receipt of the final Statement of Accounts and performance of final audit checks thereon; ► Receipt of the signed management Letter of Representation; and ► Subsequent events procedures up to the date of signing. Audit differences Due to the fact we have not been able to complete all of our planned audit procedures, we are unlikely to have a complete pic ture of misstatements which exist, or may exist, within the Council’s financial statements and we are not able to conclude that the financial statements are free from material misstatement. Where the procedures we have been able to perform have confirmed the existence of a misstatement, or indicated that a potential misstat ement may exist but further procedures required to confirm the existence of a misstatement or to quantify that misstatement have not been performed, we p rovide details in Section 5. Confidential — All Rights Reserved Executive Summary London Borough of Hillingdon Final Audit Results Report 9 Other reporting issues We have reviewed the information presented in the Annual Governance Statement for consistency with our knowledge of the Counc il. We have provided some comments to management around how the updated Annual Governance Statement narrative reflects the observations highlighted in Section 3 of this report, but otherwise have no matters to report as a result of this work. The National Audit Office have not yet issued their group audit instructions in respect of their audit of the Whole of Govern ment Accounts (WGA) therefore no work in relation to the Council’s WGA submission has been performed to date. Areas of audit focus In our Audit Planning Report we identified a number of key areas of focus for our audit of the financial report of the Council. 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 potentia l risk and exposure. Our consideration of these matters and others identified during the period is explained within the ‘Areas of Audit Focus’ section of this report and summarised below. Misstatement due to fraud or error ► We have completed some of our specific procedures to address this risk however we have not completed all of our audit procedu res and are therefore unable to conclude on whether the financial statements are materially misstated as a result of fraud or error. We have no observations to report from the procedures we have been able to complete. Risk of fraud in revenue and expenditure recognition through inappropriate capitalisation of revenue expenditure ► We have completed some of our planned procedures and have not identified any inappropriate capitalisation of revenue expendit ure. We have however not been able to complete all of our planned procedures, therefore we are not able to conclude whether material incorrect capitalisation of revenue expenditure has occurred. Valuation of land and buildings valued under the depreciated replacement cost (DRC) method and the existing use value (EUV) m ethod ► We have completed some of our planned procedures, which focused on assets revalued for 2023/24. Other than one material misst atement of the valuation of Ruislip Golf Course, which management agreed to correct in the final financial statements, our testing has not indicated that valuations may be materially misstated. We have however not been able to complete all of our planned procedures nor do we have opening balances assurance in relation to assets not revalued in 2023/24, therefore we are not able to conclude whether land and buildings as a whole are free of material misstatement. Derecognition of infrastructure assets upon subsequent expenditure / replacement ► We have completed some of our planned procedures and have not identified indications that infrastructure assets are not accou nted for correctly in accordance with the temporary relief for infrastructure asset accounting effective in the CIPFA Code for 2023/24. We have however not been able to complete all of our planned procedures, therefore we are not able to conclude whether infrastructure assets as a whole are free of material misst atement. Confidential — All Rights Reserved Executive Summary London Borough of Hillingdon Final Audit Results Report 10 Pension liability and the IAS 19 valuations ► We have completed some of our planned procedures, including consideration of movements in pension balances which occurred in 2022/23, and have not identified indications that pension balances may be materially misstated. We have however not been able to complete all of ou r planned procedures, therefore we are not able to conclude whether pension balances as a whole are free of material misstatement. Valuation of council dwellings ► We have completed some of our planned procedures, including consideration of movements in council dwelling valuations which o ccurred in 2022/23, and have not identified indications that the valuation of council dwellings may be materially misstated. We have however not been able to complete all of our planned procedures, therefore we are not able to conclude whether the valuation of council dwellings as a whole are free of material misstatement. IFRS 16 ► Our initial enquiries into the Council’s readiness for adoption of IFRS 16 demonstrated that the Council was still in the ‘data collection’ phase of preparations for IFRS 16 and not as progressed in its readiness for the new standard as we would have expected. This area was therefore one of the first to be deprioritised and more detailed work on the Council’s preparations for IFRS 16 have not been performed. We request that you review these and other matters set out in this report to ensure: ► There are no further considerations or matters that could impact these issues; ► You concur with the resolution of the issue; and ► There are no further significant issues you are aware of to be considered before the financial report is finalised. There are no matters, other than those reported by management or disclosed in this report, which we believe should be brought to the attention of the Audit Committee. Areas of audit focus (cont.) Confidential — All Rights Reserved Executive Summary London Borough of Hillingdon Final Audit Results Report 11 During the audit we identified a number of observations and improvement recommendations in relation to management’s financial processes and controls, which are set out within section 6 of this report. We have made recommendations in relation to: ► The exercise of the public inspection period in accordance with statutory requirements; ► The Council’s readiness for adoption of IFRS 16 in the 2024/25 financial statements; ► The processes for informing and reviewing asset valuations provided by the external valuer; ► The basis of valuations for the Council’s maintained school land and buildings; ► The Council’s level of access to maintained school payroll information; ► The methodology and assumptions used to determine NNDR bad debt provisions; and ► The recognition of accruals for temporary accommodation expenditure Control observations Confidential — All Rights Reserved Areas of Audit Focus02 London Borough of Hillingdon Final Audit Results Report 12Confidential — All Rights Reserved Confidential — All Rights Reserved Areas of Audit Focus Misstatements due to fraud or error 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. What is the risk, and the key judgements and estimates? Significant Risk Misstatements due to fraud or error We have not been able to complete our specific procedures to address this risk nor have we completed all of our audit procedures over the financial statements and are therefore unable to conclude on whether the financial statements are materially misstated as a result of fraud or error. We have no observations to report from the procedures we have been able to complete. London Borough of Hillingdon Final Audit Results Report 13 Our response to the key areas of challenge and professional judgement What are our conclusions? We have responded to the risk of misstatements due to fraud or error by: ► Identifying fraud risks during the planning stage of our audit; ► Inquiring of management about risks of fraud and the controls put in place to address those risks; ► Understanding the oversight given by those charged with governance of management’s processes over fraud; ► Discussing with those charged with governance the risks of fraud in the Council, including those risks that are specific to the nature of the Council’s activities; ► Considered the effectiveness of management’s controls designed to address the risk of fraud; and ► Determining an appropriate strategy to address those identified risks of fraud. In addition, in our Provisional Audit Planning Report we reported that we would perform mandatory procedures regardless of specifically identified fraud risks, including testing of journal entries and other adjustments made in the preparation of the financial statements, consideration of whether accounting estimates are free from material bias and a review for unusual transactions. We identified the inappropriate capitalisation of revenue expenditure as a specific fraud risk, our response to which is set out on the following page. We have not been able to complete our testing of journal entries and other adjustments made in the preparation of the financial statements. We have also only been able to consider whether accounting estimates are free from material bias in relation to those accounting estimates where we have been able to complete our audit procedures. Similarly, we have only been able to perform a review for unusual transactions where we have been able to complete our audit procedures over the underlying transactions. See Appendix A for a summary of the assurances we have gained from our 2023/24 audit procedures. Fraud Risk Confidential — All Rights Reserved Areas of Audit Focus Inappropriate capitalisation of revenue expenditure We have assessed that the risk of misreporting revenue outturn in the financial statements is most likely to be achieved through: ► Revenue expenditure being inappropriately recognised as capital expenditure at the point it is posted to the general ledger; or ► Expenditure being inappropriately transferred by journal from revenue to capital codes on the general ledger at the end of the year. If this were to happen it would have the impact of overstating Property, Plant and Equipment (PPE) additions. What is the risk, and the key judgements and estimates? Inappropriate capitalisation of revenue expenditure We have completed some of our planned procedures and have not identified any inappropriate capitalisation of revenue expenditure. We have however not been able to complete all of our planned procedures, therefore we are not able to conclude whether material incorrect capitalisation of revenue expenditure has occurred. We have no observations to report from these procedures. London Borough of Hillingdon Final Audit Results Report 14 Our response to the key areas of challenge and professional judgement What are our conclusions? We have responded to the risk of inappropriate capitalisation of revenue expenditure by: ► Testing Property, Plant and Equipment (PPE) additions to ensure that the expenditure incurred and capitalised is clearly capital in nature; ► Assessing whether the capitalised spend clearly enhances or extends the useful life of the asset rather than simply repairing or maintaining the asset on which it is incurred; ► Considered whether any development or other related costs that have been capitalised are reasonable to capitalise (i.e. the costs incurred are directly attributable to bringing the asset into operational use); and ► Seeking to identify and understand the basis for any significant journals transferring expenditure from revenue to capital codes on the general ledger at the end of the year. We have not been able to complete all of the above procedures and are therefore unable to conclude whether material incorrect capitalisation of revenue expenditure has occurred. Significant Risk Fraud Risk Confidential — All Rights Reserved Areas of Audit Focus Valuation of land and buildings valued under the depreciated replacement cost (DRC) method and the existing use value (EUV) methodWe have disaggregated land and building assets to identify those where we think the significant risk lies. We have associated the risk to those assets that are valued using the DRC and EUV valuation methods. These valuation methods involve higher risk estimates due to the significant assumptions and judgements involved, which trigger the use of experts by both management and EY. These estimates heighten the risk of material error. What is the risk, and the key judgements and estimates? Significant Risk Valuation of land and buildings valued under the DRC and EUV methods Management have agreed to amend the financial statements to correct a £17.3 million overstatement of Ruislip Golf Course. Understatement of £0.6 million in the updated valuation of this asset, coupled with other identified misstatements totalling an overstatement of £2.1 million, mean assets subject to revaluation in 2023/24 are overstated by £1.5 million. This is not a material misstatement, however we have not been able to complete all of our planned procedures nor do we have opening balances assurance in relation to assets not revalued in 2023/24, therefore we are not able to conclude whether land and buildings as a whole are free of material misstatement. London Borough of Hillingdon Final Audit Results Report 15 Our response to the key areas of challenge and professional judgement What are our conclusions? We have responded to the risk of misstatements within the valuations of land and buildings valued under the depreciated replacement cost (DRC) and existing use value (EUV) methods by: ► Understanding the Council’s approach to valuing DRC and EUV assets; ► Determining the impact of revaluations on the financial statements; ► Considering the use of management’s specialists – the external valuers - including the scope of work and the professional competencies of the specialist; ► Challenging the assumptions made by management and their specialists, with input from EY Real Estates (our specialists); ► Sample testing key asset information used by management’s specialists, including considering if there are any specific changes to assets and whether they have been appropriately communicated; ► Considering the annual cycle of valuations to ensure that assets have been valued within a 5-year rolling programme as required by the CIPFA Code; ► Reviewing assets not subject to valuation in 2023/24 to assess that the remaining asset base is not materially misstated; ► Considering changes to useful economic lives as a result of the most recent valuations; and ► Testing that accounting entries have been correctly processed in the financial statements. We have challenged management on the appropriateness of valuations, in particular in relation to Ruislip Golf Course where multiple incorrect valuations were provided for audit as: 1. The initial valuation was incorrectly stated as £18.2 million by the valuer, as the valuation of a different asset was incorrectly provided and this was not identified by the Council; 2. A revised valuation subsequently provided of £3.1 million was not appropriate as it did not take into account the part-disposal of the asset during the year; and 3. The final valuation of £0.9 million is, in our view, now understated by £0.7 million as the rateable value of the site for business rates was incorrectly used as proxy for market rent. Confidential — All Rights Reserved Areas of Audit Focus Derecognition of infrastructure assets upon subsequent expenditure/ replacement The CIPFA Code incorporates a temporary relief for certain reporting on infrastructure assets, which can be applied from the 2021/22 Code up to and including the 2024/25 Code. The Council applied this relief in 2021/22, and although we did not report any findings in this respect and downgraded the risk in 2023/24, we do consider that there is a remaining inherent risk as this is an issue that the Council needs to remain focussed to ensure proper arrangements are in place when the temporary relief is discontinued. What is the risk, and the key judgements and estimates? Derecognition of infrastructure assets upon subsequent expenditure/ replacement London Borough of Hillingdon Final Audit Results Report 16 Our response to the key areas of challenge and professional judgement We have responded to the risk of misstatements in relation to the derecognition of infrastructure assets upon subsequent expenditure or replacement by: ► Ensuring the Council has continued to apply the procedures required by the Code, including considering the appropriateness of the useful lives applied to infrastructure assets; and ► Reviewing the Council’s disclosures in relation to infrastructure assets. In addition, within our Provisional Audit Planning Report we reported that we would also perform the following procedures: ► Obtain evidence to match the subsequent expenditure to the carrying amount of the replaced component that is being derecognised; and ► If the carrying amount of the replaced component can’t be identified, we will test the Council’s use of the cost of the replacement as a proxy for the deemed carrying amount of the replaced component, ensuring the calculation appropriately adjusts the cost for depreciation and impairment. The Council has chosen to apply the option permitted under The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2022 to determine that the carrying amount to be derecognised when replacing a component of infrastructure assets is £nil. The Council has not therefore recorded any derecognitions in relation to its £11.1 million of additions to infrastructure assets during the period. We note that the Council has chosen to apply this option as it lacks the information necessary to determine a more appropriate derecognition, in line with the Council’s basis for applying the temporary relief available under the CIPFA Code. It remains imperative that the Council continues to both review what information it holds for existing assets in other forms, for example within the highways team, and how this can be used to disaggregate existing accounting records, and how it records its expenditure on infrastructure assets, in particular to allow it to separately identify individual assets within its accounting records, so that it has better information on which to base its reporting when the temporary infrastructure relief comes to an end. We have completed some of our planned procedures and have not identified indications that infrastructure assets are not accounted for correctly in accordance with the temporary relief for infrastructure asset accounting effective in the CIPFA Code for 2023/24. We have however not been able to complete all of our planned procedures, therefore we are not able to conclude whether infrastructure assets as a whole are free of material misstatement. What are our conclusions? Confidential — All Rights Reserved Areas of Audit Focus Pension liability and the IAS 19 valuations The Council’s pension fund deficit is a material estimated balance and the CIPFA Code requires that this liability be disclosed on the Council’s balance sheet. At 31 March 2023 this totalled £261 million (unaudited). Accounting for this scheme involves significant estimation and judgement and therefore management engages an actuary to undertake the calculations on their behalf. ISAs (UK) 500 and 540 require us to undertake procedures on the use of management experts and the assumptions underlying fair value estimates. What is the risk, and the key judgements and estimates? Pension liability and the IAS 19 valuations We have completed some of our planned procedures, including consideration of movements in pension balances which occurred in 2022/23, and have not identified indications that pension balances may be materially misstated. We have however not been able to complete all of our planned procedures, therefore we are not able to conclude whether pension balances as a whole are free of material misstatement. London Borough of Hillingdon Final Audit Results Report 17 Our response to the key areas of challenge and professional judgement What are our conclusions? We have responded to the risk of misstatement within pension balances by: ► Liaising with the EY audit team of the Hillingdon Pension Fund to obtain assurances over the information supplied to the actuary in relation to the Council; ► Assessing the work of the Pension Fund actuary, including the assumptions they have used by relying on the work of PWC as consulting actuaries commissioned by the National Audit Office for all local government sector auditors, and considering any relevant reviews by the EY actuarial team; ► Evaluating the reasonableness of the Pension Fund actuary’s calculations by comparing them to the outputs of our own auditor’s specialist’s models; ► Reviewing and testing the accounting entries and disclosures made within the Council’s financial statements in relation to IAS 19; and ► Considering outturn information available at the time we undertake our work after production of the Council’s draft financial statements, for example the year-end actual valuation of Pension Fund assets, to inform our assessment of the accuracy of estimated information included in the financial statements and whether any adjustments are required. As reported in 2021/22 (we did not perform audit work over pension balances in 2022/23), the Council’s actuary has not made any allowance for the potential impact of the ‘Goodwin v Secretary of State for Education’ tribunal ruling on the Local Government Pension Scheme on the grounds of materiality. We estimate that the application of this case’s findings would increase pension liabilities by £1.9 million. We have no other observations to report from these procedures. Confidential — All Rights Reserved Areas of Audit Focus Valuation of council dwellings The carrying amount of Council dwellings represents a significant balance in the Council’s accounts and is subject to revaluation changes on an annual basis. Management is required to make material judgmental inputs and apply estimation techniques to calculate the year end balances recorded in the balance sheet. What is the risk, and the key judgements and estimates? Valuation of council dwellings London Borough of Hillingdon Final Audit Results Report 18 Our response to the key areas of challenge and professional judgement We have responded to the risk of misstatement within the valuation of council dwellings by: ► Considering the use of management’s specialists – the external valuers - including the scope of work and the professional competencies of the specialists; ► Sample testing the key asset information used by the specialists in performing their valuations (e.g. the nature and number of beacons, valuations of units within beacons); ► Considering if there are any specific changes to assets/beacons that have occurred and that these have been communicated to the valuer; ► Considering the appropriateness of management’s consideration of estimation uncertainty; ► Testing that accounting entries have been correctly processed in the financial statements; and ► Checking whether additions are valued using the social housing discount factor in the same year that they are capitalised. We identified a small number of properties acquired during 2023/24 where the Council has not applied the social housing discount factor and has valued the assets at full market value, contrary to the required treatment of council dwellings. As a result, council dwellings are overstated by £2.1 million. Management advised that the Council’s final financial statements will include correction of this observation. We have no other observations to report from these procedures. We have identified a £2.1 million overstatement of council dwellings as a result of the social housing discount factor not being applied to properties acquired during 2023/24, which management have advised will be