Audit Committee

Minutes AUDIT COMMITTEE 18 November 2025 Meeting held at Committee Room 5 – Civic Centre, High Street, Uxbridge, UB8 1UW Committee Members Present: Councillor Nick Denys (Vice-Chair, in the Chair), Councillor Henry Higgins, Councillor Douglas Mills, and Councillor Tony Burles, Officers Present: Claire Baker – Head of Internal Audit and Risk Assurance, Alex Brown – Head of Counter Fraud Andy Goodwin – Head of Strategic Finance & Deputy Section 151 Officer Steve Muldoon – Corporate Director of Finance Andrew Macleod – Chief Accountant Pete Carpenter – Director – Pensions, Treasury & Statutory Accounts Tony Zaman – Chief Executive Officer Matthew Wallbridge – Chief Operating Officer Daniel Toohey – Head of Legal Services Ryan Dell – Democratic Services Officer Also Present: Stephen Reid, Ernst & Young Mark Rutter, Ernst & Young Councillors Present: Councillor Stuart Mathers, Leader of the Labour Group Councillor Sital Punja, Deputy Leader of the Labour Group 32. APOLOGIES FOR ABSENCE (Agenda Item 1) Apologies had been received from John Chesshire and Councillor June Nelson. It was noted that the Cabinet Member for Finance & Transformation had also given his apologies. 33. DECLARATIONS OF INTEREST (Agenda Item 2) None. 34. TO CONFIRM THAT ALL ITEMS MARKED IN PART I WILL BE CONSIDERED IN PUBLIC AND THAT ANY ITEMS MARKED PART II WILL BE CONSIDERED IN PRIVATE (Agenda Item 3) 35. MINUTES OF THE MEETING HELD ON 24 JULY 2025 (Agenda Item 4) Members referenced the Committee ’s previous request for a breakdown of prior year accounting adjustments, to which a response had been circulated to Members yesterday. Members noted that the response did not fully address the original query. Members highlighted an example relating to the writing out of overdrawn reserves, noting that variances in the General Fund activities exceeding earmarked reserves had been discovered in 2022/23 and 2023/24 and as this was not permitted under accounting standards, required adjustment. Members sought clarification on the year in which these issues had occurred; who the auditors were at that time; whether the auditors had missed this or had deemed it immaterial; and the financial consequences of not addressing these matters in the relevant year, including any additional costs incurred. Officers would provide a response outside of the meeting. EY confirmed they had reviewed the adjustments and shared the audit perspective:  The negative reserve adjustment had occurred in 2022/23 and 2023/24, both years where the audit opinion had been disclaimed. Audit procedures were therefore not completed over reserve balances.  The second adjustment related to the bad debt provision. This was noted in the 2023/24 audit results report, which had raised a control recommendation for the Council to look at bad debt provision.  The third adjustment concerned Minimum Revenue Provision (MRP), which dated back several years. Assurance ha d been drawn from opening balances, and due to its immaterial value and sampling approach, it was unlikely to be detected in sampling. Further clarification was provided that the bad debt provision related to the current year (2024/25), although based on an aged debt profile. The Chair noted that responses to these questions should be provided by the end of January to allow consideration before the next Audit Committee in February 2026. Members queried the accuracy of dates on page 4 and requested clarification by email. No further comments were raised, and the minutes of the previous meeting were agreed. RESOLVED: That the minutes of the previous meeting be agreed as a correct record 36. UPDATE ON THE GRIP (Agenda Item 5a) Officers presented an update on the Governance Review Improvement Plan (GRIP), which brought together strands of governance and financial improvement arising from internal and external audit recommendations. Workstream 1 – Financial Governance A wide range of actions and initiatives had commenced since the previous meeting, and all Section 24 recommendations were now incorporated. New spend control measures were being introduced, and the Council was undertaking a robust process for setting the 2 026/27 budget, including a thorough review of proposals for savings and growth. Officers had conducted extensive reviews of the financial position, savings, growth models, and key accounting procedures. Although the financial position had deteriorated, officers reported improved clarity regarding the Council ’s current situation and future direction. Discussions with MHCLG regarding Exceptional Financial Support (EFS) were ongoing. Additional work had been undertaken on cash flow modelling, capital programme review, and improvements to the audit position for 2024/25. Progress had also been made on reducing the in -year Dedicated Schools Grant (DSG) deficit. Workstream 2 – Directorate Governance Progress in directorate governance during the second and third q uarters had included the rollout of an aligned business and financial planning template across the organisation, with all plans approved by Corporate Directors. Internal audit exercises were underway to review these plans. A corporate tracker had been established to record business decisions and governance arrangements. The Corporate Management Team reviewed workforce, performance, finance, risk management, and projects monthly, with similar processes mirrored at other management levels. Senior managers par ticipated in regular meetings and governance training, including a masterclass session. The governance structure had been refined to reflect best practice and internal and external audit recommendations, with boards such as the Capital Board and Workforce Improvement Group reporting to the Corporate Management Team and the Chief Executive. Workstream 3 – Constitutional Governance Members were updated on the independent review of the Council’s Constitution and wider governance, commissioned from Lawyers in Local Government (LLG). An initial draft report had been received and was under review, with a meeting scheduled to discuss its constructive suggestions. Any proposed constitutional changes would be brought to Council for decision, and Members would be kept informed. Members asked about optimism bias in budget setting. Officers explained that multiple levels of review had been implemented to ensure proposals were substantiated, with robust templates and iterative challenge processes involving both officers and Cabinet Members. Monthly monitoring via an app had been established, requiring senior managers to report on savings progress, with sign -off and challenge at Director and management team levels. Growth models were also being reviewed. This ensured a more robust process than had been in place previously. All working papers had been documented to provide evidence of delivery and address risks or delays. Officers acknowledged that while predictions may not always be accurate, the process for making them w as now much more robust than in previous years. Members asked about clarity on the financial position and when there would be an optimum level of clarity. Officers noted that significant work had been undertaken to improve clarity, with ongoing monitorin g and reporting. While risks and opportunities remained, the Council was now better positioned to avoid major financial swings and to address weaknesses. Members asked about issues identified by the LGA Challenge Session. Officers noted that the session included representation from the LGA and had focused on ensuring senior management understood the consequences of the Council ’s financial position and the conditions attached to EFS. The session was described as a round -table discussion rather than a formal challenge, aimed at clarifying support options and lessons learned. Members asked for the definition of essential spend. Officers clarified that essential spend was distinct from statutory spend. While some expenditures were legally required such as when committed to contracts, others were determined by Council policy. Spend control measures aimed to honour contractual and statutory obligations, with other elements subject to policy decisions. Members queried if the Council’s high ratings in children’s services, adult services and housing provision would influence EFS negotiations. Officers responded that EFS would ensure that there was the necessary revenue to cover expenditure this financial year. While the high ratings were positive, discussions with MHCLG remained focused on financial governance and management. Assurance would be required regarding the Council’s direction and robustness in addressing financial challenges. Members asked about contingency for slippage in savings. Officers confirmed that the latest monitoring report had released in full the available contingency for all potential risks the Council could face. Future budgets would re -establish a contingency to mitigate against risks and unforeseen issues. When asked about overuse of the term ‘robust’, officers clarified that there was a requirement called the robustness of estimates which required use of the term robust. RESOLVED: That the update to the Governance Review Improvement Plan was noted and the Committee sought clarifications and assurances 37. UPDATE ON THE FMP (PRESENTATION) (Agenda Item 5b) Officers showed a presentation on the Finance Modernisation Progr amme (FMP), explaining that the programme had been initiated to improve accounting & control, budget monitoring, Oracle EPM (planning and budgeting tool) and Oracle ERP (main Oracle system). Progress had been made across the four key areas, with significan t changes implemented and further improvements planned for the next phase. Officers reported that the benefits of the programme would be realised by budget holders, the finance function, and the audit process. For budget holders, the changes would affect how they interacted with financial systems and would be supported by targeted training. The finance team expected reduced friction and improved reliability and clarity of financial data, enabling better analysis and forecasting. The audit process would benefit from enhanced transparency and higher quality working papers. Budget submission templates for capital projects for the budget year for 2026/27 had been introduced to enhance consistency. Next steps included a refresh of Oracle EPM and addressing th e backlog of finance system issues. Members noted that progress had been made, and asked what challenges and risks remained. Officers acknowledged that fixing the system required specialist support, which had been secured. Officers also emphasised the importance of user engagement and training to ensure budget holders understood their responsibilities and could provide robust forecasts. Governance arrangements around the FMP and Oracle systems had been strengthened, with regular monitoring and risk management in place. Members noted the need for more information regarding threats and barriers to success and requested more information on the struggles encountered and how these were being overcome. Officers noted that future reports could provide a clearer analysis of strengths, weaknesses, opportunities, and threats. It was suggested that Grant Thornton could present to the Committee to offer further insight. This would be discussed with the Chair. Officers confirmed that Phase One had concluded and that contracting for Phase Two was underway, with a report due to go to Cabinet. It was noted that not all objectives from Phase One had been met, with some deliverables carried forward to Phase Two. Members requested clarification on the reasons for these shortfalls, the impact on costs and timelines, and the measures in place to ensure successful delivery by March. Officers noted that it was a yearly programme in order to have everything delivered by the end of the budget year. The work was reviewed regularly and changes were made as necessary. Members referred to the budget monitoring reports scheduled for each Select Committee and noted that the Health & Social Care Select Committee had not received one in November. It was clarified that this had been a decision of the Chair of that Committee, as they would be holding an additional meeting in December. Questions were asked about the clarity of budget lines and the pace of improvements. Members highlighted the importance of accurate information for decision -making and scrutiny, and sought assurances that issues such as blurred budget lines would be resolved promptly. Officers explained that improvements in transparency and reporting were ongoing. Questions were asked about reporting to Full Council. Officers outlined the Constitutional arrangements of reporting to Full Council or to Committees. The Audit Committee was considering matters within its Terms of Reference. The budget approval process ended with referral to Full Council. RESOLVED: That the update to the FMP was noted and the Committee sought clarifications and assurances 38. SUMMARY OF RESPONSES TO STAFF SURVEY (Agenda Item 6) Officers showed a presentation on the results of the 2025 staff survey. The survey had been conducted throughout June and was open to all permanent staff, agency and casual workers, and part -time employees, but excluded school staff. The survey was primarily completed online, with paper copies provided for staff without regular access to digital devices, such as those working in waste services. Officers reported an 8% increase in response rate compared to the previous year, with good representation across most Council directorates. The results showed positive improvements, with all but one question demonstrating significant progress since 2024. Engagement levels had risen notably in several directorates. Key findings included:  95% of staff understood how their role contributed to the Council’s objectives, a 14% improvement and significantly above external benchmarks.  94% of staff felt clear about what was expected of them, an 11% increase and also above external benchmarks.  93% of staff felt treated with dignity and respect, 10% higher than the external benchmark. Officers highlighted that there had been an 8% increase in staff confidence that action would be taken as a result of the survey. Improvements were noted across almost all demographic groups, with a 63% overall response rate. Survey data was broken down by directorate and team, enabling tailored action plans at both Council -wide and team levels. The six main areas assessed – engagement, enabled, connected, safe, supported, and action – were all above external benchmarks and had improved since the previous year. Officers acknowledged some areas for further improvement but noted that even these areas had improved and were close to external benchmarks. Action plans had been agreed by the Corporate Management Team (CMT) and communicated to staff. Initiatives included improved staff communications, regular engagement sessions, enhanced technology and work environments, and a focus on inclusion and wellbeing. Managers were being equipped to support staff mental health, and efforts were underway to reduce sickness absence. Members highlighted the importance of staff feeling valued, noting that only 55% of respondents felt valued by the Council. Members expressed a desire to see improvement in this area, recognising the hard work and dedication of Council staff. Members asked about a previous survey by CIPFA which had highlighted low morale in the finance team. Officers explained that while the presentation did not show specific scores for the finance team, they could provide a summary of those results separately. The Committee acknowledged the positive progress reflected in the staff survey results. RESOLVED: That the Audit Committee noted the results of the staff survey 39. EXTERNAL AUDIT UPDATE ON ACCOUNTS (Agenda Item 7) Officers presented the external audit update on accounts. In 2023/24, there had been 216 disclaimed audits, which represented 46% of all Councils in England. Only six audits had been completed for 2024/25 out of approximately 400 councils by the end of Se ptember. The low completion rate was attributed to the extensive work required to rebuild financial processes following previous disclaimed opinions. It was noted that, given the Council ’s two consecutive disclaimed opinions, it was likely that it would take another two years to achieve a clean audit opinion, which was consistent with the national situation. The Council’s accounts had been submitted on 22 September. The public inspection period had taken place, during which four detailed sets of queries ha d been received from the public, including two face -to-face meetings. Officers were working through these queries. Government guidance had been received during the process, but it had arrived too late to influence the current audit. The majority of the audit had been focused on transactions within the year, rather than opening and closing balances. The volume and nature of queries had changed week by week, and officers were actively working with external auditors to address them. All external audit items and samples needed to be completed before Christmas to allow EY to complete their governance processes after the holiday period. Officers emphasised the importance of improving the audit results report, which covered 36 to 38 areas reviewed by external aud itors. In the previous year, 20 areas were rated red, 10 yellow, and six green. The aim was to increase the number of positive ratings in the current audit. Looking ahead, officers had begun preparations for the next year’s accounts, including a ‘soft clos e’ at the end of September, with the goal of reducing queries and ensuring a smoother closure process. EY reported that audit testing had been underway for five to six weeks. The quality of working papers and supporting documentation had improved compared to the previous year. While some minor delays had occurred, these were being managed and were not expected to impact overall delivery. No significant findings had emerged so far, and only minor differences were being addressed with management. Nothing ma terial to the financial statements had been identified at this stage. The next Audit Committee meeting was scheduled for February 2026, at which the audit results report would be presented, summarising key findings, audit differences, and control recomme ndations. The National Audit Office required all local government auditors to issue an annual report, even if the audit was incomplete, by the end of November. A draft auditors’ annual report was with officers for factual accuracy checks, with the intention to issue it before 30 November. Members asked whether sufficient immediate action had been taken to comply with recommendations issued in July under Section 24, specifically regarding the Council ’s understanding of its current financial position and the need to prevent further depletion of reserves. EY noted that work was ongoing and that their view would be reflected in the forthcoming report, which was being finalised before the end of the month. When asked how any additional government grants would be managed within the accounts, officers explained that the audit covered the accounts and a number of grant statements, some of which were also reviewed by internal audit. When new grants arose, appropriate audit arrangements were made, including securing new external auditors for housing benefit where necessary. Councillors asked for clarification on the circumstances under which external auditors may issue further statutory notices such as section 26, 27 and 28 of the Local Audit and Accountability Act 2014, and what these notices meant in practice. EY explained that they had a range of powers under the National Audit Office ’s Code of Audit Practice, including issuing recommendations, applying to a court for a declaration of unlawful action, and issuing public interest reports. Some powers had never been used. The previous recommendations had been issued in July, and the Council should be given time to respond. The forthcoming report would provide an update on the Council ’s arrangements up to 31 March 202 5 as it would cover the 2024/25 financial year. EY would report on the Council's arrangements during 2025/26 as part of their 2025/26 audit, which would start as soon as the 2024/25 audit was finished. RESOLVED: That the Audit Committee noted the progress on the audit of the 2024/25 Accounts and the work being undertaken to cover previous years ’ External Audit recommendations 40. SESSION WITH THE CABINET MEMBER (Agenda Item 8) It was noted that the Cabinet Member had given his apologies. RESOLVED: That this item was removed from the agenda 41. AUDIT COMMITTEE ANNUAL REPORT (Agenda Item 9) Members were reminded that this report had been considered at the previous Audit Committee, at which it had been decided that Members wished to make amendments. Amendments had now been made, and the report was brought back to the Committee for approval. Members approved the report. RESOLVED: That the Audit Committee approved the Draft Audit Committee Annual Report for 2024/25 before the report is presented to Council. 42. RISK MANAGEMENT REPORTS (Agenda Item 10) The Committee considered the risk management and strategic risk reports. It was noted that, following the previous meeting, the timing of these reports had been changed, resulting in more up -to-date reporting. The data for the current report was taken from 03 November. Members commended officers for their report. Members asked for further information on the EDUSEN0006 risk, which related to school safeguarding. Officers would provide an update outside the meeting. Relating to the HLBC0006 risk, Members noted that the deficit on the general fund had increased by £5.8 million in month 6, according to the Cabinet report, and that the potential need for Exceptional Financial Support (EFS) could approach £80 million. The Chair recognised that the risk had been highlighted but did not expect officers to respond. Councillors asked why the risk rating for HLBC0006 had changed from A1 to C1. Officers explained that there were two different risks: the strategic, cross -cutting risk (owned by the Corporate Management Team and currently rated C1), a nd a separate short-term operational financial risk rated A1. The strategic risk rating reflected the wider work being undertaken to address the Council ’s financial position, including actions related to EFS. Officers also confirmed that significant work w as ongoing to resolve the situation, including discussions with the MHCLG. Officers would provide a written response. RESOLVED: That the Audit Committee noted the reports and level of assurance received. 43. INTERNAL AUDIT PROGRESS REPORT (Agenda Item 11) Officers introduced the Internal Audit Progress Report. Members queried how vacancies within the Green Spaces service had led to internal control issues, asking which controls were affected and what level of debt was at risk. Officers advised that th e Green Spaces audit had identified significant organisational changes at senior management level, including a new Director for Environment and new Heads of Service. These changes had resulted in delays to processes such as budget setting and the savings p rogramme, which had been left to more junior and operational staff during the transition. This was a known area of risk and was targeted for review by Internal Audit. A clear action plan had been agreed with the service, and monthly monitoring meetings wer e now in place with Internal Audit attendance to ensure actions are implemented and risks addressed. Members asked whether the draft directorate business and financial plans would be shared with the Committee. Officers confirmed that draft plans were not shared, though the finalised version would be presented at the next meeting. RESOLVED: That the Audit Committee note d the IA Progress since the last Committee meeting 44. COUNTER FRAUD PROGRESS REPORT (Agenda Item 12) Members commended officers for their work. RESOLVED: That the Audit Committee noted the Counter Fraud Progress Report for 2025/26 Quarter 2 45. WORK PROGRAMME (Agenda Item 13) Members considered the work programme. RESOLVED: That the Audit Committee noted the dates for Audit Committee meetings The meeting, which commenced at 5.10 pm, closed at 6.55 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 filmed 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 – 10 February 2026 Part I – Public FINAL 2024/25 STATEMENT OF ACCOUNTS Committee name Audit Committee Officer reporting Pete Carpenter , Director of Pensions, Treasury and Statutory Accounts Papers with report For the London Borough of Hillingdon Appendix 1 – 2024/25 Final Statement of Accounts Appendix 2 – 2024/25 Draft Auditor’s Annual Report Appendix 3 – 2024/25 Audit Results Report For the Hillingdon Pension Fund Appendix 4 – 2024/25 Final Statement of Accounts Appendix 5 – 2024/25 Audit Results Report (TO FOLLOW) Ward All HEADLINES This report provides the final 2024/25 Statement of Accounts for the London Borough of Hillingdon and the separate final 2024/25 Statement of Accounts for the Hillingdon Pension Fund. RECOMMENDATIONS: That the Audit Committee: 1. Note the final position regarding the Statement of Accounts , Draft Auditors Annual Report, and Audit Results Report 2024/25 for the London Borough of Hillingdon for ratification and delegate f inal sign -off to the Corporate Director of Finance, in consultation with the Chair who will sign off the accounts on behalf of the Audit Committee, following approval of the Council’s EFS application; and 2. Note the final position regarding the Statement of Accounts , Auditors Annual Report, and Audit Results Report 2024/25 for the Hillingdon Pension Fund for ratification. SUPPORTING INFORMATION The Ministry of Housing, Communities and Local Government has announced measures to tackle the backlog of local government audits and have set out backstop dates for the publication of audited accounts. These are as follows: 2024/25: 27 February 2026 2025/26: 31 January 2027 2026/27: 30 November 2027 2027/28: 30 November 2028 The present position on audits across England as at the 31st December 2025 as reported by Public Sector Audit Appointments (PSAA) is that of the 457 “opted in” bodies (excluding Pension Audit Committee – 10 February 2026 Part I – Public Funds), only 101 Audits had been completed. A total of 216 disclaimed audit opinions were 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. It should be noted that as at the 31st December 2025 that there were still: 21 2023/24 Audits outstanding 7 2022/23 Audits outstanding 5 2021/22 Audits outstanding 5 2020/21 Audits outstanding 3 2019/20 Audits outstanding Advice is that due to the number of years of “Disclaimer Opinions” the Council has, and the lack of assurance obtained from audit procedures , there will be at least 2 further years of disclaimer opinions before the Council can return to fully “clean” opinions. Draft Final Accounts 2024/25 – London Borough of Hillingdon The Council published its draft Statement of Accounts for the year ended 31st March 2025 on 22nd September 2025. The Public Inspection period started on the 23rd September 2025 and ran to the 3rd November 2025. The 2024/25 Audit has not looked to rebuild the Council ’s position following two years of “Disclaimer Audits”. It has been a transaction-based audit to provide assurance on what happened during the 2024 /25 financial year and the balance sheet balances as at 31 st March 2025. External Auditors Ernst & Young (EY) did receive an updated auditing framework for 2024/25 from the Government which set out how they need to proceed in “rebuilding the Council’s position when they have Disclaimer Opinions”. However, this was received too late in the summer to reasonably be considered and then built into their audit approach for the current cycle. The audit process has now been completed , and the final accounts are provided in Appendix 1 for noting. The major changes to the accounts sin ce the draft accounts were submitted have been: 1) The removal of a £2m interim dividend announced by Hillingdon First as this was not received in the 2024/25 financial year. 2) A correction to the revenue position of £1.278m in relation to timing differences on Housing Benefit repayments. 3) Updates to the Going Concern note and the Annual Governance Statement to reflect the receipt of the S ection 24 Statement and associated recommendations, and the latest position with regard to the Council’s Exceptional Financial Support (EFS) application. 4) Reversal of the prior year adjustments Usually, these corrections would have been made against the General Fund balance but given its present balance they have been addressed by reviewing the Council’s earmarked reserves to offset the net £3.3m adjustment. These changes will be formally approved by Cabinet as part of a final 2024/25 update to be set out in the P9 2025/26 Monitoring Report. The prior year adjustments that had been reported in the draft accounts have been reversed as they fell below the required materiality level as well as a number of format/presentational changes Audit Committee – 10 February 2026 Part I – Public which have not impacted the final position for the Council. For final sign-off of the accounts, the External Auditors will require evidence that the Council’s application for EFS has been approved, and narrative in the statements will need to be updated to report the approved amount(s) . As such, it is requested that approval is delegated to the Committee Chair and the Corporate Director of Finance to sign off the final accounts once this information has been included, which is expected to be before the 27th February “backstop” date. The Final Auditor’s Annual Report will be issued at this time. Draft Auditors Annual Report – London Borough of Hillingdon The External Auditors Ernst & Young (EY) delivered their draft Auditor’s Annual Report on the 27th November 2025 – which was before the 30th November statutory deadline but after the 18 th November meeting due to the process of reaching final agreement on the content. This draft report (Appendix 2 ) builds upon the issues set out in the “Issuance of Recommendations Under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014” report which was discussed by this Committee in August 2025. This draft report sets out that there are four matters to report by exception on the Council’s value for money arrangements, relating to significant weaknesses in the Council’s arrangements in respect of:  Financial sustainability;  The quality of Council information;  The capacity of the Council’s finance team; and  The implementation of Oracle Fusion and Oracle EPM. In the August 2025 Report, the External Auditors issued 7 recommendations under Section 24 Schedule 7(2) of the Local Audit and Accountability Act (‘statutory recommendations’) to the Council. These concerned three of the four significant weaknesses in the Council’s arrangements highlighted in the draft 2024/25 Auditor’s Report The significant weakness in arrangements not covered in that report how the implementation of Oracle Fusion and Oracle EPM for which audit work was ongoing at the time the recommendations were issued. The draft audit opinion is a disclaimer opinion due to full assurance not being met at that stage over all the 2024/25 in year movements, combined with the issues highlighted in previous years’ comparative and opening balances. It should be noted that the Auditors agreed with the Council a management-imposed limitation of scope to the Council’s audit to exclude the valuations of the Council’s land and building assets from their work on the closing balance sheet for 2024/25. This was to allow the audit and finance team’s effort to be focused on those areas where it is more difficult to rebuild assurance, and hence those areas which will ultimately be of most benefit in supporting future audit opinions. The Value for Money commentary has been based on the work performed. The External Auditors have identified a number of weaknesses that they have reported by exception in relation to the Council’s financial sustainability and governance. The Value for Money recommendations are: 1. They recommend that the Council ensures it has detailed implementation plans supporting all of the planned savings included within its 2025/26 budget and future medium -term financial strategy, and identifies and develops implementation plans for further saving s which can be Audit Committee – 10 February 2026 Part I – Public pursued should additional budgetary pressures emerge or the Council fails to achieve all of its currently planned savings. 2. They recommend that the Council 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 Council should develop detailed plans for implementation of service delivery transformation and how the up-front transformation costs will be funded. 3. They recommend that the Council should balance its schools budget to prevent further growth in its Dedicated Schools Grant (DSG) deficit. In the absence of confirmed alternative arrangements, the Council should als o 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 2028. 4. They recommend that the Council review its financial forecasting processes to understand why significant financial pressures, over and above those anticipated and reflected in the Council’s annual budget, emerge and ensure future forecasting reflects the lessons learned. 5. They recommend that the Council urgently establishes a clear understanding of its current financial position, including the extent to which that position has diverged from the assumptions underpinning the 2025/26 budget and may require immediate action to prev ent further depletion of reserves during 2025/26. 6. They recommend that the Council urgently addresses the issues it has encountered with implementation of Oracle EPM to ensure that, at both individual budget holder and overall Council level, decision makers are able to access accurate and complete budgetary information to inform decision making. 7. They recommend that the Council continues at pace with the development and implementation of its Financial Modernisation Programme, as well as the wider Governance Review Improvement Plan, and ensures that the scope of these programmes addresses all of the wea knesses in current arrangements highlighted by the various internal and external reviews the Council has received. These recommendations were issued to the Council as statutory recommendations under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 on 24 July 2025. In addition to these, the re is also the following non-statutory recommendation issued as part of the Draft Auditor’s Annual Report. This has been added to the Governance Review Improvement Plan (GRIP): 8. They recommend that the Council reassesses whether the assumptions and forecasts underpinning its 2025/26 budget were sufficiently robust to support the conclusion that the Council has set a balanced budget for the 2025/26 financial year. If the Council is una ble to conclude that it has a balanced budget, it should consider what further actions it may be required to take to comply with its statutory responsibilities. In Appendix C of the draft Auditor ’s Annual Report detailed recommendations relating to the implementation of Oracle Fusion are also set out. Progress on these recommendations are set out in the GRIP document which is reported to this Committee. Audit Results Report - 2024/25 London Borough of Hillingdon The Audit Results Report is set out in Appendix 3. This report sets out the findings of the audit Audit Committee – 10 February 2026 Part I – Public process that has taken place since the draft accounts were submitted in September. The report sets out that although the level of assurance gained has increased, not all planned audit procedures for the 2024/25 year were completed. Therefore the auditors have not obtained sufficient evidence to have reasonable assurance over all in -year movements and closing balances. The 2023/24 Accounts had a “Disclaimer Opinion”, meaning there is not full assurance over some of the bought forward balances from 2023/24. As such it is anticipated that a “Disclaimer Opinion” will be issued for the Councils 2024/25 Audit. Appendix A gives details of the timescales to build back full assurance. This is not expected until the 2027/28 Accounts at the very earliest. The report reiterates capacity considerations within both the Council’s finance team and the audit team (because of lateness of accounts) , and has subsequently identified the implementation o f Oracle Fusion and Oracle EPM as an additional, discreet, risk of significant weakness. Key areas for improvement are:  Improving the timeliness of the draft financial statements  Delivery of working papers in accordance with agreed schedule  The timeliness and quality of evidence supporting key accounting estimates  The volume and value of identified misstatements  The quality and completeness of the draft financial statements  The quality of working papers and supporting evidence  The continued access to staff to support the audit in line with the Audit plan Key financial sustainability risks include the capacity of the finance team, the quality of Council information and the implementation of Oracle Fusion . These risks are monitored via the GRIP programme to this committee. The auditors assessment of the control environment shows an improvement over the 2023/24 process with 5 open risks (7 last year) of which 2 are high and 3 moderate. This report also recommends that management review processes around key account reconciliations to ensure that reconciliations are performed on a timely basis and reconciling items investigated and resolved promptly. Comparing the Council ’s position in the 2024/ 25 Audit to the 2023/ 24 Audit based on the Summary of Assurances Statement there is the following improvement: Year Red Amber Green N/a 2024/25 18 9 16 1 2023/24 26 6 11 1 Change -8 +3 +5 - Definitions: We have been able to complete our audit procedures and obtain assurances over the relevant account or disclosure. We have completed some procedures and obtained some assurances over the relevant account or disclosure, however either due to not being able to complete other procedures or the impact of not having assurance over opening balances we have not obtained assurance over the relevant account or disclosure as a whole. Audit Committee – 10 February 2026 Part I – Public We have not been able to complete our procedures and no assurance over the relevant account or disclosure has been obtained Of the 18 assurances still at red:  2 related to PPE work that is out of scope;  14 were where the auditors were not abloe to complete their work;  1 related to reserves;  1 related to the Council as a “going concern. Of the 9 assurances at amber:  4 relate to opening balances/PPE being out of scope;  2 link to Schools and associated information;  3 had other area dependencies that had not been completed. Final Accounts 2024/25 – Hillingdon Pension Fund The Pension Fund published its draft Statement of Accounts for the year ended 31st March 2025 on 30th June 2025. The Public Inspection period started on the 1st July 2025. Unlike the Council, the previous year had a “clean” audit opinion. These accounts are set out in Appendix 4. There have been no changes since the draft accounts were submitted. Audit Results Report – Hillingdon Pension Fund The Pension Fund Auditor’s Results Report is set out in Appendix 5. In this report the Pension Fund will receive an Unqualified Opinion, as in previous years. Other Audits There is the requirement for the Council to procure new Auditors for the separate 2024/25 Housing Benefit Audit required by the Department of Works and Pensions (DWP). This Audit runs a year in arrears to the main audit. Grant Thornton delivers the Council’s Teachers’ Pension and Pooling audits, and these are expected to be within approved budget estimates. FINANCIAL IMPLICATIONS PSAA has published the 2024/25 scale of audit fees for bodies that have opted into its national auditor appointment scheme. The fee scale is confirmed as a 9.5% increase on the 2023/24 scale fees to cover the additional audit work required under revised standa rds 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. Oracle work is outside these fee rates and will cost £78,079 for the significant amount of work that was undertaken in this area. The corresponding figure in the pension fund is circa £7,000. Ernst & Young have advised that there would be scale fee variations in respect of the 202 4/25 audit and that this will be in the range of £120,000 - £140,000. Hence, the total audit fee, including the Oracle work, for 2024/25 will be in the region of £631k to £651k. Audit Committee – 10 February 2026 Part I – Public LEGAL IMPLICATIONS The Secretary of State for Housing, Communities and Local Government delegated statutory functions (from the Audit Commission Act 1998) to Public Sector Audit Appointments (PSAA) on a transitional basis under powers contained in the Local Audit and Accountability Act 2014. BACKGROUND PAPERS NIL. APPENDICES For Hillingdon Borough Council Appendix 1 – 2024/25 Final Statement of Accounts Appendix 2 – Draft 2024/25 Draft Auditors Annual Report Appendix 3 – 2024/25 Audit Results Report For the Hillingdon Pension Fund Appendix 4 – 2024/25 Final Statement of Accounts Appendix 5 – 2024/25 Audit Results Report

London Borough of Hillingdon Statement of Accounts for the year to 31 March 2025 1 London Borough of Hillingdon Statement of Accounts for the year ended 31 March 2025 Contents Page Leader’s Statement 2 Narrative Report 4 Statement of Responsibilities for the Statement of Accounts 16 Independent Auditor’s Report to the Members of the London Borough of Hillingdon (to follow) 17 Main Financial Statements 18 Comprehensive Income and Expenditure Statement 19 Movement in Reserves Statement 20 Movement in Unusable Reserves Statement 21 Balance Sheet Cash Flow Statement 22 24 Statement of Accounting Policies 25 Notes to Main Financial Statements 46 Other Financial Statements 111 Housing Revenue Account and Notes 112 Collection Fund Account and Notes 116 Pension Fund Account and Notes 120 Annual Governance Statement 154 Glossary 165 Leader’s Statement 2 Leader’s Statement Introduction by Councillor Ian Edwards, Leader of the Council Welcome to Hillingdon’s Statement of Accounts for 2024/25, 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 2025. The Council has maintained frontline services to residents, with an approach based on low-cost services which continue to put residents first whilst some services also have received strong ratings from external regulators. Residents saw an increase of 2.99 per cent applied to their Council Tax for 2024/25, 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 Adult Social Care Precept at 2 per cent as government continue to use this mechanism to bridge the funding gap for the service. The Council provides vital support to residents experiencing financial hardship through its Council Tax Reduction Scheme. This has been achieved while preserving all essential frontline services, despite government funding increases falling short of inflation and rising demand driven by a growing population. The increase in immigration and the placement of migrants in hotels in Hillingdon in exceptionally high numbers has placed unfunded burdens on Hillingdon which the Council is pursuing with the Home Office. This pressure amounts to an estimated £5m for 2024/25 and the same is expected in 2025/26 adding to the financial pressure on the Council 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: • 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. • In October 2024, the Council marked the official launch of a new specialist facility at Wood End Park Academy in Hayes, designed to support children with Special Educational Needs and Disabilities (SEND). The dedicated unit offers 24 places for children aged four to eleven with autism spectrum disorder. It enables pupils to benefit from partial integration into the mainstream school setting, while also providing a tailored learning environment supported by specialist teaching staff. • Adult Social Care services were rated ‘good’ by the Care Quality Commission (CQC) following an inspection in July 2024, achieving an overall score of 73 per cent. Inspectors commended the Council’s strong partnerships, proactive approach to tackling the root causes of care needs, and its dedication to fostering independence and wellbeing. • In February 2025, the Council officially unveiled its new youth initiative and accompanying marketing campaign called Next Gen. This refreshed youth offer delivers a broader range of modern, accessible, and digitally focused services for children and young people aged eight to nineteen — and up to twenty-four for those with special educational needs and disabilities (SEND). The programme ensures timely, flexible support is available in the right places. • In June 2024, the Council celebrated the completion of improvement works at Ruislip Gardens Primary School, increasing support for children with Special Educational Needs and Disabilities (SEND). As part of the Council’s ongoing commitment to helping you ng people lead healthy lives and access high -quality education, the project delivered new inclusive facilities that will provide 32 additional school places for children with SEND. • The Council has once again retained the top spot nationally for its green spaces securing 67 green flag awards, the most flags held by any local authority for the twelfth year running. The Council has continued with its programme of investment in community facilities with most notably: ▪ A new library for Uxbridge in the Civic Centre adjacent to our adult education centre and family hub has been substantially completed with the official opening to occur in the first weeks of the next financial year Leader’s Statement 3 ▪ The building of our 5th leisure centre was held up by the contractor going into administration and works have now recommenced ▪ £120.6m investment in major housing projects acquiring 267 new homes for social housing ▪ Agreement has been reached with a new operator for the Beck Theatre ensuring its future without ongoing programme subsidy from the Council This Statement of Accounts highlights Hillingdon’s continued commitment to putting residents first, reflected in another year of dedicated efforts to support the community. As of 31 March 2025, the Council holds general balances and general fund earmarked reserves of only £7.6million. These are demanding times for local authorities, with Hillingdon like others now being significantly financially challenged due to ongoing inflation, rising demand, and demographic pressures, with particular challenges in supporting homeless households driven by both local demand and the impacts of Heathrow. These factors are the primary drivers behind the savings required in the short to medium term, a challenge shared across the local government sector. With such a low level of reserves, the Council is in conversation with the Government on measures available to support its financial resilience in the lead up to the new three -year financial settlement for 2026/27. Despite this, Hillingdon remains focused on safeguarding frontline services and pursuing transformational efficiencies through its budget strategy. Cllr Ian Edwards Leader of the Council Narrative Report 4 This document sets out the annual accounts of the London Borough of Hillingdon for the year ended 31 March 202 5. 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 protect front line services with a comprehensive capital programme. The Council employs approximately 2,600 staff inclusive of part time staff and has a population of around 319,018 (as per 2024 mid -year estimate). Hillingdon is an ethnically diverse borough with 33.3% of residents from Asian ethnic groups, 7.8% Black ethn ic 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 , whilst nearby Ruislip Lido boasts 60 acres of Narrative Report 5 water. The borough also offers a host of sporting activities, including sports centres, many with newly refurbished gyms and two exceptional 18-hole and one 12-hole golf courses, including a championship standard course at Stockley Park. The arts and enter tainment thrive, with The Beck professional theatre in Hayes, The Compass Theatre in Ickenham, and various other venues. 2.2 Financial Performance General Fund The Council’s challenges link to a number of factors including: years of the Government’s austerity programme, increasing demand for services, compounded by the wider economic environment and ongoing high levels of inflation, whilst also managing legacy issues driven by the global pandemic. Councils are starting to see central government funding increase in targeted ways. Despite these challenges, Hillingdon has still been able to continue to maintain cash discounts against Council Tax for the over 65s in r eceipt of this benefit on 31 March 2024 for another year in 2024/25, without impacting on front -line services to the public. In addition, the Council has managed significant increases in demand for services and kept fees and charges significantly cheaper than neighbouring boroughs on a per capita basis. These are financially challenging times for local authorities to deal with, having to respond to significant national pressures within a materially reduced funding envelope. Local pressures for Hillingdon include the increased cost of adult social care, ch ildren’s placement, homelessness, asylum seekers, funding the Dedicated Schools Grant ( DSG) deficit, and ensuring that it has an experienced workforce to deliver the best services it can to its residents. The 2024/25 General Fund monitoring position report ed an adverse variance of £31.5m against budget before the release of earmarked reserves, as set out in Table 1 below . In 2025, due to the pressures mentioned above and a deteriorating financial position, the Council implemented a Finance Modernisation Programme (FMP). This is focused on modernising financial processes, capability and understanding across the Council, introducing best practice and supporting the Coun cil in gaining a better understanding of its financial position. This process is being run with the support of Grant Thornton, with the Council having additional oversight from the Local Government Association. Part of this programme has included a review of the Council’s Balance Sheet. To date, the FMP has identified a number of issues which have driven a significant proportion of this adverse movement (£14.1m), including the necessity to write out an unfunded reserve of £5.5m, a re-assessment of the Council’s Treasury allocations between the General Fund and the Housing Revenue Account (HRA) has led to an adjustment of £4.5m, and an evaluation of the Bad Debt Provision policy has led to an adverse movement of £4.1m. The table below sets out the 2024/25 outturn position as reported to Cabinet in July 2025 against the Month 10 Cabinet update reported in March 2025. Table 1 The outturn position at July resulted in a draft closing General Fund Reserve deficit of £4.6m and draft Earmarked Reserves of £15.5m – a net position of £10.9m. This level of reserves was deemed to be inadequate by the Section Narrative Report 6 151 Officer. The S25 Statement in the 2025/26 budget set a minimum level of usable reserves of £32m. In addition, the General Fund position should not be negative. Consequently, the Earmarked Reserves were reviewed and £6.1m was transferred to the General Fund to give a balance of £1.5m in the General Fund and £9.4m in Earmarked Reserves in the draft accounts submitted in September for Audit. The Audit process identified £3.278m of adjustments that were required. Given the level of General Fund reserves, Earmarked Reserves were again reviewed and lowered to cover this additional requirement. Therefore, the final overspend position for the year is £34.8m. Table 1a Reserves Position As a result of this low level of reserves, the Council decided to enter into discussions with the Ministry of Housing, Communities and Local Government (MHCLG) regarding the possibility of Exceptional Financial Support (EFS). The Month 2 budget monitoring report for 2025/26 strengthened the need due to a further forecast deficit. Given that these conversations have been substantive and supportive discussions, it is the view of the Section 151 Officer that it has not been necessary to issue a Section 114 notice, but that this will continue to be kept under close review. In spite of the above, it is the Council’s view that day -to-day operations continue to deliver value for money for our residents, with benchmarking data demonstrating that service expenditure per capita remains below our comparator group (which is predominantly the Outer London boroughs). The Government’s Fair Funding Review 2.0 suggest ed that from 2026/27 funding would be re-allocated in a way that benefitted outer London boroughs, in particular Hillingdon. The final Local Government Funding Settlement in February 2026 confirmed this. Whilst it is accepted that the Council had to operate within the funding settlement given for 2024/25, it is also considered that had the Fair Funding Review taken place and funding changes applied when originally planned, the Council’s financial position would have been substantially better. The Council will continue to review service delivery and implement cost control measures where appropriate to contain the impacts of these adverse movements going forward but recognises the need for short -term Government support whilst the Council takes action to put itself on a more sustainable footing. This outturn report reflected the deteriorating position both across London and nationally. London Councils, the collective of Local Government in the capital, estimate d that boroughs would overspend against original budget plans by £700m in 2024/25 (averaging £21.2m per borough) and have forecast this to be in the region of £500m for 2025/26. The Government has published a list of councils reliant on Exceptional Financial Support from Government in 2025/26, with this list including a number of other London boroughs set to receive a total of £377.9m in 2025/26, highlighting the pressures London boroughs are facing. This underlying position for Hillingdon is in part being driven by Service s reporting an overspend of £8.5m, the key details of which are set out later in this report. Corporate Budgets are compounding this position with an adverse variance of £23.2m and Corporate Funding delivering a £0.2m favourable variance. Within Corporate Budgets the variance breaks down as follows: Narrative Report 7 • A need to rebase service operating budgets by £14.1m to recognise historic pressures from demographic growth and unachieved savings. • The writing out of a negative earmarked reserve of £5.7m • £4.5m relating to cross-cutting savings that were deemed undeliverable. • Offset by a £0.6m underspend against the pay award budget and a £0.5m release of contingency Both the £14.1m rebasing and £4.5m undelivered savings were permanently written out of the Council’s budget from 2025/26 onwards in the budget approved in February 2025. The Service Operating Budget pressure of £8.5m was largely driven by three areas: • £6.1m relating to homelessness demand continuing to run at a level above the budgeted assumption, with this being a common issue across London. • £2.5m relating to Children’s Social Care demand, with support provided to Looked After Children reporting exceptional demand above that included in the budget strategy. • £2.5m relating to pressures within Adult Social Care from demand outstripping the budgeted growth. These pressures are offset by an underspend of £2.5m largely driven by a £1.3m underspend within Finance & Transformation, £0.8m within Corporate Services & Property and £0.4m within Community & Environment. Following the subsequent release of £6.1m earmarked reserves to support the General Fund balance, the final in -year deficit ended at £25.4m. As a consequence of the 2024/25 Audit of Accounts, further adjustments of £3.3m were required. These were addressed through the application of earmarked reserves and did not impact on the General Fund balance of £1.5m. Housing Revenue Account The Housing Revenue Account (HRA) delivered a breakeven reserve position with HRA general balances remaining at a total £15.1m at 31 March 2025 (unchanged from the previous year). In addition, the HRA holds earmarked reserves of £6.8m and £4.3m (£3.2m 2023/24) in the major repairs reserve (MRR) to fund future capital works. There were 65 Right-to-Buy sales of Council dwellings in 2024/25 (49 in 2023/24) 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 2024/25 totalled £263m (£127.3m in 2023/24) and was funded from a range of sources. These sources included grants (£65m), contributions from revenue resources (£27m), proceeds from asset sales (£27m), and prudential borrowing (£144m). An underspend of £32.9m is reported against the 2024 /25 General Fund capital programme, consisting of £5.4m cost underspends and £27.4m rephasing for various projects and programmes that are continuing into future years. HRA capital investment totalled £178m with £14.9m underspend approved to be rephased into 2025/26 for further investment. Investment during 2024/25 on the General Fund totalled £84.8m. Significant General Fund investment included £8.2m towards the construction of the new Platinum Jubilee Leisure Centre in West Drayton, due to be completed in 2025/26. Other major projects included £12.1m on various carbon initiatives. A further £8.5m has been contributed towards expansion projects to increase provision for pupils with special educational needs (SEND). There was also spend of £9.9m on highways infrastructure and street lighting. Within the HRA in 2024/25, a significant acquisitions and developments programme totalling £1 20.6m increased the Council housing stock by 202 units net of 65 Right to Buy sales. A further £28.2m was invested in the continuing Hayes Estate Regeneration programme. In addition, £29.5m was expended in improvements to the existing council housing stock. Narrative Report 8 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. The Council may make 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 may be unable to repay the principal lent and/or the interest due, while a risk of investing in shares is that they may fall in value meaning that the initial outlay may not be recovered. To limit these risks, upper limits on the sums invested in each categor y have been set. Furthermore, the Council has some protection against losses through a charge over the assets of Hillingdon First Ltd. The Council assesses the risk of loss before entering into and whilst holding service loans. The Council aligns loan durations with each specific development. A specific loan agreement will be drawn up for each development using the agreed schedule as a framework. Hillingdon First Ltd will be required to provide full development scheme details to the Shareholder Committee (acting on behalf of the Council as shareholder) before the loan facility can be drawn down for specific expenditure on that development. Over the period 2020-23 the Council provided financial support totalling £1,681k in the form of soft loans (ie lower than market rates) to Greenwich Leisure Limited (GLL), with whom it holds the leisure operating contract. The purpose of this was to suppo rt the contractor during the pandemic and thereby protect public service objectives in the delivery of leisure services. The carrying value of the loan as at 1 st April 2024 was £1,304k (in 2022/23 a notional loss was recorded in the CIES representing the present value of the interest foregone over the life of the loan, resulting in a lower amortised cost than the outstanding principal). In 2024/25 the carrying value of the loan increased to £1,373k as at 31st March 2025. The Council has set up a Special Pur pose Vehicle (SPV) called The Hillingdon Care Company (THCC) to run and manage The Burroughs Care Home which was in process of acquisition at 31 March 2025 and subsequently completed in 2025/26. The objective of the company is to address the increasing demand for nursing and dementia care places, manage escalating bed prices, and ensure that residents have access to quality care locally. THCC was incorporated at Companies House on 23 January 2025. A detailed financial model, which compared acquiring the care home to the alternative of purchasing equivalent nursing care from the external market over the next 15 years, was completed. The model showed it was beneficial for the Council to acquire the Care Home. 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 5.25%, the Bank of England’s Monetary Policy Committee (MPC) decreased Bank Rate to 5% in August 2024. The Bank Rate was maintained at 5% through to November 2024, whe n it fell to 4.75%. A further fall to 4.5% occurred in February 2025 which was maintained through to the end of the year. The MPC’s focus remained on assessing how long interest rates would need to be restrictive in order to control inflation over the medium term. Narrative Report 9 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 for the year totalled £3, 126k (£4,031k in 2023/24 due to higher average cash balances invested). The weighted average balance of investments over the year was £62.62m (£83.63m in 2023/24). Investment income returns for the year on internally managed cash yielded 4.93% (4.92% in 2023/24). 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 4.25% (4.15% in 2023/24). Rising market interest rates in recent years have reduced the fair value of bonds held within these strategic pooled funds. This has declined marginally by £10k in 2024/25 and the fair value as at 31st March 2025 now reflects an unrealised loss of £1,079k. The MHCLG IFRS 9 pooled investment fund statutory override for English authorities for fair value gains and losses on pooled investment funds held at 1 st April 2024 was due to expire with effect from 1 st April 2025 – the government has now extended this to 1 st April 2029. 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 charged to the revenue account and must be taken into an unusable reserve account. This override extension means the current unrealised losses have time to recover over the medium term. The nature of this financial instrument means the fair value may rise and fall with short -term secur ity and liquidity being less of a consideration. The key objectives instead being regular revenue income and long-term price stability. The Council would only seek to sell when market conditions were favourable, and holdings were at or above original inves tment values. Although internal borrowing continued to be utilised during the year, external borrowing was also required during 2024/25 to finance capital expenditure and ensure liquidity was maintained. Overall the total loan portfolio increased by £161.3m with total loan balances at year -end of amounting to £517.5m (£356.2m 2023/24) of which General Fund borrowing amounted to £232.9m (£158.6m 23/24) and HRA £284.6m (£197.6m 23/24) as set out in the table below (the figures below are principal sums and do not include accrued interest on loans): Balance on 31/3/2024 £m New Borrowing £m Debt Maturing £m Balance on 31/3/2025 £m Year-End Average Rate % GF Loans PWLB Fixed Rate 74.60 60.00 (8.71) 125.89 4.88 Market Fixed Rate 15.00 - - 15.00 4.28 Temporary LA Borrowing 69.00 123.00 (100.00) 92.00 5.38 Total GF Loans 158.60 183.00 (108.71) 232.89 HRA Loans PWLB Fixed Rate 164.57 115.00 (27.98) 251.59 3.95 Market Fixed Rate 33.00 - - 33.00 4.03 Total HRA Loans 197.57 115.00 (27.98) 284.59 Total Loans 356.17 298.00 (136.69) 517.48 4.44 New loans totalling £115m were taken under the HRA to take advantage of the concessionary PWLB rate for HRA capital financing, of which £15m were five years or less, and £100m was taken over a longer duration. There was £28m of debt maturing within the HRA portfolio offsetting this borrowing. New loans of £183m were taken under the General Fund of which £108.7m were replacing maturing debt including short term temporary local authority loans. Over the year the Council’s loan portfolio had an average interest rate of 4.44% (3.31% 2023/24) reflecting increases in market rates. Interest paid on the loans portfolio including brokers fees over the year totalled £ 16.6m (GF £ 6.7m, HRA £9.9m), an increase of £6.3m from 2023/24 reflecting the higher debt levels. Narrative Report 10 Change in Accounting Practice The most significant change in the 2024/25 Code was the adoption of IFRS16 Leases which became mandatory for local authorities from 1 st April 2024 and requires a lessee to recognise assets and liabilities for leases with a term of more than 12 months, unless the underlying asset is of low value. For the purposes of determining low value, the Council has set a de -minimis limit of £10k for the asset value when new. The accounting policy for leases has been updated and details of the transition to the new standard are provided in Note 36. Other changes include removing the de-minimis for capital expenditure (previously £10k). Property, Plant and Equipment A net gain on disposal of £ 7.5m has been recognised in the Comprehensive Income and Expenditure statement, comprising mainly a gain 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 housing units would be more expensive. Excluding right to buy sales i n 2024/25 there were gross capital receipts amounting to £ 8.03m on sales of nine disposal sites of which eight were General Fund. 2.3 Non-Financial Performance Environment For the 12th year in a row, Hillingdon has secured top spot for the number of Green Flag spaces maintained by a council in the UK. It has retained its 67 Green Flags, which recognise parks and green spaces of the highest calibre. During 2024/25 46 new electric vehicle chargers were installed in Council owned car parks as part of a pledge to deliver a full, accessible electric vehicle (EV) charging network across the borough by 2030. More than 7,000 new households signed up to our food waste recycling service and 9,000 for our improved recycling bag delivery service during 2024/25. Leisure and Culture A uniquely-themed new playground was officially opened by the Council at Cranford Park in April 2024. The new play area is themed around historical figure Mary Cole, the Countess of Berkeley, with various play features that pay homage to her intriguing story. Equipment includes a climbing net trail, tower unit with slide and fireman’s pole, and a nest swing, as well as an ‘ice house’ shelter and tunnel, both intricately weaved from live willow branches earlier this year with the help of skilled volunteers, as well as two small wooden horses and a wooden horse and chari ot. In February 2025, the Council officially launched its new youth offer, and associated marketing campaign, Next Gen. The youth offer is a wider programme of modern, relevant, flexible and digital services for children aged eight to nineteen (and up to twenty-four with special educational needs and disabilities) closer to where young people are, making sure they can get the support they need, at the right time and place.  Schools & Children’s Services The Council celebrated the completion of enhancements at Ruislip Gardens Primary School to support more children with special educational needs and disabilities (SEND) during June 2024. The works, part of the Council's commitment to ensure young people in the borough can live healthy lives and have access to the best possible educational opportunities, have created new inclusive facilities that will offer 32 additional school places for children with SEND.   Figures released by the PAN London Admissions Board during April 2024 show that the Council has once again exceeded the London average of 89.1 per cent to give 3,212 pupils their first choice of primary school.   Hillingdon also Narrative Report 11 achieved best in west London for applicants being offered one of their top three preference schools at 99.31 per cent, compared to PAN London at 97.2 per cent.    In October 2024, the Council celebrated the official opening of a new facility providing support for children with Special Educational Needs and Disabilities (SEND) at Wood End Park Academy in Hayes. The designated unit provides 24 places for children, aged four to eleven, with autism spectrum condition. This new facility allows children to benefit from some integration into the mainstream school environment, while maintaining their own space to learn with the support of specialist teaching staff. Social Care A Care Quality Commission (CQC) inspection conducted in July 2024 judged Adult Social Care services to be ‘good’, with an overall score of 73 per cent, according to a report published on Friday 13th December 2024. Inspectors praised the Council’s work with partners, focus on addressing the root causes of care needs and commitment to promoting independence and wellbeing. The report commended the Council for having a clear focus to “achieve the best outcomes for people who lived there” and noted that most residents could access care and support services easily. Protecting Residents A new Public Spaces Protection Order (PSPO) has been introduced from February 2025 by the Council to stop taxis and private hire vehicles (PHVs) from waiting in residential streets near Heathrow Airport. It bans taxis, chauffeurs, and PHVs from waiting in residential streets in Pinkwell, West Drayton, and Heathrow Villages wards, unless they are collecting or dropping off passengers. The order aims to reduce persistent nuisance caused by drivers blocking driveways, littering, urinating, and defecating in public, and causing noise and air pollution by idling. People Resources Two library employees have been recognised for their work in creating a dedicated space for young people at Botwell Green Library. Gemma McCaffery, area manager for the libraries in the south of the borough, and Franka Aichour, the library’s branch manager, were presented with a Libraries Connected Award on Tuesday 4th June 2024. The Council is continuing to recruit and develop existing staff onto apprenticeship programmes across a range of services, with 200 apprentices across the Council in 2024/25. 2.4 Risks and Opportunities The Council has continued to run efficient frontline services, which are well rated by external review bodies, with both Adult Social Care and Children’s Social Care receiving good and excellent ratings from their respective regulators. This has been achieved whilst keeping Council Tax low, with Hillingdon having the second lowest charge out of the 20 Outer London Boroughs. Benchmarking across our comparator group (which is mainly Outer London Boroughs) demonstrates that the Council delivers value for money in service delivery, with below average per capita spend across the majority of services. However, the financial challenges set out in this narrative statement have resulted in the Council applying for Exceptional Financial Support (EFS) from the Government until the funding review is fully implemented and resolution to the costs for managing asylum numbers over and above that which all authorities are expected to bear is addressed. Seeking EFS from the Ministry of Housing, Communities and Local Government (MHCLG) is a mechanism available to local authorities when they have taken all reasonable steps to manage financial challenges themselves. The Council’s finances as set out in the report present a position wherein the Council’s expenditure is likely to exceed its resources. In these circumstances the Council’s C hief Finance Officer (Section 151 Officer) is obliged to brief the Council’s executive, Cabinet and external auditors, which has been done. Narrative Report 12 The Chief Finance Officer has also advised MHCLG and is in active discussions about EFS. Th ese have been substantive and supportive discussion and as a consequence the Chief Finance Officer is currently confident that EFS will be agreed and hence is of the view that it is not necessary to issue a Section 114 notice at this time. Having recognised the ongoing challenges with stabilising the Council’s budget, the Council has been working to deliver a Finance Modernisation Programm e (FMP) that is targeting an improvement in the Council’s financial capacity and capability across both the Finance department and the wider organisation. Whilst these issues are problematic, the Council has recognised the need to understand year on year movements across balances and reserves in more detail . This work, in identifying and remed ying issues in accounting practices and processes, will result in the Council having greater confidence in its financial management, with this confidence increasing as the FMP continues. The FMP is continuing to work at pace and is putting the Council into a better position of understanding its financial position and gaining a better knowledge of the correlation between budget modelling and outturn, with a strong focus on savings delivery. The Council is introducing enhanced spend control measures to manage the position as best as it can, but recognises that Government support will likely be required. There were seven recommendations raised by Ernst & Young in their July report received by Audit Committee on 28 August 2025, issued under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014. These are included in the Governance Review I mprovement Programme (GRIP) under workstream 1 and are being monitored and addressed with oversight from the Audit Committee. Further key recommendations arising from the Auditor’s review will be incorporated as necessary. The Government has recognised that current arrangements represent a “broken funding system” and have consulted on proposed changes to the distribution of support to local government through the Fair Funding Review 2.0 Consultation. C hanges to grant allocations will be introduced in a phased, stepped manner as part of a three -year settlement (across 2026/27 to 2028/29). London Councils have undertaken detailed analysis and modelling of the new funding mechanism on behalf of all London boroughs. Their analysis shows that Hillingdon will see a significant increase in funding from the new methodology compared to the current year and supports the Council’s long-held argument that it has been significantly under-funded compared to other local authorities. 2.5 Looking Ahead – Strategy and Resource allocation Looking into the medium term, the underlying savings requirement is driven primarily by inflation, 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 steady growth within Retained Business Rates. Following the Final Local Government Settlement for 2025/26, the Council’s grant funding from Central Government increased by £12.9m over 2024/25. Funding over the following three years increases by a further £105.2m (based on Government calculations of Council Tax increases), but staged each year rather than being received in full from 2026/27. Although the new settlement is a welcome and positive one for the Council, there will still be significant challenges for the Council in balancing its Medium Term Financial Strategy and will require EFS to do so. The budget will be presented to Full Council in February 2026. There is still significant pressure on the Dedicated Schools Grant budget (DSG). Following an in-year deficit in 2024/25 of £15m, this reduced to a forecast of £10.6m for 2025/26 by October. However, this still means the cumulative deficit, requiring cash flow from the Council, is projected to be £76.5m by March 2026. Looking forward, the Council’s General Fund capital programme 2025/26 to 2029/30 has an approved budget of £384m (as at Month 4 July 2025), with £223m 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 school expansions, investment in home care capacity, refurbishment of the crematorium, carbon initiatives and investments into technology and highways. The five year HRA capital programme Narrative Report 13 totals £529m of which £220m is allocated to new acquisitions and developments to increase the housing stock and £104m on the continuation of the Hayes regeneration programme. A further £225m is allocated to improving the condition of the existing housing stock. The Council is very much focussed on self-delivery of a sustainable Council and associated target operating model and is working with MHCLG and other partners to achieve this. Service delivery remains well managed, with spend per capita on front line services being below our comparator group (predominantly Outer London Boroughs). 2.6 Statements within the accounts General The movement in the Balance Sheet of £67.6m in year largely consists of reductions to net liabilities related to defined benefit pension schemes and increases to long term assets due to a combination of valuation movements and additions and enhancements to the asset base from capital expenditure in year. Any minor movement in the underlying IAS19 pension assumptions results in a large swing in the overall deficit position. For 2024/25 an increase in the net discount rate from 4.80% (2023/24) to 5.80% (2024/25) has reduced the value placed on the Fund's liabilities and contributed to an overall favourable impact of £59.7m 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 £131.0m (£48.0m deficit in 2023/24) on the provision of services for 2024/25. Of this, a deficit of £92.9m relates to General Fund balances, £3.5m on Schools balances and a deficit of £34.6m relates to the Housing Revenue Account. 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 decreased by £27m to £92m in 2024/25. Within this movement there was a decrease in General Fund balances of £3 4.8m arising from the outturn (including post audit impacts) offset by £ 9.4m of Earmarked Reserves released following review to ensure the General Fund remained in surplus. Earmarked Reserves increased overall by £2.9m mainly due to removing the negative balance on the Business Rates Reserve. HRA balances remained unchanged and Schools reserves reduced by £3.5m. Other movements included transferring unspent capital grants of Narrative Report 14 £11.2m to the Capital Grants Unapplied Reserve to support future financing of capital projects. The capital receipts reserve reduced by £13.5m partly due to financing of transformation costs under flexible use of capital receipts regulations. Unusable reserves reduced by £40.3m to £1,428bn in 2024/25, mainly due to decreases totalling £63.4m in the Capital Adjustment Account and Revaluation Reserve reflecting valuation losses mainly on the HRA dwellings stock after valuing new acquisitions to social housing value . Other movements included the Collection Fund Adjustment Account decreasing by £21.4m. This was partly offset by a decrease in the Pension Fund liability of £60m, reflected in the Pensions Reserve increasing by the same amount. To support the Movement in Reserves Statement, Note 4 to the accounts shows the Adjustments between Accounting Basis and Funding Basis under Regulations. This note reverses the items of income and expenditure that are required to be credited or charged to the Comprehensive Income and Expenditure Statement, that do not affect the General Fund balance for Council Tax purposes. Total adjustments for 2024/25 were £70 .4m within the General Fund, adjusting the General Fund position for Council Tax purposes to a deficit of £25.4m after the release of £9.4m earmarked reserves. 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 2024/25 was £1.519bn (£1.587bn in 2023/24). The largest items within the Balance Sheet consist of long -term assets valued at £2.24bn, and within liabilities long -term borrowing of £3 87.8m. The main contributors to the movement came from the reduction in pension liabilities, and the increase in value of Plant Property and Equipment. As at 31 March 2025 the Council has a General Fund balance of £1.5m following the overspend at outturn (£26.8m in 2023/24) and £6.1m of Earmarked Reserves excluding schools’ balances, held for specific purposes (£3.3m in 2023/24). 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 2024/25 of £20.7m. Supplementary accounting statements comprise: Housing Revenue Account (HRA) Comprehensive Income and Expenditure Statement There is a statutory duty to account separately for Local Authority housing provision. The HRA Income and Expenditure Statement shows in detail the income and expenditure on HRA services included in the Council Comprehensive Income and Expenditure Statemen t. 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 deficit in 2024/25 on HRA services of £3 4.6m (£15.4m surplus in 2023/24) due mainly to valuation losses arising from new housing acquisitions valued down to social housing existing use value. 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 Narrative Report 15 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 break even in 2024/25 (deficit of £0.1m in 2023/24), 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 deficit of £12.9m (surplus of £5.5m in 2023/24) is reported on Council Tax with a carried forward deficit of £10.7m (surplus £2.3m in 2023/24). An in-year deficit of £39.1m (surplus of £10.6m in 2023/24) is reported on Business Rates, creating a deficit within the carry forward balance on NNDR to £15.8m (surplus £23.2m in 2023/24). The share of Collection Fund activity relating to the Council is reflected in the main statement of accounts, with the remainder being treated as agency activity on behalf of the Greater London Authority and Central Government. 75% of Council Tax and 30% of Business Rates activity relates to the London Borough of Hillingdon. Pension Fund Accounts These show contributions to the Council’s Pension Fund for members during the year, together with pensions and other benefits paid from it, movements in investments during the year and the financial position of the Fund at the end of the year. These 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: - 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. 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. 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 16 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’s 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 2024/25 ('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’s Approval of the 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 2025 and its income and expenditure for the year then ended. Steve Muldoon Corporate Director of Finance (S151 officer) XX February 2026 Independent Auditor’s Report 17 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE LONDON BOROUGH To be added Main Financial Statements 18 The financial statements that follow are prepared on an accruals basis and follow best practice recommended by the Chartered Institute of Public Finance & Accountancy (CIPFA) and International Financial Reporting Standards (IFRS) as defined by the Code of Practice on Local Authority Accounting in the United Kingdom. Further details of these requirements are detailed in the Statement of Accounting Policies. These statements are published in accordance with the Accounts and Audit Regulations 2015. They summarise the overall financial position of the Council and in particular include the following: Restatement of 2023/24 Published Accounts This note provides an overview of changes to the Financial Statements from the published Statement of Account in 2023/24 as a result of changes in operational reporting requirements. This statement reconciles the position reported to management and that reported in the Comprehensive Income and Expenditure Statement. Comprehensive Income and Expenditure Statement The first of the core financial statements. This shows the expenditure and the income relating to all the services provided by the Council and how the net cost of these services has been financed by local taxpayers and government grants. Movement in Reserves Statement This statement sets out the reserves held by the Council, split into usable and unusable reserves, and shows how they have moved during the year. Balance Sheet This sets out the assets and liabilities of the Council as at 31 March 2025 but excludes the assets and liabilities of pension and trust funds. The 2023/24 Balance Sheet has been restated to disclose revenue grants receipts in advance separately – previously included in short term creditors. Cash Flow Statement This consolidated statement summarises the inflows and outflows of cash and cash equivalents arising from transactions with third parties for revenue and capital purposes. The statement excludes any transactions of the pension and trust funds. Notes to the Main Financial Statements Notes are provided to support the information in the main financial statements with additional detail of movement breakdown and analysis. A key note is the Expenditure and Funding Analysis note which shows how council funding has been used in providing services in comparison to those resources consumed or earned by authorities in accordance with generally accepted accounting practices. Comprehensive Income and Expenditure Statement 19 The Comprehensive Income and Expenditure Statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation or rents. Councils raise taxation and rents to cover expenditure in accordance with statutory requirements; this may be different from the accounting cost. The taxation position is shown in both the Expenditure and Funding Analysis and the Movement in Reserves Statement. Expenditure Income Net Expenditure Expenditure (Restated) Income (Restated) Net Expenditure (Restated) Note £'000 £'000 £'000 £'000 £'000 £'000 EXPENDITURE ON SERVICES Children, Families & Education 138,094 (21,904) 116,190 83,640 (13,260) 70,380 Community & Environment 71,440 (35,967) 35,473 85,271 (35,621) 49,650 Corporate Services & Property 47,579 (8,300) 39,279 44,767 (7,767) 37,000 Finance & Transformation 128,741 (78,609) 50,132 133,532 (91,481) 42,051 Health & Social Care 168,761 (109,161) 59,600 159,017 (102,737) 56,280 Planning, Housing & Growth 36,464 (23,915) 12,549 33,388 (19,057) 14,331 Schools 254,646 (235,673) 18,973 267,201 (237,864) 29,337 Housing Revenue Account 158,743 (85,444) 73,299 72,271 (82,509) (10,238) NET COST OF SERVICES 1,004,468 (598,973) 405,495 879,087 (590,296) 288,791 Other Operating Expenditure 6 853 - 853 841 - 841 Net loss/(gain) on disposal of non- current assets - (7,503) (7,503) - (6,773) (6,773) Net Financing and Investment Income and Expenditure 7 25,294 (2,504) 22,790 23,262 (1,919) 21,343 Taxation and Non-Specific Grant Income 8 - (290,595) (290,595) - (256,238) (256,238) Other Income and Expenditure on the Provision of Services 26,147 (300,602) (274,455) 24,103 (264,930) (240,827) (SURPLUS)/DEFICIT ON PROVISION OF SERVICES 1,030,615 (899,575) 131,040 903,190 (855,226) 47,964 (Surplus)/Deficit on revaluation of Property, Plant and Equipment assets (3,735) (64,697) Actuarial (gain)/loss on pension assets and liabilities 43 (59,722) (84,437) TOTAL COMPREHENSIVE INCOME AND EXPENDITURE 67,583 (101,170) 31 March 2025 31 March 2024

