Agenda and minutes

County Councillor Matthew Maxwell-Scott replaced County Councillor John Shedwick for this meeting.

Apologies were received from County Councillor Noordad Aziz.

It was noted that Paul Bond, Head of Governance was retiring soon. Members expressed their thanks to Paul for his hard work and support and wished him well in his retirement.

Members are asked to consider any pecuniary and non-pecuniary interests they may have to disclose to the meeting in relation to matters under consideration on the agenda.

None.

To be confirmed and signed by the Chair.

Resolved: That the minutes of the Audit, Risk and Governance Committee meeting held on 14 October 2024 be confirmed as an accurate record.

Khadija Saeed, Head of Corporate Finance and Exchequer Services presented a review of the council's borrowing and investment activity undertaken from April to November 2024.

In response to questions, members were informed that:

·  There was a significant amount of borrowing due to mature in March 2025 and therefore the council's borrowing levels would reduce until the financial year-end, in line with the council's intention to reduce borrowing as much as possible until rates had stabilised.

·  In relation to the council's external treasury management advisors, the council followed its Procurement Rules to procure this service which helped to ensure value for money from the current three-year contract with Arlingclose. Arlingclose provided advice and oversight and were not involved in business as usual or transactional decisions.

·  The annual training session on treasury management, delivered by Arlinglose and with support from the council's treasury management team, would be arranged for after the election.

Resolved: That the review of treasury management activity, for the period April to November 2024, be noted.

Noel O'Neill, Director of Finance and Commerce and Khadija Saeed, Head of Corporate Finance and Exchequer Services presented the updated Treasury Management Strategy for 2025/26.

It was highlighted that the strategy was in a different, more succinct format compared with previous years and it included a number of regulatory statements which provided assurance to government that the council's treasury management activity was compliant. There were no significant changes in approach proposed, although some flexibility would be required in order to respond to changing interest rates and manage any associated risks.

Resolved: That the Treasury Management Strategy 2025/26, as set out, be recommended to Full Council for approval.

Khadija Saeed, Head of Corporate Finance and Exchequer Services presented the council's statement of accounts for 2023/24 and management letters of representation.

The committee was asked to re-approve the statement of accounts which had been amended following the external audit, which was now substantially complete.

In response to questions, members were informed that:

·  Section 278 monies received by the council were not listed explicitly in the accounts. If they were unspent, they were included in the council's balance sheet under 'capital grants unapplied' and, if they were spent, they were included in the Comprehensive Income and Expenditure Statement (CIES). More information about section 278 monies received by area would be shared with members after the meeting.

·  Member oversight of management's actions, for example through Cabinet and the Scrutiny Management Board's budget scrutiny process, ensured decisions about the council's finances were robustly challenged.

·  Payments in advance, which were made either due to circumstance or to take advantage of a discount, were reported in the statement as not relevant to the year of the accounts.

Members commended officers for the 2023/24 revenue outturn position and thanked Grant Thornton for their work to complete their audit in a timely manner.

Resolved: That

i.  The council's statement of accounts 2023/24, as set out, be approved;

ii.  The interim Chief Executive (Chief Financial Officer) be authorised to approve any immaterial further changes to the statement of accounts for 2023/24; and

iii.  The management letters of representation, as set out, be approved and signed by the interim Chief Executive (Chief Financial Officer) and the Chair of the Audit, Risk and Governance Committee, prior to them being made available to the external auditor.

Sarah Ironmonger, Parter at Grant Thornton UK presented the Lancashire County Council Audit Findings Report 2023/24.

It was highlighted that the auditors were expecting to meet the statutory deadline and to issue an unqualified opinion.

In response to queries about the valuation of the Pension Fund's net liability/asset, it was clarified that a new standard from the National Audit Office sought to achieve consistency across local government in relation to secondary contributions. This had required an adjustment to the council's statement of accounts. Other authorities had also been required to adjust their approaches, which would vary according to their circumstances.

Resolved: That the Lancashire County Council Audit Findings Report 2023/24 be noted.

Stuart Basnett, Senior Audit Manager at Grant Thornton UK presented the Lancashire County Pension Fund Audit Findings Report 2023/24.

It was highlighted that the audit had gone smoothly and the auditors expected to issue an unqualified opinion.

In response to questions, members were informed that:

·  Oracle Fusion had not caused any disruption to this year's audit and it had made transaction level data more accessible. 2 deficiencies relating to Fusion had been identified, compared with 9 identified during the previous year, so good progress had been made. The adequacy of management's responses to those weaknesses would be assessed during the next year's audit.

·  The auditors were satisfied with management's responses to their recommendations. Generally, actions and issues were discussed with management and could be resolved during the audit. In the event that this did not happen, any issues would be highlighted to the committee.

