The Corporate Committee of Lambeth Council met on Wednesday 04 February 2026 to discuss the external audit completion reports and the statement of accounts for 2024-2025. The committee approved the final statement of accounts for 2024-2025, delegated authority for any final technical adjustments to the Corporate Director of Resources in consultation with the Chair and Cabinet Member for Finance, and approved management representation letters for both the council and the pension fund. They also considered the closedown and accounts improvement plan.

External Audit Completion Reports

The committee received and commented on the external audit completion reports for the London Borough of Lambeth Council and the London Borough of Lambeth Pension Fund for the 2024-2025 financial year. Suresh Patel, representing the external auditors, presented the reports, highlighting that the council's accounts would receive a disclaimed audit opinion due to time constraints and quality issues. He noted ongoing work on short-term debtors and anticipated further adjustments. Discussions also covered exceptional financial support from the government, which is expected to be confirmed soon and will apply to the 2024-2025 accounts.

Several objections to the council's accounts were discussed. Two objections to the 2024-2025 accounts were deemed eligible, and provisional views have been provided to the elector and the council. A further objection to the end-of-November accounts is under consideration. Two objections from the 2023-2024 accounts remain outstanding: one concerning leaseholder service charges, which involves complex discussions with the council, and another with multiple items, for which provisional views are expected soon.

The committee also discussed the backstop situation, a national issue affecting the timely auditing of local authority accounts. Councillor Malderum expressed concern about the ongoing reliance on this measure and its impact on audit opinions. Glen Hammonds, Director of Finance, explained that the 2022-2023 accounts received a non-qualified opinion, but the 2023-2024 accounts were the first to be subject to the disclaimed opinion due to the backstop. Rebuilding audit assurance after a disclaimed opinion is a complex and potentially lengthy process, which could take several years.

Concerns were raised about the council's strategy for asset disposals to support Exceptional Financial Support (EFS). Councillor Meldrum questioned the current market conditions and the potential for selling assets at a lower price. The Director of Finance acknowledged the need for a thoughtful asset management framework and disposal policy, noting that a similar exercise for the Housing Revenue Account (HRA) had successfully achieved market value for properties. The HRA budget for 2025-2026 was prepared without assuming rent convergence, which is now expected from April 2027.

The committee also addressed issues with the pension fund accounts, where a qualified opinion is likely for 2024-2025 due to difficulties in supporting sundry debtors and creditors. The finance team is working to resolve these historic issues, with an aim to achieve an unqualified opinion for 2025-2026.

James Haddock, a public speaker and chartered accountant, presented an objection regarding leaseholder service charges and provided advice on improving the council's financial culture and accounting practices. He stressed the importance of staff caring about the accuracy of numbers and that materiality is for auditors, not account preparers. He also highlighted the need for robust control mechanisms from procurement through to accounting, stating that garbage out based on garbage in.

Statement of Accounts 2024-2025

The committee reviewed the statement of accounts for 2024-2025, which had been republished several times. Glen Hammonds, Director of Finance, explained that significant updates had been made, particularly to the group accounts. A technical reclassification of a figure within the Movement in Reserves statement was noted, which did not affect the overall level of reserves. Disclosure amendments, as highlighted by Mazars, and minor typographical changes were also incorporated. The report included management representation letters for both the council and the pension fund, confirming the council's responsibilities in preparing the accounts.

A key focus of the discussion was the closedown and accounts improvement plan for 2025-2026. This plan outlines specific actions to address issues encountered in preparing the 2024-2025 accounts. The plan emphasizes the need for a dedicated team with the right skills, a clear timetable, robust project management, and effective engagement with auditors. The committee sought assurance on the quality of the current accounts, with officers detailing the extensive quality assurance and review processes undertaken, including input from external experts and senior management.

Concerns were raised about the sufficiency of in-house experience and the reliance on external input. The Director of Finance acknowledged the need to build permanent capacity within the finance team and recruit to permanent roles, such as the Chief Accountant, to reduce reliance on interim staff and external expertise. The improvement plan aims to ensure a dedicated team is in place for the 2025-2026 accounts.

The complexity of accounting for loans made by the council to Homes for Lambeth (HFL) was discussed. These loans, amounting to approximately £56 million of the total £102 million lent, have been subject to impairments. The council is required to make provision for the repayment of these loans through its Minimum Revenue Provision (MRP) policy, which is reviewed annually as part of the budget. An options appraisal for HFL is expected to be presented in the early summer, taking two to three months to complete.

The committee also discussed the financial position of schools, noting that while some schools have reserves, others are in deficit, exacerbated by falling school rolls. The Dedicated Schools Grant, particularly the high needs block, is expected to come under significant pressure. The underspend in early years was attributed to a lack of take-up of available funding, despite parental reports of difficulties in securing childcare.

Councillor Zena, as the Section 151 officer, expressed confidence in signing off the accounts as a true and fair representation of the council's finances, citing the extensive scrutiny, regular meetings with auditors, and the engagement of experienced external advisors. The improvement plan is designed to ensure a stronger starting position for the 2025-2026 accounts, with a focus on early engagement and robust balance sheet reviews.