Havering Council faces prolonged complex audit challenges, with unqualified opinion potentially delayed until 2029/30
Havering Council is facing a prolonged period of complex audit challenges, with external auditors Ernst & Young (EY) estimating that an unqualified audit opinion may not be achievable until the 2029/30 financial year.
The Audit Committee of Havering Council met on Tuesday, 13 October 2026, to discuss the progress of the council's external audit. The audit has been significantly impacted by historic audit backlogs and disclaimed audit opinions, with no or limited procedures were completed in 2021/22, 2022/23 or 2023/24 - being multiple years as opposed to the single year of the LARRIG example.
This has resulted in assurance gaps remain in some key areas
and a longer assurance recovery journey than many authorities.
Mark Hodgson from EY presented the findings, explaining that Havering is currently in quartile two
for audit readiness, indicating a relatively good performance compared to its peers. EY assesses audit readiness against eight key metrics, which include the volume of misstatements in the accounts and timeliness of publication. However, only five councils in their cohort were fully able to support an audit across all eight key metrics.
The Rebuilding Audit Assurance: Risk Assessment Update
report identified 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 accounting complexities. Specifically for the General Fund, it is sensitive to statutory adjustments and is a key indicator of the authority's financial resilience, increasing its susceptibility to misstatement and management bias.
For Earmarked Reserves and the Housing Revenue Account Reserve, the rationale for higher inherent risk is that no audit procedures were performed in 2021/22 and 2022/23. As a result, there remains an increased risk that misstatements arising in the disclaimed period were not fully identified or corrected through movement-only testing in 2024/25 and may persist within the opening balance for the current audit year.
Councillor Geoff Burgess raised concerns about potential delays in completing crucial audit procedures for debtors, creditors, and IFRS 16 leases. He noted that failure to do so could lead to the audit will be subject to a disclaimed audit opinion.
The number of items contributing to the disclaimer would be broadly similar to last year where you'd be hoping to reduce it year on year.
This could mean that the council might not be able to be in a position to report to you in November.
Mrs. Paula Mills inquired about potential fee variations. She was informed that additional costs related to rebuilding assurance might be covered by government grants. Some of this rebuilding assurance may be covered by grant from government, with expectations of continued grant similar to the Redmond grant that was paused.
EY was asked to do project work around risk assessing and rebuilding assurance, with the fee variation for this already agreed by PSAA and to be covered by MHCLG.
The committee noted the findings from the external audit report and agreed to the recommendations presented. EY has recognised improvements in audit readiness and financial reporting
at Havering Council, with the Reset to Recovery
report identifying that the council has demonstrated characteristics associated with successful assurance recovery, including improvements in audit readiness, production of financial statements and engagement with the audit process. These improvements are measured against the eight key metrics
used to assess audit readiness.
While the Reset to Recovery
report outlines an illustrative national timetable
suggesting an unqualified opinion is typically achievable in Year 4 of recovery, Havering's progress is behind these expected timescales. EY anticipates that the earliest an unqualified audit opinion might be possible is the 2029/30 financial year, dependent on current trajectories.