The Audit Committee of Lincolnshire Council met on Monday 17 November 2025 to discuss the High Needs System for SEND and Alternative Provision, receive an update on the audit of accounts for Lincolnshire County Council and the Lincolnshire Pension Fund for 2024/25, and review the Council's Financial Regulations. The committee also reviewed the risk management progress report and the Audit Committee's work programme.

High Needs System - SEND and Alternative Provision

The committee received a report providing an overview of the current High Needs System and Alternative Provision (AP) landscape within Lincolnshire. Martin Smith, Assistant Director Children's Education, presented the report, which detailed the legal framework, processes, and procedures for managing Special Educational Needs and Disabilities (SEND) and AP. The report highlighted outcomes from the Local Area Partnership Inspection in February 2025, which found that arrangements in Lincolnshire led to inconsistent experiences and outcomes for children and young people with SEND. Strengths identified included clear governance, active stakeholder engagement, and improved equipment services. However, areas for improvement included the quality of Education, Health and Care Plans (EHCPs), reduced waiting times for therapies, and enhanced communication with professionals and families. The report also detailed rising demand for SEND services, with a significant increase in EHC Needs Assessment requests and EHCPs. The committee was informed about the financial pressures on the High Needs Block, forecasting an overspend of £25 million in 2025/26. Strategic approaches to improvement included an EHCP Banding Review, a Learner of Focus initiative, and efforts to improve EHCP quality assurance. The committee was asked to seek assurances around local arrangements within the national context of significant pressures on the High Needs System.

Update on the Audit of Accounts for Lincolnshire County Council and Lincolnshire Pension Fund 2024/25 & Proposed Audit Fees for 2025/26

Claire Welberry, Strategic Finance Lead, presented the external auditors' draft Year End report for Lincolnshire County Council and the Lincolnshire Pension Fund for 2024/25. The audit of the 2024/25 accounts was substantially complete, with an expected conclusion by the end of November 2025. The report highlighted two uncorrected audit misstatements for Lincolnshire County Council exceeding the £1.35 million threshold: an overnight deposit with another council included as a short-term investment instead of cash or cash equivalents, and expenditure on an asset categorised as 'revenue expenditure funded under statute' (REFCUS) which should have been funded through capital expenditure. These misstatements were below the materiality threshold of £27 million and would not be adjusted in the final accounts. The Value for Money commentary indicated no significant weaknesses identified in financial sustainability or improving economy, efficiency, and effectiveness, but one significant risk was identified in governance related to the procurement process. For the Lincolnshire Pension Fund, KPMG expected to issue an unmodified Auditor's Report. The report also detailed proposed audit fees for 2025/26, with an uplift for the Lincolnshire Pension Fund related to ISA19 – Employee benefits, and a contractual indexation of 2.8%. The proposed fee for Lincolnshire County Council for 2025/26 was £324,829, and for the Lincolnshire Pension Fund, it was £98,495.

Risk Management Progress Report

Kevin Lane, Principal Risk & Assurance Officer, provided an update on how the Council's strategic risks were being managed. Four risks had been de-escalated from the strategic risk register: outstanding debt, recruitment and retention, education travel, and strategic contracts. The market supply risk for children's services remained an issue, with unregistered placements and budget overspends. A new strategic board, chaired by the Chief Executive, had been created to mitigate this. The High Needs Block budget risk remained unchanged and was subject to a deep dive review. Risk management activity included updates to the risk appetite process, development of e-learning tools, and the first meeting of the Strategic Risk Group. Horizon scanning topics included cyber risks, changes to Integrated Care Boards (ICBs) and their funding, economic conditions, and the immigration white paper. The report concluded that the Council's strategic risks were being managed proactively, with a strong awareness of current and emerging risks.

Review of the Financial Regulations

Michelle Grady, Assistant Director Finance, presented proposed amendments to the Council's Financial Regulations and consequent amendments to the budget definition within the Constitution. These changes were necessary to reflect updated regulations, professional codes of practice, and current operational practices. Key amendments included updates to roles in financial management, financial planning and management, risk management and internal control, control of resources and other assets, and external arrangements. Notably, the Treasury Management function would now fall within the remit of full Council. The committee was invited to endorse these proposals and recommend their approval by full Council and the Leader of the Council, as appropriate.

Audit Committee Work Programme

Claire Goodenough, Head of Audit and Risk Management, presented the Audit Committee's work programme. The programme was compiled based on the committee's terms of reference and best practice, aiming to ensure it contained the necessary assurance areas to approve the Annual Governance Statement. The work plan included updates on strategic risks, a deep dive into a selected strategic risk, a review of the Constitution, and updates on the audit of accounts and the external audit strategy. The committee was invited to review and amend the work plan, with suggestions for future items including an overview of how the council reclaims monies lost through fraud and a review of family contributions towards adult social care costs.