The Audit, Risk and Governance Committee of Lancashire Council met on Monday 27 April 2026 to review the council's financial health, internal audit progress, and governance frameworks. Key decisions included the approval of the draft Annual Governance Statement for 2025/26 and the refreshed Code of Corporate Governance for 2026/27, alongside a review of the Corporate Risk and Opportunity Register.

External Audit Progress Report and Sector Update

Ian Pinches from Grant Thornton provided an update on the external audit progress for the 2025/26 financial year. The audit is in its initial planning and interim fieldwork stages, with no significant issues identified to date. The audit team has sufficient resources to complete the work by November 2026, with main fieldwork scheduled between July and October. The report also highlighted upcoming audit deliverables, including the Audit Plan, Audit Findings Report, Auditor's Report, and Auditor's Annual Report, all due by November 2026.

Sector updates included information on the Public Sector Finance Leaders' Barometer, which indicated that while finance leaders are confident in their medium-term financial strategies, the biggest risks are outside their control, such as demand growth for statutory services and unfunded policy changes. Workforce shortages and increasing complexity are hindering transformation efforts. Changes to the CIPFA Code regarding the accounting for non-investment assets were also discussed, requiring more frequent valuations supported by indexation. The report also provided updates on the Finance Settlement 2026/27 to 2028/29, SEND reform plans, the Local Outcomes Framework, Local Government Reorganisation, transport connectivity, maintaining local roads, and the new Crisis and Resilience Fund.

Internal Audit Progress Report

Andrew Dalecki, Head of Internal Audit, reported that the Internal Audit Service is now fully staffed, a positive development after a challenging year with staffing pressures. 56% of the internal audit plan for 2025/26 has been completed and reported, with a further 26% in draft or progressing, bringing the total to 82%. The assurance levels provided for completed audits were generally reasonable, with no significant areas for concern identified. Follow-up audits indicated good implementation progress on agreed actions. Key work completed included audits on primary schools, treasury management advisory, grant audits, and several unplanned assignments addressing emerging risks.

The committee discussed the SEND Priority Action Plan, noting a red action regarding the recording of meeting minutes, which was clarified as a need for more consistency and clarity on decisions made at meetings, rather than a complete lack of records. Risk management maturity was also discussed, with a suggestion to consider the IIA's five-level risk assessment model. The assurance level of reasonable was defined as meaning that the objectives of the service are likely to be met, controls are in place and generally effective, but there are areas for improvement.

Internal Audit Annual Plan 2026/27

Andrew Dalecki presented the Internal Audit Annual Plan for 2026/27, which has been developed using a risk-based approach aligned with the council's corporate priorities. The plan covers a range of areas across directorates, including Children's Social Care, Place, Adult Services, Resources, and Grants. A specific focus is placed on Local Government Reorganisation (LGR) readiness within the Digital directorate. The plan is designed to be flexible and subject to ongoing review and amendment.

One suggestion for inclusion in the plan was reactive gully cleaning within the highways area, due to a significant reduction in reactive cleaning that exceeded expectations. The Head of Audit agreed to consider this, balancing it with the overall risk of the plan. Discussions also touched upon internal audit's capacity to maintain core services during LGR and SEND reform, and the consideration of fuel cost increases in procurement audits. The SEND financial inclusion sustainability was also suggested for inclusion within the audit work around the SEND reform plan.

Local Member Grants Scheme Annual Report 2025/26

Hannah Race presented the annual report on the Local Member Grant Scheme for 2024/25 and 2025/26. The report detailed the number of applications received, grants approved, and the total amount awarded. For 2024/25, £162,333.29 was awarded across 456 grants, with satisfactory evidence of expenditure received for 75% of grants. For 2025/26, £127,861.95 was awarded across 326 grants, with 25% of evidence received so far, reflecting a later start to the financial year due to the county council elections.

