The Audit and Governance Committee of Lancashire Combined County Authority met on Monday 23 March 2026 to review key updates, internal and external audit plans, and the corporate risk register. Decisions made included the approval of the Internal Audit Annual Plan and Strategy for 2026/2027 and the updated Corporate Risk and Opportunity Register.

Key Updates for LCCA Committees

Matthew Sidgreaves, the LCCA's Chief Operating Officer, provided an update on recent activities. The authority marked its first anniversary, with communications highlighting progress and future priorities. A meeting with the Minister for Devolution, Faith and Communities was being rescheduled. The government has invited new devolution proposals from councils without existing agreements, aiming to expand the number of foundation strategic authorities. The LCCA has confirmed £250,000 in core capacity funding for the next financial year, though disparities exist between foundation and mayoral strategic authorities, a point leaders intend to raise with the Minister. The authority has responded to consultations on overnight visitor levies, Local Government Reorganisation, spatial development strategies, and taxi and private hire vehicle licensing. The transition into Phase Two of the authority's development, focusing on delivery, includes the transfer of transport responsibilities from 1 April 2026 and the devolution of the adult skills budget later in the year. The first cohort of directly employed staff will join from 1 April, and recruitment for a Director of Transport is underway.

Internal Audit Annual Plan and Strategy 2026/2027

Laura Rix, Audit Manager, presented the Internal Audit Annual Plan and Strategy for 2026/2027. The plan, developed through discussions with senior officers and informed by the authority's risk register, totals 85 audit days. Key priorities for the year include transport transition arrangements and adult skills workstreams, identified as high-risk areas. The plan is designed to be flexible and responsive to emerging risks and organisational priorities, with any amendments to be brought back to the committee. The committee received assurance regarding the internal audit service's capacity, with a team of 17 auditors operating across three teams, utilising a matrix approach to allocate resources.

Internal Audit Progress Report

Laura Rix also presented the Internal Audit Progress Update, noting that 39 audit days had been delivered to date. Three audits are currently underway: an assurance framework review for support services provided by constituent authorities, a review of financial management and governance, and a review of governance and decision-making frameworks. The committee was informed that from 2026/27 onwards, progress reports would include updates on outstanding actions, with formal follow-up typically occurring one year after the original audit.

Indicative Audit Risk Briefing for the Year Ending 31 March 2026

Debra Chamberlain, Director at KPMG, the authority's external auditor, presented an indicative risk briefing. Materiality for the first set of financial statements was set at £1 million, with performance materiality at £650,000. Significant audit risks identified include management override of controls and grant recognition, with planned procedures to test these areas. An area of audit interest is the recognition of services provided in kind by constituent authorities. The audit cycle and timetable were outlined, including a forthcoming value-for-money risk assessment. The committee queried potential delays in information provision, acknowledging that as a new entity with a small resource base, some delays had occurred but were not a cause for concern.

Corporate Risk and Opportunity Register - Quarterly Update

Hannah Race, Head of Governance, presented the quarterly update on the Corporate Risk and Opportunity Register. Three changes were noted: a new risk related to business support delivery, a new risk concerning Local Government Reorganisation (LGR), and an increased risk score for operational capacity and resources. The target dates for risks are set by risk owners to indicate when a risk is expected to be reduced to its target score. Reviews of service-level agreements with constituent councils will be undertaken by officer groups. Interim updates on specific risks will be provided if requested by the committee.

Update on VAT Recovery

Mark Golden, Head of Accountancy at Blackpool Council, provided an update on VAT recovery. The Finance (No. 2) Bill 2025-26 had received Royal Assent on 18 March, making the authority eligible to recover VAT on its activities. The LCCA will use the TechnologyOne finance system, configured to record tax invoices accurately without allowing VAT entries on returns before legislation commencement. The authority will submit its first VAT return for March, ensuring VAT recovery within the current financial year. It was confirmed that constituent councils had invopped the authority after 1 December 2025, meaning VAT is recoverable from that date, and no VAT loss is expected for the period prior to direct recovery eligibility. The TechnologyOne system has been purchased for full organisational use.

Audit and Governance Committee Work Programme 2026/27

The committee received the updated work programme for 2026/27. Additional items suggested for inclusion include a review of the committee's effectiveness and matters relating to the procurement of external auditors. The work programme was noted as a live document, subject to ongoing review and revision. It was agreed that the implications of local government reorganisation would be incorporated within ongoing reviews of the corporate risk and opportunity register.