The Audit and Performance Committee met to discuss the annual complaints report, the audited accounts and audit findings for both the council and its pension fund, and the external auditor's annual report. The committee approved the 2024/25 pension fund statement of accounts, and agreed to delegate any residual matters relating to the audit of accounts to the Section 151 officer¹. The committee also noted the annual complaints report and the external auditor's annual report.

Annual Complaints Report

The committee reviewed the annual complaints report, which showed a 15% reduction in stage 1 complaints, but a 37% increase in stage 2 complaints. Zoe Evans, Complaints and Customer Manager, said that the council views complaints as opportunities for learning and improvement .

A key concern was the increase in escalated complaints, particularly within the housing service, where complaints rose to 36%. Shreya Patel, Head of Resident Experience, attributed this rise to increased awareness of the complaints process and the introduction of a statutory complaint handling code, which has made it easier for residents to complain and escalate issues. Patel noted that this increase in complaints is a sector-wide trend among social housing landlords.

There was also a significant increase in complaints within children's services, particularly statutory complaints. Isabella Jewell, Head of Business Intelligence, Strategy, Customer Relationships and Children's Workforce Development, explained that this was partly due to one complainant making 15 complaints. She also noted that increased awareness of the complaints procedure, along with the use of artificial intelligence (AI) tools, has made it easier for people to lodge complaints.

Several councillors voiced concerns about the difficulty of determining whether the increase in complaints signified major problems with service delivery, or whether it was simply a result of easier reporting. There was also concern that compensation payments may be incentivising complaints. The committee requested that future reports include more detailed data breakdowns, including:

• Numbers of complaints from the same complainant
• What is a result of easier complaints reporting, including the use of AI
• What is a complaint about a service negatively impacting on a resident
• What wards or estates the complaints are being made in
• More data comparisons to previous years

Councillor Ian Rowley raised concerns about a recurring theme of poor communication in the complaints data. He asked what the council was doing to improve communication with residents and complainants. Patel said that the council is working with contractors to ensure robust communication before matters escalate to the complaints stage, but acknowledged that there is still work to be done. Councillor Rowley suggested that proactive communication would likely prevent a number of complaints.

Councillor Patricia McAllister said that she found the Housing Ombudsman Landlord Performance Report difficult to read, as the presentation of the data was not easily digestible. She also raised concerns about cases where residents have experienced racism from repairs operatives, and asked what action was being taken. Officers said that they are investigating how to strengthen reporting on such instances and the handling of these complaints.

The committee also discussed the level of compliments received, and noted that more work needs to be done to capture compliments as they are likely underreported.

The committee noted that a key risk identified in the complaints data is the use of AI tools, as this can impact complaint volumes and distort data. The committee also noted financial risks relating to levels of compensation granted, and how an increasing volume of complaints could impact officer time.

Audited Accounts and Audit Findings Report (Council)

The committee received an overview of the council's audited accounts and audit findings report from Rikin Tailor, Director of Finance. He noted that the accounts had been adjusted following the audit, but the result was in line with what was reported to the committee in July 2025. Tailor said that the council is in a relatively stable position in terms of its finances, and that the International Financial Reporting Standard (IFRS) 16² implementation has been a significant undertaking but handled well by officers. The committee sought assurance that the finance team has enough resources to continue to implement IFRS 16. The committee noted that the council has sufficiently resourced the implementation and has a good account of records due to its diligent record-keeping. The committee also asked about training on IFRS 16 and whether staff across the council fully understand the implications, and noted the risk of an unqualified position if the new standard is not followed.

The committee raised concerns about increasing cost pressures for the council while government settlements are reducing, and the outcome of the government's Fair Funding Review is still unknown. The committee queried the process of examining the Medium-Term Financial Plan and noted that the budget-setting process reviews the council's Medium-Term Financial Plan and will work its way through the impact of the Fair Funding Review when the outcome has been shared.

