Apologies for absence were received from Councillors Jill Makinson-Sanders and Will Grover.

It was noted that, in accordance with Regulation 13 of the Local Government (Committees and Political Groups) Regulations 1990, notice had been given that Councillor Neil Jones had been appointed to the Committee in place of Councillor Will Grover for this Meeting only.

Apologies were also received from Councillor Thomas Kemp, Portfolio Holder for Finance.

At this point in the meeting, Members were invited to declare any relevant interests.  None were received.

To confirm the Open and Exempt Minutes of the Meeting held on 26 June 2025.

The Open and Exempt Minutes of the Meeting held on 26 June 2025 were agreed as a correct record.

The Chairman advised Members that she had met with Councillor Fiona Martin, Chairman of Overview Committee to improve relationships between the Committees and to discuss agenda co-ordination, budget planning, the Memorandum of Understanding and the report on Invest East Lindsey Limited.

Actions from the last Meeting.

Members were referred to the Action Sheet, pages 29 to 32 of the Agenda refer.

Members noted that the actions from the Meeting held on 26 June 2025 were confirmed as completed or in hand as follows:

Action No. 12 ‘Annual Governance Statement (AGS) 2024/25’, page 29 of the Agenda refers.

In reference to Portfolio Holders meeting notes, Members stressed the value in being able to observe the thought process behind decisions that were being made.  Further to a discussion, it was agreed that a follow-up Action was created to convey Members’ concerns.

Action No. 13 (a) ‘Unaudited Financial Statements 2024/25 including narrative report’, page 30 of the Agenda refers.

In reference to the request for confirmation that the Council had received the balance of £0.336m due to the Council as at 31^st March 2025 from Invest East Lindsey, Members requested clarification whether the amount remained outstanding and whether there were any penalties in relation to the repayment deadlines, page 30 of the Agenda refers.  In response, the Interim Finance Director and Section 151 Officer advised Members that an update would be requested and brought back to the Committee.

Action No. 15 ‘Budget Preparation 2025/27 – Approach and Process’, page 31 of the Agenda refers.

The Chairman explained that a conversation had taken place with the Chairman of Overview Committee as to whether the Audit and Governance Committee was the appropriate venue for earlier discussions on the budget. 

Further to a discussion, Members agreed that a future Reserved Members’ Day would be arranged to enable the involvement of all Councillors.

To receive a report from the Assistant Director, Communities and Housing Services.

David Postle, Wellbeing Service Manager and Deputy Strategic Lead for Safeguarding presented Members with the Partnership Annual Safeguarding Report 2024/2025, pages 33 to 38 of the Agenda refer.

Members were advised that the report provided an overview of the Council’s safeguarding activity from 1 April 2024 to 31st March 2025 and sought to provide assurance that the Council was vigilant in keeping people safe and to challenge any areas which could further improve the Council’s current approach to guard against complacency.

Members were invited to put their comments and questions forward.

·         In reference to Paragraph 2.2 of the report where it was highlighted that the outcome of the audit for the South & East Lincolnshire Council Partnership (SELCP) was very positive, with only a small number of actions identified to strengthen the Partnership’s record keeping to evidence the work undertaken to safeguard residents, a Member queried the number of actions that related to East Lindsey District Council and the categories which the actions related to, page 34 and 35 of the Agenda refer.  In response, the Wellbeing Service Manager and Deputy Strategic Lead for Safeguarding advised Members that there had been three actions that related to all three Councils and that immediate steps had been taken to address the actions where there had been a lack of evidence available to the auditors.

·         A Member queried whether the annual reports would provide insight into whether safeguarding referrals were increasing and whether clarification was provided on the procedure for interaction and liaison with Lincolnshire County Council’s (LCC) safeguarding roles and responsibilities.  In response, the Wellbeing Service Manager and Deputy Strategic Lead for Safeguarding advised Members that the appointment of a safeguarding officer had improved the Council’s ability to evidence the steps that had been taken, and that more information was being recorded and then escalated to LCC when appropriate.  Members were assured that more in-depth information would be included in next year’s annual safeguarding report and that a full breakdown of the number of safeguarding referrals would be evidential and subject to audit.

·         A Member highlighted the importance of knowing where to signpost people when there were concerns in relation to safeguarding.  In response, the Wellbeing Service Manager and Deputy Strategic Lead for Safeguarding explained to Members that the Safeguarding Policy was currently progressing through all three Councils and that once approved, would contain all the relevant information for Members including how to report any concerns.

