The Audit and Governance Committee of Lancashire County Council met to discuss a range of topics, including an update from the Interim Chief Operating Officer, an overview of the role of external audit provided by KPMG, an internal audit progress report, and the corporate risk and opportunity register. The committee approved the Corporate Risk and Opportunity Register, and the Audit and Governance Committee Work Programme for 2025/26. The committee also agreed to add additional items to the work plan, including a review of treasury management activities.

Interim Chief Operating Officer's Update

Matthew Sidgreaves, Interim Chief Operating Officer, provided an update on the activities of the Lancashire Combined County Authority (LCCA) since the last meeting in July. The update covered key strategy documents approved by the LCCA board, organisational governance updates, and emerging funds under LCCA control for 2026/27.

Key Strategy Documents

The LCCA board approved several key strategies:

• The Lancashire Growth Plan 2025-35
• The Get Lancashire Working Plan 2025-2027
• The Lancashire Local Transport Plan 2025-2045, which will soon be published for consultation.

Organisational Governance

The board also approved core terms and conditions for employment, a pay and grading structure, and an employee relations framework, which means that the LCCA is in a position to directly employ staff from April 2026. The LCCA has been recruiting a chair for its scrutiny committee.

Governance Review

The leaders of the three constituent councils agreed with the government to conduct a governance review to explore different governance models that reflect the geography, economy, and political landscape of Lancashire. The review is expected to be reported to the LCCA's board in October.

Emerging Funds

Matthew Sidgreaves, Interim Chief Operating Officer, provided a summary of the funds which will be under the direct control of the LCCA from 1 April next year:

• £45 million in Local Transport Grants for local transport enhancements and maintenance, and £1.3 million for resourcing.
• An estimated £17 million in Bus Service Improvement Plan capital, and £19.1 million in revenue.
• An estimated £4 million in Active Travel Fund capital, and £1.3 million in revenue to support planning, feasibility and delivery.
• £3.281 million for Lancashire Skills Hub delivery.
• An estimated £44 million for the Adult Skills Fund, including Courses For Jobs.
• £8.8 million for the Connect to Work employment support programme.

Priority Areas: Transport, Skills, and Economy

Matthew Sidgreaves, Interim Chief Operating Officer, provided updates on the priority areas of transport, skills, and economy, including key activities and decisions that need to take place between now and the end of the calendar year. He noted that a transport transition paper will be presented to the LCCA board in October, and the Skills Advisory Board will be meeting to discuss funding rules for the adult skills fund.

Questions and Discussion

Councillor County Gina Dowding asked about the timing of the local transport plan consultation and the governance review. She also raised concerns about the level of detail provided on the service level agreement for staffing.

Councillor Neal Brookes sought clarification on the role of the committee in holding the boards to account after decisions have been made.

Councillor County David Dwyer asked for clarification on the support services agreement and the provision of services by local authorities.

Councillor County Peter Buckley suggested including the past history of the RAG¹ status of particular items in future reports. Councillor County Tom Pickup asked about the transfer of staff from upper tier local authorities and engagement with companies owned by those authorities.

Overview of the Role of KPMG - External Auditors to the LCCA

Deborah Chamberlain, a director from KPMG, provided an overview of the role of external audit, including the audit of financial statements and value for money arrangements. She explained the key differences between internal and external audit, and the reporting requirements for external auditors.

Audit of Financial Statements

Deborah Chamberlain, director from KPMG, explained that KPMG needs to determine whether the accounts are properly prepared in accordance with accounting standards and give a true and fair view of the financial performance. She said that KPMG will look at the systems and controls in place to get the figures within to the general ledger which then inform the financial statements. She also said that KPMG will test any key controls that are in operation and give feedback on those to make sure that they're operating effectively or whether they could be improved.

Value for Money

KPMG assesses whether there are significant weaknesses in the authority's arrangements for achieving value for money, including financial sustainability, governance, and improving economy, efficiency, and effectiveness.

Reporting

KPMG provides an audit plan, an audit findings report, and an auditor's annual report to the audit committee.

Questions and Discussion

Councillor Matthew Thomas asked about the use of local authorities' own external audits within the external report for the LCCA, and the potential for overlap or conflict.

Councillor County David Whatley, Independent Chair, asked about the ways in which KPMG can glean intelligence on the way other CCAs have been developed, and how they can help the LCCA in terms of its further thinking and development.

Councillor County Luke Parker asked about the planning stage in the audit cycle and timetable, and whether there are any Lancashire-specific risks.

Councillor County Tom Pickup asked about commonalities in the establishment of other combined authorities in terms of risk or errors, and how KPMG liaises with each of the upper tier authorities in terms of risk.

Internal Audit Progress Report

Andy Dalecki, Head of Internal Audit, presented the internal audit progress report, which outlined the work completed since the last committee meeting. The report included updates on risk management and grants, as well as the audit program management.

Audit Universe

Andy Dalecki, Head of Internal Audit, presented the audit universe, which represents the full range of auditable areas across the organisation. He provided additional detail on the transport transition plan and adult skills elements, as requested at the previous meeting.

Questions and Discussion

Councillor County Luke Parker asked whether the current pace of grant work is sufficient to provide early assurance to the committee.

Councillor County Tom Pickup asked for a copy of the treasury management and investment strategies, as well as the capital program.

Councillor County David Dwyer asked which authorities are providing support services with regards to investment strategy and treasury strategy.

Corporate Risk and Opportunity Register – Quarterly Update

Hannah Race, Head of Governance, presented the updated corporate risk and opportunity register, noting that there were no significant changes since the last report. The four key strategic risks remain the same, with some movement in the progress and actions boxes.

Questions and Discussion

Councillor County David Whatley, Independent Chair, asked how these risks are communicated to the authority or advisory boards, and what scrutiny they receive. He also asked about the thinking behind developing the register further.

Councillor County Tom Pickup had no questions on the register.

Audit and Governance Committee Work Programme 2025/26

Gary Halsall, Senior Democratic Services Officer, presented the draft work program for the Audit and Governance Committee for 2025/26.

Discussion

Councillor County Gina Dowding asked about the suggestion to have a training session at the beginning of the meeting.

Councillor Neal Brookes suggested building a quarterly deep dive review of key risks into the program.

Councillor County Tom Pickup asked whether the committee has the ability to call things in for a separate meeting if needed.