Annual Governance Statement 2007/08

BOROUGH OF POOLE

AUDIT COMMITTEE

26 JUNE 2008

ANNUAL GOVERNANCE STATEMENT 2007/08

PART OF PUBLISHED FORWARD PLAN: YES

STATUS – GENERAL

1.PURPOSE AND POLICY CONTEXT

1.1The Accounts and Audit (Amendment) Regulations 2006, and ‘proper practice’ (CIPFA/SOLACE) require the Council to produce an Annual Governance Statement (AGS). This requires the Council to conduct a review of its governance framework, including the system of internal control, at least annually. It subsumes the Statement of Internal Control, with increased focus on governance and partnerships.

1.2The governance framework comprises the systems and processes, culture and values, by which the Council is directed and controlled, and by which it is accountable to, engages with and leads the community. The system of internal control describes the controls in place to manage the risk of failure to achieve policies, aims and objectives to a reasonable level e.g. to prevent/detect fraud, misuse of Council assets.

2.BACKGROUND

2.1The AGS describes the Council’s governance framework and internal controls with reference to the “six core principles of effective governance” and comments on the effectiveness of these arrangements. It then identifies any significant issues regarding governance arrangements or internal control weaknesses.

2.2The AGS has been signed by the Chief Executive and Leader, having been satisfied that the document was supported by reliable evidence. It is required to be formally reviewed by the Audit Committee and is published with the Statement of Accounts. It will be reviewed by the Audit Commission who will report if it is misleading or inconsistent with their knowledge of the Council’s activities.

3. DECISION REQUIRED

3.1 Members are asked to critically review the Annual Governance Statement to:

a)Consider the effectiveness of the Council’s governance arrangements and system of internal controls

b)Consider whether the AGS is sufficiently evidenced by supporting documentation

c)Consider and agree the significant control issues identified

4.PROCESS FOR COMPILING THE AGS

4.1The key sources of evidence for the AGS are as follows:

• Management Assurance Statement (MAS) – a self-assessment checklist completed by Service Unit Heads to confirm the adequacy of key governance arrangements in their Service Unit. The MAS also asks Service Unit Heads to identify key risks and issues facing their Service Units. Production of the MAS and collation of the results was undertaken by Internal Audit. See Appendix 2
• Corporate Checklist – This checklist, based on CIPFA best practice, covers ‘corporate’ governance and internal controls, such as performance and risk management. It also includes best practice arrangements for the six core principles of governance. This was completed with the input of the relevant officers across the Authority. See Appendix 3 for summary of issues identified.
• Reports from External Agencies – Key external reports were reviewed for significant governance issues – see Appendix 4 for issues considered.
• SIC 2006/07 – The progress of the detailed action plan for 2006/07 was reviewed. Items which were not implemented were carried forward to the AGS 2007/08. See Appendix 5.
• Chief Auditor’s Annual Report – The chief Auditor is required to produce an Annual Report on the effectiveness and adequacy of the Authority’s internal control environment. This report is being considered separately at this Audit Committee.

5.ACTION PLAN TO ADDRESS SIGNIFICANT ISSUES

5.1 A detailed action plan to address the significant issues identified will be produced and agreed by Management Team. Progress against this plan will be reported to the Audit Committee quarterly throughout the year.

Keith McCormick

Chief Auditor

Background Papers Nil

Name and Telephone Number of Officer to Contact:Keith McCormick 633123

AGS/Statement/AGS Audit Ctte Paper 26-6-08

Appendix 1The draft Annual Governance Statement

Appendix 2Management Assurance Statements – example document and summary of Service Unit responses

Appendix 3Corporate Checklist – Summary of Issues Identified

Appendix 4Issues from External Reports

Appendix 5 SIC Action Plan 2006/07

APPENDIX 1

ANNUAL GOVERNANCE STATEMENT

1SCOPE OF RESPONSIBILITY

1.1The Borough of Poole is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The Borough also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

1.2In discharging these overall responsibilities, the Borough of Poole is responsible for putting in place proper arrangements for the governance of its affairs, and facilitating the effective exercise of its functions, including arrangements for the management of risk.

1.3This statement explains how the Borough of Poole delivers good governance and reviews the effectiveness of these arrangements (including the system of internal control). It also meets the requirements of regulation 4(2) of the Accounts and Audit (Amendment) Regulations 2006, which require the Council to publish a statement on internal control (now subsumed within the Annual Governance Statement).

2THE BOROUGH’S GOVERNANCE FRAMEWORK

2.1The governance framework comprises the systems and processes, and culture and values, by which the Borough is directed and controlled, and by which it is accountable to, engages with and leads the community. It includes arrangements to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.

2.2The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Borough’s policies, aims and objectives; to evaluate the likelihood of those risks being realised and the impact should they be realised; and to manage them efficiently, effectively and economically.

