The Lincolnshire County Council Audit Committee met on Monday 23 March 2026 to review a range of financial and risk management reports. Key decisions included noting the progress on education travel lessons learned, approving updated financial procedures, and reviewing the external audit strategy for the upcoming financial year.

Education Travel – Lessons Learnt

The committee received an update on the lessons learned from the transformation activity undertaken to mitigate the strategic risk associated with education travel. Mike Reed, Head of Transport Services, presented a report detailing the key actions that are mitigating the education travel risk, including the implementation of a dynamic purchasing system, regular joint meetings between Children's Services and Transport, systematic contract reviews, and the promotion of personal travel budgets. The report highlighted successes such as improved collaboration between departments and detailed project planning. Challenges remain, particularly the demand-led nature of the service and the difficulty in controlling commercial operator costs, which are impacted by fuel and employment costs. The risk associated with education travel has been de-escalated to the Place Directorate risk register following successful mitigation efforts, avoiding £4.5 million in costs.

New Statutory Framework to Strengthen Standards

Will Bell, Monitoring Officer, provided the committee with an overview of the government's plans to introduce a new statutory framework to strengthen standards of conduct for elected members in local government. This reform follows a consultation launched in December 2024, which indicated a view for a mandatory minimum code of conduct, the re-establishment of Standards Committees, and the introduction of new powers to sanction members, including suspension. The legislation is anticipated in the forthcoming parliamentary session, with implementation estimated for mid-to-late 2027. Lincolnshire County Council can prepare by mapping its current code against national requirements and planning for a local adoption timetable.

Statement of Accounts 2025/26 - Accounting Policies

Claire Welberry, Strategic Finance Lead, presented the Statement of Accounting Policies for the financial year ending 31 March 2026 for both Lincolnshire County Council and the Lincolnshire Pension Fund. The report summarised changes to the Code of Practice on Local Authority Accounting, including adaptations to IAS 16 and IAS 38 concerning the measurement of non-investment assets. The council will continue its existing practice of a rolling programme of revaluations over a five-year cycle, supplemented by annual indexation. Proposed deadlines for the preparation of draft accounts are 30 June 2026, with the publication of audited accounts by 31 January 2027. The committee was asked to approve the Statement of Accounting Policies for both the council and the pension fund.

External Audit Strategy - Lincolnshire County Council and Lincolnshire Pension Fund 2025/26

KPMG LLP, the external auditors, presented their External Audit Risks - Early Reflections report for 2025/26 for both Lincolnshire County Council and the Lincolnshire Pension Fund. Key themes included early reflections on audit risks, materiality levels, the audit cycle and timetable, and fees. Significant risks identified for Lincolnshire County Council included the valuation of land and buildings, and the valuation of post-retirement benefits, which involve significant judgement and estimation. The risk of management override of controls was also highlighted as a significant risk. For the Lincolnshire Pension Fund, key risks included the valuation of investments (Levels 1, 2, and 3) and the risk of management override of controls. The audit fee for Lincolnshire County Council was set at £325,000, an increase from £316,000 in 2024/25, while the fee for the Lincolnshire Pension Fund was £98,500, up from £94,000.

Financial Procedures

Claire Welberry, Strategic Finance Lead, presented updated Financial Procedures for the committee's review and comment. These procedures reflect amendments made to the Council's Constitution and current financial processes, codes of practice, and guidance. Key amendments included updates to Financial Procedure 1 regarding the approval of budget changes, rewording of Financial Procedure 4 to reflect current financial processes, and the addition of a clause to Financial Procedure 6 concerning borrowing to invest primarily for financial return, aligning with the Prudential Code (2021).

Risk Management Annual Report 2025/26

Kevin Lane, Risk Manager, presented the Risk Management Annual Report for 2025/26. The report highlighted a focus on increasing the quality of risk information through a strengthened quality assurance process, resulting in an increase in the number of risk registers meeting the criteria. A significant change was the transition from an external software solution to the internal Microsoft suite of applications for managing risk information, including the migration of the risk dashboard to Power BI. E-learning modules for risk management have been developed, and the risk team's development has been supported through collaborative learning sessions. Horizon scanning continues to focus on cyber threats, economic volatility, and artificial intelligence. The report also noted the commencement of work on developing risk appetite statements.