·         In reference to Paragraph 2.6 where ELDC was proactive in supporting the Prevent agenda and it was stated that all officers and councillors would access the required training required for their role via the corporate HR system First4HR, a Member queried whether more data could be requested on who had undertaken the training, page 35 of the Agenda refers.  In response, the Wellbeing Service Manager and Deputy Strategic Lead for Safeguarding advised Members that the training system on First4HR was able to provide clear data on who had participated in the training and would be regularly  ...  view the full minutes text for item 26.

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

Corey Gooch, Business Intelligence and Change Manager presented Members with the Q1 Risk Report 2025/26, pages 39 to 54 of the Agenda refer.

The report included a copy of the Q1 strategic risks, attached at Appendix A and was accompanied by the Partnership Risk Register at Appendix B and Fraud Risk Register at Appendix C detailed at pages 51 to 54 of the Agenda.

Members were advised that the Risk Management Framework was based on good practice and had incorporated elements from across the Partnership to ensure consistency. The report was being taken forward to the Executive Board and then to Council for approval.

Members were invited to put their comments and questions forward.

• In reference to the list of Fraud Risks highlighted at Paragraph 2.7, a Member queried the reason that 4 out of 10 risks had a target listed as to be confirmed, page 44 of the Agenda refers.  In response, the Business Intelligence and Change Manager advised Members that the fraud risks were new and that target risk scores were expected to be received from PSPS by the end of the week.  Members were further advised that this information would be shared with Members of the Committee at the earliest opportunity and would be included in the Q2 report. 

• A Member further commented that it was difficult to understand that the new risks had not been in existence longer and supported that it would be beneficial to understand the rationale behind the risks.  In response, the Business Intelligence and Change Manager supported that the risks were not entirely new and explained that it was the fraud risk register that had been a new conception.  Members were further advised that the future status of the risks was likely to move to a treating the risk status.

• In relation to National Non-Domestic Rate (NNDR) Fraud, the Chairman highlighted a historic example of dedicated officers that had investigated addressing specific areas of fraud to save the Council money and queried whether mitigation measures needed to be considered to periodically boost dedicated staffing numbers.  In response, the Business Intelligence and Change Manager advised Members that the Committee’s feedback would be communicated to the risk owner for consideration.

• In relation to SELCP Partnership Risks (SELCP-08) – Staffing which had a target status of ‘not on target’, a Member requested further information on when the risk was expected to become on target, and for further clarification on the efforts to improve the employee benefits packages by Q2 25/26, page 43 and 51 of the Agenda refer.  In response, the Business Intelligence and Change Manager advised Members that management of the risk was a combination of PSPS, HR and the Council’s internal organisational development team and that a number of mitigations were already in place.  Members were advised that a timeline for the SELCP Academy could be shared with the Committee and that more information would be obtained in relation to the employee benefits package.  Members were further advised that the references to Local  ...  view the full minutes text for item 27.

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

Sean Howsam, Treasury and Investments Manager presented Members with the Q1 Treasury Report 2025/26 to provide Members with an update on Treasury Management performance and activity to ensure best practice was maintained, pages 55 to 72 of the Agenda refer.

The following information as detailed at Appendix 1 was highlighted to the Committee:

• An economic update for the first quarter of the 2025/26 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 2025/26;

• A review of the Council’s borrowing strategy for 2025/26;

• A review of compliance with Treasury and Prudential Limits for 2025/26.

Members were invited to put their comments and questions forward.

• In reference to the loans the Council has made to Invest East Lindsey (IEL) which had long repayment terms including until 2042 for the final repayment of £300,000 in respect of the caravan hire fleet expansion loan, a Member highlighted concerns on whether the agreed duration of the loans had been in the best interests of the taxpayer, page 66 of the Agenda refers.  In response, the Treasury and Investment Manager clarified to Members that a separate amount exceeding £300,000 referenced earlier in the report was related to other charges that IEL were liable to pay to the Council and was not related to interest on the loans or the loan repayments.  In reference to the loans to Invest East Lindsey, the Treasury and Investment Manager explained to Members that the loans had different maturity dates from when the loans had originally been issued and that an alternative loan repayment schedule had been agreed in 2024 following an analysis of IEL’s financial position.

• A Member queried who had been responsible for agreeing the loan repayments and expressed concerns with the repayments of the loans when the Council would cease to exist in a few years’ time.   In response, the Interim Finance Director and Section 151 Officer explained to Members the treatment of the loans in relation to Local Government Reorganisation (LGR).  Members were advised that all of the Council’s assets and liabilities would be transferred to the new Council and that none of the repayments owed would be written off from the legacy Councils.

• The Scrutiny and Policy Officer further explained to Members that the original repayment term of the loans had been a maximum of 20 years and that the repayments had been scheduled in the order that they were due.  Members were assured that all payments had been expected to be remade between the original 2 and 20-year repayment terms which had been agreed by the Executive Board. 

