Agenda and minutes

Apologies for absence were received from Councillors Hugo and Jackson, and County Councillor Clarke.

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 received.

Resolved: - That the Minutes of the last meeting held on 08 July 2024 be confirmed as a correct record and signed by the Chair.

The Director of Corporate Services gave thanks to the External Auditors, Internal Auditors, and the Finance Team for all their work on the arduous process of the Statement of Accounts.

The Director of Corporate Services presented the report to the meeting. The report presented the Statement of Accounts for the financial year ended 31 March 2024 which included the Authority’s 25% share of the North West Fire Control (NWFC) accounts. Its purpose was to give electors, local taxpayers, Fire Authority Member, employees, and other interested parties clear information about the Fire Authority’s finances.

The Committee considered the Statement of Accounts as presented.

The aim was to provide information on:

-        The cost of providing Fire Authority services in the financial year 2023/24.

-        How these services were paid for.

-        What assets the Fire Authority owned at the end of the financial year.

-        What was owed, to and by, the Fire Authority at the end of the financial year.

The narrative report provided a guide to the most important matters which were included in the Statement of Accounts. The Statement of Accounts had been prepared in accordance with the Accounts and Audit Regulations 2015 as amended by the Accounts and Audit (Amendment) Regulations 2021 and the Code of Practice on Local Authority Accounting in the United Kingdom.

The Statement of Accounts contained: -

Statement on Annual Governance Arrangements – Set out the Authority’s responsibilities regarding the system of internal control on corporate governance.

Independent Auditor’s Report to Members of Lancashire Combined Fire Authority – The Auditor’s report to the CFA on the accounts for 2023/24, which were set out in the agenda pack.

Statement of Responsibilities for the Statement of Accounts – Set out the responsibilities of the Authority and the Treasurer regarding the statement of accounts.

Comprehensive Income & Expenditure Statement – The Statement showed the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Fire Authority raised taxation to cover expenditure in accordance with regulations; this could be different from the accounting cost. The taxation position was shown in the Movement in Reserves Statement.

Movement in Reserves Statement – This statement showed the movement in year on the different reserves held by the Fire Authority analysed between usable and other reserves. The surplus or deficit on the Provision of Services line showed the true economic cost of providing the Fire Authority’s services, more details of which were shown in the Comprehensive Income and Expenditure Statement.

Balance Sheet – This showed information on the financial position of the Fire Authority as at the 31 March 2024, which included the level of balances and reserves at the Fire Authority’s disposal, its long-term indebtedness and the value of the assets held by the Fire Authority.

Cash Flow Statement – This showed the cash and cash equivalent movements in and out of the Fire Authority due to transactions with third parties for revenue and capital purposes.  ...  view the full minutes text for item 15/24

As part of the year-end process, the Authority was required to sign a letter of representation. This letter confirmed that the Authority had disclosed all relevant information in its accounts for the year in question and that all issues which should have been brought to the attention of the auditors had been.

The Treasurer confirmed that he would sign the letter, as there were no issues which he felt required disclosure.

Resolved: - That the Audit Committee authorised the signing of the letter by the Chair of the Committee.

Ying Li, Audit Manager presented the Audit Findings report to the Committee.

Under the Statutory Code of Audit Practice for Local Government bodies, the Authority’s external auditors, Grant Thornton, were required to issue a report to those charged with governance that summarised the conclusions from their audit work.

The audit was substantially complete, and the Value For Money (VFM) work had been completed. The auditors expected to issue an unqualified audit opinion following the Audit Committee meeting subject to receipt of the management letter of representation and final quality procedures, subject to the below outstanding matters;

·       Completion of testing for creditor, grant income, employee benefits expenses, pension liabilities, cash and bank balance, land and building revaluation, journals, and financial instrument.

·       Verify the responses from the pension fund auditor to gain assurances on underpinning controls and supporting data for the pension fund net liability.

·       Final review of the audit file by the Engagement Lead and Audit Manager. Regular reviews of the file had taken place throughout the audit.

·       Update post balance sheet events review to the date of signing.

·       Receipt of the management representation letter.

·       Review of the final set of financial statements.

Some of the matters had been completed at the time of the Committee and some were still outstanding. Grant Thornton had worked closely with the Finance Team and thanks were given for their work and excellent communication.

Members noted that the Value For Money arrangements report would be presented at the next Audit Committee meeting.

The Audit Manager drew Members attention to Page 8 of the agenda pack which detailed that the materiality had been revised as the actual gross expenditure had changed significantly from that anticipated at the planning stage. This had resulted in a review of the appropriateness of the materiality figure.

The risks identified in the Audit Plan and corresponding commentaries were:

·       Improper revenue / expenditure recognition.

-        The substantive income and expenditure testing had not identified any material errors that were required to be brought to the Service’s attention.

·       Management override of controls.

