RAPC 591/26 – Ernst & Young External Audit Planning Report 2025/26 – Annex 1

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Private and Confidential

22 April 2026

Dear Resources, Audit and Performance Committee Members

Audit planning report 2025/26

The purpose of this report is to provide the Committee with a basis to review our proposed audit approach and scope for the 2025/26 audit of New Forest National Park Authority (‘the Authority’), in accordance with the requirements of the Local Audit and Accountability Act 2014, the National Audit Office’s 2024 Code of Audit Practice, the Statement of Responsibilities issued by Public Sector Audit Appointments (PSAA) Ltd, auditing standards, and other professional requirements.

This report is intended solely for the information and use of the Resources, Audit and Performance Committee, the Authority Committee as ‘Those Charged with Governance’ and management, and is not intended to be, and should not be used, by anyone other than these specified parties.

We welcome the opportunity to discuss this report with you on 1 June 2026 as well as understand whether there are other matters which you consider may influence our audit.

Yours faithfully

Simon Mathers

For and on behalf of Ernst & Young LLP

Enc

Public Sector Audit Appointments Ltd (PSAA) issued the ‘Statement of responsibilities of auditors and audited bodies’. It is available from the PSAA website (https://www.psaa.co.uk/managing-audit-quality/statement-of-responsibilities­of-auditors-and-audited-bodies/statement-of-responsibilities-of-auditors-and-audited-bodies-from-2023-24-audits/). The Statement of responsibilities serves as the formal terms of engagement between appointed auditors and audited bodies. It summarises where the different responsibilities of auditors and audited bodies begin and end, and what is to be expected of the audited body in certain areas. The ‘Terms of Appointment and further guidance (updated July 2021)’ issued by the PSAA (https://www.psaa.co.uk/managing-audit-quality/contract-monitoring-2023-24-to-2027-28/terms-of-appointment-from-2023-24/terms-of-appointment-and-further-guidance-from-1-october-2025/) sets out additional requirements that auditors must comply with, over and above those set out in the National Audit Office Code of Audit Practice 2024 (the NAO Code) and in legislation and covers matters of practice and procedure which are of a recurring nature.

This report is made solely to the Resources, Audit and Performance Committee, Those Charged with Governance and management of New Forest National Park Authority. Our work has been undertaken so that we might state to the Resources, Audit and Performance Committee, Those Charged with Governance and management of New Forest National Park Authority those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the Resources, Audit and Performance Committee, Those Charged with Governance and management of New Forest National Park Authority for this report or for the opinions we have formed. It should not be provided to any third-party without our prior written consent.

Overview of our 2025/26 audit strategy 01

2025/26 audit strategy overview: Rebuilding Assurance

The purpose of this report

As the Authority’s body charged with governance, the Authority Committee plays a crucial role in ensuring assurance over both the quality of the draft financial statements prepared by management and the Authority’s wider arrangements to support a timely and efficient audit. Failure to achieve this will significantly increase the level of resources required to fulfil our respective responsibilities.

As part of our responsibilities, we assess and report on the adequacy of the Authority’s external financial reporting arrangements, as well as the effectiveness of Those Charged with Governance in fulfilling its role within those arrangements as part of our Value for Money assessment. Our ability to complete the audit is dependent on the timely formulation of appropriately supported accounting judgements, provision of accurate and relevant supporting evidence, access to the finance team and management’s responsiveness to issues identified during the audit. Wherever necessary, we will consider invoking other statutory reporting powers to highlight any weaknesses in these arrangements. We direct Those Charged with Governance and officers to the Public Sector Audit Appointment Limited’s Statement of Responsibilities (paragraphs 26-28) for expectations on preparing financial statements (see Appendix A).

Our shared strategy to rebuild assurance

We are now in Phase 2 of the implementation of the Ministry for Housing, Communities and Local Government’s (MHCLG) measures to address the backlog facing local government audit. Throughout 2023/24 and 2024/25, we have applied a structured, risk-based prioritisation approach to local government audits to support a return to unqualified audit opinions wherever feasible, while still meeting statutory backstop requirements. Our approach recognises that recovery depends heavily on the Authority’s own capacity and preparedness and that audit effort must be targeted where it can deliver meaningful assurance.

