The Audit Committee of Lincolnshire Council met on Monday 27 July 2026 to review the draft statements of accounts for the 2025/26 financial year, discuss the annual report of the Monitoring Officer, and consider proposed amendments to the Council's Constitution. The committee also received the Information Assurance Annual Report for 2025/26 and the Annual Governance Statement.

Draft Statement of Accounts 2025/26

Amanda Reid, Strategic Finance Manager, presented the draft annual statements of accounts for Lincolnshire County Council and the Lincolnshire Pension Fund for the 2025/26 financial year. These draft statements had been published by the statutory due date of 30 June 2026, initiating the public inspection period. Councillor Cain Parkinson raised concerns about the decrease in usable reserves, questioning the long-term risk this presented and whether it was an ongoing trend. Ms. Reid assured the committee that the decrease in usable reserves was planned and reflected commitments to additional highway and development fund spending, rather than a reflection of the council's financial resilience. Councillor Parkinson also inquired about potential risks to the pension fund from central government mandates regarding UK-based investments. It was explained that while a local investment strategy is mandated, the fund pool company, Border to Coast, would still aim for fiduciary returns, and the government had not mandated specific investment percentages that would financially disadvantage the fund. Councillor Philip Roberts noted that the local investment strategy was up to 5% over a period of time.

Andrew Middleton raised concerns about the rising demand in adult social care, children's social care, and special educational needs, questioning if the council had to accept this or if strategic actions could be taken. Heather Sandy, Executive Director of Children's Services, confirmed that investment was ongoing in creating hubs for children with SEND and an improvement programme around children's placements and social care. She acknowledged that specialist placements could be the most effective way to support these children, but rising numbers were a concern. Councillor Middleton further elaborated on the challenges of inclusive strategies in mainstream schools, where schools receiving £6,500 per student for SEND support were costing approximately £12,000 to deliver, leading to reorganisation and staff redundancies. Ms. Sandy stated that a SEND plan had been issued to the government to qualify for funding related to reforms and that a SEND improvement plan was ongoing.

Councillor Ian Carrington echoed concerns about children's provision and suggested a strategic review, particularly in light of Local Government Reorganisation (LGR). He reiterated the need to examine SEND provision and children's care due to escalating costs and demand. Councillor Philip Roberts questioned a 20% increase in staff numbers reported on page 134 of the reports pack, contrasting it with a perceived decrease in frontline teachers. Michelle Grady, Chief Finance Officer, explained that the increase in staff numbers was due to insourcing services previously contracted out, including the leaving care service and mental health services. She clarified that the officers' remuneration table only captured staff earning over £50,000, and as salaries increased, more individuals fell into this bracket. Councillor Roberts also raised concerns about exit packages totalling £2 million, questioning the justification and potential impact of LGR. Ms. Grady explained that the majority of exit packages were due to compulsory redundancies, representing permanent savings, and that packages were set by policy. She also noted that a proportion of the costs related to contributions to the Local Government Pension Scheme (LGPS) for employees over 55 accessing their pensions early.

Councillor Cain Parkinson inquired about the DSG deficit and the government's potential write-off policy, expressing concern that the council's good record of avoiding deficit might lead to them losing out on write-offs. Ms. Grady argued that the council was in a better position due to its lower deficit figure, despite receiving a smaller write-off amount. She confirmed that the statutory override for DSG deficits would end, and provision would need to be built into future budget setting and the Medium-Term Financial Plan (MTFP). Andrew Middleton asked about the cost-benefit analysis of insourcing contracted services, to which Ms. Grady responded that while directly employing staff might be more expensive, it allowed for greater efficiency and a better service overall. Councillor Cain Parkinson asked for clarification on the council's investment in Hoopal, a tech company for Herefordshire County Council, and the benefits of this investment. It was explained that Hoopal delivered services predominantly for the council, and the tech-or status meant they did not have to go through open competition. The council was a minority shareholder, purely for the provision of its finance and HR systems, which offered an efficiency of scale. Councillor Cain Parkinson also enquired about the long-term plan for Deepings Leisure Centre, which was described as run down and requiring significant investment. The latest position was that they were waiting for feedback from the Academy Trust following a change in headteacher. Councillor Cain Parkinson also questioned the depreciation of capital pothole filling as an asset, and how this was structured. Ms. Grady explained that it was an accounting transaction for the valuation of roads on the balance sheet, based on the amount spent on that category rather than the number of potholes filled.

Review of the Constitution - Council Procedure Rules/Access to Information Procedure Rules, Policy Framework and GLCCA protocol

Will Bell, Monitoring Officer, presented proposed amendments to the Council's Constitution. These included changes to Council Procedure Rules regarding the submission of motions and amendments, requiring ten clear working days' notice for motions and noon on the third working day before the meeting for amendments. This was to allow for validation and financial implications assessment by the Chief Financial Officer. Amendments were also proposed to the Access to Information Procedure Rules, requiring 24 hours' prior written notice for councillors wishing to speak at committees they are not members of. Minor changes to the Policy Framework and the GLCCA protocol were also proposed to reflect the council's reduced responsibility for the Local Transport Plan, now managed by the GLCCA.

