The Audit and Governance Committee of Lancashire Combined County Authority met on Monday 23 March 2026. Key discussions included updates on the authority's progress, the internal audit plan for the upcoming year, and the corporate risk register. Decisions were made to approve the internal audit plan and the updated corporate risk register, and to note the progress report and VAT recovery update.

Key Updates for LCCA Committees

Matthew Sidgreaves, the LCCA Chief Operating Officer, provided an update on the authority's activities. He highlighted the LCCA's first anniversary, upcoming meetings with the Minister for Devolution, Faith and Communities, and the government's invitation for new devolution proposals. The authority has secured £250,000 in core capacity funding for the next financial year, though disparities in funding between foundation and mayoral strategic authorities were noted. The LCCA is transitioning into Phase Two, focusing on delivery, with key milestones including the transfer of transport responsibilities from 1 April 2026 and the devolution of the adult skills budget later in the year. Recruitment for a Director of Transport is underway. The authority has responded to several government consultations, including those on overnight visitor levies, local government reorganisation, spatial development strategies, and taxi and private hire vehicle licensing. Thematic progress reports on transport, skills, and the economy were also presented.

Internal Audit Annual Plan and Strategy 2026/2027

Laura Rix, Audit Manager for Lancashire County Council, presented the Internal Audit Annual Plan and Strategy for 2026/2027. The plan, developed in consultation with senior officers and informed by the authority's risk register, outlines 85 audit days. Priority areas include transport transition arrangements and adult skills workstreams. The plan is designed to be flexible and responsive to emerging risks and organisational priorities. The committee received assurance regarding the internal audit service's capacity, with a team of 17 auditors operating across three teams. The committee approved the Internal Audit Plan and Strategy for 2026/2027.

Internal Audit Progress Report

Laura Rix also presented the Internal Audit Progress Update for 2025/2026. To date, 39 audit days have been delivered. Three audits are currently underway: an assurance framework review for support services, a review of financial management and governance, and a review of governance and decision-making frameworks. The committee was informed about the process for closing off outstanding actions from previous audits, with follow-up work typically occurring one year after the original audit. The committee noted the report.

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 financial statements has been set at £1 million, with a misstatement reporting threshold of £50,000. Significant audit risks identified include management override of controls and grant recognition, with planned procedures to address these. An area of interest is the recognition of services provided in kind by constituent authorities. KPMG acknowledged some delays in information provision due to the authority's newness but confirmed that these were not causing concern. The proposed audit fee is £164,479, and KPMG confirmed its independence. The committee noted the report.

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 highlighted: a new risk related to business support delivery following the end of the UK Shared Prosperity Fund, a new risk concerning future governance arrangements post-Local Government Reorganisation (LGR), and an increased risk score for operational capacity and resources. The committee approved the updated register.

Update on VAT Recovery

Mark Golden, Head of Accountancy at Blackpool Council, provided an update on VAT recovery. The Finance Act 2026 has received Royal Assent, making the authority eligible to recover VAT on its activities from 1 December 2025. The LCCA will use the TechnologyOne finance system, which has been configured to record VAT correctly. The authority will submit its first VAT return for March, ensuring VAT is reclaimed within the current financial year. It was confirmed that constituent councils had invoiced the LCCA for expenditure incurred after 1 December 2025, meaning no VAT loss is expected for the period prior to direct recovery eligibility. The committee noted the update and requested a further update on VAT recovery be added to the work programme.

Audit and Governance Committee Work Programme 2026/27

The committee reviewed the updated work programme for 2026/27. Additional items suggested by the Chair, including a review of the committee's effectiveness and matters relating to the procurement of external auditors, were noted for future inclusion. The committee agreed that implications of local government reorganisation would be monitored through ongoing reviews of the corporate risk and opportunity register. The Audit and Governance Committee's Work Programme for 2026/27 was agreed.