The Audit Committee of Wandsworth Council met on Wednesday, 12 November 2025, to discuss the progress of governance arrangements, fraud updates, the annual review of risk management, and the external audit report. Key decisions included noting the progress on governance arrangements, approving the next steps for updating the risk management approach, and accepting the report of the external auditor.

Update on External Audit and Report of the External Auditor

The committee received an update on the 2024-25 accounts and their subsequent audit. The draft accounts were published by the statutory deadline of 30 June 2025, and the audit, conducted by Ernst & Young (EY), was nearing completion, with final sign-off anticipated within the next month. Ben Lazarus from EY confirmed that the audit was broadly on track, despite some ups and downs typical of such processes. He expressed comfort with the overall progress, noting that any uncorrected audit differences were not deemed material.

A significant point raised was a significant weakness identified in the council's value for money arrangements. Mr. Lazarus explained that this was primarily due to the timing of a C3 report from the Housing Regulator in February 2025, which necessitated commentary on the arrangements during that financial year. He assured the committee that while he had to comment on the arrangements within the 2024-25 financial period, there was a positive direction of travel post-year-end.

Councillor Critchard sought clarification on whether the council's audit opinion compared favourably with other authorities, expressing concern that residents might misunderstand the implications of a disclaimed opinion. Mr. Lazarus confirmed that there had been a sector-wide reset of audit involving various regulators, leading to a large number of entities reporting disclaimed audit opinions in the 2022-23 financial period. He stressed that while technical work was ongoing to achieve a clean opinion, the current year's audit procedures were largely business-as-usual, and there were no particularly material or significant issues identified from these procedures.

Councillor Caddy raised questions regarding the value for money weakness, asking if it was solely due to the regulator's report or if other council areas contributed. Mr. Lazarus clarified that while EY's remit was not as detailed as the Housing Regulator's, they did consider other regulatory reports. He noted that a C3 rating from the Housing Regulator was a fundamental finding, and EY relied to an extent on its findings, while also performing their own checks. He indicated that more detailed commentary on value for money would be provided in the forthcoming Auditor's Annual Report.

Councillor Hedges inquired about future value for money assessments, specifically whether they would test financial resilience against fair funding outcomes and how residents could be assured that the unsatisfactory rating did not reflect wider failings. Mr. Lazarus explained that financial sustainability, a component of value for money, is inherently forward-looking and would incorporate the fair funding review. He stated that while increased pressures were anticipated, he was not currently seeing anything in the council's short-to-medium-term arrangements akin to more distressed councils. He reiterated that the value for money remit was wide-ranging, covering governance, financial sustainability, economy, efficiency, and effectiveness, and that reporting was by exception, with the housing regulator issue being the only current point of exception.

Councillor Caddy also questioned the HRA valuation and a refcus issue, referencing pages 64 and 59 of the report. Mr. Lazarus described it as a live matter, explaining that the data provided made it difficult to be comfortable that transactions were recorded in the correct year. He confirmed that discussions were ongoing with the council's finance team to resolve this. Alicia Atto, Chief Accountant, added that the HRA valuation was a live issue, with ongoing discussions with EY regarding their approach. She also confirmed that the refcus issue was being addressed, with both matters being worked on alongside the audit work.

Concerns were raised about the quality and preparation of documentation, with references to pages 94 and the fee quote. Mr. Lazarus acknowledged that while some areas were well-prepared, others required improvement, citing IFRS 16 disclosures as an example of a technical area needing completeness. Catherine Burstyn, Director of Financial Management, acknowledged that some working papers needed improvement, attributing this partly to the volume of work and the complexity of technical accounting standards. She noted that EY had acknowledged improvements from the previous year.

The committee also discussed capital projects and partnerships, with Councillor Hedges seeking assurance on unmanageable risks, particularly concerning a joint venture. Mr. Lazarus referred to his value for money reporting, stating that no unmanageable risks had been identified in this area. Catherine Burstyn added that EY was aware of expert advice obtained regarding the joint venture contract and buyout, and no issues were found. She also highlighted the ongoing review of the council's risk management strategy.

The committee voted to note the report and approve the recommendations, including providing delegated authority to the chair.

Progress on Governance Arrangements

Paul Giulioti, Director of Financial Services, presented an update on the progress of the work undertaken by the shared audit team. Six months into the plan, 21 out of 59 planned audits were completed, with a further 16 in progress, indicating the council was on track. However, challenges were noted, particularly in adult social care due to external inspections.

Councillor Caddy raised concerns about two Priority 1 (P1) recommendations that remained overdue: the storage of deeds and contracts, and fleet vehicles. Mr. Giulioti contextualised this by noting that the vast majority of recommendations from previous years had been delivered. Andrew Hamilton, Head of the Shared Audit Service, clarified that the audit team implements recommendations, but officers are responsible for their implementation. He expressed concern about the deeds and contracts issue, while deeming the fleet vehicles issue less critical as the report was issued in June 2025.

Tanya College, Audit Manager, provided further detail on the deeds and contracts issue, explaining that it had been ongoing for some time. A budget had been approved, but identifying suitable resources had been challenging. She mentioned that a visit to the archives was planned to assess the condition of the deeds and explore scanning options. The issue of finding a legally trained individual willing to undertake the work in a dingy basement was highlighted as a significant barrier. Councillor Caddy suggested that the council should consider spending more to outsource this work due to the potential value of the deeds.

