The General Purposes and Audit Committee of Bexley Council met to discuss the Local Government Association (LGA) Finance Peer Challenge, reports from Ernst & Young (EY) on audit planning, internal audit and counter fraud progress, and debt and debt recovery. The committee was asked to note the reports and approve changes to the internal audit plan and the Internal Audit Strategy.

LGA Finance Peer Challenge

The committee was scheduled to review the LGA Finance Peer Challenge, which the council requested towards the end of 2023 to address increasing overspends and the Medium Term Financial Strategy (MTFS) gap. The review took place in January 2025, and the feedback report was received at the end of March 2025.

The peer team considered five themes:

• Financial leadership
• Financial strategy, planning and forecasting
• Decision-making
• Financial outcomes
• Partnership and innovation

The council also asked the peer team to focus on children's services, given the budget pressures and demand challenges in this area.

The report highlighted that Bexley is a lean council, spending less per head of population than the average London borough. However, concerns were raised over the council's financial sustainability, the low level of revenue reserves, and the trending overspends in adult and children's services. The report also noted the risk of over-reliance on transformation as a way to balance the MTFS.

The report made 12 recommendations, including:

• Greater clarity in the MTFS
• Early engagement of finance staff in the transformation programme business case process
• Review of spending controls
• Development of a children's services transformation and reform plan
• The council needs to work as one council , breaking down silos to get the whole organisation working together to meet the transformation and financial sustainability challenges

A formal response and draft action plan were developed for each recommendation.

Ernst & Young LLP (EY) Final Audit Planning Report for Bexley's 2024/25 Accounts

The committee was scheduled to consider the final audit planning report from Ernst & Young LLP (EY), the external auditor for the council's statement of accounts for 2024/25. The report sets out the areas of risk and audit focus identified by EY for the current year audit, along with the rationale and expected audit approach. An additional area of focus has been added covering the valuation of assets using the Depreciated Replacement Cost approach. The report also provides updated audit materiality values and a timetable showing the key stages of the audit.

The report identified a number of significant risks, including:

• Misstatement due to fraud or error
• Risk of fraud in revenue and expenditure recognition, through inappropriate capitalisation of revenue expenditure
• Land & Building and Retail Investment Property Valued using Existing Use Value (EUV) approach
• Land & Building, AHFS and Non Retail Investment Property Valued using Depreciated Replacement Cost (DRC) approach
• Net pension assets valuation
• IFRS 16 leases disclosures

Ernst & Young LLP (EY) Final Audit Planning Report for the Pension Fund's 2024/25 Accounts

The committee was also scheduled to discuss the final audit planning report from EY for the Bexley Pension Fund Accounts for 2024/25. The report provides updated audit materiality values, details of the EY audit team, and a timetable for the audit.

The report identified a number of significant risks, including:

• Misstatements due to fraud or error through posting of investment income journals
• Valuation of Level 3 Investments
• IAS 26 Retirement benefits disclosures

Internal Audit & Counter Fraud Progress Reports Q2 2025/26

The committee was scheduled to receive an update on internal audit activity during the period 10 July 2025 – 08 September 2025, as well as an update on counter fraud activity for the same period.

Ten reports have been issued in final:

• Sexual Health Services - Reasonable Assurance
• Client Relationship Management (CRM) - Not rated
• CSC – Privacy Notices - Not rated
• Licensing (Alcohol & Entertainment) - Reasonable Assurance
• Key Financial Systems: Business / Non Domestic Rates Collection - Reasonable Assurance
• Transparency Code Compliance - Reasonable Assurance
• Payroll - Reasonable Assurance
• Employees - Gifts and Hospitality - Limited Assurance
• Health & Safety policy audit - Limited Assurance
• Complaints - Reasonable Assurance

The following reports have been issued in draft:

• LADO
• Controcc audit
• Complaints
• Members - Gifts and Hospitality
• Temporary Accommodation

The report also provided an update on the 2025/26 Counter Fraud Plan, which uses the approach outlined in the Fighting Fraud and Corruption Locally (FFCL) Strategy. During the period 10 July to 08 September 2025, the Counter Fraud Team logged 4 new cases in the InCase fraud case management system, comprising 2 potential Blue Badge frauds and 2 potential housing frauds. Nineteen fraud cases were closed during the same period.

The committee was asked to approve any changes to the internal audit plan and to note, comment on and approve the Internal Audit Strategy.

Debt and Debt Recovery as at 31 July 2025

The committee was scheduled to review a report setting out the main types of debt in the council, the level of debt owed, and the debt recovery process for the various types of debt.

At March 2025, the value of debt outstanding excluding Council tax and business rates was £27.649m, an increase of £2.311m since March 2024. At July 2025, the value of debt outstanding excluding Council tax and business rates was £23.330m.

The report also included details of the top 10 debtors as at 31 July 2025, which included FM Conway Limited, Countrystyle Recycling LTD, NHS South East London ICB, London Borough of Havering, Greater London Authority, London Borough of Newham, London Borough of Bromley, Reddington Retail Ltd and two Adult Social Care (ASC) service users.

The report noted that the current level of bad debt provision set aside at year end March 2025 was £10.732m, and that the forecast bad debt provision based on data at July 2025 would result in a requirement to top up the provision at March 2026.