Six Years Running, Nobody Has Signed Off Barking and Dagenham's Accounts. One Unresolved Finding Was a Loan Auditors Called Unlawful, the Council's Own Barrister Says It Was Not.
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In short. Grant Thornton, Barking and Dagenham's external auditor, disclaimed its opinion on both the council's and its Pension Fund's accounts for 2023/24 and 2024/25 on 25 February 2026, under the government's audit backstop rules [1]. That extends a run of unverified accounts back to 2019/20, when the council's previous auditor, BDO, began a run of its own four disclaimed years, finally issued in December 2025 [3]. One of the findings behind BDO's disclaimers was a short-term loan between the council and its own Pension Fund that BDO, acting on its own legal advice, reported to the regulator and called unlawful [3] [4]. The council instructed its own King's Counsel, who concluded the opposite [4]. Both sides agree the loan has since been unwound and repaid.
Six years without a clean opinion
A disclaimed audit opinion means the auditor could not gather enough evidence to say whether a council's accounts are reliable at all, which is a different and in some ways more serious finding than discovering the accounts are wrong. It is what the government's "backstop" rules produce when an auditor runs out of statutory time before a fixed deadline, and successive backstops have now produced one for Barking and Dagenham for six financial years running [1] [2]. Grant Thornton issued its disclaimed opinions on the 2023/24 and 2024/25 accounts, for both the council and the Pension Fund, on 25 February 2026, two days before that year's backstop deadline [1].
The run started earlier, with the four years before that. BDO, the council's previous auditor, missed its own backstop deadline of 13 December 2024 for the 2019/20 to 2022/23 accounts, and did not finally issue disclaimed opinions for all four years until 17 December 2025 [3]. Add Grant Thornton's two more recent disclaimers and the council has not had a verified set of accounts, for itself or its Pension Fund, since the financial year ending March 2019 [1] [3].
The loan the auditor called unlawful
One of the findings behind those earliest four disclaimers was a loan. Short-term borrowing between the council and its own Pension Fund ran in both directions across the years under dispute: a loan from the council to the fund that stood at 19.0 million pounds on 1 April 2023, and a loan running the other way, from the fund to the council, of 16.9 million pounds by 31 March 2024 [3]. BDO, acting on its own legal advice, found no evidence the arrangement complied with Local Government Pension Scheme regulations, reported the matter to the regulator as a formal concern, and concluded it was unlawful [3] [4].
The council disputes that reading. Management instructed its own King's Counsel, who concluded: "In my opinion, the Council has acted lawfully, as regards inter-fund borrowing and lending" [4]. Officers say the dispute is now academic in practical terms: Grant Thornton's 2024/25 report confirms the loan arrangement ceased and the balance owed to the council was fully repaid by 31 December 2024, and the council adopted a revised Treasury Management Strategy in October 2024 to prevent a repeat [1] [4]. A related prepayment of pension contributions, flagged alongside the loan, was fully recovered by the council back in March 2023 [1]. Grant Thornton's own reading, separate from the legal dispute over lawfulness, was that the arrangement had a value-for-money problem regardless: it charged the council only the Bank of England base rate, and management should examine whether that was adequate [3].
What else this year's audit found
The loan dispute predates the most recent audit, but Grant Thornton's 2024/25 Auditor's Annual Report raises five further significant weaknesses in the council's value-for-money arrangements, alongside three lower-grade improvement recommendations [1] [2]. The five cover the finalisation of the council's transformation plan, the finalisation of its Strategic Asset Management Plan, the capacity and capability of its finance team, oversight of its subsidiary companies, and procurement oversight and compliance with the Procurement Act 2023 [2].
The figures behind the transformation finding show why it matters. The council's medium-term financial strategy once forecast an unfunded gap of up to 70 million pounds; that has narrowed to a forecast deficit of 12 million pounds for 2026/27, rising to 12.7 million pounds in 2027/28 [1]. The council set a balanced budget for 2025/26 requiring 16 million pounds of savings with no planned use of reserves, having delivered 15.2 million pounds against a 15.6 million pound target the year before, 97.5 percent [1]. But by August 2025, 1.7 million pounds of that savings target was reported to Cabinet as at risk, concentrated in the adult social care and children's services budgets [1]. A transformation programme exists, but has no agreed, funded plan in place and is, in the auditor's own words, behind schedule [1].
When the council might get a clean opinion again
Minutes of the Audit and Risk Committee meeting of 18 February 2026 record Grant Thornton and council management agreeing, in front of elected members, on how long recovery is likely to take. Officers told the committee that even with continued progress, the earliest the council's accounts were likely to reach a qualified opinion, which is still short of a clean one, was 2027/28, and possibly not until 2028/29 [5]. The Pension Fund's own accounts are ahead of the council's on the same timeline: unlike the council, the fund does not carry the same unresolved opening-balance problem, and Grant Thornton told the committee that continued progress could put the fund on a path to a modified opinion as early as the 2025/26 audit [2] [5].
Sources
- Grant Thornton UK LLP, "Auditor's Annual Report, Year ending 31st March 2025", London Borough of Barking and Dagenham, presented to Audit and Risk Committee (18 February 2026). https://lbbd.moderngov.co.uk/documents/s179102/4.LBBD%20-%20Final%20Auditors%20Annual%20Report%202024-25.pdf
- Grant Thornton UK LLP, "Audit progress report and sector updates, March 2026", London Borough of Barking and Dagenham and Barking and Dagenham Pension Fund. https://lbbd.moderngov.co.uk/documents/s179852/GT%20report.pdf
- Grant Thornton UK LLP, "The Audit Findings for London Borough of Barking & Dagenham, Year ended 31 March 2024", presented to Audit and Risk Committee (18 February 2026). https://lbbd.moderngov.co.uk/documents/s179103/5.LBBD%20Final%20Audit%20Findings%20Report%20202324.pdf
- London Borough of Barking and Dagenham, Strategic Director of Resources, "BDO Audit Report 2019/20 - 2022/23", report to Audit and Risk Committee (26 November 2025). https://lbbd.moderngov.co.uk/documents/s177741/BDO%20Audit%20Report%20November%202025%20V2%20-%20Final.pdf
- London Borough of Barking and Dagenham, Audit and Risk Committee public reports pack for 25 March 2026, including minutes of the meeting held on 18 February 2026. https://lbbd.moderngov.co.uk/documents/g13775/Public%20reports%20pack%20Wednesday%2025-Mar-2026%2019.00%20Audit%20and%20Risk%20Committee.pdf?T=10