The Audit, Governance and Standards Committee of Southwark Council was scheduled to discuss a range of financial and operational matters in its meeting on Wednesday 19 November 2025. Key topics included the progress of internal audits, the final statement of accounts for 2024-25, and reports from external auditors KPMG. The committee was also set to review proposals for a shared internal audit service with Lambeth Council, updates from the Corporate Anti-Fraud Team, and the council's approach to complaints and customer service. Additionally, discussions were planned on the Enterprise Resource Planning (ERP) replacement programme, retrospective contract decisions, and the Treasury Management and Capital Strategies for 2026-27.

Internal Audit Progress Report November 2025

The committee was scheduled to receive an update on the progress of internal audits for November 2025. This report would have detailed the results of audits relating to the completion of the 2024-25 internal audit plan and the work undertaken to date on the 2025-26 plan. It would also have included an assessment of the systems reviewed and any recommendations raised by the auditors. A particular focus was to be placed on the follow-up status of recommendations, with an implementation rate of 92.6% noted for high and medium recommendations from 2022-23 to 2024-25. The report also detailed the internal audit schools programme for 2025/26, with site visits scheduled between December 2025 and March 2026 for various primary and nursery schools, as well as a thematic review of pension arrangements for several other schools.

Final Statement of Accounts 2024-25

A significant item on the agenda was the final statement of accounts for the financial year 2024-25. The committee was asked to note adjustments made to the council's accounts, review the Statement of Accounts itself, and approve draft letters of representation for both the Council and the Pension Fund. These letters are required by KPMG, the external auditor, to conclude their audit. The report highlighted that the auditor had completed the majority of the audit work and anticipated issuing an unqualified opinion. Adjustments to the accounts included a £28.9 million downward adjustment to the social housing portfolio due to a transposition error and a £4.5 million adjustment to the investment portfolio relating to property valuation. Minor amendments were also made to disclosure notes following technical reviews.

External Auditor's (KPMG) Reports for 2024-25

The committee was scheduled to consider reports from KPMG, the council's external auditor. These included the Year End Audit Report for the council's core financial statements, the Auditor's Annual Report, and the Year End Audit Report for the Pension Fund. These reports would have provided the committee with the auditor's conclusions on the financial statements and the council's arrangements for securing economy, efficiency, and effectiveness in its use of resources. The reports indicated that KPMG planned to issue an unmodified opinion on the council's financial statements and the Pension Fund's financial statements. However, the final Value for Money conclusion was pending due to ongoing work related to an objection received by the auditor.

Internal Audit: Shared Service Proposal

A proposal was presented for the committee to note the plan to enter into a shared service agreement with Lambeth Council for the delivery of internal audit services, commencing in January 2026. This move was identified as a way to bring more services under public control, offering benefits such as resourcing resilience, efficiencies through shared methodologies, and opportunities for staff development. Lambeth Council would act as the lead and host authority, employing staff to deliver internal audit activity for both councils, governed by a Section 101 agreement. BDO, the current provider for Southwark, would continue to provide additional resilience during the transition.

2025-26 Q3 Report of the Corporate Anti-Fraud Team and the Special Investigations Team

The committee was to receive a report summarising the work of the Corporate Anti-Fraud Team (CAFT) and the Special Investigations Team (SIT) in preventing, detecting, and responding to fraud, bribery, and corruption. The report detailed investigations referred between April and October 2025, categorised by directorate and type of fraud. CAFT investigations were generally low to medium in financial risk, while SIT focused on housing tenancy fraud, including unlawful subletting, non-occupation, and succession fraud. The report highlighted that SIT had recovered properties valued at £1.7 million and prevented fraud valued at £1.7 million in the reporting period. It also noted the ongoing National Fraud Initiative (NFI) data matching exercise.

Complaints and Customer Service

A progress report on complaints, member enquiries, and customer service performance across all departments for the first two quarters of 2025-26 was scheduled for review. The report indicated an increase in complaints and member enquiries compared to the previous year, but also improvements in response times. Stage 1 complaints increased by 19%, with Housing seeing a 20% rise. Stage 2 complaints grew by 67%, but on-time closure rates improved. The Housing Ombudsman Annual Report for 2024-25 showed improvements, with Southwark recording the fifth lowest maladministration rate in London. Contact centre performance was also reviewed, with KPI achievement reaching 72%. The report also covered key milestones in the Council's Resident Experience Plan.

