Agenda item

Report of the Head of Audit and Risk Management to:

i)                    Inform the Audit Committee of the requirements of the statutory Annual Governance Statement (AGS) and provide a draft statement relating to 2008/09 for review and approval

ii)                  Inform the Audit Committee of the supporting information used to produce the draft AGS and provide a copy of the management assurance and self assessment statement, which will be completed and submitted by Directors and ACEs, for information.

The Head of Audit and Risk Management, Anne Woods, presented the report on the draft Annual Governance Statement (AGS) for 2008/09. The Committee was advised that it was a statutory requirement for the AGS to be published as part of the Council’s statement of accounts and that it was the responsibility of the Audit Committee to review the draft document. Ms Woods reported on the way in which the AGS had been compiled by a core group of key officers and on the format of the AGS, which was prescribed by CIPFA. The Committee was advised that key changes in 2008/09 were the introduction of a local code of corporate governance and the implementation of recommendations from the previous year’s AGS. Actions required to address any gaps in assurance or evidence were detailed in the matrix of supporting evidence appended to the report, as well as in the more detailed AGS action plan and other external action plans. Progress against all the action plans would be reported to the Audit Committee on a regular basis.

Committee members expressed concern that the evidence required under the CIPFA guidance was documentary in nature, and did not include information on how procedures were implemented in practice. Whistle-blowing was raised as an example of an area where policy was in place, but the report did not clearly demonstrate that this had been acted on and the Committee emphasised that it was essential to have greater information on how policies such as this were used in practice. Ms Woods reported that the in the previous year the external auditors had looked at the extent to which the documentary evidence could be relied upon for assurance and that, where it was found that there was a risk of policies not being followed, this was addressed by an action plan. It was also reported that the local code of corporate governance had been developed as a way of drawing together all the existing policies, in line with CIPFA and SOLACE guidance. 

Concern was expressed that the draft AGS did not fully reflect the position relating to internal control procedures in the course of the previous year, and suggested that as a result of the significant events of the year, further work on self-assessment and checking was necessary. Ms Woods reported that risk and data quality, which were key areas in this regard, were covered in both the internal and external audit plans for the forthcoming year. Committee members expressed particular concern regarding the wording under paragraph 4.7 of the draft AGS that “no significant issues were identified during 2008/09 by the Audit Committee”. On this point, the Chair commented with example that the wordings were not correct. Following clarification by Ms Woods that this referred specifically to the work programme of the Audit Committee, it was agreed that this wording be amended.

The Chair advised the Committee that he had requested from officers that additional reports on non-financial activities be reported to the Audit Committee to ensure that Committee members were able to monitor these effectively, i.e. external inspection reports action plan updates. Committee members also emphasised the importance of the Committee being able to ensure that relevant officers attended meetings of the Committee to account for any issues arising within their Service.

On the specific issue of treasury management, the Chief Financial Officer proposed that the wording of the AGS be amended to make clear that, as agreed at the previous meeting, the Audit Committee was to monitor the implementation of the recommendations arising from the national review.

In light of the serious issues identified in the previous year, the Committee suggested that the report should include specific deadlines and clear details of the issues identified and the specific actions that would be taken to address these, and the way in which this process would be reported to the Audit Committee. Ms Woods reported that details of the actions to be taken, timescales and updates on progress with the recommendations made by external bodies would be reported to the Committee on a regular basis. The Committee requested that this be reflected in the AGS and it was agreed that the draft would be amended to reflect this. The Committee emphasised the importance of identifying corrective actions and not just problems, and raised as an example a recent issue that had been identified relating to literacy, for which an action plan and follow up actions were needed to ensure that the issue was addressed fully.

The Committee requested assurance that external checks were carried out on the quality of the information being provided, to ensure that the position being reported was accurate. The Chief Financial Officer advised that this was part of the internal and external audit work on data quality, which examined whether information was true and reflective of the real situation and had been recognised as a key issue. Committee members noted that there was a wider issue of culture which needed to be addressed, which went beyond issues relating to data quality. In response to the advice of the Chief Financial Officer that some of these issues were addressed in the JAR action plan, the Committee requested that a sentence be added to the AGS to reflect the fact that issues relating to culture and practice on the ground were covered in the JAR action plan.

