The Lancashire Combined County Authority (LCCA) Audit and Governance Committee convened its inaugural meeting, during which they appointed Councillor David Whatley as the independent chair, reviewed and approved its constitution, membership, and terms of reference, and established its work programme for the upcoming year. The committee also approved the Internal Audit Annual Plan and Strategy for 2025/26, the Internal Audit Charter and Mandate, and the Risk Management Strategy and Corporate Risk and Opportunity Register, setting the stage for enhanced governance and accountability within the LCCA.

Risk Management Strategy and Corporate Risk and Opportunity Register

The committee approved the Risk Management Strategy and the Corporate Risk and Opportunity Register, as detailed in the report and its appendices. The strategy outlines the LCCA's approach to risk management, assigning responsibilities across its functions and promoting a strong risk management culture. The register identifies strategic risks and opportunities, providing updates on progress and planned activities. Councillor Paul Galley congratulated the committee on including 'opportunity' in the title, praising the ambition that this implied.

Councillor David Dwyer asked how KPMG would feed into the risk register. Hannah Race, Head of Governance, explained that the register uses a 'three lines of defence' approach, incorporating information from internal and external audits. She added that KPMG would monitor the effectiveness of internal controls when forming their opinions.

Councillor Whatley suggested that the committee should take a greater interest in the risk register, perhaps by choosing a risk to examine in more detail at future meetings. Matthew Sidgreaves, Interim Chief Operating Officer, agreed that this would be helpful.

Internal Audit Annual Plan and Strategy 2025/26

The committee approved the Internal Audit Annual Plan and Strategy 2025/26, as detailed in the report and its appendices. The plan aims to enhance governance, risk management, and internal control processes within the LCCA. It aligns with the LCCA's corporate objectives and incorporates integrated assurance to provide an annual audit conclusion.

Councillor Galley noted that the plan was less detailed in the areas of transport and adult skills, despite their imminent transition to the LCCA. He requested more detail on these areas at the next meeting. Andy Dalecki, Head of Internal Audit, acknowledged the point and said that the plan was flexible and could be adapted as needed.

Councillor Whatley suggested that internal audit should be involved in providing assurance around transition plans, and Matthew Sidgreaves said that he would work with Dalecki to develop these further.

Councillor Mustapha Desai raised concerns about the timeliness of outputs from other committees and projects, and the need for alignment with the audit committee's expectations.

Internal Audit Charter and Mandate

The committee approved the Internal Audit Charter and Mandate, as detailed in the report and appendix A. The charter establishes the framework for the LCCA's Internal Audit Service, enhancing transparency and clarity regarding its function, role, and scope. It ensures stakeholders understand its purpose and responsibilities.

Councillor Whatley asked about counter-fraud arrangements. Dalecki confirmed that all audits consider fraud risks and that the internal audit team has the resources to conduct criminal investigations, if needed. He added that the LCCA would be supported in developing counter-financial crime strategies and whistleblowing policies.

Role of the LCCA Audit and Governance Committee

The committee received a report providing background information on the core purpose of the Audit and Governance Committee. Matthew Sidgreaves delivered a presentation giving an overview of the LCCA, its aims, progress, priorities and next steps.

Gary Halsall, Senior Democratic Services Officer, noted that the LCCA had appointed KPMG as its external auditors. The committee requested that representatives from KPMG attend the next meeting to provide an overview of their role and the assurances they would provide.

Councillor Matthew Thomas asked about the Shared Prosperity Fund¹ and whether the LCCA would capture it, and if so, when. He also asked whether the audit would be overseeing that. Sidgreaves explained that for 2025-26, grants coming into the LCCA would be passported back to local authorities using existing formulas. He added that the LCCA would need to consider arrangements for future years, including the formulas. Andy Milroy, Democratic Services Manager, said that the funds would appear in both the LCCA accounts and local authority accounts, so there would be dual reporting for this year.

Constitution, Membership and Terms of Reference

The committee noted the Constitution, Membership and Terms of Reference, as detailed in the report. Councillor Whatley highlighted the need to understand how the committee should report back to the LCCA and how information would flow between the overall governance arrangements of the LCCA. It was acknowledged that the current Terms of Reference could develop through time to reflect any changes as the LCCA develops, and that they should be kept under review every 12 months.

Date of Next Meeting

The next meeting will be held on 22 September 2025.