Apologies were received from Councillor Will Grover.

At this point in the Meeting, Members were invited to declare any relevant interests. 

Declarations were made as follows:

Councillor Jill Makinson-Sanders requested it be noted that she was on the Board of Directors for PSPS Limited.

To confirm the Minutes of the Meeting held on 29^th January 2025 and the Extraordinary Meeting held on 12^th February 2025.

The Minutes of the Meeting held on 29th January 2025 and the Minutes of the Extraordinary Meeting held on 12th February 2025 were agreed as a correct record.

The Chairman informed Members that a risk training session was taking place after today’s Meeting.

Members were advised that an Agenda Item on Local Government Reorganisation had been agreed for the next Audit and Governance Committee Meeting in June 2025.

The Chairman took the opportunity to welcome Brendan Arnold, the newly appointed Interim Finance Director and S151 Officer who was now in post and working across the Partnership.

To confirm the Actions from the last Meeting.

Members were referred to the Action Sheet, pages 49 to 52 of the Agenda refer.

Members noted that the actions from the Meeting held on 29th January 2025 were confirmed as completed or in hand.

·         In reference to Action No. 71 – Internal Audit Progress Report – January 2025, the Deputy Chief Finance Officer (Corporate), PSPS Limited confirmed that there was not a documented policy for insurance related asset valuations.  Members were further advised that the Council’s insurance broker was responsible for liaising with the Council’s internal valuer as part of the insurance renewal process.

• A Member further queried the absence of a policy.  In response, the Deputy Chief Finance Officer (Corporate), PSPS Limited provided Members with assurance that an insurance audit had recently been undertaken and had not presented any findings that required further action.

• A Member queried whether the Council only acted upon potential issues when identified during an audit and stressed the need for policies or guidance to be in place in relation to insurance related asset valuations. 

• Members expanded on their queries which had related to the findings of the Internal Audit Progress Report – January 2025 in relation to valuation of assets for insurance purposes and the External Audit Plan & Strategy for the Year Ending 31^st March 2025 where concerns had been raised in relation to the independence of using an internal valuer.

• A Member further queried whether it could be verified whether the internal valuer was Royal Institution of Chartered Surveyors (RICS) trained. 

In response, Brendan Arnold, the Director of Finance and Section 151 Officer assured the Committee that Members’ queries would be addressed and brought back to the next Meeting.

No further questions or comments were received.

To receive a report from the Group Manager, Insights and Transformation.

The Chairman welcomed Suzanne Rolfe, Group Manager (Insights and Transformation) to present the Quarter 3 24-25 Risk Report, pages 53 to 70 of the Agenda refer.

Members attention was drawn to the Q3 Risks (Appendix 1) and were invited to put their comments and questions forward.

• In reference to risks ELDC 12 – Technology Infrastructure failure and ELDC 13 - Cyber Incident, a Member queried whether technology infrastructure failure included the breakdown of software over a period of time and considered whether both risks would have similar likelihoods in future, page 63 of the Agenda refers.

• In reference to risk ELDC 22 – Retention of staff, a Member queried whether the risks for retention of staff should be classified as high when considering the potential options for upcoming local government reorganisation (LGR) where parts of East Lindsey may be split into different Council areas, page 65 of the Agenda refers.

Members were advised that that the query in relation to Technology Infrastructure failure and Cyber Incident would be referred to Jackie Wright, Chief Delivery Officer (PSPS) and that the risks would be explained in greater depth during the upcoming training session.    Members were further advised that the position reported on LGR was at the end of December 2024 and that the current position on LGR would be updated for the Quarter 4 report.

• In reference to the multiple table headings titled “Current risk”, a Member queried whether the headings had included the correct wording.  In response, the Group Manager (Insights and transformation) confirmed that the titles of the first two headings after existing control measures in place should read ‘likelihood’ and ‘impact’.

• A Member queried whether work undertaken in the leadup to LGR would create further risk of capacity issues.  In response, the Group Manager (Insights and transformation) informed the Committee that Members comments would be relayed to the lead officer for inclusion in the Quarter 4 report.

• In reference to risk ELDC29 – Local Government Reform (LGR), a Member queried the process for which organisational behaviour was being factored into the Council’s future risks.  In response, the Group Manager (Insights and transformation) informed the Committee that Members’ feedback would be provided to the lead officer.

• A Member queried the identity of the lead officer.  In response, the Group Manager (Insights and transformation) confirmed to Members that James Gilbert, Assistant Director (Corporate) undertook this role.

• A Member queried whether Partnership risks were the same across all councils.  In response, the Group Manager (Insights and transformation) informed Members that the Partnership risk register was the same across the three Councils, however some of the strategic risks may differ for each Council due to local changes.