Draft Auditor’s Annual Report Year ended 31 March 2025 London Borough of Hillingdon 27 November 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. Audit Committee London Borough of Hillingdon Uxbridge UB8 1UW 27 November 2025 Dear Audit Committee members 2024/25 Auditor’s Annual Report We are pleased to attach our Draft Auditor’s Annual Report, including the commentary on the Value for Money (VFM) arrangements for the London Borough of Hillingdon. This report and commentary explains the work undertaken during the year and highlights any significant weaknesses identified along with recommendations for improvement. The commentary covers our findings for audit year 2024/25. As our audit of the financial statements is ongoing, this report has been issued as draft and will be finalised as part of issuing t he 2024/25 audit report. This report is intended to draw to the attention of the London Borough of Hillingdon any relevant issues arising from our wor k up to the date of issuing the report. It is not intended for, and should not be used for, any other purpose. We welcome the opportunity to discuss the contents of this report with you at the Audit Committee meeting on 18 November 2025 . The 2025 Transparency Report for EY UK provides details regarding the firm’s system of quality management, including EY UK’s system of quality management annual evaluation conclusion as of 27 June 2025. Yours faithfully Stephen Reid Partner, For and on behalf of Ernst & Young LLP Enc Confidential — All Rights Reserved © Ernst & Young LLP 2025 Confidential — All Rights Reserved © Ernst & Young LLP 2025 London Borough of Hillingdon Auditor’s Annual 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 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. 01 Audit of financial statements02Executive Summary 03 04 Value for Money Commentary Appendices content Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary01 4London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary The Auditor’s Annual Report summarises the year’s audit work, including value for money commentary and confirmation of the financial statement opinion. It also references any use by the auditor of their additional powers and duties under the Local Audit and Accountability Act 2014. In line with the NAO Code of Audit Practice 2024 (“the 2024 Code”) and Auditor Guidance Note 03 (AGN 03), this report provides an overview to the London Borough of Hillingdon and the public, detailing current recommendations and a review of prior years’ actions, including our assessment of whether they have been satisfactorily implemented. Auditors must issue their draft Auditor’s Annual Report to those charged with governance by 30 November each year, reflecting the audit position and value for money assessment at that time, even if the audit for the period is ongoing. Responsibilities of the appointed auditor We have undertaken our 2024/25 audit work in accordance with the Audit Planning Report that we issued on 24 July 2025. We have complied with the 2024 Code, other guidance issued by the NAO and International Standards on Auditing (UK). As auditors we are responsible for: Expressing an opinion on: • whether the financial statements give a true and fair view of the financial position of the Council and its expenditure and income for the year; and • have been prepared properly in accordance with the relevant accounting and reporting framework. Reporting by exception: • if the annual governance statement does not comply with relevant guidance or is not consistent with our understanding of the Lon don Borough of Hillingdon; • the use of additional powers and duties, for example making written recommendations under Section 24 and Schedule 7 of the Ac t or making a report in the public interest; and • if we identify a significant weakness in the London Borough of Hillingdon’s arrangements in place to secure economy, efficiency and effectiveness in its use of resources. Responsibilities of the London Borough of Hillingdon The Council is responsible for the preparation of the financial statements, including the narrative statement and governance statement, in accordance with the CIPFA Code and for having internal controls in place to ensure these financial statements are free from material error. It is also responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. Purpose XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report 5 Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary 2024/25 conclusions 6 Value for money (VFM) We have four matters to report by exception on the Council’s value for money arrangements, relating to significant weaknesses in the Council’s arrangements in respect of: • Financial sustainability; • The quality of Council information; • The capacity of the Council’s finance team; and • The implementation of Oracle Fusion and Oracle EPM Each of these significant weaknesses highlights areas in which the Council needs to improve, however they are not independent of each other and the overall impact on the Council and its management of its financial position is of particular concern. The Council’s financial position is now critical. We are unable to conclude that the Council is compliant with its statutory duty to set a balanced budget in respect of the 2025/26 financial year, as required under the Local Government Finance Act 1988. We have previously issued clear and repeated warnings about the deteriorating financial situation, which have not been acted upon with sufficient urgency or rigour. The failure to respond appropriately has now resulted in a position that is unsustainable and which we are unable to conclude upon as legally compliant. Immediate and decisive action is required. We have included our value for money commentary in Section 03. Additional powers and duties On 24 July 2025, we issued 7 recommendations under Section 24 Schedule 7(2) of the Local Audit and Accountability Act (‘statutory recommendations’) to the Council. These concerned three of the four significant weaknesses in the Council’s arrangements highlighted above (the significant weakness in arrangements not covered being the implementation of Oracle Fusion and Oracle EPM over which audit work was ongoing at the time the recommendations were issued). These recommendations were issued as we are not confident that the Council has a clear understanding of its current financial position or that the pace of improvement is sufficient to address the systemic weaknesses which exist within the Council’s financial management and governance. We are also not confident that the urgency of the need to address these systemic weaknesses is fully recognised by all decision makers. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary (cont.) 2024/25 conclusions (cont.) 7 Financial statements Disclaimed As reported in our 2023/24 Audit Results Report, issued on 18 March 2025, we issued a disclaimer of opinion on the Council’s 2023/24 financial statements under the arrangements to reset and recover local government audit. In 2024/25, we are continuing to audit the closing balance sheet and in -year transactions. Although the level of assurance gained has increased, we have not yet obtained sufficient evidence to have reasonable assurance over all in-year movements and closing balances. As a result of the disclaimer of opinion on the 2023/24 financial statements, we do not have assurance over some brought forward balances from 2023/24 where we did not gain assurance (the opening balances). This means we do not have assurance over all 2024/25 in -year movements and the comparative prior year movements. We also do not have assurance over all the 2023/24 comparative balances disclosed within the 2024/25 financial statements. Taken together with the requirement to conclude our work by the 2024/25 backstop date, the lack of evidence over these movements and balances mean we are unable to conclude that the 2024/25 financial statements are free from material and pervasive misstatement of the financial statements. We therefore anticipate issuing a disclaimed 2024/25 audit opinion. Commencement of our year-end audit fieldwork was delayed as a result of the Council not publishing its draft Statement of Accounts until 22 September 2025, nearly 3 months after the statutory deadline for commencement of the public inspection period of 1 July 2025. Due to the impact of this on the available time to complete our audit procedures ahead of the backstop date, and capacity considerations within both the Council’s finance team and the audit team up to this date, there is in an increased risk that not all planned procedures will be completed and that this could impact the assurance over balances at 31 March 2025 which is able to be obtained and carried forward for the 2025/26 audit. Following discussions with management, we have agreed a management-imposed limitation of scope to our audit to exclude the valuations of the Council’s land and building assets from our work over the closing balance sheet for 2024/25. This was agreed as the valuation of land and buildings is a complex area which requires significant effort from both the Council and audit to test, but is an area where there are steps the Council can take in 2025/26 to mitigate the impact on the timeline for rebuilding of assurance in future years. This allows the audit and finance team’s effort to be focused for 2024/25 on those areas where it is more difficult to rebuild assurance, and hence those areas which will ultimately be of most benefit in supporting future audit opinions. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary (cont.) 2024/25 conclusions (cont.) 8 Going concern Where a disclaimer of opinion is issued on the financial statements, we do not conclude on whether the use of the going concern basis of accounting is appropriate. We however draw attention to the fact that the financial statement disclosures on going concern highlight the significant financial challenges facing the Council and conclude that a material uncertainty over the Council’s ability to continue as a going concern exists due to the reliance of the Council on government agreement to its request for exceptional financial support to avoid having to issue a Section 114 Notice. The Council has been in circumstances where the Council’s Section 151 Officer has had to give serious consideration as to whether to issue a Section 114 Notice for some time. The decision as to whether to issue a Section 114 Notice is a personal one for the Council’s Section 151 Officer and is a key judgement they have to make. The Council’s Section 151 Officer has sought legal advice on their decision not to issue a Section 114 Notice whilst discussions with the Ministry for Housing, Communities & Local Government (MHCLG) are ongoing over exceptional financial support, which further highlighted that the decision as to whether to issue a Section 114 Notice is judgemental and for the Section 151 Officer to make, but acknowledged it may be reasonable in principle to defer such a notice whilst there remained a “reasonable prospect” of support being received. The continued deterioration in the Council’s financial position only increases the risk that a Section 114 Notice will need to be issued. Consistency of the annual governance statement We were satisfied that the circumstances set out within the draft annual governance statement are consistent with our understanding of the Council. Management should however update the final annual governance statement to reflect our conclusions on the Council’s value for money arrangements for 2024/25, as summarised above and set out in more detail within Section 03. We however draw attention to the overall conclusion of the Council that “internal control and governance systems as set out in the Local Code of Governance were in place for the financial year 2024/25. However, there were a number of key areas of improvement to be taken further during 2025/26”. Given the significance of the matters highlighted within the annual governance statement as areas for improvement, the ‘no assurance’ conclusion of the Council’s internal auditor for the period and the observations set out within Section 03 of this report, we are unable to come to the same conclusion. Consistency of the other information published with the financial statements Financial information in the narrative statement and published with the financial statements was consistent with the draft unaudited accounts, other than some minor rounding differences. Management should however ensure that if the financial statements are amended during the audit process, any changes made are appropriately reflected within the other information published alongside the final financial statements. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary 2024/25 conclusions (cont.) 9 Consistency of the Pension Fund annual report and other information published with the financial statements Audit work in relation to the audit of the Hillingdon Pension Fund is substantively complete. However we anticipate that the audit opinion will be issued at the same time as the audit opinion on the Council’s financial statements. An unmodified audit opinion will be issued in respect of the Pension Fund financial statements. Based on the near -final versions provided for audit, financial information in the Pension Fund Annual Report and published with the financial statements is consistent with the audited accounts. Whole of Government Accounts We have not yet concluded the procedures required by the National Audit Office (NAO) on the Whole of Government Accounts submission, as the NAO have not yet confirmed the final reporting position and whether any questions will be raised on individual returns. We cannot issue our Audit Certificate until these procedures are complete. Certificate We will issue our Audit Certificate either as part of our audit report or, if later, upon receipt of confirmation from the NAO that no further procedures will be requested in relation to the Council’s Whole of Government Accounts submission. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary Under the 2024 Code, we are required to consider whether the Council has put in place ‘proper arrangements’ to secure economy, efficiency and effectiveness in its use of resources. The Code requires the auditor to design their work to provide them with sufficient assurance to enable them to report to the Council a commentary against specified reporting criteria (see below) on the arrangements the Council has in place to secure value for money through economic, efficient and effective use of its resources for the relevant period. We do not issue a ‘conclusion’ or ‘opinion’, but where significant weaknesses are identified we will report by exception in the auditor’s report on the financial statements. The specified reporting criteria are: • 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. • 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. Value for money scope 10 Arrangements for securing value for money Financial Sustainability Improving Economy, Efficiency & Effectiveness Governance Arrangements for securing value for money In undertaking our procedures to understand the body’s arrangements against the specified reporting criteria, we identify whether there are risks of significant weakness which require us to complete additional risk-based procedures. AGN 03 sets out considerations for auditors in completing and documenting their work and includes consideration of: • our cumulative audit knowledge and experience as your auditor; • reports from internal audit which may provide an indication of arrangements that are not operating effectively; • our review of the Council’s committee reports; • meetings with the Council’s management, including the Chief Executive, Section 151 Officer and Monitoring Officer; • information from external sources; and • evaluation of associated documentation through our regular engagement with the Council’s management and the finance team. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary Our commentary for 2024/25 is presented in Section 03. This section provides a summary of our understanding of the arrangemen ts at the Council, as determined from our evaluation of the evidence obtained in relation to the three reporting criteria (see table below) throughout 2024/25 and up to the date of issuing this draft Auditor’s Annual Report, which must be issued by 30 November 2025. The recommendations we have agreed upon with the Council are included in Appendices A, B and C. The final version of this report will be issued alongside the signed audit report concluding on the 2024/25 year. In compliance with the 2024 Code, we are required to provide commentary against the three specified reporting criteria. The t able below outlines these criteria, indicates whether a significant risk of weakness was identified during our planning procedures, and details our current conclusi ons regarding any significant weaknesses within your arrangements. Reporting 11 Reporting criteria Risks of significant weaknesses in arrangements identified? Actual significant weaknesses in arrangements identified? Financial sustainability: How the Council plans and manages its resources to ensure it can continue to deliver its services • Financial sustainability Yes • Financial sustainability Governance: How the Council ensures that it makes informed decisions and properly manages its risks • Quality of Council information • Capacity of the finance team • Implementation of Oracle Fusion and Oracle EPM* Yes • Quality of Council information • Capacity of the finance team • Implementation of Oracle Fusion and Oracle EPM* Improving economy, efficiency and effectiveness: How the Council uses information about its costs and performance to improve the way it manages and delivers its services No additional risks, however risks above have implications for the effectiveness of arrangements under this criteria. No additional weaknesses Weaknesses above, however, have implications for the effectiveness of arrangements under this criteria. * In our Audit Planning Report we did not identify the implementation of Oracle Fusion and Oracle EPM as a risk of significan t weakness but noted “At this time, we do not consider it necessary to identify a separate risk of significant weakness in relation to the Oracle system upgrade as it is considered as part of the risks over the quality of Council information and capacity of the Finance Team, however we are alert to the potential for value for money observations (as well as financial statement impacts) to arise from the arrangements around the implementation of this new system itself and will keep this unde r review as we execute our audit procedures over the systems upgrade”. Based on our observations set out within our VFM commentary in Section 03, we have subsequently identified this as a discreet risk of significant weakness and concluded that a significant weakness in the Council’s arrangements existed. Further details are provided within our VFM commentary. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Executive Summary The FRC Ethical Standard requires that we provide details of all relationships between Ernst & Young (EY) and the Council, and its members and senior management and its affiliates, including all services provided by us and our network to the Council, its members and senior management and its affiliates, and other services provided to other known connected parties that we consider may reasonably be thought to bear on the our integrity or objectiv ity, including those that could compromise independence and the related safeguards that are in place and why they address the threats. There are no relationships from 1 April 2024 to the date of this report, which we consider may reasonably be thought to bear on our independence and objectivity. Independence Ernst & Young (EY) has policies and procedures that instil professional values as part of firm culture and ensure that the highe st standards of objectivity, independence and integrity are maintained. Details of the key policies and processes in place within EY for maintaining objectivity and independence can be found in our annual Transparency Report which the firm is required to publish by law. The most recent version of this Report is for the year end 27 June 2025: EY UK 2025 Transparency Report | EY – UK EY Transparency Report 2024 12 XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit of financial statements02 13London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit of financial statements 14 Key findings The Statement of Accounts is an important tool for the Council to show how it has used public money and how it can demonstrate its financial management and financial health. Our audit of the 2024/25 financial statements is currently in progress. We will report our findings in our Audit Results Repo rt to the February 2026 Audit Committee meeting. Commencement of our year-end audit fieldwork was delayed as a result of the Council not publishing its draft Statement of Accounts until 22 September 2025. We have worked with management to reschedule the availability of our audit resources, however this significan t delay in the ability to commence our audit work means there is limited ability for us to accommodate delays of the nature encountered in the delivery of the 2 023/24 audit arising from inadequate quality supporting schedules or working papers. If we encounter such delays for 2024/25, these will impact on the level of as surance we are able to report within our Audit Results Report. To date we have not encountered such delays in the execution of year -end audit work for 2024/25, and management have taken a number of steps to address the causes of prior year difficulties. Following discussions with management, we have agreed a management-imposed limitation of scope to our audit to exclude the valua tions of the Council’s land and building assets from our work over the closing balance sheet for 2024/25. This was agreed as the valuation of land and buildings is a complex area which requires significant effort from both the Council and audit to test, However this is an area where there are steps the Council can tak e in 2025/26 to mitigate the impact on the timeline for rebuilding of assurance in future years. This allows the audit and finance team’s effort to be focused for 2024/25 on those areas where it is more difficult to rebuild assurance, and hence those areas which will ultimately be of most benefit in supporting future audit opinio ns. As our audit fieldwork has only recently commenced, we are not yet able to conclude on our audit risks and we will do so with in our Audit Results Report. Financial statement reporting assessment Management, and the Audit Committee as the Council’s body charged with governance, have an essential role in supporting the delivery of an efficient and effective audit. Our ability to complete the audit is dependent on the timely formulation of appropriately supported accounting judgements , provision of accurate and relevant supporting evidence, access to the finance team and management’s responsiveness to issues identified during the audit. The table over-page sets out our views on the effectiveness of the Council’s arrangements to support external financial reporting across a range of relevant measures. Where we have been unable to undertake all planned procedures this is likely to extend the timetable to recover assurance on the Council’s financial statements. In addition, the illustrative timescale for the process of re-building assurance set out in the NAO’s Local Audit Reset and Recovery Implementation Guidance (LARRIG) 01, together with our view of the Council’s actual progress against that timescale, the reasons for that and what still needs to be done to successfully rebuild assurance is set out on page 18. The timetable set out in LARRIG 01 assumes that disclaimers for 2022/23 and all prio r open audit years were issued by the statutory backstop date of 13 December 2024. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit of financial statements (cont.) 15 Financial statement reporting assessment (cont.) Area Status Explanation Further detail R A G Timeliness of the draft financial statements Ineffective The Council published its draft financial statements on 22 September 2025, nearly 3 months after the statutory deadline for commencement of the public inspection period of 1 July 2025. Whilst the delay was partly a result of the Council seeking to ensure the quality of the draft financial statements (see below), difficulties arising from the implementation of Oracle Fusion and the significant other demands on the Council’s finance team were also significant factors. We consider this further within our value for money commentary. See Section 03. Quality and completeness of the draft financial statements Requires improvement The Council has sought to strengthen controls and internal review processes supporting the preparation of the draft financial statements since the prior year. Our work to date indicates that this has resulted in an improvement in the quality of the Council’s draft financial statements in comparison to 2023/24. We however note that there remain some significant issues with the Council’s draft financial statements, including the presentation of multiple inappropriate restatements of the prior period comparative information. We are continuing to work through these with management, but, notwithstanding the fact the audit opinion on the 2023/24 financial statements was disclaimed, we would have expected to be informed of planned restatement of previous periods prior to such restatements being included within a published statement of accounts. - Delivery of working papers in accordance with agreed client assistance schedule Requires improvement Key working papers and supporting schedules were not delivered to the originally agreed timetable, however this corresponded with the significant delay in the Council’s publication of its draft financial statements. Once the full extent of likely delay was communicated to us, we worked with management to agree a revised timetable for the provision of working papers and other audit supports. This process is ongoing, the Council has mostly delivered against the revised timetable however we are beginning to see indicators of slippage which may impact our ability to conclude all planned audit procedures. - XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit of financial statements (cont.) 16 Financial statement reporting assessment (cont.) Area Status Explanation Further detail R A G Quality of working papers and supporting evidence Requires improvement The Council has sought to address audit feedback over the quality of working papers and supporting evidence provided as part of the 2023/24 audit. The steps taken have had a positive impact, with an improvement noted in the quality of supporting working papers and evidence. There are however some remaining quality issues, in particular where the Council relies on information from other bodies (such as its maintained schools) as well as where breakdowns contain high volumes of ins-and-outs making audit focus on the true underlying transactions difficult and increasing audit sample sizes. - Timeliness and quality of evidence supporting key accounting estimates Unable to conclude yet The main accounting estimates within the Council’s financial statements are the valuation of land and buildings, the valuation of pension balances and the Council’s bad debt provisions. Due to the agreed limitation of scope around the valuation of land and buildings, we have not reviewed evidence supporting these valuations. Support for the Council’s pension balances was provided to the original pre-delay timetable, however due to the delay in commencement of the audit our procedures over these balances have only recently commenced. We have not yet received the supporting evidence for the Council’s bad debt provisions. - Access to finance team and personnel to support the audit in accordance with agreed project plan Requires improvement There has been significant change within the senior roles of the Council’s finance team during the course of the 2024/25 audit. Council staff, both current and former, have been available to audit personnel when required and have actively engaged with the audit process however the level of turnover has impacted on the continuity of discussions and resulted in some delays and the need to revisit previous discussions with new Council officers. - XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Audit of financial statements (cont.) 17 Financial statement reporting assessment (cont.) Area Status Explanation Further detail R A G Volume and value of identified misstatements Unable to conclude yet Due to the delay in commencement of our audit, we have not yet completed sufficient audit work to conclude on the volume and value of identified misstatements. - Volume of misstatements in disclosure Unable to conclude yet Due to the delay in commencement of our audit, we have not yet completed sufficient audit work to conclude on the volume of identified misstatements in disclosures. - XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 EXPECTED STATUS Disclaimer opinion • Pervasive gaps over opening balances, comparators, and in-year movements. • Lack of assurance over PPE valued on a cyclical basis, from the 22/23 audit. • Lack of assurance over reserves (cumulative nature). Disclaimer or qualified opinion Continuing impact from 2023/24: • Lack of assurance over all the comparator I&E transactions, PPE (cyclical valuations) and reserves. • Due to gaps in PPE assurance, there is a likely lack of assurance over related in-year transactions. • Potential for qualified except for, but more likely to be disclaimed Qualified (except for) opinion • Assurance in place over opening and closing balances, and assurance gained over each in-year movement. • A possible gap over specific comparator balances may remain on PPE where items have not been valued since 2022/23. The impact of this on the CIES & reserves would need to be assessed. • However, with the anticipation of incorporating build-back guidance focusing on reserves, there is increasing probability that gaps in assurance can be specifically identified, leading to higher likelihood of a qualified report (not disclaimed). Unqualified opinion • Expectation that all items resolved. • Auditor will need to reassess the PPE cyclical valuation impact - but may be able to work with the authority to ensure that items previously valued in 2022/23 were revalued by this time or would be immaterial. CURRENT AUDIT STATUS OF THE COUNCIL  The Council’s progress was behind the expected timescales set out in LARRIG 01.  This is because we were unable to complete planned audit procedures as the Council did not provide good quality working papers or sufficient and appropriate evidence to support financial transactions in accordance with agreed timescales. Audit of financial statements (cont.) Current audit year 2024/252023/24 2025/26 2026/27 Progress to full assurance Set out below is the illustrative timescale for the process of re-building assurance set out in the NAO’s Local Audit Reset and Recovery Implementation Guidance (LARRIG) 01, together with our view of the Council’s actual progress against that timescale, the reasons for that and what still needs to be done to successfully rebuild assurance. The timetable set out in LARRIG 01 assumes that disclaimers for 2022/23 and all prior open audit years wer e issued by the statutory backstop date of 13 December 2024. CURRENT AUDIT STATUS OF THE COUNCIL  The Council’s progress will be behind the expected timescales set out in LARRIG 01, and the opinion for 2024/25 will be disclaimed.  Audit work over the 2024/25 statements is ongoing due to the delayed publication of the Council’s financial statements, and will not include coverage of land and building valuations as at 31 March 2025. The extent to which the Council is behind the expected timescales will depend on the Council’s ability to support the audit process between now and February 2026. LIKELY AUDIT STATUS OF THE COUNCIL  The Council is currently 1-2 years behind the illustrative timescale for the process of re-building assurance, as a result of the fact not all audit procedures were able to be completed during either 2023/24 or 2024/25.  The audit report on the Council’s 2025/26 financial statements will therefore also need to be disclaimed due to the pervasive gaps in assurance over opening balances, comparators and in-year movements (akin to the 2023/24 year in the above indicative timetable). LIKELY AUDIT STATUS OF THE COUNCIL  The ability to issue a qualified opinion on the Council’s 2026/27 financial statements will depend on the ability to complete audit procedures during the remainder of the 2024/25 audit and during the 2025/26 and 2026/27 audits, as well as the Council taking steps to support the rebuilding of assurance over PPE.  In-line with the indicative timetable for 2024/25 and 2025/26 and the fact the Council is already 1-2 years behind this timetable, it is possible that the 2026/27 opinion may also need to be disclaimed if audit procedures are not supported. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Value for Money commentary03 19London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Significant risk identified Significant weakness identified Financial sustainability How the Council plans and manages its resources to ensure it can continue to deliver its services. • Financial sustainability • Financial sustainability Governance How the Council ensures that it makes informed decisions and properly manages its risks. • Quality of Council information • Capacity of the finance team • Implementation of Oracle Fusion and Oracle EPM • Quality of Council information • Capacity of the finance team • Implementation of Oracle Fusion and Oracle EPM Improving economy, efficiency and effectiveness How the Council uses information about its costs and performance to improve the way it manages and delivers its services. No additional risks, however risks above have implications for the effectiveness of arrangements under this criteria. No additional weaknesses Weaknesses above, however, have implications for the effectiveness of arrangements under this criteria. Value for Money 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 the financial statements, the Council is required to bring together commentary on the governance framework and how this has operated during the period in a governance statement. In preparing the governance statement, the Council tailors the content to reflect its own individual circumstances, consistent with the requirements of the relevant accounting and reporting framework and having regard to any guidance issued in support of that framework. This includes a requirement to provide commentary on arrangements for securing value for money from the use of resources. The Council’s responsibilities for value for money Under the revised NAO Code we are required to consider whether the Council has put in place ‘proper arrangements’ to secure economy, efficiency and effectiveness on its use of resources. The Code requires the auditor to design their work to provide them with sufficient ass urance to enable them to report to the Council a commentary against specified reporting criteria on the arrangements the Council has in place to secure value for mo ney through economic, efficient and effective use of its resources for the relevant period. Our summary is below: Our responsibilities 20 XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 VFM commentary: Financial Sustainability Our audit procedures obtained assurance over the arrangements in place for the Financial Sustainability sub-criteria set out in AGN03: • How the body ensures that it identifies all the significant financial pressures that are relevant to its short and medium -term plans and builds these into them; • How the body plans to bridge its funding gaps and identifies achievable savings; • How the body plans finances to support the sustainable delivery of services in accordance with strategic and statutory prioritie s; • How the body ensures that its financial plan is consistent with other plans such as workforce, capital, investment, and other operational planning which may include working with other local public bodies as part of a wider system; and • How the body identifies and manages risks to financial resilience, e.g. unplanned changes in demand, including challenge of t he assumptions underlying its plans. Financial sustainability: Our audit procedures Within our Audit Planning Report, we identified one risk of a significant weakness in the Council’s arrangements for financial sustainability relating to its overall management of its financial sustainability. In the prior year, one significant weakness in the Council’s arrangements for financial sustainability was identified in relation to the same matter and we made 4 recommendations to the Council. On 24 July 2025, we escalated these recommendations to statutory recommendations under Section 24 Schedule 7(2) of the Local Aud it and Accountability Act 2014. We also made 3 additional recommendations to the Council, also as statutory recommendations under Section 24 Schedule 7 (2) of the Local Audit and Accountability Act 2014. Further explanation for this escalation is on the following pages. We summarise our consideration of the Council’s progress against the prior year recommendations in Appendix B, however we are not satisfied that they have been implemented satisfactorily. Significant risks identified during planning procedures 21 XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 VFM commentary: Financial Sustainability Overview of our conclusions 22 Based on the work performed, we have identified a significant weakness in the Council’s arrangements that we will be reporting by exception in relation to the Council’s management of its financial sustainability. Recommendations 1. We recommend that the Council ensures it has detailed implementation plans supporting all of the planned savings included wit hin its 2025/26 budget and future medium-term financial strategy, and identifies and develops implementation plans for further savings which can be pursued should additional budgetary pressures emerge or the Council fails to achieve all of its currently planned savings. 2. We recommend that the Council reviews its service delivery models to ensure that they are efficient, represent value for money a nd achieve the outcomes required for the resources invested. Where opportunities to improve service delivery models are identified, the Council 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 Council should balance its schools budget to prevent further growth in its Dedicated Schools Grant (DSG ) deficit. In the absence of confirmed alternative arrangements, the Council should also perform scenario planning for how it would manage the impact of t he current deficit on its financial position when the current statutory override ends in March 2028. 4. We recommend that the Council review its financial forecasting processes to understand why significant financial pressures, o ver and above those anticipated and reflected in the Council’s annual budget, emerge and ensure future forecasting reflects the lessons learned. 5. We recommend that the Council urgently establishes a clear understanding of its current financial position, including the ext ent to which that position has diverged from the assumptions underpinning the 2025/26 budget and may require immediate action to prevent further depletion o f reserves during 2025/26. These recommendations were issued to the Council as statutory recommendations under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 on 24 July 2025. XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Confidential — All Rights Reserved © Ernst & Young LLP 2025 Financial Sustainability considerations The Council’s budget for 2024/25 was approved at the meeting of full Council held on 22 February 2024, and included net expenditure on services to be funded through Council Tax, Non-Domestic Rates and government grants of £284.4 million. The Council’s gross expenditure is significantly higher than this, and includes spending in relation to schools and the Housing Revenue Account for which there are separate budgets, however the net expenditur e on services is the key budgetary total against which the Council measures its financial performance. In producing a balanced budget for 2024/25, the Council included savings totalling £15.8 million which would require delivery during the year. Subsequent to this, the Council identified £5.7 million of savings which were planned for delivery in 2023/24 but would require delivery during 2 024/25 instead bringing the total level of savings required to be delivered during 2024/25 to £22.5 million. Given that the Council is required to have its budget for the following financial year in place before the commencement of th e period to which it relates, the Council’s budget for 2024/25 was prepared prior to conclusion of the year ended 31 March 2024 and required the Council to make assumptions about the level of reserves it would carry into 2024/25. The Council’s final reserves balance at 31 March 2024 was £35.2 million, £2.2 million lower than assumed in setting its 2024/25 budget and only £3.2 million above the £32.0 million minimum level determined by the Council’s Section 151 Officer. The Council also reported a cumulative deficit on its Dedicated Schools Grant (DSG) at 31 March 2024 of £47.5 million, which we highlighted in our value for money commentary for the year ended 31 March 2024 exceeded the Council’s level of reserves and posed a significant risk to the Council’s financial viability. Note: The Council reports and monitors its level of reserves in reference to what it terms its ‘available usable reserves’, which consist of its General Fund and earmarked reserves not already committed and represent the reserves available to the Council to meet unplanned budgetary pressures. Throughout this commentary where we refer to the Council’s level of reserves we are referring to this measure unless otherwise stated. The Council’s budget for the year ended 31 March 2025 23 XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Identification of risks and pressures By the end of May 2024, the Council had identified a number of significant financial risks and pressures including increased demand for homelessness and adult social care services over-and-above levels assumed in setting its 2024/25 budget which it had quantified at £26.8 million. The emergence of significant financial pressures early in the financial year was also noted in 2023/24, and the recurring nature of this observation is indicative t hat the Council has not accurately captured the scale of the increasing demand for its services or the cost pressures it faces. In response to the pressures emerging early in the financial year, the Council launched a Council- wide zero-based budgeting exercise to scrutinise and challenge the assumptions underpinning its budget and future financial forecasts. The Council also brought in external budgeting and financ ial management support to assist with this exercise. The zero-based budgeting exercised performed by the Council consisted of a root -and-branch review of all of the Council’s significant budgets, and took several months to complete. During this time, the Council’s financial forecasts and assessment of its likely outturn against budget for 2024/25 were subject to significant fluctuations and the Council opted not to provide formal updated outturn assessments for June or July 2024. The Council was a lso forecasting the in-year deficit on its schools budget to be £16.1 million, a significant reduction on the £25.6 million deficit in the prior year but still a signi ficant increase to the cumulative deficit. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Financial Sustainability considerations By August 2024, the Council had concluded the zero-based budgeting exercise and established that the financial risks and pressur es arising from demographic growth, service demand pressures and challenges in delivery of some of the planned savings were more significant than previou sly identified. The total forecast deficit against budget for the year was quantified at £44.3 million and prompted the Council to take a number of measures to seek to mitigate this impact, including: • Identifying a number of ‘strategic management actions’ which required further development but were expected to deliver of £11.9 million of additional savings, including through containing inflationary uplifts within Health and Social Care to a level below the budgeted uplift , additional income from the West London Waste Authority and interventions to manage demand for homelessness services. • The introduction of senior officer star chambers, the focus of which were to build upon the zero -based budgeting exercise and identify urgent actions which could be taken to recover the in-year financial position. Star chamber sessions were held for each service area within the Council, as well as cross- service thematic sessions also taking place. As of August 2024, these sessions had identified £15.9 million of savings, but w ere an ongoing exercise. • A review of the Council’s balance sheet for options to realise existing assets, which was expected to generate a further £10.0 million of savings. Not all of the above plans had been fully developed by the Council, but even if fully delivered there remained a forecast oversp end of £6.5 million for which mitigating actions had not yet been identified by the Council. As a result, the Council assessed that there was a possibility that reserves would drop below the minimum recommended level of £32.0 million before the end of 2024/25. Identification of risks and pressures (cont.) 24 XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report The basis for the 2025/26 budget During the remainder of the year, the Council continued to invest significant time and effort in identifying further measures to respond to its financial pressures including ongoing use of senior officer star chambers. By December 2024, the Council had managed to implement a number of act ions it had identified as of August, as well as a number of additional actions subsequently identified. In addition, it planned for an additional assumed £11.0 million of revenue expenditure capable of being funded through the capital budget identification of which remained in progress. Even with these measures, th e Council was still forecasting a significant overspend for the year of £10.1 million. This forecast overspend position, as well as the impact it would have upon the Council’s reserves as at 31 March 2025, was reflected in the preparation of the Council’s budget for 2025/26 which assumed reserves at 31 March 2025 would be £24.5 million, £7.5 million below the recommended minimum level. This fact was acknowledged by the Council’s Section 151 Officer in their Section 25 Statement accompanying the Council’s 2025/26 budget, which noted that “Reserves are adequate, given the pressures the Council faces but this is a marginal call judgement. To be clear this is very different to concluding that the reserves are ample, but rather that reserves are only just enough. Reserves are very low and must be rebuilt”. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Financial Sustainability considerations By February 2025, the Council had assessed the deficit for the year as increasing, and reserves at 31 March 2025 of decreasin g, by a further £5.6 million against the assumptions underpinning its 2025/26 budget. A significant contributor to the forecast deficit for the year has been the non- achievement of savings, with £9.4 million of planned savings being written-out as either unachievable or superceded by the rebasing of service operating budgets t hrough the zero-based budgets exercise and £2.7 million identified as having ‘significant problems in delivery’. The Council would ordinarily report on its outturn against budget for the previous financial year at its June Cabinet meeting . Reporting on the Council’s outturn against budget for the 2024/25 financial year was delayed from the June Cabinet meeting to the July Cabinet meeting due to diffi culties the Council has encountered in confirming its final outturn for 2024/25. Publication of the Council’s 2024/25 outturn report occurred on 22 July 2025, two days before the July Cabinet meeting, and highlighted the reported position as draft due to ongoing review of debtor, creditor and provision balan ces at 31 March 2025. The 2024/25 outturn report showed significant further deterioration in the Council’s financial performance for 2024/25 from that assessed in February 2025. The final outturn reported by the Council was a deficit of £31.5 million, consisting of a £17.4 million overspend against the pla nned budget for 2024/25 and £14.1 million of one-off impacts arising from a balance sheet review performed as part of the Council’s Financial Modernisation Programme (see note on page 28). As a result, the Council’s reserves at 31 March 2025 were just £6.7 million. This level of reserves is £25.3 million below the minimum level determined by the Council’s Section 151 Officer for 2024/25, and £17.8 million below the level of reserves assumed to exist at 31 March 2025 in setting t he Council’s 2025-26 budget. The 2024/25 outturn report highlighted the assessment that “these reserves are deemed to be inadequate by the Section 151 Officer”. The Council’s 2024/25 outturn report also showed that its cumulative DSG deficit increased to £65.6 million at 31 March 2025. This balance is almost ten times the remaining reserves of the Council, and is likely to continue to increase as the Council does not have plans to balance its sc hools budget until 2027/28. The statutory override currently in place allowing the Council to treat its DSG deficit as an unusable reserve has been extended from March 2026 to March 2028, and the Council is wholly reliant on that being further extended or an alternative central funding mechanism being established by central gov ernment. Exhibit 01 on page 29 demonstrates how the Council’s assessment of its financial performance for 2024/25 has deteriorated through the financial year. Its assessment for the 2025/26 financial year to date is also shown (see commentary below). Exhibit 02 on the same page demonstra tes the decline in the Council’s reserves over time. Final 2024/25 outturn 25 XYZ Auditor’s Annual London Borough of Hillingdon Auditor’s Annual Report Savings within the Council’s 2025/26 budget In setting a balanced budget for 2025/26, the Council opted to increase Council Tax by the maximum amount permitted without h olding a local referendum but still identified the need for £34.0 million of savings to be delivered during 2025/26. As a result of further savings of £4.8 million originally planned for delivery in 2024/25 but carried-forward for delivery in 2025/26 following conclusion of 2024/25, the total level of savings the Council is r equired to deliver during 2025/26 is £38.8 million. This represents a significant increase on the £22.5 million required during 2024/25, and against which the Council has reported achieving just £7.1 million - though the Council has also delivered additional in-year savings not included within the original £22.5 million p lanned savings for 2024/25. The level of savings required during 2025/26 are highly significant in comparison to the available reserves of the Council. The required savings of £38.4 million represent more than five times the reserves of the Council at the start of the 2025/26 financial year. This means that non -achievement of savings during 2025/26 poses a serious threat to the financial viability of the Council, and the Council has insufficient reserves to absorb any sig nificant non-achievement of planned savings. Confidential — All Rights Reserved © Ernst & Young LLP 2025 Financial Sustainability considerations The Council itself has identified that there are significant doubts over the reliability of the budget it has set for 2025/26 , including the sufficiency of required savings. These concerns were highlighted within the budget report itself, which stated “The Council has two significant weaknesses reported on by the External Auditor EY that have been reported to the Audit Committee on 11th February. These areas are financial sustainability and quality of the Council’s information. This information quality has remained and been a significant issue in building the budget for 2025-26”. Concerns over the reliability of the Council’s 2025/26 budget were further highlighted by the Council’s Section 151 Officer in their Section 25 Statement accompanying the Council’s 2025/26 budget, which concluded that “The estimates are not sufficiently robust for the purposes of the budget calculations, given the scale of delivery needed, and the issues and uncertainties set out above” [within the Section 25 Statement]. The emergence of £5.6 million of additional financial pressures by the end of period 11 in 2024/25, beyond those considered in s etting the 2025/26 budget and of which a significant proportion are expected to continue into 2025/26, also concerned the Council’s management. In March 2025, members of the Council’s Corporate Management Team performed a review of their financial forecasts for 2025/26 which informed a revised ‘P0’ forecast which was presented to the Council’s Corporate Management Team in early April 2025. This ‘P0’ forecast indicated a significant deterioration in outlook for 2025/26 from that assumed in setting the Council’s 2025/26 budget, including consumption of the majority of the Council’s remaining reserves by 31 March 2026 (at the time of the ‘P0’ report, reserves at 31 March 2025 were still expected to be significantly higher than those subsequently reported). There were however significant reservations amongst the Council’s Corporate Management Team over the reliability of this forecast, with senior officers describing it as ‘unreliable’ and ‘not evidence based’. The Council’s Chief Executive held one-to-one meetings with senior officers to review 2025/26 budgets on a line-by-line basis, however the Council was not able to finalise a forecast it did consider reliable until the P2 (May 2025) budget monitoring report presented to the Council’s Cabinet in July 2025 alongside the 2024/25 outturn report. The revised assessment set out in the P2 forecast anticipated further overspends of £16.4 million against the Council’s approved budget for 2025/26. The forecast overspend of £16.4 million was also after the full use of £10.5 million of contingency included in the 2025/26 budget, £5.0 m illion of anticipated interventions and assuming savings of £33.2 million (out of the £38.8 million originally planned) can still be delivered. By P5, the forecast o verspend for