corrected in the final financial statements. We have no other observations to report from our procedures. We have however not been able to complete all of our planned procedures, therefore we are not able to conclude whether the valuation of council dwellings as a whole are free of material misstatement. What are our conclusions? Confidential — All Rights Reserved Areas of Audit Focus IFRS 16 Mandatory implementation of IFRS 16 Leases has been deferred until 2024/25 (though voluntary adoption is permitted and encouraged). IFRS 16 leases is a complex standard that will require a substantial amount of data gathering followed by a number of policy choice decisions. Impact assessment disclosures will need to be made in the 2023/24 financial statements and the Council will need to ensure that it is prepared for the implementation of this standard. What is the risk, and the key judgements and estimates? IFRS 16 The Council is not as progressed in its readiness for implementation of IFRS 16 as we would have expected at this stage. The Council’s financial statements disclose that the Council does not expect the new standard to have a material impact upon its financial statements, however the greatest risk lies in the completeness of balances to be recognised. We will consider this further as part of the 2024/25 audit. London Borough of Hillingdon Final Audit Results Report 19 Our response to the key areas of challenge and professional judgement What are our conclusions? We have considered the Council’s preparations for the implementation of IFRS 16 by: ► Understanding the Council’s process for implementing the new leases standard; and ► Assessing the readiness of the Council for implementation of this major standard. Our initial enquiries into the Council’s readiness for adoption of IFRS 16 demonstrated that the Council was still in the ‘data collection’ phase of preparations for IFRS 16 and not as progressed in its readiness for the new standard as we would have expected. This area was therefore one of the first to be deprioritised and more detailed work on the Council’s preparations for IFRS 16, including consideration of the disclosures made within the 2023/24 financial statements, have not been performed. Confidential — All Rights Reserved Value for Money03 London Borough of Hillingdon Final Audit Results Report 20Confidential — All Rights Reserved Confidential — All Rights Reserved Value for Money London Borough of Hillingdon Final Audit Results Report 21 The Authority's responsibilities for value for money (VFM) The Council is required to maintain an effective system of internal control that supports the achievement of its policies, aims and objectives while safeguarding and securing value for money from the public funds and other resources at its disposal. As part of the material published with its financial statements, the Council is required to bring together commentary on its gov ernance framework and how this has operated during the period in a governance statement. In preparing its governance statement, the Authority tailors the content to reflect its own individual circumstances, consistent with the requirements set out in the NAO Code of Audit Practice. This includes a requirement to pro vide commentary on its arrangements for securing value for money from their use of resources. Risk assessment and status of our work We are required to consider whether the Council has made ‘proper arrangements’ to secure economy, efficiency and effectiveness on its use of resources. Our value for money planning and the associated risk assessment is focused on gathering sufficient evidence to enable us to document our evaluation of the Council’s arrangements, and to enable us to draft a commentary under three reporting criteria (see below). This includes identifying and reporting on any significant weaknesses in those arrangements and making appropriate recommendations. We will provide a commentary on the Council’s arrangements against three reporting criteria: ► Financial sustainability - How the Council plans and manages its resources to ensure it can continue to deliver its services; ► Governance - How the Council ensures that it makes informed decisions and properly manages its risks; and ► Improving economy, efficiency and effectiveness - How the Council uses information about its costs and performance to improve the way it manages and delivers its services. We have completed our detailed VFM work and identified two risks of significant weakness as documented on the next page. Arrangements for Securing value for money Financial Sustainability Improving Economy, Efficiency & effectiveness Governance Confidential — All Rights Reserved Value for Money London Borough of Hillingdon Final Audit Results Report 22 Risks of significant weakness in VFM arrangements What is the risk of significant weakness? What arrangements did this impact? What did we do? Financial Sustainability The Council has seen a reduction in its available reserves, and growth of its Dedicated Schools Grant (DSG) deficit, over recent years and was only able to report a balanced outturn for 2023/24 due to the application of two significant one-off accounting adjustments. There is therefore a risk that the Council does not have proper arrangements in place to manage risks to its financial resilience. Financial Sustainability: How the body identifies and manages risks to financial resilience, e.g., unplanned changes in demand, including challenge of the assumptions underlying its plans. Our approach focused on: ► Assessing the financial resilience of the Council against external benchmarks; ► Reviewing the Council's financial outturn and management against budget for 2023-24; ► Reviewing the Council's financial projections and plans for the period 2024-25 to 2028-29; ► Reviewing the Council's year-to-date performance against budget in 2024-25 (as indicative of the accuracy of forecasts prepared during 2023-24); and ► Concluding on whether the above indicates that a significant weakness in the Council’s arrangements exists. Quality of Council Information (inc. impact on ability to support the external audit) As highlighted in Section 1, we have encountered difficulty in performing our audit procedures due to a combination of poor quality working papers and supporting information being provided by the Council and capacity limitations within the Council’s finance team. The Council’s internal auditor has also raised concerns over the quality of the Council’s information and the impact of this upon the Council. There is therefore a risk that the Council does not have proper arrangements in place to ensure it takes properly informed decisions and supports challenge and transparency. Governance: How the body ensures it makes properly informed decisions, supported by appropriate evidence and allowing for challenge and transparency. This includes arrangements for effective challenge from those charged with governance/audit committee. We obtained sufficient evidence on which to base a conclusion in relation to this risk through a combination of: ► Our value for money risk assessment procedures, including review of the reports of internal audit; and ► Our observations during the delivery of our planned audit procedures in relation to the financial statements. We did not therefore plan and execute additional specific procedures to respond to this risk. Confidential — All Rights Reserved Value for Money London Borough of Hillingdon Final Audit Results Report 23 Our VFM conclusions We have concluded that: ► The Council does not have proper arrangements in place to identify and manage risks to its financial resilience. We have reac hed this conclusion based on a number of factors, including: ○ The Council would have reported a significant overspend of £16.6 million (6.3% of the Council’s net budget) for 2023/24 had it not been for two one-off accounting adjustments. These adjustments are unlikely to be available in future periods; ○ The reserves of the Council identified by management as available to support Council spending decreased by 25% between 31 Mar ch 2023 and 31 March 2024; ○ The cumulative deficit on the Council’s Dedicated Schools Grant (DSG) increased by £25.6 million between 31 March 2023 and 31 March 2024, and at £47.5 million now exceeds the available reserves of the Council; and ○ As of the mid-point of 2024/25, the Council is forecasting significant overspends for 2024/25 which we consider indicative that the Council did not fully understand and / or mitigate the scale of demand and inflationary pressures it faces when setting its Medium Term Financial F orecast for the period 2024/25 to 2028/29 during 2023/24. ► The Council does not have proper arrangements in place to ensure it takes properly informed decisions and supports challenge and transparency. We have reached this conclusion based on a number of factors including: ○ The fact the Council was not able to meet the statutory deadline for commencement of the public inspection period of its draf t financial statements, and when it did so the documentation published by the Council did not comply with the requirements of the Accounts and Audit Regulatio ns as the Council did not publish its Annual Governance Statement alongside the draft financial statements; ○ Observations from the Council’s internal auditor that “poor data quality, reliance on manual records and reliance on outdated systems that are no longer fit for purpose also impacted on the quality of documentation and performance data available” was a contributing factor to the ov erall level of assurance offered by the Head of Internal Audit in their annual opinion for 2023/24 being only ‘Limited’; and ○ The significant difficulties encountered in the delivery of the Council’s external audit for 2023/24, including poor quality working papers and supporting information being provided by the Council. A copy of our proposed VFM narrative commentary, including further observations in relation to the above weaknesses in the Co uncil’s arrangements and our associated recommendations, is included in Appendix G. We will issue our final VFM narrative commentary in our 2023/24 Auditor’s Annual Report which we expect to issue in March 2025. We have only recently shared our recommendations with management therefore management responses to our recommendations will a lso be included within the Auditor’s Annual Report, to ensure that management are provided time to properly consider our recommendations. If we are not satisfied with the Council’s response to our recommendations, or the implementation of that response, we will consider exercising our further powers by making formal statutory recommendations. Confidential — All Rights Reserved Value for Money London Borough of Hillingdon Final Audit Results Report 24 The Council’s position Officers have advised that the Council recognises the scale of the financial challenges faced by the organisation and has tak en a number of steps since the end of the period covered by our value for money commentary to respond to them, including: ► Engagement of external support to assist with Council-wide development of zero-based budgets and the identification of efficiencies; ► The introduction of senior officer star chambers, focused on each area of service delivery and cross -service thematic sessions to review the Council’s operations; ► Performing a review for optimism bias in Council forecasts and taking steps to remove such bias where identified; ► Implementing improvements to the Council’s financial governance processes to improve reporting and accountability; and ► Implementing a Finance Improvement Programme with external support from the Chartered Institute of Public Finance and Account ancy. These actions form part of the Council’s arrangements for the year ended 31 March 2025 and are therefore outside of the scope of our value for money assessment for the current period and we have not corroborated management’s assertions. We will consider the actions the Council has taken during the year ended 31 March 2025 as part of our value for money work for the Council’s 2024/25 external audit. Confidential — All Rights Reserved Audit Report04 London Borough of Hillingdon Final Audit Results Report 25Confidential — All Rights Reserved Confidential — All Rights Reserved Audit Report 26London Borough of Hillingdon Final Audit Results Report Expected modification to the audit report As reported in our November 2024 Audit Completion Report to Those Charged with Governance, we issued a disclaimed audit repor t on the Authority’s 2022/23 financial statements under the Government’s legislative arrangements to reset and recover local government audit (Statutory Instrument (2024) No. 907 - “The Accounts and Audit (Amendment) Regulations 2024” and Local Authority Reset and Recovery Implementation Guidance). The reasons for the 2022/23 disclaimed audit report were set out in the aforementioned 2022/23 Audit Completion Report. As a result of the 2022/23 disclaimed audit report we do not have assurance over the brought forward balances from 2022/23 (t he opening balances). This means we also do not have assurance over a number of 2023/24 in -year movements that depend on those opening balances, and therefore some closing balances (particularly reserves). We also do not have assurance over the 2022/23 comparative amounts disclosed within the 2023/24 financial statemen ts. We did not plan to rebuild this assurance in our 2023/24 audit. As set out within Section 1 of this report, we have not been able to complete our planned programme of work to obtain sufficient evidence to have reasonable assurance over all closing balances. As we have explained, the Council has not provided good quality working papers or sufficient and a ppropriate evidence to support your financial transactions in accordance with agreed timescales. There is now insufficient audit resource available to complete the above outstanding procedures on your audit before the 2023 /24 backstop date. Insufficient support to the audit meaning that it takes significantly longer than should be necessary is one example of the factors that led to the b acklog in the first place, and why the legislative backstop has been introduced. Taken together, and alongside the requirement to conclude the 2023/24 audit by the legislative backstop date of the 28 Februa ry 2025, the lack of evidence over these movements and balances mean we are unable to conclude that the 2023/24 financial statements are free from material and pervas ive misstatement of the financial statements. The number of account areas where we have not been able to complete our audit procedures is sufficient that the overall impac t on our opinion, notwithstanding the impact on opening balance assurances of the disclaimed 2022/23 audit opinion, is pervasive. We therefore anticipate issuing a disclaimed 2023/24 audit opinion. Appendix A of this report sets out the level of assurance we have been able to gain from the procedures that we have completed. In line with the Government’s legislative arrangements set out above and specifically the ‘recovery phase’ of those arrangements and with guidance issued by the Financial Reporting Council (FRC) within their ‘Accessible Guide’ there is an expected minimum 3-year timeline to re-build audit assurances to gain full assurance over opening balances, closing balances and in-year movements. We will reflect on the impact of the areas where we did not gain our p lanned assurances in 2023/24 through our 2024/25 audit planning and set out our timeline for re- building audit assurance within our Audit Plan. Confidential — All Rights Reserved Audit Differences05 London Borough of Hillingdon Final Audit Results Report 27Confidential — All Rights Reserved Confidential — All Rights Reserved Audit Differences London Borough of Hillingdon Final Audit Results Report 28 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 accurately quantified and relate to a definite set of facts or circumstances. Judgemental differences generally involve estimation and relate to facts or circ umstances that are uncertain or open to interpretation. Summary of adjusted differences We highlight the following misstatements greater than £0.8 million which have management have advised will be corrected in th e final financial statements: ► The valuation of Ruislip Golf Course was overstated by £16.6 million due to the valuation of a different asset being incorrec tly provided as the valuation of Ruislip Golf Course by the Council’s external valuer, and the Council not identifying this error. The Council’s adjustment to the financial statements totals £17.3 million, however we consider the revised valuation to be understated and report the difference of £0.7 million as an uncorrected misst atement; ► The valuation of the Council’s investment in Hillingdon First Limited was overstated by £2.6 million as it was based on an assessment of the company as at 31 March 2023 not as at 31 March 2024 (note this was previously reported as an uncorrected misstatement, however management have advis ed it has now been corrected); ► The valuation of council dwellings was overstated by £2.1 million due to the Council not applying the social housing discount factor to a small number of properties acquired during 2023/24 and incorrectly measuring them at full market value; and ► The Council has not been able to provide evidence of the gross internal area used to inform the valuation of Cobham Manor Sch ool, and the floor area used exceeds guidance issued by the Department for Education on the area for a modern equivalent school. We have therefore calculated the exp ected valuation using the capacity of the school and the guidance issued by the Department for Education, and based on this recalculation consider the valuation to be overstated by £1.7 million. At the time of submitting this report we have only just received updated financial statements from management and have not ha d the opportunity to confirm that the above corrections have been made correctly. In addition, within our audit report on the 2022/23 financial statements we reported that the 2022/23 financial statements in

Audit Planning Report Year ending 31 March 2025 Hillingdon Pension Fund 28 April 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 and other regulators. Further details can be found at http://www.ey.com/UK/en/Home/Legal. 228 April 2025 Dear Audit Committee Members Audit Planning Report Attached is the Audit Planning Report for the upcoming meeting of the Audit Committee. This report aims to provide the Audit Committee of Hillingdon Pension Fund (the Fund) with a basis to review the proposed audit approach and scope for the 2024/25 audit. This is in accordance with the requirements of the Local Audit and Accountability Act 2014, the National Audit Office’s 2024 Code of Audit Practice, the Statement of Responsibilities issued by Public Sector Audit Appointments (PSAA) Ltd, auditing standards, and other professional requirements. This report summarises our evaluation of the key issues driving the development of an effective audit. We have aligned our audit approach and scope accordingly. The report also addresses the broader impact of Government proposals aimed at establishing a sustainable local audit system. As the Fund’s body charged with governance, the Audit Committee plays a crucial role in ensuring assurance over both the quality of the draft financial statements prepared by management and the Fund’s wider arrangements to support a timely and efficient audit. Failure to achieve this will affect the level of resources required to fulfil our responsibilities. We will report on any issues identified in the Fund’s external financial reporting arrangements as part of our Audit Results Reports and communications with those charged with governance. We direct Audit Committee members and officers to the Public Sector Audit Appointment Limited’s Statement of Responsibilities (paragraphs 26-28) for expectations on preparing financial statements (see Appendix A). This report is intended solely for the information and use of the Audit Committee and management, and is not intended to be, and should not be used, by anyone other than these specified parties. We welcome the opportunity to discuss this report with you on 14 May 2025 as well as understand whether there are other matters which you consider may influence our audit. Yours faithfully Debbie Hanson For and on behalf of Ernst & Young LLP Enc Audit Committee London Borough of Hillingdon Uxbridge UB8 1UW Address Confidential — All Rights Reserved © Ernst & Young LLP 2025 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund Audit planning report 3 Public Sector Audit Appointments Ltd (PSAA) issued the “Statement of responsibilities of auditors and audited bodies”. It is available from the PSAA website (https://www.psaa.co.uk/managing-audit- quality/statement-of-responsibilities-of-auditors-and-audited-bodies/statement-of-responsibilities-of-auditors-and-audited-bodies-from-2023-24-audits/). The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and audited bodies. It summarises where the different responsibilities of auditors and audited bodies begin and end, and what is to be expected of the audited body in certain areas. The “Terms of Appointment and further guidance (updated July 2021)” issued by the PSAA (https://www.psaa.co.uk/managing-audit-quality/terms-of- appointment/terms-of-appointment-and-further-guidance-1-july-2021/) sets out additional requirements that auditors must comply with, over and above those set out in the National Audit Office Code of Audit Practice 2024 (the NAO Code) and in legislation, and covers matters of practice and procedure which are of a recurring nature. This report is made solely to the Audit Committee and management of the London Borough of Hillingdon. Our work has been undertaken so that we might state to the Audit Committee and management of the London Borough of Hillingdon those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the Audit Committee and management of the London Borough of Hillingdon for this report or for the opinions we have formed. It should not be provided to any third-party without our prior written consent. 1 4 7 Audit risks2 Overview of our 2024/25 audit strategy 3 5 6 8 Audit materiality Scope of our audit Audit team Audit timeline Independence Appendices Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund Audit planning report 2024/25 audit strategy overview01 4 Confidential — All Rights Reserved © Ernst & Young LLP 2025 2024/25 audit strategy overview Hillingdon Pension Fund Audit planning report 5 Timely, high-quality financial reporting and audit of local bodies play a crucial role in our democratic system. It aids in effective decision-making by local bodies and ensures transparency and accountability to local taxpayers. There is a consensus that the delay in publishing audited financial statements by local bodies has reached an unacceptable level, and it is acknowledged that cooperation among all stakeholders in the sector is necessary to address this issue. The reasons for the backlog are well-documented and include:  Insufficient capacity within the local authority financial accounting profession.  Increased complexity of reporting requirements within the sector.  Insufficient capacity within audit firms with public sector experience.  Heightened regulatory pressure on auditors, leading to an expanded scope and extent of audit procedures performed. The Ministry for Housing, Communities and Local Government (MHCLG) has collaborated with the Financial Reporting Council (FRC) and other system partners to develop and implement measures to address the backlog. SI 2024/907, along with the NAO Code and the Local Authority Reset and Recovery Implementation Guidance, have been created to ensure auditor compliance with International Standards on Auditing (UK) (ISAs (UK)). In February 2025, responsibilities for leadership of the local audit system transferred from the FRC back to MHCLG. This change follows the December 2024 launch of the Government’s strategy for reforming the local audit system in England, which includes plans to establish a Local Audit Office. The approach to addressing the backlog consists of three phases:  Phase 1: Reset; clearing the backlog of historic audit opinions up to and including financial year 2022/23 by 13 December 2024. This is largely complete.  