The Governance Standards and Audit Committee of Merton Council met on Thursday 16 July 2026 to review the council's audit and governance arrangements. Key discussions included the external audit planning report, the internal audit annual report, and nominations for Alderperson status. The committee also reviewed its own annual report and work programme.

External Audit Planning Report 2025/26

The committee received an overview of the 2025/26 audit strategy, which focused on Rebuilding Assurance following previous audit challenges. Ernst & Young LLP, the external auditor, presented their plan, highlighting the phased approach to regaining unqualified audit opinions. The strategy involves a detailed risk assessment of opening reserves and a focus on rebuilding assurance over historical balances from 2022/23. Management's preparedness, including the quality of working papers and responsiveness to issues, was identified as crucial for a successful audit. Significant risks identified for the upcoming audit include the presumptive risk of management override of controls, inappropriate capitalisation of revenue expenditure, incorrect valuation of Property, Plant and Equipment, and the valuation of the IAS 19 net pension liability. Materiality for the audit was set at £12.7 million. The committee was also informed that no risks of significant weakness in value for money arrangements had been identified at this stage.

Internal Audit Annual Report

Margaret Culleton, Chief Audit Executive, presented the Internal Audit Annual Report for 2025/26. She provided an overall opinion that the council has reasonable assurance that the London Borough of Merton has effective arrangements in place for governance, risk management and internal control. This judgement was supported by the absence of pervasive or systemic control failures, though some areas required continued management focus. The report detailed the delivery of the audit plan, with 36 out of 39 audits reaching final report stage. Assurance levels were lower than previous years, with 64% of completed audits receiving Reasonable or Substantial Assurance, which was attributed to a greater focus on higher-risk areas. Key issues identified included weaknesses in grants to voluntary groups, cyber governance, client financial affairs, the high needs block, and declarations of interest. Of the 33 Priority 1 recommendations made, 15 remained outstanding, with implementation dates extending into late 2026 and early 2027. The report also confirmed the council's conformance with Global Internal Audit Standards.

Nominations for Alderperson Status

The committee considered nominations for honorary alderperson status, a recognition for past members who have rendered eminent service to the council. Following the May 2026 elections, four former councillors – Dennis Pearce, Michael Brunt, Laxmi Attawar, and the late Councillor Marsie Skeete – were eligible for consideration. A working group recommended that Councillor Marsie Skeete be considered posthumously for her exceptional service. The committee noted that these nominations would be recommended to Full Council for approval, with a two-thirds majority of members present required for acceptance.

Annual Report of the Governance, Standards and Audit Committee 2025/26

The committee reviewed its draft Annual Report for 2025/26. The report, prepared by the Chief Audit Executive, summarised the committee's activities, demonstrating how it supported good governance and fulfilled its terms of reference. It concluded that the committee had met four times during the year, maintained independent oversight of the council's risk management, internal control, financial reporting, and annual governance processes, and focused on areas such as value for money in the use of agency staff and anti-fraud arrangements. The report also outlined the committee's proposed work plan for 2026/27. The committee was asked to comment on and approve the report's content before recommending it to Full Council for noting and publication.

Work Programme

The committee reviewed its forward work plan for 2026/27. The plan included scheduled meetings in September, November, February, and July, with provisional agendas covering topics such as HR updates, corporate complaints, external and internal audit progress reports, fraud updates, and the final accounts. The work programme also included a list of items to be added as required, such as reviews of polling places, constitutional amendments, and reports on member interests.