No further comments or questions were received.

Following which, it was

RESOLVED:

That the Q3 Risk Report be noted.

To receive a report from the Treasury and Investment Manager, PSPS Limited.

Sean Howsam, Treasury and Investment Manager (PSPS Limited) presented Members with the Q3 Treasury Report 2024/25, pages 71 to 96 of the Agenda refer.

Members were advised that the report referred to a key element of the Council’s Governance Framework and represented an important contribution to the evidence trail in support of the Annual Governance Statement.

The report covered the following areas;

• An economic update for the first three quarters of the 2024/25 financial year;

• The outlook for the remainder of the financial year along with interest rate forecasts;

• A review of the Treasury Management Strategy Statement and Annual Investment Strategy;

• The Council’s capital expenditure, as set out in the Capital Strategy, and prudential indicators;

• A review of the Council’s investment portfolio for 2024/25;

• A review of the Council’s borrowing strategy for 2024/25;

• A review of compliance with Treasury and Prudential Limits for 2024/25.

Members were invited to put their comments and questions forward.  

·         In reference to the liquidation of the M&G Investments UK Property Fund, a Member requested an update on the timescale for the Council moving away from property funds, pages 88 and 89 of the Agenda refer.  In response, the Treasury and Investment Manager (PSPS Limited) confirmed that the M&G Investments UK Property Fund was in liquidation and was distributing assets as and when the properties were sold.  Members were further advised that a small repayment would be reported before the end of the financial year.

·         In reference to the timescale for liquidation of the other property funds held by the Council, the Treasury and Investment Manager (PSPS Limited) advised Members that the Council was liaising with the Council’s external treasury advisors and that a report was being presented to the Audit and Governance Committee in June 2025.

·         In refence to the loans that the Council had made to Invest East Lindsey, a Member queried whether all payments were up to date, page 86 of the Agenda refers.  In response, the Treasury and Investment Manager (PSPS Limited) advised Members that an invoice was raised for the interest for Q4 with payment due on 31st March 2025.  Members were further advised that following a recent negotiation of the payment schedule, the first repayment of £200,000 would be made on 31st March 2025.

·         The Chairman queried whether a future report would be presented to Full Council.  In response, the Treasury and Investment Manager (PSPS Limited) advised Members that a report would be presented to Full Council in the circumstances where a decision was required.

·         A Member queried whether the increase in government borrowing would have an impact on rates or gilts.  In response, the Treasury and Investment Manager (PSPS Limited) advised Members that the level of government borrowing did not unduly affect the Council and that the monetary policy committee made decisions in relation to rates which was fed into the markets for investment and borrowing.  Members were further advised that the overall global conditions for inflation and growth  ...  view the full minutes text for item 88.

To receive a report from the Internal Audit Manager, Internal Audit Lincolnshire County Council.

Matthew Waller, Internal Audit Manager (Internal Audit, Lincolnshire County Council) presented the Internal Audit Progress Report – March 2025 to Members summarising East Lindsey District Council’s responsibilities to undertake effective internal audit, pages 97 to 114 of the Agenda refer.

The Internal Audit Manager advised Members that all the work for 2024/25 was nearing completion and that three of the four audits that were outstanding were at the draft report stage and close to being finalised for the 31^st March 2025.

Members were invited to put their comments and questions forward.  

• In reference to the Audit Review on depots, a Member queried the reasons that audit findings for a waste depot at Boston Borough Council had been included in the report for East Lindsey District Council, page 111 of the Agenda refers.  In response, the Internal Audit Manager advised Members that the audit had initially examined depots across all three Councils and that the key risks for Boston had been included to provide insight and assurance on how managers were working across the Partnership.

• A Member commented that it would be beneficial for audit reports to clearly specify which aspects are related to ELDC and which were related to the Partnership.

• In reference to the findings of the Audit Review – Budget Monitoring Revenue, a Member highlighted concerns that out of 95 budget holders surveyed, only 37 responses were received and that 55% of those responses did not have a robust understanding of the budget setting process, pages 106 to 108 of the Agenda refer.  In response, the Internal Audit Manager advised Members that the survey had provided a snapshot in time and had enhanced the audit work that was being undertaken for management to action.

The Interim Finance Director and Section 151 Officer supported Members concerns on the findings and assured the Committee that action was underway to address the issues raised.

• A Member queried whether a follow-up audit would be undertaken to enhance engagement with managers and to ensure that their understanding of the budget setting process had increased.  In response, the Internal Audit Manager advised Members that the audit assurance rating for Budget Monitoring Revenue had been adequate and did not require an automatic follow-up audit, however advised that an update could be provided to the Committee on request.