2.3The following paragraphs summarise the Borough of Poole’s Governance Framework, which has been in place for the year ended 31st March 2008 and up to the date of approval of this Statement and the Statement of Accounts. The Framework is described with reference to the six core principles of effective governance and demonstrates how each principle is complied with.

Purpose of the Borough, Outcomes for the Community and Vision for the local area

2.4The Borough has identified and described its vision for Poole and local community in its Corporate Strategy, ‘Striving for Excellence’. It also aims to deliver high quality services that provide value for money, and which are aligned to the needs and priorities of the local community.

2.5The Audit Commission’s CPA Assessment for 2008 rated the Borough as a 4 star Council in recognition of the quality of the services it provides for the local community through effective use of limited resources.

2.6The Borough is a leading member of the Local Strategic Partnership. It recognises the importance of partnership working to deliver its vision and objectives. A Local Area Agreement has been developed between the Council, Poole Partnership and the Government that also reflects the priorities in the Corporate Strategy. A new Multi-Area Agreement is also planned to help deliver key priorities.

2.7The Corporate Strategy is drawn from a wide range of consultation, data evidence and political leadership, to ensure that the Council meets the needs of all the community. It is reviewed annually, to take account of issues, such as changing diversity, environmental and economic factors.

2.8The Corporate Strategy is cascaded through Service Unit business plans, individual employee interviews and action plans. Business Plans reflect Corporate Objectives and Priorities, include clear identification of service objectives and targets, and include risk registers identifying risks to meeting both Strategic and Operational Objectives. Business Plans are updated annually.

2.9The Borough’s Corporate Performance Team supports the Authority to identify, deliver and monitor its strategic and service priorities in conjunction with partners and to achieve and evidence continuous improvement. A range of performance measures is also used to monitor progress. Performance is reported twice a year to the Cabinet and Members through Performance Forums.

2.10The Borough has invested in new Performance Management software, to help improve performance management further. Plans are also in place to introduce a more comprehensive range of VFM indicators across Services to ensure best value is achieved.

2.11The Council has a Medium Term Financial Plan and Capital Programme to ensure that resources are aligned to its corporate priorities. The annual budget process also sets targets for savings and efficiencies to ensure that resources are redeployed where possible to meet key Council priorities.

2.12The Council’s Cabinet receives monthly financial monitoring reports and quarterly reports on progress against key milestones and key outcome and performance measures, and considers and approves corrective action where necessary.

2.13The Borough of Poole constantly seeks ways of ensuring the economical, effective and efficient use of resources, and for securing continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness. This is also reflected in the Council’s Business Transformation Strategy to ensure that the Council optimises its use of its financial, property, human and ICT assets.

2.14The Council regularly seeks feedback from its residents via the ‘Poole Opinion Panel’ and uses the feedback to shape its future plans. The Council’s newspaper ‘Poole News’ is delivered to all households in the Borough six times a year. The website, boroughofpoole.com is highly used by residents. The six Area Committees help bring decision-making closer to local communities and involve local people in decisions by having open forum discussions at each meeting.

2.15The Council’s ‘Promoting Equality, Respecting Diversity’ Policy outlines its vision for positively promoting equality and respecting diversity in the community, in service delivery and employment practice. The Council is currently at level 2 of the LG Equality Standard and aims to be at level 3 by March 2009, level 4 by 2010 and level 5 by 2011. Performance against the ‘Corporate Equalities Action Plan’ is reviewed twice yearly.

2.16The Council also operates a complaints procedure and uses this to identify where service quality is not satisfactory.

Members and Officers Working Together with Clearly Defined Roles

2.17The Authority has adopted a Constitution that sets out how the Council operates, how decisions are made, and the procedures that are followed to ensure that these are efficient, transparent and accountable to local people.

2.18Policy and decision-making is facilitated through the establishment of a Cabinet. The roles and responsibilities of all the Council’s committees are detailed in the Constitution. Committee meetings are open to the public except where personal or confidential matters are being disclosed. Portfolio Holders may take decisions on behalf of the Cabinet within their areas of operation. In addition, senior officers of the Council can make decisions under delegated authority, and a Scheme of Delegation to Officers is included in the Constitution. A Forward Plan is published which contains details of key decisions to be made by the Council, its committees and Service Unit Heads under their delegated powers.

2.19A protocol for effective Member – Officer communication is also included in the Constitution.

2.20The Service Provision Scrutiny and Audit Committee acts as the Borough’s Audit Committee, as defined in its Terms of Reference. The Committee meets regularly to consider internal audit quarterly performance and activity reports. Additionally the SPSAC reviews and approves the internal audit annual risk based audit plan, assurance reports, the Chief Auditor’s Annual Report and the results of the external auditor’s review of internal audit. The Chief Auditor attends these meetings. The Committee also receive relevant external audit reports. A new Audit Committee will be in place from May 2008 and Terms of Reference are being developed and it is anticipated that it will have a similar role.