• The Interim Finance Director and Section 151 Officer provided Members with assurance that that the loans had been setup using the appropriate governance channels and appropriate business considerations,  ...  view the full minutes text for item 28.

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

Mark Harrison, Internal Audit Manager, Internal Audit Lincolnshire County Council presented the Internal Audit Progress Report September 2025 to Members summarising East Lindsey District Council’s responsibilities to undertake effective internal audit, pages 73 to 84 of the Agenda refer.

Members were advised on key areas of interest which included the findings from the feedback received from the risk register review and the ICT cyber security review and the timeliness of the report.

The Internal Audit Manager advised Members that the ‘identification and monitoring of savings’ audit review had been classified as ‘Insufficient Controls’ due to a lack of governance processes and safeguards to allow a meaningful and reliable audit to take place.  Members were further advised that it was recommended and agreed by the Section 151 Officer that a new review would take place in Quarter 4.

Members were invited to put their comments and questions forward.

• A Member queried the response rate which indicated a lack of management engagement with the feedback process, page 77 of the Agenda refers.  In response, the Internal Audit Manager explained to Members that surveys had been provided to all managers once an audit had been completed and that a Key Performance Indicator (KPI) in relation to the return of surveys had indicated the timeframe for responses had been breached, however matters had now been resolved.  

• A Member highlighted concerns that the colours used in the table for the analysis of ‘live audit reviews’ was unclear, particularly where an ‘insufficient controls’ assurance rating was issued.  In response, the Internal Audit Manager advised Members that he was happy to address the colours in future reports.

• A Member further queried the reasons that the ‘insufficient controls’ rating did not fit into one of the normal audit opinion brackets.  In response, the Head of Internal Audit explained to Members that there were four standard assurance controls and that normally a ‘no assurance’ status would be issued, however this had been the first time that an ‘insufficient controls’ rating had been necessary.  It was explained to Members that this was due to the audit not being able to meet any of the standard criteria as there was not enough to be able to continue and conclude the work.   Members were further advised that it was not considered best practice to issue a ‘no assurance’ opinion by continuing the work without having anything to audit and that the ‘insufficient controls’ opinion had been an appropriate alternative, although it was a status rarely issued by auditors.

• A Member further highlighted that the use of the colour blue to highlight ‘insufficient controls’ was a poor colour choice for indicating an area of significant concern.  In response, the Internal Audit Manager acknowledged Members’ feedback.

• The Interim Finance Director and Section 151 Officer took the opportunity to draw Members’ attention to the actions where the Council was working to resolve the issues.  Members were assured that the Council was looking forward strategically to the 2026-27 financial year and over the period of the  ...  view the full minutes text for item 29.

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

Mark Harrison, Internal Audit Manager, Internal Audit Lincolnshire County Council presented the Internal Audit Charter to the Committee, pages 85 to 90 of the Agenda refer.

The Chairman spoke in support of the document being recommended for approval.

Following which it was,

RESOLVED:

That the Internal Audit Charter be approved.

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

Martin Gibbs, Head of Procurement and Contracts (PSPS) referred Members to a copy of the Exemptions Register, pages 91 to 94 of the Agenda refer.

Members were informed that the update related to the exemptions that had been signed off during the six-month period from 1^st March 2025 to 31^st August 2025.

The Head of Procurement and Contracts advised Members that 14 exemptions had been signed off which was slightly higher than the previous 6-month period where there had been 10 exemptions.

Members were invited to put their comments and questions forward.

• A Member requested clarification on the process for obtaining an exemption, including the role undertaken by officers and councillors.  In response, the Head of Procurement and Contracts (PSPS) explained to Members that an officer would contact the service with a procurement request before the options for applying an exemption were assessed and reviewed or the decision to support or challenge the request was made.  Members were assured that exemptions had a standard process across the Partnership and there was a formal four way sign off process which included the Section 151 Officer, the Chief Executive, the portfolio holder for finance and the relevant portfolio holder for the service area involved. 

• A Member commented on the benefit of the exemptions register being presented to the Committee on a quarterly, rather than six monthly basis.

• In reference to exemption reasoning 3.3.1 ‘for works, supplies, or services which are either patented or of such special character that it is not possible to obtain competitive prices’, a Member queried whether it was expected to observe more exemptions under that reasoning, page 93 of the Agenda refers.  In response, the Head of Procurement and Contracts (PSPS) explained to Members that pre-market engagement was undertaken to stimulate early interest in the market to reduce the need for bespoke goods and services.