·  Regarding the number of the Pension Fund's level 3 investments, Local Pensions Partnership Investments (LPPI) managed those investments and were audited by Grant Thornton's commercial team. That team would receive financial statements and control reports about those funds and assess the fund managers' expertise. LPPI's investments were in line with the investment strategy agreed by the council's Pension Fund Committee, which also monitored the Pension Fund's performance and risks. The auditors would not comment on the appropriateness of the Fund's investments, but may query any significant differences between the strategy and the level of investments.

·  Regarding the backlog of cases to update scheme members' information and the delays experienced by Local Pensions Partnership Administration (LPPA), there had been an improvement but as the auditors' backstop deadline was brought forward in future this would need to be kept under review. Small issues such as this could cause problems if they were not resolved promptly. LPPA presented a regular report to the Pension Fund Committee on their performance in relation to the member processing targets.

Resolved: That the Lancashire County Pension Fund Audit Findings Report 2023/24 be noted.

Sarah Ironmonger, Partner at Grant Thornton UK presented the Interim Auditor's Annual Report 2023/24.

It was highlighted that the report was interim up until it was signed, although the auditors were not expecting to make any changes.

It was noted that management's responses to the auditors' recommendations IR2 and IR7 should both have referred to Ofsted, not the Care Quality Commission (CQC). Both would be corrected.

In response to questions from members, it was clarified that:

·  The management actions with a target date of January 2025 indicated that action was already being taken to respond to the auditors' advice. It did not indicate whether the action or issue had been resolved fully.

·  The council's Overview and Scrutiny function was important and recommendation IR5 related to the auditors' view that scrutiny was enhanced when it was undertaken by different political parties. It was recommended that the membership and strength of the scrutiny committees should be kept under review, especially as the council's political make-up might change during an election year.

·  Regarding IR4, consultation was something the council was required to undertake. The auditors recognised that encouraging residents to respond to consultations could be difficult. Some authorities found that the electorate only became more engaged as the authority's financial difficulties increased. The council would look at best practice in response to the auditors' recommendation.

Resolved: That the Interim Auditor's Annual Report 2023/24 be noted.

Andy Dalecki, Head of Internal Audit presented an update on the Internal Audit Service's work and outcomes for 2024/25, for the period up to 7 January 2025.

It was highlighted that, although there were a higher number of audits receiving limited assurance in this report, there were no concerning patterns.

In response to concern that new housing developments and school planning issues affected access to primary and secondary places across Lancashire, members were informed that, when section 106 contributions were requested from a developer, the council received the money directly. More information about resolving disputes in relation to section 106 contributions would be provided after the meeting.

In relation to the audit of anti-money laundering controls, more information about the process to receive section 278 and section 38 contributions from developers would be provided after the meeting.

Regarding the high-risk outstanding management actions from audits completed in 2021/22, alternative implementation dates were being agreed with the services. More information would be provided in the next report to the committee.

Resolved: That the Internal Audit Progress Report be noted.

Andy Dalecki, Head of Internal Audit presented a report of the findings of an internal audit review of the council's governance arrangements against the Local Government Association's Improvement and Assurance Framework.

Resolved: That the report be noted.

Paul Fairclough, Head of Procurement and Contract Management presented a report on the recommendations following an external review of the council's procurement service by KPMG.

Members thanked the Procurement Service for their work and highlighted that value for money and safety in the council's contract management processes was a key concern for residents.

It was clarified that, in the event that a service provided by a contractor was not delivered to a high enough standard, such as highway repairs, it was the council's intention to hold them to account through robust contract management processes and/or by excluding suppliers from future projects if they had failed to deliver a previous contract.

It was requested that more information about the target completion dates for each of the recommendations made by KPMG be provided after the meeting, and that a summary of this piece of work be shared with all members via the next C-First newsletter. Procurement and contract management processes would also be included in the member induction programme after the May 2025 election.

Resolved: That the report be noted.

Heloise MacAndrew, Director of Law and Governance presented a report of the findings of a review of the council's compliance with the Code of Practice on Good Governance for Local Authority Statement Officers.

Members highlighted their interest in receiving updates on important pieces of governance work such as this.

Resolved: That

i.  The report be noted; and

ii.  The suggested areas for future development against the Code of Practice's standards, as set out, be approved.

Josh Mynott, Head of Democratic Services presented an annual summary of all complaints received in 2024 against county councillors under the Code of Member Conduct.

In response to questions from members, it was highlighted that:

·  Although there had been an increase in the number of complaints received, there had not been a worsening of members' conduct and the standard of conduct by Lancashire County Councillors remained high. During election years, there was increased attention placed on members which could result in more complaints. The new Code of Member Conduct Complaints Procedure also meant more complaints were formally recorded compared with previous years.

