Merton Council is facing the possibility of a qualified audit opinion for the financial year ending 31 March 2025, according to an interim audit results report from Ernst & Young LLP (EY). The council has previously faced challenges with its financial statements, with a disclaimer of opinion issued for the 2022/23 and 2023/24 financial years. The report was presented at the Governance Standards and Audit Committee meeting on Thursday 13 November 2025.
EY, the council's external auditor, stated that while they have continued to audit the closing balance sheet and in-year transactions, they have not yet obtained sufficient evidence to have reasonable assurance over all in-year movements and closing balances. This raises concerns about the accuracy and reliability of the council's financial statements.
The audit timeline has been extended from November 2025 to January 2026 due to delays in the timing and quality of supporting documentation and analysis provided by management
, as stated in the Public Reports Pack.
Key areas of focus for the audit include potential misstatements due to fraud or error, incorrect capitalisation of revenue expenditure, and the valuation of land, buildings, and pension liabilities. The Interim Audit Results Report identified uncorrected misstatements of £1.97m related to accruals. Specific concerns include the incorrect valuation of other land and buildings and surplus assets, as well as the incorrect valuation of IAS 19 net pension liability.
The Public Reports Pack stated that there were currently 12 entries on the Key Strategic Risk Register (KSRR), comprising 9 Key Strategic Risks and 3 Key Strategic Issues. Seven of these were marked as red, relating to:
- Housing Supply- Affordable Housing
- Annual Savings Programme
- Implementation of the Climate Action Plan
- DSG Safety Valve
- Risk of Cyber attack on the Council's IT Infrastructure and Systems
- Corporate Business Plan & Balanced Budget
- School Budget Deficit
In addition to the external audit progress report, the Governance Standards and Audit Committee also reviewed an Internal Audit Progress Report, a fraud update, and the key strategic risks register. These reports provide further insight into the council's governance and risk management arrangements.
