Lambeth gets its accounts over the line – but the auditors are still watching and the fix is far from finished

Lambeth Council is attempting to steady its financial ship after external auditors raised concerns about its governance and accounting processes — but new reports suggest the borough is still firmly in recovery mode rather than back on an even keel.

Two updates to the council’s Corporate Committee lay out the scale of the challenge. On one hand, Lambeth has now successfully signed off its 2024/25 Statement of Accounts, meeting a hard national deadline imposed to tackle a growing backlog of unaudited local authority finances. On the other, it is doing so under the watchful eye of external auditors and with a sprawling action plan designed to fix deeper weaknesses in how its finances are managed and reported.

The council confirmed that its latest accounts were approved and received an audit opinion just ahead of the 27 February 2026 “backstop” date — a system introduced by central government to force councils to publish accounts on time, whether or not audits are fully complete.

Getting over that line, however, was not entirely smooth. Even after formal approval earlier in the month, the accounts required further adjustments before final publication. These included incorporating up to £116 million of Exceptional Financial Support from government — a substantial intervention designed to shore up the council’s reserves and balance sheet — along with a series of audit-driven revisions and reclassifications running into the millions.

While none of the changes suggest wrongdoing, they do underline how fluid the figures remained late in the process.

More fundamentally, the report acknowledges that Lambeth has faced “significant challenges” in closing its accounts and supporting the audit process in recent years. These challenges stem partly from the national audit backlog affecting councils across England, but also from local difficulties in producing accounts of sufficient quality to satisfy auditors.

That local dimension is key — and helps explain why Lambeth is now operating under a formal action plan in response to recommendations issued by its external auditors under the Local Audit and Accountability Act 2014.

Those recommendations were triggered by concerns about the council’s financial resilience, including budget pressures, the reliability of financial monitoring and the adequacy of reserves. In response, Lambeth has set out a wide-ranging programme of corrective measures aimed at tightening financial controls, improving oversight and restoring confidence in its accounting processes.

Central to that effort is a Closedown and Accounts Improvement Plan, which effectively amounts to a reset of how the council prepares and audits its finances. Measures include stricter timetables for closing the books, earlier balance sheet checks, enhanced staff training and closer, more structured engagement with auditors throughout the year.

The council has also committed to more intensive monitoring during the audit process itself, including regular reporting to senior leadership and escalation routes for resolving issues quickly — a sign of how far the process had drifted previously.

Alongside these internal fixes sits a much larger financial challenge. The council is in the midst of delivering a savings programme worth tens of millions of pounds, while also relying on government-backed Exceptional Financial Support — much of it to be funded through asset sales — to stabilise its position in the short term.

The combination leaves Lambeth walking a narrow line: attempting to rebuild credibility with auditors while simultaneously navigating severe financial pressures that show little sign of easing.

Looking ahead, the next major test is already looming. The council is aiming to publish its draft 2025/26 accounts by 30 June 2026, with final accounts due by January 2027. Hitting those milestones cleanly — and without the late adjustments and quality concerns seen this year — will be critical to demonstrating that the improvement plan is working.

For now, the tone of the reports is cautiously optimistic. Accounts have been signed off, processes are being tightened, and lessons appear to have been learned.

But the broader picture is harder to ignore. This is not a council returning to business as usual. It is one still under scrutiny, still rebuilding trust in its financial systems, and still dependent on a complex mix of savings, support and improved governance to keep its finances on track.

Because while Lambeth can now point to a set of signed accounts, the real question is whether it has fixed the system that produces them — or simply managed, for now, to get them over the line.

And as the auditors will no doubt be watching closely, next year’s accounts may prove whether this was the start of a recovery — or just a well-managed deadline.