The committee noted the Comprehensive Income and Expenditure Statement (CIES) and how there had been major changes in the CIES throughout the year. The committee was informed that there had been a mixture of changes in cost and income over the year, and a range of technical adjustments which is set out the analytical review. The committee understood examples such as additional cost, and overspend, for temporary accommodation which meant the allocation of additional budget and technical adjustments for property reevaluations. The committee noted movement in the adult social care accounts due to significant contract inflation as well as increased costs and demand and complexity pressures which meant drawing on reserves. The committee also noted a significant reduction in net costs in the environment and communities accounts due to increased penalty charge notice³, parking and waste collection income, and technical adjustments for depreciation. The committee noted that business rate provisions and risk reserves have significantly increased and questioned the reasons for this. The committee noted that there are complicated arrangements relating to smoothing out the income received but understood that in 2023/24 there was a reduction in appeals provision so the funds were released resulting in a collection fund surplus which was added to the business rates risk reserves. The committee also understood that the appeals provision had reduced, but the new provisions list now means the volume of those seeking appeals is building again.

The committee noted the key matters in the Audit Findings Report and was informed that the outstanding points from the auditor had been closed, the auditors and finance officers are satisfied with the unadjusted differences and that an unmodified audit opinion has been issued. The committee also noted that there were no other changes to the audit plan, and no significant risks that require attention.

The committee welcomed the external auditor's thanks to the council's finance team for their hard work and quality of the accounts that have been produced, particularly over the past three months. The committee welcomed the positive feedback of the efforts regarding the IFRS 16 and how it is a credit to the finance team that the council has invested the necessary time and effort to the IFRS implementation.

The committee resolved to note the expected unmodified opinion of the council's 2024/25 statement of account, consider the findings outlined in Grant Thornton's Audit Findings Report, approve the adjustments outlined in the AFR that are reflected in the final audited set of 2024/25 accounts, and delegate any residual matters relating to the audit of accounts to the Section 151 officer.

Audited Accounts and Audit Findings Report (Pension Fund)

Phil Triggs, Tri-Borough Director of Treasury and Pensions, presented a summary of the Pension Fund Audited Accounts and Audit Findings Report. He noted that the accounts evidence the first time the council has moved into the £2bn range in terms of asset valuation. He also said that the audit has been a smooth process this year with good communication between officers and Grant Thornton.

The committee queried the asset ceilings and asked for clarity on what they mean and their impact on the accounts. The committee understood that the asset ceiling is a cap on the amount of pension fund surplus assets that can be presented in the council's accounts under the ISA19 regulation, and that there is a difference between the accounting level of surplus and the pension fund's actual surplus. The committee received clarification that the pension fund's funding level at 31 March 2025 has reduced to 140% as the pension fund actuary has taken a more prudent approach which will aid the fund in the event of possible future downward asset valuations.

The committee was made aware of the additional financial accounts restatements in the Letter of Representation and the ongoing administration issue regarding pensions records for members dated pre-2000.

The committee approved the 2024/25 Pension Fund Statement of Accounts and noted the Pension Fund's Audit Findings Report.

External Auditor's Annual Report

Jo Brown, Partner, Audit - Public Sector Assurance (London and Scotland) Grant Thornton, presented an overview of the External Auditor's Annual Report. She noted that the auditor has a responsibility to look at the council's Value for Money arrangements which focus on financial sustainability and governance as well as efforts to improve economy, efficiency and effectiveness. The committee was pleased to note that there were no new recommendations made, and previous recommendations have been satisfactorily implemented with audit evidence to support. The committee was also assured that the council's financial arrangements provide a solid foundation ahead of any future uncertainty.

The committee queried why the report did not refer to the Geoffrey Osbourne insolvency considering the substantial costs incurred. The committee noted that while there was no major liability for the council, there was work to do around processes linked to large contractors to avoid a similar situation in the future. The auditors confirmed that they would investigate this and will report back to members in due course if it is a recommendation to be added to the Value for Money report. The committee also raised the insolvency of NRS Healthcare and suggested the auditors consider this in next year's audit.

The committee raised an ongoing concern it has regarding waivers for purchase orders and understood that contract awards and waivers are subject to significant scrutiny which has resulted in the volume reducing dramatically and that progress is regularly reported to the committee in detail.

The committee noted the Value for Money Assessment issued by Grant Thornton, and that no significant weaknesses were identified in respect of the Value for Money assessment categories. The auditors will investigate the processes around the Geoffrey Osbourne insolvency, and consider investigating the recent insolvency of NRS Healthcare in its audit next year.