Phase 2: Recovery from Phase 1; from 2023/24, use backstop dates to prevent a recurrence of the backlog and allow assurance to be rebuilt over multiple audit cycles. The backstop date for the audit of the 2024/25 financial statements is 27 February 2026. Auditors are waiting for guidance from the system leader to effectively, efficiently and consistently build back assurance over disclaimed audit periods.  Phase 3: Reform; involving addressing systemic challenges in the system and embedding timely financial reporting and audit. The resetting phases noted above have implications for the audit of the London Borough of Hillingdon Council. The audit of the Pension Fund has however been completed successfully, and we have issued unmodified opinions for the years 2022/23 and 2023/24. We issued our opinion on the 2023/34 accounts on 17 t March 2025. Context Confidential — All Rights Reserved © Ernst & Young LLP 2025 2024/25 audit strategy overview (cont’d) Hillingdon Pension Fund Audit planning report 6 The Administrating Body’s Section 151 Officer is responsible for preparing the financial statements of the Fund in accordance with proper practices and confirming they give a true and fair view at the 31 March 2025. To complete the audit in a timely and efficient manner, it is essential that the financial statements are supported by high-quality working papers and audit evidence, and that Pension Fund resources are available to support the audit process within agreed deadlines. The Audit Committee has an essential role in ensuring that it has assurance over both the quality of the financial statements and the Pension Fund’s wider arrangements to support the delivery of a timely and efficient audit. Where this conditions are not met, we will:  Consider and report on the adequacy of the Pension Fund’s external financial reporting arrangements as part of our Audit Results Report and other communications with those charged with governance.  Assess the impact on available audit resource and where additional resources are deployed, seek a fee variation from PSAA. We have set out the factors that will lead to a fee variation at Appendix B, together with, at Appendix A, paragraphs 26-28 of PSAA’s Statement of Responsibilities which clearly set out what is expected of audited bodies in preparing their financial statements. Responsibilities of management and those charged with governance Confidential — All Rights Reserved © Ernst & Young LLP 2025 2024/25 audit strategy overview (cont’d) Hillingdon Pension Fund Audit planning report 7 The following ‘dashboard’ summarises the significant accounting and auditing matters outlined in this report. It seeks to provide the Audit Committee with an overview of our initial risk identification for the upcoming audit and any changes in risks identified in the current year. Audit risks and areas of focus DetailsChange from PYRisk identifiedRisk/area of focus There is a risk that the financial statements as a whole are not free from material misstatement whether caused by fraud or error. We perform mandatory procedures regardless of specifically identified fraud risks. No change increase in risk or focus Fraud riskPresumptive risk of management override of controls The Fund’s Investments includes a significant balance of hard to value Level 3 investments. The Pension Fund held Level 3 assets valued at £268 million as at 31 March 2024 per the audited 2023/24 accounts. Judgements are taken by Investment Managers to value those investments where prices are not publicly available. There is a risk that these are materially misstated given the complexity of the measurement and degree of estimation involved. No change/increase in risk or focus Significant riskValuation of hard to value investments (Level 3 Investments) The assessment of Fair Value hierarchies can be subjective. For 2023/24, as part of our audit of fair value hierarchies of the Pension Fund’s assets we agreed with the Fund that the classification of one investment of £19.2 million should be reclassified from Level 2 to Level 3. There were similar reclassifications in the 2022/23 and 2021/22 accounts of £64 million and £47 million respectively. We continue to consider this to be a significant risk in the current year and will work with the Pension Fund to agree proposed classifications early in the audit process. As part of this we will scrutinise and challenge the Pension Fund’s proposed classifications. No change/increase in risk or focus Significant riskFair value classification of Level 2 and Level 3 investments Confidential — All Rights Reserved © Ernst & Young LLP 2025 2024/25 audit strategy overview (cont’d) Hillingdon Pension Fund Audit planning report 8 The following ‘dashboard’ summarises the significant accounting and auditing matters outlined in this report. It seeks to provide the Audit Committee with an overview of our initial risk identification for the upcoming audit and any changes in risks identified in the current year. Audit risks and areas of focus DetailsChange from PYRisk identifiedRisk/area of focus The Council (and therefore Pension Fund) upgraded its finance system in May 2024. Major changes to the finance system give rise to a risk that financial data is lost or changed during migration. The Council continued to use the old system for finalisation of the 2023/24 financial statements for the Council and Pension Fund after the main data migration occurred and has therefore had to manually replicate all transactions recorded after this date in the new system. This increases the risk of error or omission in relation to 2024/25 transactions and data. The implementation of the new system has not gone smoothly. Therefore, there is also an increased risk of misstatements arising as a result of challenges encountered in its implementation. As the Pension Fund uses the integrated system, there is risk related to the Pension Fund data as well. Given the pervasive nature of these risks, we consider that they pose a risk of material misstatement. New significant riskSignificant riskImplementation of the new finance system (Oracle Fusion) Confidential — All Rights Reserved © Ernst & Young LLP 2025 2024/25 audit strategy overview (cont’d) Hillingdon Pension Fund Audit planning report 9 The following ‘dashboard’ summarises the significant accounting and auditing matters outlined in this report. It seeks to provide the Audit Committee with an overview of our initial risk identification for the upcoming audit and any changes in risks identified in the current year. Audit risks and areas of focus DetailsChange from PYRisk identifiedRisk/area of focus Every three years, a formal valuation of the whole Fund is carried out under the Local Government Pension Scheme Regulations 2013 to assess and examine the ongoing financial position of the Fund. The last fund valuation was 31 March 2022 when the fund’s liability was recalculated by the actuary and was used to set employer contribution rates and underpin investment management strategy. IAS26 requires post-employment benefits plans to disclose annually the basis used to determine the actuarial present value of promised retirement benefits, including demographic and financial key assumptions. The estimate is based on a roll-forward of data from the last triennial valuation, updated where necessary, and takes into account various factors such as mortality rates and expected pay rises along with other assumptions around inflation and investment yields. We consider there is a risk around the estimation process, data and assumptions used by the actuary when estimating the actuarial present value of promised retirement benefits. No change in risk or focus Risk of material misstatement (ROMM) IAS26 disclosure — actuarial present value of promised retirement benefits In both the 2023/24 and 2022/23 audits we have identified the same error in relation to income from the LCIV Mac fund. Distributions from this fund are reinvested at year end and, in both years, this was not communicated by the fund manager nor identified by the custodian. As a result, income was understated and profit/loss on disposal of investments and change in market value was overstated. The amounts involved were £3.4 million in 2023/24 and £4.2 million in 2022/23. We identified this as a control deficiency in addition to an error in the prior year to reflect that fact that management should have identified this error given that it had also happened in the prior year. New ROMMRisk of material misstatement (ROMM) Completeness of investment income We will continue to keep the Audit Committee updated on our assessment of any changes to audit risk. Confidential — All Rights Reserved © Ernst & Young LLP 2025 2024/25 audit strategy overview (cont’d) Hillingdon Pension Fund Audit planning report 10 Materiality We will continue to keep the Audit Committee updated on our assessment of any changes to audit risk. Planning materiality Materiality has been set at £13.6 million, which represents 1% of the net assets of the scheme as at 31 March 2024 Performance materiality Audit differences £13.6m £10.2m Performance materiality has been set at £10.2 million, which represents 75% of materiality. £0.69m We will report all uncorrected misstatements relating to the Fund Account and Net Asset Statement greater than £0.69 million. Other misstatements identified will be communicated to the extent that they merit the attention of the Audit Committee. Confidential — All Rights Reserved © Ernst & Young LLP 2025 2024/25 audit strategy overview (cont’d) Hillingdon Pension Fund Audit planning report 11 Audit scope and timeline This Audit Planning Report covers the work that we plan to perform to provide you with:  Our audit opinion on whether the financial statements of Hillingdon Pension Fund (the Pension Fund) give a true and fair view of the financial transactions during the year ended 31 March 2025 and the amount and disposition of the Fund’s assets and liabilities as at 31 March 2025; and  Our opinion on the consistency of the Pension Fund financial statements within the Pension Fund Annual Report with the published financial statements of the London Borough of Hillingdon. Our audit will also include the required mandatory procedures in accordance with applicable laws and auditing standards. When planning the audit we consider several key inputs:  strategic, operational and financial risks relevant to the financial statements;  developments in financial reporting and auditing standards;  the quality of systems and processes;  changes in the business and regulatory environment; and  management’s views on all the above. By considering these inputs, our audit is focused on the areas that matter, and our feedback is more likely to be relevant. Considering the above, our professional duties require us to independently assess audit risks and take appropriate actions. The Terms of Appointment with the PSAA permit fee adjustments based on ‘the auditor’s assessment of risk and the work needed to meet their professional responsibilities’. Therefore, we outline these risks in this audit planning report and will discuss any impact on the proposed scale fee with management. Effects of climate-related matters on financial statements Public interest in climate change is growing. We recognize that climate-related risks may span a long timeframe, and while these risks exist, their impact on the current financial statements may not be immediately significant. However, it remains essential to understand these risks to conduct a proper evaluation. Additionally, comprehending climate-related risks may be pertinent in the context of qualitative disclosures in the notes to the financial statements. We inquire about climate-related risks during every audit as part of our understanding of the entity and its environment. As we continually re-evaluate our risk assessments throughout the audit, we consider the information obtained to help us assess the level of inherent risk. Audit scope and approach We plan to adopt a substantive audit approach. Timeline An audit timetable has been agreed with management. In Section 06 we include a provisional timeline for the audit. It is essential that all parties collaborate to ensure compliance with this timeline. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund Audit planning report 12 Audit risks02 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Our response to significant risks Hillingdon Pension Fund Audit planning report 13 We have set out the significant risks (including fraud risks denoted by*) identified for the current year audit along with the rationale and expected audit approach. The risks identified below may change to reflect any significant findings or subsequent issues we identify during the audit. 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.  Identifying fraud risks during the planning stages.  Inquiry of management about risks of fraud and the controls put in place to address those risks.  Understanding the oversight given by those charged with governance of management’s processes over fraud.  Discussing with those charged with governance the risks of fraud in the entity, including those risks that are specific to the entity’s business sector (those that may arise from economic industry and operating conditions).  Considering whether there are any fraud risk factors associated with related party relationships and transactions and if so, whether they give rise to a risk of material misstatement due to fraud.  Consideration of the effectiveness of management’s controls designed to address the risk of fraud.  Determining an appropriate strategy to address those identified risks of fraud.  Performing mandatory procedures regardless of specifically identified fraud risks, including testing appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements.  Evaluating the business rationale for significant unusual transactions outside the normal course of business.  Assessing accounting estimates for evidence of management bias Having evaluated this risk, we have considered whether we need to perform other audit procedures not referred to above. We concluded that no other procedures are required. Presumptive risk of management override of controls* What is the risk? What will we do? Confidential — All Rights Reserved © Ernst & Young LLP 2025 Our response to significant risks Hillingdon Pension Fund Audit planning report 14 We have set out the significant risks (including fraud risks denoted by*) identified for the current year audit along with the rationale and expected audit approach. The risks identified below may change to reflect any significant findings or subsequent issues we identify during the audit. The Fund’s investments include Level 3 investments. Judgements are made by the fund managers to value these investments, whose prices are not publicly available. The material nature of this type of investment, means that any error in judgement could result in a material valuation error. Our approach will focus on:  Analysing the schedule of investments to ensure correct classification, presentation and disclosure of items in the financial statements and corresponding notes.  Understanding and evaluating of the work of the fund managers.  Evaluating the ISAE 3402 report for the custodian and fund managers, where applicable.  Reviewing the latest audited accounts for the relevant fund managers to ensure there are no matters arising that highlight weaknesses in the funds’ valuation.  Where the latest audited accounts are not as at 31 March 2025, make inquiries to establish what procedures management have performed to take account of this risk. We will also perform analytical procedures and check the valuation output for reasonableness against our own expectations.  Reviewing the basis of valuation for property investments and other unquoted investments and assessing the appropriateness of the valuation methods used.  Reviewing investment valuation disclosures to verify that significant judgements surrounding the valuation of Level 3 Investments have been appropriately made in the financial statements.  Performing triangulation work to agree amount per the financial statements to fund managers and the custodian.  Checking accounting entries have been correctly processed in the financial statements.  Assessing any topside adjustments and journal entries for evidence of management bias and evaluating the business rationale. Valuation of hard to value investments (Level 3 Investments) What is the risk? What will we do? Misstatements that occur in relation to complex investments valued at Level 3 fair value hierarchy such as private equities, private credit, pooled property and infrastructure investments. The total of Level 3 investments held by the Fund at 31 March 2024 was £268 million per the 2023/24 audited accounts. This accounts for over 20% of the overall Fund’s assets. If the valuation of these investments was misstated, it would impact on Investment Assets and Net Assets in the Net Asset Statement and Return on Investments section of the Fund Account. Financial statement impact Confidential — All Rights Reserved © Ernst & Young LLP 2025 Our response to significant risks Hillingdon Pension Fund Audit planning report 15 We have set out the significant risks (including fraud risks denoted by*) identified for the current year audit along with the rationale and expected audit approach. The risks identified below may change to reflect any significant findings or subsequent issues we identify during the audit. The assessment of fair value hierarchies can be subjective. For 2023/24, as part of our audit of fair value hierarchies of the Pension Fund’s assets we agreed with the Fund that the classification of an investment should be adjusted. This resulted in £19.2 million of investments being reclassified. There were a similar reclassifications in the and 2022/23 and 2021/22 years of 64 million and £47 million respectively. As a result, we continue to consider this to be significant risk in current year and will work with the Pension Fund to agree proposed classifications early in the audit process. As part of this we will scrutinise and challenge the Pension Fund’s proposed classifications. Our approach will focus on:  Gain an understanding of the Pension Fund’s approach to classification and the nature of its investments and work with the Pension Fund to agree the proposed classifications early in the audit process  Assess the significance of market inputs used in the hierarchy valuation as well as the sources of the inputs.  Confirm the basis of the valuation of each class of investment asset and assess whether it is appropriate  Obtain quoted prices directly from independent sources and compare these with the Pension Fund’s assessment of observable market inputs ( bid market price, current yields, and closing bid price) to confirm correct classification.  Test accounting entries have been correctly processed in the financial statements. Fair value classification of Level 2 and Level 3 investments What is the risk? What will we do? Misstatements may occur in relation to disclosure of fair value hierarchy of Level 2 and Level 3 investments. This may lead to incorrect disclosures, which can impact the transparency of financial statements These fair value hierarchy misstatements may lead to incorrect valuations of investments. This can result in either overstatement or understatement of asset values on the balance sheet. . Financial statement impact Confidential — All Rights Reserved © Ernst & Young LLP 2025 Our response to significant risks Hillingdon Pension Fund Audit planning report 16 ► Understand the governance processes around the new system implementation and the assurances obtained by the Council’s own processes, including with regards to completeness of data migration and any subsequent issues with using the new system. ► With support from our own IT audit specialists, design and execute procedures which respond to the specific risks identified in the Council’s implementation of the new system. At this time we are not able to describe the detailed procedures we will perform as we are still working with management to understand the nature of the challenges the Council has faced with the system implementation and evaluate what financial statement risks these may give rise to. We will provide a further update to the Audit Committee once our detailed scope of work is determined. What is the risk? What will we do? We have set out the significant risks (including fraud risks denoted by*) identified for the current year audit along with the rationale and expected audit approach. The risks identified below may change to reflect any significant findings or subsequent issues we identify during the audit. Financial statement impactFinancial statement impact The Council upgraded its finance system in May 2024. Major changes to the finance system give rise to a risk that financial data is lost or changed during migration. The Council also continued to use the old system for finalisation of its 2023/24 financial statements after the main data migration occurred and has therefore had to manually replicate all transactions recorded after this date from the old to the new system, which increases the risk of error and omission in relation to 2024/25 transactions and data. The implementation of the new system has not gone smoothly. Therefore, there is an increased risk of misstatements as a result of challenges encountered in the implementation. As the Pension Fund uses the integrated system, there is risk related to the Pension Fund data as well. Given the pervasive nature of these risks, we consider that they pose a risk of material misstatement. We have assessed that the risk of material misstatement of the financial statements is most likely to occur as a result of:  Data loss or error in the process of migration between the old and new systems;  Incomplete and inaccurate recording in the new system of entries made to the old system after the main data migration; and  Incorrect or incomplete entries being made in the new system as a result of errors in system configuration or other implementation issues. Due to the nature of this risk, there is potential for misstatement to occur in all financial statement balances. Implementation of the new Finance System (Oracle Fusion) Confidential — All Rights Reserved © Ernst & Young LLP 2025 Other areas of audit focus example area of audit focus Hillingdon Pension Fund Audit planning report 17 We have identified other areas of the audit, that have not been classified as significant risks but are still important when considering the risks of material misstatement to the financial statements and disclosures and therefore may be include in our Audit Results Report. We will also ensure that the IAS 26 disclosure is in line with the relevant standards and consistent with the valuation provided by the Actuary. What else will we do? We will:  Assess the work of the Pension Fund Actuary including the assumptions they have used by relying on the work of PWC as the consulting actuaries commissioned by the National Audit Office for all local government sector auditors, and considering relevant reviews by the EY actuarial team; and  Evaluate the reasonableness of the Pension Fund Actuary’s calculations by comparing them to the outputs of our own auditor’s specialist model Our response: Key areas of challenge and professional judgement IAS26 disclosure — actuarial present value of promised retirement benefits IAS26 requires post employment benefits plans to disclose annually the basis used to determine the actuarial present value of promised retirement benefits, including demographic and financial key assumptions. The estimate is based on a roll-forward of data from the last triennial valuation in 2022, updated where necessary, and takes into account assumptions. The information disclosed is based on the IAS 26 report issued to the Fund by the Fund Actuary. Accounting for the pension scheme involves significant estimation and judgement and therefore management engages an actuary to undertake the calculations on their behalf. ISAs (UK) 500 and 540 require us to undertake procedures on the use of management experts and the assumptions underlying fair value estimates. What is the risk/area of focus, and the key judgements and estimates? Confidential — All Rights Reserved © Ernst & Young LLP 2025 Other areas of audit focus example area of audit focus Hillingdon Pension Fund Audit planning report 18 We have identified other areas of the audit, that have not been classified as significant risks but are still important when considering the risks of material misstatement to the financial statements and disclosures and therefore may included in our Audit Results Report. We will also evaluate the ISAE 3402 report for custodian and fund managers. What else will we do? We will:  Agree the investment income back to the fund manager report for the LCIV Mac investment to ensure that the custodian has correctly treated any distributions reinvested in the fund. Our response: Key areas of challenge and professional judgement Completeness of investment income. In both the 2023/24 and 2022/23 audits we have identified the same error in relation to income from the LCIV Mac fund. Distributions from this fund are reinvested at year end and, in both years, this was not communicated by the fund manager nor identified by the custodian. As a result, income was understated and profit/loss on disposal of investments and change in market value was overstated. The amounts involved were £3.4 million in 2023/24 and £4.2 million in 2022/23. We identified this as a control deficiency in addition to an error in the prior year to reflect that fact that management should have identified this error given that it had also happened in the prior year. What is the risk/area of focus, and the key judgements and estimates? Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund Audit planning report 19 Audit materiality03 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Materiality Hillingdon Pension Fund Audit planning report 20 For planning purposes, materiality has been set at £13.6 million. This represents 1% of the Pension Fund’s net assets at 31 March 2024. It will be reassessed on receipt of the draft 2024/25 financial statements and throughout the audit process. We have chosen net assets as the Pension Fund reports on the net assets available to pay pension benefits and is asset-driven. The focus for the users of the financial statements relates to the valuation of the investments within the Pension Fund and the associated liability. The net assets of the Fund represent the net of these investment assets and liabilities. We have provided supplemental information about audit materiality in Appendix F. Planning materiality — the amount over which we anticipate misstatements would influence the economic decisions of a user of the financial statements. Performance materiality — the amount we use to determine the extent of our audit procedures. We have set performance materiality at £10.2 million which represents 75% of materiality. Our assessment reflects the strong control environment present at the Fund and our expectation of a relatively low level of misstatements based on results from previous audits. Audit difference threshold — we propose that misstatements identified below this threshold are deemed clearly trivial. The same threshold for misstatements is used for component reporting. We will report to you all uncorrected misstatements over this amount relating to the income statement and balance sheet that have an effect on income or that relate to other comprehensive income. Other uncorrected misstatements, such as reclassifications and misstatements in disclosures and corrected misstatements will be communicated to the extent that they merit the attention of the Audit Committee or are important from a qualitative perspective. Materiality Key definitions We will keep the Audit Committee updated on any changes to materiality levels as the audit progresses . Planning materiality £13.6m Performance materiality £10.2m Component performance materiality £.69m Net asset £1,362m We request that the Audit Committee confirm its understanding of, and agreement to, these materiality and reporting levels. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund Audit planning report 21 Scope of our audit04 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit process and strategy Hillingdon Pension Fund Audit planning report 22 Objective and scope of our audit In accordance with the NAO Code, our primary objectives are to conduct work that supports the delivery of our audit report to the Council. We issue an audit report that covers: 1. Financial statement audit Our opinion on the financial statements:  Whether the financial statements give a true and fair view of the Revenue and Fund Account and Net Asset Statement for the Pension Fund for the period in question, including on the consistency of the Pension Fund financial statements within the Pension Fund Annual Report with the published financial statements of London Borough of Hillingdon ; and  Whether the financial statements have been prepared properly in accordance with the relevant accounting and reporting framework as set out in legislation, applicable accounting standards or other direction. Our opinion on other matters:  Whether other information published together with the audited financial statements is consistent with the financial statements. Other procedures required by the Code:  Reviewing and reporting on matters on which we report by exception as required. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit process and strategy (cont’d) Hillingdon Pension Fund Audit planning report 23 Audit process overview Our audit involves:  Identifying and understanding the key processes and internal controls; and  Substantive tests of detail of transactions and amounts.  Reliance on the work of other auditors where appropriate;  Reliance on the work of experts in relation to areas, such as valuation of the Pension Fund and IT specialists with an expertise in data migration. Our initial assessment of the key processes across the Fund has not identified any processes where we will seek to test key controls, either manual or IT. Our audit strategy will, as in previous years, follow a fully substantive approach. This will involve testing the figures within the financial statements rather than looking to place reliance on the controls within the financial systems. We assess this as the most efficient way of carrying out our work and obtaining the level of audit assurance required to conclude that the financial statements are not materially misstated. Analytics We will use a data driven approach to enable us to capture whole populations of your financial data, in particular journal entries. These tools:  Help identify specific exceptions and anomalies which can then be subject to more traditional substantive audit tests; and  Give greater likelihood of identifying errors than random sampling techniques. Internal audit We will review internal audit plans and the results of their work. We will reflect the findings from these reports, together with reports from any other work completed in the year, in our detailed audit plan, where they raise issues that could have an impact on the financial statements. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit team05 Hillingdon Pension Fund Audit planning report 24 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit team Hillingdon Pension Fund Audit planning report 25 * Key Audit Partner Debbie Hanson* Audit partner Nimisha Dosa Manager Josna Jose Senior Specialist - Pensions (PWC consulting actuary and EY Actuaries) Specialist - IT (EY IT Audit Specialists) Confidential — All Rights Reserved © Ernst & Young LLP 2025 Use of specialists When auditing key judgements, we are often required to use the input and advice provided by specialists who have qualifications and expertise not possessed by the core audit team. The areas where specialists are expected to provide input for the current year audit are: Hillingdon Pension Fund Audit planning report 26 In accordance with Auditing Standards, we will evaluate each specialist’s professional competence and objectivity, considering their qualifications, experience and available resources, together with the independence of the individuals performing the work. We also consider the work performed by the specialist in light of our knowledge of the Fund’s business and processes and our assessment of audit risk in the particular area. For example, we would typically perform the following procedures:  Analyse source data and make inquiries as to the procedures used by the specialist to establish whether the source data is relevant and reliable  Assess the reasonableness of the assumptions and methods used  Consider the appropriateness of the timing of when the specialist carried out the work  Assess whether the substance of the specialist’s findings are properly reflected in the financial statements Final stagePlanning stage Fund Actuary PWC as Consulting Actuary to the NAO on behalf of audit providers EY Pension Advisory Team Pension Fund Valuation and Disclosures EY IT SpecialistsImplementation of the new finance system (Oracle Fusion) Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund Audit planning report 27 Audit timeline06 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Substantive testingPlanning Walkthroughs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Auditor’s Report Audit Results Report to be presented at the November Audit Committee Auditor’s Report on the Fund’s financial statements and Audit Results Report covering our conclusions on key judgements and estimates, and confirmation of our independence Audit planning report to be presented at the May Audit Committee Reporting our independence, risk assessment, planned audit approach and the scope of our audit Auditor’s Annual Report Auditor’s Annual Report summarising the results of our 2024/25 work at the Fund Timetable of communication and deliverables Below is a timetable showing the key stages of the audit and the deliverables we have agreed to provide to you through the 2024/25 audit cycle. From time to time matters may arise that require immediate communication with the Audit Committee and we will discuss them with the Audit Committee Chair as appropriate. Hillingdon Pension Fund Audit planning report 28 Timeline Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund plc Audit planning report 29 Independence07 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Introduction Hillingdon Pension Fund Audit planning report 30 The FRC Ethical Standard 2019 and ISA (UK) 260 ‘Communication of audit matters with those charged with governance’, requires us to communicate with you on a timely basis on all significant facts and matters that bear upon our integrity, objectivity and independence. The Ethical Standard, as revised in December 2019, requires that we communicate formally both at the planning stage and at the conclusion of the audit, as well as during the course of the audit if appropriate. The aim of these communications is to ensure full and fair disclosure by us to those charged with your governance on matters in which you have an interest. In addition, during the course of the audit, we are required to communicate with you whenever any significant judgements are made about threats to objectivity and independence and the appropriateness of safeguards put in place, for example, when accepting an engagement to provide non-audit services. We ensure that the total amount of fees that EY and our network firms have charged to you and your affiliates for the provision of services during the reporting period, analysed in appropriate categories, are disclosed. Required communications Final stagePlanning stage  In order for you to assess the integrity, objectivity and independence of the firm and each covered person, we are required to provide a written disclosure of relationships (including the provision of non- audit services) that may bear on our integrity, objectivity and independence. This is required to have regard to relationships with the entity, its directors and senior management, its affiliates, and its connected parties and the threats to integrity or objectivity, including those that could compromise independence that these create. We are also required to disclose any safeguards that we have put in place and why they address such threats, together with any other information necessary to enable our objectivity and independence to be assessed;  Details of non-audit/additional services provided and the fees charged in relation thereto;  Written confirmation that the firm and each covered person is independent and, if applicable, that any non-EY firms used in the group audit or external experts used have confirmed their independence to us;  Details of any non-audit/additional services to a UK PIE audit client where there are differences of professional opinion concerning the engagement between the Ethics Partner and Engagement Partner and where the final conclusion differs from the professional opinion of the Ethics Partner  Details of any inconsistencies between FRC Ethical Standard and your policy for the supply of non-audit services by EY and any apparent breach of that policy;  Details of all breaches of the IESBA Code of Ethics, the FRC Ethical Standard and professional standards, and of any safeguards applied and actions taken by EY to address any threats to independence; and  An opportunity to discuss auditor independence issues.  The principal threats, if any, to objectivity and independence identified by Ernst & Young (EY) including consideration of all relationships between you, your affiliates and directors and us;  The safeguards adopted and the reasons why they are considered to be effective, including any Engagement Quality review;  The overall assessment of threats and safeguards;  Information about the general policies and process within EY to maintain objectivity and independence  The IESBA Code requires EY to provide an independence assessment of any proposed non-audit service (NAS) to the PIE audit client and will need to obtain and document pre-concurrence from the audit committee/those charged with governance for the provision of all NAS prior to the commencement of the service (i.e., similar to obtaining a “pre-approval” to provide the service).  All proposed NAS for PIE audit clients will be subject to a determination of whether the service might create a self-review threat (SRT), with no allowance for services related to amounts that are immaterial to the audited financial statements. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Relationships, services and related threats and safeguards Hillingdon Pension Fund Audit planning report 31 We highlight the following significant facts and matters that may be reasonably considered to bear upon our objectivity and independence, including the principal threats, if any. We have adopted the safeguards noted below to mitigate these threats along with the reasons why they are considered to be effective. However, we will only perform non-audit services if the service has been pre-approved in accordance with your policy. Overall assessment Overall, we consider that the safeguards that have been adopted appropriately mitigate the principal threats identified and we therefore confirm that EY is independent and the objectivity and independence of Debbie Hanson, your audit engagement partner and the audit engagement team have not been compromised. Self interest threats A self interest threat arises when EY has financial or other interests in your company. Examples include where we have an investment in your company; where we receive significant fees in respect of non-audit services; where we need to recover long outstanding fees; or where we enter into a business relationship with you. At the time of writing, there are no long outstanding fees. We believe that it is appropriate for us to undertake those permitted non-audit/additional services set out in Section 5.40 of the FRC Ethical Standard 2019 (FRC ES), and we will comply with the policies that you have approved. None of the services are prohibited under the FRC's ES and the services have been approved in accordance with your policy on pre-approval. In addition, when the ratio of non-audit fees to audit fees exceeds 1:1, we are required to discuss this with our Ethics Partner, as set out by the FRC ES, and if necessary, agree additional safeguards or not accept the non-audit engagement. We will also discuss this with you. At the time of writing, there are no non-audit fees to audit fees with Hillingdon Pension Fund. No additional safeguards are required. A self interest threat may also arise if members of our audit engagement team have objectives or are rewarded in relation to sales of non-audit services to you. We confirm that no member of our audit engagement team, including those from other service lines, has objectives or is rewarded in relation to sales to you, in compliance with Ethical Standard part 4. There are no other self interest threats at the date of this report. Sel review threat Self review threats arise when the results of a non-audit service performed by EY or others within the EY network are reflected in the amounts included or disclosed in the financial statements. There are no self review threats at the date of this report. Management threats Partners and employees of EY are prohibited from taking decisions on behalf of management of your company. Management threats may also arise during the provision of a non-audit service in relation to which management is required to make judgements or decision based on that work. There are no management threats at the date of this report. Other threats Other threats, such as advocacy, familiarity or intimidation, may arise. There are no other threats at the date of this report. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Other communications Hillingdon Pension Fund Audit planning report 32 EY Transparency Report 2024 EY has policies and procedures that instill 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 period ended 30 June 2024 and can be found here: EY UK 2024 Transparency Report. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Hillingdon Pension Fund Audit planning report 33 Appendices08 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Appendix A — PSAA Statement of Responsibilities Hillingdon Pension Fund Audit planning report 34 As set out on the next page our fee is based on the assumption that the Council complies with PSAA’s Statement of Responsibilities of auditors and audited bodies. See https://www.psaa.co.uk/managing-audit-quality/statement-of-responsibilities-of-auditors-and-audited-bodies/statement-of-responsibilities-of-auditors-and-audited-bodies- from-2023-24-audits/. In particular the Council should have regard to paragraphs 26-28 of the Statement of Responsibilities which clearly set out what is expected of audited bodies in preparing their financial statements. We set out these paragraphs in full below: Preparation of the statement of accounts 26. Audited bodies are expected to follow Good Industry Practice and applicable recommendations and guidance from CIPFA and, as applicable, other relevant organisations as to proper accounting procedures and controls, including in the preparation and review of working papers and financial statements. 27. In preparing their statement of accounts, audited bodies are expected to:  Prepare realistic plans that include clear targets and achievable timetables for the production of the financial statements;  Ensure that finance staff have access to appropriate resources to enable compliance with the requirements of the applicable financial framework, including having access to the current copy of the CIPFA/LASAAC Code, applicable disclosure checklists, and any other relevant CIPFA Codes.  Assign responsibilities clearly to staff with the appropriate expertise and experience;  Provide necessary resources to enable delivery of the plan;  Maintain adequate documentation in support of the financial statements and, at the start of the audit, providing a complete set of working papers that provide an adequate explanation of the entries in those financial statements including the appropriateness of the accounting policies used and the judgements and estimates made by management;  Ensure that senior management monitors, supervises and reviews work to meet agreed standards and deadlines;  Ensure that a senior individual at top management level personally reviews and approves the financial statements before presentation to the auditor; and  During the course of the audit provide responses to auditor queries on a timely basis. 28. If draft financial statements and supporting working papers of appropriate quality are not available at the agreed start date of the audit, the auditor may be unable to meet the planned audit timetable, and the start date of the audit will be delayed. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Appendix B — Fees The duty to prescribe fees is a statutory function delegated to Public Sector Audit Appointments Ltd (PSAA) by the Secretary of State for Housing, Communities and Local Government. This is defined as the fee required by auditors to meet statutory responsibilities under the Local Audit and Accountability Act 2014 in accordance with the requirements of the Code of Audit Practice and supporting guidance published by the National Audit Office, the financial reporting requirements set out in the Code of Practice on Local Authority Accounting published by CIPFA/LASAAC, and the professional standards applicable to auditors’ work. The agreed fee presented is based on the following assumptions:  Officers meeting the agreed timetable of deliverables;  Our financial statement opinion being unqualified;  Appropriate quality of documentation is provided by the Council;  An effective control environment; and  Compliance with PSAA’s Statement of Responsibilities of auditors and audited bodies. See https://www.psaa.co.uk/managing-audit- quality/statement-of-responsibilities-of-auditors-and-audited- bodies/statement-of-responsibilities-of-auditors-and-audited-bodies-from- 2023-24-audits/. . In particular the Council should have regard to paragraphs 26 - 28 of the Statement of Responsibilities which clearly sets out what is expected of audited bodies in preparing their financial statements. These are set out in full on the previous page. If any of the above assumptions prove to be unfounded, we will seek a variation to the agreed fee. This will be discussed with the Council in advance. 2023/24 Prior Year 2024/25 Current Year ££ 81,68892,572Code work — scale fee Note 1Note 2 Changes in work required to address professional and regulatory requirements and scope associated with risk TBCTBCTotal fees Hillingdon Pension Fund Audit planning report 35 All fees exclude VAT (1) For 2023/24 the scale fee represents the base fee, i.e. not including any extended testing. We have submitted a scale fee variation of £9k to PSAA for determination. This is in relation to a number of areas of additional work, including the revision to ISA (UK) 315, which will continue to impact our scope and approach since implementation in 2022/23. This requires us to enhance the audit risk assessment process, better focus responses to identified risks and evaluate the impact of IT on key processes supporting the production of the financial statements. (2) The impact of ISA (UK) 315 has been included in the scale fee for 2024/25. The scale fee may however also be impacted by a range of other factors which will result in additional work. These include but are not limited to:  Non-compliance with law and regulation with an impact on the financial statements.  Prior period adjustments. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Appendix C — Required communications with the Audit Committee We have detailed the communications that we must provide to the audit committee. Our Reporting to you When and whereWhat is reported?Required communications The statement of responsibilities serves as the formal terms of engagement between the PSAA’s appointed auditors and audited bodies. Confirmation by the audit committee of acceptance of terms of engagement as written in the engagement letter signed by both parties. Terms of engagement The statement of responsibilities serves as the formal terms of engagement between the PSAA’s appointed auditors and audited bodies. Reminder of our responsibilities as set out in the engagement letterOur responsibilities Audit planning report- April 2025Communication 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 Planning and audit approach Audit results report- November 2025 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  Findings and issues regarding the opening balance on initial audits (delete if not an initial audit) Significant findings from the audit Hillingdon Pension Fund Audit planning report 36 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Appendix C — Required communications with the Audit Committee (cont’d) Our Reporting to you When and whereWhat is reported?Required communications Audit results report- November 2025Events 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  Whether the use of the going concern assumption is appropriate in the preparation and presentation of the financial statements  The adequacy of related disclosures in the financial statements Going concern Audit results report- November 2025 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 Misstatements Audit results report- November 2025 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