-        From the review of all journals posted during they year, 41 higher risks or unusual journal had been identified that warranted detailed audit testing. Audit work to date had not identified any significant issues in respect of management override of controls. The work was subject to the final review by the Engagement Lead.

·       Valuation of land and buildings.

-        As part of the overall audit work, 25 asset valuations had been tested, including large assets or those with movements outside of expectations. In completing the work, Grant Thornton examined the accounting entries, data and assumptions used, and relevant asset indices.

·       Valuation of Pension Fund Net Liability

-        The pension fund net liability of £651.920m was made up of the Firefighters pension scheme (FFPS) net liability of £651.826m and Local Government Scheme net liability of £0.094m. For the LGPS pension scheme, the Authority had considered the potential impact of IFRIC 14 before audit challenge. The Authority obtained additional information relating to  ...  view the full minutes text for item 17/24

Georgia Jones, Key Audit Partner, presented the report.

Under the National Audit Office Code of Audit Practice, the external auditors were required to consider whether the Service had in place, proper arrangements to secure economy, efficiency, and effectiveness in its use of resources.

As reported, the audit was substantially complete, and the auditors expected to issue an unqualified audit opinion following the Audit Committee meeting subject to receipt of the management letter of representation and final quality procedures.

The review of value for money arrangement covered the 3 areas of: i) financial sustainability; ii) governance and iii) improving economy, efficiency, and effectiveness.

Georgia Jones drew the Members attention to Page 150 of the agenda pack and the overall summary of the Value for Money assessment of the Authority’s arrangements. Improvements had been made from the previous year and the 2023/24 Auditor judgements on arrangements were:

-        Financial Sustainability – No significant weaknesses in arrangements were identified, but one improvement recommendation had been made to support the Authority in improving arrangements relating to efficiency savings. The recommendation related to reporting of planned and achieved savings.

-        Governance – No significant weaknesses in arrangements were identified, but seven improvements had been made to support the Authority in continuing to improve its arrangements.

-        Improving economy, efficiency, and effectiveness.

Members noted that improvement recommendations were good practice and did not suggest that there were issues with exiting arrangements.

The auditor’s review did not identify any significant weaknesses in arrangements across any of these areas, but had made 10 improvement recommendations as set out on pages 167 to 171 of the agenda pack as now considered by Members:

1.     Recommendation – That the Authority should consider making improvements to the reporting of plans to bridge identified gaps in the revenue budget, and performance against savings and efficiency plans, by:

-        disaggregating efficiency savings from adjustments to revenue contributions to capital in the MTFS summary table; and

-        reporting specifically on efficiency savings achieved as compared to the approved plan, within the quarterly financial update.

The Authority should continue development of its savings plan in advance of 2026/27, including consultations and costing of invest-to-save projects, so that delays in implementation could be avoided. Savings plans should be subject to quality impact assessments where appropriate, and responsibilities for delivery of savings should be clearly assigned.

Management Comment – Noted, budget monitoring reports to the Resources Committee would be developed to include progress against agreed savings plans in the MTFS.

2.     Recommendation – The Authority should consider opportunities to improve risk management by:

-        consolidating very similar risks and actions to reduce duplication in the Corporate Risk Register;

-        adding environmental risks to the risk scoring criteria;

-        providing more comprehensive information to the Audit Committee, such as residual risk scores and action owners/timelines for implementation;

-        mapping corporate risks to the strategic objectives outlined in the Community Risk Management Plan.

Management Comment – Noted, the corporate risk register was based on NFCC national best practice and  ...  view the full minutes text for item 18/24

The Internal Auditors produced a summary of progress against the annual plan for each Audit Committee meeting, setting out progress to date and any significant findings. The report for the period 01 April 2024 to 06 September 2024 was presented by Laura Rix, Senior Auditor.

To date, 14 days had been spent this financial year on completion of the 2024/25 plan, equating to 20% of the total planned audit activity of 70 days. The table in the report showed the current status of all audit work.

With regards to the Implementation of Learning from National Incidents, the report was in the process of compilation and would be available for the next Audit Committee meeting. Members were informed that the District Planning Activity work had now been completed and work would soon commence on Cyber Security.

In response to a question from County Councillor Singleton in relation to 2 planned Audit days for follow up audit activity, Laura Rix explained that there 2 days in the plan and 1.5 days had been used with 0.5 days variation. The only other follow up work was key financial systems which would take place later in the year, however, there were no issues which was positive.

Resolved: - That the Committee noted the report.

The next scheduled meeting of the Committee has been agreed for 10:00 hours on 28 November 2024 in the Main Conference Room, Service Headquarters, Fulwood.

Further meetings are:         scheduled for 27 March 2025

                                              proposed for 24 July 2025

The next meeting of the Committee would be held on 28 November 2024 at 10:00 hours in the Main Conference Room at Lancashire Fire and Rescue Service Headquarters, Fulwood.

Further meeting dates were noted for 27 March 2025 and agreed for 24 July 2025.