The Merton Council Governance Standards and Audit Committee met on 3 July 2025 to discuss internal and external audit reports, the annual governance statement, and the committee's annual report. The committee reviewed the effectiveness of the council's governance framework and internal controls, and planned for the upcoming year. The committee also agreed to recommend that the Council notes the Annual Report and agrees to its publication and distribution to relevant stakeholders.

Internal Audit Annual Report

The committee reviewed the Internal Audit Annual Report, which included the Head of Internal Audit's opinion on the council's internal control, risk, and governance arrangements. The report noted that 81% of assurance work completed resulted in a positive audit opinion of either reasonable or substantial assurance.

The report highlighted several key issues arising from internal audits, including:

• Procurement Cards: The report recommended ensuring evidence to confirm the appropriate request and approval of the cards and regular reviews to identify the use of excluded suppliers.
• Agency Contracts: The report noted that recruitment of off-contract agency workers should have CMT approval for set up and extensions, and confirmation of Disclosure and Barring Service (DBS) checks[^1] undertaken by the agency where required. The report also stated that agency staff must be required to undertake mandatory training, and managers need to be reminded to complete leavers forms and ensure IT equipment is returned for agency workers. [^1]: A Disclosure and Barring Service (DBS) check is a record of a person's criminal convictions and cautions. It is used to assess whether a person is suitable for certain types of work, especially those involving children or vulnerable adults.
• Grants to Voluntary Groups: The report recommended that departments administering grants must retain the supporting documentation and approval in a central location and that the funding database must be kept up to date.
• Cyber Governance and Risk Management: The report recommended that an incident response process for Cyber IT be developed and incident response scenarios conducted on a regular basis.
• Transition from Children to Adult Care and Support: The report found that in a sample of nine young people at different stages of their transition, it was not always possible to see meaningful transition planning steps in Education, Health and Care (EHC) Plans from Year 9. The report stated that leaders and managers are aware of this, and there are plans to reintroduce dedicated Transition Plans in 2025.

The committee noted the report and the recommendations for improvement.

Annual Governance Statement

The committee reviewed the Annual Governance Statement, which reports on the robustness of the council's governance arrangements. The statement assesses whether the council complied with the principles of the CIPFA/SOLACE framework¹ for good governance during 2024/25. The statement highlighted several key areas:

• Review of the work of Internal Audit: Based on the work undertaken during 2024/25, 81% of assurances were reasonable and above. The limited assurances covered procurement cards, agency contracts, grants to voluntary groups, cyber governance and risk management, and transition from children to adult services care and support. There were 15 Priority 1 actions in 2024/25, and 4 carried over from previous years, with 16 actions currently in progress.
• Financial Management: The statement noted that on 6 March 2024, the council agreed the budget for 2024/25 and the Medium-Term Financial Strategy (MTFS) 2024-28. A balanced budget was set for both 2024/25 and 2025/26, with gaps remaining in future years that need to be addressed.
• Dedicated Schools Grant (DSG): The statement identified the High Needs Deficit, which is there to fund Education services for SEND[^3], as the biggest financial risk to the council. Merton Council became part of the DfE's High Needs Safety Valve (SV) programme for high deficit Local Authorities in March 2022 and received support funding of £28.8 million from 2021/22 to 2026/27 from the DfE (Department for Education). [^3]: Special educational needs and disability (SEND).

The committee noted the statement and the actions planned for 2025/26.

Governance Standards and Audit Committee Annual Report

The committee reviewed its own Annual Report for 2024-25, which provides an overview of the committee's activities and its contribution to the council's overall governance. The report highlighted that the committee met six times during the year and provided an independent and high-level focus on the risk management framework, internal control environment, and the integrity of the financial reporting and annual governance processes.

The report also noted that the committee oversaw the steps being taken to reduce the level of reliance by the council on agency and temporary workers and to achieve better value for money from expenditure in that area.

The committee agreed to recommend that the Council notes the Annual Report and agrees to its publication and distribution to relevant stakeholders.

Work Programme

The committee considered its work programme for 2025-26, which includes regular items such as:

• HR Updates
• Corporate Complaints report
• Complaints against Members annual update
• Annual Gifts and Hospitality report
• Annual review of Risk management Strategy and Strategic Risk Register
• External Audit progress reports
• Internal Audit progress report
• Fraud Update Report

The committee agreed to the work programme.

Minutes from the Previous Meeting

The minutes from the previous meeting on 10 February 2025 were approved, with an amendment to Council Tax Support Overpayment.

Changes to the Constitution

The Deputy Monitoring Officer introduced a report on changes to the constitution, noting that the consultation group had reached general consensus on the changes to the Overview and Scrutiny Procedure Rules and the Member/Officer Protocol.

The Deputy Monitoring Officer referenced two proposed changes to the report:

• Cross party motions signed are counted towards the maximum party motions/allocation, should read 'not counted'.
• Motions are to be allocated on an annual basis with no party allowed more than 2 motions at any meeting, which would include the ruling party.

Following discussion, the committee voted on several amendments, including proposals to increase the number of priority questions, allow the independent councillor to move one motion per year, and remove question from the proposed amendment in Council Procedure Rule 6.4. All of these proposals were defeated.

However, the committee unanimously agreed to a proposal to retain the division bell at the Mayor's discretion.

The committee then voted to recommend to Council that the amendments to the Constitution as detailed in Appendix A and summarised at paragraphs 4.4 to 4.15 and 8.1 to 8.8 and taking into account the changes recommended by the Deputy Monitoring Officer at the meeting be authorised, subject to the agreed amendment on the division bell.

Report on the Use of Temporary Workers and Consultants, and HR Demographics Data

The Director of People and Culture Change introduced a report on the use of temporary workers and consultants, and HR demographics data, noting in particular the reduction in spend on agency and contractor spend between June 2024 and December 2024 and the improved benefits offer to all staff at London Borough of Merton.

The committee noted the report.

Freedom of the Borough

The committee resolved to set up a working group to assess nominations for recommendations of Freedom of the Borough.

Appointment of an Independent Member

The committee agreed to the recommendations of the report on the appointment of an independent member.