Agenda item

The report was presented by Sarah Oldendorp, Audit Manager. The Internal Audit Annual Report summarised the work undertaken by the Internal Audit Service during 2025-26 and key themes relating to risk management, governance and internal control. It provided the Head of Internal Audit’s annual opinion on the overall adequacy and effectiveness of the Authority’s framework of governance, risk management and internal control.

On the basis of the programme of work completed during 2025-26, the Head of Internal Audit confirmed substantial assurance regarding the adequacy of design and effectiveness in operation of the organisation's framework of governance, risk management and control.

Internal Audit Work Undertaken

All 70 of the budgeted days were used to deliver the internal audit plan and all work had been completed.

·         Governance, risk management and internal control

Overall substantial assurances were provided regarding the adequacy of design and effectiveness in operation of the organisation's frameworks of governance, risk management and control. Three reasonable and two substantial audits conducted within the year with a low number of resulting actions overall. A summary of actions was provided. Systems and processes were generally working effectively and ensured staff were aware of correct processes. Action plans were agreed with Senior Managers for issues raised during the year.

·         VAT

Substantial assurance was provided. It was noted that the Service had a established and well?structured process for the administration of the VAT return, supported by experienced finance staff and comprehensive procedures and documentation.

·         Treasury Management

Reasonable assurance was provided. LFRS demonstrated strong strategic oversight of treasury management, appropriate oversight and effective reporting. However, the absence of approved Treasury Management Practices (TMPs) was discussed with the Deputy Finance Manager during the audit and was now being addressed. It remained a material control gap that must be resolved to ensure full compliance with the CIPFA Treasury Management Code and to strengthen operational resilience.

·         Procurement

Reasonable assurance was provided. Lancashire Fire and Rescue Service (LFRS) had made significant progress in strengthening its procurement governance, supported by an increasingly structured framework, improved tools, and a growing alignment with the Procurement Act 2023 (the 2023 Act). The foundations for effective, well?governed procurement activity were in place, and ongoing improvements demonstrate a proactive commitment to enhancing consistency, transparency, and assurance across procurement processes.

It was noted that LFRS had established a strong governance base, with Contract Standing Orders already updated to align fully with the 2023 Act and procurement staff completing training on the 2023 Act. Several supporting documents and tools, such as the newly introduced Process Workflow Guide, revised procurement initiation templates and the implementation of the Chest e-procurement system (the Chest platform), showed a clear direction of travel toward stronger compliance. Work was already underway to refresh remaining documents, including Terms and Conditions, and to update website information to accurately reflect current practice. These initiatives demonstrated a positive and forward?looking approach that would further strengthen organisational clarity, compliance, and governance.

The Procurement Team had taken important steps to modernise its transparency arrangements, with The Chest now established as the primary platform for tendering and publication. This transition represented a significant improvement, with built?in safeguards that support compliance and consistency. While some gaps were noted during the review, such as delays in publishing contract awards and updating the contracts register, staff were already embedding new processes and strengthening record retention practices. Continued adoption of the Chest platform, together with the ongoing population of the live contracts register, would further enhance transparency, assurance, and public confidence.

In response to a question from County Councillor J Ash in relation to group procurement with other public services to get better deals, the DoCS explained that LFRS liaised wherever possible with other areas and there was a very good Blue Light Network.

County Councillor A Joynes asked when the Treasury Management Plan would be completed. The Deputy Head of Finance explained that this was the next priority after the financial statements were finalised and would be completed by the end of the financial year.

Resolved: - That the Audit Committee noted and approved the report.