Audit Committee – 14 May 2025 Part I – Public INTERNAL AUDIT 2024/25 ANNUAL REPORT Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report IA1. 2024/25 IA Annual Report Ward All HEADLINES The CIPFA Global Internal Audit Standards in the UK Public Sector Application Note requires the Head of Internal Audit to deliver an Annual Internal Audit Report and Opinion Statement that can be used by the Council to inform and support its Annual Governance Statement. This report and opinion statement summarises the work performed by I nternal Audit during 2024/25. RECOMMENDATION: That the Audit Committee notes the IA Annual Report for 2024/25. 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 ANNUAL REPORT & OPINION STATEMENT 2024/25 24 April 2025 HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 2. Contents The key contacts in connection with this document are: Claire Baker Head of Internal Audit cbaker@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. SUMMARY OF 2024/25 INTERNAL AUDIT WORK 3 3. HEAD OF INTERNAL AUDIT OPINION 5 4. INTERNAL AUDIT FOLLOW-UP 6 5. REVIEW OF INTERNAL AUDIT PERFORMANCE 7 APPENDIX A - DETAILED INTERNAL AUDIT ACTIVITY 9 APPENDIX B - CHANGES TO THE IA PLAN 11 APPENDIX C - INTERNAL AUDIT DEFINITIONS 12 HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 3. 1. INTRODUCTION 1.1 Internal Audit (IA) provides an independent assurance and advisory service that underpins good governance. IA gives an objective opinion on whether the control environment is operating as expected to help the Council achieve its strategic objectives and realise its vision for the borough of Hillingdon (LBH). It is also a requirement of the Local Government Accounts and Audit Regulations 2015 that the Authority undertakes an effective IA to evaluate the effectiveness of its risk management, internal control and corporate governance processes, taking into account public sector internal auditing standards or guidance. 1.2 The UK Public Sector IA Standards (PSIAS) in place during 2024/25 promote further improvement in the professionalism, quality, consistency and effectiveness of IA across the public sector. They stress the importance of robust, independent and objective IA arrangements to provide senior management with the key assurances they need to support them both in managing the organisation and in producing the Annual Governance Statement (AGS). Going forward into 2025/26 the PSIAS have been replaced by the Global Internal Audit Standards. 1.3 This annual report summarises the main findings arising from the 2024/25 IA work and the annual Head of Internal Audit (HIA) opinion as required by the PSIAS . The report also provides IA key stakeholders, including the Council’s Corporate Management Team (CMT) and the Audit Committee, with an opportunity to review the performance of the IA service on the delivery of the 2024/25 IA Plan and on the effectiveness of the IA service. 2. SUMMARY OF 2024/25 INTERNAL AUDIT WORK 2.1 In total 45 pieces of IA work were delivered as part of the 2024/25 IA plan as at the beginning of April 2025. This included 29 assurance reviews, 10 advisory reviews and 7 grant claim audits. This is consistent with the level of reviews completed in the prior year, despite a 2FTE reduction in the team. FIGURE 1: IA WORK COMPLETED BY REVIEW TYPE 2.2 Two planned reports are currently being finalised and a further two are being drafted. These will be reflected in the ongoing 2025/26 IA workplan. Any significant findings from these reviews have been taken into consideration as part of the Annual HIA Opinion reported below. 2.3 Of the 29 assurance reviews completed in the year, only 48% resulted in a SUBSTANTIAL or REASONABLE assurance opinion. This is a significant decrease from 63% in 202 3/24. Overall, 38% of the assurance reviews resulted in LIMITED opinions and there were four NO assurance reviews (13%). Definitions of the IA assurance levels are included at Appendix C. HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 4. FIGURE 2 IA ASSURANCE RATINGS AS A PERCENTAGE OF ASSURANCE REVIEWS COMPLETED 2.4 Within the 29 IA assurance reviews completed in 202 4/25, we raised 127 IA assurance recommendations in total. This is a slight increase compared to prior years and the higher number of high and medium rated recommendations reflects the increase in no and limited assurance reports. FIGURE 3 IA ASSURANCE RECOMMENDATIONS BY SIGNIFICANCE RATING 2.5 The individual assurance reviews carried out during 2024/25 are listed in Appendix A, including the assurance levels achieved and the number of IA recommendations made. 2.6 Five planned advisory reviews and five ad-hoc advisory reviews were also completed during the year, and seven grant claim audits. These are also detailed in Appendix A. Ad-hoc advisory work includes providing supportive advice and guidance to services across the Council, enhancing the role of IA in helping Council services improve as part of a collaborative approach. 2.7 The IA team staffing structure has remained relatively consistent during 2024/25. Although two members of the team left at the beginning of the year these were expected changes, and the IA plan was delivered by the remaining team without any external support. Following the introduction of the Global Internal Audit Standards the team have also undertaken a review of their working practices and developed a Quality Improvement Action Plan for 2025/26, which will be presented to the next Audit Committee meeting and taken forward throughout 2025/26. 11% 6% 30% 21% 10% 56% 56% 59% 42% 38% 26% 31% 7% 36% 38% 7% 6% 4% 14% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2020/21 2021/22 2022/23 2023/24 2024/25 Substantial Reasonable Limited No HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 5. 3. HEAD OF INTERNAL AUDIT OPINION STATEMENT 2024/25 3.1 The r ole of the IA service is to provide the Audit Committee and CMT with an independent assessment of the adequacy and effectiveness of the internal control , risk management and governance arrangements to ensure the achievement of the organisation’s objectives. The opinion statement is also a source of assurance for the Chief Executive and Leader of the Council in completing the Annual Governance Statement (AGS), which forms part of the statutory Statement of Accounts. 3.2 During 2024/25 the IA service had unrestricted access across the Council, received reasonable co- operation from officers, and had sufficient resources to enable it to provide adequate coverage of the Council’s control environment. Therefore, there are no qualifications to the 2024/25 HIA opinion statement. Our approach also complies with the Public Sector Internal Audit Standards and the Global Internal Audit Standards introduced at the year end. 3.3 Our IA work during 2024/25 was carried out in accordance with the IA work plan approved by CMT and the Audit Committee. The overarching opinion in this report takes into consideration the areas and risks reviewed by IA in the year, as well as the wider control environment and other sources of assurance received during the year. 3.4 2024/25 was a particularly difficult year for the Council due to significant demand pressures in key areas such as adult social care, children and young people services and homelessness, with limited funding and capacity within the services. The Council is not unique in facing these challenges, evidenced by the number of other Local Authorities seeking additional financial support. 3.5 To address these pressures there was significant focus on developing new ways of working and fast paced change during 2024/25. This included engaging external consultants to undertake a Council-wide zero -based budgeting exercise , followed by extensive senior officer challenge sessions and star chamber sessions. 3.6 The increased focus on cost saving proposals was essential given the financial challenges facing the Council. However, this also led to increased uncertainty around forward planning, weakened oversight controls due to limited capacity at a senior level, and significantly reduced focus on core areas of governance. This was particularly highlighted through the Internal Audit reviews into Directorate Governance, Asset Management and Performance Information. 3.7 Financial governance was also significantly impacted during the year due to issues with the implementation of the Oracle finance system. These issues were highlighted through the Budget Monitoring IA report, and wider reports from external consultants. Key issues include a lack of confidence in using the system by budget managers, insufficient accountability for budgets at a service level, and data quality issues with the finance and system data. These issues were further exacerbated during 2024/25 by staffing shortages in key roles in the finance directorate. 3.8 Overall, 38% of the IA reports completed in 2024/25 were given a Limited assurance opinion, and 14% were given No Assurance. This is a significant increase in the number of Limited and No assurance reviews and include some key areas of governance, for example Asset Management, Contract Management Oversight and Budget Monitoring. 3.9 The HIA also takes into consideration the scope of individual reviews , and the wider context why the review was included in the IA plan . For example, the Pre -employment checks review (reasonable assurance) only focused on the Eploy system introduced for new employees as it had already been acknowledged there were significant weaknesses with the records maintained for existing staff. Similarly, the Decent Homes Standards review (reasonable assurance) only focused on the Council’s action plan to address the high levels of non-decency in the housing stock, it did not test compliance with the standards as this was a known area of improvement. HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 6. 3.10 Common themes arising from the Internal Audit findings raised in 2024/25 include poor data quality and poor oversight controls, often due to limited capacity at a senior management level due to the increased focus on Council-wide transformation. At an operational level governance arrangements were often sporadic and related to specific areas rather than a consistent, overarching reporting framework. However, IA note t here has been a positive drive towards developing consistent performance dashboards across the Council towards the year end, to facilitate better governance arrangements going forwards . There is further work required to ensure these are aligned to overarching objectives and formal monitoring arrangements, however this is planned for 2025/26. 3.11 Due to the challenges noted above, weaknesses in the governance arrangements have been recognised by CMT, and a Governance Review Improvement Plan has been developed to take forward during 2025/26. Overall, it is the HIA's opinion that Internal Audit can provide NO assurance over the internal control, risk management and governance arrangements in place during 2024/25, however initial steps have been taken to address the issues going forward. 3.12 A Corporate Governance Group has recently been established to oversee the Governance Review Improvement Action plan. The HIA has offered their support to this group and will ensure any additional areas of improvement are shared during 2025/26. 4. Risk Management 4.1 Risk Management is the process by which risks are identified and evaluated so that appropriate actions can be taken to reduce the likelihood and impact of risks materialising. In the event a risk materialises, this could inhibit the Council from achieving its objectives and fulfilling its strategic priorities. 4.2 The IA opinion on the effectiveness of the Council’s Risk Management arrangements is based on the Chartered Institute of Internal Auditors’ Risk Maturity Model. The IA assessment of the Council’s Risk Management maturity is that the Council was RISK AWARE as at the end of April 2025, the second of the five maturity levels and consistent with the prior year. 4.3 There has been an i mproved focus on risk management through the introduction of the risk management system in 2024/25, leading to a significant increase in the number of risks documented and reviewed. However there are still a number of ongoing actions to embed risk management as a proactive process, including ensuring there are set actions in place to address the risks identified. 5. INTERNAL AUDIT FOLLOW-UP 2024/25 5.1 Progress towards implementing recommended management actions is also taken into consideration as part of the HIA annual opinion. If actions are not implemented in a timely manner then weaknesses in control and governance frameworks will remain in place. A proactive approach to implement recommendations quickly demonstrates management’s commitment to the maintenance of a robust control environment. HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 7. FIGURE 4 Status of IA Recommended Actions at the year end. 5.2 Updates on all outstanding IA management actions are reported in the quarterly IA progress reports for CMT and Audit Committee. Due to the transformational changes ongoing across the council, many of the actions have been delayed as they are incorporated into wider changes or if the responsible officer has left the organisation. These recommendations are allocated new responsible officers and implementation dates and will continue to be followed up until they are completed and verified. 6. REVIEW OF INTERNAL AUDIT PERFORMANCE 2024/25 6.1 The significant challenges facing the Council during 2024/25 also impacted on the Internal Audit team. Other services had less capacity to engage with IA reviews, there were many key officer changes and substantial restructures, and the plan was extensively adjusted to reflect emerging priority areas and other sources of assurance. In total 907 IA days were undertaken ( 2024/25 budget: 909 days) and 47 pieces of work were delivered, consistent with the prior year. 6.2 IA Key Performance Indicators (KPIs) measure the quality, efficiency and effectiveness of the IA service. Performance against the IA KPIs is reported to the Audit Committee quarterly through the IA Progress Report. At the year-end IA fully achieved all eight of the agreed KPIs in relation to the IA work. 6.3 Two further KPIs relating to management engagement with IA were partially met. The IA team has limited control over th ese KPIs, however they are used to indicate the level of engagement from other services and monitor the final outcomes of the IA work. Increasing engagement with services during 2025/26 will hopefully improve this KPI going forward and the IA team are already looking to develop monitoring dashboards to support Corporate Directors monitor IA work and recommended actions within their areas. 6.4 Finally, during 2024/25 the new Global Internal Audit Standards were introduced and became mandatory in the UK Public Sector from the beginning of 2025/26. The IA undertook a self- assessment of compliance against the standards during the year and found no significant areas of non-compliance. A Quality Improvement Action Plan has been developed and will be taken forward throughout 2025/26 to ensure compliance with the Standards. HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT Key: IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation 2024/25 8. APPENDIX A: DETAILED INTERNAL AUDIT ACTIVITY PLANNED ASSURANCE & ADVISORY REVIEWS IA Ref. IA Review Area Date Final Report was Issued Assurance Level Management Actions 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 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 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 - HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT Key: IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation 2024/25 9. IA Ref. IA Review Area Date Final Report was Issued Assurance Level Management Actions H M L O 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 - - - - 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 Final report issued 13 February 2025 Reasonable - 2 - - 24.D05 Hillingdon First Card Final report issued 19 February 2025 Limited - 4 - - 24.A02 Transport Provider Final report issued 03 March 2025 Reasonable - 3 2 - 24.D03 Cyber Security (2) Final report issued 12 March 2025 Substantial - - - - 24.C03 Schools Admissions Final report issued 31 March 2025 Reasonable 1 4 1 1 24.C02 Schools Finances (Part Two) Final report issued 08 April 2025 Limited 2 4 2 - 24.F04 Debtors Final report issued 24 April 2025 Reasonable - 3 1 2 24.S02 Mandatory Training & Induction Final report issued 30 April 2025 Limited 1 2 - - 24.F06 Budget Monitoring Final report issued 1 May 2025 Limited - 6 - - 14.F02 Key Financial Controls (Cash Handling) Final report issued 1 May 2025 Limited 2 1 2 - Total Number of IA Recommendations Raised 25 73 24 4 HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT Key: IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation 2024/25 10. IA AD-HOC CONSULTANCY & GRANT CLAIM VERIFICATION REVIEWS IA Ref. IA Review Area Current Status at end of Q3 2023/24 24.G1 Supporting Families Grant – Quarter 1 Complete – Memo Issued 24.G1 Supporting Families Grant – Quarter 2 Complete – Memo Issued 24.G1 Supporting Families Grant – Quarter 3 Complete – Memo Issued 24.G1 Supporting Families Grant – Quarter 4 Complete – Memo Issued 24.G2 Housing Benefit Grant Memo issued 12 December 2024 24.G3 Mayors Charity Accounts Memo issued 13 January 2025 24.G4 Bus Subsidy Grant Claim Memo Issued October 2024 24.Z01 TSM Technical Requirements Memo issued June 2024 24.Z02 Business Continuity Plans Memo Issued 24.Z03 ASC Uplift Memo Issued 24.Z04 Section 202 Follow Up Memo Issued 24.Z05 Uninspected B&B’s Follow Up Memo Issued HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 11. APPENDIX B: IN YEAR CHANGES TO THE INTERNAL AUDIT PLAN Internal Audit is most effective when it adapts to emerging risks and other sources of assurance received to avoid duplication. The IA team maintain an audit monitoring spreadsheet which is used to track all audit reviews, including new areas added in year, and identify any areas that can be postponed where capacity is needed for higher risk areas. The original Internal Audit plan presented to the Audit Committee in January 2024/25 included 39 planned audits. Of these, 18 reviews were removed from the plan during the year (listed below) and 15 audits were added. This resulted in 34 planned reviews completed in the year, as listed in Appendix A. IA Ref. IA Review Removed from the Plan Reason for the Change 24.X02 Cabinet Engagement Delayed to 25/26 & replaced with Directorate Governance 24.X03 Transformation Programme Delayed to 25/26 due to ongoing work in the area 24.X04 Corporate Policies and Procedures Delayed to 25/26 due to ongoing work in the area 24.S04 Gifts, Hospitality & Conflicts of Interest Replaced with Section 202 & 204 Appeals 24.S06 Utilisation of Housing Stock Removed due to alternative assurance 24.S08 Emergency Planning Replaced with Personal Evaluation Plans 24.S09 Dangerous Structures Replaced with advisory work on Tenancy KPIs 24.S11 Temporary Accommodation Replaced with B&B Rent Arrears 24.S12 Private Sector Housing Procurement Replaced with HRA Acquisitions 24.S14 Registrars Replaced with Schools Admissions 24.C01 Safety Valve Plan (Part 2) Delayed to 25/26 due to ongoing work in the area 24.F01 Post Oracle Implementation Removed due to alternative external assurance 24.F05 Social Care Charges Delayed to 25/26 due to ongoing work in the area 24.F06 Budget Setting Replaced with Budget Monitoring 24.D01 Data Quality (Liquid Logic) Replaced with Data Quality (ContrOCC) & delayed to 25/26 24.D04 Device Usage Replaced with Performance Information 24.D06 Digital Inclusion Replaced with Personal Appraisals 24.P02 Waste Services Replaced with Capital Programme HILLINGDON COUNCIL INTERNAL AUDIT ANNUAL REPORT & OPINION STATEMENT 2024/25 12. APPENDIX C: 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 needs 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. RISK DEFINITION HIGH The recommendation relates to a significant threat or opportunity that impacts the Council’s corporate objectives. The action required is to mitigate a substantial risk to the Council. In particular it has an impact on the Council’s reputation, statutory compliance, finances or key corporate objectives. The risk requires senior management attention. MEDIUM The recommendation relates to a potentially significant threat or opportunity that impacts on either corporate or operational objectives. The action required is to mitigate a moderate level of risk to the Council. In particular an adverse impact on the Department’s reputation, adherence to Council policy, the departm ental budget or service plan objectives. The risk requires management attention. LOW The recommendation relates to a minor threat or opportunity that impacts on operational objectives. The action required is to mitigate a minor risk to the Council as a whole. This may be compliance with best practice or minimal impacts on the Service's reputation, adherence to local procedures, local budget or Section objectives. The risk may be tolerable in the medium term. 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 – 14 May 2025 Part I – Public RISK MANAGEMENT ANNUAL REPORT 2024/25 Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report RM1. Risk Management Annual Report for 2024/25 Ward All HEADLINES This report presents to the Audit Committee a summary of the Risk Management work undertaken across the Council during 2024/25. The report provides assurance to the Audit Committee that risks are being managed within the relevant services 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 throughout the year. RECOMMENDATION: That the Audit Committee note the Risk Management Annual Report and progress to improve the risk management arrangements. SUPPORTING INFORMATION None. BACKGROUND PAPERS None.

