The Audit, Governance and Standards Committee meeting on 8 September 2026 addressed the progress of internal audits, corporate anti-fraud, and housing investigations, alongside updates on the implementation of audit recommendations and the draft statement of accounts. Key decisions included noting the progress on the internal audit plan, approving the Annual Governance Statement for 2025-26, and agreeing to recommend changes to the committee's terms of reference to Council Assembly to reflect new legislative requirements.

Internal Audit, Corporate Anti-Fraud and Housing Investigation Teams Progress Report

The committee received a combined report detailing the progress of the Internal Audit, Corporate Anti-Fraud, and Housing Investigation teams. David Quirk Thornton, Strategic Director for Children and Adults, provided context on the challenges faced in adult social care, including increased demand due to an aging population and the lingering effects of the pandemic on NHS waiting lists, leading to higher acuity of needs. He highlighted the council's efforts to increase in-borough provision for nursing and residential care, and the innovative use of extra care housing. Councillor John Batteson raised concerns about providers being unaware of financial distress, referencing the closure of Queen's Oak Nursing Home and the lack of mechanisms to predict such events. David Quirk Thornton acknowledged the difficulty in predicting market failures but committed to reviewing contracting mechanisms for longer notice periods and financial penalties. Councillor James Moyse inquired about political governance in adult services, and Councillor Korn confirmed her statutory responsibility as the lead member, with Councillor Wise acting as deputy. Councillor Richard Macmillan raised concerns about non-compliance with legal and regulatory requirements, to which David Quirk Thornton responded by detailing technological solutions, including a new referral pathway and the use of robotic process automation (RPA) to upload referrals onto the Mosaic system.

Chris Fleming, manager of the Housing Investigations Team, reported on housing fraud, noting a decrease in property recoveries due to the courts' lengthy timescales, a trend consistent across London. He explained that while the team is taking on fewer investigations, they are becoming more focused and intelligence-led. Fleming also highlighted the shift towards more technical breaches of tenancy rather than clear subletting. Councillor Graham Neale asked about referral sources, and Fleming stated that internal referrals form a small part of their workload, with the majority coming from proactive data matching. He also confirmed that while more resources would always be beneficial, the team is currently identifying three and a half times its cost in savings. The committee noted the progress and agreed to an action to review contracting mechanisms.

Progress on Implementation of the 2024-25 Audit Recommendations

Timothy Jones, Director of Finance, presented an update on the implementation of recommendations from the 2024-25 external audit. Of the 34 recommendations made by KPMG, 20 have been completed, with the remaining 14 being worked through. Councillor Richard Macmillan sought clarification on outstanding recommendations from prior years, and Haseena Shah, Interim Chief Accountant, confirmed these were outlined in the appendix, with two ISO 260 recommendations expected to be implemented with the SADAC 360 system next year. Councillor Graham Neale requested that previous years' outstanding recommendations be more clearly identified in future reports. The committee noted the progress made.

Draft Statement of Accounts 2025-26

The committee noted the draft unaudited Statement of Accounts for 2025-26, acknowledging its publication in accordance with the statutory timetable and that it is subject to external audit by KPMG. The report highlighted adverse variances in the General Fund (£25.3 million) and Housing Revenue Account (£1.4 million), primarily due to pressures on demand-led services, temporary accommodation, and social care.

Annual Governance Statement 2025-26

Geraldine Chadwick, Assistant Director of Corporate Finance, presented the final version of the Annual Governance Statement (AGS) for 2025-26. She confirmed that comments from the previous audit committee meeting and external audit had been incorporated, strengthening areas such as conflicts of interest and governance issues. The committee approved the AGS, which will be signed by the Chief Executive and the Leader of the Council before being published on the council's website.

Overview of Corporate Risk Management Process

Laura Sandy from the Corporate Risk and Insurance Team provided an overview of the risk management process and presented the refreshed Policy Statement. Councillor Jefferies noted a high-risk score around the HRA and asked about mitigation measures, with confirmation that this would be discussed in detail later in the agenda. Councillor James Moyes raised concerns about quantifying risks related to damp and mould in social housing, and it was agreed that housing colleagues would provide a more detailed response. Councillor Richard Macmillan questioned the lack of red risk scores even after mitigation and asked for clarity on the top three risks keeping officers awake at night. Clive Palfreyman, Director for Resources, identified the medium-term financial strategy, temporary accommodation, and social housing stock as the top three risks. The committee noted the corporate risk management process and the refreshed policy statement.

Budget Process

Councillor Sam Foster, Executive Member for Finance and General Purposes, outlined the council's budget process, highlighting a £102 million funding gap over three years due to cost pressures and central government cuts. He explained the decision not to pursue formal participatory budgeting due to the negative nature of savings required, opting instead for a large-scale budget engagement process in October. Councillor Pascale Mitchell Chaucer Ward raised concerns about reaching a diverse range of residents through the engagement process and ensuring equity and equality under the Equalities Act 2010. Councillor Foster assured that substantial resources would be dedicated to advertising and accessibility, including in-person and online engagement. Councillor John Batteson sought confirmation on the recommendation for a three-year budget and questioned the factoring in of the current neighbourhood forum model for engagement. Councillor Foster clarified that the ambition remains for a three-year budget and that engagement would initially utilise existing meetings, with significant communication planned. The committee agreed to request a fuller explanation of the community engagement approach once further developed. The committee noted the budget process and the arrangements for member oversight.

Housing Revenue Account (HRA) Governance and Financial Monitoring

Hayley O'Brien, Assistant Director of Finance Supporting Housing Services, presented an update on the HRA's financial position and governance. The HRA outturn for 2025-26 showed an adverse variance of £1.4 million, an improvement from previous forecasts. The budget for 2026-27 includes £6 million in savings, which are being closely tracked. A 30-year HRA business plan is in development for the 2027-28 budget process. New governance arrangements, including the Southwark Housing Board and Budget Recovery Board, were implemented in July 2026. Councillor Kat inquired about the relationship between short-term risk management and the 30-year business plan. Hayley O'Brien explained the business plan's role in modelling income and expenditure to ensure solvency over 30 years, and how the HRA recovery plan had been a more agile tool during a period of greater peril. The committee noted the updated position of the HRA.

Southwark360: Update on the Enterprise Resource Planning (ERP) Replacement Programme

Jason Martin, Programme Director for Southwark360, provided an update on the ERP replacement programme, highlighting key benefits such as improved establishment management, budget management, forecasting, and the procure-to-pay process. He noted that risks and issues are being managed post-mitigation and that no single item would prevent the go-live. Councillor Graham Neale questioned how cash-releasing benefits would be unlocked, and Martin explained the collaborative approach with wider transformation teams. He confirmed that cash-releasing benefits are not yet on the programme's benefits register but are expected to be delivered through system efficiencies and by releasing capacity within service departments. The committee noted the update on the Southwark360 programme.

Review of the Audit Governance and Standards Committee Terms of Reference

Geraldine Chadwick, Assistant Director of Corporate Finance, presented proposed amendments to the committee's terms of reference to reflect new statutory functions introduced by the English Devolution and Community Empowerment Act 2026. The committee agreed to recommend these changes to Council Assembly and noted the proposal to bring back a further report on the potential appointment of an independent member.

In-year Review of Work Programme 2026-27

The committee reviewed the proposed work programme for 2026-27. Councillor Graham Neale suggested adding a report on the governance of AI use, and Councillor Richard Macmillan proposed including an update on the transformation programme. These suggestions were agreed to be added to the work plan. The committee formally agreed the amended work plan.