The Audit Committee met to discuss the external audit and annual finance statement, strategic risks, counter fraud measures, internal audit progress, financial management updates, and future audit work. The committee decided to conduct a deep dive into the high needs SEND strategy¹ and transport, and also agreed to review IT at a later date.

Strategic Risk Deep Dive

The committee chose to focus its next deep dive on the high needs block of the SEND strategy and transport.

Councillor Carrington supported Councillor Bunney, who has professional expertise in this area, saying:

Let's all bear in mind we're here for Lincolnshire. Central government has not in the past always come up with answers that suit us here in Lincolnshire.

Councillor Locke recognised that SEND is a national problem, but Councillor Carrington argued that this does not diminish the risk to the council.

The committee also agreed to consider IT at a later date, following concerns raised by Andrew Middleton, Independent Added Member, about cyber security attacks and the new IT contract.

Kevin Lane, Principal Risk Officer, said that a report detailing the risk, its causes and consequences, and how it is being mitigated would be provided.

Update on External Audit

The committee received an update from Claire Welberry, Strategic Finance Lead, Financial Accounting, and Rashpal from KPMG on the external audit of the annual financial statements for Lincolnshire County Council and the Lincolnshire Pension Fund 2024/25.

Rashpal from KPMG assured the committee that the audit was progressing as planned and that there were no significant issues to report to date.

Councillor Davies raised concerns about manual overrides, but Ian Haldenby, Independent Added Member, reassured the committee that this was a common practice and nothing to be concerned about.

Andrew Middleton, Independent Added Member, asked about property valuation and pension fund liabilities, and was assured that there were no significant issues.

Councillor Roberts questioned the use of Savills for valuation and the timeliness of the valuations. Rashpal from KPMG explained that the council makes the decision on the valuer, and that the figures for 31 March 2025 were not available when the audit plan was produced.

Ian Haldenby, Independent Added Member, noted that there were no concerns around IFRS 16, the lease accounting standard², which he found reassuring.

The committee considered the information in the report and identified no further information or actions required.

Counter Fraud Interim Progress Report

Mark Harrison, Audit Manager - Counter Fraud, presented the Counter Fraud Interim Progress Report, which provided an overview of the progress made against the 2025/26 Counter Fraud Plan.

Key points:

• There has been a 300% increase in referrals since 1 April 2025, compared to the same period in 2024/25.
• A county court case in August 2025 found in favour of Lincolnshire County Council, with compensation due.
• There are 19 outstanding management actions, 11 of which have exceeded the agreed completion date.
• The National Fraud Initiative³ (NFI) has identified £1,009,550 in estimated savings.

Councillor Davies asked for more information on the county court case, and Mark Harrison explained that it related to a deputy manager from a care services home who had misused their procurement card.

Councillor Locke questioned the 4,879 duplicate invoices identified, and Mark Harrison clarified that no duplicate payments were identified. Claire Welberry added that the NFI may pick up on amounts that are part of a wider payment, but are not duplicate on the face of it.

Andrew Middleton, Independent Added Member, asked whether the increase in referrals was a good or bad thing, and Mark Harrison said it was a good thing as it showed increased awareness.

Ian Haldenby, Independent Added Member, requested more insight into the high and overdue management actions, and the duplicate invoices.

Councillor Locke asked for more detail on the referrals per service area, particularly schools.

Councillor Roberts raised concerns about the number of illegal travel passes issued, and Mark Harrison explained that these figures are compiled from the NFI and may include passes that have not been returned after a person has died or moved out of the area.

Councillor Carrington suggested that the committee send a message to all departments to find out whether they use the adhere to notify one service.

The committee noted the progress made and raised no further questions.

Internal Audit Progress Report

Claire Goodenough, Head of Audit and Risk Management, presented the Internal Audit Progress Report, which provided details of the internal audit work completed up to August 2025.

Key points:

• The internal audit plan is progressing in line with expectation.
• All draft and final issued reports have been fully implemented.

Andrew Middleton, Independent Added Member, asked about the feedback tables on page 71 and the overdue management actions on page 80. Claire Goodenough explained that the schools are a separate team and that the outstanding actions had been updated in the presentation.

Ian Haldenby, Independent Added Member, suggested correlating the feedback with how the recommendations have been identified and delivered.

The committee noted the contents of the report and discussed no further actions.

CIPFA Financial Management Code Update and Best Value Duty

Michelle Grady, Assistant Director - Finance, presented the CIPFA Financial Management (FM) Code update and Best Value Duty report.

Key points:

• The report provided an update on actions identified to further improve compliance with the CIPFA FM Code⁴.
• The report summarised the statutory guidance published in May 2024 by the Ministry of Housing Communities and Local Government (MHCLG) detailing good practice in meeting the local authority best value duty.

Councillor Davies asked whether Grant Thornton would be coming back to review and sign off on the completed actions, and Michelle Grady said that there were no plans to do so. Rashpal from KPMG explained that they do a value for money assessment, but would not be able to do a separate piece of work.

Andrew Middleton, Independent Added Member, asked about external validation and whether the committee was comfortable that the actions had been signed off. He also asked whether the characteristics and indicators on page 101 could be used as a constant self-evaluation framework.

Ian Haldenby, Independent Added Member, said that any action plan should demonstrate how it is going to be implemented.

The committee considered and commented on the contents of the report and the appendices.

Horizon Scanning Report

Claire Goodenough, Head of Audit and Risk Management, presented the Horizon Scanning Report 2025, which presented emerging trends and risks facing public sector organisations and local authorities across the country.

The report covered:

• Financial sustainability
• Workforce recruitment and retention
• Digital transformance and AI governance
• Procurement reforms and capacity

Councillor Davies suggested having a specific report that looks at the risks and mitigations of local government reorganisation.

Andrew Middleton, Independent Added Member, raised concerns about NSIPs and their risk to investment versus their impact on the county.

The committee considered the content of the report and noted areas for advice and information.

Audit Committee Work Programme

Claire Goodenough, Head of Audit and Risk Management, presented the Audit Committee Work Programme, which invited the committee to consider its work programme.

Councillor Davies suggested having a consideration for local government reorganisation as a standalone risk piece.

Andrew Middleton, Independent Added Member, reiterated his concerns about NSIPs.

The committee agreed to review and amend the audit committee's work plan.