The Wandsworth Council Audit Committee met to discuss the 2023-24 and 2024-25 accounts, risk management, governance arrangements, and to approve the recruitment of an independent member to the committee. The committee agreed to the recommendations for the 2023-24 accounts and 2024-25 external audit, the recruitment process for an independent member, and the annual review of risk management. The committee also approved the council's Annual Governance Statement for 2024/25.

Update on Accounts and External Audit

Alicia Atto, Chief Accountant, provided an update on the 2023-24 accounts and the 2024-25 draft accounts and subsequent audit, referencing Paper No. 25-247. The 2023-24 accounts were signed in February, ahead of the backstop date¹ of 28 February 2025. The 2024-25 draft accounts were published by the statutory deadline of 30 June 2025. Adrian Barmer, a senior manager with EY external audit, was present to answer questions.

Councillor Mrs. Kim Caddy, Deputy Leader of the Opposition, asked about the valuation of council homes, referencing page 30 of the report:

Why did the policy change? What's the difference between the previous policy and the current policy or the new policy? And how's that going to affect the accounts going forward?

Mr. Barmer explained that EY had identified an issue with the valuations of council dwellings during the 2023-24 audit. The valuer was not taking into account additions made during the year, leading to a £135 million discrepancy. The policy has since been updated to ensure additions are recognised in the current year.

Councillor Caddy also raised the need for a robust savings plan, given the council's financial challenges. Mr. Barmer confirmed that EY had not yet done their value for money work for 24-25, but that it would be reported back to the November committee.

Councillor Lynsey Hedges asked about increased risks identified in the plan for 2024-25, including the valuation of Housing Revenue Account (HRA) properties, the adoption of IFRS 16 leases², and the group structure of Winstanley and York Road Regeneration LLP³. Mr. Barmer clarified that these areas would be reviewed as part of the audit for 2024-25, with findings reported to the committee in November. Feneda Ameri, the Executive Director of Finance, addressed a question about the impact of government finance funding changes, stating that the impact was expected to be severe, particularly for London councils like Wandsworth. She added that EY would be discussing the council's medium-term financial strategy, which is being updated, and will go through the formal approval process in September/October.

The committee agreed to note the Auditor's Annual Report for 2023/24 and EY's 2024/25 Audit Planning Report.

Recruitment of Independent Member

Paul Gliotti, Director of Financial Services, presented Paper No. 25-248 outlining the process for recruiting an independent member to the audit committee. He explained that the terms of reference had been changed to include two independent members to bring expertise and a different perspective to the committee.

Councillor Sean Lawless questioned how easy it would be to find suitable candidates. Mr. Gliotti acknowledged that it could be a struggle, as the pool of people with relevant experience willing to serve on the committee is narrow. However, he noted that the council had been successful in the past.

Councillor Lawless suggested using social media, such as LinkedIn, to advertise the vacancy. Mr. Gliotti agreed to liaise with the HR team to promote the position as widely as possible.

The committee agreed to the recommendations to proceed with the recruitment process.

Annual Review of Risk Management

Paul Gliotti, Director of Financial Services, presented Paper No. 25-261 on the annual review of risk management. He explained that the council has historically operated on a three-tier structure, with corporate risks, service risks, and project risks being reported separately. A recent peer review of boroughs within the South West London Audit Partnership revealed that other boroughs have a more centralised approach to tracking service risks.

Mr. Gliotti proposed reviewing the risk management process to ensure that all underlying service risks are tracked in one location. He stated that key stakeholders, including the chair of the committee and executive directors, would be engaged in the review, with draft proposals presented for ratification in November.

Councillor Caddy offered to get involved in the review, given her experience on the committee.

Councillor Hedges referenced a ransomware incident at St. Helens Borough Council in August 2023 and highlighted the need for workforce cyber awareness and participation in sector resilience networks. She asked if the council participates in such networks.

Mr. Gliotti responded that he was unsure if the council participates in that specific arrangement, but noted that cyber risk is a key issue in the annual governance statement. He added that Ian Robinson and his team have engaged with third parties to monitor and track cyber risks.

Councillor Jo Rigby asked about the completion rate for cyber awareness training among staff. She was informed that the completion rate is 95%. She also asked if there is a task force looking at the opportunities for AI across the council. Mr. Gliotti confirmed that there is a change and innovation department that is championing best practice in this area.

Councillor Hedges asked about the Wind Stanley York Road development, and how confident the council is about the joint venture's governance and risk controls. Mr. Gliotti responded that it is covered in the annual governance statement.

Councillor Hedges also asked about the £20,000 quotation requirement and how compliance will be enforced. Mr. Gliotti stated that this would be covered through continuous auditing, with spot checks done for purchases above £10,000 and below £20,000.

Councillor Hedges suggested doing spot check phishing emails to test staff cyber awareness. Mr. Gliotti said that he was not aware of this being done, but that it may be something that is considered in the future.

The committee agreed to the recommendations to keep existing arrangements for the current year and to report back on any proposed changes for next year.

Review of Governance Arrangements and Annual Governance Statement

Paul Gliotti, Director of Financial Services, presented Paper No. 25-262 on the review of the council's governance arrangements and the publication of the Annual Governance Statement (AGS) for 2024/25. He explained that the AGS is based on seven principles set out by the SIPFA code⁴ and provides an opinion on the effectiveness of the council's internal control mechanisms. Mr. Gliotti stated that he deemed the council's internal control mechanisms to be effective, as 86% of audits undertaken on an assurance basis came back in a positive manner, with 100% of those in the key financial systems. He highlighted key information in the report, including the fraud team's activity and notional savings, the overall summary of internal audit work, and the key risk areas identified in the AGS. These key risk areas were:

• Devolved management organisations
• Information governance and cybersecurity
• Knowledge management
• Contract management
• Winstanley York Road
• Procurement thresholds

Councillor Caddy expressed concern that the change programme isn't being gripped in the way that one might expect, referencing paragraph 92 on page 162 of the report. Andrew Hamilton, head of the shared audit service, responded that there are a number of priority one recommendations made as a result of that report, and that they will come back and report in detail when those have been implemented. He added that the director of change and innovation is confident that a lot of work has been completed and a lot of the recommendations have been completed already. Councillor Caddy requested that the director of change and innovation come back and talk the committee through those changes at the next meeting.

Councillor Caddy also asked about fleet vehicles, noting that no consistent procurement process was followed. Mr. Hamilton explained that the audit was prompted by concerns raised by directors and highlighted significant change in personnel across the department. He stated that the underlying issue was around the governance of that whole area itself.

Councillor Caddy asked if the council will have to retrospectively change PLMDs and fess up to HMRC. Mr. Hamilton responded that there wouldn't be, as the records to understand whether people have done something they shouldn't have done do not exist.

Councillor Caddy asked about the drop in fraud referrals, referencing page 169 of the report. Mr. Hamilton explained that it was an NFI year, which resulted in a load of extra referrals that came out.

Councillor Caddy referenced paragraph 93 on page 163, asking for confirmation that the outstanding electrical safety tests have been completed in tenanted properties by the end of December 2025. Mr. Hamilton stated that he would have to get back to her outside of the meeting with that one.

The committee agreed to the recommendations to note the council's statutory annual review of its governance arrangements and to approve the proposed Annual Governance Statement for 2024/25.