Concerns were raised about the decrease in applications and awards compared to the previous year, with a suggestion that the number of new councillors might have contributed. The underspend from the Local Member Grants budget will be apportioned to support care leavers' activities and events, and potentially contribute to a new community fund, subject to Cabinet approval. Discussions also covered the £200 carry-forward limit per councillor, with a suggestion to increase this to £400 or allow rolling over while a councillor is in position. The grant scheme rules do prevent repeat applications for the same event, but not for different events or causes.

Lancashire Culture and Sport Fund Annual Report

Janie Moran and Heather Fox presented the annual report for the Lancashire Culture and Sport Fund. This fund, established in 2022, operates as a crowdfunding project to ensure community support for projects. Since its inception, £1,432,880.80 has been pledged by the fund, with total raised by community projects exceeding £3.5 million. The fund has a 94% success rate for projects reaching their crowdfunding targets, earning Lancashire County Council a Gold standard rating from Spacehive, the platform provider.

Discussions addressed concerns about the all or nothing funding model and the potential for the council's pledge to be a significant portion of the target, potentially influencing the outcome. It was clarified that Spacehive verifies project costs and legitimacy, and that council pledges are not automatic and are based on merit. The all or nothing model was retained as it was considered fairer. The regulation of organisations receiving funds was also discussed, with assurances that projects are verified to ensure public benefit and legitimacy. A suggestion was made to increase the crowdfunding pot with inflation, as the budget has not changed since the scheme's inception.

The Council's Annual Governance Statement 2025/26 and Code of Corporate Governance 2026/27

Hannah Race presented the draft Annual Governance Statement (AGS) for 2025/26 and the refreshed Code of Corporate Governance for 2026/27. The AGS summarises the outcome of the annual review of the council's governance arrangements, highlighting progress made and identifying areas for further strengthening. The Code of Corporate Governance reaffirms the council's commitment to effective governance and aligns with CIPFA and Solace best practice standards.

The committee was asked to approve the draft AGS for inclusion in the Statement of Accounts and recommend the refreshed Code of Corporate Governance to Full Council for adoption. A question was raised regarding the 61 upheld complaints, primarily related to SEND, and who scrutinises and decides on the course of action. It was explained that these complaints were upheld by the Ombudsman, and that the SEND Priority Action Plan aims to reduce these numbers. The committee also discussed the possibility of including explanations for the recommended payments in Ombudsman complaints, such as distress or financial loss.

Corporate Risk and Opportunity Register Quarterly Update

Hannah Race presented the quarterly update to the council's Corporate Risk and Opportunity Register. It was noted that risk scores have decreased in key areas such as adult social care demand, SEND, and school places, reflecting the effectiveness of mitigating actions. The risk relating to the Southport inquiry has moved from the confidential to the public register following the publication of Phase One findings.

The committee also received deep dive reports on adult social care demand and school places. The Adult Social Care Demand risk score has reduced from 16 to 12, with ongoing actions focusing on demand management, prevention, and market stewardship. The School Places risk remains at 12, with ongoing work on planning permission for new schools and expansion projects, although the demand for SEND places continues to be a significant challenge.

Audit, Risk and Governance Committee Self-Assessment of Good Practice Summary Report

Laura Ricks and Hannah Race presented the summary report of the committee's self-assessment. The assessment found that the committee largely aligns with good practice, with strengths in governance arrangements, effective chairing, member engagement, and positive working relationships. However, areas for improvement were identified, including skills development, demonstrating added value, and alignment with emerging best practice. Three actions were agreed: developing a structured training plan, undertaking a further review of committee member skills after six months, and strengthening the Chair's annual report. The formatting of a table within the report was noted as illegible when printed or on screen, and an apology was given, with a commitment to consider alternative formats for future reports.

Urgent Business

There was no urgent business to discuss.

Date of Next Meeting

The next meeting of the committee was scheduled for Monday 27 July 2026 at 2:00 pm at County Hall, Preston.

Exclusion of Press and Public

The committee considered whether the public should be excluded from the meeting for certain items, but no items required exclusion.