Update Report on Corporate Risk

The committee was to receive an update on the council's key risks, presented in a revised assurance framework format. This framework aimed to map sources of assurance across the 'three lines of defence' (business operations, oversight functions, and internal audit). The top corporate risks, generally assessed as amber or red, included financial pressures in the Housing Revenue Account, asset management and building safety, cyber security, medium-term financial planning, and the failure of key providers. The report indicated an increase in the overall severity of risk, reflecting financial pressures, regulatory oversight, and funding reform.

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

A progress report on the Southwark360 Programme, aimed at replacing the council's Enterprise Resource Planning (ERP) system for HR, Finance, Procurement, and Payroll services by April 2027, was to be presented. The current SAP system, in use since 1999, has fundamental issues requiring modernisation. The programme's vision is to create a resilient, future-ready council with modern, reliable, and cost-effective tools. The mobilisation phase, from April 2023 to September 2025, focused on planning, resourcing, and establishing a procurement framework. Contracts for the ERP system vendor (SAP S/4 HANA Public Cloud) and implementation partners (HCL Technologies, Veran Performance, Infosys) had been awarded. Foundational projects were underway to enhance workforce readiness, data quality, and process maturity. The estimated cost for the initial three-year term was £22.75 million, with further costs of £12.9 million over a 10-year period.

Retrospective Approval for Gateway Report (Print Management Services)

The committee was asked to note the reasons for the retrospective approval of a 12-month contract extension for Print Management Services with Corporate Document Services Ltd (CDS). Delays in securing timely approval for the contract extension were attributed to resourcing issues within Corporate Facilities Management (CFM), including a vacant Procurement Manager post. The report outlined actions being taken to strengthen governance, including monthly monitoring of contract timelines, enhanced reporting mechanisms, and a dedicated TUPE coordinator.

Report on Retrospective Contract-Related Decision: Housing Aids and Adaptations

This report concerned a retrospective contract-related decision regarding the extension of contracts for contractors delivering housing adaptations. The report detailed the financial summary of expenditure and projected spend, and outlined actions taken by the Director of Repairs and Maintenance to minimise the risk of future retrospective contract decisions. These actions included strengthening contract exit planning, TUPE compliance, performance management, and enhancing reporting mechanisms. The report also noted that the extension of these contracts would assist the council in meeting its statutory obligations under the Landlord and Tenant Act 1985.

Housing Revenue Account (HRA) Governance and Financial Monitoring

An update on the governance arrangements for the Housing Revenue Account (HRA), focusing on financial and performance monitoring for 2025-26 and the budget-setting process for 2026-27, was scheduled. The report highlighted the HRA's reliance on income streams such as rents and service charges, and the pressures faced due to inflation, below-inflation rent caps, and building safety requirements. The Council's HRA Recovery Plan was noted as being implemented in two phases, with phase 1 focusing on cost control and phase 2 on resetting budgets and repaying debt. The report indicated a slight improvement in the financial position for 2025-26, but acknowledged ongoing risks, particularly in repairs and maintenance.

Treasury Management Strategy and Capital Strategy 2026-27

The committee was asked to note the draft Treasury Management Strategy (TMS) for 2026-27 and its appendices, which included forecasts for interest rates, inflation, and PWLB rates. The strategy outlined the council's approach to managing its borrowing, investments, and cash flows, with a focus on security, liquidity, and yield. The economic environment was described as fragile, with persistent inflation and elevated borrowing costs. The report detailed the council's debt and investment portfolios, including forecasts for the current and next three years, and outlined the borrowing strategy, which prioritised the Public Works Loan Board (PWLB) as the principal source of borrowing. The capital strategy, which sets the policy framework for capital investment, was also presented, noting that it was undergoing an update to align with CIPFA guidance. The Minimum Revenue Provision (MRP) Policy Statement for 2026-27 was also included.

Independent Members of the Audit, Governance and Standards (Civic Awards) Sub-Committee: Recommendations

The committee was asked to note the criteria for inviting individuals to join the civic awards sub-committee for evaluating nominations for the 2025 Civic Awards. Invitees should have a good understanding of the borough and its diverse communities, be familiar with the Voluntary and Community Sector (VCS), and be able to evaluate nominations. As a group, the independent members should reflect the borough's diversity in terms of gender, ethnicity, and age, including at least one person under 25. The committee was also invited to provide comments on these criteria and suggest individuals to be invited.

In Year Review of Work Programme 2025-26: November 2025

The committee was asked to note the proposed work programme for 2025-26. The programme was grouped in line with the committee's functions, covering audit activity, the regulatory framework, accounts, treasury management, and the council's standards framework. The report emphasised the need for flexibility to address emerging issues and noted that training for members would continue. The committee was invited to consider whether the attached work programme reflected its priorities and to suggest any amendments.