Management has overall responsibility for leading and sustaining the Authority’s recovery from a disclaimed audit opinion. This includes ensuring that the financial statements are prepared in accordance with proper practices and supported by complete, accurate and timely audit evidence.

To deliver this, it is essential that management:

• Provide high quality working papers and ensure that all audit evidence is complete, consistent and readily accessible.
• Allocate sufficient, knowledgeable resources throughout the audit cycle.
• Actively engage with auditors, promptly addressing findings and resolving weaknesses in financial reporting arrangements.
• Communicate transparently with Those Charged with Governance, ensuring that Committee members have clear visibility of risks, progress and emerging issues.

In line with the National Audit Office’s Local Audit Reset and Recovery Implementation Guidance (LARRIGs) - and specifically the guidance on rebuilding assurance following a disclaimed opinion - management must support the restoration of reliable opening balances and enable a phased progression from disclaimed to qualified and ultimately unmodified audit opinions. Achieving this requires sustained delivery of the “natural rebuild,” through the completion of all planned audit procedures across successive annual cycles, alongside targeted work to rebuild assurance over historical balances, including both usable and unusable reserves, where cumulative gaps in evidence present the most significant challenges.

2025/26 audit strategy overview: Rebuilding Assurance

Our shared strategy to rebuild assurance continued

Appendix A explains the expected timeline to full assurance set out within the NAO’s LARRIG 01 guidance, along with our assessment of the Authority's status. During 2023/24 and 2024/25, the focus of the rebuild process has been on this “natural” rebuild, to complete all planned audit procedures for each respective audit year. As we set out in Appendix A, although planned audit procedures for 2023/24 could not be completed, the delivery of all planned procedures for 2024/25 means that the Authority has now commenced the “natural” rebuild process. As part of our interim audit procedures for 2025/26, we will undertake a detailed risk assessment to evaluate the risk of material misstatement in the opening reserves balances at 1 April 2025, and to assess management’s readiness to support the historic rebuild process over transactions and balances in 2022/23 that were not subject to audit. This work is expected to be completed by 30 June 2026 and is essential to determining whether the pre-2023/24 gaps in assurance - particularly those relating to reserves and other cumulative balances - can be sufficiently addressed to support future progression towards qualified or unmodified audit opinions.

We will discuss the outcome of our risk assessment of the opening reserves balances with management to confirm our proposed approach for 2025/26. Before we commence any audit procedures relating to the historic rebuild of assurance, it will be essential for management to have completed the necessary review and reconciliation of both usable and unusable reserves and to be able to provide assurance to Those Charged with Governance that these balances are accurate, supportable and properly documented.

It is likely that we will need to audit certain transactions and movements for 2022/23 and 2023/24 to rebuild assurance over the historic position. Should we proceed with this phase of work, we will require assurances from management that high quality working papers and supporting evidence can be provided for transactions from 2022/23 and 2023/24, together with sufficient management capacity to support this historic rebuild without compromising the delivery of all planned procedures in 2025/26 over the closing balances and in year movements.

2025/26 audit strategy overview: Rebuilding Assurance

Timeline

An audit timetable has been agreed with management. In Section 7 we include a provisional timeline for the audit. It is essential that all parties collaborate to ensure compliance with this timeline.

Preparedness for audit

Our ability to complete the audit is dependent on the timely formulation of appropriately supported accounting judgements, provision of accurate and relevant supporting evidence, access to the finance team and management’s responsiveness to issues identified during the audit. Our 2024/25 reporting included our assessment of the effectiveness of the Authority's arrangements to support the external audit process across a range of relevant measures (reproduced in Appendix A). We concluded that the Authority was not fully prepared for the audit and that improvements were required in relation to:

• Discrepancies identified in the working papers provided to support the IFRS 16 calculations, and associated accounting treatment, and the balance of REFCUS spend for the year.
• Delays experienced in relation to a number of audit requests, included areas of our audit identified as risks in our Audit Planning Report.

We will continue to report on our assessment of the quality of the Authority's financial statements’ preparation and support, to support ongoing transparency of the audit process to those charged with governance, and to facilitate benchmarking and tracking of progress in future years.

Our independence considerations

Overall, we consider that the safeguards that have been adopted appropriately mitigate any principal threats identified and we therefore confirm that EY is independent and the objectivity and independence of Simon Mathers, your audit engagement partner and the audit engagement team have not been compromised.

