Audit Committee – 13 February 2026

Final Annual Financial Report 2024/25 including Final Annual Governance Statement

Purpose	For Decision
Classification	Public
Executive Summary	This report sets out the requirements and reasoning for the request for authority to be given for the approval of the final 2024/25 Annual Financial Report (including the Letter of Representation) and additionally recommends that the final Annual Governance Statement 2024/25 be approved.
Recommendation(s)	It is recommended that Audit Committee: 1. Agree that the Strategic Director Corporate Resources (Section 151 Officer), in consultation with the Chairman of the Audit Committee, be given authority to review and consider the 2024/25 Audit Completion Report from the Council’s external auditor. 2. Agree that the Strategic Director Corporate Resources (Section 151 Officer) and the Chairman of the Audit Committee, approve: a. the Annual Financial Report for 2024/25; and b. the 2024/25 letter of representation 3. Agree the Final Annual Governance Statement 2024/25 be approved by the Chief Executive and Leader of the Council.
Reasons for recommendation(s)	The Council is required to prepare, and have externally audited, an Annual Financial Report for each year and to prepare an Annual Governance Statement. This report seeks authority for the Strategic Director Corporate Resources (Section 151 Officer) to approve the final Annual Financial Report for 2024/25 and the associated letter of representation and additionally explains the reasons for the approach taken for the financial year’s audit. Additionally, it is a requirement for the Final Annual Governance Statement to be approved.
Ward(s)	All
Portfolio Holder(s)	Councillor Jeremy Heron – Finance and Corporate
Strategic Director(s)	Alan Bethune – Strategic Director Corporate Resources (Section 151 Officer)
Officer Contact	Paul Whittles Assistant Director – Finance 02380 285766 paul.whittles@nfdc.gov.uk

1. This report provides an update to the Audit Committee on the audit of the 2024/25 Annual Financial Report and set out recommendations for the conclusion of the audit process.

2. Previous reports to the Audit Committee have set out the background to the national backlog of local authority audits.

3. For New Forest District Council all Annual Financial Reports, up to and including the 2023/24 financial year, have been produced and approved as final.

4. The government instigated a number of back stop dates to resolve the audit backlog. The backstop date for 2024/25 audits is 27 February 2026.

Authorisation of the financial statements

5. In order to be in a position to approve the suite of financial statements relevant to 2024/25 the Council has or will undertake these steps:

a. Approval of the Annual Financial Report for audit by the s151 Officer, this was originally completed on 30 June 2025.

b. Publishing the Annual Financial Report, this was originally completed on 30 June 2025.

c. Holding a minimum 30-day public inspection period for the Annual Financial Report, this was originally undertaken between 1 July and 11 August 2025.[PW1] [LC2]

d. The Annual Financial Report was republished on 13 November 2025 following updates regarding the implementation of IFRS 16 – Leases, with a further inspection period undertaken between 14 November and 29 December 2025.

e. Providing updated assurances related to the year in question, this information has been sought from the Chairman of the Audit Committee, s151 Officer, Monitoring Officer and Internal Audit Manager. No issues were identified that require reporting.

f. Reviewing and providing comments on the external auditor’s Audit Completion Report – this is required to be done prior to the approval of the accounts in a timely manner in order to meet the 27 February 2026 backstop date.

g. Approving a final Annual Financial Report in a timely manner in order to meet the 27 February 2026 backstop date and is a subject of this report. This will be signed by the Chairman of the Audit Committee and s151 Officer.

h. Signing a Letter of Representation, normal practice is to complete this at the time the audit is finalised. This is a subject of this report and will be signed by the Chairman of the Audit Committee and s151 Officer.

i. Signing the final Annual Governance Statement. This is a subject of this report and will be signed by the Chief Executive and Leader of the Council.

j. Publishing the final auditor’s report and completion report with the final approved Annual Financial Report, plus the Annual Governance Statement for 2024/25, this is required to be completed by 27 February 2026.

6. The Annual Financial Report including the Annual Governance Statement is attached as an annex to this report. Ernst & Young are anticipating that their opinion will be issued on the accounts as they are currently presented.

7. Updates to the draft Annual Governance Statement have been made to reflect:

a. the newly adopted Executive Management Team structure;

b. additional legal capacity that has been created to take effect from February 2026; and

c. a change in the action plan to remove budget system development, with a focus instead on training users on the existing system functionality

Corporate plan priorities

8. The Annual Financial Report is a public facing document that sets out a number of key financial figures related to the Council’s financial performance and sustainability.

9. The external auditor’s report provides assurance to stakeholders as to the effectiveness of the Council’s internal control environment and its efficiency in securing value for money in the use of public funds.

10. It provides assurance on the financial standing of the Council and ensures that commitments to corporate plan can be delivered with adequate and sustainable financing.

11. Ensuring the council is being financial responsible, as evidenced by independent external audits, underpins all of our corporate plan themes (People, Place and Prosperity).

Options

12. The options in this report are:

13. Option 1: to give authority to the Strategic Director Corporate Resources (Section 151 Officer), in consultation with the Chairman of the Audit Committee, to review and consider the 2024/25 Audit Results Report and to approve the 2024/25 Annual Financial Report and associated letter of representation; and for the Annual Governance Statement 2024/25 be approved by the Chief Executive and Leader of the Council in order to meet the statutory deadlines.

14. Option 2: to review and consider the 2024/25 Audit Results Report and not to approve the 2024/25 Annual Financial Report and associated letter of representation, and not to approve the signing of the Annual Governance Statement, which could lead to the council not complying with its statutory duties by the deadline.

Options Appraisal

15. The Annual Financial Report was prepared in accordance with CIPFA guidance and the Accounting Policies that were approved by the Audit Committee. The processes used were the same as those that have produced robust accounts in previous years.

16. Ernst & Young LLP anticipate issuing a disclaimed audit opinion for 2024/25 following the 2023/24 disclaimed audit report, as they do not have assurance over the brought forward balances and thus the 2024/25 in-year movements and some closing balances, as well as lack of assurance over the 2023/24 comparative amounts disclosed in the 2024/25 financial statements. The next meeting of the audit committee is not until after the 27 February 2026 backstop deadline and Ernst & Young anticipate completing their work within this timescale.

17. Therefore, Option 1, to give authority to the Strategic Director Corporate Resources (Section 151 Officer), in consultation with the Chairman of the Audit Committee, to review and consider the 2024/25 Audit Results Report and to approve the 2024/25 Annual Financial Report and associated letter of representation, and for approval of the Annual Governance Statement by the Chief Executive and Leader of the Council is the recommended option.

Consultation undertaken

18. Consultation between the council and our external auditors and advisors has been continuous throughout as the audit has developed.

19. Audit Committee has been appraised of the progress to date at each opportunity.

Financial and resource implications

20. The Annual Financial Report has been prepared by officers using existing resources.

Legal implications

21. There are no legal implications arising as a result of the recommendations in this report.

Risk assessment

22. An evaluation of the risks indicates that the existing controls in place mean that no significant risks that been identified at this time.

Environmental / Climate and nature implications

23. There are no environmental or climate and nature implications as a result of this report.

Equalities implications

24. There are no equality matters arising as a result of this report.

Crime and disorder implications

25. There are no crime and disorder matters arising as a result of this report.

Data protection / Information governance / ICT implications

26. There are no data protection, information governance or ICT implications arising as a result of this report.

Appendices:

Background Papers:

Appendix 1 - Annual Financial Report 2024/25 including Annual Governance Statement 2024/25

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