Audit Results Report Year ended 31 March 2025 London Borough of Hillingdon 3 February 2026 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. Audit Committee London Borough of Hillingdon Hillingdon Civic Centre 225-226 High St Uxbridge UB8 1UW 3 February 2026 Dear Audit Committee members 2024/25 Audit Results Report We attach our Audit Results Report, summarising the status of our audit for the forthcoming meeting of the Audit Committee. We will update the Audit Committee at its meeting scheduled for 10 February 2026 on further progress to that date and explain the remaining steps to the issue of our final opinion. The audit is designed to express an opinion on the 2024/25 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’s (the Council’s) accounting policies and judgements and material internal control findings. Each year sees further enhancements to the level of audit challenge, the exercise of professional judgement and the quality of evidence required to achieve the robust professional scepticism that society expects. We thank the management team for supporting this process. 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 consider and report on the adequacy of the Council’s external financial reporting arrangements and the effectiveness of the Audit Committee in fulfilling its role in those arrangements as part of our assessment of value for money arrangements; and consider the use of other statutory reporting powers to draw attention to weaknesses in those arrangements where we consider it necessary to do so. We draw Audit Committee members’ and officers’ attention to the Public Sector Audit Appointment Limited’s Statement of Responsibilities (paragraphs 26-28) which clearly sets out what is expected of audited bodies in preparing their financial statements. This report is intended solely for the information and use of the Audit Committee and management, and is not intended to be and should not be used by anyone other than these specified parties. We welcome the opportunity to discuss the contents of this report with you at the Audit Committee meeting on 10 February 2026. Yours faithfully Stephen Reid Partner, For and on behalf of Ernst & Young LLP Enc Confidential — All Rights Reserved Confidential — All Rights Reserved London Borough of Hillingdon Audit Results 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 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. 01 04 07 Areas of Audit Focus02Executive Summary 03 05 06 08 09 Value for Money Audit Report Audit Differences Assessment of Control Environment Other Reporting Issues Independence Appendices content Confidential — All Rights Reserved Executive Summary01 4London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Executive Summary – Context for the Audit Context for the audit - Measures to address local audit delays 5 Timely, high-quality financial reporting and audit of local bodies is a vital part of the democratic system. It supports good decision making by local bodies and ensures transparency and accountability to local taxpayers. There is general agreement that the backlog in the publication of audited financial statements by local bodies has grown to an unacceptable level and there is a clear recognition that all stakeholders in the sector need to work together to address this. Reasons for the backlog across the system have been widely reported and include:  lack of capacity within the local authority financial accounting profession;  increased complexity of reporting requirements within the sector;  a lack of auditors and audit firms with public sector experience; and  increased regulatory pressure on auditors, which in turn has increased the scope and extent of audit procedures performed. The Ministry for Housing, Communities and Local Government (MHCLG) has worked collaboratively with the Financial Reporting Council (FRC) and other system partners, to develop and implement measures to clear the backlog. 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 December 2024. This has now been delivered.  Phase 2: Recovery from Phase 1, starting from 2023/24, in a way that does not cause a recurrence of the backlog by using backstop dates to allow assurance to be rebuilt over multiple audit cycles. The backstop date for audit of the 2024/25 financial statements is 27 February 2026. This process of rebuilding assurance will take several years to achieve. The National Audit Office (NAO), supported by the MHCLG and the FRC, are responsible for issuing guidance and have been liaising with audit firms to understand the complexities involved and to seek to ensure a more consistent approach for restoring assurance for disclaimed periods. The NAO has now published its Local Audit Reset and Recovery Implementation Guidance (LARRIG) 06 setting out considerations for rebuilding assurance following the issue of disclaimed audit opinions under the backstop arrangements. The guidance predominantly focuses on the rebuilding of assurance over reserves, where it is more difficult to obtain assurance because of the way in which they accumulate over successive years. It also continues to recognise that the approach needed to rebuild assurance will differ authority to authority and will need to be considered in the context of both inherent risk factors which all authorities subject to recently disclaimed opinions will share, and factors specific to each individual authority’s system of internal control and financial reporting. We will continue to consider the impact of this on our audit approach. In 2024/25 we have continued to focus our audit on the closing balance sheet and in-year transactions, which allows the build back of assurances over a large number of balances within the financial statements where audit procedures can be completed for successive years.  Phase 3: Reform involving addressing systemic challenges in the system and embedding timely financial reporting and audit. As reported in our 18 March 2025 Audit Results Report, we issued a disclaimer of opinion on the Council’s 2023/24 financial statements under these arrangements to reset and recover local government audit. The audit opinion on the Council’s 2022/23 financial statements was also disclaimed. In 2024/25, we have continued to focus our audit on the closing balance sheet and in-year transactions. Although the level of assurance gained has increased, we have been unable to complete all of our planned audit procedures over the balance sheet as at 31 March 2025 or the income and expenditure during 2024/25. We have not therefore obtained sufficient evidence to have reasonable assurance over all in-year movements and closing balances. As a result of the disclaimer of opinion on the 2023/24 financial statements, we also do not have assurance over some brought forward balances from 2023/24 where we did not gain assurance (the opening balances). This means we do not have assurance over all 2024/25 in-year movements and the comparative prior year movements. We also do not have assurance over all the 2023/24 comparative balances disclosed in the 2024/25 financial statements. Taken together with the requirement to conclude our work by the 2024/25 backstop date, the lack of evidence over these movements and balances mean we are unable to conclude that the 2024/25 financial statements are free from material and pervasive misstatement of the financial statements. We therefore anticipate issuing a disclaimed 2024/25 audit opinion. Appendix A sets out the current position of the London Borough of Hillingdon in rebuilding to return to a position of full assurance on its financial statements as compared with the timeline envisaged by the NAO’s LARRIG 01. This is informed by the summary of the assurances we have gained from our 2023/24 and 2024/25 audit procedures, set out at Appendix B. London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Scope update 6 In our Provisional Audit Planning Report presented at the 28 August 2025 Audit Committee meeting, we provided an overview 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:  Commencement of our year-end audit fieldwork was delayed as a result of the Council not publishing its draft Statement of Accounts until 22 September 2025, nearly three months after the statutory deadline for commencement of the public inspection period of 1 July 2025. Due to the impact of this on the available time to complete our audit procedures ahead of the backstop date, and capacity considerations within both the Council’s finance team and the audit team up to this date, there was an increased risk at the point we commenced our audit fieldwork that not all planned procedures would be completed and that this could impact the assurance over balances at 31 March 2025 which is able to be obtained and carried forward for the 2025/26 audit. Following discussions with management, we agreed a management-imposed limitation of scope to our audit to exclude the valuations of the Council’s land and building assets from our work over the closing balance sheet for 2024/25. This was agreed as the valuation of land and buildings is a complex area which requires significant effort from both the Council and audit to test, but is an area where there are steps the Council can take in 2025/26 to mitigate the impact on the timeline for rebuilding of assurance in future years. This allowed the audit and finance team’s effort to be focused for 2024/25 on those areas where it is more difficult to rebuild assurance, and hence those areas which will ultimately be of most benefit in supporting future audit opinions.  In our Provisional Audit Planning Report, we communicated that our audit procedures would be performed using a materiality of £12.6 million. We updated our planning materiality assessment using the draft results and have also reconsidered our risk assessment. Based on our materiality measure of gross expenditure on provision of services, we have updated our overall materiality assessment to £14.4 million (Provisional Audit Planning Report — £12.6 million). This results in updated performance materiality, at 50% of overall materiality, of £7.2 million, and an updated threshold for reporting misstatements of £720,000.  In our Provisional Audit Planning Report, we communicated that we had completed our initial value for money (VFM) risk assessment for planning purposes and had identified three risks of significant weakness regarding the Council’s ‘proper arrangements’ to secure economy, efficiency and effectiveness in its use of resources:  financial sustainability;  quality of Council Information (inc. impact on ability to support the external audit); and  capacity of the Finance Team We also reported that our VFM risk assessment is an iterative process and would be updated throughout the audit. Our Provisional Audit Planning Report noted “At this time, we do not consider it necessary to identify a separate risk of significant weakness in relation to the Oracle system upgrade as it is considered as part of the risks over the quality of Council information and capacity of the Finance Team, however we are alert to the potential for value for money observations (as well as financial statement impacts) to arise from the arrangements around the implementation of this new system itself and will keep this under review as we execute our audit procedures over the systems upgrade”. We have subsequently identified the implementation or Oracle Fusion and Oracle as an additional, discreet, risk of significant weakness. 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 delays in the provision of working papers and supporting information by the Council, including where such information is held outside of the Council’s finance team, and capacity limitations within the Council’s finance team. Due to the implementation of the backstop date of 27 February 2026 for the completion of the audit, during the execution of our audit we have worked with management where progress was not satisfactory to prioritise the Council’s and audit resources on those account areas which contribute the most towards the rebuilding of assurance following previous disclaimed audit reports and/or there was the highest probability of being able to complete our planned audit procedures by the backstop date. Consequently, we have not been able to complete 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 2023/24, to enable conclusion on whether the Council’s 2024/25 financial statements are free from material misstatement. A summary of the assurances we have gained from our 2024/25 audit procedures, along with those areas where we have not been able to gain the planned assurance, is set out at Appendix B. We therefore anticipate issuing a disclaimed 2024/25 audit opinion. London Borough of Hillingdon Audit Results Report Executive Summary Confidential — All Rights Reserved Status of the audit 7 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 those account areas which contribute the most towards the rebuilding of assurance following prior year disclaimed audit report and/or there was the highest probability of being able to complete our planned audit procedures by the backstop date. Our audit work in respect of prioritised areas is substantially complete. 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 been able to complete our audit procedures are set out in Appendix B. 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, including updated Annual Governance Statement, and performance of final audit checks thereon. Our expectation is that both the Annual Governance Statement and going concern narrative is updated to reflect the outcome of MHCLG’s consideration of the Council’s request for exceptional financial support, confirmation of which the Council is still awaiting from MHCLG.  Finalisation of the wording of our audit report, including the basis for disclaiming our audit opinion on the 2024/25 financial statements and the reporting of the significant weaknesses in the Council’s arrangements set out in Section 3.  Receipt of the signed management Letter of Representation.  Subsequent events procedures up to the date of signing. Given that the audit process is still ongoing, we will continue to challenge the remaining evidence provided and the final disclosures in the Statement of Accounts which could influence our final audit opinion. London Borough of Hillingdon Audit Results Report Value for money (VFM) In our Provisional Audit Planning Report dated 24 July 2025, we reported that we had completed our VFM risk assessment and we had identified three risks of significant weakness in respect of financial sustainability, the quality of Council information and the capacity of the finance team. During the course of our audit we identified an additional risk of significant weakness in relation to the implementation of Oracle Fusion and Oracle EPM. Having updated and completed the planned procedures in these areas we have identified a significant weakness in the Council’s arrangements in relation to each of these risks. On 27 November 2025, we issued our Auditor's Annual Report which set out further details of the observations leading us to our conclusion that a significant weakness existed in the Council's arrangements in relation to each of these risks. We note that our Auditor's Annual Report is included on the agenda for the same Audit Committee meeting as this report. Given the significance and pervasive nature of the matters reported in our Auditor's Annual Report, we would have expected the Audit Committee to have had opportunity to consider this report before now. We do not repeat the detail contained within our Auditor's Annual Report within this report, however a summary of our work in this area is provided in Section 3. 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 picture 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, we provide details in Section 5. Executive Summary Confidential — All Rights Reserved Other reporting issues 8 We have reviewed the information presented in the Annual Governance Statement for consistency with our knowledge of the Council. We have asked management to update the Annual Governance Statement commentary to reflect our value for money findings, as set out in Section 3, and the Council’s application to MHCLG for exceptional financial support, but otherwise have no additional material matters to report as a result of this work. London Borough of Hillingdon Audit Results Report Areas of audit focus In our Provisional Audit Planning Report we identified a number of key areas of focus for our audit of the financial statements 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 potential risk and exposure. Our consideration of these matters and others identified during the period is explained within Section 2 of this report and summarised below. Status of our workRisk We have completed some of our specific procedures to address this risk however we have not completed all of our audit procedures 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. Misstatements 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 procedures and are therefore unable to conclude on whether the financial statements are materially misstated as a result of inappropriate capitalisation of revenue expenditure or use of capital reserves. We have no observations to report from the procedures we have been able to complete. Inappropriate capitalisation of revenue expenditure or use of capital reserves As explained on page 6, we agreed a management-imposed limitation of scope to our audit to exclude the valuations of the Council’s land and building assets from our work over the closing balance sheet for 2024/25. We have therefore not completed our specific procedures to address this risk and are unable to conclude on whether the financial statements are materially misstated as a result of inappropriate valuations of land and buildings. Valuation of land and buildings, including surplus assets We have completed our specific procedures to address risks of misstatement arising from the transfer of financial records from the previous Oracle R12 system to the Oracle Fusion system, including procedures performed by our IT audit specialists, and are able to conclude that the financial statements are not materially misstated as a result of errors arising from the initial system implementation. As we have not completed all of wider planned audit procedures, we are unable to conclude on whether the financial statements may be materially misstated as a result of issues with Oracle Fusion following the initial implementation. We also note that our observations in performing our audit procedures to address this risk led to the recognition of a specific risk of significant weakness in the Council’s arrangements to secure value for money with regards to the implementation of Oracle Fusion and Oracle EPM, further details of which are provided in Section 3. Implementation of the new finance system (Oracle Fusion) Executive Summary Confidential — All Rights Reserved 9London Borough of Hillingdon Audit Results Report Status of our workRisk As explained on page 6, we agreed a management-imposed limitation of scope to our audit to exclude the valuations of the Council’s land and building assets from our work over the closing balance sheet for 2024/25. We have therefore not completed our specific procedures to address this risk and are unable to conclude on whether the financial statements are materially misstated as a result of inappropriate valuations of council dwellings. Valuation of council dwellings We have completed our specific procedures to address risks of misstatement arising from the valuation of pension assets and liabilities as at 31 March 2025 and are able to conclude that theses balances are not materially misstated. As we were not able to obtain assurances over balances as at 31 March 2024 as part of the prior year’s audit, we are unable to conclude on whether in-year movements in these balances are materially misstated. Net pension valuation 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.  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. Control observations 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:  performance of reconciliations; and  resolution of reconciling differences within reconciliations. In addition, we made 10 recommendations to address specific observations and control weaknesses identified in relation to the implementation of Oracle Fusion and Oracle EPM within our Auditor’s Annual Report issued on 27 November 2025. Further details are provided within that report. Independence Please refer to Section 8 for our update on independence. Executive Summary Confidential — All Rights Reserved 10London Borough of Hillingdon Audit Results Report Executive Summary Non-compliance with laws and regulations During the course of our audit, we became aware of the following instances of potential non-compliance with laws and regulations which have required us to perform additional considerations of the implications for our audit:  The emergence of significant overspends against the Council’s 2025/26 budget, set during 2024/25, as early as period 2 of the 2025/26 financial year, coupled with much lower actual reserves as at 31 March 2025 than the Council had assumed in setting its 2025/26 budget together raise questions over the reliability of the Council’s 2025/26 budget. These concerns were highlighted by the Council’s Section 151 Officer themselves in their Section 25 report on the 2025/26 budget, and leave us unable to conclude that the Council is compliant with its statutory duty to set a balanced budget in respect of the 2025/26 financial year, as required under the Local Government Finance Act 1988. A recommendation that the Council reassesses whether the assumptions and forecasts underpinning its 2025/26 budget were sufficiently robust to support the conclusion that the Council has set a balanced budget for the 2025/26 financial year was included within our Draft Auditor’s Annual Report issued on 27 November 2025.  As detailed on pages 6 and 40, the Council did not comply with the statutory deadline by which local authorities were required to publish draft financial statements for public inspection under the Accounts and Audit Regulations 2015 and its notice published in lieu of doing so did not contain the required explanation of reasons why the Council had not complied with this requirement.  We received correspondence during the course of our audit which raised concerns that the Council may not be complying with the requirements for Disclosure and Barring Service (DBS) checks for individuals working in the Council’s maintained schools. Following consideration, we concluded that these concerns arose from a misunderstanding of the Council’s reporting of actions required to achieve compliance with a newly introduced internal Council policy which contained tighter restrictions than those placed on the Council by external requirements, and that no non-compliance with laws and regulations had occurred. Confidential — All Rights Reserved Factors impacting the execution of the audit 11 Management, and the Audit Committee as the Council’s body charged with governance, have an essential role in supporting the delivery of an efficient and effective audit. Our ability to complete the audit is dependent on the timely formulation of appropriately supported accounting judgements, provision of accurate and relevant supporting evidence, access to the finance team and management’s responsiveness to issues identified during the audit. The table below sets out our views on the effectiveness of the Council’s arrangements to support the external financial audit across a range of relevant measures. Where we have been unable to undertake all planned procedures this is likely to extend the timetable to recover assurance on the Council’s financial statements. See Appendices A and B for further details. London Borough of Hillingdon Audit Results Report Further detailExplanation Status Area GAR We consider this further in our VFM reporting, see Section 3. The financial statements were published on 22 September 2025, nearly three months after the statutory deadline for commencement of the public inspection period of 1 July 2025. IneffectiveTimeliness of the draft financial statements We consider this further in our VFM reporting, see Section 3. Ensuring the quality of the draft financial statements was one of management’s reasons for the delayed publication of the draft financial statements. Compared to 2023/24, the draft financial statements were of a noticeably better quality with significantly fewer internal inconsistencies or typographical and arithmetic errors, although our checks did identify a small number of such points. We did however note a number of incorrect restatements of the prior period comparatives within the draft financial statements which management has agreed to revert in the final statements. Requires improvement Quality and completeness of the draft financial statements We consider this further in our VFM reporting, see Section 3. The original timetable agreed with management for the delivery of supporting working papers was predicated on the Council having draft financial statements prepared by 30 June 2025. The delays in finalising the draft financial statements also resulted in delays providing the supporting working papers for audit. Against revised timelines agreed with management, the delivery of working papers was better than in 2023/24 however we continued to encounter delays in relation to certain account areas. There were a small number of areas, in particular in relation to information held by schools, where appropriate supporting working papers were not able to be provided resulting in associated account areas being deprioritised by management. Ineffective Delivery of working papers in accordance with agreed client assistance schedule Executive Summary Confidential — All Rights Reserved 12London Borough of Hillingdon Audit Results Report Further detailExplanation Status Area GAR We consider this further in our VFM reporting, see Section 3. As with the timeliness of working papers, we noticed improvements compared to our experience during the 2023/24 audit however the quality of supporting working papers remains mixed. In particular, the Council can struggle to provide data in formats or to the level of granularity required to support the execution of audit procedures (for example individual transaction or balance breakdowns rather than summarised totals). Requires improvement Quality of working papers and supporting evidence N/A Supporting models for the Council’s bad debt provisions were provided in a timely manner, however they are large complex documents which we found difficult to follow or reconcile to the financial statements or understand how previous audit recommendations to review supporting assumptions had been addressed. We were unable to arrange time with the relevant officers to obtain an understanding of these models, and therefore have been unable to form a view on whether the Council’s bad debt provisions are reasonable. Evidence supporting the Council’s defined benefit pension balances was provided in a timely manner and was of good quality. A management-imposed limitation of scope over the valuations of the Council’s land and buildings was agreed with management prior to the execution of audit procedures, therefore we did not obtain detailed evidence supporting these estimates. IneffectiveTimeliness and quality of evidence supporting key accounting estimates N/A We encountered difficulty obtaining access to individuals responsible for a small number of areas, including the Oracle implementation and bad debt provisions. Outside of these areas, officers have engaged proactively with the audit process and offered good availability. Due to the significance of some of the matters considered as part of the audit, in particular those summarised within Section 3 of this report and set out in more detail within our Auditor’s Annual Report, we have had more cause to interact with senior officers, including the Council’s statutory officers, than we would normally expect. Senior officers have also engaged positively with the audit team. Requires improvement Access to finance team and personnel to support the audit in accordance with agreed project plan Executive Summary Confidential — All Rights Reserved 13London Borough of Hillingdon Audit Results Report Further detailExplanation Status Area GAR We consider this further in our VFM reporting, see Section 3. Through our audit procedures we identified one material misstatement of the Statement of Cash Flows and two further misstatements, relating to cut-off of income and classification of liabilities, which are individually larger than our performance materiality. A number of smaller misstatements have also been identified, further details of which can be found in Section 5. Management have agreed to amend the final statements to correct known misstatements. We note the effect of corrected audit differences was to reduce the Council’s reserves by £3.3 million and remaining uncorrected audit differences would further decrease reserves by £0.1 million. These amounts, whilst not material, are significant in the context of the Council’s limited reserves balance at 31 March 2025. As noted on page 11, we also noted a number of incorrect restatements of the prior period comparatives within the draft financial statements which management have agreed to revert in the final statements. As we have not been able to complete our audit procedures for all account areas (see Appendix B), there may be further misstatements of which we have not become aware. IneffectiveVolume and value of identified misstatements N/A We have only identified a small number of misstatements within disclosures. We do however note that due to the focus of our audit effort being on on those account areas which contribute the most towards the rebuilding of assurance following previous disclaimed audit reports, our audit effort was primarily directed towards financial statement balances rather than disclosures and we have only been able to complete our audit procedures over a relatively small number of disclosures. Further details are provided in Appendix B. Effective (see commentary) Volume of misstatements in disclosure Executive Summary Confidential — All Rights Reserved 14 Areas of Audit Focus02 London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Areas of Audit Focus We have responded to the risk of misstatements due to fraud or error by:  Identifying fraud risks during the planning stages;  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 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;  Considering 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. Through these procedures we concluded that there was a specific fraud risk around inappropriate capitalisation of revenue expenditure or use of capital reserves. Further details of our response to these identified risks are provided on the next page. In addition, we planned the following procedures to respond to this risk:  Performing mandatory procedures regardless of specifically identified fraud risks, including testing of journal entries and other adjustments in the preparation of the financial statements;  Undertaking procedures to identify significant unusual transactions; and  Considering whether management bias was present in the key accounting estimates and judgments in the financial statements. We have only partially been able to complete our testing of journal entries, including risk assessment to identify unusual journal entries for further investigation, 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 B for a summary of the assurances we have gained from our audit procedures. We have no material observations to report from the procedures we have been able to complete. Our response to the key areas of challenge and professional judgement 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? 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. What are our conclusions? Significant RiskFraud risk 15 Misstatements due to fraud or error London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Areas of Audit Focus We have responded to the risk of misstatements due to inappropriate capitalisation of revenue expenditure or use of capital reserves by:  Testing Revenue Expenditure Funded by Capital Under Statute (REFCUS) to ensure that it is appropriate for the revenue expenditure incurred to be financed from ringfenced capital resources; and  Testing adjustments made between usable reserves and unusable capital reserves for appropriateness and to ensure they are made at the correct amount. We have been able to confirm that adjustments made between usable and unusable capital reserves are consistent with other balances presented within the financial statements, for example capital additions and capital grant income. As we have not however been able to conclude all of our audit procedures over these underlying balances, we are unable to conclude on whether these adjustments are appropriate. We were also not able to complete our planned procedures over the calculation of the Council’s Minimum Revenue Provision (MRP). We have no other observations to report from these procedures. In addition, we planned the following procedures to respond to this risk:  Testing of Property, Plant and Equipment (PPE) to ensure that the expenditure incurred and capitalised is clearly capital in nature;  Assessing whether the capitalised spend clearly enhances or extends the useful like of asset rather than simply repairing or maintaining the asset on which it is incurred;  Considering 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 or from unusable capital reserves to usable reserves on the general ledger at the end of the year. We have not been able to complete these planned procedures. Our response to the key areas of challenge and professional judgement Under ISA 240 there is a presumed risk that revenue may be misstated due to improper revenue recognition. In the public sector, this requirement is modified by Practice Note 10 issued by the Financial Reporting Council, which states that auditors should also consider the risk that material misstatements may occur by the manipulation of expenditure recognition. We have assessed the risk is most likely to occur through the inappropriate capitalisation of revenue expenditure or inappropriate adjustments between usable reserves and unusable capital reserves. What is the risk, and the key judgements and estimates? We have completed some of our planned procedures and have not identified any material inappropriate capitalisation of revenue expenditure or use of capital reserves. 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 or use of capital reserves has occurred. We have no observations to report from these procedures. What are our conclusions? Significant RiskFraud risk 16 Inappropriate capitalisation of revenue expenditure or use of capital reserves London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Areas of Audit Focus We planned the following procedures to respond to this risk:  Understanding the Council’s approach to valuation of land and buildings, including surplus 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 (EY specialists) where appropriate;  Sample testing key asset information used by management’s specialists. We will consider 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 (or annually for surplus assets);  Reviewing assets not subject to valuation in 2024/25 to assess that the remaining asset base is not materially misstated;  Considering changes to useful economic lives as a result of the most recent valuation; and  Testing that accounting entries have been correctly processed in the financial statements. As set out on page 6, due to the impact of delays in publication of the Council’s draft financial statements and the commencement of the audit on the available time to complete our audit procedures ahead of the backstop date, and capacity considerations within both the Council’s finance team and the audit team up to this date, there was an increased risk at the point we commenced our audit fieldwork that not all planned procedures would be completed and that this could impact the assurance over balances at 31 March 2025 which is able to be obtained and carried forward for the 2025/26 audit. Following discussions with management, we agreed a management-imposed limitation of scope to our audit to exclude the valuations of the Council’s land and building assets from our work over the closing balance sheet for 2024/25. This was agreed as the valuation of land and buildings is a complex area which requires significant effort from both the Council and audit to test, but is an area where there are steps the Council can take in 2025/26 to mitigate the impact on the timeline for rebuilding of assurance in future years. This allowed the audit and finance team’s effort to be focused for 2024/25 on those areas where it is more difficult to rebuild assurance, and hence those areas which will ultimately be of most benefit in supporting future audit opinions. Consequently, we have not performed the planned procedures to respond to this risk. Our response to the key areas of challenge and professional judgement We have disaggregated land and building assets to identify those where we think the significant risk lies. We have associated the risk to land and building assets that are valued using the Depreciated Replacement Cost (DRC) and Existing Use Value (EUV) valuation methods, as well as surplus assets which are valued at fair value. The DRC, EUV and fair value valuation methods involve higher risk estimates due to the significant assumptions and judgements involved, and for which the Council uses external specialists. These estimates heighten the risk of material error. What is the risk, and the key judgements and estimates? We have not been able to complete our planned procedures nor do we have opening balances assurance in relation to assets not revalued in the current period, therefore we are not able to conclude whether land and buildings as a whole are free of material misstatement. What are our conclusions? significant risk 17 Valuation of land and buildings, including surplus assets London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Areas of Audit Focus We have responded to the risk of misstatements arising from the implementation of the new finance system, Oracle Fusion, by:  understanding 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; and  with support from our own IT audit specialists, designing and executing procedures which respond to the specific risks identified in the Council’s implementation of the new system. Our inspection of the Council’s Data Migration Strategy identified unresolved comments which mean we have been unable to conclude on whether the strategy was finalised prior to being implemented. Reconciliation of the Council’s financial information from the previous system, Oracle R12, to the new system, Oracle Fusion, was complicated by the fact the Council had previously maintained combined accounting records for 4 separate entities (the Council, Hillingdon Pension Fund, Hillingdon First Limited and the Mayor of Hillingdon’s Charitable Trust) within the same general ledger. These have been more appropriately separated within Oracle Fusion, however it made like-for-like comparison of financial records more challenging. Management completed reconciliations of Oracle Fusion to Oracle R12 post-migration, however supporting data reports were not retained therefore we have been unable to verify the completeness or accuracy of information used to perform these checks and, therefore, whether these reconciliations were properly performed. We also noted that these reconciliations were not reviewed by the Corporate Director of Finance, as we would have expected. Using our IT audit specialists, we performed our own reconciliations of Oracle R12 to Oracle Fusion. We identified a number of differences at the account code level which we have not been able to resolve, however we have been able to demonstrate that opening balances within Oracle Fusion are materially consistent with the closing balances within the published 2023/24 financial statements. We are therefore able to conclude that opening balances within Oracle Fusion are materially correct at the financial statement level, however we are unable to conclude on whether more granular data has been properly migrated. Errors in the migration of detailed financial records may result in misstatements over time, for example where opening balances are correct in aggregate but incorrectly attributed to individual balances impacting subsequent movements in these balances. Our procedures over the implementation of Oracle Fusion, as well as the Oracle EPM reporting suite implemented as part of the same project, also identified significant governance failings and ongoing weaknesses in internal controls which increase the risk of incorrect accounting entries arising post- migration or in the future. Further details are provided in Section 3. Our response to the key areas of challenge and professional judgement 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 therefore had to manually replicate all transactions recorded after this date in the new system which increases the risk of error / omission. The implementation of the new system has not gone smoothly, therefore there is also an increased risk of misstatements arising from subsequent use of the new system because of challenges encountered in the implementation of the new system. Given the pervasive nature of these risks, we consider that they pose a risk of material misstatement. What is the risk, and the key judgements and estimates? We were able to conclude that opening balances migrated from Oracle R12 to Oracle Fusion are materially correct at the financial statement level. We are however unable to conclude that detailed accounting records were correctly migrated at the transaction level. In addition, we have identified a number of ongoing internal control weaknesses which increase the risk that inappropriate accounting entries may have been recorded in Oracle Fusion post-migration or could be recorded in future periods. We are therefore unable to conclude on whether the financial statements may be materially misstated for reasons linked to the implementation of the new finance system. Within Section 3 we also report a significant weakness in the Council’s arrangements to secure value for money in relation to the implementation of Oracle Fusion. What are our conclusions? significant risk 18 Implementation of the new finance system (Oracle Fusion) London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Areas of Audit Focus We planned the following procedures to respond to this risk:  Considering the use of management’s specialists – the external valuers - including the scope of work and the professional competencies of the specialists;  Sample testing key asset information used by the specialists in performing their valuations (e.g. 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 in-year additions have been valued using the social housing discount factor. As set out on page 6, due to the impact of delays in publication of the Council’s draft financial statements and the commencement of the audit on the available time to complete our audit procedures ahead of the backstop date, and capacity considerations within both the Council’s finance team and the audit team up to this date, there was an increased risk at the point we commenced our audit fieldwork that not all planned procedures would be completed and that this could impact the assurance over balances at 31 March 2025 which is able to be obtained and carried forward for the 2025/26 audit. Following discussions with management, we agreed a management-imposed limitation of scope to our audit to exclude the valuations of the Council’s land and building assets from our work over the closing balance sheet for 2024/25. This was agreed as the valuation of land and buildings is a complex area which requires significant effort from both the Council and audit to test but is an area where there are steps the Council can take in 2025/26 to mitigate the impact on the timeline for rebuilding of assurance in future years. This allowed the audit and finance team’s effort to be focused for 2024/25 on those areas where it is more difficult to rebuild assurance, and hence those areas which will ultimately be of most benefit in supporting future audit opinions. Consequently, we have not performed the planned procedures to respond to this risk. Our response to the key areas of challenge and professional judgement The carrying amount of Council dwellings represents a significant balance in the Council’s financial statements 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? We have not been able to complete our planned procedures therefore we are not able to conclude whether council dwellings are free of material misstatement. What are our conclusions? 19 Valuation of council dwellings London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Areas of Audit Focus We have responded to the risk of misstatements of the net pension valuation by:  Liaising with the auditor of 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 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 our own EY Pensions specialists;  Evaluating the reasonableness of the Pension Fund actuary’s calculations by comparing them to the outputs of our own auditor’s specialist’s model; and  Reviewing and testing the accounting entries and disclosures made within the Council’s financial statements in relation to IAS 19. Our review of the valuation of pension assets and liabilities at 31 March 2025, including the application of the asset ceiling to the net pension balance, found balances to be materially correct. However, as we were unable to conclude on pension balances at 31 March 2024 as part of the prior year’s audit, we do not have assurance over opening balances and hence we are unable to conclude on whether in-year movements in pension balances are materially correct. An immaterial understatement of pension assets of £2.5 million was identified as the Council’s share of misstatements in the valuation of total Pension Fund assets reported to the scheme actuary by the Hillingdon Pension Fund. Following audit challenge, management agreed to include a disclosure which highlights the ongoing uncertainty as to whether the principles, and resulting financial implications, established by the ‘Virgin Media v NTL Pension Trustees’ legal case are applicable to the Local Government Pension Scheme. We have no other material observations to report from our procedures. Our response to the key areas of challenge and professional judgement The Local Authority Accounting Code of Practice and IAS 19 require the Council to make extensive disclosures within its financial statements regarding its membership of the Local Government Pension Scheme administered by the Council. 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 2024, this totalled £183 million. 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. The information disclosed is based on the IAS 19 report issued to the Council by its actuary. What is the risk, and the key judgements and estimates? We have been able to conclude that pension assets and liabilities at 31 March 2025 are materially correct. As we were however unable to conclude on pension balances at 31 March 2024 as part of the prior year’s audit, we do not have assurance over opening balances and hence we are unable to conclude on whether in-year movements in pension balances are materially correct. What are our conclusions? 20 Net pension valuation London Borough of Hillingdon Audit Results Report Confidential — All Rights Reserved Areas of Audit Focus 21 Going concern London Borough of Hillingdon Audit Results Report The provisions of the CIPFA Code of Practice on Local Authority Accounting in respect of going concern reporting requirements reflect the economic and statutory environment in which local authorities operate. These provisions confirm that local authorities cannot be created or dissolved without statutory prescription and that they must prepare their financial statements on a going concern basis of accounting. Local authorities carry out functions essential to the local community, are themselves revenue-raising bodies and the financial reporting framework presumes the continuation of service provision. However, the Council is required to carry out a going concern assessment that is proportionate to the risks it faces. Under the auditing standard in relation to going concern (ISA570), the Council is required to ensure that its going concern disclosure within the statement of accounts adequately reflects its going concern assessment and in particular highlights any uncertainties it has identified. As summarised within Section 3 and reported on in more detail within our Auditor’s Annual Report issued on 27 November 2025, the Council’s financial position deteriorated significantly during 2024/25 and has continued to deteriorate during 2025/26. The Council forecast as early as July 2025, based on its assessment of its financial position as at 31 May 2025, that the Council would not have sufficient reserves to support itself through to the end of the 2025/26 financial year and sought exceptional financial support from MHCLG. The Council is still waiting to learn of the MHCLG response to its request for exceptional financial support. Due to the statutory standing of the Council and the presumptions within the CIPFA Code of Practice on Local Authority Accounting that local authorities will be a going concern, the Council’s challenging financial position does not prevent management from concluding that the Council is a going concern. The going concern disclosures should however reflect the severity of the Council’s financial position and the outcome of MHCLG’s response to the Council’s request for exceptional financial support. We expect these disclosures to