Please refer to Appendix B for our update on independence.

Scope of our audit

In accordance with the NAO Code, our primary objectives are to conduct work that supports the delivery of our audit report to the Authority. Additionally, we aim to ensure that the Authority has established proper arrangements for securing economy, efficiency, and effectiveness in its use of resources, as mandated by relevant legislation and the requirements of the NAO Code. We will issue an Auditor’s Annual Report that the summarises our opinion on the financial statements by 30 November 2026 and other procedures required by the Code. This includes our assessment of the control environment, including our follow up of the recommendations that we made in 2024/25 (refer to Appendix C). In addition, our Auditor’s Annual Report will conclude on whether the Authority has put in place ‘proper arrangements’ to secure economy, efficiency and effectiveness on its use of resources and report a commentary on those arrangements.

2025/26 audit strategy overview: Audit risks and materiality

Audit risks and areas of focus

The purpose of our audit is to obtain reasonable assurance to express an opinion about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. There is one significant change to the scoping for the audit of the 2025/26 financial statements, relating to the implementation of changes to the Code of Practice on Local Authority Accounting and CIPFA’s Bulletin 22 in relation to the valuation of Property, Plant and Equipment.

The following ‘dashboard’ summarises the significant accounting and auditing matters outlined in this report. It seeks to provide Those Charged with Governance with an overview of our initial risk identification for the upcoming audit and any changes in risks identified in the current year.

Materiality

Planning materiality

£121,660. Materiality has been set at £121,660, which represents 2% of total expenditure in 2024/25 (2024/25: £121,100, 2%).

Performance materiality

£91,245. Performance materiality has been set at £91,245, which represents 75% of materiality.

Audit differences

£6,083. We will report all uncorrected misstatements relating to the income statement and balance sheet that have an effect on income and misstatements in the OCI over £6,083. Other misstatements identified will be communicated to the extent that they merit the attention of Those Charged with Governance.

2025/26 audit strategy overview: Value for Money

Under the NAO Code we are required to:

• Satisfy ourselves that the Authority has made proper arrangements to secure economy, efficiency and effectiveness in its use of resources, having regard to NAO AGN 03.
• Design work to provide sufficient assurance to support reporting against the Code’s specified reporting criteria outlined below; and
• Apply a risk-based approach to our work, informed by sector knowledge, the annual governance statement, evidence from the financial statements audit and relevant work of other bodies.

In undertaking our risk assessment, we obtain an understanding of the key processes the Authority has in place, including financial management, risk management and partnership working arrangements. Our Auditor’s Annual Report, which will be issued before 30 November 2026 will include a summary of our commentary on the arrangements in place against each of the three value for money criteria and recommendations raised as a result of any significant weaknesses identified.

Our risk assessment

02 Audit risks

Our response to significant risks

We have set out the significant risks (including fraud risks denoted by*) identified for the current year audit along with the rationale and expected audit approach. The risks identified below may change to reflect any significant findings or subsequent issues we identify during the audit.

Presumptive risk of management override of controls*

Our response to significant risks

Inappropriate capitalisation of revenue expenditure*

Other areas of audit focus

We have identified other areas of the audit, that have not been classified as significant risks, but are still important when considering the risks of material misstatement to the financial statements and disclosures and therefore may be key audit matters we will include in our audit report.

Other areas of audit focus

03 Value for money

Value for money

Authority's responsibilities for value for money

• Financial sustainability: How the Authority plans and manages its resources to ensure it can continue to deliver its services.
• Governance: How the Authority ensures that it makes informed decisions and properly manages its risks.
• Improving economy, efficiency and effectiveness: How the Authority uses information about its costs and performance to improve the way it manages and delivers its services.

The Authority is required to maintain an effective system of internal control that supports the achievement of its policies, aims and objectives while safeguarding and securing value for money from the public funds and other resources at its disposal.

As part of the material published with the financial statements, the Authority is required to bring together a commentary on the governance framework and how this has operated during the period in a governance statement. In preparing the governance statement, the Authority tailors the content to reflect its own individual circumstances, consistent with the requirements of the relevant accounting and reporting framework and having regard to any guidance issued in support of that framework. This includes a requirement to provide commentary on arrangements for securing value for money from the use of resources.