2.21The Borough’s Service Provision Scrutiny and Audit Committee provides assurance to the Council on the effectiveness of the governance arrangements, risk management framework and internal control environment.

2.22The Council’s Chief Executive (and Head of Paid Service) leads the Council’s officers and chairs the overall corporate Management Team

2.23The financial management of the Authority is conducted in accordance with the financial rules set out in Part 4 of the Constitution and with Financial Regulations. The Council has designated the Head of Financial Services as the Chief Financial Officer in accordance with Section 151 of the Local Government Act 1972. The Council has in place a four-year Medium-Term Financial Plan, updated annually, to support the medium-term aims of the Corporate Strategy and Business Plan – ‘Striving for Excellence’.

2.24All staff, including senior management, have clear conditions of employment and job descriptions which set out their roles and responsibilities. Terms and conditions of employment are overseen by the Borough’s Personnel and Training Service.

2.25The Council has designated the Head of Legal & Democratic Services as Monitoring Officer. It is the function of the Monitoring Officer to ensure compliance with established policies, procedures, laws and regulations. After consulting with the Head of Paid Service and Chief Financial Officer, the Monitoring Officer will report to the full Council if it is considered that any proposal, decision or omission would give rise to unlawfulness or maladministration. Such a report will have the effect of stopping the proposal or decision being implemented until the report has been considered.

2.26Protocols for partnership working are currently being developed to ensure there are clear governance arrangements and accountabilities when working with partners.

Promoting Values for the Authority and Upholding High Standards of Conduct and Behaviour

2.27The Council expects high standards of conduct from its officers and members. Both the Member and Officer Codes of Conduct are contained in the Constitution and include requirements for declarations of interests, gifts and hospitality. Their importance is reinforced through Member and Office induction courses.

2.28The Member Code of Conduct was reviewed during 2007/08 and is enforced by the Borough’s Standards Committee. The role of the Standards Committee includes strengthening and maintaining high standards of conduct, through, for example, promoting, advising on, and monitoring the Members’ Code of Conduct and investigating alleged breaches.

2.29In accordance with changes in legislation, from 2008/09, the Standards Committee will have primary responsibility for determining complaints in the first instance. In preparation for this, the Borough’s Constitution has been amended to increase the membership of the Standards Committee by an additional independent member.

2.30The Borough takes fraud, corruption and maladministration very seriously. It has an ‘Anti-Fraud and Corruption’ Policy, which clearly states the Council’s commitment to fighting fraud and corruption, and explains the role of Members, Senior Officers and Employees in reporting possible fraud. A Whistleblowing Policy is also in place that provides avenues for employees, contractors, partners and Members to raise concerns without fear of reprisal. It also provides basis on which the complaint will be investigated. Both the Anti-Fraud and Corruption Strategy and the Whistleblowing Policy were reviewed and refreshed during the year.

2.31All officers are also expected to comply with the Borough’s Financial Regulations and Contract Standing Orders, which form part of the Constitution and describe the controls requirements for financial and purchasing systems. They are supported by more detailed guidance, for example, through the Procurement Toolkit or through the provision of specialist advice from the Borough’s Internal Audit and Corporate Procurement Teams. Standing Orders relating to Contracts and Tenders have also been reviewed during 2007/08 in line with CIPFA guidance.

2.32The Council also has an established Email and Internet Policy, which all employees sign up to. This policy reduces the risk of abuse of IT facilities.

Taking Informed and Transparent Decisions and Managing Risk

2.33The Council’s Constitution sets out how the Council operates and the process for policy and decision making.

2.34Cabinet is the decision making body for the Council, unless decisions need to be referred to the Council under the Constitution. Decisions made by Cabinet are on the basis of written reports that include assessments of the legal and financial implications of decisions (as advised by the named legal and finance officers). Consideration is also being given to including risk, equalities and environmental impact assessments within these reports.

2.35Cabinet decisions are scrutinised by the scrutiny function, which has the power to call in decisions made. The call-in function also applies to decisions made by Portfolio Holders on behalf of Cabinet.

2.36Other decisions are made by officers under delegated powers. The Borough has a Scheme of Delegation in place for day to day operational decisions.

2.37Policies and procedures governing the Council’s operations include Financial Regulations, Contract Standing Orders and a Risk Management Strategy. It is the responsibility of Management across the Council to ensure these policies are adhered to. The Internal Audit Section checks that policies are complied with. Appropriate action is taken where incidents of non-compliance are identified.

2.38‘Equality Impact Assessments’ (EQIAs) are carried out to ensure equality and diversity issues are properly considered when policies or services are being developed or changed.

2.39The Borough’s Risk Management Strategy (updated in 2007/08) requires the consideration of risk in all key management processes undertaken. The Council is continuing to embed systems for identifying and evaluating all significant risks, developed and maintained with the pro-active participation of all those associated with planning and delivering services.