Risk Management Strategic Risk Register Update 03-2026

Kevin Lane, Risk Manager, provided an update on the strategic risk register. The register now contains 13 risks, with the addition of the Working Age Adults risk. The report detailed improvements in assurance levels for several strategic risks, including IT Infrastructure moving to Substantial Assurance following the successful implementation of a secondary data centre. The Budget risk direction of travel is improving due to increased funding certainty, and the Working Age Adults risk has achieved Adequate Assurance following improved financial oversight and the insourcing of mental health services. The Market Supply for Children's placements remains a strategic risk with Limited Assurance .

Counter Fraud Annual Report

Mark Harrison, Team Leader – Counter Fraud, presented the Counter Fraud Annual Report for 2025/26. The report detailed progress against the Counter Fraud Plan approved in March 2025. The team received 75 referrals, a 25% increase on the previous year, leading to six investigations. These investigations resulted in identified recoveries and savings totalling £12,477.47, with further potential recoveries pending. The report also highlighted the success of proactive work, including 14 counter fraud reviews completed, and a significant increase in staff completing the online counter fraud e-learning course. Whistleblowing referrals and enquiries were also detailed, showing a rise in reports related to LCC services.

Counter Fraud Annual Plan 2026/27

Mark Harrison, Team Leader – Counter Fraud, presented the proposed Counter Fraud Annual Plan for 2026/27. The plan outlines key areas of focus, including collaboration with internal and external partners, communication, and proactive reviews in areas such as expenses, procurement cards, Treasury Management, Adult Care Finance, Strategic Asset Management & Estates, Recruitment, Grants, and Counter Fraud Services to Schools. The plan aims to enhance financial integrity, operational efficiency, and regulatory compliance, safeguarding council assets and reputation.

Annual Audit Committee Report for 2025

Claire Goodenough, Head of Audit and Risk, presented the Annual Audit Committee Report for 2025. The report summarised the committee's effectiveness, attendance, and interactions throughout the year. It highlighted the committee's role in overseeing governance, risk management, and internal control frameworks, as well as reviewing internal and external audit activities. The report noted a change in committee membership following the May 2025 elections and the provision of training to new members. Key activities included reviewing the Annual Governance Statement, internal audit reports, and counter fraud work. The committee supported the deep dive review into Artificial Intelligence (AI) across Council services.

Internal Audit Progress Report 2 of 2

Claire Goodenough, Head of Audit and Risk, presented the Internal Audit Progress Report for the period September 2025 to March 2026. The report detailed the work completed in line with the annual internal audit plan, adhering to Global Internal Audit Standards. The report indicated that 95% of the agreed plan had been delivered, with two additional advisory assignments undertaken. The team is adequately resourced, and preparation for the Head of Internal Audit's Annual Opinion is underway. The report also highlighted the development of a new Microsoft management action tracker to improve oversight and reporting of outstanding management actions. Executive summaries from finalised reports were provided, including audits on HR Policy Implementation, Business Continuity Plan Quality, LCC Wholly Owned Companies Governance, School Financial Monitoring, and IT NIST Framework, with assurance ratings ranging from Adequate to Limited.

Internal Audit Plan for 2026/2027

Claire Goodenough, Head of Audit and Risk Management, presented the proposed Internal Audit Plan for 2026/2027. The plan is risk-based and designed to be agile, responding to changing risks and priorities. Key areas of focus include HR Restructure Efficiency, Health & Safety Statutory Obligations, Procurement Act Compliance, Adult's Provider Resilience, and Cyber Security. The plan aligns with Global Internal Audit Standards and includes provisions for grant audits and advisory work. The internal audit team is confirmed to be adequately resourced, with plans for recruitment and development to address national skills shortages.

Audit Committee Work Programme

The committee reviewed and commented on its work programme for the upcoming year. Items included updates on Education Travel, Accounting Policies, External Audit Plans, Financial Procedures, Risk Management reports, Counter Fraud plans and reports, the Annual Audit Committee Report, and Internal Audit progress and plans. A deep dive review into the current and future use of Artificial Intelligence (AI) across Council services was agreed as a priority for the committee. The committee also noted that an audit relating to Grantham High Street would be reported through the standard internal audit cycle.