Notes to the Pension Fund Account 119 PENSION FUND ACCOUNT Note 31 March 2025 31 March 2024 £'000 £'000 Contributions 4 60,666 58,148 Transfers In from other pension funds 5 6,189 51,642 66,855 109,790 Less: Benefits 6 (65,199) (60,556) Less: Payments to and on account of leavers 7 (11,110) (8,907) (76,309) (69,463) Net additions/(withdrawals) from dealings with members (9,454) 40,327 Less: Management expenses 8 (13,100) (13,441) Net additions/(withdrawals) including fund management expenses (22,554) 26,886 Return on investments Investment income 9 17,573 19,609 Profit and losses on disposal of investments and changes in market value of investments 10A 52,595 129,976 Taxes On Income (31) (29) Net return on investments 70,137 149,556 Net Increase/(Decrease) in the fund during the year 47,583 176,442 Net Assets at start of year 1,361,954 1,185,512 Net Assets at end of year 1,409,537 1,361,954 Note 31 March 2025 31 March 2024 £'000 £'000 Investment Assets 10 1,406,412 1,361,382 Investment Liabilities 10 -- Total net investments 1,406,412 1,361,382 Current Assets 11 3,364 994 Current Liabilities 12 (239) (422) Net assets of the fund available to fund benefits at the end of the reporting period 1,409,537 1,361,954 The Pension Fund Accounts summarise the transactions of the scheme and show the net assets at the disposal of members. They do not take account of li abilities to pay pensions and other benefits after the period end. The actuarial present value of promised retirement benefits is disclosed at note 18. Steve Muldoon Corporate Director of Finance (S151 Officer) 22 September 2025 Notes to the Pension Fund Account 120 1. DESCRIPTION OF THE FUND a. General The London Borough of Hillingdon Pension Fund ("the Fund") is part of the Local Government Pension Scheme (LGPS) and is administered by the London Borough of Hillingdon ("the administering body"). The Council is the reporting entity for this pension fund. The Fund is a contributory defined benefits scheme established in accordance with statute to provide benefits to members and retired members of the London Borough of Hillingdon and Admitted and Scheduled bodies in the Fund. Benefits in respect of service from 1 April 2014 are based on career average revalued earnings (CARE) scheme. Benefits in respect of past service up to 31 March 2014 are based on final salary. Pensions move in line with the Consumer Price Index (CPI) annually. Benefits paid out include a pension payable to former members and their dependants, lump sum retirement benefits, payment of death benefits where death occurs in service or retirement, and yearly payment of benefits on medical grounds. The Fund is governed by the Public Service Pensions Act 2013 and administered in accordance with the following secondary legislation: - Local Government Pension Scheme Regulations 2013 (as amended) - Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 (as amended) - Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 b. Membership Membership of the LGPS is voluntary and employees are free to choose whether to join the scheme, remain in the scheme or make their own personal arrangements outside of the scheme. Due to government legislation, since 1 February 2013 all new employees who are not in the scheme are automatically enrolled. Members have the option to opt out of the scheme. Employees who have opted out are then re-enrolled every 3 years, when they can again opt out. Organisations participating in the London Borough of Hillingdon Pension Fund include the following: - Scheduled bodies, which are automatically entitled to be members of the Fund. - Admitted bodies, which participate in the Fund under the terms of an admission agreement between the Fund and the employer. Admitted bodies include voluntary, char itable, and similar not-for-profit organisations, or private contractors undertaking a local authority function following outsourcing to the private sector. Employers who contribute to the Fund in addition to London Borough of Hillingdon are: Admitted Bodies: Culinera– Uxbridge High school CCS Homecare Service Cucina – Bishopshalt Cucina - Ryefield East & North Herts NHS Trust Energy Kidz Ltd Greenwich Leisure Kindred Cleaning - Harlington School Cleaners Hayward Services - Guru Nanak School - Ryefield School - Field End Primary - Hermitage Primary Notes to the Pension Fund Account 121 Heathrow Travel Care Herts Catering Limited Hillingdon & Ealing Citizens Advice Hillingdon Care Contract HPS Services FM Limited Pabulum - West Drayton Academy Service Master – Belmore Academy KGB Cleaning – Highfield School Glen Group Ltd – Meadow High School The Pantry (UK) Limited (Frays Academy – St Matthews) Scheduled Bodies: Barnhill Academy Belmore Academy Bishop Ramsey Academy Bishopshalt Academy Charville Academy Douay Martyrs Academy Eden Academy Trust - Moorcroft School - Pentland Field School - Grangewood School - Sunshine House School Elliot Foundation Trust - Hillingdon Primary School - John Locke Academy - Pinkwell School Guru Nanak Academy Trust - Nanak Sar Primary School - Guru Nanak Sikh Academy Global Academy Harefield Academy Richmond, Harrow & Uxbridge College Haydon Academy Notes to the Pension Fund Account 122 UTC Heathrow LBDS Frays Academy Trust - Cowley St. Lawrence Academy - Laurel Lane Academy - St. Matthews Primary School - St. Martins Primary School London Housing Consortium Park Federation Trust - Park Academy West London - Cranford Park Academy - Lake Farm Park Federation - Wood End Academy QED Academy Trust - West Drayton Academy - Coteford Junior Academy - Queensmead Academy - Northwood Academy Rosedale Hewens Academy Trust Swakeleys Academy VLT - Field End Junior School - Hermitage Primary School - Ruislip Academy - Ryefield Academy - Vyners Academy Uxbridge Academy William Byrd School Willows Academy Notes to the Pension Fund Account 123 London Borough of Hillingdon Pension Fund 31 March 2025 31 March 2024 Number of employers with active members 66 66 Number of employees in scheme London Borough of Hillingdon 5,445 5,639 Other employers 3,554 3,543 Total 8,999 9,182 Number of Pensioners London Borough of Hillingdon 7,445 7,048 Other employers 1,212 1,341 Total 8,657 8,389 Deferred Pensioners London Borough of Hillingdon 9,962 9,746 Other employers 4,562 4,625 Total 14,524 14,371 c. Funding The Fund is financed by contribution s from the employers, Pension Fund me mbers and by income from the Fund's investments. The Pension Fund accounts do not take accoun t of liabilities to pay pensions and other benefits in the future. The contributions from the London Borough of Hillin gdon and other participating employers are set through the triennial actuarial valuation at a rate sufficient to meet the long-term liabilities of the Fund. Contributions are made by active members of the Fund in accordance with the LGPS Regulations 2013 and range from 5.5% to 12.5% of pensionable pay for the financial year endi ng 31 March 2025. Employers also pay contributions into the Fund based on triennial funding valuations. The last such valuation was as of 31 March 2022 - this covers the three financial years following 2022/23 (2023/24, 2024/2025 & 2025 /26). Currently employer contribution rates range from 18.9% to 42.3% of pensionable pay, as per the 2022 valuation. d. Investments The Pension Fund investments are managed externally by fund managers: Adams Street Partners, AEW UK, Legal & General Investment Management, LGT Capital Partners, Lo ndon CIV, Macquarie Investments, Permira LLP, UBS Global Asset Management and Blackstone In vestments. In addition, there is one direct investment into pooled funds with M&G Investments. e. Governance The Fund is overseen by the Pensions Committee (comprised of Councillors) and the Pensions Board (comprised of an even number of employer and member representatives). The performance of the fund managers is monitored by the Pensions Committee (Four meetings in 2024-25) and governance is overseen by the Pensions Board (Three meetings in 2024-25). Pensions Committee and Pensions Board consisted of the following members in 2024/25: Pensions Committee Cllr Reeta Chamdal (Chairman) Cllr Stuart Mathers Cllr Kaushik Banerjee (Vice-Chairman) Cllr Tony Burles Cllr John Riley – until 28 November 2024 Cllr Douglas Mills – From 29 November 2024 Pensions Board Roger Hackett (Scheme Member Representative) Shane Woodhatch (Employer Representative) Tony Noakes (Scheme Member Representative) Vicky Trott (Employer Representative) Jack Francis-Kent (Scheme Membership Representative) Anna Beattie (Employer Representative) Notes to the Pension Fund Account 124 2. BASIS OF PREPARATION The accounts have been compiled in accordance with the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 which is based on International Fi nancial Reporting Standards (IFRS) as amended for the public sector and underpinned by the Local Government Pension Scheme Regulations. The accounts have been prepared on an accrual basis, except for transfer values, which are accounted for on a cash basis, and summarise the Fund transactions and report on the net assets available to pay pension benefits as of 31 March 2025. The accounts do not take into account obligations to pay benefits and pensions that fall due after the reporting date (31 March 2025). The Pension Fund Accounts have been prepared on a going concern basis. 3. ACCOUNTING POLICIES a. Valuation of assets - Market quoted investments: Equities are valued at bid ma rket prices available on the final day of the accounting period. - Fixed income securities including short-term instrument s are priced based on eval uated prices provided by independent pricing services. - For pooled funds, if bid prices are provided by the Fund administrators, then these are used, otherwise the Net Asset Value (NAV) is used. The NAV for pooled funds is derived by subtracting the fund’s liabilities from assets and divide the result by total units/shares within the pooled fund. - Private Equity is valued using the latest audited valu ation from the Limited Partner/General Partner. This is adjusted for any capital calls/distribu tions that have taken place since th e date of the statement. Unquoted investments for Private Placements and Infrastructure are priced using discounted cash flow methodology. b. Foreign currency translation of assets and liabilities and forward foreign exchange contracts are converted into sterling at the closing middle rates of exchange in the Net Assets Statement. Overseas income is converted at rates of exchange ruling when remitted. c. Acquisition costs of investments occur as brokerage commission when investments are purchased. They are recorded in the cost figure on an accrual basis. d. Investment management expenses are recorded at cost when the fund managers/custodian invoice the fund on a quarterly basis or provide a fee schedule deducted at sour ce. Expenses are recorded on an accrual basis. Where an investment manager’s complete fee schedule has not be en received by year end, an estimate based on the previous quarter’s amount is included in the accounts. In 2024/25, no such fees are based on estimates. The fund also agreed with the following fund managers that thei r fees include elements of performance, Adams Street Partners, AEW UK, Macquarie Infrastructure Partners, Permira LLP, London CIV and Blackstone Investments. e. Administration expenses are paid when invoiced by third party providers through the administering authority's payment system and recharged to the Pension Fund. f. Interest on property developments - property is held in unit trusts for the Pension Fu nd, the return received is calculated in accordance with the unit price at the Net Assets Statement date. g. Contribution Income Normal contributions are accounted for on accrual basis as follows: x Employee contribution rates are set in accordance wi th LGPS regulations, using common percentage rates for all schemes, that rise according to pensionable pay. x Employer contributions are set at a percentage rate recommended by the fund actuary for the period which they relate. Employer deficit funding contributions are accounted for on the basis advised by the fu nd actuary in the rates and adjustment certificate issued to the relevant body. Additional employers’ contributions in respect of ill-health ar e accounted for as part of the tri-ennial valuation exercise and employers’ contribution rates adjusted accordingly fo r relevant employers. Early retirement strain costs are accounted for on accrual basis. Notes to the Pension Fund Account 125 h. Benefits are accounted for in the period in which they fa ll due. All benefits are calculated in accordance with the statutory regulations in force at the relevant benefit date. i. Transfers are accounted for on a cash basis, as the amou nt payable or receivable by the scheme is not determined until payment is made and accepted by the recipient. Group transfers are accounted for under the agreement upon which they are made. j. Cash and cash equivalents are held in the custody acco unts by fund managers as agreed in the individual Investment Management Agreements (IMA). Cash held is at the discretion of the manager but must not exceed the stipulated permitted range in the IMA. k. Investment Income - dividends from quoted securities are accrued when the securities are quoted ex-dividend. Interest on cash deposits is accrued on daily basis. Critical Judgements and Uncertainties l. Unquoted Alternative Investments - Fair values of alternat ive investments are highly subjective in nature. They are inherently based on forward-looking estimates and judg ements involving many factors. Unquoted alternative investments are valued by investment managers using methods such as IFRS fair value principles, discounted cash flow method and guidelines set out by the International Pr ivate Equity and Venture Capital Association (IPEV), of which the British Venture Capital Association is a founding member. The value of alternative investments as of 31 March 2025 was £268,326k (£244,700k on 31 March 2024). m. Assumptions made about the future an d other major sources of estimation uncertainty - The Pension Fund accounts contain estimated figures that are based on assumptions ma de by the Fund about the fu ture or events that are otherwise uncertain. Estimates are made considering hist orical experience, current trends, and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. Notes to the Pension Fund Account 126 Items where there is a significant risk of material movements in value in the financial year are as follows: Item Uncertainties Private equity Private equity investments are valued at fair value in accordance with British Venture Capital Association guidelines or commensurate overseas equivalent. These investments are not publicly listed and as such there is a degree of estimation involved in the valuation. The fair value principles employed to value the underlying investments and the valuation policy remains unchanged. Both managers continue to use the latest valuation available from underlyinginvestment managers, adjusting for any known cash flows and take into account any known and measurable impact. It is important to note that given the evolving situation and the quarterly cycle of priv ate equity valuations, additional data needs to be accessible before a more accurate estimate can be made with regard to potential effects of market events on net asset values. Item Uncertainties Infrastructure - Macquarie Infrastructure Real Assets and LCIV Stepstone Infrastructure Valuation represents the fair value of investments held at 31 March 2024. The valuations have been completed by MIRA (Macquarie Infrastructure Real Assets) in accordance with ASC 820-10 (Fair Value Measurements), under which the fair value is determined to be the price that would be received upon sale of the investments in an orderly transaction between market participants. These investments are not publicly listed and as such there is a degree of estimation involved in the valuation. Item Uncertainties Private Finance - M&G and Blackstone Private Finance investments are valued at par as they are mostly floating rate notes tied to LIBOR. Final valuation is undertaken by the analysts employed by the fund manager as they are not traded on the open market. Effect if actual results differ from assumptions The total private equity investments in the financial statements are £2,993k. There is a risk that this investment may be under or overstated in the accounts. Effect if actual results differ from assumptions The total infrastructure alternative investments in the financial statements are £69,222k. There is a risk that this investment may be under or overstated in the accounts. There are no openly traded market prices available for this asset category. Effect if actual results differ from assumptions The total private finance investments in the financial statements are £20,876k. There is a risk that this investment may be under or overstated in the accounts. There are no openly traded market prices available for this asset category. Notes to the Pension Fund Account 127 Item Uncertainties Direct Lending - Permira Credit Solutions & LCIV Private Debt Private Debt Investments are valued on a quarterly basis and in accordance with International Priv ate Equity and Venture Capital valuation guidelines. These investments are not publicly listed and as such there is a degree of estimation involved in the valuation. Item Uncertainties Pooled Property - AEW UK & UBS Property Pooled property assets are valued independently for the respective managers with a lot of subjective and unobservable inputs that may be affected by prevalent socio-economic issues. The underlying assets do not have the luxury of an open market transactional data like Equities and does result in valuation vary ing by wide degrees. Item Uncertainties Actuarial present value of promised retirement benefits Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rates used, the rates at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on Pension Fund assets. A firm of actuaries, Hymans Robertson, are engaged to provide the fund with expert advice about the assumptions to be applied. The IAS19 balance sheet is based on financial market values and future market expectation indicators as at 31 March 2024 to comply with the accounting standard. Effect if actual results differ from assumptions The total Private Debt investments in the financial statements are £70,838k. There is a risk that this investment may be under or overstated in the accounts. There are no openly traded market prices available for this asset category. The effects on the net pension liab ility of changes in individual assumptions can be measured. For instance, an increase in the discount rate assumption would result in a decrease in pension liab ility. An increase in assumed earnings would increase the value of liabilities and an increase in assumed life expectancy would increase the liability. This would not effect the Fund Account or Net Asset Statement, but would impact the Council Accounts. Below are the details of the sensitivity analysis to the method of assumptions used for year ended 31 March 2025 by the fund's actuaries. Effect if actual results differ from assumptions Effect if actual results differ from assumptions The total Pooled property investments in the financial statement is £106,070k. There is a risk the investments may be over or under stated in the accounts. These asset class of investments are not openly traded and a lot of unobservable inputs are ut ilised in the valuation of the assets. These unobservable valuation assumptions may have a profound effect on the actual pricing at year end thus skew shown valuation the fund accounts. Notes to the Pension Fund Account 128 Sensitivity to Unquoted Alternative Assets valuation and Pricing: Information on sensitivities of the valuation and pricing methodologies of these asset classes are disclosed in notes 14 and 16. Sensitivity Analysis Sensitivity to the assumptions for the year ended 31 March 2025 Approximate % increase to liabilities Approximate monetary amount (£m) 0.1% p.a increase in the Discount Rate 2% 17 1 year increase in member life expectancy 4% 43 0.1% p.a. increase in the Salary Increase Rate 0% 1 0.1% p.a. increase in the Pension Increase Rate (CPI) 2% 17 The principal demographic assumption is the longevity assump tion. For sensitivity purposes, it is estimated that a 1- year increase in life expectancy would approximately increase the liabilities of the Pension Fund by around 3-5%. 4. CONTRIBUTIONS 31 March 2025 31 March 2024 By category £'000 £'000 Employees 13,412 12,506 Employers Contributions: Normal 40,045 38,867 Deficit Funding 7,209 6,775 60,666 58,148 Deficit Funding: At the actuarial valuation on 31 March 2022 the Fund was 88% funded, with the remaining 12% deficit to be recovered over a period of 20 years. 31 March 2025 31 March 2024 By authority £'000 £'000 LB Hillingdon 41,503 39,847 Scheduled Bodies 18,667 17,874 Admitted Bodies 496 427 60,666 58,148 Notes to the Pension Fund Account 129 5. TRANSFERS IN 31 March 2025 31 March 2024 £'000 £'000 Individual transfers in from other schemes 6,189 6,401 Bulk Transfers In* - 45,241 6,189 51,642 6. BENEFITS 31 March 2025 31 March 2024 By category £'000 £'000 Pensions (53,735) (49,125) Commutations and Lump Sum Retirement Benefits (9,885) (10,191) Lump Sum Death Benefits (1,579) (1,240) (65,199) (60,556) 31 March 2025 31 March 2024 By authority £'000 £'000 LB Hillingdon (56,183) (54,265) Scheduled Bodies (8,462) (5,499) Admitted Bodies (554) (792) (65,199) (60,556) 7. PAYMENTS TO AND ON ACCOUNT OF LEAVERS 31 March 2025 31 March 2024 £'000 £'000 Refunds to members leaving service (157) (172) Individual transfers out to other schemes (9,230) (8,735) Bulk Transfers Out (1,723) - Notes to the Pension Fund Account 130 8. MANAGEMENT EXPENSES The administering authority incurred costs in managing the Fund for the period ending 31 March 2024 as follows: 31 March 2025 31 March 2024 £'000 £'000 Administrative Costs (1,212) (1,166) Investment Management Expenses (11,592) (11,796) Oversight and Governance (296) (479) (13,100) (13,441) 8A. INVESTMENT MANAGEMENT EXPENSES BREAKDOWN 2024/2025 £'000 £'000 £'000 £'000 Total Management Expenses Performance Fees Transaction Costs Equities -- - - Pooled Investments (6,854) (3,635) (1,660) (1,559) Pooled Property Investments (4,632) (3,100) (42) (1,490) Private Equity (49) (82) 34 (1) (11,535) (6,817) (1,668) (3,050) Custody Fees/Investment Advice (56) Total (11,591) 2023/2024 £'000 £'000 £'000 £'000 Total Management Expenses Performance Fees Transaction Costs Equities -- - - Pooled Investments (6,670) (3,610) (2,363) (697) Pooled Property Investments (4,977) (3,714) - (1,263) Private Equity (149) (96) (22) (31) (11,796) (7,420) (2,385) (1,991) Custody Fees/Investment Advice (46) Total (11,842) 8B. EXTERNAL AUDIT COSTS 31 March 2025 31 March 2024 £'000 £'000 Payable in Respect of External Audit (93) (93) (93) (93) External Audit costs are included in Oversight and Governance within Management Expenses Any Increase in external audit costs will be attributable to fee adjustment to reflect procurement outcome by PSAA/MHCLG Notes to the Pension Fund Account 131 9. INVESTMENT INCOME 31 March 2025 31 March 2024 £'000 £'000 Income from Equities - - Pooled Property Investments 4,359 6,152 Pooled Investments- Unit trusts and other managed funds 12,413 12,606 Interest on cash deposits 801 851 17,573 19,609 10. INVESTMENTS 31 March 2025 31 March 2024 £'000 £'000 Investment Assets Equities 27 29 Pooled investments 1,195,087 1,156,809 Pooled property investments 194,432 190,438 Private equity 2,993 5,521 Other Investment balances Cash deposits 13,793 8,316 Investment income due 80 269 Total investment assets 1,406,412 1,361,382 Net investment assets 1,406,412 1,361,382 Notes to the Pension Fund Account 132 10A. RECONCILIATION OF MOVEMENTS IN INVESTMENTS AND DERIVATIVES 2024/25 Value 1 April 2024 £'000 Purchases at cost £'000 Sales proceeds £'000 Profits and losses on disposal of investments and Changes in market value of investments £'000 Value 31 March 2025 £'000 Equities 29 - (1) (1) 27 Pooled Investments 1,156,787 315,432 (312,520) 35,388 1,195,087 Pooled Property Investments 190,460 220 (3,930) 7,682 194,432 Private Equity 5,521 14 (1,730) (812) 2,993 1,352,797 315,666 (318,181) 42,257 1,392,539 1,352,797 315,666 (318,181) 42,257 1,392,539 Other investment balances Cash Deposits 8,316 13,793 Investment Income Due 269 10,338 80 Total Investment Assets 1,361,382 52,595 1,406,412 2023/24 Value 1 April 2023 £'000 Purchases at cost £'000 Sales proceeds £'000 Profits and losses on disposal of investments and Changes in market value of investments £'000 Value 31 March 2024 £'000 Equities 29 - - - 29 Pooled Investments 965,621 88,693 (21,164) 123,659 1,156,809 Pooled Property Investments 194,436 1,592 (1,133) (4,457) 190,438 Private Equity 6,346 46 (1,108) 238 5,521 1,166,432 90,330 (23,405) 119,440 1,352,797 1,166,432 90,330 (23,405) 119,440 1,352,797 Other investment balances Cash Deposits 16,510 8,316 Investment Income Due 140 269 Adjustments to Market Value Changes - 10,536 - Total Investment Assets 1,183,082 129,976 1,361,382 Notes to the Pension Fund Account 133 10B. ANALYSIS OF INVESTMENTS 31 March 2025 31 March 2024 £'000 £'000 Equities UK Quoted 27 29 27 29 Pooled funds - additional analysis Fixed income unit trust 231,038 229,796 Diversified Growth Funds 60,056 63,800 Infrastructure Funds 69,221 66,313 Global Equity 763,763 725,899 Limited liability partnerships 71,009 71,001 1,195,087 1,156,809 Other Investments Pooled property Investments 194,432 190,438 Private equity 2,993 5,521 197,425 195,959 Cash deposits 13,793 8,316 Investment income due 80 269 13,873 8,585 Total investment assets 1,406,412 1,361,382 Net investment assets 1,406,412 1,361,382 10C. INVESTMENTS ANALYSED BY FUND MANAGER Investment Assets and Liabilities by Fund Manager Market Value Market Value 31 March 2025 31 March 2024 £'000 £'000 Investments Managed by London CIV Pool Legal & General Investment Management 779,602 55 816,668 60 London CIV Asset Pool 423,872 30 337,193 25 1,203,474 86 1,153,861 85 Investments Managed Outside of London CIV Adams Street Partners 1,600 - 3,713 - AEW UK 74,652 5 72,517 5 Blackstone Investments 20,705 1 19,241 1 LGT Capital Partners 1,393 - 1,809 - M&G Investments 171 - 460 - Macquarie Infrastructure 8,362 1 15,124 1 Permira Credit Solutions 11,214 1 14,739 1 UBS Global Asset Management (Equities) 50 - 56 - UBS Global Asset Management (Property) 72,827 5 74,891 6 Other* 11,964 1 4,971 - 202,938 14 207,521 14 Total 1,406,412 100 1,361,382 100 Fund Manager % % * Other includes pending trades, accrued income and cash held in custody accounts, independent of fund managers not mandated to hold cash. * No single holding within an investment represents more than 5% of total assets Notes to the Pension Fund Account 134 10D. STOCK LENDING The Fund’s investment strategy sets the parameters for the Fund’s stock-lending programme. At the year-end, the value of quoted equities on loan was £27k (31 March 2024: £29k). These equities continue to be recognised in the Fund’s financial statements. Counterparty risk is managed through holdin g collateral at the Fund’s custodian bank. At the year-end the Fund held collateral (via the custodian) at fair value of £29k (31 March 2024: £31k) representing 106% of stock lent. Collateral consists of acceptable securities and government debt. Stock-lending commissions are remitted to the Fund via the custodian. During the period the stock is on loan, the voting rights of the loaned stock pass to the borrower. There are no liabilities associated with the loaned assets. 11. CURRENT ASSETS 31 March 2025 31 March 2024 £'000 £'000 Debtors Employers' contributions due 39 50 Employees' contributions due 137 157 Other 1,619 99 Cash balances 1,569 688 3,364 994 12. CURRENT LIABILITIES 31 March 2025 31 March 2024 £'000 £'000 Creditors Other local authorities (LB Hillingdon) - (72) Other entities (239) (350) (239) (422) Note: Other entities liabilities are due from the Pension Fund to bodies external to the government e.g., fund managers. 13. ADDITIONAL VOLUNT ARY CONTRIBUTIONS Additional Voluntary Contributions paid by scheme members are not included in the accounts. The additional voluntary contributions are paid by scheme memb ers directly to Prudential Assurance Company, who manage these monies independently of the fund and, as determined by the fund actuary, do not form part of the Fund valuation. According to information provided by Prudential, £99k was re ceived in additional voluntary contributions by members, in 2024/25 (£92k 2023/24) and AVC Fund value was £3,374k (£3,591k 2023/24). Any transfer of additional contributions into the Fund during the year are included in the employee contributions value as detailed in note 4. Market Value 31 March 2025 Market Value 31 March 2024 £'000 £'000 Prudential Assurance Company 3,374 3,591 3,374 3,591 Notes to the Pension Fund Account 135 14. FAIR VALUE - BASIS OF VALUATION The basis of the valuation of each class of investment asset is set out below. There has been no change in the valuation techniques used during the year. All assets have been valu ed using fair value techniques which represent the highest and best price available at the reporting date. Description of asset Valuation hierarchy Basis of valuation Observable and unobservable inputs Key sensitivities affecting the valuations provided Market quoted investments Level 1 Published bid market price ruling on the final day of accounting period. Not required Not required Pooled investments - overseas unit trusts Level 2 Closing bid price where bid and offer prices are published. Closing single price where single price is published. NAV-based pricing set on a forward pricing basis Not required Pooled Investments - Property Funds Level 2 Closing bid price where bid and offer prices are published. Closing single price where single price is published. NAV-based pricing set on a forward pricing basis Not Required Pooled Investments Property Funds Level 3 Comparable valuation of similar companies in accordance with International Private Equity and Venture Capital Valuation Guidelines (2018) EBITDA multiple Revenue multiple Discount for lack of marketability Control premium Valuations could be affected by material events occurring between the date of the financial statements provided and the pension fund’s own reporting date, by changes to expected cashflows, and by any differences between audited and unaudited accounts. Alternative Assets (Private Equity, Private Credit and Infrastructure Level 3 Comparable valuation of similar companies e.g. in accordance with International Private Equity and Venture Capital Valuation Guidelines (2018) EBITDA multiple revenue multiple discount for lack of marketability control premium Valuations could be affected by material events occurring between the date of the financial statements provided and the pension fund’s own reporting date, by changes to expected cashflows, and by any differences between audited and unaudited accounts. Having analysed historical data and current market trends, and consulted with fund managers, the Fund has determined that the valuation methods described above are likely to be accurate to within the following ranges and has set out below the consequent potential impact on the closing value of investments held on 31 March 2025. It is worth noting the sensitivity analysis below is just one of the possible changes to assets value due to the impact of factors affecting valuation methodology employed by the fund managers. Sensitivity being measured in this note differs from those in note 16 (other price risks). Notes to the Pension Fund Account 136 Valuation range (+/-) Market Value 31 March 2025 £'000 Value on Increase £'000 Value on Decrease £'000 Pooled investments - Limited Liability Partnerships (Infrastructure) a 10% 69,221 76,143 62,299 Pooled investments - Limited Liability Partnerships (Private Credit) b 10% 71,009 78,110 63,908 Pooled Property - UBS Property & AEW UREF 10% 106,070 116,677 95,463 Pooled Dislocation Fund - Balckstone 5% 20,705 21,740 19,670 Private Equity - d 5% 2,993 3,143 2,843 Total 269,998 295,813 244,183 Sensitivity of assets valued at level 3 a) The potential movement of 10% represents a combination of the following factors, which could all move independently in different directions: i) material changes in economic and financial assumptions. ii) discounted equity cash flow rate. b) The assumed movement is based on pricing of loans in the second ary leveraged loan market, with widening/narrowing spreads resulting in price changes either way. c) The assumed movement is based fluctuations in market pr ices for comparable assets, real estate market Illiquidity and counterparty default. d) Movement in the assessed valuation range derive from changes in the underlying profitability of component companies, the range in the potential movement of 5% is caused by unexpected changes to cash flow forecast and discounts for lack of potential bids. 14A. FAIR VALUE HIERARCHY Asset and liability valuations have been classified into three levels, according to the quality and reliability of information used to determine fair values. Transfers between levels are recognised in the year in which they occur. Level 1 Assets and liabilities at level 1 are those where the fair va lues are derived from unadjusted quoted prices in active markets for identical assets or liabilities. Products classified as level 1 comprise quoted equities, quoted fixed securities, quoted index linked securities and unit trusts. Level 2 Assets and liabilities at level 2 are those where quoted market prices are not available; for example, where an instrument is traded in a market that is not considered to be active, or where valuation techniques are used to determine fair value. Level 3 Assets and liabilities at level 3 are those where at least one input that could have a significant effect on the instrument’s valuation is not based on observable market data. The following table provides an analysis of the financial assets and liabilities of the pension fund grouped into levels 1 to 3, based on the level at which the fair value is observable. Notes to the Pension Fund Account 137 Level 1 Level 2 Level 3 Total £'000 £'000 £'000 £'000 Financial Assets at Fair Value through Profit and Loss Equities 27 0 0 27 Pooled Investments 0 1,034,152 160,935 1,195,087 Pooled Property Investments 0 88,377 106,055 194,432 Private Equity 0 0 2,993 2,993 27 1,122,529 269,983 1,392,539 Financial Liabilities at Fair Value through Profit and Loss Total 27 1,122,529 269,983 1,392,539 Level 1 Level 2 Level 3 Total £'000 £'000 £'000 £'000 Financial Assets at Fair Value through Profit and Loss Equities 29 0 0 29 Pooled Investments 0 1,000,277 156,532 1,156,809 Pooled Property Investments 0 84,441 105,997 190,438 Private Equity 0 0 5,521 5,521 29 1,084,718 268,050 1,352,797 Financial Liabilities at Fair Value through Profit Total 29 1,084,718 268,050 1,352,797 Values as at 31 March 2025 Quoted Market Price With Significant Unobservable Inputs Using Observable Inputs Using Observable Inputs Values as at 31 March 2024 Quoted Market Price With Significant Unobservable Inputs Notes to the Pension Fund Account 138 14B. RECONCILIATION OF FAIR VALUE MEASUREMENTS WITHIN LEVEL 3 Level 3 Assets Reconciliation There were no transfers into Level 3 in 2024/25 Fund Managers & Asset Categories Value 1 April 2024 Purchases at cost Sales proceeds Unrealised gains/(losses) Realised gains/(losses) Value 31 March 2025 £'000 £'000 £'000 £'000 £'000 £'000 Private Equity - Adams Street Partners, LGT Capital Partners & UBS 5,521 14 (1,730) (1,451) 639 2,993 Private Finance - M&G 460 - (214) (105) 30 171 Infrastructure - Maquarie & LCIV 66,313 51,624 (58,710) 7,469 2,525 69,221 Property - UBS Property,& AEW UREF 105,997 220 (869) 509 213 106,070 DGF/Dislocation - Blackstone 19,240 9,670 (5,937) (2,131) (137) 20,705 Direct Lending - Permira & LCIV Private Debt 70,519 888 (5,061) 5,380 (888) 70,838 Total Level 3 Assets 268,050 62,416 (72,521) 9,671 2,382 269,998 Notes to the Pension Fund Account 139 14C. LEVEL 3 PRICING HIERARCHY DISCLOSURES Quantitative Information on Significant unobservable inputs Private Equity: Adams Street & LGT capital The significant unobservable inputs used in the fair value measurement of privately held securities are Revenue multiples, EBITDA multiple, net income multiple and discount for lack of marketability and potential bids. Private Finance: M&G The assets are mostly floating rate notes and held at par value. Infrastructure: Macquarie The following quantitative information are considered for sign ificant unobservable inputs, in valuation of infrastructure assets: - The acquisition financial model is used as a base case. - Update for any material changes in economic, operational, and financial assumptions. - Discount equity cash flows at the sum of the risk-f ree rate and the appropriate risk premium (as determined by the implied risk premium at acquisition unless there is an inherent change in the riskiness of the underlying investments which may necessitate a change in the risk premium). Direct Lending: Permira The following key terms are confirmed as inputs for each yield analysis calculation: - Cash / PIK (Payment in Kind) margin - Frequency of interest payments - Commitment and settlement date - Contracted and expected maturity date Pooled Property: AEW, UBS Property & LGIM LPI Fair value is primarily derived using recent market transact ions on arm’s length terms, where available and discounted cashflow of future earnings are taking into consideration, alongside observable and unobservable inputs. Description of Valuation Process Private Equity The fair value of financial instruments that are not traded in an active market are de termined by using valuation techniques. Private equity investments for which market quot ations are not readily available are valued at their fair values by the Board of Directors. Priv ate equity valuations are usually genera ted by the managers of the underlying portfolio of investments on a quarterly basis and are actually received with a delay of at least one-to-two months after the quarter end date. As a result, the year-end net asset valu e predominantly consists of po rtfolio valuations provided by the investment managers of the underlying funds at a specific date, adjusted for subsequent capital calls and distributions. If the Board of Directors comes to the conclusion upon recommendation of the Investment Manager (after applying the above-mentioned valuation methods), that the most recent valuation reported by the manager/administrator of a Fund investment is materially misstated, it will make the necessary adjustments using the results of its own review and analysis. The valuation adjustments relate to events su bsequent to the last capital account valuation statement received but based upon information provided by the invest ment manager and all other available unobservable inputs. In estimating the fair value of fund investments, the Investment Manager in its valuation recommendation to the Board of Directors considers all appropriate and applicable factors. Private Finance: M&G These assets are floating rate and are held to maturity, they are valued at par unless suffering from impairment. Impairments may be applied if an asset's credit rating deteriorates. Direct Lending: Permira - In each case, valuations are prepared in accordance with International Private Equity & Venture Capital Valuation (“IPEV”) Guidelines - All direct lending investments are valued on a mark-to-market basis at the date of valuation - Where an investment is considered illiquid (level 3), a yield analysis is performed to infer a fair market value for that investment. - Each valuation is reviewed to ensure: Notes to the Pension Fund Account 140 x Third party evidence to support pricing (such as Market data, broker quotes or Bloomberg pricing, as well as latest financials and capital struct ure; and any other adjustments to value) was evidenced. x That the valuations are prepared in a consistent manner with previous valuations and that any changes in methodology or valuation are clearl y explained; and valuations are derived using methodology consistent with the IPEV guidelines. Infrastructure: Macquarie Valuations are calculated by the indivi dual asset teams on a quarterly basis. The valuation process follows the British Venture Capital Association (BVCA) guid elines and is compliant with Intern ational Financial Reporting Standards (IFRS). The most generally accepted methodology of valuing in frastructure assets is by way of a discounted cash flow (DCF) analysis. DCF-Based Market Valuation Process Financial Model The acquisition financial models of all the Fund’s underlying investments will be externally audited prior to financial close. They will be used as the initial base financial models for the DCF analysis. Update for Economic, Operational and Financial Assumptions The economic assumptions in the financial models are adjusted every three months to reflect current market conditions. The main economic variables relate to interest rates, exchange rates and inflation. The initial operational assumptions in each of the financ ial models are the acquisition forecasts. Any historical information (e.g., distributions received in an intervening period and year-to-date performance) will be updated within the model. In relation to forward-looking assumptions, the acquisition assumptions will continue to be used unless there is a material inconsistency between these assumptions and: - The actual operational results to date - The revised forecasts provided by management or approved by the board. The financial assumptions in the model (e.g., cost of debt an d capital structure) are also updated to reflect the actual debt put into place, current base rates and any material change in outlook with regards to future leverage. Discount Rate Equity cash flows are discounted at the acquisition internal rate of return, which is adjusted for changes in the relevant risk-free rate. The acquisition internal rate of return is the return, which is forecast under the acquisition case and price, reflecting the risks inherent in each of the investments. The difference between the acquisition internal rate of return and the risk-free rate at the date of acquisition equates to the risk premium, which is the risk compensation to equity holders. Most of the Fund’s assets are likely to see some decreas e in the risk premium as assets are de-risked following acquisition. Such projects may have a changing risk “life cycle”, whereby the risk changes as the asset matures. In addition, if there is a change in the inherent risk of an investment, then the risk premium may need to be reconsidered. Pooled Property: AEW, UBS Property & LGIM LPI Pooled properties have been valued in accordance with RICS valuation – Professional Standards VPS4 (7.1) fair value and VPGA 1 valuations for inclusion in fi nancial statements, which adopts the de finition of fair value used by the International Accounting Standards Board: “The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.” The properties are valued individually, and the details of tenure, tenancies and floor area are considered for valuation purposes. Notes to the Pension Fund Account 141 Dislocation Fund: Blackstone Fair value guidance defines fair value, establishes a framework for measuring fair value, and establishes requirements for disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. Investments in Investee Funds. The fair value of investments in limited Consolidated Partnerships and investment funds and affiliated limited Consolidated Partnerships and investment funds (“Investee Funds”) is generally determined using the reported net asset value per share of the Investee Fund, or its equivalent (“NAV”), as a practical expedient for fair value if the reported NAV of the Investee Fund is calculated in a manner consistent with the measurement principles applied to investment companies. In order to use the practical expedient, the AIFM has internal processes to independently evaluate the fair value measurement process utilized by the underlying Investee Fund to calculate the Investee Fund’s NAV. Such internal processes include the evaluation of the Investee Fund’s policies and related internal controls in place to estimate the fair value of its underlying investments that are included in the NAV calculation, performing ongoing operational due diligence, review of the Investee Fund’s audited financial statements and ongoing monitoring of other relevant qualitative and quantitative factors. Narrative and Quantitative description of sensitivity to changes in valuation methods and market conditions: Private Equity Market valuation method applied to investments is sensitive to four main components: i) changes in actual market prices. ii) interest rate risk. iii) foreign currency movements; and iv) other price risks Private Finance (M&G) The only possible sensitivity associated with private finance valuations and methodology is credit rating. This may result in an analyst impairing an asset if there is a change in the asset's credit rating. Infrastructure: Macquarie The economic assumptions in the financial models are adjust ed every three months in order to reflect current market conditions. The main economic variables relate to interest rates, exchange rates and inflation. Infrastructure: LCIV See Direct Lending, LCIV Private Debt below Direct Lending: Permira The yield analysis methodology used to value the level 3 assets are sensitive to the following inputs: - EURIBOR swap rates (up to 7 years) - LIBOR swap rates (up to 7 years) - ELLI (3 year discounted spread data) These inputs are sourced directly from Bloomberg feeds or independently from Duff & Phel ps (ELLI data) relevant to each period end date. These inputs impact on: (1) the implied IRR calculations at the period end valuation date; (2) the forecast cash and/or PIK yields that track LIBOR or EURIBOR; and (3) ultimately the implied asset price calculated from these inputs as the period end to determine the valuation price. Direct Lending: LCIV Private Debt Investments are initially recognized at cost and subsequently measured at fair value. Investments are valued on a basis that the Manager considers fair and reasonable having co nsidered the latest available valuation provided by the investment entity. The level of estimati on uncertainty is significant, and actual values may differ significantly from estimates. Purchases and sales are recognised when a legally binding and unconditional right to obtain, or an obligation to deliver, an asset or liability arises. All realised and unrealised gains and losses on investments are recognized as net capital gains/(losses) in the Statement of Total Return. Unrealised gains and losses comprise changes in the fair value of investments for the period. Pooled Property – AEW, UBS Property & LGIM LPI Notes to the Pension Fund Account 142 Prevalent economic conditions may affect occupancy rate or possible default in rent payments and conversely affecting transaction values. Local authority intentions, planning proposals and onerous restrictions are some of the other factors to which Pooled Property assets transactions may be sensitive towards. These are: i) Market price risk: Future values of investments in direct property and related property investments will fluctuate due to changes in market prices. ii) Real Estate valuation changes: Property investme nts are illiquid assets and valuing is difficult. iii) Credit risk: counterparty (t o a financial instrument) or tenant (of a property) will cause a financial loss to the Fund by failing to meet a commitment it has entered with the Fund. 15. CLASSIFICATION OF FINANCIAL INSTRUMENTS The following table analyses the carrying amounts of fina ncial instruments by category and net assets statement heading. No financial instruments were reclassified during the accounting period. Designated as fair value through P&L Assets at amortised cost Financial Liabilities at Amortise d Cost Total Designate d as fair value through P&L Assets at amortised cost Financial Liabilities at Amortised Cost Total 31 March 2025 31 March 2024 31 March 2024 31 March 2024 31 March 2024 31 March 2024 31 March 2024 31 March 2024 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Financial Assets Equities 27 - - 27 29 - - 29 Pooled Investments 1,195,087 - - 1,195,087 1,156,809 - - 1,156,809 Pooled property investm 194,432 - - 194,432 190,438 - - 190,438 Private Equity 2,993 - - 2,993 5,521 - - 5,521 Cash - 13,793 - 13,793 - 8,316 - 8,316 Other Investment balan - 80 - 80 - 269 - 269 1,392,539 13,873 - 1,406,412 1,352,797 8,585 - 1,361,382 Total 1,392,539 13,873 - 1,406,412 1,352,797 8,585 - 1,361,382 15A. NET GAINS AND LOSSES ON FINANCIAL INSTRUMENTS 31 March 2025 31 March 2024 Financial Assets £000's £000's Designated at Fair Value through profit and (loss) 52,595 129,976 52,595 129,976 16. NATURE & EXTENT OF EXPOSURE TO RI SKS ARISING FROM FINANCIAL INSTRUMENTS Risk and Risk Management The Fund's primary long-term risk is that the Fund's assets will fall short of its liabilities. Therefore, the aim of investment risk management is to minimise the risk of an overall reduction in the value of the Fund and to maximise the opportunity for gains across the whole Fund portfolio. The Fund achieves this through asset diversification to reduce exposure to market risk (price risk, currency, and interest rate risks) and credit risk to an acceptable level. In addition, the Fund manages its liquidity risk to ensure there is sufficient liquidity to meet the Fund's forecast cash flows. Responsibility for the Fund's risk management strategy rests with the Pensions Committee. Risk management policies are established to identify and analyse the risks faced by the Council's pensions operations. Policies are reviewed regularly to reflect changes in activity and in market conditions. Market risk The risk that the fair value of cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risks. To mitigate against market risk the Pension Fund invests in a diversified pool of assets to ensure a reas onable balance between different categories. The management Notes to the Pension Fund Account 143 of the assets are placed with a few fu nd managers with different performance targets and investment strategies. Each fund manager is expected to maintain a diversified portfolio in each asset class. Risks associated with the strategy and investment returns are included as part of the quarterly reporting to Pensions Committee where they are monitored and reviewed. Other price risk Other price risk represents the risk that the value of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether those changes are caused by factors specific to the individual instruments or its issuer, or factors affecting all such instruments in the market. The Fund is exposed to share and derivative price risk. This aris es from investments held by the Fund for which the future price is uncertain. All securities investments present a risk of loss of capital. Except for shares sold short, the maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. The potential losses from shares sold short are unlimited. The Fund's investment managers mitigate this price risk through diversification and the selection of securities and other financial instruments is monitored by the Council to ensure it is within limits specified in the Fund Investment Strategy Statement. Other price risk - Sensitivity Analysis Following analysis of historical data and expected investment return movement during the financial year, the Fund has determined that the following potential change in market pr ice risk are reasonably possible for the relevant reporting periods. Potential price changes are determined based on the observed historical volatility of asset class returns. 'Riskier' assets such as equities will display greater potential volatility th an bonds as an example, so the overall outcome will depend largely on Fund asset allocations. The potential volatilities are consistent with one standard deviation movement of the change in value of assets over the last three years. This can then be applied to period end asset mix. Had the market price of the Fund investments increased or decreased in line with the percentage change below, the change in the net assets available to pay benefits in the market price would have been as follows (the prior year comparator is shown below). Asset Type Value as at 31 March 2025 Percentage Change Value on Increase Value on Decrease £'000 % £'000 £'000 Global Equity 763,763 12.00% 855,415 672,111 UK Equity 27 12.00% 30 24 Bonds 231,038 8.50% 250,676 211,400 Alternatives 203,279 5.40% 214,256 192,302 Property 194,432 6.20% 206,487 182,377 Total 1,392,539 1,526,864 1,258,214 Note: Bonds valuation in the table above includes pooled fund held bonds. Asset Type Value as at 31 March 2024 Percentage Change Value on Increase Value on Decrease £'000 % £'000 £'000 Global Equity 770,458 12.10% 863,683 677,233 UK Equity 29 12.10% 33 25 Bonds 229,796 9.10% 250,707 208,885 Alternatives 162,054 3.60% 167,888 156,220 Property 190,460 6.80% 203,411 177,509 Total 1,352,797 1,485,723 1,219,871 Note: Bonds valuation in the table above includes pooled fund held bonds. Notes to the Pension Fund Account 144 Interest Rate Risk - The risk to which the Pension Fund is exposed to changes in interest rates and relates to its holdings in bonds and cash. Based on interest received on fixed interest securities, cash, and cash equivalents. The Fund's direct exposure to interest rate movements as of 31 March 2024 and 31 March 2023 is set out below. These disclosures present interest rate risk based on the underlying financial assets at fair value. Interest Rate Risk Sensitivity Analysis The Fund recognises that inte rest rates can vary and can affect both inco me to the Fund and the value of net assets available to pay benefits. A 100 basis poin ts (1%) movement in interest rates is consistent with the level of sensitivity applied as part of the Fund's risk management strategy. The analysis that follows assumes that all other variables, in particular exchange rates remain constant, and shows the effect in the year on the net assets available to pay benefits of a +/- 1% change in interest rates. Value as at 31 March 2025 Potential movement on 1% change in interest rates Value on increase Value on decrease Assets exposed to interest rate risks £'000 £'000 £'000 £'000 Cash balances 15,362 154 15,516 15,208 Bonds - pooled funds 231,038 2,310 233,348 228,728 Total change in assets available 246,400 2,464 248,864 243,936 Value as at 31 March 2024 Potential movement on 1% change in interest rates Value on increase Value on decrease Assets exposed to interest rate risks £'000 £'000 £'000 £'000 Cash balances 8,984 90 9,074 8,894 Bonds - pooled funds 229,796 2,298 232,094 227,498 Total change in assets available 238,780 2,388 241,168 236,392 Currency Risk - The risk to which the pension fund is exposed to fluctuations in foreign currency exchange rates. The Pension Fund can set up a passive currency hedge where these risks are perceived to be adverse. As of 31 March 2024, the Fund had no currency hedge in place for those managers who do not hedge their own portfolios. The following table summarises the fund's currency exposure as of 31 Ma rch 2024 and as at the previo us period ending 31 March 2023. Currency exposure by asset type Currency risk sensitivity analysis Following analysis of historical data in consultation with PIRC Ltd, the Funds data provider, the Fund considers the likely volatility associated with foreign exchange rate movements to be 6.1%, based on the data provided by PIRC. A 6.1% fluctuation in the currency is considered reasonable base d on PIRC's analysis of historical movements in month end exchange rates over a rolling twelve-month period. This analysis assumes that all variables, in particular interest rates, remain constant. Managers that hedge against currency risk are not included in this sensitivity analysis. A 6.1% strengthening/weakening of the pound against various currencies in which the Fund holds investments would increase/decrease the net assets available to pay benefits as follows: Notes to the Pension Fund Account 145 Assets exposed to currency risk Asset Value 31 March 2025 Potential market movement Value on increase Value on decrease 6.10% £'000 £'000 £'000 £'000 Pooled Funds 633,163 38,623 671,786 594,540 Private Equity/Infrastructure 72,214 4,405 76,619 67,809 705,377 43,028 748,405 662,349 Assets exposed to currency risk Asset Value 31 March 2024 Potential market movement Value on increase Value on decrease 6.10% £'000 £'000 £'000 £'000 Pooled Funds 663,973 40,502 704,475 623,471 Private Equity/Infrastructure 71,834 4,382 76,216 67,452 735,807 44,884 780,691 690,923 Credit Risk - Credit risk represents the risk that the counterparty to a transaction or a financial instrument will fail to discharge an obligation and cause the fund to incur a financial loss. The market values of investments generally reflect an assessment of credit in their pricing and consequently the ri sk of loss is implicitly provided for in the carrying value of the Fund’s financial assets and liabilities. The Pension Fund's entire investment portfolio is exposed to some form of credit risk, except for the derivative position, where the risk equates to the net market value of a positive derivative position. Credit risk can be minimised through careful selection of high-quality counterparties, brokers, and financial institutions. The Pension Fund is also exposed to credit risk through Securities Lending, Forward Currency Con tracts, and its daily treasury activities. The Securities Lending programme is run by the Fund's custodian North ern Trust which assigns four different risk management oversight committees to control counterparty risk, collater al risk, and the overall securities lending programme. The minimum level of collateral for securities on loan is 102%, however more collateral may be required depending on the type of transaction. To further mitigate

Draft Audit Results Report Year ended 31 March 2025 Hillingdon Pension Fund 3rd February 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. Private and Confidential 3 3 February 2025 Dear Audit Committee Members 2024/25 Draft Audit Results Report We are pleased to attach our draft Audit Results Report, summarising the status of our audit for the forthcoming meeting of the Audit Committee. We will update the Audit Committee at its meeting scheduled for 10 February 2026 on further progress to that date and explain the rem aining steps to the issue of our final opinion. The audit is designed to express an opinion on the 2024/25 financial statements and address current statutory and regulatory requirements. This report contains our findings related to the areas of audit emphasis, our views on Hillingdon Pension Fund’s accounting policies and judgements and material internal control findings. Each year sees further enhancements to the level of audit challenge, the exercise of professional judgement and the quality of evidence required to achieve the robust professional scepticism that society expects. We thank the management team for suppor ting this process. This report is intended solely for the information and use of the Audit Committee and management. It is not intended to be and should not be used by anyone other than these specified parties. We welcome the opportunity to discuss the contents of this report with you at the Audit Committee meeting on 10 February 2026 . Yours faithfully Debbie Hanson Partner For and on behalf of Ernst & Young LLP Encl Audit Committee London Borough of Hillingdon Uxbridge UB8 1UW Confidential — All Rights Reserved Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results 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 (Statement of responsibilities of auditors and audited bodies (from 2023/24 audits) - Page 4 of 7 - PSAA). The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and audited bodies. It summarises where the different responsibilities of auditors and audited bodies begin and end, and what is to be expected of the audited body in certain areas. The “Terms of Appointment and further guidance from July 2021” issued by the PSAA sets out additional requirements that auditors must comply with, over and above those set out in the National Audit Office Code of Audit Practice (the Code) and 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 in accordance with the statement of responsibilities. Our work has been undertaken so that we might state to the Audit Committee, and management of Hillingdon Pension Fund those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the Audit Committee and management 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 1 4 4 7 7 Areas of Audit Focus Areas of Audit Focus 2 2 Executive Summary Executive Summary 3 3 5 5 6 6 8 8 Audit Report Audit Report Audit Differences Audit Differences Other Reporting Issues Other Reporting Issues Assessment of Control Environment Assessment of Control Environment Independence Independence content Appendices Appendices Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results Report Executive Summary01 {68}: 4 Confidential — All Rights Reserved Executive Summary In our Audit Planning Report presented to the 14 May 2025 Audit Committee meeting, we provided you with an overview 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: ▪ Changes in materiality: We updated our planning materiality assessment using the draft results and have also reconsidered our risk assessment. Based on our materiality measure of 1% of Net Assets, we have updated our overall materiality assessment to £14.1 million (Audit Planning Report — £13.6 million). This results in updated performance materiality, at 75% of overall materiality, of £10.6 million, and an updated threshold for reporting misstatements of £704k. Scope update Hillingdon Pension Fund Audit Results Report 5 Status of the audit Our audit work in respect of the Pension Fund opinion is substantially complete, subject to final Executive review in some areas. Therefore, further issues may arise once this review is complete.The following items relating to the completion of our audit procedures were outstanding at the date of this report. ▪ Conclusion procedures including; final review of Annual Report and Accounts to confirm changes made to the most recent versio n are materially complete and accurate; update of our subsequent events procedures to the date of our opinion; and receipt and checking of signed accounts and letter of repres entation Audit differences ▪ We have not identified any audit differences, adjusted or unadjusted that we need to bring to your attention. ▪ We identified some other disclosure misstatements which have been corrected by management. Areas of audit focus In our Audit Plan, we identified a number of key areas of focus for our audit of the financial report of Hillingdon Pension F und. This report sets out our observations and status in relation to these areas, including our views on areas which might be conservative and areas where there is potential risk and exposure. Our consideration of these matters and others identified during the period is explained within the ‘Areas of Audit Focus’ section of this report and summarised belo w. Fraud risk - Misstatements due to fraud or error We carried out procedures to address this risk as set out in our Audit Plan, including identifying risks, considering control s and their effectiveness, testing journal entries and testing estimates for evidence of management bias. Subject to the finalisation of our review procedures, no significant matters have been identified in the completion of our work to da te. Significant risk - Valuation of Level 3 complex investments We undertook additional procedures, as described more fully in Section 02 of this report, to gain assurance over the material accuracy of the year-end valuation of the Pension Fund’s Level 3 complex investments, which are inherently more difficult to value. Work in this area has now been completed. Based upon the audit procedures undertaken, we have concluded that the valuation of these investments is materially accurate. We have noted a judgemental difference of £3.2 million (potential understatement of investments) due to timing differences between th e current carried valuation and our estimate of the 31st March valuation for unquoted (level 3) investments. As this is not material, we have sufficient assurance over the mate rial accuracy of this estimate Confidential — All Rights Reserved Executive Summary (cont’d) Significant risk —fair value classification of Level 2 and Level 3 investments We carried out procedures as set out in our Audit Plan to ensure that the assessment of investments as Level 2 or Level 3 are in line with the Fair Value hierarchy. No significant matters have been identified in the completion of our work to date. Significant risk - Implementation of the new finance system (Oracle Fusion) Based on the procedures to address risks of misstatement arising from the transfer of financial records from the previous Ora cle R12 system to the Oracle Fusion system, including procedures performed by our IT audit specialists, we are able to conclude that the financial statements are not materially mi sstated as a result of errors arising from the initial system implementation. We were also able to conclude that opening balances migrated from Oracle R12 to Oracle Fusion are materially correct at the financial statement level. The Council’s auditors have reported a significant weakness in the Council’s arrangements to secure value for money in relati on to the implementation of Oracle Fusion. These weaknesses have therefore been reported to those charged with governance and are not repeated in our reporting on the Pension Fund. Estimates involved in the disclosures of IAS26- inherent risk We carried out procedures to address this risk as set out in our Audit Plan and assessed the information disclosed in the statement of account. Subject to the finalisation of our review procedures, no significant matters have been identified in the completion of our wo rk to date. Risk of material misstatement— Completeness of investment income Subject to the finalisation of our review procedures, no significant matters have been identified in the completion of our wo rk to date. We noted a misstatement in disclosure where in relation to recognition of investment income from AEW UK Urban Real Estate, which was recognised as capital distribution. 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 ▪ 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 Please refer to Section 7 for our update on Independence. We have no issues to report. Areas of audit focus Control observations Independence Hillingdon Pension Fund Audit Results Report 6 During the course of the audit, we have identified control observations which we wish to bring to your attention. Further det ail on control observations is included in Section 06 Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results Report 7 Areas of Audit Focus02 {68}: Confidential — All Rights Reserved Areas of Audit Focus We undertook our standard procedures to address fraud risk, which included: We enquired of management about risks of fraud and the controls put in place to address those risks. We gained an understanding of the oversight given by those charged with governance of management’s processes over fraud. We considered the effectiveness of management’s controls designed to address the risk of fraud. We tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in preparing the financial statements. We reviewed accounting estimates for evidence of management bias. We evaluated the business rationale for any significant unusual transactions. We utilised our data analytics capabilities to assist with our work, including journal entry testing. We assessed journal entries for evidence of management bias and evaluated for business rationale. We have also: Undertaken a review of reconciliations of the financial statements to the fund manager and custodian reports and investigated any reconciling differences; For investment income, we agreed the reconciliation between fund managers and custodians back to the source reports, which included evidencing the investment income achieved; Re-performed the detailed investment note using the reports we have acquired directly from the custodian or fund managers; and • Checked the reconciliation of holdings included in the Net Assets Statement back to the source reports. Our response to the key areas of challenge and professional judgement 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? We have completed the audit procedures outlined above. Subject to the finalisation of our review procedures, no significant matters have been identified in the completion of our work to date. What are our conclusions? Significant RiskKey Audit Matter Hillingdon Pension Fund Audit Results Report 8 Significant risk — misstatements due to fraud or error* Confidential — All Rights Reserved Areas of Audit Focus For a sample of Level 3 investments we: • Analysed the schedule of investments to ensure correct classification, presentation and disclosure of items in the financial statements and corresponding notes. • Understood and evaluated of the work of the fund managers. • Evaluated the ISAE 3402 report for the custodian and fund managers, where applicable. • Reviewed 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, made inquiries to establish what procedures management have performed to take account of this risk. We also performed analytical procedures and check the valuation output for reasonableness against our own expectations. • Reviewed the basis of valuation for property investments and other unquoted investments and assessing the appropriateness of the valuation methods used. • Reviewed investment valuation disclosures to verify that significant judgements surrounding the valuation of Level 3 Investments have been appropriately made in the financial statements. • Performed triangulation work to agree amount per the financial statements to fund managers and the custodian. • Checked accounting entries have been correctly processed in the financial statements. • Assessed any topside adjustments and journal entries for evidence of management bias and evaluating the business rationale. Our response to the key areas of challenge and professional judgement 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. 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. 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. What is the risk, and the key judgements and estimates? We have completed the audit procedures outlined above. Based upon the audit procedures undertaken, we have noted a judgemental difference of £3.2 million (potential understatement of investments) due to timing differences between the current carried valuation and our estimate of the 31st March valuation for unquoted (level 3) investments. As this is not material, we have sufficient assurance over the material accuracy of this estimate No further matters have been identified in the completion of our work to date. What are our conclusions? Significant RiskKey Audit Matter Hillingdon Pension Fund Audit Results Report 9 Significant risk — valuation of Level 3 complex investments Confidential — All Rights Reserved Areas of Audit Focus We : Gained an understanding of the Pension Fund’s approach to classification and the nature of its investments and worked with the Pension Fund to agree the proposed classifications early in the audit process; Assessed the significance of market inputs used in the hierarchy valuation as well as the sources of the inputs; Confirmed the basis of the valuation of each class of investment asset and assessed whether it is appropriate; Obtained quoted prices directly from independent sources and compared these with the Pension Fund’s assessment of observable market inputs ( bid market price, current yields, and closing bid price) to confirm correct classification; Tested that accounting entries related to valuation have been correctly processed in the financial statements. Our response to the key areas of challenge and professional judgement The classification of investments using the fair value hierarchy requires the accurate identification of observable and unobservable inputs and requires a high level of professional judgement. The assessment of Fair Value hierarchies can be subjective and includes an element of judgement. There have been reclassifications in the fair value hierarchies of the pension fund assets as a result of the audit in the last two years. What is the risk, and the key judgements and estimates? We have completed the audit procedures outlined above. Subject to the finalisation of our review procedures, no significant matters have been identified in the completion of our work to date. What are our conclusions? Significant RiskKey Audit Matter Hillingdon Pension Fund Audit Results Report 10 Significant risk — fair value classification of Level 2 and Level 3 investments Confidential — All Rights Reserved Areas of Audit Focus We have responded to the risk of misstatements arising from the implementation of the new finance system, Oracle Fusion, by: • understanding 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; and • with support from our own IT audit specialists, designing and executing procedures which respond to the specific risks identified in the Council’s implementation of the new system. Reconciliation of the Council’s financial information from the previous system, Oracle R12, to the new system, Oracle Fusion, was complicated by the fact the Council had previously maintained combined accounting records for 4 separate entities (the Council, Hillingdon Pension Fund, Hillingdon First Limited and the Mayor of Hillingdon’s Charitable Trust) within the same general ledger. These have been more appropriately separated within Oracle Fusion. However, this made like-for-like comparison of financial records more challenging. Using our IT audit specialists, we performed our own reconciliations of Oracle R12 to Oracle Fusion. We identified a number of differences at the account code level which we have not been able to resolve, however we have been able to demonstrate that opening balances within Oracle Fusion are materially consistent with the closing balances within the published 2023/24 financial statements. Our substantive testing of the Pension Fund financial statements included reconciliation of balances and transactions to the general ledger and did not identify any material issues. We note however that the Council’s auditor has reported a significant weakness in the Council’s arrangements to secure value for money in relation to the implementation of Oracle Fusion. These weaknesses have therefore been reported to those charged with governance and are not repeated in our reporting on the Pension Fund. Our response to the key areas of challenge and professional judgement 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 therefore had to manually replicate all transactions recorded after this date in the new system which increases the risk of error / omission. The implementation of the new system has not gone smoothly, therefore there is also an increased risk of misstatements arising from subsequent use of the new system because of challenges encountered in the implementation of the new system. Given the pervasive nature of these risks, we consider that they pose a risk of material misstatement. What is the risk, and the key judgements and estimates? We were able to conclude that opening balances migrated from Oracle R12 to Oracle Fusion are materially correct at the financial statement level. We are also able to conclude that we have sufficient assurance over the material accuracy of in year transactions and year end balances based on our substantive testing. What are our conclusions? Significant Risk Hillingdon Pension Fund Audit Results Report 11 Significant risk - implementation of the new finance system (Oracle Fusion) Confidential — All Rights Reserved Areas of Audit Focus We have: • Evaluated whether the IAS26 disclosure is in line with the relevant standards and consistent with the valuation provided by the Actuary. • Engaged EY Pensions to review the roll forward procedures associated with the IAS 19 reports for London Borough of Hillingdon which makes up 84% of the total pension fund asset and support our IAS26 disclosures work. • Evaluated and placed reliance on EY Pension’s and PwC’s review of the underlying pension IAS19 assumptions used by the actuary, which also support the IAS26 figures. • Assessed the competence of management experts, Hymans Robertson as the Pension Fund’s actuary. Our response to the key areas of challenge and professional judgement 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, and the key judgements and estimates? Subject to the finalisation of our review procedures, no significant matters have been identified in the completion of our work to date. We identified some discrepancies between the disclosures and the Actuary’s report. These have been corrected by Management. What are our conclusions? Hillingdon Pension Fund Audit Results Report 12 Risk of material misstatement - IAS26 disclosure — actuarial present value of promised retirement benefits Confidential — All Rights Reserved Areas of Audit Focus We have: • Agreed 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. • We have also evaluated the ISAE 3402 report for custodian and fund managers. Our response to the key areas of challenge and professional judgement 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, and the key judgements and estimates? Subject to the finalisation of our review procedures, no significant matters have been identified in the completion of our work to date. We noted a misstatement in disclosure where in relation to recognition of investment income from AEW UK Urban Real Estate, which was recognised as capital distribution. What are our conclusions? Hillingdon Pension Fund Audit Results Report 13 Risk of material misstatement — completeness of Investment Income Confidential — All Rights Reserved Audit Report03 {68}: Hillingdon Pension Fund Audit Results Report 14 Confidential — All Rights Reserved Draft Audit Report Our opinion on the financial statements INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF LONDON BOROUGH OF HILLINGDON ON THE PENSION FUND’S FINANCIAL STATEMENTS Opinion We have audited the Pension Fund (“the Fund”) financial statements for the year ended 31 March 2025 under the Local Audit and Accountability Act 2014 (as amended). The pension fund financial statements comprise the Fund Account, the Net Assets Statement and the related notes 1 to 24, including material accounting policy information. 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 2024/25. In our opinion the pension fund financial statements: • give a true and fair view of the financial transactions of the Fund during the year ended 31 March 2025 and the amount and disposition at that date of its assets and liabilities as at 31 March 2025; and • have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below. We are independent of the Council as administering authority for the Pension Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and the Comptroller and Auditor General’s AGN01, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Corporate Director of Finance’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the authority’s ability to continue as a going concern for a period of 12 months from when the Fund’s financial statements are authorised for issue. Our responsibilities and the responsibilities of the Corporate Director of Finance with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the authority’s ability to continue as a going concern. Other information The other information comprises the information included in the Statement of Accounts 2024/25, other than the financial statements and our auditor’s report thereon. The Corporate Director of Finance is responsible for the other information contained within the Statement of Accounts 2024/25. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. Hillingdon Pension Fund Audit Results Report 15 Draft audit report Confidential — All Rights Reserved Draft Audit Report Our opinion on the financial statements We have nothing to report in this regard. Matters on which we report by exception We report to you if: • we issue a report in the public interest under section 24 of the Local Audit and Accountability Act 2014 (as amended); • we make written recommendations to the audited body under Section 24 of the Local Audit and Accountability Act 2014 (as amended); • we make an application to the court for a declaration that an item of account is contrary to law under Section 28 of the Local Audit and Accountability Act 2014 (as amended); • we issue an advisory notice under Section 29 of the Local Audit and Accountability Act 2014 (as amended); or • we make an application for judicial review under Section 31 of the Local Audit and Accountability Act 2014 (as amended). We have nothing to report in these respects Responsibility of the Corporate Director of Finance As explained more fully in the Statement of the Corporate Director of Finance’s Responsibilities set out on pages [...], the Corporate Director of Finance is responsible for the preparation of the Council’s Statement of Accounts, which includes the pension fund financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25, and for being satisfied that they give a true and fair view. The Corporate Director of Finance is also responsible for such internal control as the Corporate Director of Finance determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Corporate Director of Finance is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Administering Authority either intends to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with Corporate Director of Finance. Hillingdon Pension Fund Audit Results Report 16 Draft audit report Confidential — All Rights Reserved Draft Audit Report Our opinion on the financial statements Our approach was as follows: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Fund and determined that the most significant are the Local Government Pension Scheme Regulations 2013 (as amended), and The Public Service Pensions Act 2013. • We understood how the Fund is complying with those frameworks by making enquries of the management. We corroborated this through our reading of the Pension Board minutes and other information. • Based on this understanding, we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved making enquiries of the management for their awareness of any non- compliance of laws or regulations, inspecting correspondence with the Pensions Regulator and review of minutes. • We assessed the susceptibility of the Fund’s financial statements to material misstatement, including how fraud might occur by considering the key risks impacting the financial statements and documenting the controls that the Fund has established to address risks identified, or that otherwise seek to prevent, deter or detect fraud. • In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any identified significant transactions that were unusual or outside the normal course of business. These procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. • To address our fraud risk we tested the consistency of the investment asset valuation from the independent sources of the custodian and the fund managers to the financial statements. • To address our fraud risk we tested the consistency of the investment asset valuation from the independent sources of the custodian and the fund managers to the financial statements. • The Fund is required to comply with The Local Government Pensions Scheme regulations, other legislation relevant to the governance and administration of the Local Government Pension Scheme and requirements imposed by the Pension Regulator in relation ot the Local Government Pension Scheme. As such, we have considered the experience and expertise of the engagement team including the use of specialists where appropriate, to ensure that the team had an appropriate understanding of the relevant pensions regulations to assess the control environment and consider compliance of the Fund with these regulations as part of our audit procedures. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the members of London Borough of Hillingdon, as a body, in accordance with Part 5 of the Local Audit and Accountability Act 2014 (as amended) and for no other purpose, as set out in paragraph 85 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the London Borough of Hillingdon and its members as a body, for our audit work, for this report, or for the opinions we have formed. Debbie Hanson (Key Audit Partner) Ernst & Young LLP (Local Auditor) Luton Date Hillingdon Pension Fund Audit Results Report 17 Draft audit report Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results Report 18 Audit Differences04 {68}: Confidential — All Rights Reserved Audit Differences In the normal course of any audit, we identify misstatements between amounts we believe should be recorded in the financial s tatements and the disclosures and amounts actually recorded. These differences are classified as ‘known’ or ‘judgemental’. Known differences represent items that can be accurat ely quantified and relate to a definite set of facts or circumstances. Judgemental differences generally involve estimation and relate to facts or circumstances that are uncertain or open to interpretation. We have not identified any audit differences, adjusted or unadjusted that we need to bring to your attention We have identified a number of disclosure errors which management have agreed to amend. Until all our review procedures are complete further differences may be identified. Hillingdon Pension Fund Audit Results Report 19 Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results Report 20 Other Reporting Issues05 {68}: Confidential — All Rights Reserved We must give an opinion on the consistency of the financial and non -financial information in the Hillingdon Pension Fund Annual Report with the audited Pension Fund financial statements. We have reviewed the Pension Fund Annual Report and are satisfied that it is consistent with the financial statem ents. We also are required to give an opinion on the consistency of the pension fund financial statements included in the Annual Report with the audited pension fund financial statements included in the full annual statement of accounts of the London Borough of Hillingdon. We have prepared and will issue a cons istency statement to management alongside our audit report once the Council’s financial statements have been finalised. Hillingdon Pension Fund Audit Results Report 21 Consistency of information published with the financial statements Other Reporting Issues Other powers and duties We have a duty under the Local Audit and Accountability Act 2014 to consider whether to report on any matter that comes to ou r attention in the course of the audit, either for the Authority to consider it or to bring it to the attention of the public (i.e. “a report in the public interest”). We also have a duty to make written recommendations to the Authority, copied to the Secretary of State, and take action in accordance with our responsibilities under the Local Audit and Accountability Act 2014. We had no reason to exercise these duties. Other reporting issues As required by ISA (UK&I) 260 and other ISAs specifying communication requirements, we must tell you significant findings fro m the audit and other matters if they are significant to your oversight of the Fund’s financial reporting process. We had no matters to report. Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results Report 22 Assessment of Control Environment06 {68}: Confidential — All Rights Reserved Assessment of Control Environment Financial controls As part of our audit of the financial statements, we obtained an understanding of internal control sufficient to plan our audit and determine the nature, timing and extent of testing performed. Although our audit was not designed to express an opinion on the effectiveness of internal control, we are required to communicate to you significant deficiencies in internal control. During the course of the audit, we have identified one new area of weakness in relation to the Pension Fund’s control environment. We have summarised these weakness and associated recommendations (along with the risk rating) below: 1) We noted inconsistencies in the treatment of distributions by the custodian compared to the fund manager. Specifically, income distributions were incorrectly classified as capital distributions, and vice versa. These misclassifications led to discrepancies in the recognition of investment income by the pension fund, which relies on the custodian’s reporting as its primary source. Recommendation • Management should strengthen diligence when reviewing the treatment of distributions by the custodian to ensure that classification is correct. Prior year weaknesses open at 1 April 2025: 1) Weakness in the identification and documentation of observable and unobservable inputs used in valuations of Level 2 and Level 3 investments. This was also reported in the prior year. (Moderate) We have not identified any similar issues in the 2024/25 audit and therefore this issue is now closed 2) Weaknesses in the procedures in place for the Pension Fund to identify the income reinvested by fund managers not identified by the custodian. (Moderate) Our review of work in this areas is ongoing and we will provide an update in our final Audit Results Report The table below provides an overview of the ‘high’ ‘moderate’ and ‘low’ rated observations we have from the 2023/24 audit. High Moderate Low Total Open at 1 April 2025 0 2 0 2 Closed during FY25 0 1 0 1 New points raised in FY25 0 1 0 1 Total open points as at 31 March 2025 0 2 0 2 A weakness which does not seriously detract from the internal control framework. If required, action should be taken within 6–12 months. Matters and/or issues are considered to be of major importance to maintenance of internal control, good corporate governance or best practice for processes. Action should be taken within six months. Matters and/or issues are considered to be fundamental to the mitigation of material risk, maintenance of internal control or good corporate governance. Action should be taken either immediately or within three months. Key: Hillingdon Pension Fund Audit Results Report 23 Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results Report 24 Independence07 {68}: Confidential — All Rights Reserved Independence Hillingdon Pension Fund Audit Results Report 25 We are not aware of any inconsistencies between the Pension Fund’s policy for the supply of non -audit services and FRC Ethical Standard. We are not aware of any apparent breach of that policy. We confirm that, in our professional judgment, EY is independent, our integrity and objectivity is not compromised and we hav e complied with the FRC Ethical Standard. We confirm that your engagement team (partners, senior managers, managers and all others involved with the audit) and others within the firm, the firm and network firms have complied with relevant ethical requirements regarding independence. Confirmation Relationships The FRC Ethical Standard requires that we provide details of all relationships between Ernst & Young (EY) and the Pension Fun d, and its members and senior management and its affiliates, including all services provided by us and our network to the Pension Fund, its members and senior management and its affiliates, and other services provided to other known connected parties that we consider may reasonably be thought to bear on the our integrity or objectivity, including tho se that could compromise independence and the related safeguards that are in place and why they address the threats. There are no relationships from 1 April 2024 to the date of this report which we consider may reasonably be thought to bear o n our independence and objectivity. EY Transparency Report 2025 Ernst & Young (EY) has policies and procedures that instil professional values as part of firm culture and ensure that the hi ghest standards of objectivity, independence and integrity are maintained. Details of the key policies and processes in place within EY for maintaining objectivity and independence can be found in our annual Transparency Report which the firm is required to publish by law. The most recent version of this Report is for the year end 30 June 2025 EY UK 2025 Transparency Report | EY - UK Services provided by EY There are no services provided by EY from 1 April 2024 to the date of this report, which we consider may reasonably be though t to bear on our independence and objectivity. The table on the subsequent page includes a summary of the fees that you have paid to us in the year ended 31 March 2025 in l ine with the disclosures set out in FRC Ethical Standard and in statute. Full details of the services that we have provided and the related threats and safeguards are included below. We have adopted the necessary safeguards in our completion of this work and complied with Auditor Guidance Note 1 issued by the NAO in February 2025. Confidential — All Rights Reserved Independence 26 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. A breakdown of our fees is shown in the table to the right. As set out in our Audit Planning Report the agreed fee presented was based on the following assumptions: ► Officers meeting the agreed timetable of deliverables; ► Our financial statements opinion being unqualified; ► Appropriate quality of documentation is provided by the Pension Fund; and ► The Pension Fund has an effective control environment ► The Pension Fund 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 Pension Fund should have regard to paragraphs 26 - 28 of the Statement of Responsibilities. If any of the above assumptions prove to be unfounded, we seek a variation to the agreed fee. A narrative summary of the areas where we expect to raise scale fee variations for the audit of the Pension Fund are set out in the fee analysis on this page. Current Year Prior Year £m £m Scale Fee – Code Work 92,572 81,688 Proposed scale fee variation TBD Note 2 9,048 Note 1 Total fees 0 0 All fees exclude VAT (1) As set in our 2023/24 Audit Results Report a scale fee variation was submitted to PSAA covering the following areas: • ISA 315; additional procedures to address the enhanced requirements of revised standard undertaken • Quality and preparation issues leading to extra work in relation to an investment originally classified as level 2 rather than level 3 and the understatement of investment income. As at the date of this report that scale fee variation has been determined at a total value of £9,048 (2) We propose to submit a scale fee variation to PSAA for additional 2024/25 work covering the incremental work by our IT audit specialists to provide assurance over the migration of financial records of the Hillingdon Pension Fund from Oracle R12 to Oracle Fusion alongside the work performed as part of the Council’s audit for 2024/25. The fee for this has been agreed with management but is subject to final determination by PSAA. Hillingdon Pension Fund Audit Results Report Confidential — All Rights Reserved Hillingdon Pension Fund Audit Results Report 27 Appendices08 {68}: Confidential — All Rights Reserved Appendix A — Required communications with the Audit Committee There are certain communications that we must provide to the Audit Committees of UK entities. We have detailed these here tog ether with a reference of when and where they were covered: Our Reporting to you Required communications What is reported? When and where Terms of engagement Confirmation by the audit committee of acceptance of terms of engagement as written in the engagement letter signed by both parties. The statement of responsibilities serves as the formal terms of engagement between the PSAA’s appointed auditors and audited bodies Our responsibilities Reminder of our responsibilities as set out in the engagement letter. The statement of responsibilities serves as the formal terms of engagement between the PSAA’s appointed auditors and audited bodies Planning and audit approach Communication of: ▪ The planned scope and timing of the audit ▪ Any limitations on the planned work to be undertaken ▪ The planned use of internal audit ▪ The significant risks identified When communicating key audit matters this includes the most significant risks of material misstatement (whether or not due to fraud) including those that have the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. Audit Planning Report – April 2025 Significant findings from the audit ▪ Our view about the significant qualitative aspects of accounting practices including accounting policies, accounting estimates and financial statement disclosures ▪ Significant difficulties, if any, encountered during the audit ▪ Significant matters, if any, arising from the audit that were discussed with management ▪ Written representations that we are seeking ▪ Expected modifications to the audit report ▪ Other matters if any, significant to the oversight of the financial reporting process ▪ Findings and issues regarding the opening balance on initial audits This Audit Results report, Feb 2026 meeting of the Audit Committee. Hillingdon Pension Fund Audit Results Report 28 Required communications with the Audit Committee Confidential — All Rights Reserved Our Reporting to you Required communications What is reported? When and where Going concern Events or conditions identified that may cast significant doubt on the entity’s ability to continue as a going concern, including: ▪ Whether the events or conditions constitute a material uncertainty related to going concern ▪ Whether the use of the going concern assumption is appropriate in the preparation and presentation of the financial statements ▪ The appropriateness of related disclosures in the financial statements This Audit Results report, Feb 2026 meeting of the Audit Committee. Misstatements ▪ Uncorrected misstatements and their effect on our audit opinion, unless prohibited by law or regulation ▪ The effect of uncorrected misstatements related to prior periods ▪ A request that any uncorrected misstatement be corrected ▪ Material misstatements corrected by management This Audit Results report, Feb 2026 meeting of the Audit Committee. Fraud ▪ Enquiries of the audit committee to determine whether they have knowledge of any actual, suspected or alleged fraud affecting the entity ▪ Any fraud that we have identified or information we have obtained that indicates that a fraud may exist ▪ Unless all of those charged with governance are involved in managing the entity, any identified or suspected fraud involving: ▪ Management; ▪ Employees who have significant roles in internal control; or ▪ Others where the fraud results in a material misstatement in the financial statements. ▪ The nature, timing and extent of audit procedures necessary to complete the audit when fraud involving management is suspected ▪ Matters, if any, to communicate regarding management’s process for identifying and responding to the risks of fraud in the entity and our assessment of the risks of material misstatement due to fraud ▪ Any other matters related to fraud, relevant to Audit Committee responsibility. This Audit Results report, Feb 2026 meeting of the Audit Committee. Hillingdon Pension Fund Audit Results Report 29 Appendix A — Required communications with the Audit Committee (cont’d) Confidential — All Rights Reserved Our Reporting to you Required communications What is reported? When and where Related parties Significant matters arising during the audit in connection with the entity’s related parties including, when applicable: ▪ Non-disclosure by management ▪ Inappropriate authorisation and approval of transactions ▪ Disagreement over disclosures ▪ Non-compliance with laws and regulations ▪ Difficulty in identifying the party that ultimately controls the entity This Audit Results report, Feb 2026 meeting of the Audit Committee. Independence Communication of all significant facts and matters that bear on EY’s, and all individuals involved in the audit, integrity, objectivity and independence. Communication of key elements of the audit engagement partner’s consideration of independence and objectivity such as: ▪ The principal threats ▪ Safeguards adopted and their effectiveness ▪ An overall assessment of threats and safeguards ▪ Information about the general policies and process within the firm to maintain objectivity and independence Communications whenever significant judgements are made about threats to integrity, objectivity and independence and the appropriateness of safeguards put in place. Audit Planning Report – April 2025 This Audit Results report, Feb 2026 meeting of the Audit Committee. Hillingdon Pension Fund Audit Results Report 30 Appendix A — Required communications with the Audit Committee (cont’d) Confidential — All Rights Reserved Our Reporting to you Required communications What is reported? When and where External confirmations ▪ Management’s refusal for us to request confirmations ▪ Inability to obtain relevant and reliable audit evidence from other procedures. This Audit Results report, Feb 2026 meeting of the Audit Committee. Consideration of laws and regulations ▪ Subject to compliance with applicable regulations, matters involving identified or suspected non-compliance with laws and regulations, other than those which are clearly inconsequential and the implications thereof. Instances of suspected non-compliance may also include those that are brought to our attention that are expected to occur imminently or for which there is reason to believe that they may occur ▪ Enquiry of the audit committee into possible instances of non-compliance with laws and regulations that may have a material effect on the financial statements and that the audit committee may be aware of This Audit Results report, Feb 2026 meeting of the Audit Committee. Significant deficiencies in internal controls identified during the audit ▪ Significant deficiencies in internal controls identified during the audit. This Audit Results report, Feb 2026 meeting of the Audit Committee. Hillingdon Pension Fund Audit Results Report 31 Appendix A — Required communications with the Audit Committee (cont’d) Confidential — All Rights Reserved Our Reporting to you Required communications What is reported? When and where Written representations we are requesting from management and/or those charged with governance ▪ Written representations we are requesting from management and/or those charged with governance This Audit Results report, Feb 2026 meeting of the Audit Committee. System of quality management ▪ How the system of quality management (SQM) supports the consistent performance of a quality audit This Audit Results report, Feb 2026 meeting of the Audit Committee. Material inconsistencies or misstatements of fact identified in other information which management has refused to revise ▪ Material inconsistencies or misstatements of fact identified in other information which management has refused to revise This Audit Results report, Feb 2026 meeting of the Audit Committee. Auditors report ▪ Any circumstances identified that affect the form and content of our auditor’s report This Audit Results report, Feb 2026 meeting of the Audit Committee. Use of statutory powers • Identification of issues that are likely to lead to a form of public reporting, including: • Statutory recommendations • Public interest reporting • Referral of matters to the Secretary of State and NHS England This Audit Results report, Feb 2026 meeting of the Audit Committee. 32 Appendix A — Required communications with the Audit Committee (cont’d) Hillingdon Pension Fund Audit Results Report Confidential — All Rights Reserved Appendix B — Outstanding matters The following items relating to the completion of our audit procedures are outstanding at the date of the release of this rep ort: Item Actions to resolve Responsibility Annual Report and Accounts Review of the Annual Report Incorporation of EY review comments on disclosure notes Check of the most recent version of the accounts to ensure amendments and complete and accurate Receipt and check of final signed version of the accounts EY and management Management representation letter Receipt of signed management representation letter Management and audit committee Subsequent events review Completion of subsequent events procedures to the date of signing the audit report EY and management Until all our final review procedures are complete, we cannot confirm the final form of our audit opinion as new issues may e merge or we may not agree on final detailed disclosures in the Annual Report. At this point no issues have emerged that would cause us to modify our opinion. A draft of the current opi nion is included in Section 03. Hillingdon Pension Fund Audit Results Report 33 Outstanding matters Confidential — All Rights Reserved Appendix C — Management representation letter [To be prepared on the entity’s letterhead] [Date] Ernst & Young [Address] This letter of representations is provided in connection with your audit of the financial statements of Hillingdon Pension Fund (“the Fund”) for the year ended 31 March 2025. We recognise that obtaining representations from us concerning the information contained in this letter is a significant procedure in enabling you to form an opinion as to whether the financial statements give a true and fair view of the financial transactions of the Fund during the year ended 31 March 2025, and of the amount and disposition at that date of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the year, in accordance with applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2024/25. We understand that the purpose of your audit of the Fund’s financial statements is to express an opinion thereon and that your audit was conducted in accordance with International Standards on Auditing (UK), which involves an examination of the accounting system, internal control and related data to the extent you considered necessary in the circumstances, and is not designed to identify - nor necessarily be expected to disclose all fraud, shortages, errors and other irregularities, should any exist. Accordingly, we make the following representations, which are true to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves: A. Financial Statements and Financial Records 1. We have fulfilled our responsibilities, under the relevant statutory authorities, for the