• In reference to the Exemption for Destination Lincolnshire Digital and Marketing, the Chairman highlighted that there were other digital marketing providers and queried the reasons that it had not been considered to break the contract down into constituent parts, for example separating the digital marketing and the tourism aspects of the project, page 91 of the Agenda refers.   In response, the Head of Procurement and Contracts (PSPS) advised Members that decisions were made on a project-by-project basis and that it was in the Council’s interest to secure contracts that made it easier on time and resources, particularly where specialisms were required and it was necessary to ensure there were cost advantages. Members were advised that a more detailed response would be obtained from the relevant officer and brought back to the Committee.

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 11.30am.

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

Dan Wiley, Assistant Manager, KPMG was in attendance remotely on behalf of KPMG Limited, External Auditors to provide Members with an update.

Members were advised that good progress had been made, with 80% of the audit work completed.  The Assistant Manager explained to Members that a key risk had related to the evaluation of land and buildings and that delays had been experienced in relation to receiving responses from the Council’s internal valuer.  Members were further advised that the audit sample had needed to be extended in relation to floor plans and was expected to take some additional time to complete.

Members were assured that no significant issues had been identified, and that KPMG was working closely with the Head of Finance Delivery (PSPS) and the finance team to continue moving the audit work forward.

Members were invited to put their comments and questions forward.

The Chairman commented that it was positive that no areas for concern had been highlighted in relation to external audit.

No further questions or comments were received.

The Chairman thanked Dan Wiley, Assistant Manager, KPMG for his update.

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

The Chairman presented Members with the Audit and Governance Committee Annual Report 2024/25, pages 95 to 108 of the Agenda refer.

The report provided Members with an overview of the activity of the Audit and Governance Committee during the municipal year 2024/25.

Members were referred to Appendix A, pages 99 to 108 of the Agenda refer.

Members were invited to put their comments and questions forward.

• A Member commented in support of the report and proposed that the inclusion of global attendance figures of Members at meetings could provide valuable insight.

• A Member highlighted the value of observing where attendees had given apologies or sent substitutes and supported that attendance was essential for good governance.

• A Member commented that attendance data should be highlighted on a per Member basis.

Further to a discussion it was agreed to include the attendance of Members at meetings in the amended report that would go forward to Full Council.

No further comments or questions were received.

Following which it was,

RESOLVED:

• That the Audit and Governance Committee's Annual Report 2024/25 be approved.

• Than an amendment be made to the report to include attendance data and be presented to Full Council at its Meeting to be held on 8th October 2025.

To receive a draft memorandum of understanding.

The Chairman presented Members with the Draft Memorandum of Understanding for Overview and Scrutiny Committee and Audit and Governance Committee, pages 109 to 117 of the Agenda refer.

Members were advised that the Memorandum of Understanding had been sourced from the Centre for Governance and Scrutiny (CFGS) and followed on from a piece of work undertaken between the Chairman and Vice-Chairman of the Overview and Audit and Governance Committees.

Members were advised that the adoption of the Memorandum of Understanding had been approved by the Overview Committee at its Meeting on 22^nd July 2025.

N.B Councillor Edward Mossop left the Meeting at 11.38am.

No comments or questions were received.

Following which it was,

RESOLVED:

That the adoption of the Draft Memorandum of Understanding be approved by the Audit and Governance Committee.

To consider the Audit & Governance Committee Work Programme 2025/26.

N.B Councillor Edward Mossop returned to the Meeting at 11.40am.

Members were presented with the Audit & Governance Committee Work Programme 2025/26, pages 118 to 120 of the Agenda refer.

The Chairman highlighted to Members that the Item on Budget Preparation 2026/27 for November 2025 was being removed from the Work Programme following a discussion with the Chairman of Overview Committee.

Members were invited to put their comments and questions forward.

• A Member queried whether budget preparation was still being examined from an Audit and Governance perspective.  In response, the Interim Finance Director and Section 151 Officer explained to the Committee that all Members of Audit and Governance were being encouraged to attend the Overview Committee budget scrutiny meeting in January 2026 which would support wider Member engagement with the budget setting process.

• A Member queried whether the dates for the budget scrutiny meeting could be added to Members’ diaries at the earliest opportunity.  In response, the Democratic Services Officer confirmed to Members that the invitations would be sent to Members following the Meeting. 

• The Chairman further advised Members that the January 2026 Overview Committee Meeting was visible in the overall schedule of meetings and that a Reserved Members’ Day would be arranged prior to January 2026 to enable earlier budget discussions to take place.

Following which it was,

RESOLVED:

That the Committee Work Programme 2025/26 be noted.

The programmed date for the next Meeting of this Committee was noted as Wednesday 19 November 2025.

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).

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 update Audit & Governance Committee Members regarding the operation and activities of Invest East Lindsey Limited.

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.