·  The council did not currently collect feedback from complainants about whether they felt the Monitoring Officer's response and course of action in relation to their complaint was satisfactory. How to collect this information in future would be considered further.

·  Currently, the law did not allow the Conduct Committee to take or uphold any action in relation to a member who was found to have breached the Code of Member Conduct, other than requiring an apology or for the subject member to undertake training.

Resolved: That the Annual Report of Complaints be noted.

Heloise MacAndrew, Director of Law and Governance presented the updated Corporate Risk and Opportunity Register.

It was noted that the next quarter's actions identified in relation to Corporate Opportunity 1: Sub Regional Place Leadership and Governance should have had a target date of March 2025.

Members commented that the newly added risks were timely and reflected the challenges facing the council.

It was noted that a briefing note on lessons learned from the public interest report on Woking Borough Council had recently been shared with the Chair. Reports such as this helped the council to identify learning from other authorities. The officer Compliance and Assurance Board considered these reports when they were published. It was agreed an annual report to summarise the key risks and learning identified should be included on the committee's work plan, with any significant findings relating to the county council's arrangements reported sooner. In the meantime, the briefing note on Woking Borough Council's report and a list of other best value / public interest reports would be shared after the meeting.

In response to a query about risks relating to Local Pensions Partnership Administration (LPPA), members were advised that these risks were reported through the directorates' reporting processes like all other risks and, if necessary, would be escalated to the corporate register.

Resolved: That

i.  The updated Corporate Risk and Opportunity Register be approved; and

ii.  An annual report of learning from best value / public interest reports be added to the Audit, Risk and Governance Committee's work plan.

An item of urgent business may only be considered under this heading where, by reason of special circumstances to be recorded in the minutes, the Chair of the meeting is of the opinion that the item should be considered at the meeting as a matter of urgency.  Wherever possible, the Chief Executive should be given advance warning of any member’s intention to raise a matter under this heading.

None.

The next meeting of the committee will be held on Monday 24 March 2025 at 2.00 pm at County Hall, Preston.

It was noted that the next meeting of the Audit, Risk and Governance Committee would be held on Monday 24 March 2025 at 2.00 pm at County Hall, Preston.

The committee is asked to consider whether, under Section 100A(4) of the Local Government Act, 1972, it considers that the public should be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information as defined in the appropriate paragraph of Part 1 of Schedule 12A to the Local Government Act, 1972, as indicated against the heading to the item.

Resolved: That the press and members of the public be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information, as defined in the appropriate paragraph of Part I of Schedule 12A to the Local Government Act 1972.

It was considered that in all the circumstances, the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

(Not for Publication – Exempt information as defined in Paragraphs 3 and 7 of Part 1 of Schedule 12A to the Local Government Act, 1972.  It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interests in disclosing the information).

(Not for Publication - Exempt information as defined in Paragraphs 3 and 7 of Part 1 of Schedule 12A to the Local Government Act, 1972. It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interest in disclosing the information.)

The committee considered the private and confidential Appendix C to Item 15 – Corporate Risk and Opportunity Register – Quarterly Update.

It was requested that information about the schools affected by the Building Schools for the Future programme be provided after the meeting.

Resolved: That Appendix C to Item 15 – Corporate Risk and Opportunity Register – Quarterly Update be noted.

(Not for Publication – Exempt information as defined in Paragraphs 2, 3 and 7 of Part 1 of Schedule 12A to the Local Government Act, 1972.  It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interests in disclosing the information).

(Not for Publication - Exempt information as defined in Paragraphs 2, 3 and 7 of Part 1 of Schedule 12A to the Local Government Act, 1972. It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interest in disclosing the information.)

Peter Walker, Investigations Manager presented a private and confidential update on investigations completed, whistleblowing complaints received, and ongoing and planned anti-financial crime work.

Resolved: That the Financial Crime, Investigations and Whistleblowing Update Report be noted.

(Not for Publication – Exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A to the Local Government Act, 1972.  It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interests in disclosing the information).

(Not for Publication - Exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A to the Local Government Act, 1972. It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interest in disclosing the information.)

Noel O'Neill, Director of Finance and Commerce presented a private and confidential update on the overpayment of salaries.

It was requested that further information about the recovery of overpayments be provided after the meeting.

Resolved: That the report be noted.

(Not for Publication – Exempt information as defined in Paragraphs 3 and 7 of Part 1 of Schedule 12A to the Local Government Act, 1972.  It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interests in disclosing the information).

(Not for Publication - Exempt information as defined in Paragraphs 3 and 7 of Part 1 of Schedule 12A to the Local Government Act, 1972. It is considered that in all the circumstances of the case the public interest in maintaining the exemption outweighs the public interest in disclosing the information.)

Carol Groom, Head of ICT Strategy and Assurance presented a private and confidential update on cyber security.

Resolved: That the report be noted.