Audit Committee – 10 February 2026 Part I – Public GOVERNANCE REVIEW IMPROVEMENT PLAN Committee name Audit Committee Officers reporting Daniel Toohey, Director of Legal & Governance/ Monitoring Officer Steve Muldoon, Corporate Director of Finance Matthew Wallbridge, Chief Operating Officer Papers with report Governance Review Improvement Plan Ward N/A HEADLINES 1. The Governance Review Improvement Plan (GRIP) is Hillingdon Council’s strategic response to identified governance areas for improvement . It aims to strengthen internal controls, clarify internal decision-making and improve accountability, ensuring the Council is well-governed corporately, financially resilient, and transparent. RECOMMENDATION That the update to the Governance Review Improvement Plan be noted and the Committee seek any clarifications and assurances and provide comments to officers. SUPPORTING INFORMATION 2. The GRIP (see Appendix) is a strategic programme launched by the London Borough of Hillingdon in March 2025 to address key governance weaknesses identified in several reviews, including the CIPFA review (March 2025), Directorate Governance Internal Audit (September 2025) and the Provisional Audit Results Report (February 2025). 3. In addition, Members will recall that, on 24 July 2025, the Council’s External Auditors issued the Council with a Value for Money Update and Recommendations Under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 (S24 Report). That report was given consideration by Full Council at the meeting on 11 September 2025, and it was resolved, inter-alia, that:  the programmes of work and actions which were already in place to address the S24 Report recommendations, as clearly set out in the Financial Modernisation Programme (FMP) which commenced in February 2025, and the Governance Review Improvement Plan (GRIP) which commenced in March 2025, be welcomed and approved.  the Audit Committee, who have already been monitoring the progress of the FMP and GRIP, be instructed to continue to monitor the delivery of the actions and report back to Council in no later than 12 months, or earlier if required, to ensure the S24 Report recommendations have been fully addressed. 4. Accordingly, this report is brought before Members to provide an update on the work and actions contained within the GRIP. Audit Committee – 10 February 2026 Part I – Public 5. Led by the Corporate Governance Group, the GRIP is structured around three workstreams:  financial governance – including the S24 recommendations  directorate governance, and  constitutional / democratic governance 6. Each workstream has defined actions and leadership. The overall aim of the GRIP is to embed a tiered governance model, improve business planning, and strengthen internal arrangements and protocols. 7. The GRIP is a public -facing initiative, with progress updates presented at this Audit Committee and to future meetings, demonstrating the Council’s commitment to reform and accountability. Workstream #1 - Financial Governance: 8. The Finance Modernisation Programme (FMP) is a significant transformation initiative by the London Borough of Hillingdon to review and strengthen the Council’s financial systems, processes, and structures. The programme was initiated to address budget challenges and to modernise the Council’s financial infrastructure. 9. There are a significant number of challenges that the council is seeking to address both in this programme and more broadly in addressing the council’s adverse financial position. It is recognised that addressing all of these is of critical importance to the council’s recovery, however this will be costly in both resources and time. Some of this resourcing will be provided through phase 2 of the FMP which will see additional external resource seconded in to support the annual accounts and MTFS processes. 10. Summary of progress since the last meeting includes the following:  Additional spend control measures are now in place to review invoice related expenditure. Staffing spend control measures continue, and a new Temporary Accommodation placements review panel is now taking place weekly to review new, existing and high-cost placements.  Forecasting and in-year delivery of savings and areas of financial risk continue to be assessed each month and forecasts revised accordingly. The forecast determined at month 6 has remained stable through to month 9 although there have been movements both favourable and adverse within this. The mitigation forecast has been able to be reduced as opportunities and improvements have been identified by service areas. Weaknesses in previous budgeting and forecasting processes and how the shortfalls materialise have been identified and are being addressed through closer attention to key assumptions and by making sure the budget setting process is more thorough than in the past.  Delivery plans on key 2026/27 savings proposals (those deemed higher risk or more complex) have been requested and are in the process of being reviewed.  Delivery costs of savings proposals are being confirmed to ensure these are properly captured and funded in the 2026/27 budget.  The next iteration of the MTFS process will be timetabled to begin much earlier in the new financial year to allow more time to find savings opportunities, review proposals and ensure all necessary pro cesses have ample time to be worked through in a structured and considered manner. Audit Committee – 10 February 2026 Part I – Public  Discussions with MHCLG on EFS have progressed with further detailed submissions made which will inform the government’s decision, and on which an announcement is anticipated before the Council convenes to approve the 2026/27 budget.  The FMP has come to the end of phase 1 and is now on phase 2. Training sessions were delivered to non-finance staff to clarify the expectations of budget managers and senior managers. Work continued on audit readiness to assist the 24/25 closedown and prepare for the 25/26 closedown, and a review of the MTFS process.  Preparation for the 2025/26 accounts closedown and audit process is underway with the aim of being able to deliver the draft accounts by 30 June and further assist and improve the audit process and outcomes.  DSG – The forecast in -year deficit for 2025/26 i s reducing further and will be below £10m by year-end, compared to a £15m deficit in 2024/25. This is projected to reduce further over the coming two years.  A further action raised in the Draft Auditor’s Report has been added and is being followed up in the first instance by the Monitoring Officer and team.  Performance reports presented to the Cabinet and Select Committees  A clear prioritised deliverable plan in place setting out the work to deliver an updated EPM monitoring template in Oracle for the first reporting period in the next financial year, as well as a learning and development programme to enable this. Workstream #2 – Directorate Governance: 11. Summary of progress since the last meeting:  Corporate Governance Arrangements Training – green - Governance masterclass session has been given to the Senior Management members, including the Senior Management Team standardisation and reporting.  A wider corporate “governance toolkit” intranet site has been launched.  The Directorate Business and Financial Plans internal audit exercise has been presented to CMT  Planning has started for the 2026/27+ Business and Financial Plans framework Workstream #3 - Constitutional Governance: 12. Summary of progress since the last meeting:  The external review of certain key elements of the Constitution has been completed and the report on suggested improvements has been received.  Once reviewed, a report will be brought before Council with any suggested changes to the Constitution. BACKGROUND PAPERS: Nil

Governance Review Improvement Plan (GRIP) Executive Summary and Purpose The accountability and governance arrangements in the Council are established but need to be reset, developed and improved further to manage the increasingly complex and high value projects being undertaken to deliver the challenging MTFS savings targets as approved by Council on the 27th February 2025. The Governance Review Improvement Plan (GRIP) was therefore commissioned and sponsored by Tony Zaman, as Chief Executive and Head of Paid Service, in early March 2025. It will focus on three (3) workstreams, and be overseen by the Corporate Governance Group, which will take regular reports from the individual workstream leads. It is intended that the use of workstreams will bring focus and rigour to the financial and governance management process. GRIP Programme and Workstreams The GRIP will consist of the following three (3) workstreams: 1. Financial Governance - lead by the Council's s151 Officer 2. Directorate (Officer Decision-making) Governance - lead by the Council's Chief Operating Officer, on behalf of the Council's Head of Paid Service 3. Remaining Areas - i.e. Constitutional/ Democratic Governance - lead by the Monitoring Officer Each Workstream will have two stages: 1. Governance Review Improvement Plan - a review phase, whereby the Council takes stock of recommendations provided by an independent review, or auditor 2. Governance Recommendations Implementation Plan - an implementation phase, where the Council will set out its plan of action and detail for implementing the GRIP recommendations, providing updates on progress The workstream leads will report on progress with the delivery of their associated actions on the Governance Recommendations Implementation Plan to the Corporate Governance Group. The Corporate Governance Group via the Corporate Business Manager will manage and oversee the delivery of the Governance Recommendations Implementation Plan. Project Drivers and High-Level Issues The workstreams will be responsible for delivering the recommendations as referenced in the following reviews that have been undertaken. • Directorate Governance Int Audit report (Sept 2024) • LBH Final Audit Results Report (5 February 2025) • Note - recommendations to follow an Independent Review of Constitutional and Democratic Governance The workstreams will also link to the Council Strategy Commitments of a well-run, sustainable council with sound financial management, achieving positive outcomes for residents. By establishing and delivering the outcomes from the three reviews through the creation of the three workstreams will provide a robust oversight that the Council it is doing the right things, in the right way, for the right people in a timely, inclusive, open, honest and accountable manner. Finance Modernisation Programme (FMP) and Engagement with Grant Thornton Workstream 1 (Finance Governance) actions and improvements will be delivered in conjunction with the work being carried out by the Council via its Finance Modernisation Programme (FMP). The Council has engaged Grant Thornton in order to review areas including Oracle improvement work, and to provide further capacity and capability to enable financial improvements to be delivered at pace. This will be looked at going forward so as to dovetail with this work and also to explore if further assistance from Grant Thornton team may be required in relation to the broader FMP actions. Theme Title of Review Recommendation Actions Detailed Delivery Actions Senior Responsible Officer Lead Action Delivery Lead Start Date End Date RAG Status Quarterly Progress Update (Oct - Dec 2025) Quarterly Progress Update (Jan - Mar 2026) 1.1 Financial Sustainability London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 (Statutory recommendations to the Council under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 - Recommendation 1) The Council to build 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. (That the Council ensures it has detailed implementation plans supporting all of the planned savings included within its 2025-26 budget and future medium-term financial strategy and identifies and develops implementation plans for further savings which can be pursued should additional budgetary pressures emerge or the Council fails to achieve all of its currently planned savings). 1. Agree a savings programme to deliver a balanced budget . 2. Deliver a mechanism for the regular review of savings progress and governance to change/add to savings depending on the levels of reserves. 3. Agree and implement spend control measures. 4. Review of the level of service provision across its services to ensure that the Council is striking an affordable balance between the monies it receives to fund services and the cost of those services. 5. Devise and roll out the updated Directorate Business and Financial Plan Template.(see ref: Directorate Governance workstream recommendation 2.1) Through CMT and all SMTs: 1. Monitor delivery of agreed savings programmes - M2 2. Monitor use of MTFS savings app to ensure tight control - M3 & M4. 3. Enforce spend control measures across the Council. 4. Ensure compliance of Business and Financial Plan Template across Corporate Directors Steve Muldoon Andy Goodwin Matt Davis 01/04/25 31/03/26 A 1. Additional spend control measures are being introduced to ensure that all new spend through PO's/invoices undergoes a review and sign off process that the spend is essential. 2. An updated savings template has been issued and training workshops held on these to ensure that there is sufficient detail captured on savings and proposals to ensure that they can be assessed as sufficiently robust to sign off. This will also capture the prospective cost of implementing the savings. More detailed plans will be requested in respect of specific proposals identified as being at higher risk of slippage or non-delivery. This is being undertaken for prospective 2026/27 savings rather than as part of the 2025/26 budget which has already been set. 3. A review of the deliverability of all 25/26 savings has been undertaken as part of the M5 forecast process and savings are being reviewed closely each month with Corporate Directors. This has flushed out any optimism bias in the previous reporting and so a firmer position is now reported. This will feed into the MTFS 26/27 - 28/29 cycle. 4. All 25/26 savings which have been downgraded and no longer forecast to deliver in year will undergo a separate review to assess whether they are completely undeliverable, or if the value and timing of future delivery needs reprofiling and can be achieved in 2026/27. 5. P-cards being reviewed in light of contract extension to reduce the number of cards in use and enforce tighter use on essential spend. 6. An application to MHCLG for Exceptional Financial Support has been made with subsequent substantive discussions, which will address the reduction in reserves in recent years by re-establishing a base level of reserves, address the projected deficit in 25/26 and project the support required over subsequent years. 1. Spend control boards now embedded with the organisation. This includes requests for new P-cards and spend over £500. Anecdotal evidence that unnecessary spend is being captured/stopped at Head of Service/Director level or not being put forward. 2. 2025/26 Growth and Savings schedules re-reviewed as part of the initial 2026/27 Budget Report presented to Cabinet on the 23rd December 2025. Delivery plans requested in respect of those 2026/27 proposals considered more challenging to deliver. 3. Savings assessed as undeliverable or at risk in the 2025/26 position have been reviewed to assess the impact on 2026/27 with adjustments as necessary in the 2026/27 base budget setting. Amber savings at this stage also being assessed more closely as the outcome on these should now be getting clearer. 4. The Council has submitted its EFS application and had the initial review undertaken by CIPFA in January. Final submission due end of January to MHCLG and discussions being held with MHCLG on this. This will necessarily include some rebuilding of reserves which are now depleted. Some rephasing likely. Now awaiting final in-principle decision on approval of EFS and the agreed value, expected in February. 5. A list of further potential opportunities to investigate for further savings in the next iteration of the MTFS is being compiled which will be discussed with the ruling adminstration post May elections. 1.2 Service Delivery London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 (Statutory recommendations to the Council under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 - Recommendation 2) The Council to review 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 Council should develop detailed plans for implementation of service delivery transformation and how the up-front transformation costs will be funded. • Review of the level of service provision across its services to ensure that the Council is striking an affordable balance between the monies it receives to fund services and the cost of those services. • Devise and roll out the updated Directorate Business and Financial Plan Template (note ref Directorate Governance workstream - recommendation 2.1) The impact of the review of the saving programme for Month 2 along with the initial estimate of these new measures to be included in the Month 2 budget monitoring report to Cabinet and refined as proposals are further developed. In parallel to the M2 monitoring position, the Cabinet to also receive the 2024/25 Outturn position. This will enable the complete Council final position to be reviewed and consolidated in one meeting. Steve Muldoon Andy Goodwin Matt Davis 01/04/25 31/03/26 A 1. Officers are currently updating and reviewing demand modelling for key areas of service provision to understand the key drivers of demand and cost, and hence where focus on efficiency needs to be undertaken. A significant number of KPIs and dashboards have been prepared to support the analysis, and benchmarking is being reviewed to understand the key areas where the council is high/average/low cost and where opportunities for further efficiencies should be explored further. 2. Approval was given at October Cabinet to progress disposal of the council car park at Cricket Field Road (the "Lobster Pot") in order that an increase in local adult social care provision can be provided, helping offset the increasingly expensive external provision the council currently faces. 3. The Capital Programme has been reviewed with a view to accelerating the acquisition of property through the HRA to be used to help mitigate the high cost of and increasing demand for temporary accommodation. 4. A review of the use of capital receipts for transformation funding has been undertaken to clarify what capital receipts will be available for use and qualify under the regulations, and what expenditure will be able to be offset against these receipts. 5. A review of the personnel hierarchy structures in Oracle has been undertaken to ensure these are reflective of understanding, correct errors therein, and correct any vacant posts or supernumerary positions that can be removed to mitigate the in-year position. 6. The Corporate Management Team meet on a weekly basis and as part of the agenda the Service Delivery Board reviews options, projects and changes to service provision in light of the council's financial position. 7. The Council are reviewing the Medium Term Financial Strategy which includes service provision and options for consideration as part of budget setting 1. A number of rounds of meeting (at all levels, Officer and Member) have taken place to review service demand models and base budget requirements as part of the 2026/27 Budget Process. 2. Areas which will require more in-depth delivery model reviews in 2026 are being formulated and built into the MTFS from 26/27. 3. The cost implementing changes and savings in 2026/27 is being identified to ensure that this is captured as part of the MTFS and delivery plans are being requested where transformational or complex savings proposals have been put forward. Anticipated to be funded from flexible capital receipts. 4. Hierarchy structures in Oracle are being reviewed and updated to ensure that these better align with how directorates want to view their services 5. Meetings have resulted in updated base budgets as part of the initial 2026/27 Budget Report presented to Cabinet on the 23rd December 2025. This includes significant adjustments (growth) to savings and pressures that are implicit in the £36m Period 7 2025/26 overspend position. The mitigation/intervention target set of £2m in 26/27 is being reduced as improvements in the Directorate forecasts are coming through. 6. Interface between the HR system (Zellis) and Oracle to ensure all establishment changes are managed in a more effective manner. Expected implementation of this daily interface is expected late in Quarter 4 2025/16. 1.3 Schools Budget London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 (Statutory recommendations to the Council under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 - Recommendation 3) The Council to seek to balance its schools budget to prevent further growth in its Dedicated Schools Grant (DSG) deficit. In the absence of confirmed alternative arrangements, the Council 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 2028. 1. The Council to seek to balance its school’s budget to prevent further growth in its Dedicated Schools Grant (DSG) deficit. 2. Council to consider performing 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 2028. 1. Officers to review existing and likely positions and outcomes. 2. The Council to continue to monitor the national picture on this issue - Note - This is a known national issue with many councils unable to fully fund their DSG deficits within General Fund reserves and resources. Steve Muldoon Andy Goodwin Andy Goodwin 01/04/25 31/03/26 A A letter has been received from DfE commending the Council on "the significant progress that has been achieved in Hillingdon and your rigorous approach to providing a high quality, financially efficient SEND service". The Government intends to set out plans for reforming the SEND system in the coming months: Average EHCP costs, EHCP numbers, number of EHCP cases in mainstream settings, placements in independent settings and a revised banding framework. A projection of the DSG deficit up to March 2028, when the statutory override ends, indicates that the council's cumulative DSG deficit will reach £90.8m without any further safety valve contributions from DfE or LBH. The one known scenario that can be modelled for as a potential solution at present would be for this to be capitalised (using EFS) which would lead to an annual MRP charge to the council's revenue budget of £2.6-2.8m/yr. At that point, from 2028/29, the annual in-year position is anticipated to be break-even. However this is a scenario that affects councils up and down the country and so we await further guidance from Government on how this multi-£bn national issue will be addressed. A number of indicators being tracked demonstrate that significant progress is being made in reducing the cost burden on the DSG deficit which will help to bring this down over time: Average EHCP costs, EHCP numbers, EHCPs in mainstream settings, numbers in independent settings and a revised banding framework. The white paper on SEND reform is anticipated to come through very soon, although not as soon as the local government funding settlement arrives. All councils eagerly await clarity from government on how the DSG deficit balances as at 31/3/2028 will be treated from that point onwards. The annual cost to the council in the form of interest is approaching £4m/year to fund the cash cost of the deficit. The council's in-year deficit was budgeted at £12.5m, down from the actual deficit in 2024/25 of £15m. The P7 forecast was a reduction of £1.9m at £10.6m and early indications from P9 workings are that this will reduce further to below £10m, a significant reduction on the prior year. The number of EHCP requests has dramatically increased recently in response to the imminent announcements and so may slow this down but the council is still projecting to bring the annual deficit down further over the next two years. Meetings on SEND Reform have commenced with DfE officers and advisors ahead of the announcements. 1.4 Financial Forecasting London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 (Statutory recommendations to the Council under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 - Recommendation 4) The Council review its financial forecasting processes to understand why significant financial pressures, over and above those anticipated and reflected in the Council’s annual budget, emerge and ensure future forecasting reflects the lessons learned. 1. Deliver detailed finance procedures manual as described in the Constitution. To assist with clearly defining the responsibilities of budget holders and other individuals with finance responsibilities. Will assist in holding individuals to account and to promote the ownership of budgets. 2. Existing Financial Regulations to be updated as part of the Oracle Roll Out. (e.g. in regard to setting policies for budget setting, income, journals etc). 3. Current spreadsheet-based systems being used pending full EPM implementation, also need to be fully documented and communicated. 4. Training to be delivered on the financial responsibilities and wider financial regulations to ensure effective governance and organisational financial management. The responsibility of all officers but should be well understood and supported by finance officers and business partners. They have a key role in promoting good practice and identifying areas of weakness and non-compliance, working to support colleagues across the Council to help them discharge their responsibilities. 1. Progress with the process underway under the banner of the Finance Modernisation Programme (FMP) that the Council is embarking on with partners Grant Thornton. 2. The Council to report on the expected financial position for 2025/26 will take place for the first time this year when the Month 2 monitoring cycle is completed and reported to Cabinet on 24th July, and the forecasting processes and underlying assumptions (as well as the 24/25 closure of accounts) will ensure this is a more robust and transparent process than last year. 3. Scrutiny finance training for Members to take place in September '25. 4. EPM to be refreshed over this period. Steve Muldoon Matt Davis Andy Goodwin 01/04/25 31/03/26 A The forecast outturn during the course of 2025/26 has flagged up that a £30m+ deficit is likely, meaning that the budget setting process is flawed, rather than the forecasting process. Drivers of this are considered to be heavily influenced by the following: - Savings need to be more robustly developed and challenged at the time of submitting proposals. This will be improved upon through more detailed templates and challenge sessions. - Growth has outstripped expectations but also the understanding of the level of demand in the current year is weak. Growth and demand models and in-year tracking need to be better developed. - Optimism bias needs to be removed. Cross-cutting savings need to be tightly owned and managed or they do not move forward at pace. RAG ratings of savings need better definition and savings need challenge through the year. - Dependency on capital receipts to fund revenue spend creates a risk of overspend if these do not materialise to plan. This approach will be removed from future budgets. - A significant movement in 2024/25 came from balance sheet corrections as the balance sheet review process progressed. This exercise needs concluding to ensure there are no further hidden surprises. Reconciliations need to be maintained more frequently and reviewed by others. - There needs to be an exercise after each year end to review changes from the final forecast to the outturn to understand which variances are ongoing and have not been fully built into the new year's budget. Many of the above issues arise due to a lack of clarity in the current year position as the budget setting process for the following year begins, and a weak challenge of new proposals which undermines deliverability of savings through the following year. Growth modelling needs improvement and the budget setting process tightening. This needs to begin earlier in the year than has been the case in recent years as the process becomes rushed and insufficient time remains to perform a thorough process. While these issues will be addressed during the current MTFS cycle, the fact that the council is having to address so many issues at once and has limited time available for turnaround does present a risk that these will not be fully resolved. A contingency will be required to mitigate any such unforeseen/unidentified issues. 1. The P6 forecast outturn indicated a £36m deficit which has stayed steady in P7 and is expected to remain steady in the P9 forecast also. As part of the budget process, as set out in 1.1 and 1.2 above initial 2026/27 Budget Report presented to Cabinet on the 23rd December 2025 includes significant adjustments (growth) to savings and pressures that are implicit in the £36m forecast. The variances contained in this demonstrate that it is the budget setting process that has been flawed, rather than the forecasting process. Drivers of this, that have been scrutinised to deliver the 23rd December initial 2026/27 Budget Report include: - Savings achievability is key - for 26/27 these have been more robustly developed and challenged and delivery plans are now being worked up. - Growth, demand and inflation have been understated previously - models and in-year tracking have been developed to understand the underlying trends. - Variances carried forward from the previous year not properly addressed - budget rebasing forms a significant part of the growth in 26/27 MTFS modelling - Optimism bias (e.g. growth and savings) - this has been removed and cross-cutting savings minimised as these lack clear ownership - Dependency on capital receipts to fund revenue spend has been removed from future budgets and will only be used for one-off savings implementation costs. - Contingency has been rebuilt 2. There will be an exercise at each year end to review changes from the final forecast to the outturn to understand which variances are ongoing and may not been fully built into the new year's budget. 3. Given time pressure experienced in this year’s budget process, the process will need to begin earlier in the year to perform a thorough, unrushed process. While many of the above issues will be addressed during the current MTFS cycle, the fact that the council is having to address so many issues at once and has limited time available for turnaround does present a risk that these will not be fully resolved. A contingency has been rebuilt to mitigate unforeseen/unidentified issues. 1.5 - Financial Information London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 1.5.1 The Council perform data quality assessments, using the Government Data Quality Framework or another suitable framework, of its key activities to enable it to better understand what its key data sources are, how it uses such data, the maturity of its data quality processes and any limitations in the data it uses; 1.5.2 That having completed the data quality assessments, the Council should develop action plans to address any areas of weakness identified and ensure that implementation of those action plans is monitored and remedial action taken where necessary 1. Ensure that key data in the organisation that informs decision making are available and accessible to senior managers 2. Prepare Power BI dashboards that relate to the Council's performance and expenditure across all service areas, with a process for assessing data content and data quality in each. 1. The Finance Modernisation Programme to include workstream to improve processes and controls and improve Oracle functionality to enable modern processes and drive compliance with process and data standards. The Finance Systems workstream is to support a range of improvement actions including: - Integrations - Improving existing integrations with feeder systems and developing additional interfaces to significantly reduce the level of manual intervention in the transfer and validation of data into Oracle. This work will support and be informed by the Council's wider initiative to improve the data management. 2. The FMP/FS workstream to work on short term actions to improve data validation prior to transfer into Oracle and sustainable processes changes to reduce the high level of changes required to master data and ensure more robust management of cut off procedures to support Oracle maintenance and financial reporting processes. 3. End of year performance report to the Cabinet and also select committees. 4. End of year performance report to the select committees. 5. Performance reports to be taken to SMTs and CMT on a monthly basis to review progress, actions and data quality Matthew Wallbridge Ian Kavan Darren Persaud/ Darren Everden/ Matt Davis 01/04/25 31/03/26 A 1. Annual Performance Report being presented to Select Committees 2. MTFS Dashboard to track savings progress presented to SDB on a monthly basis 3. Over 100 Power BI dashboards are available across the organisation with finance, performance and benchmarking data to support Corporate Directors and senior managers to help inform decision making 4. Power BI dashboard has been produced to make the data from Oracle clearer to budget managers, heads of service and corporate directors. This will drive greater understanding or challenge of the veracity of the data, hence continuous improvement in the quality of data. 1. In line with a more recent recommendation, closer attention will be paid to reconciliations for core balance sheet control accounts and balances. 2. The Oracle programme will be a key contributor in ensuring that budget managers take ownership of their data and forecasts. Training has already been rolled out to both budget holders and senior managers to clarify expectations of them in their forecasts and underlying financial information. Finance Governance Recommendations and Actions Governance Review Improvement Plan (Finance Governance) 1.6 Capacity and Capability London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 The Council to review the capacity and skill mix within the Council’s finance team to ensure that the Council is able to support the production and audit of its financial statements within statutory timeframes, as this is a key enabler for supporting appropriate scrutiny of the Council’s financial performance by stakeholders. 1. Recruit to a permanent s151 officer role. 2. Commission and fund specialist capacity and capability to inject extra support to deliver the audit recommendations and the improvements in the CIPFA report. This is to align with the improvements needed in the Oracle programme 3. Restructure the Finance directorate, and review the additional areas within Finance 1. Deliver restructure and recruitment campaign to deliver the right skills and capacity to deliver the outputs from the FMP. 2. In the interim bring in extra capacity and capability to deliver the FMP through consultants who have the experience, tools and techniques to accelerate the improvements. 3. The Finance Moderation Programme is to support key actions to improve capacity and capability with the Council's finance team, these include: - Advice into the designing of senior finance roles including S151 Officer - Design of a new finance operating model, including finance team structure - Mapping of detailed tasks and roles and responsibilities across the new finance structure - Advising on the transition approach to move from the As Is to Be structure aligned to achievement of process and technology based improvements. 4. Further transition planning activities include: - development of a full competency model for all finance roles - detailed skill assessment across all finance roles Steve Muldoon Andy GooAndy Goodw01/04/25 31/03/26 A 1. Grant Thorton have come to an end of phase 1 of their work on the Finance Modernisation Programme, with phase 2 to begin shortly. Additional resource is being seconded in to support capacity and capability on the annual accounts process and the Medium Term Financial Strategy. 2. Specialist support from GT to drive the Finance Modernisation Plan forward in respect of Oracle and the annual accounts has included: - impementation of an updated Oracle monitoring template for users that has simplified the monitoring process for budget managers with one return for all budget managers' budgets (was one return for each cost centre). This has now been running for 2 periods. - work with the HR team to define and specify an interface that will work daily to transfer establishment data from the HR system to Oracle, meaning the establishment position on Oracle will be continuously updated. Now awaiting an upgrade on the HR system to move forward. - Technical support in reviewing key working papers such as IFRS16 to identify possible issues and ensure compliance to new auditing standards, and to provide support and quality assurance of the 2024/25 audit process. - Work with the capital team to establish and define the issues being encountered in the use of projects to enable resolution. - with new processes in place to manage hierarchial changes, work with the Council in reviewing Oracle access and authorisation setups, taking into account External Audit recommendations suppied in October following the audit of the Oracle R12 to Fusion transition. 1. Key roles in the Finance team have been or are being recruited to on a permanent basis with appointments to two Head of Finance positions and recruitment to a lead capital position underway. 2. Joint work with Grant Thorton has now moved into a shorter, sharper, phase 2 work package on the Finance Modernisation Programme. 3. Specialist support in Phase 2 from GT to drive the Finance Modernisation Plan forward in respect of Oracle and the annual accounts includes: a. implementation of Oracle items as set out in 1.8 below – workshops and design work are already under way. b. finalisation of the work on the interface that will undertake daily transfer of establishment data from the HR system to Oracle. c. work with the capital team to establish and define the issues being encountered in the use of projects to enable resolution. d. Reviewing the Governance and processes linked to the Council financial reporting processes e. Reviewing the transaction processes & recharging models for efficiency across the Council – starting with procurement processes f. Working with the DOF on a new structure and financial skills of the Finance department and the Council. This may include some bolstering of resource in key areas to increase in-house capacity and capability and reduce future dependency on external resource from consultants. 1.7 A clear financial position London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 (Statutory recommendations to the Council under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 - Recommendation 5) We recommend that the Council urgently establishes a clear understanding of its current financial position, including the extent to which that position has diverged from the assumptions underpinning the 2025/26 budget and may require immediate action to prevent further depletion of reserves during 2025/26. 1. Review and update the reported forecast position to reflect all known issues, avoiding optimism bias, so the extent of the challenge facing the council is properly understood and can be firmly addressed. 2. Assess the impact on EFS request to MHCLG and update accordingly; engage further with MHCLG to progress this. 3. Assess the closing level of reserves as at 31/3/25 and how this compares to what the council set itself as a minimum level and the average position across London Boroughs. 4. Derive the impact on the MTFS for the council over the next 3 years and how this will need to be addressed through savings and EFS. 1. Assess and challenge all current year savings to assess deliverability, keeping these under regular review each month. 2. Identify other key risks to the forecast and financial position, assess reliability of forecasting in these areas, how these can be improved and any further potential financial impact. 3. Implement further spend controls, communicate these to staff. 4. Engage productively with MHCLG to press for early decision on EFS if possible, clarify the process and timetable. 5. Benchmark reserves to determine how LBH compares to peers and inform the EFS application. 6. Progress the MTFS process to understand the gap and the level of EFS that may be required over the next 2-3 years 7. Assess the asset base for potential disposals to contribute capital receipts towards offsetting the EFS required. Steve Muldoon Andy GooAndy Goodw01/04/25 31/03/26 A This theme has been added this quarter to ensure completeness of S24 recommendations in the GRIP. 1. The recent P5 and P6 reports demonstrate that the Council has been reviewing the current financial position closely with regard to the deliverability of the savings target, removing optimism bias from the forecast. The seriousness of the position has been communicated to and acknowledged by senior management and Cabinet members, with further spend control measures now being introduced. Further financial risks have been identified and clarified in the report as these may further impact the outturn, and are in the process of being scrutinised further. 2. Growth modelling is being reviewed and improved to ensure that there is a stronger understanding of the key cost indicators in temporary accommodation and social care, both to inform the forecast and the MTFS. 3. Reserves have been compared to those held by other London boroughs at 31/3/25. Some of those are of course inflated by the EFS they have already received and so adjusting for this, LB Hillingdon was 5th lowest for General Fund reserves at that date. Reserves are being sought to be bolstered through the EFS application, to bring these back above the minimum level recommended in the February S25 report. 4. Cash flow modelling has been scrutinised to understand the impact this will have on the council's ability to borrow to cover expenditure through the remainder of the year, including how much headroom it still has. 5. Capital projects are being reviewed to identify any which show signs of likely slippage, or can be reduced or deferred. This action will assist the forecast cash position and reduce the eventual impact on the general fund. 1. The P6 forecast deficit of £36m has stayed steady through to P9 which indicates that many of the issues inherent in the budget as set have been flushed out, in respect of savings, growth and other budgeting issues. This has enabled the MTFS to be built on a more confident and stable base, reducing the risk of avoidable issues arising in 2026/27 budget setting. 2. The position has been clearly communicated to, discussed with, and acknowledged by senior management and Cabinet members and reflected in the 2026/27 initial Budget Report. Enhanced spend control measures are now embedded. 3. Reserves are being sought to be bolstered through the EFS application, to bring these back to an acceptable level. 4. Cash flow continues to be modelled and scrutinised to understand the impact this will have on the council's ability to borrow to cover expenditure through the remainder of the year, including how much headroom it still has. The council will be able to manage any short-term pressures to avoid any critical cashflow issues. 5. Existing capital projects have been reviewed as part of the 2026/27 MTFP process to identify any which show signs of likely slippage or can be reduced or deferred. This action will assist the forecast cash position and reduce the eventual impact on the general fund. 1.8 Oracle EPM London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 (Statutory recommendations to the Council under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 - Recommendation 6) We recommend that the Council urgently addresses the issues it has encountered with implementation of Oracle EPM to ensure that, at both individual budget holder and overall Council level, decision makers are able to access accurate and complete budgetary information to inform decision-making. 1. Stabilise Oracle EPM environment and resolve outstanding Implementation issues. 2. Strengthen governance and control processes around system access and configuration. 3. Ensure accurate and reliable reporting against budget for all budget holders and decision makers. 1. Conduct a retrospective review of all risks and issues logged during implementation to confirm closure or mitigation. 2. Complete a user access review for Fusion and EPM, ensuring appropriate authorisation and removal of conflicting permissions. 3. Ensure month end close processes run efficiently and effectively and data has integrity. 4. Update system security policies to enforce password controls, login attempt limits, and account lockout protocols. 5. Implement a data quality assessment for EPM outputs to validate completeness and accuracy for decision-making. 6. Develop and roll out training sessions for budget holders on using EPM, dashboards and interpreting financial data. Matthew Wallbridge Pete CarpMartin Brow 01/04/25 31/3/26 A This theme has been added this quarter to ensure completeness of S24 recommendations in the GRIP. 1. Oracle Programme Manager appointed in October. 2. Worked with External Auditors to undertake an implementation audit of the transition from Oracle R12 to Oracle Fusion. The review highlighted a number of access and authorisation improvements which are being integrated into the improvement programme. 3. Implementation of an updated Oracle EPM monitoring template for users that has simplified the monitoring process for budget managers with one return for all budget managers' budgets (was one return for each cost centre). This has now been running for 2 periods. 4. Workshop review sessions run on period end closing in mid october, taking on board learning points from the first 2 months of the updated EPM monitoring solution, to ensure the month end process for October is run more efficiently. 5. Updated governance processes being implemented by new programme manager to ensure Oracle updates are properly designed, owned and understood by the business, and rolled out with the appropriate levels of testing and training. 6. Workshops run through October to document and provide a solution for the issues being encountered with projects. 7. Contracted for Phase 2 of the Oracle element of the FMP 8. Presentation to the Audit Committee on Oracle (with progress updates in more detail and the future plan) The 2024/25 draft Auditor's Report has highlighted a number of Oracle improvements that are set out in Appendix C of that report. These are being actively implemented by: 1. A clear prioritised deliverable plan now being in place setting out the required work over the upcoming period. 2. Improving the updated EPM monitoring template using more of the Oracle Fusion technology for implementation as part of the Month 2 2026/27 monitoring. 3. Updating of the Council's access and authorisation arrangements to simplify its use and maximise the how the Council utilises its Oracle licences - due for implementation at the end of the quarter, with joint workshops already taking place. 4. Implementation of updated procurement processes, including additional punchout access to Amazon for users within the quarter and building of resilience to ensure quicker punchout implementation for additional suppliers. 1.9 Issues highlighted by external reviews London Borough of Hillingdon Final Audit Results Report Year ended 31 March 2024 (Statutory recommendations to the Council under Section 24 Schedule 7(2) of the Local Audit and Accountability Act 2014 - Recommendation 7) We recommend that the Council continues at pace with the development and implementation of its FMP, as well as the wider GRIP, and ensures that the scope of these programmes addresses all of the weaknesses in current arrangements highlighted by the various internal and external reviews the Council has received. 1. Progress the FMP and GRIP as already laid out. 2. Review all other documents which highlight weaknesses and make recommendations for improvement and implementation, and capture relevant actions in the GRIP/FMP plans 3. Review feedback from EY on the issues they have raised in the past year and capture these to ensure they get addressed. 1. Review the Internal Audit reports for 2024/25 to pull out relevant actions not yet addressed or completed. 2. Review the CIPFA review report for issues and actions to address Steve Muldoon Pete CarpPete Carpen01/08/25 27/02/26 A This theme has been added this quarter to ensure completeness of S24 recommendations in the GRIP. 1. Recommendations from the 2023/24 External Audit Report are included in this document as are the additional recommendations in the S24 Report. These are reviewed on an ongoing basis internally and reported quarterly to Audit Committee. 2. The External Auditors have undertaken a transaction audit for the move from Oracle R12 to Fusion. A number of recommendations linked to access rights were made in October and these have been included in the access and authorisation review mentioned in 1.6 above. 3. Work continues with the External Auditors on the Audit of the 2024/25 Accounts and there is an update on this work reported to the Audit Committee. 1. Draft 2024/25 Auditor's Report has 3 sets of recommendations (previous year, 2024/25, and Oracle) in its appendices which are picked up in this statement. 2. Final 2024/25 Auditor's Report and associated updated recommendations are part of the February 2026 Audit Committee agenda. 3. Oracle Recommendations set out in item 1.8 Oracle EPM. 4. Preparation for 2025/26 Accounts has started – including implementation of a full balance sheet review (and correction) as at Quarter 3 to speed up processes and ensure with greater probability that the draft accounts are delivered by the 30 June 2026 deadline. This builds on initial work undertaken for Quarter 2 of 25/26. 5. The GRIP and FMP are being reported on at each Audit Committee to update on the progress being made, with new recommendations being added as they arise. 1.10 Robustness of the Budget 2025/26 London Borough of Hillingdon Draft Auditor's Annual Report Year ended 31 March 2025 VFM Recommendation We recommend that the Council reassesses whether the assumptions and forecasts underpinning its 2025/26 budget were sufficiently robust to support the conclusion that the Council has set a balanced budget for the 2025/26 financial year. If the Council is unable to conclude that it has a balanced budget, it should consider what further actions it may be required to take to comply with its statutory responsibilities. 1. Assess the S25 Statement and Budget report published in February 2025 re the 2025/26 financial year. 2. Review and assess the assumptions and forecasting underpinning the budget for 2025/26. 3. Review and assess intervention actions taken by the Council and the S151 Officers throughout the course of the 2025/26 year to ensure compliance with statutory responsibilities. 1. Monitoring Officer team to lead on preparing a review and assessment. 2. MO team to interview statutory and other officers as required. 3. MO team to meet with external auditor to discuss their concerns. Dan Toohey Dan Toohey Brendan Molloy 27/11/25 27/2/26 in draft form A The Monitoring Officer team has commenced a review exercise and has had initial discussions with the S151 Officer and Head of Paid Service. The review exercise will culminate in a draft report with conclusions and/or recommendations aiming for end of February 2026. The draft will then be circulated for comment from the External Auditor, S151 Officer and Head of Paid Service, with a view to it being concluded by the end of March 2026 Theme Title of Review Recommendation Actions Detailed Delivery Actions Senior Responsible Officer Lead Action Delivery Lead Start Date End Date RAG Status Quarterly Progress Update (April - June 2025) Quarterly Progress Update (July - September 2025) Quarterly Progress Update (Oct - Dec 2025) 2.1 - Directorate Business and Financial Plan Template Internal Audit Report on Governance September 2024 1. The Directorate Business and Financial Plan template should be updated to require directorates to set clear objectives aligned to the Council’s corporate/strategic objectives. 2. These objectives should then be taken into consideration when allocating resources, developing directorate action plans and setting key performance indicators for the 2025/26 year. 3. The Directorate Business and Financial Plans should be reviewed and approved through CMT to ensure there are no cross-directorate impacts, and they are consistent with the wider corporate/strategic objectives. 1. Complete a review and update of the business and financial planning requirements, including corporate objectives and business plan template. 2. Ensure Directorate Annual Plans are in place for all areas. 3. Template to be reviewed Annually and brought to CMT for approval. 4. Directorate Business and financial plans to be completed annually by CMT. 5. CMT to monitor Directorate Business and financial plans quarterly. 1. Updated Directorate Business and Financial Plan Template to be approved by COO. 2. Circulate the Directorate Business and Financial Plan Template to all Corporate Director's to complete with a deadline date. Directorate Business and Financial Plans to be sent to Corporate Business Manager. 3. Schedule all Directorate Business and Financial Plans to be approved by CMT. 4. Circulate final Directorate Business and Financial Plans to CMT. 5. Save all final Directorate Business and Financial Plans in the SMT SharePoint folder. 6. Template will be reviewed by CMT on an annual basis. 7. Directorate Business and financial plans will be completed annually for approval at CMT. 8. CMT will monitor Directorate Business and financial plans quarterly. 9. The updated Directorate Business and Financial Plans, once underway and having been in place for a time, will be the subject of an internal audit exercise to consider areas for improvement (what has worked well vs. what has not etc) Matthew Wallbridge Darren Persaud Michelle Smith 31/03/25 30/07/25 A 1. Business and Financial Plan Template draft settled by COO then discussed at CMT and sent to all Corporate Directors 2. The Directorate Business and Financial Plan Template has been circulated to all Corporate Director's to complete with a deadline date and a copy sent to the Corporate Business Manager. 1. All scheduled Directorate Business and Financial Plans have been approved by CMT. 2. Final Directorate Business and Financial Plans have been circulated to CMT. 3. Directorate Business and Financial Plans are to be uploaded into the CMT SharePoint folder. 1- The Directorate Business and Financial Plans internal audit exercise (to consider areas for improvement) will report by end of Oct' 2.2 - SMT Standardisation and Reporting Internal Audit Report on Governance September 2024 1. CMT to agree a standard agenda template and reporting schedule for all SMT meetings covering the following key areas of governance as a minimum: 1.Workforce 2.Service delivery & performance against set objectives 3.Financial performance 4.Risk management 5.Key Projects 2. The SMT reporting schedule should also be aligned to the CMT reporting schedule to ensure any issues identified within the Directorates are appropriately escalated to CMT. System to ensure Directors are held to account for maintaining these SMT meetings in line with the agreed expectations and format. 1. As part of the review of governance and corporate working across the Council, a new standardised meetings structure and agenda for management and governance arrangements to be implemented. Standard Agenda/Minutes template to be produced for CMT & SMT meetings 2. Minutes should be recorded for all Directorates, which should be including the topics of discussion, and any decisions or actions agreed. Actions should be followed up at the next meeting to ensure they are completed. 3. A formal Corporate Governance Group (CCG) (formerly an informal statutory officers governance group) to be set up and will regularly (and annually) undertake a review of the effectiveness of Directorate Governance arrangements including how actions have been implemented and make recommendations for governance improvements for the ensuing year to be included in the GRIP. 1. Set up the SharePoint folder for CMT's, following a similar design to the CMT SharePoint Folder. 2. Email Executive PA's to inform them of the CMT SharePoint folder, and ask them to save all papers in that folder. 3. Standard Agenda/Minutes template to be produced for CMT & SMT meetings. Circulate the template agenda for Directorate SMT's, to Corporate Director's and their Executive PA's advising that this is the template to be used for all CMT & SMT meetings going forward. 4. Set up a Corporate Governance Group (CCG) Matthew Wallbridge Mark Braddock/ Lloyd White Michelle Smith 31/03/25 28/02/26 G 1. Shared folder created for CMT, Internal Groups and SMTs. 2. Communications with PAs awaited pending security access. 3. New standard agenda and minute templates created and agreed for CMT, SDB, Groups and SMTs. Roll out across all internal bodies ongoing. Templates agreed by CMT on 29 May. 4. Additional delivery action to enhance internal governance: - New Corporate Tracker App, aligned with Cabinet Forward Plan now assists CMT/SDB by tracking key executive business through internal bodies before final decision democratic. This will ensure stronger internal governance and accountability, better coordination and robust decision-making. The Cabinet Forward Plan is discussed at CMT monthly, whilst the aligned Corporate Tracker, weekly at SBD. 5. Corporate Governance Group (CCG) first meeting on 19 March 2025. Further meetings were held monthly - on 25 March, 1 May, 3 June, reviewing the GRIP progress, and governance related issues generally. 1. PAs/Eas and Corporate Directors advised of new templates to use going forward. SDB using new templates, CMT using new templates w/e 16 July 2025, SMTs usage being rolled-out. 2. New internal briefing "business proposal" template prepared aligned to new Cabinet/Cabinet report template under review to simplify reporting requirements. 3. CCG meeting held 8 July 2025, reviewing the GRIP progress, and governance related issues generally 1. Final briefing / training session to be given to Senior Managers Meeting 2. CGG continuing to meet and monitor prgoress with GRIP 3. Corporate Tracker in place internally for CMT and key stakeholders to track key council business aligned with internal governance groups and processes, prior to democratic decision-making. 2.3 - Review of Governance Arrangements (Senior Management Meetings) Internal Audit Report on Governance September 2024 1. The scope and frequency of the Senior Management Meetings should be reviewed to ensure it facilitates cross-directorate collaboration and information sharing. CMT should agree formal reporting arrangements to escalate issues and decisions from individual Directorates to ensure the wider impacts on other services can be considered. Where key issues impact on more than one directorate, separate project boards should be established providing a forum for collaboration between the relevant services. 1. Complete a review of the reporting/governance arrangements and implement changes at all management levels, including working with Elected Members, to deliver the Council priorities. 2 A review will be carried out on the officer decision-making structure and tiers of management meetings, with a schematic prepared showing key officer groups, their terms of reference and their relationship between SMTs and reporting lines into CMT. This to be agreed at CMT and rolled out with training/briefings for managers. 1. Review the frequency of the SMM, and then agree frequency with the COO. 2. Create a forward plan of topics to be covered at SMM meetings. 3. Schedule the SMM forward plan at CMT for approval. 4. Share forward plan with SMM. Tony Zaman Matthew Wallbridge Angela Laws 31/03/25 28/02/26 G 1. SMM meetings diarised for 25/26 2. Future agenda items discussed at CMT 3. Draft schedule for SMM 2 Completed the review on the officer decision-making structure and tiers of management meetings. Completed schematic showing key officer groups, their terms of reference and their relationship between SMTs and reporting lines into CMT. This has been agreed at CMT and rolled out with training/briefings for managers. 3. Since the budget went live, the Council has launched a MTFS App to capture the full details of the savings project, with the app feeding into the Council’s monthly monitoring process that will be fed back to Cabinet in line with the monitoring timetable. 1. SMM schedule and plan agreed for 25/26 2. Further training provided to managers on the officer decision-making structure and tiers of management meetings, i.e. schematic showing key officer groups, their terms of reference and their relationship between SMTs and reporting lines into CMT. NB follow-up training provided at SMM on 17 July 2025. 1. New internal govenance arrangements at officer level in place to shape, review, and support proposals before they reach the democratic and Member domain for decision. 2. All officer groups established with ToR and governance arrangements. To be published on intranet to ensure wider knwoledge amongst staff about arrenagements. 3. SMTs have been briefed. 4. Officer delegations reviewed to reflect updated Management Structure and Directorates in place. Additionally, general management delegations under review to reflect internal controls and broader spans of management control. 2.4 - Corporate Governance Arrangements Training Internal Audit Report on Governance September 2024 1. Training should be provided to Corporate Directors and Senior Managers on a yearly basis, and during the induction of newly onboarded Directors/Senior Managers. 2. The training should cover the core principles of governance, and link to wider sessions on budget monitoring/financial performance, workforce planning, service delivery and risk management. This will provide the Directors with a uniformed approach to the expected levels of governance within the Council. 3. CMT should collectively review their governance arrangements on an annual basis and agree actions to address any areas of improvement. 1. Briefings and training on Corporate Governance arrangements will be delivered to all managers. Link to wider sessions on workforce planning, service delivery and risk management. This will provide the Directors with a uniformed approach to the expected levels of governance within the Council. 2. Training to be delivered on the financial responsibilities and wider financial regulations to ensure effective governance and organisational financial management. The delivery of financial governance set out in the Constitution is the responsibility of all officers but should be well understood and supported by finance officers and business partners. They have a key role in promoting good practice and identifying areas of weakness and non-compliance, working to support colleagues across the Council to help them discharge their responsibilities. 3. Establish and communicate to Directors and Budget Managers, accountability and ownership for their respective roles. 4. Division of responsibility between the budget holder and finance business partners needs to be reviewed and clarified. Due to a high degree of reliance being placed on finance business partners in the services to be the custodians of financial data rather than the budget holders themselves. 1.Roll out the annual training programme for leaders/managers 2.Democracy / Governance Master Class to made mandatory for new Team Managers and above. 3.CMT to review annually its effectiveness and ToR 4. NB: annual review to be undertaken by CMT via the AGS Matthew Wallbridge Mark Braddock Angela Laws 31/03/25 31/03/26 G 1. Paper going to CMT 23 July to update mandatory training programmes, which will be open to all staff and include annual, bi- annual and 3 yearly mandatory training programmes. Additional report going to CMT on proposed senior manager training overing coming month. 2. The well-established Democracy and Governance Master Class is mandatory for all new Team Managers and above. Additionally, all new Corporate and key Directors receive political and Democratic Governance briefings from the Head of DS or Democratic Services Manager as part of their induction. 1. Governance masterclass session at SMM in July 2025 2. Creating a wider “governance toolkit” intranet site, aligned/linked to the Cabinet toolkit intranet site. Cabinet toolkit has been simplified and made clearer for staff in terms of knowing who makes decisions and process for preparing executive reports for decision. 3. Key governance areas included in performance appraisals i.e. mandatory training, risk management, budget management 1. Governance training being rolled out. 2. Wider corporate “governance toolkit” intranet site devised. 2.5 - Minute taking and action planning Internal Audit Report on Governance September 2024 1. Minutes should be recorded for all Directorates, which should be including the topics of discussion, and any decisions or actions agreed. 2. Actions should be followed up at the next meeting to ensure they are completed. 1. Minutes of Directorate meetings to be recorded and retained 2. Action items lists to be maintained and monitored 1.To ensure minutes / action lists are maintained on shared folders 2. This to be reviewed as part of GRIP monitoring by CCG Matthew Wallbridge All Corporate Directors Michelle Smith 31/03/25 31/03/26 B 1. Minutes for CMT, SDB and SMT meetings are kept and recorded and are kept on shared folders Action trackers being monitored Impemented Non Finance Recommendations and Actions Governance Review Improvement Plan (Directorate Governance)

