The Audit, Risk and Governance Committee of Lancashire County Council met on Monday 22 April 2024 to review the council's financial statements for 2022/23, including the Statement of Accounts and Letters of Representation. The committee also received updates on external and internal audits, the corporate risk register, and the Local Member Grants Scheme, alongside the Annual Report on the Lancashire Culture and Sport Fund.

Key discussions included the approval of the council's Statement of Accounts for 2022/23, with the Executive Director of Resources (Chief Financial Officer) authorised to approve any subsequent changes. The committee noted the external auditor's findings for both Lancashire County Council and the Lancashire County Pension Fund for 2022/23, as well as the interim auditor's annual report. An update on the Corporate Risk and Opportunity Register for Quarter 1 of 2024/25 was presented, highlighting that risks related to the Oracle Fusion data breach and mental health beds had been removed from the corporate register. The committee also reviewed the Local Member Grants Scheme Annual Report and the Annual Report on the Lancashire Culture and Sport Fund, noting the positive impact of these schemes on communities. Finally, the committee considered and approved the Internal Audit Annual Plan for 2024/25 and the draft Annual Governance Statement for 2023/24, recommending the updated Code of Corporate Governance for approval by Full Council.

The Council's Statement of Accounts for 2022/23 and Letters of Representation

Khadija Saeed, Head of Corporate Finance and Exchequer Services, presented the council's updated Statement of Accounts for 2022/23. These accounts included several technical adjustments, such as the amended accounting treatment of a pension prepayment, correction in the recognition of a payment in advance, increased disclosure in the 'Related parties' note, and a correction to a historic misalignment in fixed asset records. These adjustments were largely technical and did not affect the council's reported outturn position for the financial year.

The committee was also asked to approve the management representation letters for both Lancashire County Council and the Lancashire County Pension Fund. These letters are a requirement for the conclusion of the external audit, providing written representations from management and those charged with governance on matters material to the financial statements.

The committee resolved to approve the council's Statement of Accounts for 2022/23, authorise the Chief Financial Officer to approve any subsequent changes, and agreed for the management representation letters to be signed by the Chief Financial Officer and the Chair of the Audit, Risk and Governance Committee.

External Audit Reports

Stuart Basnett, Senior Audit Manager at Grant Thornton UK, presented the external auditor's reports.

Lancashire County Council Audit Findings Report 2022/23: This report detailed the overall findings of the external audit for the county council's annual accounts and its value for money arrangements. A key finding was the identification of a significant weakness in governance arrangements related to the implementation of Oracle Fusion. The report noted that while management had responded swiftly to issues and implemented required changes, further work was needed to fully realise the system's benefits. The committee requested a further report on the Oracle Fusion implementation, outstanding issues, lessons learned, and progress made.

Lancashire County Pension Fund Audit Findings Report 2022/23: This report highlighted that the Pension Fund's audit could not be formally signed off until the county council's audit was finalised. However, the auditors expected to issue an unqualified opinion. Delays in receiving requested information from Local Pensions Partnership Administration Ltd (LPPA) had resulted in an additional fee.

Interim Auditor's Annual Report on Lancashire County Council 2022/23: This interim report indicated that the audit of the financial statements was ongoing, with an anticipated unqualified opinion, subject to the resolution of outstanding issues. The report noted that the implementation of Oracle Fusion had caused delays to the audit process for both 2021/22 and 2022/23. The committee requested a further report on the Oracle Fusion implementation, including outstanding issues and lessons learned.

Internal Audit Reports

Andy Dalecki, Head of Internal Audit, presented the Internal Audit Progress Report for 2023/24. The report indicated that 74 out of 100 planned audit assignments had been completed and reported. The committee noted that some work from the 2023/24 audit plan would be carried over into the next financial year.

The committee also considered the Internal Audit Annual Plan for 2024/25, which outlines the work proposed to support the Head of Internal Audit's overall opinion on the council's governance, risk management, and control processes. The plan was approved by the committee.

Governance and Risk Management

The committee reviewed the updated Terms of Reference for the Audit, Risk and Governance Committee, following the approval of a new Constitution for Lancashire County Council. It was requested that a report on the process for appointing an independent, co-opted member be presented at the next meeting.

The Corporate Risk and Opportunity Register for Quarter 1 of 2024/25 was presented, noting that risks related to the Oracle Fusion data breach and mental health beds had been removed from the corporate register. The committee requested that information on when academisation was last considered as a risk or opportunity be shared after the meeting.

The committee considered and approved the draft Annual Governance Statement for 2023/24 and recommended the updated Code of Corporate Governance for 2024/25 to Full Council for approval.

Grant Schemes and Funds

Josh Mynott, Head of Democratic Services, presented the Local Member Grants Scheme Annual Report, covering the 2022/23 and 2023/24 financial years. The report detailed the number of applications, grants approved, and the total amounts awarded. The committee requested a six-monthly update report on this scheme.

Steve Lloyd, Libraries, Culture and Registration Services Manager, and Heather Fox, Cultural Development Manager, presented the Annual Report on the Lancashire Culture and Sport Fund. The report highlighted the fund's positive impact on community cohesion, health, and wellbeing, noting that for every £1 contributed by the council, at least £1.50 was leveraged in external pledges. The committee applauded the well-run scheme and its positive impact.

Other Matters

The committee noted the exclusion of the press and public for specific agenda items due to the likely disclosure of exempt information. The date of the next meeting was confirmed as Monday 22 July 2024.