Havering Council's external audit recovery timeline extended to 2029/30

Havering Council's external audit recovery timeline has been extended, with an unqualified audit opinion now anticipated no earlier than the 2029/30 financial year.

The Audit Committee of Havering Council received an update on Tuesday 13 October 2026, detailing the progress of the council's external audit. The external auditor, Ernst & Young (EY), reported that while improvements in audit readiness and financial reporting have been noted, the council faces a longer recovery journey than many authorities due to historic audit backlogs and disclaimed audit opinions.

A bar chart illustrating the performance of London boroughs across four quartiles, with Havering Council specifically marked, showing varying levels of audit readiness indicated by green, yellow, and red bars.
Havering Council's audit readiness compared to other London boroughs.Source: Audit Committee papers, 13 October 2026

Mark Hodgson from EY explained that Havering is currently in quartile two for audit readiness, indicating a relatively good performance compared to its peers. The Reset to Recovery report assesses the council's performance against national metrics, looking at eight key metrics ranging from the volume of misstatements in accounts to publication timeliness. However, only five councils in their cohort were fully able to support an audit across all of these eight metrics. Havering is described as being just about halfway in the London borough portfolio, with no reds and green in half of the eight metrics that we are looking at.

The extended recovery timeline is attributed to historic audit backlogs and disclaimed audit opinions. Specifically, the Rebuilding Audit Assurance: Risk Assessment Update report identifies several reserves, including the General Fund, Earmarked Reserves, and the Housing Revenue Account Reserve, as having a higher inherent risk due to past disclaimers and the complexity of accounting adjustments. Assurance gaps remain in some key areas, and rebuilding assurance is expected to take place over several audit cycles rather than being achieved within a single year. For the 2023/24 financial year, no or limited procedures were completed for areas such as Group, Debtors, Creditors, Expenditure, and Grant Income, hindering the build-back of assurance. Furthermore, no audit procedures were performed in 2021/22 and 2022/23 for certain reserves, increasing the risk that misstatements from those periods persist.

Bar charts illustrating the 2024/25 summary of assurances and the change in assurance since 2023/24 for the London Borough of Havering Council.
Havering Council's audit assurance summary.Source: Audit Committee papers, 13 October 2026

Councillor Geoff Burgess raised concerns about potential delays in completing specific audit procedures for the 2025/26 audit, such as debtors and creditors, and IFRS 16 leases, highlighting these as areas of highest risk. He inquired about the consequences of not completing these procedures within the revised timetable. Mark Hodgson from EY stated that the consequences would be that the audit will be subject to a disclaimed audit opinion. He elaborated that while the type of opinion the council's getting would be the same, the number of items contributing to the disclaimer would be broadly similar to last year. He also noted an operational impact on you as a committee, being able to fulfill your, your functions and an impact on the type of reporting we would do.

Bar chart showing the breakdown of audit opinions across different types of local authorities, including "Other," "London Borough," "Pension Funds," "Police and Fire," "Unitary," "County," and "District." The categories of audit opinions are "Unmodified," "Qualified," "Disclaimed backstop," and "Unsigned."
Audit opinions across local government bodies.Source: Audit Committee papers, 13 October 2026

Mrs. Paula Mills, an independent member of the committee, questioned the potential fee variation indicated in EY's report. She was informed that additional costs related to rebuilding assurance might be covered by government grants, specifically from MHCLG. Audit firms were asked to undertake project work around risk assessment and rebuilding assurance, with these costs potentially being covered by government funding.

Havering Council is implementing measures to improve its audit readiness and financial reporting processes. EY recognises improvements in audit readiness, financial reporting and engagement with the audit process. The council has a plan with EY for 2025/26, focusing on debtors and creditors, and has rescheduled some audit work to improve the chances of completing these areas. Efforts are also underway to improve the handling of leases. The finance team has undergone a restructure, adding capacity and resilience with new posts. Arrangements for financial leadership are also being strengthened with recent appointments. Furthermore, a revised training offer for managers is being implemented to ensure better engagement with finance and monitoring systems, alongside a review of data quality and reporting.

A diagram illustrating the key roles and responsibilities of the Audit Committee, including focusing on assurance, strengthening governance, finance capacity, technology development, and sustaining recovery.
The role of the Audit Committee.Source: Audit Committee papers, 13 October 2026

The Reset to Recovery report, available in the public reports pack Public reports pack 13th-Oct-2026 19.00 Audit Committee.pdf, provides further details on the council's audit readiness and the steps being taken to address the challenges. The meeting agenda and supplementary documents can be found at Agenda frontsheet 13th-Oct-2026 19.00 Audit Committee.pdf and Supplementary Agenda 13th-Oct-2026 19.00 Audit Committee.pdf respectively.