Finance Modernisation Programme Audit Committee, 10th February 2026 Finance Modernisation Programme The Finance Modernisation Programme was initiated in response to findings from past internal and external audits. It has been established to: • Address key challenges in financial management and systems (Oracle) capability • Deliver sustainable improvement in Council’s ability to manage its financial performance and improve certainty of its financial position. Finance Modernisation Programme Phase One – What we have done Focused on the most critical issues first, and laying the groundwork for long term improvement. Finance Modernisation Programme The high-level vision and ambition for Finance: Finance Finance will be A Trusted Advisor - adding value by providing the appropriate support and challenge to enable effective management of budgets and enhance strategic decision making How we will support the Council Providing timely, accurate information Focusing on insightful analytics and support for demand modelling Leading on ensuring effective financial governance and control How we will get there Doing the basics well & ensuring the numbers are right Getting on the front foot – clean audits, clear financial strategy, robust budgets Developing a supportive culture & operating model Continuously improving efficiency and effectiveness – optimising automation in processing & in reporting Providing the training, support and career progression to attract and retain staff Finance Modernisation Programme Phase Two – What we are doing The programme supports the ambition for Finance Audit Readiness Planning, Budgeting and Reporting Process Modernisation Finance Strategy Audit readiness – Analysis and issue resolution MTFS, Demand and Savings review Optimise use of Oracle for transaction processes CFO Planning workshop Financial close best practice 2026/27 Budget Manager training Review recharging models Strategy and stakeholder engagement IFRS 16 Advice High quality reporting system Review recharging models Finance Skills and Competency framework Learning and Development framework Fostering a Culture for Change Finance Modernisation Programme Finance Strategy - Overview The strategy aligns resources to support efficient and effective financial management across the Council. Self Service Direct Support Online Support Budget Holders Financial procedures and user guidance, updated for Oracle, accessible to all user via Teams. Budget holders, and other stakeholders, can access timely and accurate financial information via Oracle. Finance is a partner to the Council. Heads of Finance provide the primary direct link between Finance and Services, providing strategic advice and decision support. Key elements include: • Roles and responsibilities: Budget holders are accountable for their budgets. Clear roles and responsibilities across the Finance Function support provision of timely and accurate information and leading effective financial governance and control. • Oracle: The Finance Function will continuously improve processes, optimising the user of Oracle, reducing manual tasks, streamlining transactional processes. This shift will enable a more seamless and efficient finance service. • Learning and Development: A strong emphasis on developing finance skills across the organisation and fostering a culture of continuous improvement. This focus will ensure that the Finance Function evolves in line with organisational needs and industry best practices. • High-Quality Reporting: Enhanced reporting capabilities will provide decision-makers with timely and insightful financial information, enabling more effective resource allocation and strategic planning. Finance Modernisation Programme High Quality Reporting - All stakeholders benefit from high-quality reporting. Better, smoother decision- making is achieved, budget holders become more financially aware, and ultimately, better value for money is delivered. What high-quality financial reporting enables… What does this mean for me? • Less manual manipulation and bespoke reports • Time shift from data production to insight and advice • Capacity to showcase financial skills and knowledge • One version of the truth… finance adds value to service activities • A more resilient, efficient finance function • Stronger business partnering capability • Better use of limited finance capacity • An opportunity to showcase finance skills and knowledge • “We get involved at the earliest stages and influence outcomes” Elected Members Corporate Directors & Senior Managers Budget Managers Finance • A single version of the truth across the Council • Ability to drill into financial position quickly and consistently • Forward-looking insight, not just historical variance • Clear commentary from budget holders embedded within reports • Faster, more decisive leadership • Early identification of risk and corrective action • More strategic conversations focused on solutions, not data validation • Clear ownership of budgets with intuitive, easy to interpret information • Consistent forecasts supported by underlying data • Confidence to engage constructively in finance conversations • Reduced time reconciling spreadsheets or querying figures • Stronger budgetary control • More accurate forecasting • “We get professional insight from finance” • “We understand our finances better” • Clear line of sight between financial position, service performance and outcomes • Improved ability to scrutinise, challenge and hold officers to account • Reduced reliance on verbal explanations and retrospective clarifications • Better informed policy and budget decisions • Stronger democratic oversight and public accountability Finance Modernisation Programme Oracle Transformation Journey – from Foundation to Value FMP phase 2 provides an Oracle delivery roadmap to enable efficiencies, improve practice and deliver value Foundation Hierarchies (February) Cost & Control Licence Costs (March) Purchasing (March) Insight Reporting (April) Execution & Investment Payments (June) Capital Projects (June) Enablement Change Journey: Communications, Change Champions, Learning Guides, Business Led Training, BAU Support Executive takeaway: The roadmap moves deliberately from structural foundations, through cost control and insight, to scalable execution and capital projects, managing dependencies. Executive takeaway: The programme change principles will ensure effective communication and management of change, business led training and business change support to enable value. January/February March April May/June Finance Modernisation Programme Oracle Finance Modernisation Programme Learning and Development A focus on skills and development to ensure finance has the right skills and can attract, retain and develop people. Detailed mapping of the skills required now and, in the future, by role and grade. A framework of technical skills and competency for all finance roles and grades A learning and development framework, defining development tools for all roles and grades Future Skills Mapping Skills and Competency Framework Development Pathways Defined skills and competencies, by role and grade to support effective performance management. Finance Modernisation Programme Barriers to success: Capacity: The Finance team has limited capability and capacity to support a wide range of complex changes and initiatives, especially as these relate to a range of competing pressures and liaison with different stakeholders. Oracle: There is a dependency on support and maintenance provider Mastek to for the deployment of Oracle developments to the live environment. Ownership: Ensuring budget holders have a clear accountability framework for budget management, and the use of Oracle. And for learning and development to be in place to facilitate this. Change management challenges and change fatigue: large organisational changes can reduce the appetite for adopting new ways of working, especially if benefits of the business partnering approach are not clearly communicated or quick wins not demonstrated. Finance Modernisation Programme The Finance Modernisation Programme Phase 2 will deliver: • Budget monitoring: 26/27 budget monitoring managed through Oracle • Modern finance function: Structure and skills to support the Council • Learning & Development: L&D framework aligned finance skills and competency framework. Not just a Finance responsibility. • Ownership: Clear accountabilities and support collateral for effective financial management across the organisation

Audit Committee – 10 February 2026 Part I – Public RISK MANAGEMENT REPORTS Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report Risk Management Report Strategic Risk Report Ward All HEADLINES The Risk Management Report presents to the Audit Committee a summary of the Council’s risks from the Risk Management System at the 28 January 2026. The Risk Report focuses on key performance indicators to support the Committee gain assurance risks are being managed effectively across the Council and mitigating actions are being implemented. The report also includes a summary of the Council’s most significant red rated risks, also known as the Corporate Risk Register. The Strategic Risk Report focuses on the wider strategic risks potentially impacting on the Council’s Strategic Objectives, aligning them to the Council’s key performance indicators from the Performance Dashboard to provide assurance the risks are being managed effectively. RECOMMENDATION That the Audit Committee note the reports and level of assurance received. SUPPORTING INFORMATION None. BACKGROUND PAPERS NIL. APPENDICES Appendix A – Risk Management Report Appendix B – Strategic Risk Report

RISK MANAGEMENT REPORT 28 January 2026 HILLINGDON COUNCIL RISK MANAGEMENT REPORT 2 CONTENTS The key contacts in connection with this document are: Claire Baker Head of Internal Audit and Risk Assurance cbaker@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. RISK REGISTER UPDATE 3 3. CORPORATE RISK REGISTER UPDATE 5 APPENDIX A: SUMMARY OF CORPORATE RISK REGISTER 7 APPENDIX B: RISK SCORING METHODOLOGY 8 HILLINGDON COUNCIL RISK MANAGEMENT REPORT 3 1. INTRODUCTION 1.1 Hillingdon Council has a statutory responsibility to ensure arrangements are in place for managing risks. Risk management is about managing opportunities and threats to objectives to help create an environment of “no surprises”. It is a crucial element of good management and a key part of corporate governance. Although r isks can never be entirely eliminated , proportionate and targeted action can be taken to reduce risks to an acceptable level. 1.2 Managing risk should be viewed as a mainstream activity and something that is an integral part of everyday management. Risk Management involves the early identification of risks, assessing their potential consequences, and determining the most effective way to reduce the likelihood and/or impact of the risk. The Council’s Risk Management P olicy provides a framework to ensure there are clear roles, responsibilities and methodologies for identifying, recording and managing risks. 1.3 This report summarises the Council’s Risk Register as at the date on the front of the report, and outlines the work undertaken since the last Audit Committee meeting to improve risk management arrangements. It is designed to support the Audit Committee to m onitor and review the authority’s risk management arrangements, as per the Committee’s terms of reference. 2. RISK REGISTER UPDATE 2.1 There were 225 total risks recorded on the Risk Management System at the time of this report. This is a reduction from 263 risks at the beginning of November 2025 due to work undertaken within directorates to review and close long standing overdue risks: 2.2 There were 22 red rated risks on the risk register. Since the last Audit Committee report four red risks were closed, seven red risks were downgraded to amber or green and removed from the corporate risk register, and three were added to the register. The details of the red rated risks are shown on the corporate risk register in section three of this report. 2.3 There was one unscored risk at the time of this report. The risk had been added to the register the day this report was run, and therefore it is likely the score was still being considered. The low number of unscored risks is a positive indication officers are comfortable scoring risks in line with the Council’s Risk Scoring Methodology (see Appendix A) to ensure they are escalated and monitored appropriately. HILLINGDON COUNCIL RISK MANAGEMENT REPORT 4 2.4 At the time of this report there were only five risks overdue for review, this is a significant improvement from 41 risks at the beginning of November 2025. 2.5 No red rated risks were overdue for review at the time of this report. Details of the red risks are highlighted in the corporate risk register in section three. 2.6 In the last three months there were 12 new risks added to the risk register , including one red rated risk outlined in section three. 2.7 Since the last Audit Committee report there were 50 risks closed and removed from the risk register. Fourteen related to Fraud, Loss and Error risks previously added by the Counter Fraud team and now closed as tolerated by the relevant service. The four red and 16 of the 17 amber Statutory Service Provision risks related to sourcing properties to address the housing demand in temporary accommodation. These have been closed by the Assistant Director for Housing Needs as there is a new team in place and key projects have been delivered. 2.8 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 it should be considered whether the current risk score is within the Council’s risk appetite level and therefore it is appropriate to tolerate the risk. HILLINGDON COUNCIL RISK MANAGEMENT REPORT 5 2.9 As at the time of this report there were only 32 risks without actions allocated on the risk management system. This is 14% of all risks and a significant decrease from 107 risks at the end of November 2025. This includes no red rated risks. 2.10 In total there were 257 actions allocated against risks on the system. Of these only seven actions were overdue for review at the time of this report (3%). 3. CORPORATE RISK REGISTER UPDATE 3.1 The Council’s Corporate Risk Register (CRR) is an essential part of the Council’s Risk Management arrangements. The CRR includes any operational risks from the Risk Management System graded 'red' due to their potential likelihood and impact. 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. 3.2 The CRR is presented to the Corporate Management Team (CMT) 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 Audit Committee maintain oversight of the risk management arrangements and monitor the CRR to gain assurance the arrangements are working effectively. 3.3 Since the last Audit Committee the following risks were removed from t he Corporate Risk Register: CRR Risk: FINMAN0007 - Insufficient capacity to meet support demand This risk was reduced to amber as the service are currently meeting demand with agency staff to cover vacancies, and an action plan is in place to review long term requirements. EDUSEN0006 - Removal of children from schools due to safeguarding concerns This was a short -term risk relating to a concern raised with the service. The concerns have been addressed and therefore the risk has been reduced to green and will be closed when appropriate. LANDB0022 - Complaint reporting and management. This risk has been r educed to amber following the successful implementation on the JADU system and the weekly measures were proven to be working over the last six months. HILLINGDON COUNCIL RISK MANAGEMENT REPORT 6 PLANRE0008 - Planning, Building Control and Land Charges System (Ocella) unsupported and unfunded from Jan 2027 This risk was reduced to a mber as the p rocurement of a new system has progressed and therefore it is expected the risk will be mitigated before the existing system becomes unsupported. CHILSC0012 - Increasing cost of external residential provision and reduced internal resilience This risk has been reduced to amber as action has been taken by the service to increase our alternative internal provision and foster carers numbers. TECH0001 - Cyber Security Cyber awareness for all staff, high profile discussions at directorate senior leadership meetings and regular reviews of performance data have lowered the likelihood of staff falling for phishing attempts therefore the risk has been reduced to amber. LANDB0004 - Decent Homes/ Thermal efficiencies This risk has been reduced to amber as planned investment is now in place to recover the non-decency performance. This has a positive impact on thermal efficiency. HOUSNE0014 - Low volume of preventions achieved resulting in static or increased demand for Temporary Accommodation. This risk was closed by the Assistant Director for Housing Needs and Homelessness as the p revention rates have increased following work undertaken by the team and new management systems. HOUSNE0018 - Risk of being overwhelmed by NASS evictions This risk was closed by the Assistant Director for Housing Needs and Homelessness as the performance figures show there is n o evidence of increased rough sleeping, TA expenditure or officer burnout linked to HO evictions HOUSNE0024 - Lack of Temporary Accommodation supply within capped rates will see Temporary Accommodation costs continue to rise and not meet targets savings This risk was closed by the Assistant Director for Housing Needs and Homelessness as there has been significant work to implement capped rates and the next phase of the process is almost complete HOUSNE0025 - Not delivering the 2025/26 Service Plan targets for private rented properties and savings. This risk was closed by the Assistant Director for Housing Needs and Homelessness as the supply of private rented properties has improved. 3.4 Since the last Audit Committee the following risks were added to the Corporate Risk Register: PLANRE0006 - Heathrow Airport Expansion This risk was already on the register however it has been upgraded from amber to red following further government announcements in relation to the expected timeline. PUBPRO0010 - Stalled recruitment to the Private Sector Housing Team The P rivate Sector Housing team currently rely on a gency contractors in critical roles. If the council cannot attract competent and qualified officers there is a risk statutory duties will not be delivered without continued reliance on agency staff. HESAFE0003 - Inadequate resource in relation to Health & Safety advice within the organisation This risk was already on the register however it has been upgraded from green to red following a review by the service. Work is ongoing to increase compliance across the Council. HILLINGDON COUNCIL RISK MANAGEMENT REPORT 7 APPENDIX A: SUMMARY OF CORPORATE RISKS CRR Risk: 30 Jun 2025 3 Nov 2025 15 Jan 2026 Last Reviewed Next Review Due PROCUR0025 - Financial Resilience of Contracts Static C2 Static C2 Static C2 15/01/2026 15/02/2026 STRAF0002 - Ability to Deliver a Balanced Budget in the Short & Medium Term Static A1 Static A1 Static A1 05/01/2026 05/02/2026 LANDB0003 - Decarbonisation Static C2 Static C2 Static C2 13/01/2026 13/02/2026 TRSA0003 - Liquidity Risk Static D1 Increasing C1 Static C1 12/01/2026 12/02/2026 HOUSNE0001 - High Levels of Homelessness Demand Static C2 Static C2 Static C2 07/01/2026 07/04/2026 LANDB0011 - Housing Landlord Service - Not Meeting Regulatory Requirements Static A2 Static A2 Static A2 07/01/2026 07/04/2026 LANDB0019 - Lone-working devices - no visiting officers within housing have lone working devices. Static B2 Static B2 Static B2 22/01/2026 22/03/2026 PROPER0001 - Disposal Programme Static D1 Static D1 Static D1 16/01/2026 16/02/2026 PROPER0011 - Insurance Valuations Static A1 Static A1 Static A1 13/01/2026 06/04/2026 PENS0011 - Failure of the pool in management of funds / access to funds Static D1 Static D1 Static D1 04/11/2025 04/02/2026 LANDB0021 - Compliance IT systems and reliance on spreadsheets Static C2 Static C2 Static C2 08/12/2025 08/03/2026 LANDB0026 - Rent increasing because of operating model and structure of the line management. Static B2 Static B2 Static B2 26/01/2026 26/02/2026 LANDB0025 - There is concern in all areas of the service with Data Quality and Performance analysis. Static B2 Static B2 Static B2 26/01/2026 26/02/2026 ASSETS0018 - Upcoming Regulatory Compliance and Enhanced Operational Efficiency Static C2 Static C2 Static C2 19/01/2026 19/03/2026 BUSTRA0002 - The transformation programme required to deliver significant savings in order for the Council to achieve a balanced budget. Static C2 Static C2 Static C2 22/01/2026 22/07/2026 RESIDE0001 - Risk of contractor failure and/or increasing costs of providers delivering statutory or critical services New B2 Static B2 07/01/2026 07/04/2026 GREENS0029 - Lack of compliance with the approved Tree strategy New B2 Static B2 27/01/2026 27/02/2026 GREENS0031 – non-compliant with our approved tree policy New C2 Static C2 13/01/2026 13/02/2026 ENVIRO0005 - Cremation service New C2 Static C2 13/01/2026 13/02/2026 PLANRE0006 - Heathrow Airport Expansion Increasing D1 10/11/2025 10/02/2026 PUBPRO0010 - Stalled recruitment to the Private Sector Housing Team New C2 07/01/2026 07/02/2026 HESAFE0003 - Inadequate resource in relation to Health & Safety advice within the organisation Increasing C2 19/01/2026 19/04/2026 HILLINGDON COUNCIL RISK MANAGEMENT REPORT 8 APPENDIX B: RISK SCORING METHODOLOGY

Strategic Risk Register 28 January 2026 Risk Description HLBC0009: Education and Care Placement Sufficiency Risk Rating: C1 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 Councilas 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. Service Strategy 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 Targets And RAG Children’s High-Cost Residential Placements (Target <19) Mother & Baby Placements (Target <5) Future Demand Indicators: No. Unaccompanied Asylum-Seeking Children No. Looked After Children No. Referrals No. Child Protection Plans SEND Final EHCP Issued in 20 weeks (Target >85%) Future Demand Indicators: No. Needs Assessment – Agreed to Assess No. EHCPs Needs Assessment Requests Directorate Customer Complaints Risk Description HLBC0010: Adult Social Care Demand Risk Rating: D2 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. Service Strategy 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 technology projects to inform future service transformation and enhance outcomes for residents in Adult Social Care. Targets And RAG Placement Costs Average Payment by Placement Residents in Home Care Active Services Directorate Customer Complaints Risk Description HLBC0005: High Levels of Homelessness and Housing Needs Demand Risk Rating: C2 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 up to 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 experiencinga 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. Service Strategy - 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 leased properties 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. Targets And RAG By 31 March 2026, no more than 64 households in nightly charged temporary accommodation. No more than 50 new nightly charged TA placements per month (baseline = 75 in 2024/25) Zero temporary accommodation tenancies above the price cap (baseline = 327 March 2025) Risk Description HLBC0006: Ability to deliver the budget savings in 2025/26 and 2026/27 Risk Rating: C1 The Council has faced a number of funding and economic and demand-led pressures over a number of years which have all placed increasing pressure on the Council's financial position. In order to address this, the Council now has a savings programme which is the higher than it has ever achieved in the past, with £34m of new savings and £4.8m carried forward from 2024/25 still to be delivered. The Council also ended 2024/25 with an unacceptably low level of general and controllable earmarked reserves, such that it will be unable to mitigate any unforeseen financial shocks. As at month 5, the Council is forecasting an overspend of c£30m which would take it into negative reserves, which cannot be left unaddressed. A key driver in this forecast overspend is that the savings programme is not on track with many savings now rated red or determined as undeliverable. Mitigations will need to be found but will not be sufficient to offset this. The general contingency budgeted for at £10.5m has been fully released leaving no further budgetary flexibility to address the overspend. The Council has therefore applied to MHCLG for Exceptional Financial Support (EFS) and is in substantive discussions with MHCLG, both written and verbal, and is awaiting a formal response. On the basis that MHCLG is currently considering this and assuming that it would agree (confirmation expected in February 2026), the S151 Officer is not currently minded to issue a S114notice. Service Strategy- • EFS application submitted in December, updated version to be submitted by end January 2026​ • Financial Modernisation and Improvement Programme - ongoing​ • Tighter spending controls – now in place and communicated with staff​ • The capital programme bids for 26/27 have been reduced as part of the MTFS process; transformation spend has been reviewed as part of the 25/26 monitoring process; asset disposal strategy now sits under the Land & Property Board and sites continue to be proposed to Cabinet for approval to dispose.​ Risk Description HLBC0007: Digital Transformation & Cyber Security Risk Rating: C3 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. Service Strategy • Digital transformation programme.

Audit Committee – 10 February 2026 Part I – Public INTERNAL AUDIT PROGRESS REPORT Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit & Risk Assurance Papers with report Internal Audit Progress Report Ward All HEADLINES The attached Progress Report presents the Audit Committee with a summary of the Internal Audit (IA) work covered since the last Committee meeting. It also provides an opportunity for the Head of Internal Audit to highlight to the Audit Committee any significant issues that they need be aware of that have arisen since the last IA Progress Report. Further, it enables the Audit Committee to hold the Head of Internal Audit to account on delivery of the IA work p lan, and officers to account for managing any risks and control weaknesses identified during the course of IA activity. RECOMMENDATION That the Audit Committee notes the IA Progress since the last Committee meeting SUPPORTING INFORMATION IA provides an independent assurance and advisory service that underpins good governance, which is essential in helping the Council achieve its strategic objectives and realise its vision for the borough of Hillingdon. BACKGROUND PAPERS NIL. APPENDIX Appendix A – Internal Audit Progress Report

INTERNAL AUDIT PROGRESS REPORT 28 January 2026 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 2. CONTENTS The key contacts in connection with this document are: Claire Baker Head of Internal Audit cbaker@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. SUMMARY OF INTERNAL AUDIT ACTIVITY 3 3. FOLLOW UP OF MANAGEMENT ACTIONS 4 4. FORWARD LOOK 4 6 APPENDIX A: IA REVIEWS 5 APPENDIX B: IA AD HOC ADVISORY & GRANT CLAIM VERIFICATION REVIEWS 7 APPENDIX C: FOLLOW UP OF MANAGEMENT ACTIONS 8 APPENDIX D: KEY PERFORMANCE INDICATORS 10 APPENDIX E: ASSURANCE LEVELS AND RATINGS 11 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 3. 1. INTRODUCTION The Role of Internal Audit Internal Audit (IA) provides an independent assurance and advisory service that underpins good governance, essential in helping the Council achieve its corporate objectives and realise its vision for the borough of Hillingdon. It is also a requirement of the Accounts and Audit Regulations 20 15 that the Authority undertakes an effective IA to evaluate the effectiveness of its risk management, internal control and corporate governance processes, taking into account the Global Internal Audit Standards. The Purpose of the Internal Audit Progress Report This progress report presents the Council’s Corporate Management Team (CMT) and Audit Committee with summary information on all IA work completed since the last Audit Committee meeting. In addition, it provides an opportunity for the Council's Head of Internal Audit (HIA), to highlight any significant issues which have arisen from IA work. 2. SUMMARY OF INTERNAL AUDIT ACTIVITY Internal Audit have continued to progress through the reviews from the 2025/26 IA workplan. Since the last Audit Committee meeting, five reviews were completed to final report stage. These include: • One ADVISORY report summarising the debt discovery work undertaken to support a wider debt project. • One SUBSTANTIAL assurance report: Income Generation: Business Rates • One REASONABLE assurance report: Directorate Business and Financial Plans • One REASONABLE/LIMITED assurance report and One LIMITED assurance report: Documentation Security (LIMITED) This review focused on the Council’s arrangements for managing the storage and retention of physical documents, with a particular focus on document security and the impact of the Civic Centre project. Each service is responsible for managing their own documents, with most departments storing records locally . Spot checks revealed multiple occasions of non -compliance with physical documentation security protocols , and office moves resulted in many documents no longer stored in close proximity to the teams that use them. There are controls limiting access to the Civic Centre, however these do not prevent access from officers in other services or from other organisations renting space within the building. In addition to the on -site storage available, services also have the option to archive documents externally through a third -party document storage provider. It was noted some services are not maximising the use of th is provider, resulting in unnecessary storage at the Civic Centre. Savings Programme (REASONABLE / LIMITED) In February 2025 the Council approved the Medium-Term Financial Strategy (MTFS) for 2025/26, including £34m of savings and an additional £4.8m of deliverable prior year savings. A t the time of this review (M onth 4), £9.0m of the savings programme had already been achieved (23%), and a further £7.1m were on track to be delivered. This is a significant achievement against the prior year, when only £7.1m was achieved by the year end. However, £9.4m of savings ha d also been marked as ‘unlikely to be delivered’ and £1.4m written off (dark red). There were significant challenges setting the savings programme at the beginning of the year, and this was the root cause of many of the findings identified. This has led to a large proportion of the savings not being delivered (28%) and alternative options were being pursued at the time of this review. Internal Audit were able to give m ore assurance over the ongoing scrutiny of the savings programme as there has been significant actions taken to improve the monitoring arrangements. This includes the implementation of a Savings Management App, increased information in the monthly monitoring reports, and greater engagement and accountability with individual services. HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 4. Therefore, Internal Audit provid ed two assurance ratings for this review; limited assurance in relation to Savings Development for the 2025/26 savings , however reasonable a ssurance in relation to the current ongoing scrutiny and monitoring arrangements. The HIA also notes the processes in place for identifying savings as part of the 2026/27 MTFS appear to address many of the findings raised in this report. As these were implemented after this review was completed they will be tested as part of the 2026/27 IA Plan. Three further reports are out in draft, and Four reports are at the review stage. These should all be finalised before the next Audit Committee. For details of these reviews please see Appendix A. Since the last Audit Committee IA has also undertaken verification work for the Disabled Facilities Grant claim and Mayors Charity Account. For details of the grant claims and ad hoc consultancy reviews please see Appendix B. Changes to the Internal Audit Workplan Since the last Audit Committee the following reviews have been removed from the plan: Data Quality This review was removed from the plan as work was already being undertaken by the Business Intelligence Team to review the performance dashboards for 2026/27. Targeted reviews into higher risk areas will be considered for 2026/27. HR information This review was delayed until 2026/27 due to limited capacity to support the review in the HR team and ongoing work to review the starters, leavers and change processes which will be included in the scope of this review. Since the last Audit Committee meeting the following review was also added to the plan: Data Protection This review was added at management’s request following discussion at the Hillingdon Information Assurance Group in relation to the action plan from the Cyber360 external review. 3. FOLLOW UP OF MANAGEMENT ACTIONS The table in Appendix C outlines the agreed management actions followed up since the last Audit Committee meeting. Actions are marked as verified once IA have received evidence to demonstrate the action has been fully implemented. Once all actions from an individual report are verified the report is marked closed and will be removed from the tracker. In total 49/77 (64%) management actions due to have been implemented were marked as verified or complete. Eighteen were marked as overdue as they have not been completed by their agreed implementation date . New implementation dates will be set for these actions, and they will be followed up again until they are completed. Eleven were marked as unknown as we are waiting on responses from the responsible officer. This is something we are looking to address through our automated follow up tracker in 2026/27. 4. FORWARD LOOK The IA team will focus on completing the remaining 2025/26 reviews outlined in Appendix A and drafting the Internal Audit Annual Report for the next Audit Committee meeting. Over the next quarter the IA team will also begin planning for the initial reviews in the 2026/27 and ensuring any new processes, templates and guidance is in place for the beginning of the year. IA would like to take this opportunity to formally thank all staff throughout the Council with whom IA had contact. There are no other matters that the HIA needs to bring to the attention of the CMT and Audit Committee at this time. HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 5. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation APPENDIX A: IA REVIEWS IA Ref. IA Review Area Current Status Assurance Level Actions & Risk Rating H M L O P2 Capital Programme Final Report Issued 19 May 2025 REASONABLE - 7 - - S8 PEEPs in Highrise Buildings Final Report Issued 18 June 2025 LIMITED - 3 - - A01 Commissioned & Direct Payments Final Report Issued 13 June 2025 ADVISORY - - - - C1 DSG (Safety Valve Plan (Part 2)) Final Report Issued 19 June 2025 SUBSTANTIAL - 1 - - H2 Housing H&S requirements Final Report Issued 3 June 2025 SUBSTANTIAL - - 1 - H1 Data Quality H&C Final Report Issued 21 August 2025 REASONABLE 1 1 - - H1 Community Safety Final Report Issued 21 August 2025 LIMITED - 2 1 - S1 Agency Expenditure & Checks Final Report Issued 17 September 2025 REASONABLE - 3 - - P3 Greenspaces Final Report Issued 22 October 2025 NO 1 6 - - C1 School’s pre-employment checks Final Report Issued 23 October 2025 REASONABLE - 2 1 - P2 Corporate Estate Final Report Issued 24 October 2025 LIMITED 1 2 1 - P5 Highways Final Report Issued 4 November 2025 LIMITED 1 2 - - X1 Documentation Security Final Report Issued 16 December 2025 LIMITED - 4 1 - X1 Directorate Business and Financial Plans Final Report Issued 28 November 2025 REASONABLE - 3 - - X2 Savings Programme Final Report Issued 1 December 2025 REASONABLE / LIMITED 1 3 - - F3 Income Generation: Business rates Final Report Issued 16 December 2025 SUBSTANTIAL - - 2 - X8 Debt Discovery Work Final Report Issued 27 January 2026 ADVISORY - - - - H3 Temporary Accommodation Action Plan Draft Report Issued TBC Once Finalised X4 Corporate Policies and Procedures Draft Report Issued Advisory C4 Housing and Social Care Collaboration Draft Report Issued TBC Once Finalised X3 Budget delivery Under Review Advisory HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 6. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation IA Ref. IA Review Area Current Status Assurance Level Actions & Risk Rating H M L O F2 Income Generation Under Review Advisory H7 Housing Allocations Under Review TBC Once Finalised C6 Health and Safety in Schools Under Review TBC Once Finalised H8 Right to Buy Fieldwork TBC Once Finalised P7 HRA Acquisitions Fieldwork TBC Once Finalised H4 B&B & HRA Arrears Fieldwork TBC Once Finalised S3 Emergency Planning Fieldwork TBC Once Finalised C3 Multiagency working Fieldwork TBC Once Finalised H9 Awaab’s Law Implementation Fieldwork TBC Once Finalised F5 Procurement Fieldwork TBC Once Finalised X6 Contract Management Fieldwork TBC Once Finalised F4 Key Financial Controls Planning TBC Once Finalised X7 Corporate Governance Planning TBC Once Finalised S8 Data Protection Planning TBC Once Finalised Total Number of IA Management Actions Raised 5 41 7 0 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 7. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation APPENDIX B: IA AD-HOC ADVISORY & GRANT CLAIM VERIFICATION REVIEWS IA Ref. IA Review Area Current Status Z01 Housing Housemark return Completed Z02 Grievance Investigation Completed Z03 Internal Review with Counter Fraud Completed Z04 Adult Mental Health Service Completed Z05 Debt Project Ongoing Z06 Environment Support Ongoing Z07 P-Card Review Ongoing G01 Trading Standards Grant Verification Completed G03 Bus Service Operators Grant Completed G02 Housing Benefit Grant Claim Ongoing G04 Disability Facilities Grant Claim Ongoing G05 Mayors Charity Account Ongoing HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 8. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation APPENDIX C: IA FOLLOW UP OF MANAGEMENT ACTIONS Ref Review Number of Actions Current Status of Actions: Comments Verified Completed Overdue Unknown Not Due H M H M H M H M H M H M 20.A03 Cemeteries: Bereavement Service and Ground Maintenance 2 4 - - - - - - - - 2 4 Due February 2026 20.A31 Exclusions or Education Cases for Vulnerable Young People - 4 - 3 - - - 1 - - - - New Date: February 2026 22.A42 Fraud prevention controls in tendering & contacts - 4 - 3 - - - - - - - 1 Due February 2026 22.A45 Adult social care referrals and assessment - 2 - 1 - - - 1 - - - - New Date: January 2026 22.C59 Care Leavers Allowances 1 1 - - 1 1 - - - - - - Awaiting Evidence 23.C04 Neglect (Children's) - 2 - 1 - 1 - - - - - - Awaiting Evidence 23.P06 Facilities Management - 3 - - - - - 3 - - - - New Date: January 2026 23.F07 Fleet Damage - 4 - 2 - - - - - - - 2 Due March 26 23.S13 Pool Cars 2 3 2 3 - - - - - - - - CLOSED 23.C03 SEND Data Quality 4 1 3 1 - - 1 - - - - - New Date: March 2026 23.D02 Performance Information - 3 - - - - - - - 3 - - Due December 2025 23.S14 Uninspected B&Bs 2 3 2 1 - 2 - - - - - - Awaiting Evidence 24.S15 Overtime, Expenses & Mileage Payments 5 2 4 2 - - 1 - - - - - New Date: March 2026 24.S17 Section 202 & 204 Appeals review - 3 - 1 - - - - - 2 - - Due September 2025 24.P4 Asset Management 2 2 - 2 - - - - - - 2 - Due March 2026 23-S09 Personal Appraisals - 3 - 3 - - - - - - - - CLOSED 24-S03 Pre-employment checks - 3 - 1 - - - 2 - - - - New Date: March 2026 24-S05 Decent Homes Standards - 2 - 2 - - - - - - - - CLOSED 24-P3 Leasehold Management and Service Charges - 2 - - - - - - - - - 2 Due January 2026 24-D05 Hillingdon First Card - 4 - - - - - - - - - 4 Due March 2026 24-F3 Contract Management Oversight 3 1 - - - - - - - - 3 1 Due January 2026 24-S18 B&B Rent Arrears 3 2 - - - - - - - - 3 2 Due February 2026 24-S13 HRA Rent Arrears 1 3 - - - - - - - - 1 3 Due February 2026 24-C02 Schools Finances 2 4 - - - - 2 4 - - - - New Date: March 2026 24-F04 Debtors - 3 - - - - - - - - - 3 Due April 2026 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 9. IA = Internal Audit H = High Risk M = Medium Risk L = Low Risk O = Observation 24-F06 Budget Monitoring - 6 - - - - - - - - - 6 Due April 2026 24-F02 Key Financial Controls (Cash Handling) 1 2 1 - - - 1 1 - - - - New Date: March 2026 24-S08 PEEPs in Highrise Buildings - 3 - - - - - - - - - 3 Due March 2026 24-C01 DSG (Safety Valve Plan (Part 2)) - 1 - 1 - - - - - - - - CLOSED 24-S10 Documentation Security - 4 - - - - - - - - - 4 Due March 2026 25-P03 Green Spaces 1 6 - - - - - - 1 4 - 2 Due January 2026 25-P05 Highways 1 2 1 1 - - - 1 - - - - New Date: March 2026 25-S01 Agency Expenditure and Checks - 3 - 3 - - - - - - - - CLOSED SUBTOTAL 30 95 13 31 1 4 5 13 1 9 11 37 TOTAL 125 44 5 18 10 48 HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 10. APPENDIX D: INTERNAL AUDIT KEY PERFORMANCE INDICATORS The Key Performance Indicators (KPIs) for IA quarterly reporting to CMT and the Audit Committee in 2025/26 are set out below: KPI Performance Measure Target Current Status KPI 1 Planning to be initiated at least six weeks before the planned fieldwork start date to allow the relevant service to prepare documents and ensure staff availability. 80% 89% KPI 2 The final terms of reference for the review to be agreed before the planned fieldwork start date. 80% 84% KPI 3 Fieldwork to be completed within two months of the opening meeting, unless agreed with the relevant Review Sponsor. 80% 92% KPI 4 Draft Reports to be issued three weeks after the end of fieldwork meeting with the key contact 80% 100% KPI 5 Annual IA Plan delivered to draft report stage by 31st March, unless agreed with Review Sponsor 90% 60% KPI 6 Annual IA Plan delivered to final report stage by 31st March, unless agreed with Review Sponsor 80% 51% KPI 7 Draft management responses to be received two weeks after the draft report is issued 80% 76% KPI 8 Review Sponsor to approve the management responses two weeks after the updated report is issued. 80% 75% KPI 9 HIGH and MEDIUM risk IA recommendations completed within the agreed timescale 80% 64% KPI 10 IA folders with fully completed compliance checklists identified through spot checks 90% TBC Key for future reporting on actual KPI performance: • RED = currently this performance target is not being met (significantly [>5%] short of target performance). • AMBER = currently not meeting this performance target (just short [<5%] of target performance). • GREEN = currently meeting or exceeding this performance target HILLINGDON COUNCIL INTERNAL AUDIT PROGRESS REPORT January 2026 11. APPENDIX E: ASSURANCE LEVELS AND ACTION RISK RATINGS ASSURANCE LEVEL DEFINITION SUBSTANTIAL There is a good level of assurance over the management of the key risks to the Council objectives. The control environment is robust with no major weaknesses in design or operation. There is positive assurance that objectives will be achieved. REASONABLE There is a reasonable level of assurance over the management of the key risks to the Council objectives. The control environment is in need of some improvement in either design or operation. There 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 and 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 leading to a substantial variance between the risk appetite and the residual risk to objectives. There is a high risk that objectives will not be achieved. FINDING RATING DEFINITION HIGH The finding relates to a significant threat that could impact the Council’s corporate objectives. i.e. a high number of key business risks remain unidentified and/or unmanaged as control systems do not exist and/or do not operate effectively. The risk requires senior management attention as soon as possible. MEDIUM The finding relates to a potentially significant threat that could impact on either corporate or operational objectives. This includes weaknesses in the control systems that are not considered serious but may have some impact on the service. The risk requires management attention and should be addressed within six months to ensure full compliance with expected controls. LOW The finding relates to a minor threat that impacts on operational objectives, this includes non -compliance with best practice or local procedures, and minimal impacts on the Service's reputation or budget. The risk may be tolerable in the medium term but management should take action within the next year to improve the control framework to ensure full compliance with expected controls. OBSERVATION This includes any items Internal Audit would like to highlight that may not directly relate to a finding. This includes notable performance and innovative controls that should be shared with others, potential concerns raised during the audit that are outside the scope of the review and will be considered separately, and any areas of improvement that had already been addressed by management at the time of the review.

