The Audit, Governance and Standards Committee meeting scheduled for 13 July 2026 was set to review a range of critical reports concerning the council's financial health, operational efficiency, and adherence to governance standards. Key discussions were expected to focus on the outcomes of the Corporate Anti-Fraud Team and Special Investigations Team's year-end report, progress on the significant Southwark360 Enterprise Resource Planning (ERP) replacement programme, and the external audit plans for both the council and its pension fund.

Corporate Anti-Fraud Team and Special Investigations Team Year End Report 2025-26

The committee was scheduled to review the year-end report for the Corporate Anti-Fraud Team (CAFT) and the Special Investigations Team (SIT) for the 2025-26 period. This report was intended to summarise the work undertaken by these teams to prevent, detect, and respond to fraud, bribery, and corruption, thereby supporting the council's commitment to integrity, transparency, and the responsible management of public funds. The report detailed investigations across various areas, including corporate referrals, homelessness applications, housing waiting lists, Right to Buy applications, and Blue Badge fraud. It also outlined the Special Investigations Team's remit concerning housing tenancy fraud, including unlawful subletting, non-occupation, and succession fraud. The report included statistics on investigations opened and closed, properties recovered, and the financial value of fraud detected, amounting to £2.2 million.

Southwark360: Six-Month Progress Update on the Enterprise Resource Planning (ERP) Replacement Programme

A progress update was scheduled on the Southwark360 programme, which aims to replace the council's legacy SAP ERP system. The current SAP system, in use since 1999, has limitations in reporting, mobile accessibility, and adaptability to legislative changes. The SAP system is due to go out of support in 2027 and be retired in 2030. The report detailed the procurement process for the new ERP solution, with contracts awarded to SAP for the S/4 HANA Public Cloud ERP Solution and to various implementation partners. The programme remained on budget, with savings targets identified and longer-term savings plans to be developed. Governance structures, including the Programme Sponsorship Board, were in place, and the programme was progressing through its delivery phase. The report also addressed programme scope, including a contract variation for additional reporting capability, and outlined plans for user adoption, change management, and supplier management.

External Audit Plan – Southwark Council & Pension Fund

The committee was to review the external audit plans for the year ending 31 March 2026 for both Southwark Council and the Southwark Pension Fund. These plans, prepared by KPMG, outlined the planned audit scope, risk assessment, and approach for the statutory audits. For Southwark Council, the planned scope included an assessment of financial statements, with materiality set at £34.1 million. Key audit risks identified were the valuation of fixed assets (properties), management override of controls, and the valuation of pension obligations. KPMG would also report on the Council's arrangements for Value for Money (VfM) across financial sustainability, governance, and improving economy, efficiency, and effectiveness. For the Pension Fund, materiality was set at £22.6 million, with significant risks including management override of controls and the valuation of directly held investment property.

Internal Audit Progress Report for 2025-26

This report provided an update on the work undertaken and the results of audits completed to date on the 2025-26 internal audit plan. It was noted that this was the final progress report from BDO, the council's internal auditors, with future reporting to be provided by the new Head of Internal Audit. The report summarised the executive summaries of finalised audits, including areas such as Capital Expenditure Management, Change Management/Future Southwark, Commercial Properties – Garages, Commercial Waste, Hospital Discharges, IT Application – Mosaic, IT – Cyber Security, IT – Major Incident Response/Business Continuity, Key Financial Systems, Nursing and Residential Care, Pensions Administration, Procurement, School Admissions, Short Breaks and Respite Care, Temporary Accommodation, Tenancy Management Organisations (TMOs), and Voluntary Sector Grants. The report also detailed the follow-up status of recommendations, noting a high implementation rate.

Internal Audit – Annual Report & Opinion 2025-26

This report presented the internal audit work completed for the London Borough of Southwark covering the period 1 April 2025 to 30 June 2026. It was prepared in line with Global Internal Audit Standards (GIAS) in the UK Public Sector. The report provided an overall opinion on the adequacy and effectiveness of the council's risk management, control, and governance processes. The overall opinion for 2025-26 was Generally satisfactory with improvements required in some areas, indicating that while controls were generally suitably designed and operating effectively, improvements were needed in specific areas. The report highlighted areas receiving limited assurance opinions, including Nursing & Residential Care, Waiting List Management, and IT Application – Mosaic, among others. It also detailed high-significance findings in strategic risk areas such as Asset Management Systems and Building Safety.

Internal Audit Risk-Based Plan, Strategy, Charter and Mandate

The committee was asked to approve the Internal Audit Plan for 2026/27, the three-year Internal Audit Strategy, and the Internal Audit Charter and Mandate. The plan was developed based on an assessment of the council's strategies, objectives, and risks, informed by input from senior management and the committee. It focused on areas of risk, including IT, fraud, and compliance programmes. The strategy outlined the medium-term direction of the internal audit service, aiming to be a leading provider of internal audit services. The Charter and Mandate formalised the purpose, authority, and responsibilities of the internal audit service, reflecting the Global Internal Audit Standards and CIPFA's Code of Practice.

Draft Annual Governance Statement 2025-26

The committee was to note the draft Annual Governance Statement (AGS) for 2025-26. This statement is a mandatory requirement under the Accounts and Audit Regulations 2015, requiring the council to review the effectiveness of its system of internal control and report on this review. The AGS outlines how the council has reviewed its governance arrangements, assessed their effectiveness against the CIPFA/SOLACE framework, and identified actions for improvement. It detailed the council's assurance arrangements based on a three lines model (management, risk and compliance, and internal/external audit) and highlighted progress on issues raised in the previous year's AGS. The statement also identified emerging governance risks for 2026-27 and the medium term, including economic volatility, demand pressures, legislative changes, and the use of AI.

Compliance with CIPFA Financial Management Code

This report provided an assessment of the council's compliance with the CIPFA Financial Management Code for the 2025-26 financial year. The FM Code, based on six principles (Leadership, Accountability, Transparency, Standards, Assurance, and Sustainability), translates into 17 standards. The report detailed the council's compliance against each standard, providing evidence of systems, processes, and documentation. It highlighted that the council met the requirement for a credible and transparent financial resilience assessment through the CIPFA Financial Resilience Index, which rated the council as 'low risk' for overall financial sustainability but identified higher-risk areas such as the Housing Revenue Account (HRA) reserves and gross external debt. The report also confirmed compliance with statutory obligations for budget setting and the CFO's responsibility for financial reporting.

Formation of Audit, Governance and Standards Sub-Committees for 2026-27

The committee was asked to establish two sub-committees for the 2026-27 municipal year: the Audit, Governance and Standards (Standards) Sub-Committee to consider misconduct complaints against elected councillors and co-opted members, and the Audit, Governance and Standards (Civic Awards) Sub-Committee to consider civic awards. The report outlined the proposed membership sizes and proportionality for each sub-committee, as well as the process for appointing co-opted members to the Civic Awards Sub-Committee.

In-Year Review of Work Programme 2026-27: July 2026

This report presented the proposed work programme for the Audit, Governance and Standards Committee for the 2026-27 municipal year. The programme was structured around the committee's key functions, including audit activity, accounts, treasury management, governance, and standards. It included standing items and flexibility for emerging issues. The committee was asked to consider whether the attached work programme reflected its priorities and to suggest any amendments. The programme was grouped in line with the committee's roles as defined in its terms of reference, with a commitment to ongoing member training.