The Committee received an update from the Council’s external auditors, KPMG, and confirmed the minutes of the previous meeting. It also discussed an update on the progress of the Council's Internal Audit work, and approved its new Internal Audit Charter. Finally, the committee received an update on the Council's Corporate Risk Register.

External Audit Update

The Committee received a verbal update on the progress of the 2023/24 audit of the Council’s accounts from KPMG.

KPMG reported that there were no uncorrected audit differences, but did identify five corrected audit misstatements. Most of the misstatements related to the valuation of Property, Plant and Equipment, in particular Council Dwellings.¹

The draft Statement of Accounts was published on the Council’s website on 19 June 2024, excluding the Narrative Statement and Annual Governance Statement (AGS)² due to the upcoming election. The full draft was then published on 26 July 2024. The publication of the draft accounts was delayed from the statutory deadline of 31 May 2024 because of problems encountered finalising the Housing Revenue Account (HRA) figures due to the complexities of transferring Lewisham Homes’ services to the Council and the implementation of a new housing management system.

The auditors are expected to sign off the final Statement of Accounts at the Full Council meeting on 22 January 2025.

The Committee also received an update on the progress of the 2023/24 Value For Money (VFM) audit. This identified two significant risks; both were in relation to the Council’s HRA:

Both of the significant risks are in relation to the Council’s Housing Revenue Account (HRA), which continues in 2024/25 to remain under significant financial strain and is therefore not unexpected.

The Committee noted that the HRA budget was overspent by £6.1m in 2023/24, and that the current HRA reserve stood at £7.4m.

The VFM audit also raised concerns about the Council's governance of its housing stock. This follows the Council's self-referral to the Regulator of Social Housing in December 2023 following the identification of a failure to meet statutory health and safety requirements in some homes.

The Authority self-referred to the Regulator of Social Housing in December 2023 due to identifying a failure to meet statutory health and safety requirements in some of its homes, including overdue fire remedial actions and repairs. The regulator concluded that the Authority is not meeting the required outcomes of the Decent Homes Standard but there is no statutory or enforcement action that they have taken to date.

KPMG reported that their audit of the 2023/24 Pension Fund accounts had found that only minor adjustments were required to the draft accounts.

KPMG’s report identified nine recommendations for the Council (six priority two and three priority three). Formal management responses will be provided to KPMG following the meeting and the progress against the recommendations will be reported to the Committee in 2025.

Internal Audit Update

The Committee received an update on the progress of the Internal Audit work. The Council’s Head of Assurance, Rich Clarke, presented his report, which noted that all published reports had so far received positive assurance conclusions. The Committee noted that the Head of Assurance would be leaving the Council in February 2025 to take up a new position as Chief Executive of SWAP Internal Audit.³

Mr Clarke’s report also provided an update on the new Global Internal Audit Standards that are to be adopted by local government from April 2025. The Committee approved the Council's new Internal Audit Charter.

Corporate Risk Register Update

The Committee discussed a report on the Corporate Risk Register. It was noted that Pentana Risk, the Council’s risk management software, was being increasingly used across the Council, including by service and project-specific risk registers.

The Committee noted that a dedicated Risk Officer would be joining the Council in January 2025.