RISK MANAGEMENT ANNUAL REPORT 2024/25 14 April 2025 HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 2024/25 2 CONTENTS 1. INTRODUCTION 3 2. EMBEDDING RISK MANAGEMENT IN 2024/25 3 3. YEAR END RISK REGISTER UPDATE 4 4. CORPORATE RISK REGISTER 6 5. FORWARD PLAN 6 APPENDIX A: CORPORATE RISK REGISTER 7 APPENDIX B: RISK SCORING METHODOLOGY 9 HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 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 a crucial element of good management and a key part of corporate governance. Although risks can never be entirely eliminated, proportionate and targeted action can be taken to reduce risks to an acceptable level. 1.3 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. Th e Council’s Risk Management P olicy provides a framework to ensure: • Clear accountabilities and well defined roles and responsibilities for managing risks • Risks are promptly identified and their likelihood and impact on Council business is accurately assessed and appropriate action is taken to mitigate the potential risk • Employees have the knowledge and skills to identify and manage risks • Decisions are taken having considered relevant risks • The impact of risk management is evaluated 2. EMBEDDING EFFECTIVE RISK MANAGEMENT IN 2024/25 2.1 This section of the report describes some of the key ways risk management is promoted and embedded throughout the Council during 2024/25. 2.2 Risk Management System 2.2.1 The focus throughout 2024/25 has been ensuring risks are recorded in the new risk management system purchased and developed during 2023/24. Training sessions were provided to each directorate Senior Management Team by the Head of Internal Audit , introducing the new risk system and facilitating directorate level discussions on the risks that needed to be added. 2.2.2 The new system has helped facilitate an ongoing culture change moving accountability for managing risks to the individual services and Directorates. The new system allows greater collaboration between services in relation to risks and improves transparency of risks across the Council, whilst also reducing the time required to update the register on an ongoing basis. 2.2.3 Following the initial roll out of the system ongoing one to one support has been provided by the Head of Internal Audit to individual officers when requested. Training on risk management was also provided for Members of the Audit Committee as part of the ir Training and Development Plan co-ordinated by Democratic Services. 2.3 Aligning Risk and Performance 2.3.1 Key Performance Indicators in relation to risk management were implemented at the beginning of the year and are reported through CMT and the Audit Committee to ensure the new risk management system is embedded effectively. These include the number of risks overdue for review, the number of unscored risks and the number of risks with no mitigating actions assigned. 2.3.2 Further work was also undertaken to align the corporate risks from the risk management system to the Council’s strategic objectives through a Strategic Risk Report. This aligns the high scoring operational risks from the Corporate Risk Register to cross cutting strategic risks against the relevant strategic objective. During the year the Head of Internal Audit has also worked with the Business Intelligence team to align the strategic risks to the wider performance reports being developed and the key performance indicators. Going forwards this will help provide assurance that actions taken to reduce the risks are having the intended impact. HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 2024/25 4 2.3.3 Finally, during 2024/25 the Corporate Risk Management Group (CRMG) was integrated into a wider Corporate Governance Group chaired by the Council’s Monitoring Officer. The new Group met prior to the year end to re view the Council’s risk register and key performance indicators. Going forwards this group will provide management oversight of the Council’s Risk Register to ensure individual risk owners are held accountable for managing risks. 3. YEAR END RISK REGISTER UPDATE 3.1 As highlighted above, work has been ongoing to develop the risk management arrangements across the Council during 2024/25. Including fully embedding the new risk system into the day- to-day operations within individual services. 3.2 The number of risks recorded in the central risk register had increased from 107 risks at the end of 2023/24 to 242 risks at the end of 2024/25 . This demonstrates the increased focus on proactively highlighting risks at all levels of the organisation , which will continue to improve awareness of emerging issues. 3.3 There were 26 red rated risks on the risk register at the year end, which have been escalated to the corporate risk register shown in section four of this report, in line with the Risk Management Policy. 3.4 At the year-end there were no unscored risks on the risk register (a decrease from 31 at the end of Q3). This had been raised as an area of concern during the year due to the large number of unscored risks at the end of Q2. All risks should be scored in line with the Council’s Risk Scoring Methodology to ensure they are escalated and monitored appropriately. 3.5 At the end of the year there were 34 risks overdue for review, a positive decrease from 61 risks at the end of Q3. The majority of these were green rated risks in the Place directorate, and were overdue for review due to staffing vacancies in the directorate. 3.6 There was one red rated risk overdue for review at the year -end relating to Section 106 funding. It was only due to be reviewed at the very end of March and was missed due to annual leave. It was reviewed on the 3 April 2025 and the risk score reduced to amber. 3.7 All risks added to the Risk Management System should have actions allocated to reduce the likelihood or impact of the risk. If a risk does not have actions in place to reduce the risk score 1 32 36 8 30 22 8 25 20 7 8 19 2 6 6 2 10 0 10 20 30 40 50 60 70 Children's Services Directorate Finance Directorate Place Directorate Adult Services and Health Directorate Corporate Services Homes and Communities Total Risks by Directorate RED AMBER GREEN 0 17 0 6 0 0 7 1 0 2 0 0 1 0 5 10 15 20 25 30 Children's Services Directorate Finance Directorate Place Directorate Adult Services and Health Directorate Corporate Services Homes and Communities Overdue for Review by Directorate GREEN AMBER RED HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 2024/25 5 it should be considered whether the risk is being tolerated, and whether it is within the Council’s risk appetite to tolerate the risk at that level. 3.8 At the end of 2024/25 there were 135 risks without actions allocated on the risk management system. This is 56% of all risks , a reduction from 61% of all risks at the end of Q3. This includes eight red rated risks. 3.9 Ensuring all risks have action plans in place is a priority area of improvement for 2025/26. This will also involve reviewing the Council’s risk appetite statement to ensure actions are not closed as tolerated above the acceptable level. 3.10 At the year-end there were 153 actions all ocated against 107 risks on the system. Of these only 16 were actions overdue for review (10%). The Head of Internal Audit and Corporate Governance Group will continue to monitor this during 2025/26 as they push to ensure all risks have appropriate actions allocated. 3.11 Finally, the graph below shows the risk status for each risk, as recorded by the risk owner, split between the different risk categories. The highest proportion of risks were categorised as Fraud, Loss and Error risks. These risks were added when the counter fraud risk register was transferred onto the system during the year. 90% of these risks are rated green, and as many of these risks remain static, we expect them to be tolerated and closed during 2025/26. 26 31 3 15 16 3 8 11 2 1 11 1 1 3 3 0 10 20 30 40 50 Children's Services Directorate Finance Directorate Place Directorate Adult Services and Health Directorate Corporate Services Homes and Communities Risks without Actions by Directorate GREEN AMBER RED 0 2 2 0 3 1 0 4 2 0 2 00 1 2 3 4 5 6 7 Children's Services Directorate Finance Directorate Place Directorate Adult Services and Health Directorate Homes and Communities Corporate Services Actions Overdue for Review GREEN AMBER RED 8 4 10 1 1 25 65 1 37 4 3 8 6 2 11 5 2 8 8 7 3 12 2 5 4 0 10 20 30 40 50 60 70 80 90 Financial Fraud, Loss and Error Non-Statutory Service… Statutory Service Provision Workforce IT & Technology Health & Safety (including… Project/Transformation Reputational Risk Status by Risk Category Decreasing Risk Static Increasing Risk New HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 2024/25 6 4. CORPORATE RISK REGISTER (CRR) 4.1 The Council’s Corporate Risk Register (CRR) is an essential part of the Local Authority’s Risk Management arrangements. The CRR documents any operational risks from the risk management system which are graded 'red' due to their potential likelihood and impact on the Council. These risks are then monitored by the Corporate Management Team and used to inform the Strategic Risks presented to the Audit Committee in the Strategic Risk Report. The Corporate Risk Register is outlined in Appendix A. 4.2 The CRR is presented to the Corporate Management Team (CMT), Corporate Governance Group and the Audit Committee quarterly. The Corporate Management Team is responsible for ensuring the identified risks are being managed and mitigating actions are being implemented. The Corporate Governance Group and Audit Committee maintain oversight of the risk management arrangements and monitor the CRR to gain assurance the arrangements are working effectively. 4.3 During 2024/25 the new Risk Management system was implemented, giving greater ownership of risks to individual services and enabling risks to be escalated to the CRR as soon as they emerge. This has led to a more dynamic CRR as risks are escalated then addressed and reduced more regularly. Further work will be ongoing during 2025/26 to align the CRR to other performance dashboards and wider governance arrangements. 4.4 Analysis of Corporate Risk Register Number of Corporate Risks brought forward from 2023/24 16 Number of new Corporate Risks in 2024/25 21 Number of retired Corporate Risks in 2024/25 11 Number of Corporate Risks where the Risk Scores have increased 3 Number of Corporate Risks where the Risk Scores have decreased 2 Number of Corporate Risks where the Risk Scores have remained static 2 Total Number of Corporate Risks at the end of 2024/25 26 5. 2024/25 FORWARD PLAN 5.1 Move to 'Risk Defined' 5.1.1 The Chartered Institute for Internal Audit's Risk Maturity Model is a benchmarking tool to assess the Council's organisation’s risk maturity. In accordance with this model our current risk maturity level is 'Risk Aware', the second of the five maturity levels . This is consistent with the score at the end of 2023/24. 5.1.2 It is an asp iration to develop the organisation’s risk maturity to the next level of ‘Risk Defined’. Work is ongoing to align risk information with the wider performance reporting dashboards to enable Corporate Directors to monitor risks within their areas more effectively and hold officers accountable for managing their risks. 5.1.3 The focus for 2025/26 will also be to improve the number of actions recorded in the system to evidence what steps are being taken to mitigating the risks identified. HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 2024/25 7 APPENDIX A: CORPORATE RISK REGISTER CRR Risk: 2023/24 Q4 2024/25 Q1 2024/25 Q2 2024/25 Q3 2024/25 Q4 Reviewed Date The General Data Protection Regulations Static D1 Removed - Decreased Capital Programmes Static C2 Removed - Decreased Rent arrears Static A3 Removed - Decreased Workforce Sufficiency Static C2 Removed - Decreased Meeting Housing Needs Static A1 Removed – Replaced (HOUSNE0001) Children’s Care placements Static C2 Removed – Replaced (CHILSC0012) High Needs SEN placements Decrease D1 Removed – Replaced (EDUSEN0004) Increased levels of fraud Static B1 Removed – Replaced (Multiple risks) LEARN0001 - Community DOL Static C2 Static C2 Removed - Decreased FINMAN0029 - Maintained Schools Funding Static D1 Static D1 Removed - Decreased DIRECC0005 - Home to School Transport New C2 Static C2 Static C2 Removed - Decreased PROCUR0002 - Financial Resilience of Contracts Increase B2 Decrease C2 Static C2 Static C2 Static C2 11/02/2025 TECH0001 - Cyber Security Static C1 Static C1 Static C1 Static C1 Decrease D1 27/12/2024 STRAF0002 - Ability to Deliver a Balanced Budget in the Short & Medium Term Static D1 Increase A1 Static A1 Static A1 Static A1 19/03/2025 LANNB0004 - Decent Homes/ Thermal efficiencies New B1 Static B1 Static B1 Static B1 Static B1 31/03/2025 LANDB0003 - Decarbonisation New C2 Static C2 Static C2 Static C2 Static C2 31/03/2025 EDUSEN0004 - Uncertainty over the Safety Valve Agreement and impact if it is not held by DfE New D1 Increase B1 Static B1 Static B1 19/03/2025 PENS0015 - Failure of employers to deliver accurate and timely employee administration information New A3 Static A3 Static A3 Static A3 09/01/2025 TRSA0003 - Liquidity Risk New D1 Static D1 Static D1 Static D1 25/03/2025 CHILSC0012 - Increasing cost of external residential provision and reduce internal resilience New C2 Static C2 Static C2 Static C2 13/02/2025 HOUSNE0001 - High Levels of Homelessness Demand New C2 Static C2 Static C2 Static C2 12/03/2025 LANDB0011 - Housing Landlord Service - Not Meeting Regulatory Requirements New A2 Static A2 Static A2 Static A2 01/04/2025 HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 2024/25 8 LANDB0019 - Lone-working devices - no visiting officers within housing have lone working devices. New B2 Static B2 Static B2 03/03/2025 PROPER0001 - Disposal Programme New D1 Static D1 31/03/2025 PROPER0006 - Insurance Valuations New A1 Static A1 31/03/2025 FINMAN0007 - Insufficient capacity to meet support demand New C2 Static C2 19/03/2025 PLANRE0008 - Planning, Building Control and Land Charges System (Ocella) unsupported and unfunded from Jan 2027 New A2 Static A2 17/02/2025 PLANRE0010 - Delivery of Carbon Neutrality by 2030 New C2 Static C2 24/12/2024 PLANRE0015 - Unable to spend S106 funding on time New D1 Static D1 27/12/2024 PENS0011 - Failure of the pool in management of funds / access to funds New D1 12/02/2025 LANDB0021 - Compliance IT systems and reliance on spreadsheets New C2 17/03/2025 HOUMAN0024 - Current RSH inspection notice - Reputational risk of failing against the standards required. New C2 03/03/2025 HOUMAN0025 - Rent increasing because of operating model and structure of the line management. New B2 03/03/2025 HOUMAN0026 - There is concern in all areas of the service with Data Quality and Performance analysis New B2 03/03/2025 HOUMAN0027 - Complaint reporting and management New C2 31/03/2025 ASSETS0018 - Upcoming Regulatory Compliance and Enhanced Operational Efficiency New C2 03/03/2025 BUSTRA0001 - The transformation programme required to deliver significant savings in order for the Council to achieve a balanced budget. New C2 24/03/2025 HILLINGDON COUNCIL RISK MANAGEMENT ANNUAL REPORT 2024/25 9 APPENDIX B: RISK SCORING METHODOLOGY

Audit Committee – 14 May 2025 Part I – Public STRATEGIC RISK REPORT Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit Papers with report Strategic Risk Report Ward All The Strategic Risk R eport aligns the Strategic Objectives of the Council with the overarching Strategic Risks that could impact on those objectives, and the Corporate Risks from the Corporate Risk Register. CMT are currently working on their risk management reporting framework, which will take into consideration the Strategic Risks and how they are presented to the Audit Committee and other Committees. RECOMMENDATION: That the Audit Committee note the Strategic Risk Report and provide feedback on the content and level of assurance received. SUPPORTING INFORMATION None. BACKGROUND PAPERS None.

