Wandsworth Council's Housing Revenue Account (HRA) has been flagged as an area of concern by external auditors, Ernst & Young (EY), prompting a closer look at the valuation of council-owned properties. The issue arose from a change in the council's approach to valuing these properties, specifically regarding how additions to council dwellings were accounted for in prior years. These 'additions in year' refer to improvements or extensions made to council properties, and the lag in recognising them in valuations created a discrepancy.
The Wandsworth Audit Committee convened on Wednesday 9 July 2025 to discuss the matter, among other financial and governance issues. The committee reviewed an update on the 2023/24 accounts, and 2024/25 accounts and external audit, and the Auditor's Annual Report Wandsworth Borough Council.
According to Alicia Atto, Chief Accountant, the 2023/24 accounts were signed in February, ahead of the statutory deadline. However, Adrian Barmer, a senior manager with EY external audit, explained that during the 2023/24 audit, EY identified a discrepancy in the valuation of council dwellings. The valuer was not consistently accounting for additions made during the year, creating a lag in recognition. This resulted in £135 million in additions not being recognised in the valuation.
In response, Wandsworth Council has updated its policy to ensure that additions are recognised in the current year. EY will review the updated valuation reports and provide feedback to the Audit Committee in November. Barmer noted that EY had an initial look at the approach and didn't have any fundamental questions.
Councillor Mrs. Kim Caddy, Deputy Leader of the Opposition, inquired about the potential effects of this policy change on future accounts. Barmer confirmed that EY would report back to the committee in November regarding their comfort level with the updated approach.
Beyond the HRA, other areas of Wandsworth Council's financial reporting are also being scrutinised by EY, including the adoption of IFRS16 (Leases) and the review of the new group structure and application of IFRS 3 (Business Combinations) for Winstanley and York Road Regeneration LLP. The report pack identifies these as areas of increased risk. For IFRS16, the auditors have flagged this as an increased risk as it is new.
For the Winstanley and York Road Regeneration LLP, the increased risk is due to the complexity involved in transition.