Audit Committee – 10 February 2026 Part I – Public INTERNAL AUDIT CHARTER & 2026/27 DRAFT PLAN Committee name Audit Committee Officer reporting Claire Baker, Head of Internal Audit Papers with report Internal Audit Charter Internal Audit 2026/27 Draft Plan IA Briefing on the Global IA Standards Ward All HEADLINES The attached draft Internal Audit Plan presents the Audit Committee with the current proposed Internal Audit (IA) activity for the 2026/27 financial year. The plan presented covers a twelve -month period to enable the IA team to align it with their available capacity and ensure they are providing the best value for money. However, the IA Team maintain an ongoing flexible audit tracker so reviews will be continuously added and removed throughout the year. Any changes to the plan will be reported through the Progress Report to the Audit Committee. The plan takes into consideration the key risks facing the Council and any alternative sources o f assurance available in relation to these risks. It has also been shared with the Corporate Management Team to ensure it is aligned with any wider projects or changes planned for 2026/27. Also attached are the Internal Audit Charter, which defines the purpose, authority and responsibilities of the Internal Audit service, and a summary of the self-assessment against the Global Internal Audit Standards completed in November 2025. The briefing also includes details of the Essential Conditions highlighted in the Global Internal Audit Standards , which outline the role of the Audit Committee in relation to Internal Audit and should be considered at least annually. RECOMMENDATIONS That the Audit Committee: 1. Approves the Internal Audit Annual Plan for 2026/27; 2. Notes the purpose and responsibilities of Internal Audit as outlined in the Charter ; and 3. Notes the Essential Conditions and self -assessment against the Global Internal Audit Standards. SUPPORTING INFORMATION NIL. BACKGROUND PAPERS Audit Committee – 10 February 2026 Part I – Public NIL. APPENDICES Appendix A – Internal Audit Charter Appendix B – Internal Audit 2026/27 Draft Plan Appendix C – IA Briefing on the Global IA Standards

HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 1 INTERNAL AUDIT CHARTER 1. Purpose of this Charter 2.1. In accordance with the Global Internal Audit Standards the purpose, authority and responsibility of the internal audit activity must be formally defined in an Internal Audit (IA) Charter. 2.2. The Hillingdon Council IA Charter defines the purpose, authority and responsibility of the IA Service within the Council. The Charter establishes the Head of IA's (HIA's) position within the Council including the nature of the HIA's functional reporting relationships. The Chart er authorises access to records, personnel and physical properties relevant to the performance of engagement and defines the scope of IA activities. 2.3. The HIA is responsible for applying this IA Charter and ensuring it is maintained in line with the Global Internal Audit Standards. This IA Charter shall be reviewed and presented to the Audit Committee for approval. The Charter will be reviewed every three years, or sooner if significant changes have been made by the Corporate Management Team (CMT) to ensure that it remains relevant to the needs of the Council. 2. Internal Audit Mandate 2.1. The Local Government Accounts and Audit Regulations 2015 require every local authority to ‘undertake an effective IA to evaluate the effectiveness of its risk management, control and governance processes, taking into account public sector internal auditing standards or guidance.’ 2.2. The regulations also state any ‘officer or member of the relevant authority must, if required to do so for the purposes of the internal audit, make available such documents and records; and supply such information and explanations as are considered necessary by those conducting the internal audit.’ Commitment to Adhering to the Global Internal Audit Standards 2.3. The IA service will adhere to the mandatory elements of The Institute of Internal Auditors' (IIA) International Professional Practices Framework, which are the Global Internal Audit Standards and UK Public Sector Application Note. The HIA will report annually to the Audit Committee and CMT regarding the conformance with the Standards, which will be assessed through a quality assurance and improvement program. 3. Internal Audit Purpose 3.1. IA is defined in the IIA Global Internal Audit Standards as “ an independent, objective assurance and advisory service designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 2 bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management, and control processes.” 3.2. The purpose of the internal audit function is to strengthen the Council’s ability to create, protect, and sustain value by providing the Audit Committee and Senior Management with independent, risk -based, and objective assurance, advice, insight, and foresight. IA is not responsible for control systems and managing risks, responsibility for effective internal control and management of risks rests with the management of the Council. 3.3. The Internal audit function is most effective when: • Internal auditing is performed by competent professionals in conformance with The IIA’s Global Internal Audit Standards and Public Sector Application Note. • The internal audit function is independently positioned with direct accountability to the Audit Committee • Internal auditors are free from undue influence and committed to making objective assessments. 4. Scope of Internal Audit 4.1. The scope of internal audit activities includes all activities conducted by the Council. 4.2. The HIA will provide an Annual HIA Opinion Statement for the Council through the Audit Committee. The HIA opinion statement will cover the three core areas below and be in line with the Global Internal Audit Standards: • Risk Management - Risk Management is the process of identifying, quantifying and managing the risks that the Council faces in attempting to achieve its objectives. • Corporate Governance - Corporate governance is the system of rules, practices and processes by which the Council is directed and controlled. • System of Internal Controls - The system of internal control is a process for assuring achievement of the Council’s objectives in operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies. It incorporates both financial and nonfinancial systems. 4.3. To enable full discharge of its duties, the HIA and the IA service has authority to: • Have right of direct access to the Chair of the Audit Committee , the Chief Executive, External Audit, the Leader of the Council and all other Members • Have unrestricted access to all Council functions, records, property and personnel required to plan and undertake audit assignments necessary to fulfil its scope • Obtain assistance, where necessary, from Council officers and contractors involved in the subject of audit engagements. 4.4. The IA activity will remain free from interference by any element in the Council, including matters of audit selection, scope, procedures, frequency, timing, or report content to permit maintenance of a necessary independent and objective mental attitude. Internal auditors will have no direct operational responsibility or HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 3 authority over any of the activities they review. Accordingly, internal auditors will not engage in any activity that may impair their judgement or objectivity. 4.5. The IA service will also provide advisory services to management as appropriate for the Council. Before any advisory work is agreed, the HIA will ensure that IA has the appropriate skills, resources and approval to undertake the review. The HlA will also ensure that appropriate sa feguards are in place to preserve objectivity in areas subject to future IA activity. 4.6. IA will exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors must make a balanced assessment of all the relevant circumstances and not be unduly influenced by their own interests or by others in forming judgements. 4.7. When the auditors receive confidential information, it shall be kept confidential at all times, except as required by law or as provided for in regulatory, ethical or other professional declarations. 5. HIA Roles and Responsibilities Ethics and Professionalism 5.1. The HIA and IA team have responsibility to undertake their work at all times in accordance with the Global Internal Audit Standards and the UK Public Sector Application Note. Those members of the IA team who have membership of professional bodies will also comply with the relevant requirements of that organisation. 5.2. The HIA will ensure that internal auditors: • Conform with the Global Internal Audit Standards, including the principles of Ethics and Professionalism: integrity, objectivity, competency, due professional care, and confidentiality. • Understand, respect, meet, and contribute to the legitimate and ethical expectations of the Council and be able to recognise conduct that is contrary to those expectations. • Encourage and promote an ethics-based culture in the Council • Report behavior that is inconsistent with Council’s ethical expectations, as described in applicable policies and procedures. Objectivity 5.3. The HIA will ensure that the internal audit function remains free from all conditions that threaten the ability of internal auditors to carry out their responsibilities in an unbiased manner, including matters of engagement selection, scope, procedures, frequency, timing, and communication. If the HIA determines that objectivity may be impaired in fact or appearance, the details of the impairment will be disclosed to appropriate parties. 5.4. Internal auditors will maintain an unbiased mental attitude that allows them to perform engagements objectively such that they believe in their work product, do HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 4 not compromise quality, and do not subordinate their judgment on audit matters to others, either in fact or appearance. 5.5. Internal auditors will have no direct operational responsibility or authority over any of the activities they review. Accordingly, internal auditors will not implement internal controls, develop procedures, install systems, or engage in other activities that may impair their judgment, including: • Assessing specific operations for which they had responsibility within the previous year. • Performing operational duties for the Council or its affiliates. • Initiating or approving transactions external to the internal audit function. • Directing the activities of any employee that is not employed by the internal audit function, except to the extent that such employees have been appropriately assigned to internal audit teams or to assist internal auditors. 5.6. Internal auditors will: • Disclose impairments of independence or objectivity, in fact or appearance, to appropriate parties and at least annually, such as the HIA, Audit Committee, management, or others. • Exhibit professional objectivity in gathering, evaluating, and communicating information. • Make balanced assessments of all available and relevant facts and circumstances. • Take necessary precautions to avoid conflicts of interest, bias, and undue influence. Managing the Internal Audit Function 5.7. The HIA has the responsibility to: • Develop a risk -based internal audit plan that considers the input of the Audit Committee and senior management. Discuss the plan with the Audit Committee and senior management and submit the plan to the Audit Committee for review and approval. • Review and adjust the internal audit plan, as necessary, in response to changes in Council’s business, risks, operations, programs, systems, and controls. • Communicate with the Audit Committee and senior management if there are significant changes to the internal audit plan. • Communicate the impact of resource limitations on the internal audit plan to the Audit Committee and senior management. • Ensure internal audit engagements are performed, documented, and communicated in accordance with the Global Internal Audit Standards and the UK Public Sector Application Note. • Follow up on all ‘high’ and ‘medium’ risk rated audit findings to confirm the implementation of agreed action plans and communicate the results to the Audit Committee and senior management. HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 5 • Ensure the internal audit service collectively possesses or obtains the knowledge, skills, and other competencies and qualifications needed to meet the requirements of the Global Internal Audit Standards and fulfill the internal audit mandate. • Identify and consider trends and emerging issues that could impact Council and communicate to the Audit Committee and senior management as appropriate. • Consider emerging trends and successful practices in internal auditing. • Establish and ensure adherence to methodologies designed to guide the internal audit function. • Ensure adherence to Council’s relevant policies and procedures unless such policies and procedures conflict with the internal audit charter or the Global Internal Audit Standards. Any such conflicts will be resolved or documented and communicated to the Audit Committee and senior management. • Coordinate activities and consider relying upon the work of other internal and external providers of assurance and advisory services. If the HIA cannot achieve an appropriate level of coordination, the issue must be communicated to senior management and if necessary escalated to the Audit Committee. Communication with the Audit Committee and Senior Management 5.8. The HIA will report quarterly to the Audit Committee and senior management . This includes reporting on: • The internal audit function’s mandate. • The internal audit plan and performance relative to its plan. • Internal audit budget and resource requirements • Significant revisions to the internal audit plan and budget. • Potential impairments to independence, including relevant disclosures as applicable. • Results from the quality assurance and improvement program, which include the internal audit function’s conformance with The IIA’s Global Internal Audit Standards and action plans to address the internal audit function’s opportunities for improvement. • Significant risk exposures, control issues, and other areas of focus for the Audit Committee that could interfere with the achievement of the Council’s strategic objectives. • Results of assurance and advisory reviews • Management’s responses to risk that the internal audit function determines may be unacceptable or acceptance of a risk that is beyond the Council ’s risk appetite. Management of Engagements 5.9. Internal auditors will: HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 6 • provide a detailed Terms of Reference for each review establishing the engagement's objective, key risks, and scope. • promptly communicate findings and conclusions to management, proposing recommendations to address any identified weaknesses. • obtain and record sufficient evidence to support their conclusions and engagement results. • issue a balanced, clear and concise summary report following the review , including a management action plan setting out the agreed actions to address the findings identified. • Submit a quarterly IA progress report to CMT and the Audit Committee summarising IA performance and work carried out in the period. • Submit an Annual IA report to CMT and the Audit Committee including the statutory HIA opinion statement on the Council's internal control, risk management and corporate governance arrangements. 6. Audit Committee & Senior Management Responsibilities Audit Committee Oversight 5.1. To establish, maintain, and ensure that the Council’s internal audit function has sufficient authority to fulfil its duties, the Audit Committee will: • Discuss with the HIA and senior management the appropriate authority, role, responsibilities, scope, and services (assurance and/or advisory) of the internal audit function. • Ensure the HIA has unrestricted access to and communicates and interacts directly with the Audit Committee, including in private meetings without senior management present. • Discuss with the HIA and senior management other topics that should be included in the internal audit charter. • Participate in discussions with the HIA and senior management about the essential conditions, described in the Global Internal Audit Standards, which establish the foundation that enables an effective internal audit function. • Review and approve the internal audit charter with the HIA to consider changes affecting the service, such as the employment of a new HIA or changes in the type, severity, and interdependencies of risks to the Council. • Approve the risk-based internal audit plan. • Provide input to senior management on the appointment and removal of the HIA, ensuring adequate competencies and qualifications and conformance with the Global Internal Audit Standards. • Provide input to senior management on the HIA’s performance. • Receive communications from the HIA about the internal audit function including its performance relative to its plan. HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 7 • Ensure a quality assurance and improvement program has been established and review the results annually. • Make appropriate inquiries of senior management and the HIA to determine whether scope or resource limitations are inappropriate. Senior Management 5.2. In order to be effective, the IA service requires the full co -operation of senior management. 5.3. Senior management will keep the IA service abreast of significant proposed changes in processes, systems, newly identified significant risks and all suspected or detected fraud or corruption. Senior management will also ensure that the IA service has access to sufficient information and resources in order to deliver the internal audit plan as directed by the Audit Committee. 6. Organisation Position & Reporting Relationships 6.1. The HIA will be positioned at a level in the organisation that enables IA services and responsibilities to be performed without interference from management, thereby establishing the independence of the IA function. 6.2. The HIA will report functionally to the Audit Committee and administratively (for example, day -to-day operations) to the Director of Finance . This positioning provides the organisational authority and status to bring matters directly to senior management and the Audit Committee without interference, and supports the internal auditors’ ability to maintain objectivity. 6.3. The HIA will confirm to the Audit Committee, at least annually, the organisational independence of the IA function. If the governance structure does not support organisational independence, the HIA will document the characteristics of the governance structure limiting independence and any safeguards employed to achieve the principle of independence. The HIA will disclose to the Audit Committee any interference internal auditors encounter related to the scope, performance, or communication of internal audit work and results. The disclosure will include communicating the implications of such interference on the IA function’s effectiveness and ability to fulfil its mandate. Changes to the Mandate and Charter 6.4. Circumstances may justify a follow -up discussion between the HIA, Audit Committee, and senior management on the IA Mandate or other aspects of the IA Charter. Such circumstances may include but are not limited to: • A significant change in the Global Internal Audit Standards. • A significant reorganisation within the organisation. • Significant changes in the HIA, Audit Committee, and/or senior management. • Significant changes to the Council’s strategies, objectives, risk profile, or the environment in which the Council operates. • New laws or regulations that may affect the nature and/or scope of IA services. 7. Quality Assurance HILLINGDON COUNCIL INTERNAL AUDIT CHARTER 8 Quality Assurance Improvement Programme (QAIP) 7.1. The HIA will develop, implement, and maintain a quality assurance and improvement program that covers all aspects of the internal audit function. The program will include assessments of the internal audit function’s conformance with the Global Internal Audit Standards, as well as performance measurement to assess the internal audit function’s progress toward the achievement of its objectives and promotion of continuous improvement. 7.2. Annually, the HIA will communicate with the Audit Committee and senior management about the internal audit function’s quality assurance and improvement program, including the results of internal assessments (ongoing monitoring and periodic self -assessments) and external assessments. External assessments will be con ducted at least once every five years by a qualified, independent assessor or assessment team. Reporting Internal Audit Performance 7.3. A summary of actual IA performance against targeted performance will be reported to CMT and the Audit Committee as part of the quarterly IA progress reports. These results will allow all stakeholders to measure the performance and robustness of the IA team and also provide an indicator on how effectively the Council is at managing its risks. 7.4. Key performance Indic ators (KPIs) will be agreed with the CMT and Audit Committee. Any IA KPIs set will need management co-operation to enable them to be achieved, IA can influence the results, but they cannot completely control them. It is therefore important that interpretation of the IA KPIs is not taken in isolation, as other factors should be taken into account.

DRAFT INTERNAL AUDIT PLAN January 2026 HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 2. Contents The key contacts in connection with this document are: Claire Baker Head of Internal Audit cbaker@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. THE INTERNAL AUDIT PLANNING PROCESS 3 3. THE INTERNAL AUDIT PLAN OVERVIEW 5 4. THE DETAILED INTERNAL AUDIT PLAN 6 5. INTERNAL AUDIT SKILLS AND RESOURCES 10 APPENDIX A - INTERNAL AUDIT DEFINITIONS 11 APPENDIX B - INTERNAL AUDIT KEY PERFORMANCE INDICATORS 12 HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 3. 1. INTRODUCTION 1.1 The Role of Internal Audit 1.1.1 The Local Government Accounts and Audit Regulations 2015 require every local authority to undertake effective Internal Audit (IA) to evaluate the effectiveness of its risk management, control and governance processes, in line with the Global Internal Audit Standards and CIPFA Public Sector Application Note. 1.1.2 IA provides an objective opinion to the Council on whether the control environment, corporate governance arrangements and risk management framework are operating effectively, which is essential in helping the Council achieve its corporate objectives and realise its vision for the borough of Hillingdon. 1.1.3 The IA service at Hillingdon apply a risk -based approach to determine the priorities of the IA activity. This means that IA gives greater assurance to the Council because it is based on the key risks to the organisation’s objectives. As a result, we will not just be commenting on whether the controls operate, but whether they are the right controls to achieve the overall aims of the service. 1.2 The Purpose of the Internal Audit Plan 1.2.1 The Global Internal Audit Standards require the Head of Internal Audit (HIA) to create an internal audit plan that supports the achievement of the Council’s objectives. The plan should be discussed with the Audit Committee and Senior Management and approved by the Audit Committee. 1.2.2 The IA work undertaken throughout the year is a crucial component of the HIA’s annual opinion statement. In order to deliver this assurance, it is vital for the organisation to have a comprehensive plan which prioritises the limited resources of the IA team to maximise the risk-based coverage , whilst also adapting to new emerging risks, organisational changes and other sources of assurance. 2. THE INTERNAL AUDIT PLANNING PROCESS 2.1 The Approach to IA Planning in 2026/27 2.1.1 In developing the risk -based annual IA Plan the HIA has considered the organisation’s governance, risk management, and control processes. Key sources taken into consideration when developing this plan include: • Council Strategy – The IA Plan was reviewed against the Council Strategy for 2022-2026, to ensure the plan is aligned to the Council’s key priorities for the period. • IA Strategy & Charter – This IA Plan is aligned to the wider 2025-2028 Internal Audit Strategy and IA priorities. It is also aligned on the agreed IA purpose, scope and responsibilities as outlined in the IA Charter. • Risk Registers – The HIA considered the Council’s risk management arrangements and reviewed the risk management system to establish the key risks facing the Council. Where reviews align to specific corporate risks this is noted in the detailed plan below. • CMT Transformation Priorities – This IA Plan has been developed taking into consideration any known transformation projects. T o avoid duplicating work in HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 4. areas already under review, whilst also providing assurance over the effectiveness of the transformation programme where appropriate. • Meeting Minutes – The HIA considered the minutes from the corporate governance group where the discussion was in relation to the governance, risk management, and control processes. • Performance Dashboards – The HIA considered how the Council monitors their performance, and the r eliability and integrity of both operational and financial information. Where performance information was available potential risk areas were considered for inclusion in the IA Plan. • Senior Management – Senior managers from across the Council are continuously engaged in the ongoing IA plan, including members of Corporate Management Team (CMT), to identify any emerging risks or changes facing their services. • Audit Committee – Any comments from members of the Audit Committee will be reflected in the IA plan after the draft is presented at the Audit Committee meeting on the 10 February 2026. • External Assurance Providers – The Council’s external auditors are invited to discuss any matters of concern and to identify any areas where they may consider IA work to inform their own risk assessment. The HIA has also taken into consideration the results of other external reviews including CQC and Ofsted inspections. • Wider IA Knowledge – The IA Plan also reflects the cumulative knowledge of the IA team in relation to emerging risks facing the Council, including the wider strategic issues and regulatory changes emerging elsewhere, effecting local government. 2.2 Variations to the Plan 2.2.1 The IA team keep the programme under continuous review during the year to ensure the coverage has the flexibility to respond to the dynamic environment in which the Council operates. This approach helps make sure IA resources are directed in a more flexible and targeted manner to maximise the benefit to our stakeholders. 2.2.2 Where changes are required during the year, these will be agreed with the relevant Director and reported to the Audit Committee. Any areas that are delayed or cannot be completed due to capacity restraints will be recorded on the ongoing tracker to ensure they are not forgotten. 2.3 Internal Audit Resources 2.3.1 IA work for the year is determined by the number of days available based on the capacity in the IA Team. Reviews are prioritised to ensure the key risks facing the Council are given sufficient IA attention. The HIA is confident the current resources are sufficient to deliver the plan and meet the IA requirements under the Global Internal Audit Standards. Further information on the IA Team and capacity is included in Section 5 of this report. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 5. 3. THE 2026/27 INTERNAL AUDIT PLAN OVERVIEW 3.1 Key Elements of the IA Plan 3.1.1 The Internal Audit Plan for 2026/27 is outlined over the next few pages. This includes the following key elements: • Planned Assurance Reviews - Risk-based reviews that provide assurance to the Audit Committee and senior management that key risks to the achievement of objectives are being effectively mitigated , and control arrangements are operating as expected. • Planned Advisory Reviews - The planned risk-based reviews will include some advisory work where there are known areas of improvement and additional support is required, these will take into consideration other internal and external support to ensure we avoid any duplication. • Grant Claims – This includes verifying grant expenditure and relevant returns before they are submitted. Work will be undertaken in 2026/27 to ensure all grants requiring grant certifications and sign offs by IA are identified and completed. • Ad-hoc Advisory – As well as planned advisory reviews there is a further allocation of days for unprogrammed advisory to allow the team to respond to urgent requests for advice. Demand for support has been increasing as there are significant changes taking place across the council and the IA service becomes more well known at an operational level. • Follow up – Throughout 202 6/27 the IA team will continue to follow up on recommendations raised in prior year reports to ensure they are implemented and embedded effectively. IA are currently implementing a new automated follow up process which will reduce the reliance on manual emails and improve the data available for ongoing monitoring. As part of this process further digital dashboards will be developed to increase awareness of outstanding recommendations and improve accountability within services and directorates. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 6. 4. THE DETAILED 2026/27 INTERNAL AUDIT PLAN QUARTER ONE REF. AUDIT TITLE SRR DESCRIPTION Cross Directorate Reviews (X) X1 Grant Register 0006 This will be an advisory review to identify the sources of grant income across the Council and confirm what monitoring arrangements are in place to ensure grant income is being maximised and spent in line with any grant conditions. X2 Project Management 0007 This review will consider the pro ject management arrangements in place to monitor significant projects planned for 2026/27. This will include ensuring there is appropriate collaboration and oversight. X3 Business Continuity This compliance-based review will test whether services have business continuity plans in place and the overarching monitoring arrangements to support for the new Business Continuity lead. Directorate: Residents Services (R) R1 Fleet This review will test compliance with safety requirements, follow up on the fleet damage report completed in 2023/24, and consider how technology can be used to support the service. R2 Play Equipment Health & Safety This compliance-based review will test how Play Equipment is monitored and whether appropriate inspections and maintenance ha ve been completed to meet Health and Safety requirements. R3 Disposals This review will consider the processes in place for identifying assets for disposal, and whether there is appropriate scrutiny and approval before the disposal is actioned. R4 Environment Forward Planning Following management changes in this directorate this advisory review will focus on supporting these teams to establish clear objectives, plans and risk registers for 2026/27. These will be further reviewed in Q4 to ensure they are embedded effectively. Directorate: Finance (F) F1 Aged Debt & Write Offs 0006 Following the debt work completed in 2025/26 this review will assess how aged debts are monitored, provided for and written off when they are no longer recoverable. QUARTER TWO REF. AUDIT TITLE SRR DESCRIPTION Cross Directorate Reviews (X) X4 Business and Financial Plans Follow Up This review will follow up on the recommendations made in the 2025/26 Business and Financial Plans audit and test whether appropriate plans are in place for 2026/27. X5 Directorate Governance 0006 Following the governance improvement actions undertaken in 2025/26 this review will test whether the new directorate level governance arrangements have been embedded effectively. X6 Directorate Spend Controls 0006 Three spend control compliance audits have been included in the plan to consider whether the spend controls are working effectively within the directorates, social care and housing. Directorate: Adult Social Care & Health (A) A1 Spend Control - Social Care 0006 As above, three spend control compliance audits have been included in the plan to consider whether the spend controls are working effectively within the directorates, social care and housing. Directorate: Children’s Services (C) C1 Fostering 0009 This review was added to the plan as there have been significant changes in the fostering service since the last audit was undertaken. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 7. Directorate: Residents Services (R) R5 Spend Controls – Housing 0005 As above, three spend control compliance audits have been included in the plan to consider whether the spend controls are working effectively within the directorates, social care and housing. R6 Temporary Accommodation Data 0005 This review will provide assurance on the accuracy of performance data in relation to Temporary Accommodation and how the service monitors the accommodation provided. R7 Civic Amenity Site This compliance-based review will test how the Civic Amenity Site ensures they are delivering their service objectives and meeting any necessary standards or regulations. Directorate: Corporate Services (S) S1 HR Compliance This review will consider whether there is appropriate oversight of HR compliance to ensure officers are held accountable for non -compliance. This includes mandatory training, appraisals and any annual declarations. Directorate: Finance (F) F2 Fees and Charges 0006 This review will assess the processes in place for setting the Council’s fees and charges, including benchmarking charges against other Local Authorities and considering the potential impact on demand for the services. QUARTER THREE REF. AUDIT TITLE SRR DESCRIPTION Cross Directorate Reviews (X) X7 Budget Monitoring 0006 Following the actions taken to improve budget monitoring in 2025/26 these days have been included in the plan to ensure they are embedded effectively at a service level. X8 Use of Performance Information 0007 This review will assess how the Council is using the ir performance data effectively, including whether performance reports cover statutory requirements and action plans are in place to address poor performance. X9 Savings monitoring 0006 Following the Saving Programme review in 2025/26 this review will deep dive into individual savings proposals to confirm action plans are in place to deliver the saving and alternative savings proposals identified where necessary. X10 Resident Engagement This review will consider the different communication options available for residents to contact the Council, and whether they are aligned with each other to ensure residents can reach the appropriate service efficiently. X11 Company Governance This review will assess the governance arrangements for companies established by the Council, and how the Council maintains oversight to ensure the expected outcomes are achieved. Directorate: Adult Social Care & Health (A) A2 Adult Social Care Charges 0006 To test compliance with the Council’s policies and procedures in relation to social care charges, including financial assessments and how income is collected. Directorate: Residents Services (R) R8 Landlord Service Data 0007 This review will provide assurance on the accuracy of performance data in relation to the Landlord Service, including whether mandatory indicators have been calculated correctly. R9 Domestic Abuse 0005 This review will assess the processes in place to support victims of domestic abuse, including how services collaborate to provide an effective response. R10 Rental Income 0006 To provide assurance whether the Council is maximising their rental income from leased properties. Including how rent is calculated and how the income is collected. Directorate: Corporate Services (S) S2 HR Info 0007 Following the action undertaken by the Human Resources service in 2025/26 to improve data quality in relation to staffing structures, this review will test the new arrangements in place to ensure the data continues to be accurate. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 8. QUARTER FOUR REF. AUDIT TITLE SRR DESCRIPTION Cross Directorate Reviews (X) X12 Resident Consultation This review will assess how residents are consulted in key decisions, and whether the consultation was appropriate and responses managed appropriately. Directorate: Adult Social Care & Health (A) A3 ASC Contract Management 0010 This review will provide assurance there is a clear contract register in place for Adult Social Care contracts and appropriate contract management arrangements to ensure they are providing value for money. A4 ASC Culture Review 0010 This advisory review will involve engaging with officers across the directorate to confirm whether they understand the directorate structure, their individual role and whether they feel teams are collaborating effectively. A5 Mortuary Training Academy This will be a compliance-based review to test whether the Mortuary is meeting any necessary standards and requirements. Directorate: Children’s Services (C) C2 Schools Thematic Review 0009 These days will be used to review a sample of schools and test their arrangements in place in relation to a key area of governance, The topic will be agreed with the Director for Education in Q3. Directorate: Residents Services (R) R12 Theatres This service review will assess how the Theatre service ensures they achieve value for money, including whether there are any further opportunities to maximise income. R11 Asset Management 0007 This review will consider the Council’s Asset Management arrangements, including testing the accuracy of the asset register and the processes in place to ensure it remains up to date. R13 Awaabs Law 0005 This review will follow up on any recommendations made in the Awaabs Law review in 2025/26 and test compliance with the new requirements in 2026. R14 Environment Forward Planning (Part 2) Following the advisory review in Q1 this review with assess whether the agreed forward plans have been followed and ongoing monitoring arrangements embedded effectively. Directorate: Corporate Services (S) S3 Procurement Act Compliance This review will test compliance with the Procurement Act across the Council and whether there are appropriate monitoring arrangements in place to address any non-compliance. ONGOING AUDIT WORK REF. AUDIT TITLE SRR DESCRIPTION Other Internal Audit Work - Grant Claims - Several grant certifications and sign offs are required by IA during the year on behalf of the Council. - Ad Hoc Advisory - These days will be used for urgent requests for advice and support to improve systems and processes, mitigate risk and enable the achievement of objectives. - Recommendation Follow up - All High and Medium recommendations raised by Internal Audit will be followed up as they become due to ensure they have been implemented effectively. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 9. ALIGNING TO THE STRATEGIC OBJECTIVES As part of the Internal Audit planning process the proposed reviews have been aligned to the Councils Strategic Objectives for 2022-2026. This summary is intended to provide assurance the plan will support the Council to achieve these core objectives. (1) Safe and Strong Communities Play Equipment Health & Safety, Resident Engagement, Resident Consultation (2) A Thriving Economy Resident Engagement, Rental Income, (3) A Digital-enabled, modern well-run council Grant Register, Project Management, Business Continuity, Aged Debt & Write Offs, Directorate Governance, Spend Controls, HR Info, Procurement Act Compliance (4) Thriving, healthy households Fostering, Temporary Accommodation Data, Domestic Abuse, ASC Contract Management (5) A green and sustainable borough Environment Forward Planning, Civic Amenity Site HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 10. 5. INTERNAL AUDIT SKILLS AND RESOURCES 5.1 In line with the Global Internal Audit Standards, the Head of Internal Audit appointed is professionally qualified and suitably experienced, whilst the IA team collectively possess the knowledge, skills and other competencies required to perform their responsibilities. 5.2 We are confident there will be sufficient IA capacity available to meet the skills and resource requirements needed to deliver the 2026/27 risk -based IA Plan. Based on the current workforce the calculated total available IA time for 2026/27 is 949 IA days. 5.3 This is an increase from 2025/26 as one team member is due to return from maternity leave at the beginning of the year . During 2025/26 one Internal Auditor and one Assistant Manager also left the Council. The Internal Auditor post was replaced with an Apprentice Auditor in May 2025, however the Assistant Manager post remains vacant at the beginning of 2026/27. 5.4 The impact of the maternity leave and vacancies on the capacity for IA work in 2025/26 was minimised by reducing the non -audit work completed by the team. However, the capacity plan will be reviewed during 2026/27 if the Assistant Manager post is filled or if there are any further staffing changes. 5.5 We continue to invest in the training and development of all our staff, including identifying opportunities for further development in associated areas of assurance. In particular, we will also seek opportunities to develop our digital skills and experience to allow us to automate our own processes and provide greater assurance in relation to Council wide systems and technology. AVAILABLE CHARGEABLE TIME Type of IA Work 2026/27 Planned 2025/26 Forecast 2024/25 Actual 2023/24 Actual Assurance & Advisory Audits 785 694 773 703 Grant Claims 70 64 57 65 Ad-Hoc Advisory 50 45 33 15 Recommendation Follow-Up 12 40 40 40 Facilitation 32 12 12 20 949 Days 855 Days 915 Days 843 Days HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 11. APPENDIX A - INTERNAL AUDIT DEFINITIONS ASSURANCE LEVEL DEFINITION SUBSTANTIAL There is a good level of assurance over the management of the key risks to the Council objectives. The control environment is robust with no major weaknesses in design or operation. There is positive assurance that objectives will be achieved. REASONABLE There is a reasonable level of assurance over the management of the key risks to the Council objectives. The control environment is in need of some improvement in either design or operation. There is a misalignment of the level of residual risk to the objectives and the designated risk appetite. There remains some risk that objectives will not be achieved. LIMITED There is a limited level of assurance over the management of the key risks to the Council objectives. The control environment has significant weaknesses in either design and/or operation. The level of residual risk to the objectives is not aligned to the relevant risk appetite. There is a significant risk that objectives will not be achieved. NO There is no assurance to be derived from the management of key risks to the Council objectives. There is an absence of several key elements of the control environment in design and/or operation. There are extensive improvements to be made. There is a substantial variance betwe en the risk appetite and the residual risk to objectives. There is a high risk that objectives will not be achieved. FINDING RATING DEFINITION HIGH The recommendation relates to a significant threat that impacts the Council’s corporate objectives. i.e. a high number of key business risks remain unidentified and/or unmanaged as control systems do not exist and/or do not operate effectively. The risk requires senior management attention as soon as possible as it may result in the breakdown of part/whole of the service. MEDIUM The recommendation relates to a potentially significant threat that impacts on either corporate or operational objectives. This includes weaknesses in the control systems that are not considered serious but may have some impact on the service. The risk requires management attention and should be addressed within six months to ensure full compliance with expected controls. LOW The recommendation relates to a minor threat that impacts on operational objectives, this includes non-compliance with best practice or local procedures, and minimal impacts on the Service's reputation or budget. The risk may be tolerable in the medium term but management should take action within the next year to improve the control framework to ensure full compliance with expected controls. OBSERVATION This includes any items Internal Audit would like to highlight that may not directly relate to a finding. This i ncludes notable performance and innovative controls that should be shared with others, potential concerns raised during the audit that are outside the scope of the review and will be considered separately, and any areas of improvement that had already been addressed by management at the time of the review. HILLINGDON COUNCIL INTERNAL AUDIT PLAN 2026/27 12. APPENDIX B - INTERNAL AUDIT KEY PERFORMANCE INDICATORS The Key Performance Indicators (KPIs) for IA quarterly reporting to CMT and the Audit Committee in 2026/27 are set out below: KPI Category Performance Measure 2026/27 Target KPI 1 Timeliness: IA Planning to be initiated at least six weeks before the planned fieldwork start date to allow the relevant service to prepare documents and ensure staff availability. 80% KPI 2 Timeliness: IA & Management The final terms of reference for the review to be agreed before the planned fieldwork start date. 80% KPI 3 Timeliness: IA & Management Fieldwork to be completed withing two months of the opening meeting, unless agreed with the relevant Review Sponsor. 80% KPI 4 Timeliness: IA Draft Reports to be issued three weeks after the end of fieldwork meeting with the key contact 80% KPI 5 Timeliness: IA Annual IA Plan delivered to draft report stage by 31st March, unless agreed with Review Sponsor 90% KPI 6 Timeliness: IA Annual IA Plan delivered to final report stage by 31st March, unless agreed with Review Sponsor 80% KPI 7 Timeliness: Management Draft management responses to be received two weeks after the draft report is issued 80% KPI 8 Timeliness: Management Review Sponsor to approve the management responses two weeks after the updated report is issued. 80% KPI 9 Quality HIGH and MEDIUM risk IA recommendations completed within the agreed timescale 80% KPI 10 Quality IA folders with fully completed compliance checklists identified through quarterly spot checks 90% Key for future reporting on actual KPI performance: RED = currently this performance target is not being met (significantly [>5%] short of target performance) . AMBER = currently not meeting this performance target (just short [<5%] of target performance) . GREEN = currently meeting or exceeding this performance target

INTERNAL AUDIT STANDARDS & QUALITY IMPROVEMENT ACTION PLAN November 2025 HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 2. 1. INTRODUCTION In January 2024 the Global Institute of Internal Audit (GIIA) published new Professional Standard s for Internal Auditors. The Standards became globally effective from 9 January 2025 and replaced the International Professional Practice Framework, which was the basis for the UK Public Sector Internal Auditing Standards. From the 1 April 2025 Auditors working in the UK public sector were also required to follow the new Global Internal Audit Standards, subject to the interpretations and additional requirements set out in a CIPFA Application Note. The Standards are organised into five domains: • Domain I: Purpose of Internal Auditing. • Domain II: Ethics and Professionalism. • Domain III: Governing the Internal Audit Function. • Domain IV: Managing the Internal Audit Function. • Domain V: Performing Internal Audit Services. 3. DOMAIN I & ESSENTIAL CONDITIONS The Audit Committee and Corporate Management Team (CMT) are essential to support Internal Audit’s ability to meet the Purpose of Internal Auditing. Therefore, the Standards include a range of obligations under Domain III: Governing the Internal Audit Function for the Audit Committee and CMT to fulfil when overseeing and directing internal audit. These are referred to as “Essential Conditions” and listed in Appendix A below. The Standards state the HIA must discuss the Essential Conditions at least annually with the Audit Committee and CMT. This must also cover the following points required by the Standards: • The Purpose of Internal Auditing as articulated in Domain I: Purpose of Internal Auditing. • The Essential Conditions outlined under each of the standards in Domain III: Governing the Internal Audit Function. • The potential impact on the effectiveness of the internal audit function if the Audit Committee or CMT does not provide the support outlined in the essential conditions. As there are many Essential Conditions these have been listed separately in Appendix A. However, the Purpose of Internal Auditing as articulated in Domain I: Purpose of Internal Auditing is highlighted below: The Essential Conditions require the Audit Committee to have significantly more operational oversight in relation to Internal Audit than previously held. This will need to be reflected in the Committee’s Terms of Reference, and proposed wording has been included in Appendix D. Where the Audit Committee or CMT cannot, or will not, agree to implement any Essential Condition, the HIA must document these decisions and set out the impact on the work of the internal audit service. Domain I: Purpose of Internal Auditing Internal auditing strengthens the organisation’s ability to create, protect, and sustain value by providing the board and management with independent, risk-based, and objective assurance, advice, insight, and foresight. Internal auditing enhances the organisation’s: • Successful achievement of its objectives. • Governance, risk management, and control processes. • Decision-making and oversight. • Reputation and credibility with its stakeholders. • Ability to serve the public interest. Internal auditing is most effective when: • It is performed by competent professionals in conformance with the Global Internal Audit Standards, which are set in the public interest. • The internal audit function is independently positioned with direct accountability to the board. • Internal auditors are free from undue influence and committed to making objective assessments. HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 3. 2. COMPLIANCE WITH THE STANDARDS The Head of Internal Audit and Risk Assurance (HIA) completed an initial self-assessment against the standards in November 2024 to ensure any significant areas for improvement were addressed in advance of the implementation date. Actions already taken include reviewing the Internal Audit Charter to ensure it is consistent with the best practice template and includes the key information required by the Standards, and updating the Internal Audit Strategy. The standards require the HIA to undertake an annual review of compliance, therefore a more detailed assessment has been completed in October 2025. A summary of the current compliance is outlined in Appendix B. As the standards are new it is difficult to justify a fully compliant rating some areas because there is limited evidence in place to show the requirements are embedded yet. Overall, the HIA is comfortable with an overall rating of ‘Generally Achieved’ across the five Domains, with three principles ‘Fully Achieved’ and one Partially Achieved. There were no significant areas of improvement identified, and any improvement actions have been developed into a Quality Improvement Action Plan summarised in section 5 below. As a Public Sector organisation in the UK the Council must also comply with the CIPFA Application Note in relation to the Global Internal Audit Standards. This adapts the Global Internal Audit Standards where necessary to align with wider UK Public Sector requirements. The HIA has also completed an annual self -assessment against the application note, summarised in Appendix C. Overall six of the requirements are ‘F ully Achieved’ and eight are ‘Generally Achieved’. 4. OTHER AREAS CONSIDERED As part of this annual self-assessment the following areas were also considered: Benchmarking Data In June 2025 the London Audit Group undertook a benchmarking exercise to compare Internal Audit services from across the London Boroughs. This included reviewing reporting lines, staffing structures, additional responsibilities and service budgets. Overall, the Hillingdon Council team had the second lowest day rate, providing an above average level of reviews with a below average budget. We also had the highest percentage of risk-based reviews, providing value for money by focusing on tailored reviews into key risk areas rather than undertaking standard compliance-based reviews. The benchmarking also covered some of the key risk areas identified across the London Boroughs. All four ideas identified (Housing Compliance, Contract Management, Capital Projects & Transformation) have already been covered by the Hillingdon Internal Audit service. This also provides assurance the team have not missed potential risk areas identified in other Boroughs. Resourcing During 2025/26 the capacity within the in -house IA team decreased as one Internal Auditor was on Maternity Leave and we were unsuccessful recruiting a replacement Assistant Manager. The IA Plan was revised during the year to prioritise reviews where necessary in line with the available resources, and to ensure there was sufficient coverage for the Annual Opinion without the need to use additional external resources. HEAD OF INTERNAL AUDIT & RISK ASSURANCE IA ASSISTANT MANAGER (Vacant) APPRENTICE AUDITOR INTERNAL AUDITOR INTERNAL AUDITOR INTERNAL AUDITOR (Maternity Leave) IA ASSISTANT MANAGER HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 4. We are confident that there will be sufficient IA resources available to meet the skills and resource requirements needed to complete the 2025/26 IA Plan and deliver the 2026/27 IA Plan. The HIA will continue to monitor the capacity within the team and will look to recruit into vacant positions during 2026/27. The IA Team also continue to focus on training and development, taking into consideration the limited training budget available. We are currently prioritising Internal Audit qualifications and undertaking internal peer to peer training through team meetings. In particular, we will also seek opportunities to develop our digital skills and experience to allow us to automate our own processes and provide greater assurance in relation to Council wide systems and technology. Staff Survey Results A Council-wide staff survey was completed in June 2025. Due to the small size of the IA team their results are consolidated with the larger Counter Fraud Team to ensure individual res ponses could not be identified. The results from the survey were very positive with 100% positive scores for the following four questions: • I am treated with dignity and respect by my line manager/supervisor • My line manager/supervisor trusts me to make decisions about my work • I understand how my role contributes to the performance of my service • I can rely on my line manager/supervisor to be there for me if I need help or support There were no significant areas of concern identified through the survey however the lowest scoring questions have been discussed as part of an IA team meeting and actions put in place to improve these areas. In particular, the HIA will look for opportunities for more junior members of the team to engage with the Corporate Management Team and the wider Finance Directorate, and to raise the profile of the Internal Audit service. 5. QUALITY IMPROVEMENT ACTION PLAN SUMMARY The Internal Audit Team are continuously seeking to improve their performance , including improving their compliance with the Global Internal Audit Standards. Following this self-assessment they have identified the following key actions for 2026/27, which will be monitored through the IA monthly team meetings and reported annually to the Audit Committee: • In 2026/27 the IA Team will look to increase the ir use of technology and automation to improve efficiency and performance monitoring data available. This includes embedding the newly developed automated follow up process , and developing a monitoring dashboard to provide the Corporate Management Team with greater oversight o f the recommendations implemented and the IA work completed. • Undertake a review of the Audit Committee Terms of Reference and suggest any necessary updates to ensure they reflect the Essential Conditions outlined in Appendix A. This review has been completed, and proposed changes have been attached in Appendix D. • Update the IA Team capacity plan as part of 2026/27 annual planning process and consider whether the level of resources is sufficient to provide an effective IA service. If necessary, consider alternative recruitment or training options to increase capacity and skills within the team. In particular, the key skills in relation to technology and data analytics. • Implement more formal record keeping in relation to team training to improve the level of evidence available for the self-assessment, and update the IA team competency framework and job descriptions in line with the updated guidance from the IIA and CIPFA. • Review the Internal Audit Manual to ensure it is consistent with the Global Internal Audit Standards and includes sufficient detail on the key areas outlined within the standards. In particular, develop clear guidance and training in relation to root cause analysis. HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 5. APPENDIX A: CMT & AUDIT COMMITTEE ESSENTIAL CONDITIONS STANDARD 6.1 INTERNAL AUDIT MANDATE Audit Committee: • Discuss with the HIA and CMT the appropriate authority, role, and responsibilities of the internal audit function. • Approve the internal audit charter, which includes the internal audit mandate and the scope and types of internal audit services. Corporate Management Team: • Participate in discussions with the Audit Committee and HIA and provide input on expectations for the internal audit function that the Audit Committee should consider when establishing the internal audit mandate. • Support the internal audit mandate throughout the organisation and promote the authority granted to the internal audit function. STANDARD 6.2 INTERNAL AUDIT CHARTER Audit Committee: • Discuss with the HIA and CMT other topics that should be included in the internal audit charter to enable an effective internal audit function. • Approve the internal audit charter. • Review the internal audit charter with the HIA to consider changes affecting the organisation, such as the employment of a new HIA or changes in the type, severity, and interdependencies of risks to the organisation. Corporate Management Team: • Communicate with the Audit Committee and HIA about management’s expectations that should be considered for inclusion in the internal audit charter. STANDARD 6.3 AUDIT COMMITTEE AND CMT SUPPORT Audit Committee: • Champion the internal audit function to enable it to fulfil the Purpose of Internal Auditing and pursue its strategy and objectives. • Work with the CMT to enable the internal audit function’s unrestricted access to the data, records, information, personnel, and physical properties necessary to fulfil the internal audit mandate. • Support the HIA through regular, direct communications. • Demonstrate support by: • Specifying that the HIA reports to a level within the organisation that allows the internal audit function to fulfil the internal audit mandate. • Approving the internal audit charter, internal audit plan, budget, and resource plan. • Making appropriate inquiries of CMT and the HIA to determine whether any restrictions on the internal audit function’s scope, access, authority, or resources limit the function’s ability to carry out its responsibilities effectively. • Meeting periodically with the HIA in sessions without CMT present. Corporate Management Team: • Support recognition of the internal audit function throughout the organisation. • Work with the Audit Committee and management throughout the organisation to enable the internal audit function’s unrestricted access to the data, records, information, personnel, and physical properties necessary to fulfil the internal audit mandate. STANDARD 7.1 ORGANISATIONAL INDEPENDENCE Audit Committee: • Establish a direct reporting relationship with the HIA and the internal audit function to enable the internal audit function to fulfil its mandate. • Authorize the appointment and removal of the HIA. • Provide input to CMT to support the performance evaluation and remuneration of the HIA. • Provide the HIA with opportunities to discuss significant and sensitive matters with the Audit Committee, including meetings without CMT present. • Require that the HIA be positioned at a level in the organization that enables internal audit services and responsibilities to be performed without interference from management. This positioning provides the organizational authority and status to bring matters directly to CMT and escalate matters to the Audit Committee when necessary. • Acknowledge the actual or potential impairments to the internal audit function’s independence when approving roles or responsibilities for the HIA that are beyond the scope of internal auditing. HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 6. • Engage with CMT and the HIA to establish appropriate safeguards if HIA roles and responsibilities impair or appear to impair the internal audit function’s independence. Engage with CMT to ensure that the internal audit function is free from interference wh en determining its scope, performing internal audit engagements, and communicating results Corporate Management Team: • Position the internal audit function at a level within the organisation that enables it to perform its services and responsibilities without interference, as directed by the Audit Committee. • Recognise the HIA’s direct reporting relationship with the Audit Committee. • Engage with the Audit Committee and the HIA to understand any potential impairments to the internal audit function’s independence caused by non -audit roles or other circumstances and support the implementation of appropriate safeguards to manage such impairments. • Provide input to the Audit Committee on the appointment and removal of the HIA. • Solicit input from the Audit Committee on the performance evaluation and remuneration of the HIA STANDARD 7.2 HIA QUALIFICATIONS Audit Committee: • Review the requirements necessary for the HIA to manage the internal audit function, as described in Domain IV: Managing the Internal Audit Function. • Approve the HIA’s roles and responsibilities and identify the necessary qualifications, experience, and competencies to carry out these roles and responsibilities. • Engage with CMT to appoint a HIA with the qualifications and competencies necessary to manage the internal audit function effectively and ensure the quality performance of internal audit services. Corporate Management Team: • Engage with the Audit Committee to determine the HIA qualifications, experience, and competencies. • Enable the appointment, development, and remuneration of the HIA through the organisation’s human resources processes. STANDARD 8.1 AUDIT COMMITTEE INTERACTION Audit Committee: • Communicate with the HIA to understand how the internal audit function is fulfilling its mandate. • Communicate the Audit Committee’s perspective on the organization’s strategies, objectives, and risks to assist the HIA with determining internal audit priorities. • Set expectations with the HIA for: The frequency with which the Audit Committee wants to receive communications from the HIA. • The criteria for determining which issues should be escalated to the Audit Committee, such as significant risks that exceed the Audit Committee’s risk tolerance. • The process for escalating matters of importance to the Audit Committee. • Gain an understanding of the effectiveness of the organisation’s governance, risk management, and control processes based on the results of internal audit engagements and discussions with CMT. • Discuss with the HIA disagreements with CMT or other stakeholders and provide support as necessary to enable the HIA to perform the responsibilities outlined in the internal audit mandate. Corporate Management Team: • Communicate senior management’s perspective on the organization’s strategies, objectives, and risks to assist the HIA with determining internal audit priorities. • Assist the Audit Committee in understanding the effectiveness of the organization’s governance, risk management, and control processes. • Work with the Audit Committee and the HIA on the process for escalating matters of importance to the Audit Committee. STANDARD 8.2 RESOURCES • Collaborate with CMT to provide the internal audit function with sufficient resources to fulfil the internal audit mandate and achieve the internal audit plan. • Discuss with the HIA, at least annually, the sufficiency, both in numbers and capabilities, of internal audit resources to fulfil the internal audit mandate and achieve the internal audit plan. • Consider the impact of insufficient resources on the internal audit mandate and plan. • Engage with CMT and the HIA on remedying the situation if the resources are determined to be insufficient. Corporate Management Team: • Engage with the Audit Committee to provide the internal audit function with sufficient resources to fulfil the internal audit mandate and achieve the internal audit plan. HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 7. • Engage with the Audit Committee and the HIA on any issues of insufficient resources and how to remedy the situation. STANDARD 8.3 QUALITY • Discuss with the HIA the quality assurance and improvement program, as outlined in Domain IV: Managing the Internal Audit Function. • Approve the internal audit function’s performance objectives at least annually. • Assess the effectiveness and efficiency of the internal audit function. Such an assessment includes: Reviewing the internal audit function’s performance objectives, including its conformance with the Standards, laws and regulations; ability to meet the internal audit mandate; and progress towards completion of the internal audit plan. • Considering the results of the internal audit function’s quality assurance and improvement program. • Determining the extent to which the internal audit function’s performance objectives are being met. Corporate Management Team: • Provide input on the internal audit function’s performance objectives. • Participate with the Audit Committee in an annual assessment of the HIA and internal audit function. STANDARD 8.4 EXTERNAL QUALITY ASSESSMENT • Discuss with the HIA the plans to have an external quality assessment of the internal audit function conducted by an independent, qualified assessor or assessment team. • Collaborate with CMT and the HIA to determine the scope and frequency of the external quality assessment. • Consider the responsibilities and regulatory requirements of the internal audit function and the HIA, as described in the internal audit charter, when defining the scope of the external quality assessment. • Review and approve the HIA’s plan for the performance of an external quality assessment. Such approval should cover, at a minimum: • The scope and frequency of assessments. • The competencies and independence of the external assessor or assessment team. • The rationale for choosing to conduct a self -assessment with independent validation instead of an external quality assessment. • Require receipt of the complete results of the external quality assessment or self -assessment with independent validation directly from the assessor. • Review and approve the HIA’s action plans to address identified deficiencies and opportunities for improvement, if applicable. • Approve a timeline for completion of the action plans and monitor the HIA’s progress. Corporate Management Team: • Collaborate with the Audit Committee and the HIA to determine the scope and frequency of the external quality assessment. • Review the results of the external quality assessment, collaborate with the HIA and Audit Committee to agree on action plans that address identified deficiencies and opportunities for improvement, if applicable, and agree on a timeline for completion of the action plans. HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 8. APPENDIX B: IIA GLOBAL STANDARDS The HIA has assessed the Council’s current compliance with the Global Internal Audit Standards using the following grading: F Fully Achieved - No changes required to meet the standard G Generally Achieved - Small actions required P Partially Achieved - Area of improvement required. N Not Achieved - Will be addressed by developing an action plan. N/A Not Applicable SUMMARY OF REQUIREMENTS Domain I: Purpose of Internal Auditing G Domain II: Ethics and Professionalism G Principle 1 Demonstrate Integrity F • Standard 1.1: Internal auditors must perform their work with honestly and professional courage. F • Standard 1.2: Internal auditors must understand, respect, meet, and contribute to legitimate and ethical expectations of the organisation. F • Standard 1.3: Internal auditors must not engage in or be a party to any activity that is illegal or discreditable to the organisation or the profession of internal auditing that may harm the organisation or its employees. G Principle 2 Maintain Objectivity G • Standard 2.1: Internal auditors must maintain professional objectivity when performing all aspects of internal audit services. G • Standard 2.2: Internal auditors must recognise and avoid or mitigate actual, potential, and perceived impairments to objectivity. G • Standard 2.3: If objectivity is impaired in fact or appearance, the details of the impairment must be disclosed promptly to the appropriate parties. G Principle 3 Demonstrate Competency G • Standard 3.1: Internal auditors must possess or obtain the competencies to perform their responsibilities successfully. P • Standard 3.2: Internal auditors must maintain and continually develop their competencies to improve the effectiveness and quality of internal audit services. G Principle 4 Exercise Due Professional Care G • Standard 4.1: Internal auditors must plan and perform internal audit services in accordance with the Global Internal Audit Standards. F • Standard 4.2: Internal auditors must exercise due professional care by assessing the nature, circumstances, and requirements of the services to be provided. G • Standard 4.3: Internal auditors must exercise professional scepticism when planning and performing internal audit services. G Principle 5 Maintain Confidentiality G • Standard 5.1: Internal auditors must follow the relevant policies, procedures, laws, and regulations when using information. G • Standard 5.2: Internal auditors must be aware of their responsibilities for protecting information and demonstrate respect for their confidentiality, privacy, and ownership of information acquired when performing internal audit services or as the result of professional relationships. G Domain III: Governing the Internal Audit Function G Principle 6 Authorised by the Audit Committee F • Standard 6.1: The HIA must provide the Audit Committee and CMT with the information necessary to establish the internal audit mandate. F • Standard 6.2: The HIA must develop and maintain an internal audit charter that specifies the internal audit functions. F HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 9. • Standard 6.3: The HIA must provide the Audit Committee and CMT with the information needed to support and promote recognition of the internal audit function throughout the organisation. F Principle 7 Positioned Independently P • Standard 7.1: The HIA must confirm to the Audit Committee the organisational independence of the internal audit function at least annually. G • Standard 7.2: The HIA must help the Audit Committee understand the qualifications and competencies of a HIA that are necessary to manage the internal audit function. P Principle 8 Overseen by the Audit Committee G • Standard 8.1: The HIA must provide the Audit Committee with the information needed to conduct its oversight responsibilities. G • Standard 8.2: The HIA must evaluate whether internal audit resources are sufficient to fulfil the internal audit mandate and achieve the internal audit plan. G • Standard 8.3: The HIA must develop, implement, and maintain a quality assurance and improvement program that covers all aspects of the internal audit function. G • Standard 8.4: The HIA must develop a plan for an external quality assessment and discuss the plan with the Audit Committee. G Domain IV: Managing the Internal Audit Function G Principle 9 Plan Strategically G • Standard 9.1: To develop an effective internal audit strategy and plan, the HIA must understand the organisation’s governance, risk management, and control processes. G • Standard 9.2: The HIA must develop and implement a strategy for the internal audit function that supports the strategic objectives and success of the organisation and aligns with the expectations of the Audit Committee, CMT, and other key stakeholders. F • Standard 9.3: The HIA must establish methodologies to guide the internal audit function in a systematic and disciplined manner to implement the internal audit strategy, develop the internal audit plan, and conform with the standards. F • Standard 9.4: The HIA must create an internal audit plan that supports the achievement of the organisation’s objectives. G • Standard 9.5: The HIA must coordinate with internal and external providers of assurance services and consider relying upon their work. P Principle 10 Manage Resources G • Standard 10.1: The HIA must manage the internal audit function’s financial resources. F • Standard 10.2: The HIA must establish an approach to recruit, develop, and retain internal auditors who are qualified to successfully implement the internal audit strategy and achieve the internal audit plan. G • Standard 10.3: The HIA must strive to ensure that the internal audit function has technology to support the internal audit process. P Principle 11 Communicate Effectively G • Standard 11.1: The HIA must develop an approach for the internal audit function to build relationships and trust with key stakeholders. G • Standard 11.2: The HIA must establish and implement methodologies to promote accurate, objective, clear, concise, constructive, complete and timely internal audit communications. F • Standard 11.3: The HIA must communicate the result of internal audit services to the Audit Committee and CMT periodically and for each engagement as appropriate. F • Standard 11.4: If a final engagement communication contains a significant error or omission, the HIA must communicate corrected information promptly to all parties who received the original communication. N/A • Standard 11.5: The HIA must communicate unacceptable levels of risk. G Principle 12 Enhance Quality G • Standard 12.1: The HIA must develop and conduct internal assessments of the internal audit function’s conformance with the Global Internal Audit Standards and progress towards performance objectives. F • Standard 12.2: The HIA must develop objectives to evaluate the internal audit function’s performance. F • Standard 12.3: The HIA must establish and implement methodologies for engagement supervision, quality assurance, and the development of competencies. G HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 10. Domain V: Performing Internal Audit Services G Principle 13 Plan Engagements Effectively G • Standard 13.1: Internal auditors must communicate effectively throughout the engagement. F • Standard 13.2: Internal auditors must develop an understanding of the activity under review to assess the relevant risks. G • Standard 13.3: Internal auditors must establish and document the objectives and scope for each engagement. F • Standard 13.4: Internal auditors must identify the most relevant criteria to be used to evaluate aspects of the activity under review defined in the engagement objectives and scope. G • Standard 13.5: When planning an engagement, internal auditors must identify the types and quantity of resources necessary to achieve the engagement objectives. F • Standard 13.6: Internal auditors must develop and document an engagement work program to achieve the engagement objectives. G Principle 14 Conduct Engagement Work G • Standard 14.1: To perform analyses and evaluations, internal auditors must gather relevant and reliable information. G • Standard 14.2: Internal auditors must analyse relevant, reliable, and sufficient information to develop potential engagement findings. G • Standard 14.3: Internal auditors must evaluate each potential engagement finding to determine its significance. G • Standard 14.4: Internal auditors must determine whether to develop recommendations, request action plans from management, or collaborate with management to agree on actions. G • Standard 14.5: Internal auditors must develop an engagement conclusion that summarises the engagement results relative to the engagement objectives and management’s objectives. G • Standard 14.6: Internal auditors must document information and evidence to support the engagement results. G Principle 15 Communicate Engagement Results and Monitor Action Plans F • Standard 15.1: For each engagement, internal auditors must develop a final communication that included the engagement’s objectives, scope, recommendations and/or action plans, and conclusions. F • Standard 15.2: Internal auditors must confirm that management has implemented internal auditors’ recommendations or management’s action plans following an established methodology. F APPENDIX C: CIPFA APPLICATION NOTE Application Note Topic Assessment GIAS Standard the Application Note relates to Ethics and standards in public life Fully achieved 1.2 - Organisation's ethical expectations Handling information Generally achieved 2.5 - Protection of information Value for Money Generally achieved 9.1 - Understanding Governance, risk management and control processes Value for money Generally achieved 13.4 - Evaluation criteria The role of regulators Generally achieved 9.5 - Coordination and reliance Resources Generally achieved 6.3 - Board and senior management support Resources Generally achieved 8.2 - Resources Resources Fully achieved 10.1 - Financial resource management Resources Generally achieved 10.2 - Human resources management Resources Generally achieved 10.3 - Technological resources Overall conclusion and annual reporting Fully achieved 11.3 - Communicating results Overall conclusion and annual reporting Fully achieved 12.1 - Internal quality assessment Chief audit executive qualifications Fully achieved 7.2 - Chief audit executive qualifications Selecting independent assessors Fully achieved 8.4 - External Quality Assessment HILLINGDON COUNCIL INTERNAL AUDIT STANDARDS 11. APPENDIX D: AUDIT COMMITTEE TERMS OF REFERENCE If the Audit Committee chooses to comply with the Essential Conditions listed in the Global Internal Audit Standards the HIA proposes the following changes to the Internal Audit section of the Audit Committee Terms of Reference. Two sessions have been removed as they could be perceived as limiting the independence of the IA service, and three sections have been added to summarise the additional requirements from the essential conditions. If accepted, these changes will need to be reviewed against the wider Constitution and Cabinet Member Delegations to ensure the re are no conflicts and will need to be formally approved as part of the next updates to the Constitution. Internal Audit 1) Review and approve (but not direct) the Internal Audit Strategy , Internal Audit Charter and Internal Audit Mandate to ensure they meet the Council's overall strategic direction. 2) Review, approve and monitor (but not direct) Internal Audit’s planned programmes of work, paying particular attention to whether there is sufficient and appropriate coverage. 3) Establish a direct reporting relationship with the H ead of Internal Audit and work with the C orporate Management Team to ensure Internal Audit can perform without interference from management and has unrestricted access to the data, records, information, personnel, and physical properties necessary to fulfil the internal audit mandate. 4) Through quarterly Internal Audit summary reports of work done, monitor progress against the Internal Audit Plan and assess whether adequate skills and resources are available to provide an effective Internal Audit function. Monitor the main Internal Audit recommendations and consider whether management responses to the recommendations raised are appropriate with due regard to risk, materiality and coverage. 5) Make recommendations to the Leader of the Council and Cabinet Member for Finance on any changes to the Council’s Internal Audit Strategy and plans. 6) Review the Annual Report and Opinion Statement and the level of assurance this provides over the Council’s corporate governance arrangements, risk management framework and system of internal controls. 7) Discuss with the HIA the quality assurance and improvement program and agree the plan and scope of any external quality assessment. Consider reports dealing with the activity, management and performance of internal audit services and approve the HIA’s action plans to address any areas of improvement. 8) Following a request to the Corporate Director of Finance and, subject to the approval of the Leader of the Council or Cabinet Member for Finance, to request work from Internal Audit. 9) To be fully consulted on any recruitment, appointment or dismissal of the HIA and provide input to CMT in relation to their reporting lines, and performance evaluation. If necessary , collaborate with CMT to establish appropriate safeguards if HIA roles and responsibilities impair , or appear to impair, the internal audit function’s independence.

