The LCR Audit and Governance Committee met on Thursday, 1 October 2026, to review internal audit updates, receive an external audit progress report on the 2025/26 Statement of Accounts, and discuss the risk management framework and the committee's work programme. The committee noted the internal audit findings, which included no major opinion reports and three moderate opinion reports, and agreed to a recommendation for a deeper dive into Artificial Intelligence (AI) by the overview and scrutiny committee. They also approved the committee's work programme for the 2026/27 municipal year.

Internal Audit Update

The committee received an update on internal audit work completed in the second quarter of 2026-27. Laura A. Williams, Head of Internal Audit and Risk, presented the report, highlighting that nine opinion audits and one AI maturity assessment were completed. Pleasingly, there were no major opinion reports issued, indicating no significant risks to the organisation. However, three moderate opinion reports were issued concerning Skills Bootcamps Claims, In-House Software Design, and Asset Management Service and Maintenance Contracts. These reports identified areas requiring timely attention to improve the control environment.

A significant portion of the discussion focused on the Artificial Intelligence (AI) Maturity Assessment. The overall conclusion was that the organisation's AI maturity is at a developing stage, with governance, data management, and ethical oversight still being formalised. Councillor Chris Cooke raised concerns about the potential for over-reliance on AI, drawing parallels with everyday experiences where AI can appear authoritative. Laura A. Williams clarified that the organisation's use of AI is currently modest and focused on tasks like research and refining language, rather than decision-making. She assured the committee that AI is not being used without human intervention. Councillor Alexander Hitchmough proposed that this topic be taken to the overview and scrutiny committee for a more in-depth review, which was agreed.

The report also detailed the status of recommendations. While 45 recommendations were implemented during the period, 51 high and 93 medium-priority recommendations remain outstanding. A particular concern was the seven high-priority recommendations that predate the 2025-26 financial year, indicating a significant elapsed time since their identification. The committee agreed to the recommendations set out in the internal audit report.

2025/26 Statement of Accounts - External Audit Update

Katie Kingston from Forvis Mazars LLP provided an update on the external audit of the 2025/26 Statement of Accounts. She reported that the audit fieldwork had commenced and was on track to be completed by the end of December 2026, meeting the statutory deadline of January 2027. No material misstatements or significant deficiencies in internal control had been identified to date. The Value for Money (VfM) work was also progressing, with findings to be reported in November. The committee was also informed about the Financial Reporting Council's (FRC) Annual Review of Audit Quality 2026, which noted improvements in Forvis Mazars' audit quality over the past five years. The committee agreed to the recommendations set out in the report.

Risk Management Update

Laura A. Williams also presented the update on the risk management framework. The Corporate Risk Register, which outlines the highest scoring risks to the organisation, was reviewed. The six key risks identified remain unchanged in their scoring: Accountability, Resilience, Environment, Transport, Economic Prosperity, and Financial Sustainability. New actions have been identified for several of these risks, particularly concerning the Rewiring the State initiative and its implications for devolved responsibilities, and aligning investment priorities with the Local Growth Plan.

The report highlighted an overall improvement in the consistency and completion of service and project risk registers compared to the previous quarter. The establishment of a Directors' Risk Forum and the development of a Risk Practitioners Network were noted as positive steps in embedding effective risk management. The committee also heard about progress in fraud risk assessments and the development of a training programme for different levels of staff. Councillor Chris Cooke raised a question regarding the status of service risk registers, noting that Policy and Strategy was marked as amber (partially complete). Laura A. Williams explained that this reflected the dynamic nature of policy development and the specific requirements for risk register completion, assuring the committee that efforts were being made to move all areas towards a green status. The committee agreed to the recommendations in the risk management update report.

Committee Work Programme 2026/27

The committee considered the proposed work programme for the 2026/27 municipal year. The Monitoring Officer presented the draft programme, which outlined the core business to be considered at future meetings, including regular updates on internal audit, finance, and risk management, as well as reviews of the Constitution and accounting policies. The committee noted that the work programme is not fixed and can be amended as needed. Members expressed satisfaction with the clarity and visual layout of the programme. A specific mention was made of a planned Deep Dive session in Risk Management outside of the regular committee meetings. The committee agreed to the recommendations set out in the report, approving the work programme for the upcoming year.