Auditor responsibilities

Under the NAO Code we are required to consider whether the Authority has put in place ‘proper arrangements’ to secure economy, efficiency and effectiveness on its use of resources. The Code requires the auditor to design their work to provide them with sufficient assurance to enable them to report to the Authority a commentary against specified reporting criteria (see below) on the arrangements the Authority has in place to secure value for money through economic, efficient and effective use of its resources for the relevant period.

The specified reporting criteria are:

Value for money

Planning and identifying risks of significant weakness in value for money arrangements

The NAO’s guidance notes require us to conduct a risk assessment that collects sufficient evidence to document our evaluation of the Authority's arrangements, allowing us to draft a commentary under the three reporting criteria. This involves identifying and reporting on any significant weaknesses in those arrangements and making appropriate recommendations. In considering the Authority's arrangements, we consider:

• The annual governance statement;
• Evidence of arrangements during the reporting period;
• Evidence obtained from our audit of the financial statements;
• The work of inspectorates and other bodies; and
• Any other evidence that we deem necessary to facilitate the performance of our statutory duties.

We then evaluate whether there is evidence indicating significant weaknesses in arrangements. According to the NAO's guidance, determining what constitutes a significant weakness and the extent of additional audit work required to address the risk is based on professional judgment. The NAO indicates that a weakness can be considered significant if it:

• Exposes, or could reasonably be expected to expose, the Authority to significant financial loss or risk;
• Leads to, or could reasonably be expected to lead to, significant impact on the quality or effectiveness of service or on the Authority's reputation or unlawful actions;
• Identifies a failure to take action to address a previously identified significant weakness, such as failure to implement or achieve planned progress on action/improvement plans.

When planning work identifies a risk of significant weakness, the NAO’s guidance requires us to consider the additional evidence needed to verify whether there is a significant weakness in arrangements. This involves conducting further procedures as necessary. We are required to report our planned procedures to Those Charged with Governance.

Reporting on value for money arrangements

If we determine that the Authority has not made proper arrangements for securing economy, efficiency, and effectiveness in its use of resources, the NAO Code mandates that we reference this by exception in the audit report on the financial statements.

Additionally, we are required to provide a commentary on the value for money arrangements in the Auditor’s Annual Report. The NAO Code specifies that this commentary should be clear, readily understandable, and highlight any issues we wish to draw to the Authority's or the wider public’s attention. This may include matters that are not considered significant weaknesses in arrangements but should still be brought to the Authority's attention. It will also cover details of any recommendations from the audit and the follow-up of previously issued recommendations, along with our assessment of their satisfactory implementation. Our 2025/26 Auditor’s Annual Report must be issued in draft by 30 November 2026 to comply with the revised requirements of the NAO Code.

Value for money

Value for money risk assessment

We have completed our initial value for money planning, where we have considered:

• Our entity level controls and understanding the business assessment
• The Authority's Risk Register/the Annual Governance Statement
• Authority meeting minutes and/or our planning meetings with management
• Key financial and budget information
• Key performance reports/internal audit reports
• Findings of other inspectorates, review agencies and other relevant bodies.

As part of our initial planning work, we considered whether there were any risks of significant weakness in the body’s arrangements for securing value for money that we needed to perform further procedures on. The risks we have identified are detailed on the table overleaf along with the further procedures we will perform. We will continue to review the body’s arrangements and report.

04 Audit materiality

Materiality

05 Scope of our audit

Audit process and strategy

Objectives of our audit scoping

In accordance with the NAO Code, our primary objectives are to conduct work that supports the delivery of our audit report to the Authority. Additionally, we aim to ensure that the Authority has established proper arrangements for securing economy, efficiency, and effectiveness in its use of resources, as mandated by relevant legislation and the requirements of the NAO Code. We will issue an audit report that covers:

1. Financial statement audit

   Our opinion on the financial statements:

   • Whether the financial statements give a true and fair view of the financial position of the Authority and its expenditure and income for the period in question; and
   • Whether the financial statements have been prepared properly in accordance with the relevant accounting and reporting framework as set out in legislation, applicable accounting standards or other direction.

   Our opinion on other matters:

   • whether other information published together with the audited financial statements is consistent with the financial statements.

