The Audit and Risk Committee of Barking and Dagenham Council will now oversee the accounts of the council's subsidiary companies, a move prompted by recommendations from external auditors Grant Thornton. This decision comes as the council continues to address issues that have led to disclaimed audit opinions for its financial statements since 2019/20.
During a meeting on Wednesday, March 25, 2026, the committee reviewed progress on the 2025/26 Council and Pension Fund accounts. Grant Thornton highlighted that while the council's financial statements have received disclaimed audit opinions for several years, planning for the upcoming audit is focused on rebuilding assurance over opening balances, in-year income and expenditure, and closing balances. The disclaimers were attributed to national backstop arrangements
and matters of historical opening balances, rather than newly identified failures.
Specifically, a lack of audit assurance over the opening balances for 2025/26, including usable and unusable reserves, property, plant and equipment, and other brought-forward balances, fundamentally constrained the ability to issue an unmodified audit opinion.
Paul Dossett, a key audit partner from Grant Thornton, explained the significant challenges in obtaining assurance over opening balances due to several years of disclaimed opinions.
He noted that the length of time and number of years that have been disclaimed
complicates the process. Furthermore, corporate knowledge doesn't exist because obviously there's been a big change in the finance team,
requiring careful consideration of how to test transactions and journals from that period. Consequently, Mr. Dossett indicated that an unqualified opinion for the council's accounts was unlikely before the 2027/28 or 2028/29 financial years.
In contrast, there is more optimism for the Pension Fund's accounts. For the Pension Fund, there is less of a challenge around opening balances than there is for the council side,
making it easier to gain assurances on the previous years' audits
as it did not have the issue of opening balances to contend with.
This means the Pension Fund has a greater possibility of moving from a disclaimed to a qualified opinion for 2025/26.
Shabana Kausar, Director of Financial Services and Deputy S151 Officer, presented the 2025/26 audit plan and accounting policies, available at 2025-26 Audit Plan and Accounting Policies. She noted an accelerated timeline for the audit, with a target completion of November 30, 2026, ahead of the statutory backstop date of January 31, 2027. This earlier target, set by Grant Thornton, is intended to support a smoother transition into future audit cycles, reduce cumulative pressure on both the Council and the auditors, and help re-establish a more sustainable and timely annual reporting timetable in line with national expectations for the local audit system.
Improvement measures include lessons learned sessions, quarterly balance sheet reviews, and early liaison with subsidiaries.
The committee's future work programme will include oversight of the accounts of company subsidiaries. Grant Thornton's Value for Money work identified strengthening oversight of subsidiary companies, and enhancing procurement oversight
as key recommendations, noting that oversight of the Authority's subsidiary companies including financial and performance management
was a significant weakness. The council has 15 subsidiaries, grouped into B First, BD Group, Reside, and BD Energy. The sheer number of companies adds to the complexity. While progress has been made in governance, Grant Thornton stated they can't say with any confidence is how the numbers work, because we haven't been able to audit the numbers and how the numbers integrate into your accounts.
The last time group accounts were undertaken was in 2018-19, meaning the consolidation and group's position will be challenging to assess after six years of independent auditing of subsidiaries.
A draft work programme will be shared with current committee members before the end of the municipal year. The committee's agenda and reports can be found in the Public reports pack for the meeting on Wednesday, March 25, 2026.
