The Barking and Dagenham Audit and Risk Committee has received an internal audit report for the 2025/26 financial year, which concluded that the council's framework of governance, risk management, and internal control is generally satisfactory with some improvements required
.
The report, presented by Bash Fowora, Interim Head of Audit, indicated that while controls are broadly effective, certain areas necessitate further strengthening. The 'Internal Audit Annual Report 2025/26' highlights that arrangements are not yet fully embedded or consistently applied across all areas of the organisation.
Most of the internal audit work for the year was completed, with 31 risk and compliance audits and 10 school audits finalised. The majority of these audits resulted in opinions of Substantial Assurance
or Reasonable Assurance
.
However, three audits resulted in Limited Assurance
opinions: Section 17 of the Crime and Disorder Act 1998 Review, Parent Company Governance, and Loans & Investments. These highlighted areas where governance, oversight, and strategic requirements need improvement.
Section 17 of the Crime and Disorder Act 1998 Review
For the Section 17 review, significant gaps were identified in governance, oversight, and organisational awareness. The absence of a designated strategic or operational lead for overseeing and promoting Section 17 duties across the Council means there is unclear ownership, limiting assurance that these responsibilities are consistently embedded and effectively monitored in decision-making. Furthermore, the lack of formal documented guidance for officers on incorporating Section 17 into planning, decision-making, or service delivery leads to inconsistency and reduced assurance over compliance. The absence of a formal mechanism to monitor or report on the outcomes of Section 17 actions within Corporate Plans, strategies, or key decisions, and the lack of defined roles, responsibilities, reporting requirements, and procedures for addressing non-compliance, result in limited oversight and accountability. These gaps could potentially lead to the Council failing to adequately consider crime and disorder in its decision-making processes, which is a statutory duty. Management has agreed to address these issues by April 30, 2026.
Parent Company Governance
The Parent Company Governance review found that while progress has been made, key weaknesses persist, particularly in the oversight of BD Group, a wholly owned subsidiary of the Council. Oversight arrangements for BD Group were limited, with no appointed commissioner and no formal client function in place, resulting in weak day-to-day governance, reduced scrutiny of contractual compliance, and diminished financial accountability. This suggests that the operational management and decision-making processes within BD Group are not robust, potentially leading to inefficiencies and poor execution of tasks. Reduced scrutiny of contractual compliance implies that contracts entered into by BD Group may not be adequately monitored for adherence to their terms, increasing the risk of non-compliance, financial penalties, or failure to achieve desired outcomes. Diminished financial accountability indicates a lack of clear responsibility and oversight for financial matters within BD Group, potentially leading to financial mismanagement, inaccurate reporting, or loss of funds. While the Shareholder Agreement is being changed and a new Business Plan is being produced to address these issues, the immediate implications are a heightened risk of financial loss, reputational damage, and failure to meet strategic objectives due to inadequate governance and oversight. Management has agreed to address these issues by June 30, 2026.
The objective of the 'Parent Company Governance' review was to assess the design and effectiveness of controls over companies' governance, including decision-making, accountability, strategic alignment, financial management, and risk management across BD Group, Reside, Be First, and BD Energy.
The weaknesses identified suggest a lack of clear accountability, insufficient scrutiny, and poor financial management within these subsidiaries, which directly impacts the Council's overall governance and financial health due to its ownership and responsibility for these entities.
Loans & Investments
The Loans & Investments review noted that while treasury management practices are sound, a significant shortfall in Right to Buy receipts was based on unvalidated assumptions, impacting the financial viability of a project. This shortfall undermin[ed] confidence in the project's financial viability and sustainability.
While the report does not elaborate on the specific significance of Right to Buy receipts in the broader context of the council's financial viability or project planning, it clearly indicates that inaccurate projections of these receipts can have a material impact on the confidence in the financial viability and sustainability of projects that rely on them. Action for this finding is yet to be agreed.
Broader Governance Challenges
Beyond the specific 'Limited Assurance' audits, the report highlights broader governance challenges. Key governance challenges identified in the Draft Annual Governance Statement include staffing pressures in specialist, statutory, and governance-critical areas, with ongoing capacity and capability pressures in finance, procurement, and statutory services.
While progress has been made in resolving the backlog of Statements of Accounts, limited cumulative audit assurance for earlier years persists, requiring continued focus on timely financial reporting, strengthening technical capacity, and rebuilding full audit assurance. Significant weaknesses remain in the Value for Money Assessment, particularly in financial sustainability (transformation planning), governance of subsidiary companies, and procurement arrangements.
Financial resilience is another concern, with sustained financial pressures from demand-led services (social care, SEND), structural funding gaps, and economic uncertainty requiring continued focus. Long-term sustainability depends on a credible and fully funded transformation programme. Governance and financial resilience across subsidiary companies remain a significant risk, with ongoing financial pressures, reliance on Council support, and weaknesses in financial controls and performance reporting.
The Council does not currently have a standalone Local Code of Corporate Governance, although principles are reflected in existing documents. Work is underway to formalize this into a single, documented code. Risks also persist regarding building safety and regulatory compliance, including asset data quality, compliance evidence, and clarity of roles and responsibilities.
Emerging issues for 2026/27 include delivery of transformation programmes, ongoing financial sustainability and demand pressures, partnership working, health system reform, SEND reform, school financial pressures, Children's Social Care reform, major system implementation, data management, embedding governance improvements, procurement and contract management, cyber security, business continuity, and the Public Office (Accountability) Bill.
No Critical
findings were raised across the financial year, and school audits generally provided a good level of assurance.