Further to a discussion, it was agreed to note the request for a follow-up update as an action.

• A Member queried whether any one department required more training than the other departments.  In response, the Internal Audit Manager advised Members that the query would be examined with managers to improve understanding across all departments.

• A Member highlighted that the size of the budget may affect individuals’ knowledge and their ability to analyse it.

• In reference to the cyber audit, a Member queried the justification for Council delaying the audit until Q1 of 2025/26, page 103 of the Agenda refers.   In response, the Internal Audit Manager advised Members that the Council was in the process of completing the  ...  view the full minutes text for item 89.

To receive a report from the Assistant Director (Governance) and Monitoring Officer.

John Medler, Assistant Director, Governance and Monitoring Officer presented Members with the Combined Assurance Status Report 2024/25, pages 115 to 140 of the Agenda refer.

Members were advised that the Combined Assurance Status Report provided a record of assurance against the Council’s critical services, key risks, partnerships and projects and supported the Council’s commitment to achieving good corporate governance.

Members were invited to put their comments and questions forward.

• In reference to Key Partnerships, a Member queried where Partnership working with Internal Drainage Boards (IDBs) and Town and Parish Councils sat within achieving the Council’s goals and desired outcomes, page 138 of the Agenda refers.  In response, the Assistant Director, Governance and Monitoring Officer advised Members that the query would be taken away for further consideration.

• In reference to Deputy Chief Executive – Communities’ Critical Activities, a Member queried the absence of flooding which was of high importance.  In response, the Assistant Director, Governance and Monitoring Officer advised Members that the request would be queried with the relevant Assistant Director and would be recognised in future reports.

• A Member queried whether Local Government Reorganisation (LGR) was an emerging risk for recognition in the report.  In response, Matt Waller, Internal Audit Manager advised Members that the risk had not been established at the time of the report and that the evolving risk would be considered more closely in subsequent reports.

• A Member queried whether it would benefit the Committee to see trends in RAG ratings over the past 5 years rather than just a single snapshot in time.  In response, the Internal Audit Manager explained to Members that the ratings were intended to highlight the feelings of managers each year and that it was healthy to have a mixture of RAG ratings for an accurate reflection.

• In reference to the risk of ‘Failure to delivery major capital schemes within the capital programme’, a Member highlighted mitigating actions did not appear to work and that there was increased risk to the rural market towns, page 125 of the Agenda refers.   In response, the Assistant Director, Governance and Monitoring Officer advised the Committee that Members concerns would be reflected in the next strategic risk register.

·         In reference to LGR, the Assistant Director, Governance and Monitoring Officer further assured Members that a range of risks had been identified and were being examined.

• In reference to Key Partnerships, a Member queried the way in which the Council was partnership working with Historic England, page 138 of the Agenda refers.  In response, the Chairman advised Members that the Council had a number of key partnerships which varied in their effectiveness.

• In reference to Theddlethorpe GDF Proposal, page 103 of the Agenda refers, the Chairman highlighted this was no longer on the Council’s key projects lists.  The Chairman further advised Members that LGR was expected to feature more prominently in the next report.

The Chairman thanked the Assistant Director, Governance and Monitoring Officer and Matthew Waller, Internal Audit Manager (Internal Audit, Lincolnshire County Council) for the  ...  view the full minutes text for item 90.

To receive a report from the Internal Audit Manager, Internal Audit Lincolnshire County Council.

Matthew Waller, Internal Audit Manager (Internal Audit Lincolnshire County Council) presented Members with the Internal Audit Plan 2025/26, pages 141 to 150 of the Agenda refer. 

In accordance with Global Internal Audit Standards requirements, the purpose of the report was for internal audit to establish a risk-based audit plan to determine the resourcing of the internal audit service, consistent with the Council’s goals.

Members were invited to put their comments and questions forward.  

• A Member queried the timeline for appointing internal auditors for 2027-28 in the lead up to Local Government Reorganisation (LGR).  In response, the Internal Audit Manager advised Members that Internal Audit, Lincolnshire County Council was currently in contract with the Council and could extend or terminate the contract as necessary depending on various clauses in the agreement.

• In reference to the Section 106 audit review, a Member commented in support of recent assurance provided by the Section 106 monitoring team at the Overview Committee Meeting on Tuesday 25^th March 2025, page 146 of the Agenda refers.

• A Member queried the definition of Section 106 Agreements.  In response, the Vice-Chairman explained to Members that a Section 106 Agreement was secured when planning permission was granted for certain developments so that money could be provided from the developer for infrastructure and health care.