   Other procedures required by the Code:

   • Examine and report on the consistency of the Whole of Government Accounts schedules or returns with the body’s audited financial statements for the relevant reporting period in line with the instructions issued by the National Audit Office.

2. Arrangements for securing economy, efficiency and effectiveness (value for money)

   We are required to consider whether the Authority has put in place ‘proper arrangements’ to secure economy, efficiency and effectiveness on its use of resources and report a commentary on those arrangements.

Internal audit

We will review internal audit plans and the results of their work. We will reflect the findings from these reports, together with reports from any other work completed in the year, in our detailed audit plan, where they raise issues that could have an impact on the financial statements.

In 2024/25, the Authority's Internal Audit Annual Report concluded that the framework of governance, risk management and control are ‘reasonable’.

06 Audit team

Audit team

Audit team leadership

The engagement team is led by Simon Mathers, who has overall responsibility for the performance of the audit and for the auditor’s report issued on behalf of EY.

Simon Mathers

Key audit partner

Rumana Rafiq Ullah

Manager

Doreen Minja

Lead Senior

Henry Bourne

Associate 1

Specialist 1

(Specialist PWC consulting actuary and EY Actuaries)

Our approach to the use of specialists

When auditing key judgements, we are often required to use the input and advice provided by specialists who have qualifications and expertise not possessed by the core audit team. The areas where EY specialists are expected to provide input for the current year audit are:

In accordance with Auditing Standards, we will evaluate each specialist’s professional competence and objectivity, considering their qualifications, experience and available resources, together with the independence of the individuals performing the work.

We also consider the work performed by the specialist in light of our knowledge of the Authority’s business and processes and our assessment of audit risk in the particular area. For example, we would typically perform the following procedures:

• Analyse source data and make inquiries as to the procedures used by the specialist to establish whether the source data is relevant and reliable
• Assess the reasonableness of the assumptions and methods used
• Consider the appropriateness of the timing of when the specialist carried out the work
• Assess whether the substance of the specialist’s findings are properly reflected in the financial statements.

07 Audit timeline

Timeline

Timetable of communication and deliverables

Below is a timetable showing the key stages of the audit and the deliverables we have agreed to provide to you through the audit cycle in 2025/26.

From time to time matters may arise that require immediate communication with Those Charged with Governance and we will discuss them with the Committee Chair as appropriate.

We will also provide updates on corporate governance and regulatory matters as necessary.

• Audit planning report: Reporting our independence, risk assessment, planned audit approach and the scope of our audit
• Audit Results Report: Reporting our conclusions on key judgements and estimates and confirmation of our independence
• Auditor’s Annual Report: Audit opinion on the Authority's financial statements and Auditor’s Annual Report summarising the results of our 2025/26 work at the Authority

08 Appendices

Appendix A — Rebuilding assurance: responsibilities

The Authority's responsibilities

As set out in Appendix B our fee is based on the assumption that the Authority complies with PSAA’s Statement of Responsibilities of auditors and audited bodies. See https://www.psaa.co.uk/managing-audit-quality/statement-of-responsibilities-of-auditors-and-audited-bodies/statement-of-responsibilities-of-auditors-and-audited-bodies-from-2023-24-audits/. In particular, the Authority should have regard to paragraphs 26-28 of the Statement of Responsibilities which clearly set out what is expected of audited bodies in preparing their financial statements. We set out these paragraphs in full below:

Preparation of the statement of accounts

26. Audited bodies are expected to follow Good Industry Practice and applicable recommendations and guidance from CIPFA and, as applicable, other relevant organisations as to proper accounting procedures and controls, including in the preparation and review of working papers and financial statements.

27. In preparing their statement of accounts, audited bodies are expected to:

• prepare realistic plans that include clear targets and achievable timetables for the production of the financial statements;
• ensure that finance staff have access to appropriate resources to enable compliance with the requirements of the applicable financial framework, including having access to the current copy of the CIPFA/LASAAC Code, applicable disclosure checklists, and any other relevant CIPFA Codes.
• assign responsibilities clearly to staff with the appropriate expertise and experience;
• provide necessary resources to enable delivery of the plan;
• maintain adequate documentation in support of the financial statements and, at the start of the audit, providing a complete set of working papers that provide an adequate explanation of the entries in those financial statements including the appropriateness of the accounting policies used and the judgements and estimates made by management;
• ensure that senior management monitors, supervises and reviews work to meet agreed standards and deadlines;
• ensure that a senior individual at top management level personally reviews and approves the financial statements before presentation to the auditor; and
• during the course of the audit provide responses to auditor queries on a timely basis.

