The Lincolnshire County Council Audit Committee met on Monday 22 June 2026 to review the council's risk profile, internal audit performance, and external audit plans. Key discussions included the overall adequate assurance rating for the council's risk management, the internal audit opinion for the 2025-26 financial year, and the external audit plans for the council and the Lincolnshire Pension Fund for 2025-26. The committee also discussed changes to legislation regarding the publication of members' home addresses in their registers of interest and selected Artificial Intelligence (AI) as the focus for a strategic risk deep dive review.

Combined Risk Report 2026

The committee received an overview of Lincolnshire County Council's (LCC) risk profile for 2026. Kevin Lane, Team Leader for Insurance and Risk, presented the Combined Risk Report, which indicated an overall adequate assurance level, a decrease from substantial in previous years. This reduction reflects the increasing pressures and uncertainties facing local authorities. All directorates, including Place, Children's Services, Resources, Fire and Rescue, and Adult Care and Community Wellbeing, also received an adequate assurance rating.

The report highlighted four key risk themes: Local Government Re-organisation (LGR), Increased Demand, Budget and Funding, and Organisational Stability. Andrew Crookham, Chief Executive, elaborated on these themes, noting that LGR is the most significant change facing the organisation, with potential disaggregation of countywide services posing risks to service delivery, economies of scale, and expertise. He also discussed the increasing demand across all services, the ongoing budget pressures despite a recent fair funding review, and the need for organisational stability amidst significant change. Michelle Grady, Section 151 Officer, added that while the budget and funding outlook had improved following the fair funding review and SEND reform white paper, risks remain regarding increased demand exceeding forecasts, inflation impacting contracted services, failure to deliver savings, and resource diversion due to LGR.

Annual Audit Report & Opinion

Claire Goodenough, Head of Audit and Risk, presented the annual audit report and opinion for the 2025-26 financial year. She stated that the frameworks of governance, risk, and internal controls were deemed adequate, with audit testing demonstrating that controls were working in practice. However, improvements in control design and application were recommended to reduce reliance on employee diligence. Weaknesses in the control environment for maintained schools were noted as being outside the direct control of council officers due to delegations to Governing Bodies.

The report detailed several areas where limited assurance was awarded, including HR policy implementation and impact, members' allowances, LCC wholly owned companies, financial management and support for maintained schools, exceptional payments to foster carers, and specific maintained school audits. The root causes for these limited assurance findings were often attributed to systemic factors such as failures to apply policies and procedures, lack of training, and inadequate governance.

Internal Audit Strategy

Claire Goodenough also presented the three-year Internal Audit Strategy for 2026-2029. The strategy aims to enhance the effectiveness and delivery of the Corporate Assurance & Risk Management (CARM) functions, adapting to a changing risk environment characterised by LGR, advancing technology, increased demand, and partnership working. The vision is to be a trusted partner driving continuous improvement.

Key strategic objectives include integrating data analysis into audits, building an internal development programme for succession planning, improving data reliability for resource planning, enhancing root cause analysis in audit and fraud work, and equipping staff for LGR and future assurance work. The strategy acknowledges the challenges of recruiting experienced internal auditors and proposes an in-house approach to develop talent.

External Audit Plans - Lincolnshire County Council and Lincolnshire Pension Fund 2025/26

Representatives from KPMG, the external auditors, presented their indicative audit plans for Lincolnshire County Council and the Lincolnshire Pension Fund for the 2025-26 financial year. For Lincolnshire County Council, materiality was set at £32 million, with a lower level of £24 million for misstatements reported to the committee. Significant risks identified included the valuation of land and buildings, the valuation of post-retirement benefit obligations, and management override of controls. KPMG outlined their audit approach, including working with internal audit and specialist teams, and utilising AI software for journal entry analysis.

For the Lincolnshire Pension Fund, materiality was set at £35.6 million. Significant risks included management override of controls, inaccurate recording or valuation of investments, and issues with contribution recording. KPMG detailed their approach, which involves working with actuarial specialists, using their iRADAR tool for investment valuations, and performing procedures over contributions. A fee increase of 3.08% was noted, with potential further variations due to the LGPS triennial valuation and a change of custodian.

Elected and Co-opted Members Register of Interests - Home Address

Will Bell, Monitoring Officer, informed the committee about changes to legislation, effective from 29 June 2026, under Section 32A of the Localism Act 2011. These changes mean that members' home addresses will no longer be automatically published in their registers of interest unless they specifically request it. The published register will state that the address is withheld under Section 32A. Provisions for redacting other sensitive interests, such as secondary home addresses or employment, based on the risk of violence or intimidation, remain in place under Section 32 of the Localism Act 2011. Councillor Ian Carrington supported the change, noting its importance in encouraging new people to become councillors by addressing fears of intimidation.

Strategic Risk - Deep Dive Review

The committee was asked to select a risk or risk theme for a deep dive report to be presented at the July meeting. Following discussion, the committee proposed focusing on Artificial Intelligence (AI) usage and implementation, encompassing both current and future use, and its associated risks. Councillor Paul Lock suggested that AI could be integrated into the review of the new IT contract, while Councillor Ian Haldenby advocated for a split focus on AI acquisition versus AI use, and Councillor Carrington supported a twin-track approach to AI acquisition and use. Councillor Bunny also supported AI, alongside quantum computing, as areas requiring further investigation. Ultimately, the committee proposed a deep dive into the future use of AI, with Councillor Haldenby suggesting the inclusion of current and future use to address uncontrolled elements and assess existing usage.

Audit Committee Work Programme

Mark Harrison presented the Audit Committee's work programme, which outlines core assurance activities aligned with the committee's terms of reference and best practice. The programme is designed to help the committee effectively deliver its responsibilities and track areas requiring further work or assurance, particularly in preparation for approving the Annual Governance Statement. Councillor Cain Parkinson inquired about the audit for Grantham High Street and whether an ongoing investigation into the leader would come before the committee. It was confirmed that the Grantham High Street audit would be reported through the standard cycle, and the information assurance policy related to the leader's investigation was not considered to be within the audit committee's purview, though further clarification would be sought from the Monitoring Officer. The committee noted the report and approved the existing work programme.