Audit Committee – 10 February 2026 Part I – Public 2025/26 QUARTER 3 COUNTER FRAUD PROGRESS REPORT Committee name Audit Committee Officer reporting Alex Brown, Head of Counter Fraud Papers with report 2025/26 Quarter 3 Counter Fraud Progress Report Ward All HEADLINES The attached report presents the Audit Committee with summary information on all Counter Fraud work covered in relation to 2025/26 Quarter 3 and assurance in this respect. It also provides an opportunity for the Head of Counter Fraud to highlight to the Audit Committee any significant Counter Fraud issues that have arisen which they need to be aware of. Further, the report enables the Audit Committee to hold the Head of Counter Fraud to account on delivery of the Counter Fraud Plan and facilitates in holding management to account for managing issues identified during the course of the Counter Fraud Team activity. RECOMMENDATIONS That the Audit Committee: 1. Notes the Counter Fraud Progress Report for 2025/26 Quarter 3; and 2. Suggests any comments/amendments. SUPPORTING INFORMATION The Counter Fraud Team supports the Council in meeting its statutory responsibility under section 151 of the Local Government Act 1972 for the prevention and detection of fraud and corruption. The work of the team underpins the Council’s commitment to a zero toleranc e approach to fraud, bribery, corruption, and other irregularities, including any money laundering activity. BACKGROUND PAPERS The Counter Fraud Team holds various background research documents in relation to the Counter Fraud Plan. APPENDIX Appendix A – 2025/26 Quarter 3 Counter Fraud Progress Report

Counter Fraud COUNTER FRAUD Report to Audit Committee: 2025/26 Quarter 3 31st December 2025 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. Contents The Counter Fraud key contacts in connection with this report are: Alex Brown Head of Counter Fraud t: 01895 556811 e: abrown@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. EXECUTIVE SUMMARY 3 3. COUNTER FRAUD ACTIVITY IN Q3 4 4. COUNTER FRAUD PERFORMANCE IN Q3 8 5. FORWARD LOOK 8 APPENDIX A - CFT Q3 KPI PERFORMANCE 9 APPENDIX B - CFT Q3 FINANCIAL PERFORMANCE 10 APPENDIX C – GLOSSARY OF TERMS 11 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. 1. INTRODUCTION The Role of the Counter Fraud Team 1.1 The Counter Fraud Team (CFT) supports the Council in meeting its statutory responsibility under section 151 of the Local Government Act 1972 for the prevention and detection of fraud and corruption. The work of the CFT underpins the Council’s commitment to a zero- tolerance approach to fraud, bribery, corruption, and other irregularit ies, including any money laundering activity. 1.2 As well as counter fraud activity, there is also a range of preventative work that the team is responsible for carrying out. This includes fraud awareness training and ensuring the Council have up-to-date and appropriate investigation policies and procedures. The Purpose of the Counter Fraud Progress Report 1.3 The Counter Fraud Progress Report provides the Council’s Corporate Management Team (CMT) and Audit Committee with summary information on all counter fraud work carried out during the Quarter 3 (Q3) period (1st October to 31st December 2025). In addition, it provides an opportunity for the Head of Counter Fraud (HCF) to highlight any significant issues arising from counter fraud work in Q3. 1.4 The progress report also highlights to CMT, the Audit Committee and other key stakeholders, the performance of the CFT in meeting its strategic and operational objectives (as set out in the Counter Fraud Strategy 2025 to 2028), which provides an opportunity for the HCF to be held to account in this respect. 2. EXECUTIVE SUMMARY 2.1 In Q3 the CFT has sustained its focus on areas of high-risk including Housing, Social Care and Revenues while continuing to support the Council wide Debt & Income project . This approach has delivered financial savings of c£3.5m in Q3 2025/26. This brings the year- to-date total to c£10.1m exceeding the target of £8.8m. 2.2 The majority of the CFT’s work in Q 3 has been undertaken in the area of Housing , in particular reactive investigative work due to tenancy fraud. Currently the team are investigating 130 cases of Housing fraud which is consistent with previous quarters. In addition to these ongoing cases a large number of investigations have concluded in Q 3, leading to the team recovering 29 properties at a notional saving of c£2m. The high number of properties recovered in the third quarter not only provides much needed Housing stock to those in need but demonstrates that the CFT are on track to deliver a significant amount of property recovery, in line with previous years. 2.3 During Q2 the CFT has continued to visit emergency accommodation provided by the Council to residents who have approached as homeless. During visits, the CFT uncovered 10 clients were no t occupying their emergency accommodation, which led to accommodation closures on all 10 cases saving c£268k. This work is vital to ensure the Council has enough accommodation to support those in need during a time when demand is increasing. 2.4 The CFT in Q3 has continued its Revenues Maximisation project, to identify businesses that are not declared for business rates . In total 1 5 businesses have been bought into the ratings list with bills issued for c£733k. This work is vital in supporting the Councils income and will be prioritised in Q4. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. 2.5 Following the success of the CFT winning two awards at the Public Finance Awards 2023 and being shortlisted for an award in 2025, the HCF and management team nominated the service for the Public Sector Counter Fraud Awards 2026. The team have been shortlisted in two the category Local Excellence and Team of the Year. The nomination was based on the team’s multi-discipline approach that led to c£1 0.9m of savings in 2024/25. Entries were deliberated by a panel of experts and the CFT have been shortlisted for the prestigious award alongside other fraud teams with awards ceremony in March 2026. 3. COUNTER FRAUD ACTIVITY IN QUARTER 3 3.1 Housing Fraud 3.1.1 The CFT has maintained its strong performance from previous quarters successfully recovering 29 social housing properties, with a notional saving of c£ 2m in Q3. This brings the total number of properties recovered this financial year to 84. The loss prevention savings for this area of work stands at £728k for Q3. These positive results stem from a range of proactive projects and data matching exercises undertaken by the CFT, highlighting that tenancy fraud remains a significant risk for the Council. 3.1.2 The Key Performance Indicator (KPI) 4 (refer to Table 4 in Appendix A) requires the CFT to recover 30% of properties associated with tenancy fraud referrals. This quarter the CFT has achieved 77% of tenancy fraud referrals resulting in property recovery. As per Table 1 below, the case type of property recovery shows that non-occupation is still the highest area of tenancy fraud risk. Table 1 ~ Housing Tenancy Fraud Cases Case Type Q1 Q2 Q3* 2025/26* £k/value** Abandonment 0 0 0 0 £0 Deceased 13 9 11 33 £2,310k NFI Fraud Hub 2 4 5 11 £770k Non-Occupation 8 10 7 25 £1,750k Other 1 1 0 2 £140k Sub-Let 1 1 6 8 £560k Wrongful Succession 2 3 0 5 £350k Total Properties Recovered 27 28 29 84 £5,880k * As at end of Q3 (31ST December 2025). ** Tenancy Fraud Forum valuation. 3.1.3 Housing fraud remains the Council’s most significant fraud risk , with the CFT actively investigating 130 cases relating to tenancy fraud . To date 9 possession orders have been granted through legal proceedings and are awaiting enforcement action . In addition, 32 further cases comprising both criminal and civil matters, are currently with our legal team for progression. 3.1.4 In Q3 the team have also continued with proactively identifying cases of unknown deceased tenants with the assistance of the NFI Fraud Hub. The details of this work can be found in subsection 3. 6 of this report. This work, though not classed as fraud, has continued to contribute to the number of properties recovered. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. 3.1.5 The CFT has continued to proactively analyse internally sourced data to identify discrepancies that can lead to property recovery or generate financial savings, such as reductions in council tax discounts and exemptions. One notable data -driven initiative involved reviewing council tax exemptions applied to social housing stock, which facilitated the recovery of 8 properties in Q3. This approach has resulted in a total of 26 properties being recovered during the current financial year. 3.1.6 The CFT has continued its rolling proactive project conducting residency checks to all emergency accommodation placements to highlight any instances o f non-occupation or subletting. In Q3 the CFT has closed a further 10 emergency accommodation units due to non-occupation, resulting in savings of c£268k. This brings the total of closures this financial year to 26 . During these visits officers address any other concerns such as recovering any rent arrears and setting up payment plans for arrears. A further 14 cases have been opened due to concerns of suspected non-occupation. 3.1.7 The CFT conducts verification checks on all Right to Buy (RTB) applications submitted to the Council, ensuring applicants meet eligibility criteria for the substantial discount and that funds used for the purchase comply with anti-money laundering regulations. In Q3, the CFT cancelled one RTB application, generating an estimated saving of approximately £136k, and is currently investigating 7 cases involving suspected sub-letting and non-occupation. Two of these cases have been referred to the Legal department to initiate criminal proceedings for fraud -related offences. Additionally, the CFT closed a further RTB application at the verification stage due to the applicant’s failure to provide the required financial information 3.2 Revenues Fraud & Inspections 3.2.1 In the area of Revenues, t he CFT has continued to maintain a high level of performance and again exceeded their KPI target (refer to Table 4 at Appendix A). In Q3, as detailed in Table 2 below, the CFT has conducted 1,304 inspections, with 1,290 (99%) visited within the 10-day KPI target. Table 2 ~ Revenues Inspections Performance 2025/26 Revenues Inspections Q1 Q2 Q3* Total number of inspections completed 1,841 1,593 1,304 Percentage within 10-day target 99% 99% 99% *As at end of Q3 (31st December 2025). 3.2.2 In Q3, the Counter Fraud Team (CFT) uncovered 13 additional properties operating as “Beds in Sheds” that were previously unlisted. This discovery led to revised Council Tax bills being issued to the responsible parties, generating approximately £10,000 in additional revenue. The CFT will continue collaborating with other Cou ncil departments throughout the year to identify similar cases and take appropriate enforcement action. 3.2.3 During Q3, the CFT continued its Revenue Maximisation programme in partnership with key stakeholders. This initiative focuses on identifying unlisted properties and changes in land use. As a result, 15 previously unlisted business premises were identified, leading to additional billing worth around £733,000 issued to businesses in Q3. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. 3.3 Social Care 3.3.1 In Q3, the CFT sustained its successful engagement within Social Care, reporting its most productive quarter of the year with loss prevention savings of approximately £ 177k. These positive outcomes were achieved through a range of workstreams, including the Financial Assessment verification process, tracing service users, and verifying residents receiving Section 17 support. 3.1.2 In Q3 CFT officers have continued to pilot visiting residents to recover outstanding Social Care debt . This has proven to be successful wit h further results obtained of initial payments of £ 3,600 being made during Q3 with a further two payment plans being established which will result in additional c£ 9.2k being recovered over the next 12 months. 3.3.3 The CFT’s risk-based loss prevention work within Financial Assessments has con tinued throughout Q 3, with the team conducting 142 financial assessmen t verifications, resulting in savings of over £100k . The verification process is designed to identify anomalies, such as hidden capital or assets prior to financial support being administered and to provide assurance that only eligible applicants are provided support. 3.3.4 Section 17 of the Children’s Act 1989 places a duty on the Council to safeguard and promote the welfare of children in need. Section 17 support offers a range of services that includes providing accommodation and/or financial assistance to eligible appl icants. The CFT undertake verification checks for all Section 17 applicants who approach Social Care. Table 3 below, illustrates the outcomes derived from the preventive measures in place that ensure services provided are only accessed by those who meet the eligibility criteria. Table 3 ~ Section 17 Verification Cases 2025/26 Section 17 Cases Q1 Q2 Q3* 2025/26* Total number of cases reviewed 14 15 8 37 Total number verified as accurate 10 5 7 22 Total number of cases closed 1 3 1 5 Total number of cases under further checks 3 7 1 - Loss Prevention Savings £3544 - £17,708 £21,252 * As at end of Q3 (31st December 2025). 3.4 Blue Badge 3.4.1 Cases from previously reported Blue Badge operations and referrals from residents have continued to progress during Q3 with the successful prosecution of one Blue Badge case. Following a hearing in the Magistrates Court £1,500 in prosecution costs was awarded to the Council and £225 in fines issued to the offender. 3.5 London Counter Fraud Hub 3.5.1 The CFT is recognised as a leading member of the London Counter Fraud Hub (LCFH). The hub is designed to bring London Boroughs together, sharing data to identify fraud, loss or error. This innovative approach will also use the power of data to uncover cross borough frauds. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. 3.5.2 The unique capabilities of the LCFH are now fully integrated into the CFT , enabling automated referrals every two weeks . These referrals highlight cases where the Council may be unaware that a tenant has passed away, allowing early intervention and maximising loss prevention. As a direct result of this intelligence during Q3 , five Council properties have been recovered and returned to use. 3.6 National Fraud Initiative 3.6.1 The National Fraud Initiative (NFI) is a data matching exercise co-ordinated by the Cabinet Office and conducted every 2 years. The NFI matches data from over 1,300 organisations, including councils, the Police, hospitals and almost 100 private companies to identify potential fraud and error. 3.6.2 The CFT have dedicated significant resource into analysing the data provided by the 2024/25 NFI exercise which has led to savings in a variety of work streams. 3.6.3 Reviewing cases where the NFI had identified changes in the income and capital of recipients of Council Tax Reduction (CTR) has led to overpayments of c£34k which will be added to revised Council Tax billing. 3.6.4 The annual data match aiming to identify incorrectly claimed Council Tax Single Person Discount has been processed during Q3 which has led to the identification of £63k in incorrectly claimed discount which will be added to revised Council Tax billing with further results expected during Q4. 3.7 Other Counter Fraud Activities 3.7.1 The Counter Fraud Team has been shortlisted for two prestigious accolades at the Counter Fraud Awards 2026: The Local Excellence Award and Team of the Year Award . These nominations reflect the team’s outstanding contribution to safeguarding public resource s and their commitment to innovation and best practice in fraud prevention and detection. Being recognised at a national level underscores the team’s dedication and the high standards of work delivered throughout the year. 3.7.2 During Q3, the Counter Fraud Team actively participated in a careers fair alongside other service areas. The event was aimed at supporting care leavers by providing information and guidance on career opportunities within the council. The team showcased the diverse roles available in fraud investigation and highlighted the importance of protecting public funds. This engagement not only promoted awareness of the council’s work in tackling fraud but also encouraged young people to consider careers in this specialist area. 3.7.3 During Q3 the CFT has delivered a series of organised fraud awareness training sessions for School Admissions and Client Affair s. These sessions have not only strengthened the organisation’s fraud awareness but also facilitated in identifying key risk areas. Further sessions with other departments have been booked in Q4. 3.7.4 Throughout Q3, the Counter Fraud Team continued to play a leading role in shaping national policy and sharing best practice across the sector. The Counter Fraud Manager represented the council at key industry events, speaking at conferences organised by the National Anti- Fraud Network and the Social Housing Law Association. These engagements provided an opportunity to influence policy discussions, exchange insights with other professionals, and reinforce the council’s reputation as a thought leader in counter fraud strategy. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. 4. COUNTER FRAUD PERFORMANCE IN Q3 4.1 Attached at Appendix A is Table 4 which sets out the Q3 performance by the CFT against the 9 KPIs. Also attached at Appendix B is Table 5 which provides an overview of the financial performance of the team in Q3 within each of the main areas of counter fraud activity. The CFT’s financial performance should be considered against a target of £ 8.8m for 2025/26. 4.2 The CFT has achieved a consistent level of performance across KPI’s throughout the quarter. The details of this are that 9 out of 9 KPI’s are above targeted performance. The management team are pleased that all KPI’s have been met and will be working closely with the team to ensure this level of performance is sustained. 5. FORWARD LOOK 5.1 During Q4 further data matching from NFI will be available in the areas of Adult Social Care and Council Tax. These matches are likely to detect instances of fraud and have a financial benefit to the Council. The CFT will prioritise these data sets for analysis in Q4. 5.2 As part of the CFT’s programme to become digitally and data enabled, a new Power BI dashboard providing management information including insights, performance and outcomes will be completed in Q4. This will change the way the service reports to stakeholders and provide real time information. 5.3 To sustain high levels of property recovery the CFT plans to undertake a variety of proactive projects in Q4. The projects will be risk based to identify suspected subletting or non - occupation across different tenures. 5.4 The CFT would like to take this opportunity to formally record its thanks for the co-operation and support it has received from the management and staff of the Council during this quarter. There are no other counter fraud matters that the HCF needs to bring to the attention of CMT or the Audit Committee at this time. Alex Brown APCIP Head of Counter Fraud HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. APPENDIX A: Table 4 - CFT KPIs and Actual Performance CFT KPIs Target Q1 Q2 Q3* 25/26* 24/25 1. Percentage of fraud referrals risk assessed within 3 working days 95% 100% 100% 100% 100% 99% 2. Verification work timescales for completion: a. Right to Buy case completion within 28 working days 95% 100% 98% 100% 99% 98% b. Financial Assessments completion within 2 working days 95% 100% 100% 100% 100% 100% c. Section 17 reviews completion within 7 working days 95% 93% 100% 100% 97% 100% 3. Investigation plan completion within 5 working days of case allocation 95% 100% 99% 100% 100% 100% 4. Tenancy fraud referrals received resulting in property recovery 30% 67% 74% 77% 73% 71% 5. Investigations resulting in loss prevention/financial saving outcome 40% 36% 41% 41% 40% 47% 6. Revenue inspections completed within 10 working days of referral date 95% 99% 99% 99% 99% 99% * As at end of Q3 (31st December 2025). HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. APPENDIX B: Table 5 - CFT Quarter 3 2025/26 Financial Performance * As at end of Q3 (31st December 2025). ** Average weekly cost against average length of support. This figure fluctuates but has been provided by the Council's Business Performance Team Work Area Description Quarter 1 Quarter 2 Quarter 3* Quarter 4 2025/26* Housing Right to Buy discounts £98,800 £112,800 £136,400 £0 £348,000 Property Recovery (notional savings) £1,890,000 £1,960,000 £2,030,000 £0 £5,880,000 Other savings/loss prevention £134,604 £295,690 £269,209 £0 £699,503 Social Care Section 17 and UASC** £3,544 £35,417 £54,338 £0 £93,299 Financial Assessments £11,295 £15,926 £110,531 £0 £137,752 Direct Payments £0 £0 £0 £0 £0 Other (Including Debt Visits) £129,830 £96,572 £12,888 £0 £239,290 Revenues Single Person Discount £7,307 £11,355 £69,244 £0 £87,906 Council Tax Reduction, Exemptions & Arrears £48,626 £43,869 £38,380 £0 £130,875 Unlisted Buildings £29,366 £20,054 £10,222 £0 £59,642 Housing Benefit Overpayments £1,086 £28,279 £32,131 £0 £61,497 NNDR £1,639,354 £22,801 £733,651 £0 £2,395,806 Blue Badge Simple Caution & Financial Penalty £2,578 £14,246 £1,725 £0 £18,549 Immigration Officer Social Care Savings £10,265 £17,708 £0 £0 £27,973 Internal Pension & Salary Overpayments £1,285 £0 £240 £0 £1,525 Totals Loss Prevention Savings £304,975 £510,458 £570,078 £0 £1,385,511 Notional Savings £3,246,832 £2,007,136 £2,668,861 £0 £7,992,829 Cashable Savings £453,557 £146,998 £258,294 £0 £858,849 Costs awarded and penalties £2,578 £21,413 £1,725 £0 £25,716 Total £4,007,942 £2,686,005 £3,498,958 £0 £10,192,905 HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. APPENDIX C - Glossary of Terms Beds in Sheds: 'Beds in Sheds' is the term used to describe habitable outbuildings, or annexes to private properties being utilised without the awareness of the Council or the Valuation Office Agency (VOA). Blue Badge: A Blue Badge provides parking concessions and helps people with non-visible and visible disabilities or health conditions park closer to their destination. The Blue Badge enables holders to park in designated disabled person’s parking bays either on the pu blic highway or privately owned car parks. In addition, badge holders can park on single or double yellow lines for up to 3 hours. Direct Payments: The Council are responsible for administering direct payments to service users who have been assessed as needing care and support services. The payments are made to allow applicants to access care to meet their social care needs, such as support with living tasks and social activities. Disabled Facility Grants: The council offers a range of financial support schemes for people with disabilities, such as the Disabled Facilities Grant (DFG). The DFG is a means tested scheme that allows eligible applicants to receive financial support to make adaptations to their home, if they, or someone living at the property is disabled. Financial Assessments: The Council is under a financial and legal obligation to carry out this means tested assessment for each service user. The Financial Assessment (FA) identifies whether the applicant(s) is eligible to receive funding towards their care costs. Fraud Hub: Utilising the existing Cabinet Office infrastructure and systems, most London based local authorities have agreed to upload internally held data sets for proacti ve data matching exercises. These regularly agreed upon exercises will lead to the identif ication of possible fraud, loss or error. National Fraud Initiative : The National Fraud Initiative (NFI) is a data matching exercise co - ordinated by the Government Cabinet Office and conducted every 2 years. There is also an annual review of claimants in receipt of Single Persons discount data that is matched against the Electoral Roll data. The NFI matches data from over 1,200 organisations, including councils, the police, hospitals and almost 100 private companies to identify potential fraud and error. New Homes Bonus: The New Homes Bonus (NHB) is a grant that is paid by central government to incentivise local housing growth. Onsite Immigration Enforcement Official: The Onsite Immigration Enforcement Official (OSIO) provides enhanced access to Home Office data for the purpose of assessing cases involving immigration issues and for assisting in a range of counter fraud work. Right to Buy: The Right to Buy (RTB) process is a statutory scheme whereby a tenant(s) can apply to purchase their property at a significant discount from its market value. There are strict conditions that must be met by the applicant(s) if they are to qualify for the discount. Revenue Maximisation: The use of internally held data and the utilisation of external data partners to identify previously unlisted commercial and domestic properties , along with identifying commercial properties that have undertaken modifications or improvements that would result in the revaluation of its Rateable Valu e (RV). Commercial enti ties are under no obligation to inform Council Tax as to when they have started tra ding or if their RV needs to be recalculated. The Council will only retain 15% of the identified rates. HILLINGDON COUNCIL COUNTER FRAUD PROGRESS REPORT 2025/26 Quarter 3. Section 17: The CFT provides assurance and mitigate the risk of fraud within Children’s Social Care, in particular the allocation of emergency accommodation provided under Section 17 of the Children’s Act 1989. The verification process seeks to validate a family’s reason for approach as well as their financial circumstances, as applicants claim to be destitute and requiring accommodation and or financial support. The CFT conducts verification checks on all applicants approaching the Council. Small business Rates Relief : The Small Business Rates Relief (SBRR) scheme is designed to reduce the amount of business rates payable by small businesses. This reduction is available to ratepayers who occupy a property with a rateable value of no more than £15,000. Tenancy Fraud Forum Valuation: As of the 2022/23 financial year, the CFT will be using the new Tenancy Fraud Forum valuation for property recovery. Working in conjunction with the London Boroughs’ Fraud Investigators’ Group (LBFIG) a new formula has been created to determine how much tenancy fraud costs. The formula considers the annual average temporary accommodation cost per family, the average duration for tenancy fraud, as well as the average investigation, legal and void costs. The agreed calculation for tenancy fraud within the borough is now valued at £56k per property (Previously £18k). The new calculation allows Hillingdon Council to accurately calculate financial savings by factoring in local figures. Unaccompanied Asylum-Seeking Children: Unaccompanied Asylum-Seeking Children (UASC) are children and young people who are seeking asylum in the UK but have been separated from their parents or carers. Whilst their asylum claim is processed, they are cared for by the Council and provided with accommodation and or financial support.

Audit Committee – 10 February 2026 Part I – Public COUNTER FRAUD ANNUAL OPERATIONAL PLAN FOR 2026/27 Committee name Audit Committee Officer reporting Alex Brown, Head of Counter Fraud Papers with report Counter Fraud Annual Operational Plan for 2026/27 Ward All HEADLINES The attached report presents the Audit Committee with the planned Counter Fraud approach and activity for the forthcoming financial year and seeks to:  Provide assurance to all key stakeholders that the risk of fraud is being managed effectively;  Demonstrate the Council’s commitment to good governance through minimising the risk of fraud; and  Set out the Counter Fraud Teams planned activity in line with risk. RECOMMENDATIONS That the Audit Committee: 1. Notes the Counter Fraud Annual Operational Plan for 2026/27; and 2. Suggests any amendments/comments. SUPPORTING INFORMATION The Counter Fraud Team supports the Councils risk and governance arrangements by taking a zero-tolerance approach to fraud and corruption. In order to deliver this assurance, the Counter Fraud team produce an Annual Operation Plan detailing activity across high risk areas of fraud. The plan is formulated based on the Counter fraud Strategy, Fraud Universe and tak es into consideration, both, the IA Plan and strategy. BACKGROUND PAPERS The Counter Fraud Teams holds various background statistical management documents in relation to the production of the Counter Fraud Annual Operational Plan 2026/27. BACKGROUND PAPERS Appendix A – Counter Fraud Annual Operational Plan for 2026/27

COUNTER FRAUD ANNUAL OPERATIONAL PLAN 2026/27 31st December 2025 HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 2. Contents The Counter Fraud key contacts in connection with this report are: Alex Brown Head of Counter Fraud t: 01895 556811 e: abrown@hillingdon.gov.uk Page 1. INTRODUCTION 3 2. THE COUNTER FRAUD STRATEGIC APPROACH 3 3. THE FRAUD UNIVERSE 4 4. THE COUNTER FRAUD PLAN 2026/27 4 5. COUNTER FRAUD SKILLS & RESOURCES 5 6. COUNTER FRAUD REPORTING 5 7. MEASURING COUNTER FRAUD PERFORMANCE 5 8. ACKNOWLEDGEMENT 6 APPENDIX A – FRAUD, LOSS & ERROR RISK ASSESSMENT 7 APPENDIX B - OPERATIONAL WORK PLAN 2026/27 10 APPENDIX C – COUNTER FRAUD TEAM KPI’s 13 APPENDIX D – COUNTER FRAUD OUTCOMES METHODOLOGY 14 HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 3. 1. INTRODUCTION The Role of the Counter Fraud Team 1.1 The Counter Fraud Team (CFT) is responsible for delivering the Counter Fraud Strategy and Annual Operational Plan to ensure that the Council meets its statutory objectives in relation to fraud and corruption. The Annual Operational Plan gives key stakeholders an overview of the CFT operational activity for the coming financial year, as well as a summary of the key fraud risks the Council faces. 1.2 As well as a range of counter fraud activities, the CFT has historically conducted a range of other types of investigative work which do not necessarily have a criminal or fraud element to them i.e. revenue inspections, disciplinary investigations, other loss prevention work, etc. It also includes preventative work such as fraud awareness training, advising management on fraud risks and counter fraud controls as well as ensuring the Council has up-to-date and appropriate investigation policies and procedures. The Purpose of the Counter Fraud Annual Operational Plan 2026/27 1.3 The Annual Operational Plan 2026/27 outlines the Council's approach to effectively tackle both the internal and external risk of fraud through its planned counter fraud activity. This planned approach is produced based upon the fraud landscape set out within the Councils risk register, to ensure that CFT resources are effectively deployed into areas of the highest fraud risk. The Annual Operational Plan also features a variety of proactive and reactive activity including investigative, project and verification work. 2. THE COUNTER FRAUD STRATEGIC APPROACH 2.1 The published Counter Fraud Strategy for 2025-28 details the approach and core principles of how the CFT will tackle and combat fraud and corruption . It also highlights the CFT’s strategic objectives and provides assurance to key stakeholders by setting out how the Council’s exposure to fraud is minimised. 2.2 The main principles of the Counter Fraud Strategy are:  Risk Based Approach – The deployment of resources into the highest areas of fraud risk based upon the fraud universe and the risk assessment process.  Partnership & Engagement – Communicating with service areas and key stakeholders to understand the risks the Council faces whilst creating a counter fraud culture. Offer support to stakeholders by undertaking work streams to identify fraud.  Prevent, Detect, Pursue & Deter – The cornerstone of the counter fraud approach, with a focus on prevention, as preventative measures are more effective than cure.  Innovation & Modernisation – A focus on delivering an efficient and effective counter fraud service through greater use of technology and data. 2.3 To ensure the CFT can operate effectively in preventing, detecting, and pursuing fraud, a wide range of policies are in place providing a corporate framework to support staff. These corporate policies outline the Council’s approach to countering fraud and corruption. Further details on these policies are included on the Hillingdon Council website. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 4. 3. THE FRAUD UNIVERSE 3.1 In line with the Counter Fraud Strategy, the CFT deploys a risk -based approach which is embedded into all forms of counter fraud activity, including the triaging of referrals. Specifically, a risk assessment is carried out assessing the available evidence to ensure resources are allocated effectively. 3.2 During the risk assessment process, the CFT will score the assessment based on the following categories:  Financial risk – What is the potential value of the fraud? What impact does it have on the Council and its residents?  Reputational risk – How does this damage the Councils reputation? How would residents and the wider public perceive the referral if the Council took no action?  Operational risk – How does this allegation, if true effect the day to day running of the Council? Is there a need to strengthen processes to mitigate fraud?  Systemic risk – Is this a new or emerging risk based on environmental, Social or economic factors? Is this a fraud risk we will likely continue to be exposed to? Do we need to change working practices to combat the risk? 3.3 The Council’s fraud risks are managed via the Council’s risk register, and the Counter Fraud Team’s risk assessment of those risks are set out in Appendix A . This highlights the pressures faced by the Council which includes national and local influences. External factors have greatly impacted the world over the past 3 years , in particular economic uncertainty which continues to create a perfect storm for opportunistic fraud to thrive. 3.4 As the fraud landscape within the public sector is ever changing, it is important that the CFT keeps up to date with industry news and communicates with key stakeholders to recognise the pressures and risks the Council will encounter. This will give the CFT the ability to adapt and combat the changing fraud risk landscape. 4. THE COUNTER FRAUD PLAN 2026/27 4.1 Set out in Appendix B, is the draft Counter Fraud Annual Operational Plan for 2026/27. The plan has been devised in liaison with key stakeholders and takes into consideration fraud risks as set out at in Appendix A. The planned operational activity covers proactive and reactive work across a wide range of fraud risks, whilst also retaining the flexibility for the CFT to tackle any emerging risks. 4.2 The plan explains the work the CFT will carry out by fraud risk and includes outcomes achieved previously in these areas, as well as the overall risk assessment rating. The plan for 2026/27 includes a variety of activity, which is listed below by type:  Criminal Investigations – Investigations that have a criminal element undertaken by qualified investigators. These investigations normally fall within services areas, where a fraud is alleged to have taken place by a person or business accessing services or funds. Typically, the CFT will investigate offences relating to fraud, theft, bribery and forgery but may where it is in the interest of the Council and its residents, investigate other offences.  Civil Investigations – These investigations are often where the burden of proof for criminal proceedings cannot be met, or it is not in the public interest to prosecute. These matters are dealt with by way of compliance and may require civil proceedings to bring the case to a resolution. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 5.  Disciplinary Investigations – At times key stakeholders in conjunction with HR may require the assistance of the CFT in disciplinary matters.  Verifications – A workstream conducted by the CFT to verify the eligibility of service users before accessing a particular scheme. These verification workstreams are embedded into processes within Housing and Social Care. This type of work is the core function behind the CFT’s preventative measures.  Proactive Projects – A series of projects conducted throughout the financial year, targeting the highest risk areas within the Council to drive down fraud, loss and error.  Data Matching – Exercises designed to identify fraud, loss or error by matching internal and external data sets. Returned matches are analysed to verify the veracity of the potential outcomes identified.  Consultancy Work – Upon request the CFT can carry out a review of service processes highlighting recommendations to improve fraud controls. 4.3 Another key feature of the 2026/27 plan is for the continued collaborative approach to risk between Internal Audit (IA) and the CFT. The CFT will work in conjunction with Internal Audit to identify areas of fraud risk and control weaknesses. Both teams can then deploy resources effectively to improve risk through mitigation and activity. 5. COUNTER FRAUD SKILLS & RESOURCES 5.1 Every member of staff in the Counter Fraud Team is either professionally qualified in counter fraud or is actively studying for a relevant professional qualification supported by the Council. This helps to ensure that the CFT provides a fully professional and effective service. A skills matrix approach is also used as part of monthly one to one meeting as well as at 6 monthly performance reviews. 5.2 In 2025/26 the HCF has reviewed the resources required for the CFT to operate effectively to meet its strategic objectives and deliver the operation work plan for 2026/27. The service has been operating under a new structure since April 2025 with new technology to improve the effectiveness of the team. The HCF believes th e current structure is adequately resourced to achieve its work plan and the outcomes associated. 6. COUNTER FRAUD REPORTING 6.1 The CFT reports its progress to Corporate Management Team (CMT) and the Audit Committee (AC) on all matters of counter fraud activity on a quarterly basis. These reports provide an update on performance against KPIs, strategic and operational objectives and delivery against the financial loss prevention target for the year. In addition to this, an annual report is presented to CMT and AC providing a summary overview of counter fraud activity for the financial year including a detailed analysis on team performance and outcomes. This enables CMT and the AC to hold the Head of Counter Fraud to account. 6.2 The CFT also liaises with services managers on an ongoing basis to ensure regular dialogue in relation to counter fraud activities (where appropriate) as well as delivery of service level agreements. This high level of engagement plays a significant part in the CFT meeting its core principles set out in the Counter Fraud Strategy. 7. MEASURING COUNTER FRAUD PERFORMANCE 7.1 As the CFT is a support function that works closely with the majority of service areas across the Council, there are a wide range of stakeholders to satisfy, as well as key stakeholders such as CMT and the AC. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 6. 7.2 To monitor counter fraud performance across service areas, outcomes and objectives a suite of KPIs were refreshed and agreed in the Counter Fraud Strategy 2025-28. Regular updates on performance against these KPIs will be provided in each quarterly progress report and are updated yearly and set out in Appendix C. 7.3 The Counter Fraud Strategy 2025-28 sets out nine strategic objectives for the CFT to pursue, which includes the financial loss prevention target for the year. Taking into consideration the change in fraud landscape and the team’s performance in 2025/26 and the methodology used to calculate outcomes (Appendix D), the financial loss prevention target for 2026/27 has been set at £9.4m. This target is subject to resourcing arrangements being agreed for the continuation of debt recovery visits . It is also worth noting the V OA have a backlog of cases which in turn, is slowing outcomes for revenues maximisation. 8. ACKNOWLEDGEMENT 8.1 The CFT would like to take this opportunity to formally record its thanks for the co-operation and support it has received from the Council’s management as part of the risk-based planning process. Alex Brown APCIP Head of Counter Fraud 31st March 2026 HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 7. APPENDIX A – FRAUD, LOSS & ERROR RISK ASSESSMENT The fraud risks specific to LBH are set out below, which is a summary of the organisational Fraud Risk Assessment (the Fraud Universe) for the Council. Fraud Risk Area Fraud, Loss & Error Risk Assessment General Fraud Risks  Increased financial pressure associated with the rise in the cost of living on individuals and concerns over money and fear of redundancy due to economic climate leading to higher likelihood and pressure to commit fraud by those internally and externally.  Increased demand within services leading to reduced due diligence over operational matters and overriding of controls creating a greater opportunity for fraud.  An increase in vacancies due to a challenging recruitment market leads to lack of resources and impacts the operation of preventative controls, decreased monitoring activity and increasing risk of fraud going undetected.  Decreased face -to-face meetings with service users, less verification of original documentation with reliance on scanned or copies of documentation. More provision of services remotely leading to higher likelihood of fraud not being detected.  An inflated recruitment market, leading to a higher number of vacancies with a heavy reliance on agency. A lack of due diligence with a priority of meeting resourcing demands, leaving the organisation exposed to recruiting unsuitable candidates.  The negative impact of the rise in the cost of livi ng and inflation on residents and businesses , leads to a greater risk of non -payment for services, increasing the Council’s debt and reduces the opportunity for recovery.  Decrease in support from back-office services due to lean operating models requiring front lines services to perform additional tasks leading to reduced resources to carry out due diligence within processes creating a greater opportunity for fraud to thrive.  Fast pace and significant transformational change to meet budget pressures and provide efficient modern services sees process change with limited consideration to fraud risk and control.  Poor data quality in services used for decision making at a strategic or operational level can leave departments susceptible to fraud or loss. IT & Procurement of Goods and Services  An increased need to win government contracts because of financial pressures on businesses due to the cost of living leading to the fraudulent manipulation of procurement processes.  Higher financial pressure on Council contractors creating increased desire to maximise profit from contracts leading to higher likelihood of misrepresentation of services, goods and materials supplied.  Increased cyber-crime activity nationally and globally and the higher likelihood of a cyber-attack against the Council such as ransomware, malware, viruses, tap jacking, quishing and a continually adapting external cyber -threat environment. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 8. Fraud Risk Area Fraud, Loss & Error Risk Assessment  Demand to shift more of Council activities onto online platforms to access services can expose the organisation to programmed bots that break into user accounts to redirect payments/refunds, steal contact information and other harmful activities that could also lead to negative GDPR and reputational ramifications.  A reduction in oversight for contract management due to front line demand led pressures, creating an envir onment for contractors to commit fraud through claiming additional income and sub-standard services, goods or materials. Port Authority  Higher numbers of Unaccompanied Asylum Seekers (UAS) approaching the Council compared to non -port authorities, leading to greater levels of fraudulent approaches to the Council for services.  Increases in services used by individuals where service provision is subject to immigration status, leading to more likelihood of misrepresentation of circumstances to access services where there is No Recourse to Public Funds (NRPF). Statutory Duty to Provide Social Housing  Higher levels of housing need and homelessness claims in the borough linked to ongoing cost of living pressures, leading to increased levels of fraud within housing.  Public perception of a vailability of low -cost social housing leads to greater numbers of individuals seeking housing from the Council and the opportunity to misrepresent circumstances within the process to obtain housing fraudulently.  Increased pressure on housing services requiring greater use by the Council of temporary accommodation. With the likelihood of the accommodation used being outside of the borough which in turn reduces the ability to monitor use and occupation and increases likelihood of misuse going undetected. Social Care Provider  High costs of social care provisions lead to greater pressure to misrepresent circumstances in relation to assets and income in the financial assessment process.  Inability of vulnerable individuals to properly manage Direct Payments meaning greater involvement of family members and third parties to manage payments, leading to increased risk of opportunistic mis appropriation of funding by a third party.  Absence of appropriate financial controls or appropriate monitoring, leading to the increased risk of unwarranted Direct Payments expenditure and misappropriation of funding.  Access to Council services by individuals subject to immigration status checks leads to risk of misrepresentation of status to access services where there is NRPF. Revenue Collection Authority  High cost of rateable value of business premises leads to the risk of fraudulent misrepresentation of circumstances to take advantage of reliefs.  Pressure to reduce individual costs against the cost of Council Tax leads to the wrongful claiming of single person discount and/or other exemptions and discounts, leading to lost revenue across a large number of residential addresses. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 9. Fraud Risk Area Fraud, Loss & Error Risk Assessment  Increases in the cost of living leads to residents misrepresenting their circumstances in order to qualify for the Council Tax Reduction scheme.  Council Tax and Business Rates costs leads to the risk of deliberate avoidance of co mpletion of new build properties by developers and owners meaning lost revenues for the Council. HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 10. Appendix B - Counter Fraud Annual Operational Work Plan 2026/27 Set out below is the draft Counter Fraud Annual Operational Work Plan for the key proactive projects and investigative work due to be conducted in 2026/27. Counter Fraud Activity Planned Work Outcomes 2025/26 Risk Tenancy Fraud & Housing Investigations The CFT will continue to detect illegal sub -letting and non-occupation of Council properties as referred by colleagues and residents. This also includes false applications for housing, assignment and succession. The CFT will also recover properties in case s where Housing Services have faced challenges in their investigations to gain lawful possession of Council properties. 114 properties recovered, £7,160k notional savings HIGH Social Housing & Temporary Accommodation Residency Checks A risk -based approach to tenancy residency checks working with the Housing team and using tenancy fraud data to identify hotspots. This will be delivered as part of proactive projects work. Social Housing & Temporary Accommodation In-House Data Matching Proactive project work utilising data from internal systems to identify instances of illegal sub-letting and non-occupation of Council properties. Housing Right to Buy (RTB) The CFT will continue to provide a risk -based verification service of all RTB applications to identify fraud and where appropriate actively investigate applications found to contain suspected misrepresentation. 5 applications closed, 1 criminal prosecution HIGH B&B Residency Checks The CFT will continue with proactive residency checks on all emergency B&B accommodation. The checks will identify suspected non-occupation and sub-letting of emergency housing, and false applications. 27 cases closed, £725k in loss prevention savings HIGH Social Care S.17 Emergency Funding Desk based checks to confirm eligibility of applicants requiring emergency accommodation and support from Social Care. An annual proactive project identifying suspected subletting or non -occupation of accommodation provided by the Council. 3 Placements Closed, £52k financial savings HIGH UASC Project An annual proactive project identifying suspected sub- letting or non-occupation of accommodation provided by the Council. A referral process is in place for cases of misrepresentation to be passed to the CFT for investigation. N/A HIGH Direct Payments Proactive project work utilising data to identify instances of funds not being used appropriately, and or misrepresentation of circumstances in order to access funding towards care costs. N/A HIGH HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 11. Counter Fraud Activity Planned Work Outcomes 2025/26 Risk Commissioned Care Proactive project work utilising data to identify instances of services not being provided and overpayments. N/A HIGH Revenues Inspections and Investigations In 202 5/26 the CFT will continue to deliver all inspections for Business Rates and Council Tax and develop an investigative approach to Business Rates and Council Tax avoidance and illegal evasion. 4412 inspections conducted in 2025/26 HIGH Revenue Maximisation Proactive project work utilising data to identify previously unlisted or modified domestic or commercial properties that are not paying the correct amount of tax or rates. £2.3m of previously uncollected NNDR identified HIGH Council Tax Discounts & Exemptions A proactive desk top data review of discounts and exemptions utilising data matching and in-house data. All discounts found to be fraudulent will be referred to the Revenues Team for removal of discounts/exemptions and investigated for fraud where appropriate by the CFT. Joint working with the Department for Work and Pensions to identify and pursue Council Tax Reduction fraud investigations. £294k in loss prevention savings HIGH Social Care Financial Assessments The CFT will continue to verify all applicants who apply for Social Care funding via Financial Assessments to ensure eligibility. The CFT will conduct a proactive project with the Financial Assessment Team to identify loss prevention savings during the ann ual review process and review all NRPF service users immigration status to assess eligibility to access public funds. £137k of loss prevention identified HIGH Debt Recovery Visits The CFT uses its out of hours visiting function and utilises officers training in communication and engagement, to encourage those that owe money for services to pay. This includes one off payment and negotiated payment plans across a variety of different service areas. c£164k of payments HIGH London Counter Fraud Hub Working in conjunction with other London based local authorities to create proactive data matching exercises to identify fraud and error in known risk areas leading to loss prevention outcomes. 13 properties recovered, (included in the property recovery total above) MEDIUM HILLINGDON COUNCIL Counter Fraud Annual Operational Work Plan 2026/27 12. Counter Fraud Activity Planned Work Outcomes 2025/26 Risk 'Beds in Sheds' - Unregistered Residential Dwellings The Revenues Investigations Unit will identify unlawful and unregistered residential dwellings in order that properties are brought within Council Tax banding and evasion pursued as investigations. Any enforcement action on planning issues will be referred to Planning Enforcement and Housing Standards. 52 cases identified, revenue of £59k MEDIUM Blue Badge Referrals As part of the CFT’s reactive capabilities, allegations of Blue Badge misuse will be risk assessed , and CFT resources deployed where appropriate. 13 Criminal prosecutions. £4.4k in fines issued and £14k in prosecution costs awarded LOW Fraud Awareness & Engagement The CFT will continue to provide a program of fraud awareness internally to champion a counter -fraud culture and encourage service provider engagement over fraud risks. This will include a refreshed fraud awareness campaign including whistleblowing, money laundering and bribery concerns. This will also include periodic social media communications released to the public to promote awareness and raise the profile of counter fraud activity within the borough. Delivered 3 awareness sessions N/A London Borough of Hillingdon Counter Fraud Annual Operational Work Plan 2026/27 13. APPENDIX C – Counter Fraud Team KPI’s 2026/27 The updated KPI’s for the CFT are set out in the table below. The KPI’s have been reviewed and updated to ensure team performance can be measured against all key areas of the service delivery. CFT KPIs 2026-27 Actual 2025/26 Performance 2026/27 Annual Target 1. Percentage of fraud referrals risk assessed within 3 working days 100% 95% 2. Verification work timescales for completion: a. Right to Buy case completed within 28 working days 99% 95% b. Financial Assessments completed within 2 working days 100% 95% c. Section 17 reviews completed within 7 working days 97% 95% 3. Investigation plans completed within 5 working days of case allocation 100% 95% 4. Tenancy fraud referrals received resulting in property recovery 73% 40%* 5. Investigations resulting in loss prevention/financial saving outcome 40% 40% 6. Revenues Inspections completed within 10 working days of referral date 95% 95% * = An increase in KPI target compared to 2025/26 London Borough of Hillingdon Counter Fraud Annual Operational Work Plan 2026/27 14. APPENDIX D – Counter Fraud Team Outcomes Methodology The latest Fraud valuations are set out in the table below. All fraud valuations have been reviewed to ensure they are proportionate, justifiable, reasonable, are following a sound methodology and give key stakeholders quantifiable data on the team’s performance. Service Area Counter Fraud Activity Methodology of Loss Prevention Valuation Housing Homeless applications and/or emergency accommodation closed Average cost of accommodation per night x average length of stay* Council property or temporary accommodation recovered Tenancy Fraud Forum calculation** Right to Buy application closed Value of the discount offered during the Right to Buy process First time Buyer Grant recovered Value of the grant received Social Care Section 17 application and/or accommodation closed Average cost of accommodation per night x average length of stay* Financial assessment application closed or amended Value of the amendment to the financial assessment or the value of the contribution for 1 year for any closed financial assessments Disabilities Facilities Grant application closed or amended Value of the grant received Unaccompanied Asylum Seeker accommodation and/ or application closed Cost of accommodation and/or subsistence to the Council for 1 year*** Direct Payment amended or closed Value of the amendment or the value of the direct payment for 1 year plus any backdated calculations Revenues Council Tax Reduction amended or closed Value of the amendment or value of 1 year’s benefit plus any backdated calculations Council Tax discount or exemption cancelled Value of 1 year’s discount/exemption plus any backdated calculations Housing benefit overpayment Value of overpayment Bed in Shed or Annexe identified 1 year’s value of additional Council Tax income plus any backdated billing London Borough of Hillingdon Counter Fraud Annual Operational Work Plan 2026/27 15. * = Average weekly cost against average length of support. This figure fluctuates but has been provided by the Council's Business Performance Team. ** = A national formula to calculate the value of tenancy fraud which takes into consideration cost of emergency accommodation, court costs, investigator costs, void costs and length of time the fraud has been committed. *** = Cost of accommodation and subsidence per week for one year. This figure is a prudent estimate as the Council can and does often support asylum seeking children until they are 25 years old. **** = NNDR operates under a business rates retention model with the Council keeping 30% of income. Identification of unlisted business or residential property 1 year’s value of additional income plus any backdated billing**** All service area’s Debt Recovery The value of the debt collected or the value of the payment plan up to 12 months.

Audit Committee – 10 February 2026 Part I – Public WORK PROGRAMME Committee name Audit Committee Officer reporting Ryan Dell, Democratic Services Papers with report Work Programme Ward All HEADLINES This report is to enable the Audit Committee to review planned meeting dates and the work 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 May 2026 will start at 17:10. Meetings Room 28 May 2026 CR5 12 August 2026 TBC 30 November 2026 TBC 10 February 2027 TBC 26 May 2027 TBC BACKGROUND PAPERS NIL. APPENDICES Appendix A – Work Programme

WORK PROGRAMME 2026 2027 Nov Feb May Aug Nov Feb May 18 10 28 12 30 10 26 Member training Pre-meet (17:00-17:10) Head of Internal Audit Corp. Dir. of Finance Head of Counter Fraud EY Head of Internal Audit Corp. Dir. of Finance Head of Counter Fraud Appointment of Chair X Appointment of Vice-Chair X Interviews for Independent Chair of the Audit Committee Governance Review Improvement Plan Update Update Update Update Update Update Update Financial Modernisation Programme Update Update Update Update Update Update Update Council response to statutory recommendations report issued by the Council’s external auditors Report back to full Council on s24 reports recommendations X Summary of responses to Staff Survey X REQUEST BY CTTEE: Transformation, Digital & Technology Risk External Audit External Audit item Update on Accounts EY's VfM update Update on Accounts Draft 24/25 Auditors Annual Report 24/25 Audit Results Report Update on Accounts Update on Accounts Update on Accounts Update on Accounts Update on Accounts Accounts Statement of Accounts & Annual Governance Statement (AGS) DRAFT 2024/2025 STATEMENT OF ACCOUNTS & AGS DRAFT 2025/2026 STATEMENT OF ACCOUNTS & AGS Audit Committee Annual Report 24/25 (Updated) 25/26 Risk Management Annual Report X x Risk Management Report 25/26 Q2 25/26 Q3 26/27 Q1 26/27 Q2 26/27 Q3 Strategic Risk Report 25/26 Q2 25/26 Q3 25/26 Q4 26/27 Q1 26/27 Q2 26/27 Q3 26/27 Q4 Internal Audit Annual Report 25/26 26/27 Internal Audit Progress Report 25/26 Q2 25/26 Q3 26/27 Q1 26/27 Q2 26/27 Q3 Internal Audit Charter X X Internal Audit Plan 26/27 27/28 Internal Audit Strategy Counter Fraud Annual Report 25/26 25/26 Counter Fraud Progress Report 25/26 Q2 25/26 Q3 26/27 Q1 26/27 Q2 26/27 Q3 Counter Fraud Operational Work Plan 26/27 27/28 Counter Fraud Strategy 2025-2028 Counter Fraud 2025/26 Democratic Services Corporate Services/ Finance 2026/27 Service area Internal Audit Audit Committee