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: Education and Care Placement Sufficiency 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 from JCAD: CRR Rating Exec Lead: Dan Kennedy Current Rating: C2 None Date Added: 01/11/2023 Last Review: 12/03/2025 Target Rating: E2 Next Review Date: 12/06/2025 Change: Static Risk Description Primary Actions: Sources of Assurance/KPIs In line with the London picture, demand from homeless households in Hillingdon remains high and has increased by more than 50% since 2022/23. The unit cost of interim accommodation is rising by more than 30% per year. The rise in homelessness is due to the changing market conditions, the high purchase cost of homes and high rental costs combined with the Borough being a port authority with the associated infrastructure which leads to Hillingdon experiencing a higher relative level of need than many other Boroughs. The competing demands on social housing providers to improve the condition of their existing homes is also re-directing resources away from providing new housing supply. The lack of affordable housing puts significant pressure on the Council's finances and ability to meet its statutory responsibilities in this area. Insufficient supply of affordable good quality housing in both the private and public sector can lead to a detrimental impact on the health, wellbeing and educational attainment of residents. Transformation programme in place 25/26. Key actions: - increase proactive, homeless prevention actions with those evicting, to reduce levels of homeless presentations (reduce by 25 placements per month) -implement a price cap for all TA nightly charged placements -secure 100 new leases for use as TA in 2025/26 -increase the supply of private rented accommodation by 25 units (total=349 units in 25/26 for general fund placements) -increase the supply of social rented homes available to homeless households, to include delivery of 245 new LBH properties in 2025/26. • Dan Kennedy: 12/03/25 By 31 March 2026, no more than 64 households in nightly charged temporary accommodation (baseline 31/03/25 = 725) No more than 50 new nightly charged TA placements per month (baseline = 75 in 2024/25) 599 lettings to homeless families in 2025/26 (baseline = 352 in 2024/25) Zero temporary accommodation tenancies above the price cap (baseline = 327 March 2025) 349 private sector lets to homeless households in 2025/26 (baseline = 324 in 2024/25) 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 Actions: Sources of Assurance/KPIs 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. Transformation requires greater capital receipts than forecast. ZBB and Star Chambers SMM leadership team cascades Spending control panel Leadership and culture financial focus Robust financial challenge Contingency plan for non- delivery Council budget report Section 25 s151 officer statement Early pressures review work Month 2 Monitor Capitalisation Oracle progress CIPFA improvement plan 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 Actions: Sources of Assurance/KPIs 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) Phishing Threats (Target <3500) 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 Actions: Sources of Assurance/KPIs 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. Ongoing procurement transformation programme, including strengthening the training for contract managers to raise any concerns in relation to potential concerns with contractors. TBC 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: Education and Care Placement Sufficiency 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: 13.03.2025 Target Rating: D2 Next Review Date: 13.06.2025 Change: Static Risk Description Primary Actions: Sources of Assurance/KPIs Social care market conditions has resulted in inflated costs and lack of choice for residential and IFA care options for Looked After Children. This results in a significant risk to financial stability of Children's Services and the Council as a whole. It also poses a risk to regulatory outcomes for children. In SEND, primary legislation promoting parental choice coupled with limited provision for ASD conditions increases reliance on INMSS which creates a financial risk. 1. DSG Recovery Plan 2. SEND Improvement Plan 3. Fostering Transformation Programme 4. Charville Residential Project 5. CWD Respite Project 6. Care Offer 7. Social Work Delivery Model High Cost Residential Placements (Target <19) % EHCP in mainstream Provision Mother & Baby Placements (Target <5) Children Placed in INMSS in year Reduction in DSG deficit in year New Foster Care Households (Target 1 per month) Final EHCP Issued in 20 weeks (Target >85%) 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 Actions: Sources of Assurance/KPIs 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. 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. Number of Contacts (Target <4500) Number of Referrals (Target <600) No Further Action (Target >1250) Info and advice Given (Target >50) Residents in Home Care (Target <1300) Placement Costs (Target TBC) Active Services (Target <5150) Average Cost of Placements (Target TBC) Hours of Support Given (Target <53)

Audit Committee – 14 May 2025 Part I – Public 2024/25 COUNTER FRAUD ANNUAL REPORT Committee name Audit Committee Officer reporting Alex Brown – Head of Counter Fraud Papers with report 2024/25 Counter Fraud Annual 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 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 Strategi c 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. Note the Counter Fraud Annual Report for 2024/25; 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 tolerance 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 Strategic Plan.

COUNTER FRAUD ANNUAL REPORT TO AUDIT COMMITTEE: 2024/25 1st April 2025 HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 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 2024/25 6 4. COUNTER FRAUD PERFORMANCE 2024/25 12 5. FORWARD LOOK 2025/26 12 APPENDIX A - Loss Prevention Performance 2024/25 12 APPENDIX B - KPIs and Actual Performance 2024/25 15 APPENDIX C – Proactive CF Projects 2024/25 16 APPENDIX D - Counter Fraud Benchmarking 2023/24 18 APPENDIX E - Glossary of Terms 19 APPENDIX F - Social Media Campaigns 21 HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 3. 1. INTRODUCTION 1.1 The Role of the Counter Fraud Team 1.1.1 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 irregularities, including any money laundering activity. 1.1.2 As well as counter fraud activity, the CFT also conduct a range of other types of investigative work which do not necessarily have a criminal element to them i.e. revenue inspections, disciplinary investigations, etc. There is also a range of preventative work that the team is responsible for carrying out, such as fraud awareness training and ensuring the Council have up-to-date and appropriate corporate investigation policies and procedures. The CFT also leads on the Council's assessment of the risk of fraud and corrupti on across all council services. 1.2 The Purpose of the Counter Fraud Annual Report 1.2.1 The Counter Fraud Annual Report 2024/25 provides the Council’s Corporate Management Team (CMT) and the Audit Committee with information on the counter fraud work carried out during 2024/25. It summarises for CMT and the Audit Committee the key findings from the quarterly progress reports presented during the year . 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 2024/25. 1.2.2 The Annual 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 and The Annual Operational Plan), which provides an opportunity for the HCF to be held to account in this respect. 2. EXECUTIVE SUMMARY 2.1 The challenges faced by the public sector and in particular Local Authorities have been ever present in 2024/25. The current economic climate has created an environment where front line services have seen an unprecedented demand for support which in turn creates an opportunity for fraud to occur. However, through top level commitment the CFT is well resourced and placed across high fraud risk areas. This approach has led the team to delivering c£10.9m of savings in 2024/25. 2.2 Following on from the success of the CFT winning the outstanding fraud prevention, detection and recovery award and the Grand Prix Award at Public Finance 2023. The CFT management team entered the service into the Public Sector Fraud Awards 2025 for Local Excellence. In addition, Laura Piggott Counter Fraud Manager for Tenancy Fraud was also nominated for Female Pioneer of the Ye ar for her fight against Tenancy Fraud. Both the team and Laura were shortlisted for the awards. Though unfortunately neither won in their respected categories , it is testament to where the team is in its journey in protecting the public purse. 2.3 In Q4 of 2024/25 the team have been through a small-scale restructure to realign its focus on high-risk areas of fraud. Some low-risk fraud activity has been transferred back to services and new areas of work have been added to the 2025/26 operational Workplan. This has led to a small reduction in resources (2.0 FTE). However, with the use of data, technology and digital processes coupled with a focu sed approach the HCF is confident that the CFT will deliver against its strategic objectives in 2025/26. HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 4. 2.4 Housing fraud, in particular tenancy fraud, has remained the highest fraud risk to the Council and an area of focus for the CFT , with the team conducting civil and criminal investigations into suspected cases of housing fraud, alongside proactive loss prevention projects. This has achieved overall loss prevention savings of c£7.8m in 24/25. These savings included the recovery of 112 Council properties due to tenancy fraud , this represents an 8% increase on the previous year’s outcomes (23/24). The increase represents the highest property recovery achieved in a single year. 2.5 With the cost-of-living crisis Housing services have seen a significant rise in those requiring support due to homelessness over recent years. This has led to increased numbers currently in emergency accommodation . This increased demand presents the Council with a higher risk of fraud . The CFT currently have a secondee from Housing to residency check all emergency accommodation to highlight any occurrences of non -occupation or subletting. In total 39 cases of accommodation placements were cancelled saving c£ 745k. With this additional resource demonstrating significant loss prevention savings and a high return on investment, a permanent staffing solution will be sort in 25/26. 2.6 The CFT has focused its efforts into improving its coverage and activity with in Social Care in 2023/24. In total c£380k of financial savings have been identified, demonstrating an increase of 21% on the previous year’s outcomes. Though this demonstrates a positive move in the direction of travel in combating social care fraud, the HCF believes more can be done. Additional activity in the areas of direct payments and commissioned care are now built into the 25/26 work plan. 2.7 In the area of Revenues, the team has delivered 6,861 inspection visits during 2024/25, which is a 0.5% increase from 2023/24. The team has prioritised its work in areas that maximise revenue for the Council. This effective way of working has led to the CFT to generating c£1.4m in additional business rates billings. In 25/26 the team will continue this approach whilst also review ing and improv ing processes using technology and dig ital solutions. This in turn will create greater capacity to increase revenue. 2.8 The CFT has operated with a Home Office Onsite Immigration Official (OSIO) integrated within the Counter Fraud Team since 2018. The OSIO supports the Council in decision making for those that require assistance for Housing or Social Care by providing real-time Home Office data. In 2024/25 the OSIO co ntributed savings of c£ 226k to the overall counter fraud financial target. 2.9 The CFT ha s continued to carry out focused proactive projects as part of its strategic approach to tackle fraud in the Council’s highest risk areas. These area s are considered to be susceptible to fraud and financial loss. Per the table at Appendix C the CFT conducted 8 proactive projects in 202 4/25. The proactive drives provide assurance across the Council and highlights, where needed, any further preventative measures. 2.10 Part of the CFT’s remit is to create awareness internally and externally of f raud including promoting positive outcomes from its work. Across 24/25 the team has worked closely with the Communications Team to educate on the risk of fraud, how to report fraud and share some of the successes of the CFT. Appendix F showcases some of the media work delivered in 24/25. 2.11 Chart 1 over the page, summarises the areas in which the CFT has achieve d loss prevention savings (cost reductions) in 20 24/25 by each quarter. The majority of loss prevention savings have been achieved by the CFT within Housing due to the team’s work in tenancy fraud . A full breakdown of all CFT loss prevention savings can be found at Appendix A. HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 5. Chart 1 - CFT Loss Prevention Savings Achieved in 2024/25 2.12 Chart 2 below summarises the allocation of CFT resource in 2024/25. Similar to previous years, the team has spent the majority of its time working within the area of Housing . The resourcing and time spent in Housing has increased by 11% compared to 23/24 . This has directly correlated with the increase in tenancy fraud outcomes. Chart 2 - CFT Allocated Resource in 2024/25 2.13 In 2024/25 the CFT received a total of 584 referrals for investigation from both internal and external sources (compared to 634 in 20 23/24). Chart 3 provides a summary of the trend in referrals over the year. 2.14 Though referrals have decreased by 8% , outcomes have remained in line with previous years. The HCF and management will plan another year of fraud awareness and engagement to create an anti-fraud culture and increase referrals in areas of high risk. £0 £500,000 £1,000,000 £1,500,000 £2,000,000 £2,500,000 £3,000,000 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Housing Social Care Revenues Immigration 62% 9% 21% 2% 6% Housing Social Care Revenues Internal Investigations & Consultancy Reviews Fraud Risk Assessment & Data Matching HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 6. Chart 3 - Number of 2024/25 Referrals by Quarter *Referrals generated through CFT proactive projects or data matching exercises 3. ANALYSIS OF COUNTER FRAUD ACTIVITY IN 2024/25 3.1 This section provides a more detailed analysis of the activities of the CFT during 2024/25, detailing specific work streams and the trends within each area for comparison and contrast. The activities of the CFT were predominantly focused on three main fraud areas of work : Housing, Social Care and Revenues. The CFT also conducted proactive Blue Badge operations during the year as well as investigating allegations of Blue Badge misuse. 3.2 Housing Fraud 3.2.1 Throughout 2024/25 tenancy fraud investigations, housing verifications and proactive project work in homelessness and tenancy management has continued to be the key areas of work for the CFT. The CFT continues to proactively identify and investigate instances of tenancy fraud. This combined approach has enabled the team to deliver effective loss prevention savings and recover a substantial amount of Council properties. The CFT has also continued to provide assurance to key stakeholders b y undertaking verification checks in a variety of different areas, ensuring the applicants' eligibility for housing services are properly verified prior to being offered a tenancy. This provides assurance to key stakeholders that the risk of fraud in this area is being managed effectively. 3.2.2 During the year the Counter Fraud Management Team worked closely with stakeholders in Housing to improve the counter fraud culture and provide tailored support. Management provided guidance on potential fraudulent cases and interviewed clients in conjunction with housing staff to provide learning opportunities and demonstrate first hand interviewing techniques. This close support from the CFT has given housing staff the tools and confidence to challenge suspected fraudulent applications and work proactively in reducing the fraud risks within temporary accommodation. Though this work has taken place the HCF believes mo re can be done to ensure frontline staff are equipped and able to challenge fraudulent cases from the outset. 3.2.3 As per Chart 4 over the page , most of the counter fraud activity that was conducted within housing is heavily focussed on tenancy fraud investigations which correlates to the increased outcomes in this area. 0 10 20 30 40 50 60 70 80 Q1 Q2 Q3 Q4 External Internal CFT* Average HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 7. Chart 4 - CFT Work Within Housing Services in 2024/25 3.2.4 Per Table 1 below, in 2024/25 the CFT successfully recovered an outstanding 112 Council properties. This is an 8% increase on outcomes from 2023/24 and represents the highest property recovery figure ever achieved by the CFT for the third consecutive year . The increased risk of tenancy fraud from the cost-of-living crisis, combined with the improvement in data matching, and the effective processing of investigations by the CFT has contributed to this success. Table 1 ~ Housing Tenancy Fraud Cases Housing Tenancy Fraud 2024/25 2023/24 2022/23 Cases £k/value* Cases £k/value Cases £k/value Total number of recovered properties 112 £7,840k 103 £5,768k 84 £4,704k *Calculated using the new Tenancy Fraud Forum valuation. 3.2.5 Chart 5 (over the page) summarises the loss prevention outcomes of the team by area of counter fraud activity within Housing. The team’s high levels of property recovery have contributed to the majority of the savings . In addition, the CFT identified and closed 39 emergency accommodation placements saving c£ 745k. With the ongoing success of uncovering fraud within emergency accommodation the CFT will continue to allocate resources into the rolling visiting project for 2025/26. 3.2.6 In 202 4/25 the CFT continued to carry out verifications as part of the housing allocations process. As per Table 2 over the page, 1191 housing cases were processed for verification These enhanced checks give assurance to management that housing applicants are genuine, entitled to be housed prior to allocation and highlight potential fraudulent applications for further investigation. 65% 2% 15% 12% 6% 0% Inv - Tenancy fraud Inv - Right to Buy Inv - B&B Vfs - Allocations Vfs - Right to Buy Vfs - First Time Buyers, Mutual exchange & Tenancy Succession HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 8. Chart 5 - CFT Loss Prevention Outcomes in Housing 2024/25 3.2.7 Of the 1191 housing verifications carried out in 2024/25, the CFT identified 21% for rejection, including the closure of 30 applications. There are various reasons for a verification to be rejected or closed, and these include significant rent or Council Tax arrears, property ownership , no immigration status , or misrepresentation of circumstances . With a high demand for social housing assistance these checks continue to demonstrate their importance, as applicants may have been successful in obtaining a council property that they were not entitled to. Table 2 ~ Housing Tenancy Verification Cases 2024/25 Housing Tenancy Verification Cases Q1 Q2 Q3 Q4 Total Total number of cases reviewed 281 376 286 248 1191 % Identified by CFT for rejection 30% 19% 17% 19% 21% Total number of applications closed 5 6 8 11 30 3.3 Revenues 3.3.1 The CFT carries out inspections of businesses and domestic properties in the borough, Council Tax exemptions and discounts (such as SPD) and data matching work through the National Fraud Initiative (NFI) , as well as maximising revenue through the identification of Beds in Sheds/Annexes. The work of the CFT aims to improve efficiency and increases productivity by applying proven effective visiting processes and investigati ve techniques to maximise revenue. This ensures that Business Rates and Council Tax are correctly applied to all properties, including business premises and new-build properties. 3.3.2 Table 3 over the page, outlines the performance of the Revenues Inspection function against the previous year. Th e CFT has maintained its performance against the KPI, providing an effective and efficient service. The volume of inspections has remained largely stable allowing the team to remain focused in its approach of prioritising income generation through the Revenues Maximisation project. £0 £500,000 £1,000,000 £1,500,000 £2,000,000 £2,500,000 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Prevention of Accommodation Costs Property recovery Other savings/loss prevention HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 9. Table 3 ~ Revenues Inspections Performance 2024/25 Revenues Inspections 2024/25 2023/24 Improvement Total number of inspections completed 6,861 6,829 +32 / + 0.5% Percentage within 10 day target 99% 99% N/A 3.3.3 The CFT continued to proactively identify Beds in Sheds within the borough and a total of 86 unregistered dwellings during the year have been added to the Council Tax list . These previously unlisted properties resulted in loss prevention savings of c£89k through additional council tax billing . The identification of Beds in Sheds will continue to be a priority for the CFT with further work planned for 2025/26. 3.4 Revenue Maximisation 3.4.1 The continued focus on areas of loss prevention within NNDR has proven to be highly successful. The team have maintained its activity in this area identifying unknown businesses for ratings or those businesses that should have an increased RV through its own proactive projects and working with suppliers . This has led to billings being issued to businesses to the value of c£ 1.4m with the Council retaining 15% under the business rates retention model. This area of work highlighted the benefits of utilising data and using investigative practices to support inspections. 3.4.2 With positive financial outcomes across three financial years, the CFT will seek Cabinet Member approval for continued funding in this area for the next 2 years. 3.5 National Fraud Initiative 3.5.1 The National Fraud Initiative (NFI) is a bi -annual data matching exercise overseen by the Cabinet Office. Results from the NFI matching were received at the end of Q3 2024/2 5 with work commencing immediately to review this work stream. 