Councillor Cain Parkinson questioned the necessity of the ten-day notice for motions, stating it was obscene and that the council had a proud record of not having this as an issue historically. Mr Bell explained that his review of other councils indicated this was common practice and served to provide greater transparency. Councillor Ian Carrington questioned the similarities between the proposed changes and those imposed at other councils administered by reform, and asked for evidence of previous constitutional breaches or incorrect advice from the Chief Financial Officer due to lack of notice. Mr Bell stated he was unaware of any such instances but that the budget meeting highlighted the need for more time for amendments to be properly considered. Councillor Cain Parkinson argued that the three-day notice for amendments was too restrictive, citing an example where an amendment was needed during a meeting on digital ID. He also contended that amendments should be debated on their own merits and not grouped together. Mr Bell clarified that the Chairman could propose grouping amendments for debate, but the final decision rested with the full council. Councillor Philip Roberts supported the changes, stating the previous budget meeting's amendments were purely political and appeared on the day or the day before, making proper scrutiny impossible. He argued that advance notice would allow for logical review and potentially longer meetings if necessary. Councillor Ian Carrington expressed concern that the proposed changes, particularly vesting power in the Chairman, could stifle debate and be anti-democratic, going a country mile beyond codifying good practice. He argued there was no evidence to substantiate the risks presented by Mr Bell. Councillor Cain Parkinson agreed, stating the proposed changes would shut down opposition groups and reduce scrutiny. Councillor Philip Roberts reiterated that the issue was the timing of amendments, not the amendments themselves, and that advance notice would allow for proper scrutiny. Councillor Cain Parkinson pointed out that the digital ID motion would have failed under the proposed rules due to the amendment timing. Mr Bell clarified that flexibility still existed within the constitution for motions to be altered during debate and that the council retained inherent jurisdiction to deal with matters as it saw fit. He reiterated that the aim was to give officers more time for proper consideration. The committee voted to endorse the proposals, with Councillor Philip Roberts proposing and Councillor James Bean seconding. The Chairman exercised a casting vote in favour, carrying the motion.

Information Assurance Annual Report 2025/26

David Ingham, Head of Information Assurance, presented the annual report, highlighting an increased demand and complexity across records management, information security, and information governance. He noted a 35% increase in support requests, the highest ever, following four years of previous increases. Despite this, response KPIs continued to be met. The focus remained on areas processing sensitive information, namely children's and adult services, which accounted for nearly 60% of support.

Regarding information governance, there was a 142% increase in data protection complaints, with 27 upheld or partially upheld. Mr Ingham stated the analysis did not identify a single underlying cause, suggesting growing public awareness and greater scrutiny of data handling. He also noted anecdotal evidence of AI tools potentially enabling more detailed complaints. Despite the increase in complaints, there was a 38% reduction in complaints received by the Information Commissioner's Office (ICO), with none upheld. A 97% completion rate for Information Assurance e-learning was highlighted as a positive response.

In records management, progress was made on reviewing hard copy records in off-site storage, with over half a million records reviewed and over 163,000 destroyed. Work had also been initiated on a digital environment, including embedding improved records management controls across Microsoft 365 and reviewing aged digital information.

Information security saw a 30% increase in reported security incidents, overwhelmingly driven by hardware assets reported unaccountable by the previous IT provider. This was assessed as an inventory reconciliation issue rather than widespread loss. IT service had introduced improved controls to minimise asset loss. Benchmarking against 78 local authorities found personal data breaches increased by an average of 53% over five years, compared to the council's 47% increase. Referrals to the ICO were zero, attributed to effective team response.

Councillor Cain Parkinson questioned why 163,000 records were destroyed, and Ms. Reid explained that officers did not have the time or resources to manage records properly prior to the dedicated team being established. Councillor Philip Roberts asked for more specificity on the 87 data protection complaints, and Mr Ingham clarified that infringements were against data protection principles, with unauthorised sharing being the top category, often done with best intentions. Councillor Philip Roberts also asked about the 157 missing assets, and Mr Ingham explained these were primarily laptops and IT hardware, with the high number last year attributed to inventory reconciliation issues with the previous IT provider. Councillor Ian Carrington commended the team for their work, acknowledging the scale and sensitivity of information management. A question was raised about response times for Freedom of Information (FOI) requests, and it was noted that a new Access to Information policy was being implemented to improve responsiveness. Councillor Philip Roberts asked if historical records were being destroyed, and Mr Ingham confirmed that historically important documents might be passed to archives, but others were destroyed based on retention periods and business need. Councillor Bunney asked about records in old, unused buildings, and Mr Ingham clarified that schools were responsible for their own records, and the project had involved reviewing buildings due for emptying to ensure records were extracted, reviewed, retained, or destroyed. The committee noted the contents of the report.

Annual Governance Statement

Claire Goodenough, Head of Audit and Risk, presented the Annual Governance Statement (AGS). The statement confirmed that the council's corporate governance arrangements for 2025/26 were fit for purpose and adequate, in accordance with the CIPFA/SOLACE Delivering Good Governance Framework. No significant governance issues were identified. Areas for improvement identified in the Annual Audit Opinion for 2026/27 included strengthening control monitoring, improving second line oversight processes, developing independent ownership of risks, formalising escalation processes, and improving control process design to reduce reliance on individual staff. The committee agreed to note the report and its contents.

Audit Committee Work Programme

Claire Goodenough presented the Audit Committee's work programme. Councillor Cain Parkinson asked if the audit relating to Grantham High Street would be reported to the committee, and Ms. Goodenough confirmed it would be reported through the standard internal audit reporting cycle. Councillor Cain Parkinson also queried whether an ongoing Member information assurance investigation would be considered by the Audit Committee in the absence of a Standards Committee, and was advised that this fell outside the committee's remit. The committee noted the work programme and comments made.

The meeting was adjourned for a short break and reconvened at 12:00 pm. The committee then proceeded to vote on the review of the Constitution, which was carried. The meeting concluded at 11:30 am.