The Audit and Governance Committee of the Lancashire Combined County Authority (LCCA) met on 22 September 2025 to review the progress of internal audits, the corporate risk and opportunity register, and the LCCA's work programme. Key decisions included the approval of the internal audit progress report, the corporate risk and opportunity register, and the draft work programme for 2025/26.

Chief Operating Officer's Update

Matthew Sidgreaves, Interim Chief Operating Officer, provided an update on the LCCA's progress. He highlighted the approval of several key strategy documents by the LCCA board, including the Lancashire Growth Plan, the Get Lancashire Working Plan, and the Lancashire Local Transport Plan. The board also approved the LCCA's core terms and conditions for employment, pay and grading structure, and an employee relations framework, enabling the LCCA to directly employ staff.

Significant progress has been made on the Support Services Agreement, which has been signed for the current financial year, with a scoping exercise underway for future years. The budget setting process for 2026/27 and 2027/28 has commenced. The LCCA is preparing for upcoming meetings of its advisory boards for Transport, Skills, and Economy.

The committee was informed about the funds that will be under the LCCA's direct control from April 2026, including the Local Transport Grant (£45m revenue, £1.3m capital), Bus Service Improvement Plan (£17m capital, £19.1m revenue), and Active Travel Fund (£4m capital, £1.3m revenue). For skills, the Lancashire Skills Hub delivery is allocated £3.281m revenue, the Adult Skills Fund is estimated at £44m revenue, and the Connect to Work programme has a budget of £28.8m revenue.

Updates were provided on the LCCA's priority areas:

• Transport: The LCCA is progressing with the development of a single Bus Service Improvement Plan and Enhanced Partnership documentation. The Local Transport Plan is out for consultation, and operational public transport transition activities are being assessed.
• Skills: The LCCA has submitted its draft Adult Skills Fund Strategic Skills Plan to the Department for Education and is preparing for the launch of an Open Framework for procurement. The Get Lancashire Working plan has been approved, and delivery has commenced.
• Economy: The report referenced the £19 million Growing Places Fund, a revolving loan fund for commercial land and premises development, which is being transferred to the LCCA.

Overview of KPMG - External Auditors

Deborah Chamberlain, Director at KPMG, provided an overview of the role of external audit. She explained that KPMG's responsibilities include auditing the financial statements, assessing value for money arrangements, and undertaking additional powers and duties. KPMG will provide an audit report on the financial statements, an audit completion certificate, and an auditor's annual report.

Chamberlain clarified the differences between internal and external audit, noting that external audit focuses on providing an independent opinion on financial statements to external parties, while internal audit provides ongoing assurance within the organisation. The audit of financial statements will focus on areas with the greatest risk of material misstatement, considering both quantitative and qualitative factors. Value for money assessments will cover financial sustainability, governance, and the economy, efficiency, and effectiveness of services. KPMG will also respond to any objections from the public regarding the accounts.

The audit cycle and timetable were presented, indicating that planning for the year-end audit would commence in March 2026, with the audit plan issued to the committee around June.

Internal Audit Progress Report

Andy Dalecki, Head of Internal Audit, presented the first quarterly update on internal audit work. Since the last meeting, work has commenced on risk management and understanding grant requirements. Approximately 25% of the annual audit plan has been completed. The report included an updated audit universe, detailing potential auditable areas, with further clarification provided on key elements such as the Lancashire Growth Plan, Connect to Work, and the Adult Skills Fund.

The committee noted that much of the grant work would be completed in the following financial year, focusing on signing off grants from previous periods. Discussions also covered the Treasury Management and Investment Strategies, and the Capital Programme, with a commitment to provide copies of these documents and potentially include them in future agenda items.

Corporate Risk and Opportunity Register – Quarterly Update

Hannah Race, Head of Governance, presented the updated Corporate Risk and Opportunity Register. The four key strategic risks identified in the previous quarter remain the same, with some progress noted on mitigation actions. The register is expected to expand as the LCCA's work progresses. Risks are communicated through the LCCA Support Services monthly group, to Chief Officers, and to LCCA board members. The committee discussed the correlation between the readiness rag ratings presented by the Interim Chief Operating Officer and the numeric ratings on the risk register, agreeing to improve alignment in future.

The four key strategic risks identified are:

• Local Transport Authority Functions: The risk of failure to deliver LTA functions from April 2026 due to transition issues.
• Adult Skills Fund: The risk of failure to deliver the devolved Adult Skills Fund from August 2026 due to mobilisation issues.
• Operational Capacity and Resources: The risk of the LCCA operating ineffectively due to fragmented capacity, systems, and processes across support functions.
• Strategic Planning and Financial Sustainability: The risk of failure to establish an appropriate organisational structure due to financial constraints and uncertainty regarding future governance models.

Audit and Governance Committee Work Programme 2025/26

Gary Halsall, Senior Democratic Services Officer, presented the draft work programme for the Audit and Governance Committee for 2025/26. The programme includes regular updates on internal audit, risk management, and the Chief Operating Officer's reports. It also incorporates the external audit plan and timetable. The committee discussed the possibility of including deep-dive reviews on specific risks, such as transport transition, and noted the potential for training sessions to be incorporated into future meetings. The work programme is considered a living document, subject to change as new priorities emerge.

The next meeting of the Audit and Governance Committee is scheduled for 22 December 2025.