Hammersmith and Fulham Council's Audit Committee has reviewed the council's external audit plan for the 2025/26 financial year, setting a materiality threshold of £18.4 million. This threshold equates to 2% of the prior year's gross operating costs for the Council.
The plan, prepared by Grant Thornton UK LLP, outlines the scope and procedures for the statutory audit of the council's financial statements. The audit fee for the council is proposed at £483,242, a slight decrease from the previous year's fee of £483,942.
Significant risks identified for special audit consideration include management override of controls, the valuation of pension assets and liabilities, and the valuation of land and buildings, including council dwellings. The valuation of land and buildings, specifically council dwellings, other land and buildings, and investment properties, is identified as a significant risk of material misstatement due to the substantial value of these assets and the sensitivity of their valuation to key assumptions. The Council revalues its land and buildings on a rolling, five-yearly basis, with indexation applied in intervening years for assets not fully revalued.
To address the risk of management override of controls, Grant Thornton UK LLP will gain assurance regarding the completeness of the full journals listing, analyze it to identify high-risk unusual journals, and test these for appropriateness and corroboration. They will also use data analytics and targeted tests to select the highest-risk journals, understand management's accounting estimates and critical judgements, and review any other unusual or significant transactions.
For the significant risk of pension fund net liability valuation, the auditors will update their understanding of management's processes and controls, evaluate instructions to management experts (the actuary), and assess the actuary's competence, capabilities, and objectivity. They will also assess the accuracy and completeness of information provided by the Council to the actuary, test the consistency of pension fund assets and liabilities with actuarial reports, and review the reasonableness of actuarial assumptions. Assurances will be sought from the auditor of the Hammersmith and Fulham Pension Fund regarding data validity and accuracy, and the fund's asset valuation. The application of IFRIC 14 will also be reviewed.
Regarding the valuation of land and buildings, including council dwellings, Grant Thornton UK LLP will evaluate management's processes, assumptions, and instructions to valuation experts. They will assess the competence, capabilities, and objectivity of management's experts and write to valuers to confirm the basis of their valuations. The auditors will challenge the information and assumptions used by valuers, potentially engaging their own valuer. Specific procedures for council dwelling revaluations include testing the appropriateness and application of Beacon Valuations. For other land and buildings, testing will focus on key assumptions, build costs, obsolescence factors, floor plans, yields, and income, with particular attention to management's impairment assessment, valuations based on historic data, and assets with a change in use. They will also test the input of revaluations into the Council's asset register and evaluate assumptions for assets not revalued during the year. If indexation is used, the approach, application, and appropriateness of indices will be assessed.
The typical process for engaging an external auditor involves contract management and procurement by Public Sector Audit Appointments (PSAA). In 2023, PSAA awarded a contract for audits to Grant Thornton UK LLP, effective from the 2023/24 financial year, and the proposed fee for the 2025/26 audit is set by PSAA under this contract.
The backstop date for the audit of years ended 31 March 2026 is 31 January 2027. However, Grant Thornton UK LLP is working closely with the finance team to achieve an earlier audit completion date of September 2026, aiming to bring the sign-off date even further ahead of the backstop date.
Further details on the audit plan can be found in the Public reports pack 16th-Mar-2026 19.00 Audit Committee. The Agenda frontsheet 16th-Mar-2026 19.00 Audit Committee and Audit Committee Action Sheet 202526 are also available.
