Lambeth Council faces significant financial management risks, an independent assessment has revealed.
An independent review by Grant Thornton found that the council is at risk of non-compliance in eight key financial areas, despite meeting nine other standards. The report, presented to the Audit and Risk Committee on Thursday 22 October 2026, highlights concerns over demonstrating value for money, financial resilience, medium-term financial planning, stakeholder engagement with members, monitoring financial performance, and external financial reporting.
Specific issues identified include the inability to consistently evidence value for money in spending and contracts, and a lack of explicit financial resilience assessments that test plans against adverse scenarios. The report also noted that draft accounts for 2025/26 were published three weeks after the statutory deadline, and the council has received disclaimed audit opinions for several years.
In a separate but related development, the council's external auditors, Forvis Mazars, indicated they would issue a disclaimed opinion on the 2025/26 financial statements for both the Council and the Pension Fund. The disclaimed opinion for the Pension Fund is due to historic challenges in preparing the accounts and the ongoing issues with the Pension Fund's sundry debtors and creditors balances
which remain unresolved. For the Council's financial statements, the disclaimed opinion is due to historic challenges in preparing the accounts
. The meeting information also mentions that two objections relating to the 2023/24 Statement of Accounts were still in progress.
Steps being taken to rectify these issues are detailed in the Closedown and Accounts Improvement Plan
, which includes actions to strengthen year-round accounting processes, improve balance sheet reconciliations, and enhance the preparation of disclosures.
The plan aims to improve timeliness and quality for future accounts.
Key recommendations to address the at risk
areas include agreeing a corporate policy on commercial income, completing purchase-to-pay and contract management improvements, and starting options appraisals for major contracts well ahead of expiry. The council also needs to improve central visibility of spend below £100,000.
Regarding financial resilience, the council has not yet carried out an explicit assessment that tests its plans against plausible adverse scenarios. Recommendations include preparing a formal financial resilience assessment for the 2027/28 budget and setting out a three-to-five-year asset disposal pipeline.
Medium-term financial planning was also flagged, with concerns that the planning horizon is short and the plan for repaying Exceptional Financial Support (EFS) is not yet settled. Recommendations include aligning the phasing of staff savings with realistic delivery plans and linking service plans more clearly to the Medium-Term Financial Strategy (MTFS).
Member engagement arrangements are still evolving following the move to no overall control, creating uncertainty around how financial proposals secure cross-party support. Recommendations include formalising terms of reference for the Cross-Party Budget Working Group and formalising financial briefing arrangements for opposition groups.
Weaknesses remain in the monitoring of the balance sheet and in the preparation of the annual accounts. Recommendations include formalising quarterly balance sheet reviews, strengthening directorate ownership of balance sheet risks, and continuing to review and deploy Section 106 (S106) and Community Infrastructure Levy (CIL) balances.
External financial reporting has faced challenges, with draft accounts for 2025/26 published three weeks after the statutory deadline. The council has received disclaimed audit opinions for several years. Recommendations include providing further updates on the Closedown & Accounts Improvement Plan, committing to a timetable to rebuild assurance with the external auditor, and strengthening scenario modelling within the MTFS.
The review acknowledged significant progress made by the council in strengthening its financial management, including improved financial controls and a greater focus on financial discipline. However, it stressed the need to embed these improvements consistently across the organisation.
Public reports pack Thursday 22-Oct-2026 17.30 Audit and Risk Committee