28. If draft financial statements and supporting working papers of appropriate quality are not available at the agreed start date of the audit, the auditor may be unable to meet the planned audit timetable, and the start date of the audit will be delayed.

Observations from 2024/25

As we have outlined in prior years, our ability to complete the audit is dependent on the timely formulation of appropriately supported accounting judgements, provision of accurate and relevant supporting evidence, access to the finance team and management’s responsiveness to issues identified during the audit. We presented our views on the effectiveness of the Authority's arrangements to support external financial across a range of relevant measures as part of our 2024/25 Audit Results Report.

We have repeated this assessment on the following page.

Appendix A — Rebuilding assurance continued

Progress to full assurance

The chart below sets out the illustrative timescale for the process of rebuilding assurance set out in the NAO’s Local Audit Reset and Recovery Implementation Guidance (LARRIG) 01, together with our view of the Authority's actual progress against that timescale, the reasons for that assessment and what still needs to be done to successfully rebuild assurance.

The guidance recognises that the path to full assurance, and therefore an unqualified opinion, will usually take a number of years to achieve, and depends upon co-ordination and engagement between the Authority and audit team. Since 2022/23, we have applied a structured, risk-based prioritisation approach to local government audits to support a return to unqualified audit opinions wherever feasible, while still meeting statutory backstop requirements.

New Forest National Park Authority progress

• In the audit report for the year ended 31 March 2025, a qualified audit opinion was issued which drew attention to lack of assurance over classification of reserves between usable and unusable.
• In the audit report for the year ended 31 March 2024, a disclaimer of opinion was issued due to the application of the backstop.
• In our view, the Authority's progress is in line with the expected timescales set out in LARRIG 01.

In 2024/25 we were able to make significant progress in the level of assurance achieved in relation to property, plant and equipment. Our risk assessment for 2025/26 is underway, and our work will seek to focus on continuing to buildback assurances in the following areas:

• Classification of reserve balances between usable and unusable including the General Fund Balance, Earmarked Reserves, Developers’ Contributions Unapplied and the Capital Adjustment Account.

Efficient delivery will continue to rely on the strong cooperation we have experienced to date as we set out on the following page, including timely responses, clear communication and the provision of good-quality working papers. Maintaining this approach will support us in completing the audit in line with the agreed timetable.

Appendix A — Rebuilding assurance: responsibilities continued

Factors impacting the execution of the 2024/25 audit

Key: Red: Ineffective. In our judgement, significant improvements are required in the Authority's arrangements to support the rebuilding of assurance. Action should be taken to respond immediately. Amber: Requires Improvement. Matters and/or issues had an impact on the delivery of the audit and should be addressed in future years. Green: Effective. There were no significant matters that impacted the timing or effectiveness of audit procedures.

Appendix A — Rebuilding assurance: responsibilities continued

Factors impacting the execution of the 2024/25 audit continued

Key: Red: Ineffective. In our judgement, significant improvements are required in the Authority's arrangements to support the rebuilding of assurance. Action should be taken to respond immediately. Amber: Requires Improvement. Matters and/or issues had an impact on the delivery of the audit and should be addressed in future years. Green: Effective. There were no significant matters that impacted the timing or effectiveness of audit procedures.

Appendix B - Independence and Fees

Required communications

The FRC Ethical Standard 2024 and ISA (UK) 260 ‘Communication of audit matters with those charged with governance’, requires us to communicate with you on a timely basis on all significant facts and matters that bear upon our integrity, objectivity and independence. The Ethical Standard requires that we communicate formally both at the planning stage and at the conclusion of the audit, as well as during the course of the audit if appropriate. The aim of these communications is to ensure full and fair disclosure by us to those charged with your governance on matters in which you have an interest.

In addition, during the course of the audit, we are required to communicate with you whenever any significant judgements are made about threats to objectivity and independence and the appropriateness of safeguards put in place, for example, when accepting an engagement to provide non-audit services.

We ensure that the total amount of fees that EY and our network firms have charged to you and your affiliates for the provision of services during the reporting period, analysed in appropriate categories, are disclosed.

