The Governance Standards and Audit Committee of Merton Council met on Thursday 3 September 2026 to discuss external audit updates, internal audit progress, corporate complaints, HR employment matters, and the committee's work programme. The committee received updates on the progress of the 2025/26 audit of the Statement of Accounts and the Internal Audit Progress Report. The committee was recommended to agree to the publication of the annual corporate, children's services, and adult social care complaints reports.

External Audit Update

Kevin Suter, an external auditor from EY, presented an update on the external audit, highlighting that the sector has made significant progress in addressing historic audit backlogs and restoring timeliness. However, the focus is now shifting to rebuilding assurance and confidence in financial reporting. Suter noted that while many councils, including Merton, are progressing towards unmodified opinions, a significant cohort are facing persistent challenges. He emphasised that audit readiness is the critical differentiator for organisations that are able to support the audit process efficiently, starting with well-prepared accounts, sufficient finance capacity, and strong governance.

EY's risk assessment on Merton's reserves identified the General Fund Balance, Capital Grants Unapplied, Revaluation Reserve, and Capital Adjustment Account as areas of higher inherent risk due to their materiality, complexity, and the impact of previous disclaimed opinions. Earmarked Reserves, Capital Receipts Reserves, and the Collection Fund Adjustment Account were assessed as lower risk. The auditors plan to focus on rebuilding assurance over these higher-risk areas, with the aim of achieving an unqualified audit opinion by 2026-27.

The committee received an update on the progress of the audit on the 2025/26 Statement of Accounts. The audit commenced on 13 July 2026 and is progressing in line with the agreed timetable. The council and EY aim to complete and sign off the audit before the end of December 2026, comfortably ahead of the statutory deadline of 31 January 2027. No objections were received during the public inspection period for the draft accounts.

Internal Audit Progress Report

Margaret Culleton, Head of Internal Audit, presented the Internal Audit Progress Report for 2026/27. As of August 2026, 32% of the audit plan had been completed, with most audits achieving reasonable or above assurance. The report highlighted recurring themes from completed work, including insufficient documented procedures, reliance on spreadsheets, manual processes, weaknesses in performance information, and the need for clearer governance responsibility. Two limited assurance reports were issued: one on Arboriculture Risk Management, identifying that risk management arrangements had not kept pace with the council's tree stock management, and another on Direct Payments, highlighting concerns regarding reliance on spreadsheets, segregation of duties, and data quality. The audit plan has been refreshed to respond to changing risks and priorities, with some audits being moved or deferred due to resource pressures and restructuring.

Corporate Complaints Report

Sharon Evans, Director of Governance and Civic Services, presented the Corporate Complaints Report for 2025/26, along with reports for Children's Services and Adult Social Care. The report detailed that 1450 formal stage 1 corporate complaints were received, a 39% increase from the previous year. Of these, 638 (44%) were upheld. The report noted an increase in complaints related to Council Tax billing, homelessness, parking, and refuse collections. A significant factor contributing to the increase in complaints and other requests, such as Freedom of Information requests, was identified as the use of Artificial Intelligence (AI) by complainants, which often results in more complex and lengthy submissions. The committee discussed the challenges and potential opportunities presented by AI-generated complaints, with suggestions to use AI to help manage the influx. The report also highlighted that 53% of stage 1 complaints and 34% of stage 2 complaints were responded to within the statutory timescales, a decrease from the previous year. The council is working to improve these response times, particularly with the implementation of the new LGSCO Complaint Handling Code.

Complaints Against Members

Sharon Evans also presented the annual update on Code of Conduct complaints against members. Since September 2025, eight complaints were processed. Of these, one was not accepted as it fell outside the Members' Code of Conduct, four were not referred for formal investigation due to no case to answer or disproportionate investigation, and two resulted in training for the councillor. One complaint remains under determination. The nature of the complaints primarily concerned the use of social media, allegations of disrespectful behaviour, and the use of a councillor's position for personal advantage. Seven complaints were made by members of the public, and one by a Merton Councillor. No complaints progressed to a full investigation or public hearing.

HR Employment Report including Agency Worker Update

Mildred Phillips, Director of People and Culture, presented the HR Employment Report. The report indicated a reduction in agency worker spend and headcount, with expenditure falling to £4.7 million in the quarter, a decrease of £1 million compared to the same period last year. The number of agency workers also reduced from 299 to 253. However, there was a slight increase in interim workers, who are paid on a daily rate and are more expensive, due to new council priorities and a significant IT transformation agenda requiring specialist expertise. The report also highlighted that recruitment remains challenging, particularly in professional areas like legal and IT. Sickness absence increased slightly but remains below the London average, with mental health being the most frequent cause of absence. The council is also increasing its use of the Apprenticeship Levy to fund qualifications and support local employment. New staff benefits, including an electric vehicle scheme and grandparent leave, have been introduced to enhance employee wellbeing and retention.

Work Programme

Richard Poole, Vice-Chair, presented the Work Programme. The committee noted that an additional meeting was likely to be scheduled for October, with a proposed date of the 8th, to discuss constitutional amendments related to brilliant basics projects and other items. The November meeting may be moved to December to accommodate the final accounts signing. Members were invited to suggest additional items for the work programme, with the understanding that any additions would need to be strategic and within the committee's remit.

The meeting was attended by Councillors Franca Ofeimu (Chair), Richard Poole (Vice-Chair), Michael Butcher, Brenda Fraser, Dan Hogan, Devina Paul, Daniel Shearer, Slawek Szczepanski, Robert Mitchell, Victoria Wilson, Daniel Holden, and Nick Thomas. Apologies were received from Councillor Fraser and Councillor Platt. Independent persons Anastasia Sedari and Sabrina Winter were also present. Officers present included Asad Mushtaq (Executive Director of Finance and Digital), Sharon Evans (Director of Governance and Civic Services), and Margaret Culleton (Head of Internal Audit).