Harrow Council's external audit for 2024/25 has revealed significant weaknesses in several key areas, including children's social care and governance arrangements. The findings were presented to the Governance, Audit, Risk Management and Standards Committee (GARMS) on 25 November 2025.

The audit, conducted by Forvis Mazars, identified four significant weaknesses:

  • DSG Deficit
  • Governance arrangements in relation to management of the schools PFI contract
  • Arrangements in the provision of Children's Social Care
  • Governance in relation to allegation of fraud and Corruption

The report pack stated that management had discussed the draft value for money findings with Mazars and that the risks associated with two of the findings were no longer significant at the end of 2024-25 as the recommendations had been largely implemented. The two findings deemed 'no longer significant' are:

  • PFI Schools: The risks identified was that the lack of monitoring may have led to overcharging or poor performance of the supplier had been mitigated by the appointment of a specialist and having the lead officer who is leading on this.
  • Governance re Fraud: At the time of the internal audit in January 2025, 10 of the 16 recommendations were all in place during 2024/25. The six outstanding recommendations fall into two categories: IT systems and management oversight/separation of duties. A follow-up on the progress by internal audit showed that if they'd given new ratings by the year-end, they'll have been more positive as the recommendations had been partially implemented and the key parts of the separation of duties was in place.

However, the report pack also indicated that the weakness regarding governance in relation to allegations of fraud and corruption was raised in previous years, indicating a lack of sustained improvement in this area. Furthermore, the Ofsted report noted that support for care leavers had deteriorated since the last inspection in 2020.

The external auditors are required to provide a summary of the work they have undertaken and the judgments they have reached against each of the specified reporting criteria in this Auditor's Annual Report. They make recommendations where they identify weaknesses in arrangements or other matters that require attention from the Council. They refer to two distinct types of recommendation:

• Recommendations arising from significant weaknesses in arrangements – they make these recommendations for improvement where they have identified a significant weakness in the Council's arrangements for securing economy, efficiency and effectiveness in its use of resources. Where such significant weaknesses in arrangements are identified, they report these (and our associated recommendations) at any point during the course of the audit.

• Other recommendations – they make other recommendations when they identify areas for potential improvement or weaknesses in arrangements which we do not consider to be significant, but which still require action to be taken.

Specific Weaknesses and Action Plans

  • Children's Social Care: The audit highlighted significant weaknesses in the provision of children's social care. The report states that the Council's action plan provides clear responses to each of the eight points for improvement identified within the Ofsted report. The responses to each improvement point are thorough and the Council have undertaken a full review of the processes and protocols in place within the service line. However, as the action plan was produced in July 2025, the actions in place are currently in the early stages and not fully completed to assess whether the necessary improvements have been made.

  • Schools PFI Contract: Governance failures were identified in relation to the management of the council's schools PFI contract. In January 2025, an internal audit review found that, since the contracts team within the Place directorate was disbanded within a restructure of the directorate of 2021/22, the schools PFI contract had not been monitored, and no handover process had been put in place at the time of the restructure. Almost all staff with knowledge of the schools PFI have left the Council, with limited knowledge retained. The internal audit report raised 14 recommendations for the Council to address the weaknesses identified, 12 of which were categorised as High risk and the other 2 as Medium risk. The overall assurance opinion gave 'no assurance' to the effectiveness of the controls in place.

  • Allegation of Fraud and Corruption: In August 2021, the Council were alerted to allegations of fraud and corruption within a particular service area that are currently subject to a criminal investigation by the Police. The Council completed an internal audit review of the systems in place and commissioned an independent review with the same scope. The independently led review raised five recommendations for the Council to address to improve its internal control and reduce the risk of similar events occurring in the future. A follow up internal audit review was completed in December 2024 and provided limited assurance over the operation of controls for the service area subject to allegations of fraud and corruption. At the end of 2024/25, one high rated and four medium rated recommendations were yet to be implemented.

  • DSG Deficit: The Council had an opening Dedicated Schools Grant (DSG) reserve deficit of £1.8m, but this deficit increased to £13.8m by the end of 2024/25. This was made up of an overspend of £13.7m on the High Needs Block, which was partially mitigated by underspends on other DSG blocks. The Council's Budget Monitoring Report for Q1 of 2025/26, taken to Cabinet in September 2025, projected the cumulative deficit at the end of 2025/26 to be £28m. This is a projected overspend of £14.1m for the 25/26 financial year, again driven by the High Needs Block which continues to see increasing number and complexity of need of children requiring Education Health and Care Plans (EHCP).

The report pack stated that the scale fees for 2024/25 were £421k and £85k for the main audit and pension fund audits respectively. It also stated that the proposed additional fees for Value for Money risks and significant weaknesses and Payroll data migration were £35k and £15k respectively, subject to PSAA approval.

The Appendix 1 - Harrow Draft AAR 24-25 summarised the work undertaken by the auditors in respect of the audit of the council's 2024-25 statement of accounts and the Pensions Fund accounts.