To present for consideration the External Auditor’s Interim Annual Report for the year ended 31 March 2026.

The Committee had before it a report of the Corporate Director (Finance & IT)) (A.1) which presented for its consideration the External Auditor’s Interim Annual Report for the year ended 31 March 2026.

Members were aware that during the year, several reports were issued by the Council’s External Auditor as part of their work associated with the Statement of Accounts and the review of the Council’s arrangements to secure value for money.

The first such report had been their Audit Plan and Strategy that had been presented to the Committee in June 2026. That report had set out the various elements of the work that the External Auditor planned on undertaking in respect of the year ending 31 March 2026 and had included their value for money risk assessment / approach that had been set against the following three key elements:

1.  Financial Sustainability;

2.  Governance; and

3.  Improving economy, efficiency and effectiveness.

The Committee was made aware that, ordinarily this would have been presented alongside the outcome of their work on the Council’s Statement of Accounts within their final annual report for the year, but due to the backstop date arrangements introduced by the Government in response to the national recovery from previous audit delays, they were required to publish their value for money commentary for 2025/26 by 30 November 2026.

It was reported that the External Auditor would continue their work associated with the wider Statement of Accounts review, with the aim of reporting their findings within a final annual report for the year by the backstop date for the publication of the audited accounts, which for 2025/26 was 31 January 2027.

To meet the 30 November 2026 deadline associated with reporting the value for money issues highlighted above, the External Auditor had issued an interim Annual Report, which set out the outcome of their work to date.

As in the previous year, the outcome had been welcomed, with no significant risks identified in relation to the Council’s value for money arrangements across the three key areas highlighted above.

The Committee was advised that the External Auditor had revisited the recommendations they had made in the previous year within the attached interim report. The Council’s on-going responses had now either been put in place or remained ongoing, which were reported separately to the Audit Committee as part of providing the necessary assurances.

Members were informed that the External Auditor had made two recommendations within their report, which also included the Council’s management responses. Updates on those would be provided to the Committee as part of their on-going work programme.

The Committee acknowledged that the External Auditor was still undertaking the necessary activities associated with the Council’s Statement of Accounts for 2025/26, with the outcomes planned to be presented to the Committee at their next scheduled meeting in January 2027. Their ongoing work could identify issues that impacted on their current value for money commentary and, if that was the case, an update would be reported within the External Auditor’s final report for the year if necessary.

The External Auditor’s representatives (Sarah McKean and Holly Gaff) presented to the Committee their “Auditor’s Annual Report for Tendring District Council – Interim Report for the year ended 31 March 2026”.

Sarah McKean informed the Committee that, in relation to the Council’s financial statements, 85% of the field work had been completed and that testing of the findings of that field work was underway. It was expected that the audit closure meeting would be held in mid-November which would be a useful practice run given that the statutory deadline for the approval and publication of the statement of accounts for 2026/27 would be 30 November 2027 (rather than the deadline for the 2025/26 accounts of 31 January 2027.

Ms McKean reminded Members that its final report would be submitted to the Committee’s next meeting in January 2027. She also highlighted that there was one material query that needed further challenge and investigation in respect of the valuation of the Council’s buildings due to discrepancies in the floor area calculations.

Ms McKean further informed the Committee that the assessment of the Council’s financial statements carried out by 31 July 2026 had indicated that the Council was in “bucket B” and that therefore there was a good chance that the Council would receive an unqualified audit opinion on its final statement of accounts.

Holly Gaff drew Members’ particular attention to the following matters:-

(i)       that the Council’s Corporate Risk Register had not been updated since January 2025;

(ii)      that the last Corporate Peer Challenge had been issued by the Local Government Association in 2018, with the next report due in or before 2023 and that this was therefore significantly overdue;

(iii)    the latest update on the performance improvement observations follow-up from the prior year.

Richard Barrett drew the attention of the Committee to the Council’s management responses to the External Auditor’s performance improvement observations follow-up from the prior year, which he hoped the External Auditor would find acceptable as a pragmatic and proportional approach by the Council.

It was moved by Councillor Sudra, seconded by Councillor Placey and unanimously:-

RESOLVED that -

(a)     in respect of the 2025/26 Statement of Accounts process, the External Auditor’s Interim Annual Report for the year ended 31 March 2026 be noted; and

(b)     the Council’s management responses to the External Auditor’s recommendations, as set out in Attachment 1 to item A.1 of the Report of the Corporate Director (Finance & IT), along with the publication of the External Auditor’s report as necessary, be approved.