The Chairman thanked Matthew Waller, Internal Audit Manager (Internal Audit, Lincolnshire County Council) for his report.

Following which it was,

RESOLVED:

That the Internal Audit Plan 2025/26 be noted.

To receive a report from the External Audit Director, KPMG.

James Boyle, External Audit Director was in attendance on behalf of KPMG, External Auditor, to present the Indicative External Audit Plan & Strategy for the Year Ending 31 March 2025, pages 151 to 178 of the Agenda refer.

The purpose of the report was to outline the External Auditor’s risk assessment and planned audit approach for the audit of Council’s consolidated financial statements for the year ending 31st March 2025.

Members were advised on the following areas:

• Overview of planned scope including materiality
• Significant risks and other audit risks
• Audit risk and our audit approach
• Mandatory communications
• Group involvement - significant component audits
• Value for money risk assessment

Members were invited to put their comments and questions forward.  

• A Member highlighted to the Committee that earlier queries in relation to the Council’s use of an internal valuer had originated from KPMG’s report from the previous Meeting held on 29^th January 2025, Minute No. 71 refers. 

• The Chairman commented that it was surprising that KMPG were not intending to contact component auditors for Invest East Lindsey Limited, page 165 of the Agenda a refers.  In response, the External Audit Director (KPMG) advised Members that from the perspective of auditing the group, KPMG had to determine whether there was a financial statements audit risk and confirmed that no specific risk had been identified that would affect their group opinion.  Members were further advised that from the value for money (VFM) perspective, KMPG had reached out to the auditors to gain an understanding of the reporting process and to examine arrangements in place around sustainability, governance arrangements and achieving efficiency, economy and effectiveness.

The Chairman thanked James Boyle, External Audit Director (KPMG) for his report.

Following which it was,

RESOLVED:

That the report be noted.

To receive a report from the Deputy Chief Finance Officer, PSPS Limited.

Ellie Stacey, Deputy Chief Finance Officer (PSPS Limited) presented Members with the Financial Statements 2024/25 – Accounting Policies, pages 179 to 200 of the Agenda refer.

Members were advised that the accounting policies formed Note 1 within the Financial Statements, and were the specific principles, bases, conventions, rules, and practices applied by an authority in preparing and presenting Financial Statements.  Application of these accounting policies resulted in information that was relevant to the decision-making needs of the users of the Financial Statements, and reliable in presenting a true and fair view of the financial position of the authority.

Members were further advised that there had been a change to the accounting policies in regard to accounting for leases and that the new standard of accounting to recognise leases on the balance sheet had commenced from 1^st April 2024.  Members were assured that the impact of this standard on the Financial Statements was considered minimal.

Members were invited to put their comments and questions forward.  

• A Member queried the definition of a right of use asset, page 180 of the Agenda refers.  In response, the Deputy Chief Finance Officer (PSPS Limited) provided Members with an example where a vehicle waste depot leased from the County Council would require a value placed on the asset which would reflect that ELDC had use of the asset.

No further comments or questions were received. 

Following which it was,

RESOLVED:

That the Financial Statements 2024/25 – Accounting Policies be approved in advance of the production and approval of the draft accounts.

To receive a report from the Head of Procurement and Contracts, PSPS.

Martin Gibbs, Head of Procurement and Contracts referred Members to a copy of the Exemptions Register and details on each of the exemptions, pages 201 to 204 of the Agenda refer.

Members were informed that ten exemptions had been signed off from 1^st September 2024 to 28^th February 2025 which was a reduction from 20 exemptions in the previous six months.

Members were invited to put their comments and questions forward.

• A Member queried whether the list of exemptions was an acceptable number of and sought clarification on the threshold for referral to Full Council.  In response, the Head of Procurement and Contracts advised Members that ten exemptions were considered normal across a six-month period and that the procurement thresholds for reporting to Full Council was £4.4 million for works and £180,000 for services.  

• The Chairman queried whether the procurement exemptions covered the Council’s subsidiaries such as Invest East Lindsey Limited.  In response, the Head of Procurement and Contracts advised Members that no oversight was provided for Invest East Lindsey Limited as it was a commercial entity.

• A Member queried whether the National Portfolio Organisation (NPO) exemptions were included due to East Lindsey District Council holding the funds.  In response, the Head of Procurement and Contracts confirmed to Members that was correct.

• In reference to the procurement exemption for Consultancy for Horncastle Hub Solar PV (£60,000), a Member requested clarification on the background of the decision to award the contract to a consultant.  In response, the Head of Procurement and Contracts confirmed that a response would be provided to Members for the next Meeting.