Appendix B - Independence and Fees continued

Overall Assessment

We highlight the following significant facts and matters that may be reasonably considered to bear upon our objectivity and independence, including the principal threats, if any. We have adopted the safeguards noted below to mitigate these threats along with the reasons why they are considered to be effective. However we will only perform non-audit services if the service has been pre-approved in accordance with your policy.

Overall, we consider that the safeguards that have been adopted appropriately mitigate the principal threats identified and we therefore confirm that EY is independent and the objectivity and independence of Simon Mathers, your audit engagement partner and the audit engagement team have not been compromised.

Self interest threats

A self interest threat arises when EY has financial or other interests in your company. Examples include where we receive significant fees in respect of non-audit services; where we need to recover long outstanding fees; or where we enter into a business relationship with you. At the time of writing, there are no long outstanding fees.

We believe that it is appropriate for us to undertake those permitted non-audit/additional services set out in Section 5.40 of the FRC Ethical Standard 2024 (FRC ES), and we will comply with the policies that you have approved.

When the ratio of non-audit fees to audit fees exceeds 1:1, we are required to discuss this with our Ethics Partner, as set out by the FRC ES, and if necessary agree additional safeguards or not accept the non-audit engagement. We will also discuss this with you.

At the time of writing, there are no non-audit services. No additional safeguards are required.

A self interest threat may also arise if members of our audit engagement team have objectives or are rewarded in relation to sales of non-audit services to you. We confirm that no member of our audit engagement team, including those from other service lines, has objectives or is rewarded in relation to sales to you, in compliance with FRC ES Section 4.

There are no other self interest threats at the date of this report.

Self review threats

Self review threats arise when the results of a non-audit service performed by EY or others within the EY network are reflected in the amounts included or disclosed in the financial statements. There are no self review threats at the date of this report.

Appendix B - Independence and Fees continued

Management threats

Partners and employees of EY are prohibited from taking decisions on behalf of management of your company. Management threats may also arise during the provision of a non-audit service in relation to which management is required to make judgements or decisions based on that work.

There are no management threats at the date of this report.

Other threats

Other threats, such as advocacy, familiarity or intimidation, may arise.

There are no other threats at the date of this report.

EY Transparency Report

EY has policies and procedures that instil professional values as part of firm culture and ensure that the highest standards of objectivity, independence and integrity are maintained. Details of the key policies and processes in place within EY for maintaining objectivity and independence can be found in our annual Transparency Report which the firm is required to publish by law. The most recent version of this Report is for the period ended 30 June 2025 and can be found here: EY UK 2025 Transparency Report.

Appendix B — Independence and Fees continued

The duty to prescribe fees is a statutory function delegated to Public Sector Audit Appointments Ltd (PSAA) by the Secretary of State for Housing, Communities and Local Government.

This is defined as the fee required by auditors to meet statutory responsibilities under the Local Audit and Accountability Act 2014 in accordance with the requirements of the Code of Audit Practice and supporting guidance published by the National Audit Office, the financial reporting requirements set out in the Code of Practice on Local Authority Accounting published by CIPFA/LASAAC, and the professional standards applicable to auditors’ work.

The agreed fee presented is based on the following assumptions:

• officers meeting the agreed timetable of deliverables;
• our financial statement opinion and value for money conclusion being unqualified;
• appropriate quality of documentation is provided by the Authority;
• an effective control environment; and
• compliance with PSAA’s Statement of Responsibilities of auditors and audited bodies. See https://www.psaa.co.uk/managing-audit-quality/statement-of-responsibilities-of-auditors-and-audited-bodies/statement-of-responsibilities-of-auditors-and-audited-bodies-from-2023-24-audits/. In particular the Authority should have regard to paragraphs 26–28 of the Statement of Responsibilities which clearly sets out what is expected of audited bodies in preparing their financial statements. These are set out in full on the previous page.

If any of the above assumptions prove to be unfounded, we will seek a variation to the agreed fee. This will be discussed with the Authority in advance.