3.5.2 The initial review of the NFI matches has provided significant outcomes in Q4 2024/25, including:  47 Housing register applications being closed where the applicant ’s circumstances had changed, and they no longer qualified for housing support  181 Disabled parking badges being cancelled where the Council had not been notified the badge holder had passed away  29 Resident parking permits being cancelled where the Council had not been notified the permit holder had passed away. 3.5.3 There are four ongoing investigations where the NFI matching has identified suspicion of polygamous working with council employees being linked to multiple authorities. 3.5.4 Work will continue to review the NFI matching during 2025/26 with additional outcomes and savings expected throughout the year. 3.5.5 The NFI also produces an annual review of Council Tax Single Person Discount claims which are matched against Electoral Roll records which identified savings of £108,077.09 during 2024/25. Matches for the new financial year were received during Q4 and are being reviewed. HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 10. 3.5.6 The CFT is recognised as a leading member of the NFI backed London Counter Fraud Hub (LCFH) which aims to proactively identify instances of cross borough fraud and loss and to provide access to regularly updated data from other public sector bodies. 3.5.7 During 2024/25 the LCFH has provided fortnightly data matching between council tenancy records and death registration information. This has identified 33 properties where the council was unaware of the death of the tenant, and which has led to the properties being recovered and returned to use earlier and more efficiently that would otherwise be the case. This has provided a notional financial saving of £2,310,000. 3.6 Blue Badge Fraud 3.6.1 The 2024/25 financial period marked the CFT’s most successful year for supporting disabled motor ist and protecting the blue badge scheme . Working collaboratively with the Metropolitan Police in tackling known hot spot areas and the team’s participation in the National Blue Badge Day of Action , a total 18 offenders were put before the court s with c£7k in fines and costs being issued. 3.6.2 The team’s commitment in ensuring that Blue Badge holders c ould continue to access the parking facilities on offer across the borough was further demonstrated with the launch of the team’s first ever Blue Badge amnesty . This heavily advertised campaign allowed for badges that should not have been in circulation returned to the Council without the fear of repercussions. This innovative approach led to the return of 14 badges and removed the potential for any instances of future misuse occurring. 3.7 Social Care 3.7.1 During the year the CFT have continued to deploy resources to tackle fraud across various areas within Social Care . The team’s approach has been to work proactively and reactively to reduce the Council’s exposure to fraud in areas that pose considerable financial risk. The steps taken have enabled the team to cover vast areas within both adults and children’ social care. 3.7.2 The proactive approach taken by the team within Financial Assessments, has seen over 630 verifications processed in -order to highlight instances where service users have misrepresented their circumstance or failed to disclose information as part of the fin ancial assessment process. In total, 23 cases of suspected fraud have been investigated with these cases achieving c£364k in loss prevention savings . The team have seen year on year improvements in this area with the 2024/25 period marking the team’s most successful year since the process was introduced and a remarkable 130% increase in reported financial outcomes for the same period last year. 3.7.3 Over the course of 2024/25 CF received a number of referrals regarding the Homes for Ukraine Scheme. This government initiative allows individuals and organisations to offer accommodation to Ukrainians fleeing the war in Ukraine. As part of the scheme hosts accommodating those effected by the war are entitled to thank you payments. As a direct result of referrals received, CF identified two instances where overpayments had been made to hosts despite individuals having left the accommodation provided and achieved loss prevention saving of c£1,700. 3.7.4 Working collaboratively with both the Travel Assistance and SEN team, CF conducted its first investigation relating to personal transport budget s following concerns raised th at travel assistance had been provided to an ineligible applican t. Travel assistance is provided to applicants to provide support with meeting school transportation costs . This cross-service investigation identified that travel assistance had been provided when the applicant was not entitled to support, this resulted in c£6k in savings. HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 11. 3.7.5 Utilising the team’s investigative capabilities a number of enquiries to trace debtors on behalf of the Corporate Collections Team were carried out over the 2024/25 period. Whilst these cases don’t have a criminal element they do pose a financial risk to the Council . Deploying counter fraud resources debtor’s whereabouts were established and savings of c£8k achieved. 3.7.6 Chart 6 below, summarises the loss prevention outcomes of the team for the work carried out within Social Care. Over the course of 202 4/25 the CFT has continued to raise its profile within these services and engage positively with stakeholders, which has delivered loss prevention savings of c£380k. The HCF notes that some areas of fraud risk have low outcomes. To address this , proactive project work for 25/26 has been added to the work programme. Chart 6 - CFT Loss Prevention Outcomes in Social Care 2024/25 g 3.8 Onsite Immigration Officer (OSIO) 3.8.1 Chart 7 below, summarises the outcomes for the work of the OSIO within 2024/25. This is based on prudent cost estimates to the Council which are linked to immigration enquires where the OSIO has been able to access Home Office databases and effectively communicated information derived from these to key council service areas. The total value of the OSIO work for 2024/25 is estimated at c£226k. Chart 7 - OSIO Loss Prevention Outcomes 2024/25 £0 £50,000 £100,000 £150,000 £200,000 £250,000 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Section 17 UASC DFG Financial Assessments Direct Payments Other £0 £10,000 £20,000 £30,000 £40,000 £50,000 £60,000 £70,000 £80,000 £90,000 £100,000 £110,000 £120,000 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Social Care Homeless application HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 12. 3.9 Fraud Awareness Campaign 3.9.1 The CFT has continued to embed an effective counter fraud culture within the Council. A total of 9 Fraud Awareness sessions were conducted over the course of the year. Each presentation was tailored to incorporate the different fraud risks encountered by each service area. These sessions give officers the tools to spot and report fraud , whilst encouraging them to champion a counter fraud culture organisation wide. One session was provided to local residents at Oak Farm Library helping to raise awareness of the work of CFT with the wider public and to provide general fraud prevention advice. 3.9.2 The Council s various social media platforms have been utilised by the CFT to raise awareness of the different types of fraud and scams that had become prevalent over the course of the year, as well as fraud risks and team outcomes . Tweets and online posts were shared to encourage residents to report suspected instance s of fraud . Examples of the CFT’s media campaign can be found in Appendix F. There has been a notable correlation between the quality and quantity of referrals following on from the Fraud Awareness campaign. 4. ANALYSIS OF THE COUNTER FRAUD TEAM PERFORMANCE 2024/25 4.1 The CFT introduced a suite of KPIs in 2018/19 which were agreed and implemented in liaison with CMT and the Audit Committee. The KPIs allow effective measurement of performance and enable the team and the HCF to be better held to account by CMT and Audit Committee. The table at Appendix B sets out the performance by the CFT against the KPIs throughout 2024/25 by quarter and previous years. 4.2 As illustrated in Appendix B, performance against KPIs has remained consistent throughout the financial year . The team has also achieved 9 of the 9 KPI targets which is a considerable achievemen t. The team’s overall performance can be attributed to the management information available and t he management team’s engagement with staff around performance. 4.3 The table at Appendix A provides a detailed breakdown of the loss prevention performance of the Counter Fraud Team during 2024/25. The table highlights the increase in Housing outcomes mainly around property recovery. 4.4 During 2024/25 the CFT has actively sought to obtain data from each London Borough relating to counter fraud activity and produced benchmarking i nformation which is set out at Appendix D. This data relates to reported figures in counter fraud annual reports to oversight committees for 2023/24. There is a significant inconsistency between authorities in terms of what they each report to their oversight committees and the variation in values they each place on individual activities. As a result, this makes comparison between authorities in terms of individual counter fraud work areas difficult to quantify. 4.5 Nevertheless, there are several areas of general commonality (as set out in Appendix D), including the performance on housing fraud and Blue B adge which are present across most London Boroughs. 5. FORWARD LOOK 2025/26 5.1 Looking ahead to 2025/26, the CFT as part of the Council's Counter Fraud Strategy 2025-28 will continue to develop its risk-based approach, focusing on the areas of highest fraud risk within services. Key to this is the continued engagement with service areas on fraud risk and controls to support and un derpin the Council’s “Fraud Universe” which steers the CFT Annual Operational Work Plan. 5.2 Moving ahead, there are a number of key priorities for the CFT. These include: HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 13.  Implementation of the Counter Fraud Annual Operational Work Plan 2025/26, with a full and ongoing reassessment of the fraud risk profile of the Council to ensure the CFT adapts to any emerging risks;  To continue to embed a counter fraud culture across the Council through a successful programme of Fraud Awareness , alongside engagement with key stakeholders regarding fraud issues internally and externally;  Review and improve all processes to ensure the team is efficien t, effective and modernised through technology and digitalisation. This improve ment programme started at the end of 24/25 with the aim of removing paper from all counter fraud activity.  Maintain performance with suppliers to identify businesses that are not listed for ratings through our Revenues Maximisation Project, to increase the NNDR collectable by the Council, using open-source data and intelligence gathering;  Sustain the level of performance the team achieved in the last 3 years into 25/26 , by focusing on our strategic objectives , KPIs and the financial loss prevention target by deploying a risk based approach to fraud;  Continue to work closely with Housing key stakeholders around the increased risk of fraud, with the view to conduct further proactive and reactive counter fraud activity in this area; and  Increase reach and activity across Social Care to support the protection of budgets through reactive and proactive activity. 5.3 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 , CMT and the Audit Committee during 2024/25. Alex Brown APCIP Head of Counter Fraud 1st April 2025 HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 14. APPENDIX A: CFT Loss Prevention Performance 2024/25 * Average weekly cost against average length of support. This figure fluctuates but has been provided by the Council's Business Performance Team. ** NNDR operates under a business rates retention model with the Council keeping 15% of income. 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 £1,540,000 £7,840,000 Other savings/loss prevention £172,171 £272,844 £173,054 £153,922 £771,992 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 £429 £16,135 Revenues Single Person Discount £22,527 £40,497 £16,120 £44,786 £123,931 Council Tax Reduction & arrears £4,551 £4,027 £15,772 £6,131 £30,482 Unlisted Buildings £31,758 £21,817 £25,256 £10,291 £89,123 Housing Benefit Overpayments £12,750 £18,648 £17,831 £16,065 £65,294 NNDR** £784,844 £4,492 £267,514 £320,284 £1,377,134 Blue Badge Simple Caution & Financial Penalty £2,512 £2,258 £731 £1,900 £7,401 Immigration Officer Housing Homelessness Applications* £0 £0 £0 £0 £0 Social Care Savings £108,480 £79,514 £14,560 £23,851 £226,405 Totals Loss Prevention Savings £360,196 £560,351 £273,241 £177,028 £1,370,817 Notional Savings £2,779,867 £2,262,466 £2,205,218 £1,828,306 £9,075,858 Cashable Savings £176,892 £72,551 £98,490 £110,425 £458,358 Costs awarded and penalties £2,512 £2,258 £731 £1,900 £7,401 Total £3,319,467 £2,897,626 £2,577,681 £2,117,659 £10,912,434 HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 15. APPENDIX B: KPIs and Actual Performance 2024/25 CFT KPIs Target Q1 Q2 Q3 Q4 24/25 23/24 1. Percentage of fraud referrals risk assessed within 3 working days 95% 100% 99% 100% 99% 99% 99% 2. Verification work timescales for completion: a. Housing Allocations completion within the target date set by Housing 95% 100% 100% 100% 98% 99% 99% b. Right to Buy case completion within 28 working days 95% 100% 96% 100% 100% 98% 100% c. Financial Assessments completion within 7 working days 95% 100% 100% 100% 100% 100% 100% d. Section 17 reviews completion within 7 working days 95% 100% 100% 100% 100% 100% 100% 3. Investigation plan completion within 5 working days of case allocation 95% 100% 100% 100% 99% 99% 98% 4. Tenancy fraud referrals received resulting in property recovery 30% 64% 67% 82% 59% 67% 46% 5. Investigations resulting in loss prevention/financial saving outcome 40% 47% 45% 50% 34% 43% 48% 6. Revenue inspections completed within 10 working days of referral date 95% 99% 99% 99% 99% 99% 99% HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 16. APPENDIX C: Proactive Counter Fraud Projects 2024/25 Proactive Project & Rationale Project Outcomes Gas & Electrical Checks Access - Q1 Working collaboratively with internal departments, the CFT conducted unannounced visits to all social housing properties that were overdue a gas safety or electrical safety check for 12 months or longer. The purpose of this project was to reduce the number of properties that were overdue these inspections, whilst also identifying potential cases of non - occupation or subletting  Number of properties visited - 165  Properties Recovered - 8  Investigations continuing - 3  Financial Savings - £448,000 Blue Badge Q1, Q2, Q3 The CFT conducted a total of six proactive Blue Badge operations in identified high risk area s and 1 Blue Badge amnesty. Checks were carried out on all badges that were displayed to ensure that the badges were being used in accordance with the Blue Badge scheme . The operations included seizing expired badges, which removes them from circulation and prevents potential misuse in the future.  Number of badges checked - 231  Number of badges seized - 28  Number of fraudulent uses of badges – 12  Number of investigations continuing - 6  Total value of fines - £1,018  Total value of awarded prosecution costs - £3,871 Beds in Sheds – Q1 and ongoing 'Beds in Sheds' is the term used to describe buildings or annexes on private properties that have been erected without the Valuation Office being made aware and that can be considered habitable. This means that the building o r annexe should be charged Council Tax. The CFT carried out unannounced visits to properties that were highlighted via referrals and intelligence checks.  Number identified for bringing into Council Tax - 86  Investigations continuing - 5  Income generation - £89,123.11 Temporary Accommodation Residency – Q3 The CFT carried out unannounced residency checks on all service users residing in Temporary Accommodation properties. The purpose of the project was to identify any sub - letting of accommodation, instances of non - occupation, as well as verifying those that had applied for social housing and ensuring that they were still eligible.  Number of properties visited - 225  Properties Recovered - 3  Investigations continuing - 8  Financial Savings - £176,412.25 National Fraud Initiative (NFI) - Ongoing The National Fraud Initiative (NFI) main exercise is a bi-annual data match against numerous public and private sector data sources. The National Fraud Initiative (NFI) Recheck is an annual data match where SPD data is matched against the Electoral Roll.  £108,077.09 Savings from Single Person Discount matching HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 17. London Counter Fraud Hub - Ongoing The London Counter Fraud Hub is designed to bring London Boroughs together, sharing data to identif y cases of fraud, loss or error. The first in house data matching exercise using the LCFH, matched tenancy records against the death register. This highlights any properties that the Council are unaware that the tenant has passed away.  Number of properties returned - 33  Financial Savings - £2,310,000 Internal Revenues Maximisation - Ongoing The Revenues Investigation Unit have carried out a series of pro-active action days monitoring and reviewing business rates listings in high -risk areas which has identified new and improved premises to increase business rates billing.  Additional business rates billing - £450,871.54 Council Tax Exemptions – Ongoing The CFT carried out desk top checks of Class E & F exemptions utilising data matching and in-house data. This highlighted any properties that the Council were unaware that the tenant ha d passed away or was residing elsewhere due to care needs.  Number of properties returned - 16  Financial Savings - £1,120,000 HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 18. APPENDIX D: Counter Fraud Benchmarking 2023/24 London Borough Council Properties Returned RTB Cancelled Housing Applications Closed Council Tax & CTRS Blue Badge Outcomes* Social Care Barking & Dagenham 9 Barnet 41 12 6 £39,836 69 Bexley 27 36 Brent 15 1 £1,129,121 38 Bromley £14,126 78 Camden 52 10 62 City of London 14 2 3 £13,218 Croydon 26 Ealing 13 119 £53,989 £254,000 Enfield 14 1 5 £2,098 Greenwich 9 2 Hackney 37 4 2 61 Hammersmith & Fulham 18 22 13 £167,828 Haringey 53 111 Harrow 8 3 2 £43,003 Havering 14 3 1 Hillingdon 103 3 29 £123,971 3 £313,864 Hounslow 14 1 9 £38,257 Islington 47 2 6 9 Kensington & Chelsea 50 26 20 Kingston 8 12 32 Lambeth 78 5 £26,179 126 Lewisham Merton 5 4 £8,206 Newham 32 8 3 Redbridge 7 1 Richmond 5 42 Southwark 14 3 12 Sutton 6 7 1 £15,510 Tower Hamlets 48 9 Waltham Forest 47 7 7 £712,707 8 Wandsworth 36 14 17 Westminster (City of) 38 3 18 2 Where the cell is greyed out, the data was not available to us from the council in question. * = Successful outcomes for Blue Badges are defined as fines and/or prosecutions but excludes seized badges. HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 19. APPENDIX E: Glossary of Terms Beds in Sheds 'Beds in Sheds' is the term used to describe habitable outbuildings, or annexes to private properties being utilised without the awareness of the Council or the Valuation Office Agency (VOA). Blue Badge A Blue Badge provides parking concessions and helps people with non-visible and visible disabilities or health conditions park closer to their destination. The Blue Badge enables holders to park in designated disabled person’s parking bays either on the public highway or privately owned car parks. In addition, badge holders can park on single or double yellow lines for up to 3 hours. Direct Payments The Council are responsible for administering direct payments to service users who have been assessed as needing care and support services. The payments are made to allow applicants to access care to meet their social care needs, such as support with living tasks and social activities. Disabled Facility Grant The council offers a range of financi al 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 (LCFH) Utilising the existing Cabinet Office infrastructure and systems, most London based local authorities have agreed to upload internally held data sets for proactive data matching exercises. These regularly agreed upon exercises will lead to the identification 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. HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 20. Revenues Maximisation The use of internally held d ata 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 it s Rateable Value (RV). Commercial entities are under no obligation to inform Council Tax as to when they have started trading or if their RV needs to be recalculated. The Council will only retain 15% of the identified rates. Section 17 The CFT provides a ssurance and mitigate s 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 Busi ness 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. 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. HILLINGDON COUNCIL COUNTER FRAUD ANNUAL REPORT 2024/25 Counter Fraud Annual Report 21. APPENDIX F: Social Media Campaigns

Audit Committee – 14 May 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 28 August 2025 will start at 17:10. Meetings Room 28 August 2025 TBC 18 November 2025 TBC 10 February 2026 TBC 28 May 2026 TBC

WORK PROGRAMME Audit Committee 2025 2026 Meeting Month Feb Mar May Aug Nov Feb May Meeting Date 11 18 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) Corp. Dir. of Finance (RE) Head of Counter Fraud EY Head of Internal Audit TBC Head of Counter Fraud Appointment of Chair X Appointment of Vice-Chair X Interviews for Independent Chair of the Audit Committee External Audit item X X X X X X Audit Committee Annual Report 24/25 Risk Management Annual Report X Risk Management Report 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 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 Strategy X Internal Audit Progress Report 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 Q3 25/26 Q1 25/26 Q2 25/26 Q3 Counter Fraud Strategy 2025-2028 X IA Assurance Review of Contract Management Oversight X REQUEST BY CTTEE: Transformation, Digital & Technology Risk Management X X Work Programme X X X X X X 2025/2026