The Lincolnshire Audit Committee met to discuss the annual report of the monitoring officer, the external audit value for money report, a risk management progress report, the draft statement of accounts, and the audit strategy and charter. The committee approved recommendations to receive and consider the annual report of the monitoring officer and to consider the external audit value for money risk assessment report. They also noted the internal audit strategy and approved the internal audit charter.

External Audit Value for Money Risk Assessment

The committee considered the External Audit Value for Money Risk Assessment report for Lincolnshire County Council 2024-2025, presented by Claire Welberry, Strategic Finance Manager, and Rashpal, a representative from KPMG. The report aimed to identify any significant weaknesses in the council's arrangements to secure value for money¹. The assessment covered financial sustainability, governance, and improving economy, efficiency, and effectiveness.

Rashpal clarified that the audit doesn't examine every penny spent but focuses on the arrangements in place to ensure value for money.

Councillor Ian Carrington asked about the impact of the high needs block, such as special educational needs and disabilities (SEND) provision, on stress testing. Rashpal responded that they assess how the council copes with the high needs block, considering reserves and decisions to improve efficiency. They also challenge budget assumptions, such as inflation rates.

Councillor Andrew Crookham asked if the authority had sufficient focus, scrutiny and exploration of alternative solutions to the challenge of transporting vulnerable children to education. Rashpal said that while they had looked at the council's overall arrangements, a detailed investigation wasn't conducted as it didn't appear to be a significant risk in the context of the NAO code.

Councillor R G Davies raised concerns about contract registers and procurement outlines, asking about formal action plans and feedback loops. Rashpal explained that performance improvement observations are raised, and depending on their severity, they are followed up.

Councillor P J Roberts questioned whether the value for money audit itself represented value for money, considering the overlap with internal reports. Rashpal clarified that the audit is a statutory requirement.

The committee approved the recommendation to consider the external audit value for money risk assessment report and identify any further information or actions required.

Risk Management Progress

Mandy Knowlton-Rainer, Insurance and Risk Lead, and Kevin Lane, Principal Risk Officer, presented the Risk Management Progress Report, which provided an update on the management of the council's strategic risks.

Kevin Lane noted that a new risk, local government reorganisation (LGR), had been added to the strategic risk register. He also highlighted changes in other risks, including a decreased impact for recruitment and retention, a lowered risk for education travel, and an increased likelihood for the high needs block budget risk. The market supply children's risk had been changed to an issue due to challenges in securing timely placements.

Councillor R G Davies raised concerns about the lack of numerical data to justify changes in the risk register, particularly regarding home to school transport and predicting the number of children needing school places. He said:

For example, risk around predicting the number of children that are going to need to go to school in September. We would think, wouldn't we, that that would be quite an easy number to predict, but the reality is it's not, and it's absolutely a nightmare.

Kevin Lane responded that the assessments are made by the risk owners, and the implementation of key risk indicators is planned for the future.

Councillor Ian Carrington asked about IT resources, including financial and human resources and skills. Kevin Lane said that Project Ball was ongoing, representing a significant investment in the IT programme, and that he was not aware of many vacancies in the area.

Councillor Andrew Crookham asked about the risks associated with the creation of a combined mayoral authority for Lancashire. Kevin Lane said that risks were being monitored at the directorate level, but not strategically across the council.

Councillor P T Lock asked about the knock-on effects of risks to multiple departments in the council. Kevin Lane said that the council does have some NSIP² risks, but not linking into the impacts of the NSIPs on Lincolnshire as a county, simply to our statutory responsibilities and duties at the minute.

The committee approved the recommendations to note the status of the strategic risks, seek assurance over the council's governance of risk and control environment, and confirm any further actions required.

Draft Statement of Accounts

Michelle Grady, Assistant Director - Finance, presented the draft statement of accounts for 2024/25, inviting scrutiny and comment from the committee. She noted that the publication of the draft accounts was a legislative requirement and that the accounts would be reviewed by auditors.

Councillor R G Davies questioned the allocation of thought for LGR and SEND in the accounts' key assumptions and risk modelling. Michelle Grady responded that a business case would be formulated around the impact of LGR.

Councillor R G Davies asked where a breakdown of overspending areas, particularly social care pressures, could be found in the accounts. Michelle Grady directed him to the narrative report.

Rashpal from KPMG explained the backstop dates for audit opinions, noting that Lincolnshire County Council's backstop date for the previous year was 28 February, and the audit opinion was issued in January.

Councillor S Bunney asked how reserves are released. Michelle Grady explained that reserves with a specific purpose are released through scrutiny, executive, and council approval.

Councillor S Bunney noted a decrease in school reserves and asked about provisions for funding the deficit. Michelle Grady clarified that the council itself cannot fund the deficit due to protections of the DSG³.

Councillor P T Lock requested a deeper dive breakdown on short-term debtors in another session.

Councillor P J Roberts asked how academies are coping with higher SEND, and whether they receive higher funding. Michelle Grady clarified that the SEND responsibility still sits with the council.

The committee approved the recommendation to consider and comment on the report and appendices.

Audit Strategy and Audit Charter

Claire Goodenough, Head of Audit and Risk Management, presented the audit strategy and audit charter, noting that it is good practice to review the charter when there's a fundamental change, such as change to audit, given LGR. She said:

You can't plan for an organisation that is not planned to be here. So, that will be a reduced strategy, and that will come to you next financial year.

The committee approved the recommendations to note the internal audit strategy for 2025-2026 and to understand and approve the internal audit charter.