All fees exclude VAT

1. The 2024/25 work has been completed and a final fee will be determined shortly. For 2024/25 the planned fee represents the base fee, i.e., not including any extended testing. A scale fee variation has been submitted to PSAA covering the following areas:
   • Additional procedures to assess the completeness and accuracy of the Authority’s IFRS 16 Leases adjustments and disclosures, arising as a result of the implementation of IFRS 16 in 2024/25. This will include the work required to assess the adjustments made elsewhere in the financial statements.
   • Additional procedures required to assess the completeness and accuracy of the REFCUS balance disclosed in the financial statements, driven by the determination of this balance being influenced by the funding received as opposed to the expenditure incurred.
   • Additional work and resource required to complete our audit procedures as a result of the delayed responses to audit requests.
   • Additional procedures required as a result of the modification to our audit report.
   • Additional procedures arising as a result of the updated IAS 19 pension report being obtained due to the errors made in the initial report prepared by the actuary.
2. The scale fee also may be impacted by a range of other factors which will result in additional work, which include but are not limited to:
   • Consideration of correspondence from the public and formal objections.
   • New and revised accounting standards, for example full adoption or additional disclosures in respect of IFRS 16.
   • Non-compliance with law and regulation with an impact on the financial statements.
   • VFM risks of, or actual, significant weaknesses in arrangements and related reporting impacts.
   • The need to exercise auditor statutory powers.
   • Prior period adjustments.
   • Modified financial statement opinions.

Appendix C — Prior year recommendations

As part of our annual audit procedures we will follow up the specific open and in progress recommendations reported within our 2024/25 reporting, including those relating to value for money arrangements. The two open recommendations from prior years are outlined below, along with the response from management.

Internal control weaknesses

Classification of recommendations

• Grade 3: Less significant issues and / or areas for improvement which consider merit attention but do not require to be prioritised by management.
• Grade 2: Risks or potential weaknesses which impact on objectives and compliance, or impact the operation of a single process, and so require prompt but less urgent immediate action by management.
• Grade 1: Key risks and / or significant deficiencies which are either critical to the achievement of strategic objectives or significant risks to material compliance with regulatory requirements. Management needs to address and seek resolution urgently.

Appendix D — Regulatory update

Key regulatory changes

There are a number of key regulatory developments underway relating to local authority governance and the audit of the Authority's financial statements. The following table provides a high level summary of those that have the potential to have the most significant impact on you:

Appendix D — Regulatory update continued

Key regulatory changes continued

Appendix D — Regulatory update continued

Other reporting

Appendix D — Regulatory update continued

National Audit Office reporting

There are a number of key publications from the National Audit Office that have an impact on the Authority. The following table provides a high level summary of those that have the potential to have the most significant impact on you:

Appendix E — Required communications with Those Charged with Governance

We have detailed the communications that we must provide to Those Charged with Governance.

Appendix E — Required communications with Those Charged with Governance continued

Appendix E — Required communications with Those Charged with Governance continued

Appendix E — Required communications with Those Charged with Governance continued

Appendix F — Additional audit information

Objective of our audit

In addition to the key areas of audit focus outlined within the plan, we have to perform other procedures as required by auditing, ethical and independence standards and other regulations. We outline the procedures below that we will undertake during the course of our audit.

Other required procedures during the course of the audit

• Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control.
• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Concluding on the appropriateness of management’s use of the going concern basis of accounting.
• Evaluating the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Reading other information contained in the financial statements, including the board’s statement that the annual report is fair, balanced and understandable, the reporting to Those Charged with Governance appropriately addresses matters communicated by us to Those Charged with Governance and reporting whether it is materially inconsistent with our understanding and the financial statements.
• Maintaining auditor independence.

Purpose and evaluation of materiality

For the purposes of determining whether the accounts are free from material error, we define materiality as the magnitude of an omission or misstatement that, individually or in the aggregate, in light of the surrounding circumstances, could reasonably be expected to influence the economic decisions of the users of the financial statements. Our evaluation of it requires professional judgement and necessarily takes into account qualitative as well as quantitative considerations implicit in the definition. We would be happy to discuss with you your expectations regarding our detection of misstatements in the financial statements.

Materiality determines the level of work performed on individual account balances and financial statement disclosures.

The amount we consider material at the end of the audit may differ from our initial determination. At this stage, however, it is not feasible to anticipate all of the circumstances that may ultimately influence our judgement about materiality. At the end of the audit we will form our final opinion by reference to all matters that could be significant to users of the accounts, including the total effect of the audit misstatements we identify, and our evaluation of materiality at that date.