Councillor Hedges raised a question about Business Continuity Plans (BCPs), noting that only half of the services had been tested. She sought assurance on how the council would function in a major incident. Mr. Hamilton stated that BCPs were in place at a service level, but testing was ongoing. He acknowledged that cyber threats were a key focus, with recent exercises involving executive directors. He explained that while BCPs are important, the council prioritises services based on risk, and not all services would cease to operate if unable to function for a period.

Councillor Critchard requested more information on the audit timetable, specifically regarding the number of audit days and the reasons for delays. Mr. Hamilton confirmed that there was sufficient resource in terms of days and funding, but recruitment remained challenging. He indicated that the aim was to complete 90% of the plan, acknowledging that 100% completion was unlikely due to unforeseen issues. He also clarified that missing one or two audits would not have a material impact on the council's ability to provide an overall opinion.

Councillor Critchard also raised concerns about the fleet vehicles policy, noting the lack of a revised due date for its implementation. Mr. Giulioti explained that a process was in place for P11d declarations, but the audit identified gaps in controls. He stressed that the audit had not identified significant wrongdoing, but rather weaknesses that could lead to issues. Councillor Caddy requested that a due date for the fleet policy be agreed and recorded at the next audit committee meeting if it was not yet in place.

Councillor Critchard also inquired about an audit of the South West London Fraud Partnership. Kevin Holland, Assistant Director of Fraud Risk, explained that the audit was conducted by Mazars and found the procedures satisfactory, although recommendations were made to update the partnership agreement, which dated back to the partnership's inception.

The committee noted the report.

Fraud Update 2025/26

Kevin Holland, Assistant Director of Fraud Risk, presented the fraud update, highlighting the work undertaken by the team. He noted that the council was part of a wider partnership and that the report focused on the authority's specific activities. Table 1 outlined key objectives and progress, while Table 2 summarised referral levels compared to previous years.

Mr. Holland mentioned a national local government fraud survey, indicating that the growth in spend in areas like temporary accommodation unfortunately attracts fraudsters. He highlighted the use of artificial intelligence (AI) as both a benefit and a challenge, noting its potential for identifying trends but also its use by fraudsters. He provided an example of AI being used to screen applications, with hidden text potentially manipulating the process.

Councillor Rigby expressed concern about the increasing use of AI in scams and requested more information on how the council planned to identify and counter AI-enabled fraud. Mr. Holland explained that IT services handle scam emails and firewalls, blocking tens of thousands of attacks daily. He confirmed that the council's membership in the Government's Counter Fraud Profession provided access to information on trends and new techniques.

Councillor Caddy questioned the reduction in savings from housing applications, council tax, and fleet vehicles, contrasted with a significant increase in savings from other categories. Mr. Holland explained that the other figure included notional savings from the National Fraud Initiative (NFI) data matches, primarily from blue badges and waiting lists for deceased individuals still in circulation. He noted that the NFI operates on a two-year cycle, explaining the fluctuations. He also mentioned the use of a third-party provider for council tax and discount recovery.

Councillor Hedges inquired about benchmarking for temporary accommodation fraud and the checks in place for grant funding. Mr. Holland stated that comparative figures for temporary accommodation fraud were not yet available, but the council was gaining a better understanding of fraud types, including those involving providers. Regarding grants, he explained that checks would be risk-based, with more rigorous controls for larger sums. Councillor Rigby raised concerns about the lack of attendance from certain councillors at the Grant Scrutiny Committee, impacting the level of scrutiny. It was suggested that this issue be taken back to the Grant Scrutiny Committee in the first instance.

Councillor Critchard commented on the number of visits to temporary accommodation, noting their value not only for fraud detection but also for safeguarding and ensuring the suitability of accommodation. Mr. Holland confirmed that three safeguarding referrals had been made from these visits, and that the housing service was resourcing its own visiting scheme.

The committee noted the report.

Annual Review of Risk Management

Paul Giulioti, Director of Financial Services, presented an update on the revised approach to risk management. Historically, only two reports went to the board for oversight, with limited evidence of how risks were managed between reporting cycles. The new approach aims to demonstrate risk management at service and divisional director levels before escalating to executive directors and the corporate risk register.

The new process will involve four reports going to the directors' board, feeding from divisional directors. A digital format is being developed with the IT team to improve efficiency. Mr. Giulioti outlined a timeline for implementation, with initial training for executive directors expected by the end of January, and testing of the new platform in January and February. The aim is to have a more detailed report for the July Audit Committee.

Councillor Hedges inquired about the timeline, noting a discrepancy with the strategy approval date mentioned in the report. Mr. Giulioti clarified that while headline corporate elements would be presented in January, the full digital format and detailed reporting would likely be available by July. He also asked about engagement with the transformation programme. Mr. Giulioti confirmed engagement with all parts of the authority, including service directors, to shape the new approach.

Councillor Critchard sought clarification on the budget and timeline, and how member engagement would work. Mr. Giulioti explained that there was no specific new budget, as risk management is embedded in existing processes, and the digital system is being developed internally. He stated that training would be provided as part of existing contract negotiations. He also indicated that the frequency of member engagement with the risk register would be determined once the new system was in place, with the July Audit Committee being a potential first opportunity for more detailed review.

The committee approved the next steps for updating the risk management approach.