• A Member queried whether procurement exercises considered where goods were being sourced from to ensure that they did not involve slave labour.  In response, the Head of Procurement and Contracts assured Members that due diligence checks were performed for all procurement exercises. 

• The Head of Procurement and Contracts further advised Members that the Horncastle Hub Solar PV had not yet reached the capital works stage and that a consultant had been used in the early stages before proceeding to applying for planning permission.

No further questions or comments were received.

The Chairman thanked the Head of Procurement and Contracts for his informative update.

N.B. The Head of Procurement and Contracts left the Meeting at 11.29am.

To receive a report from the Assistant Director, Regulatory.

The Chairman welcomed Donna Hall, Group Manager Public Protection to present the Regulation of Investigatory Powers Act (RIPA) 2000 - update, pages 205 to 212 of the Agenda refer.

Members were advised that the purpose of the report was to provide the Audit and Governance Committee with an update on the Council’s activities in respect of the Regulation of Investigatory Powers Act (RIPA) 2000 during the last 12 months, to ensure arrangements remained up to date, and to provide assurance that the Council's legal obligations were effectively managed. The report also sought to update Members on anticipated changes necessary to ELDC Policy and Procedures to reflect current guidance issued by the Home Office and the Investigatory Powers Commissioners Office (IPCO), which was the regulatory body that oversaw compliance with RIPA by public bodies.

Members were advised that the Council’s January 2024 return relating to last year’s activities had been zero as no covert activities had been undertaken.

Members were invited to put their comments and questions forward.

• The Chairman commented that body worn cameras were not technically covert surveillance.

• A Member queried whether councillors or officers would be undertaking surveillance by wearing body cameras.  In response, the Group Manager Public Protection advised Members that a trial had been undertaken at Boston with a view to a rollout of body worn cameras across the rest of the Partnership.  Members were advised that officers with public facing roles, particularly those in enforcement would be the primary roles being considered for wearing body cameras. 

No further questions or comments were received.

The Chairman thanked the Donna Hall, Group Manager Public Protection for the report.

Following which it was,

RESOLVED:

That the Regulation of Investigatory Powers Act (RIPA) 2000 Update be noted.

To receive a report.

Members were presented with the Audit & Governance Self-Assessment Action Plan, pages 213 to 222 of the Agenda refer.

The Chairman highlighted the recommendations that had come forward from the Self-Assessment undertaken in January 2025 and invited Members to put their comments and questions forward.

• Members stressed the importance for Committee Members and Portfolio Holders to attend Meetings.   In response, the Chairman advised the Committee that all Members of the Executive Board were being sent invitations for virtual attendance at Committee Meetings to encourage greater engagement.

• A Member queried whether a follow up had been undertaken with Committee Members who had not completed the self-assessment.  In response, the Scrutiny and Policy Officer explained that nine Members of the Committee had participated in the Self-Assessment exercise and that the two independent Members had not completed the survey due to being new to the Committee.

• A Member further queried the approach that was being taken to encourage better attendance by Members at Committee Meetings.  In response, the Chairman advised the Committee that she would raise the concerns with the Leader of the Council and the relevant Executive Board Members and Portfolio Holders at the Meeting between herself and the Vice-Chairman that was scheduled for May 2025.

No questions or comments were received.

Following which it was,

RESOLVED:

That the Audit & Governance Self-Assessment Action Plan be noted and the recommendations agreed.

To consider the Audit & Governance Committee Work Programme 2024/25.

Members were presented with the Audit & Governance Committee Work Programme 2024/25, pages 223 to 228 of the Agenda refer.

Members were invited to put their comments and questions forward.

·         A Member highlighted concerns with future Meeting dates that conflicted with Internal Drainage Board Meetings and queried whether the proposed Meeting date for June 2025 could be rearranged.  In response, the Chairman confirmed that the request would be noted as an action for Democratic Services to address.

Following which it was,

RESOLVED:

That the Committee Work Programme 2024/25 be noted.

The provisional date for the next Meeting was noted as Wednesday 25 June 2025 and was to be confirmed at the AGM.

That under Section 100 (A) (4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following item on the grounds that, if they were present, there could be disclosed exempt information as defined at paragraph 3 of Part 1 of the Schedule 12A of the Act (as amended).

RESOLVED:

That under Section 100 (a) (4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following items on the grounds that, if they were present, there could be disclosed to them exempt information as defined in paragraph 3 of Part 1 of Schedule 12A to the Act (as amended).

To receive a report.

A confidential report was submitted by the Deputy Chief Executive – Programme Delivery to enable Members to receive an update regarding the operation and activities of Invest East Lindsey Limited.

RESOLVED

That the report be noted and that the recommendations contained within the Exempt Minute be approved.