The Committee asked how checks were made to obtain assurance that the issues identified with culture and practice in certain Services weren’t present throughout the Council. Ms Woods responded that with benefit claims, for example, work was sample-checked for quality assurance and full details were also provided in specific reports. The Committee emphasised that, while good data was important, it was essential to follow up and check on the implementation of policies to provide the full picture.

The Chair asked the Chief Financial Officer whether assurance could be provided that, by fulfilling the requirements in producing the AGS, the Council’s rating under the Comprehensive Area Assessment would improve from the present CPA 1 star rating. The Chief Financial Officer reported that the Council aspired to improve it’s rating, but that improvement could not be guaranteed by meeting the requirements of the producing the AGS, as the rating would be at the discretion of the assessors plus there are a number of other service areas that require improvement.

The Chair asked whether the Chief Financial Officer had applied his full responsibility and professional expertise in the preparation of the draft AGS, and the Chief Financial officer confirmed that this was the case. The Chair noted that no consultation had been carried out in the preparation of the report, and asked whether, as the AGS related to the quality of performance, officers were confident that the AGS could help to recover the Council’s ratings position. Ms Woods clarified that the document had not been consulted on externally as it was a document to be produced by the Council, and reported that the Chief Financial Officer, Chief Executive and other Directors were all included in working to improve the Council’s rating. The Chair asked whether officers were satisfied with the wording of the sections dealing with the governance framework and the review of its effectiveness, as standard wording for these areas were not provided by CIPFA. The Head of Audit and Risk Management and the Chief Financial Officer confirmed that they were satisfied with the wording of these sections.

The Chair asked whether Grant Thornton would assist the Council to improve their rating in the next assessment. The Chief Financial Officer confirmed that he would be working closely with Grant Thornton to ensure that the Council’s systems were fully implemented and effective.

In response to a question from the Chair regarding the group of core officers working on the AGS and how improvements on the previous year would be made, Ms Woods confirmed that this group remained unchanged from the previous year and would be working to improve performance by reflecting on the issues raised as a result of inspections focusing on governance, and on the action plans proposed in the draft AGS and report.

The Chair asked about the Quality Outcomes Board, its terms of reference and why no reports of its discussions were presented to the Audit Committee. The Chief Financial Officer reported that the Quality Outcomes Board was an advisory board to reflect on issues arising from the JAR, and reported that key issues raised at the board are being communicated to all Members. It was reported that the advice provided by the Quality Outcomes Board would be considered and would then become part of the formal decision making process of the Council, in accordance with its terms of reference.

In response to a question from the Chair regarding the officer code of conduct, Ms Woods confirmed that all staff were required to formally acknowledge receipt of the code of conduct and that a record of this was held by the Council.

The Chair noted that, although the minutes of the previous meeting indicated that confirmation that everyone was aware of the key risks and responsibilities would be included in the AGS, this did not appear in the draft. It was agreed that the draft AGS would be amended to include this confirmation.

The Chair reported that it had been agreed with officers and also agreed at the last Committee meeting that the Audit Committee would receive regular reports on progress with recommendations arising from all reports and inspections carried out on the Council by external organisations. Committee members requested these progress reports be presented to the Committee on a 6-monthly basis, although the Chair strongly recommended that it should be quarterly instead of 6 monthly, because the assessments of the external auditors were largely dependant on the performances of the authority on the remit of those reports.

Referring to the sections on performance management arrangements (4a and 4c), risk management (5a, 5h and 6j) and assurance statements (7a) in the matrix of supporting evidence, the Chair requested that time limits be identified for each stage of these processes to ensure that all necessary actions were carried out. Committee members requested that each audit be reported to the Audit Committee once the appropriate Service had responded, and that the Committee should then receive 6 monthly updates on progress against the audit recommendations. The Committee also requested a 6 monthly progress report on the JAR action plan.

The Chair raised a question as to whether the role of the Head of Audit and Risk Management was aligned to the latest terms of reference of the Committee. It was agreed that the Chief Financial Officer would provide Committee Members with a briefing note on this.

The Committee requested information on the arrangements for the officers’ register of interests. Ms Woods reported that the register was held by the Human Resources department, and she would seek clarification regarding the access arrangements to the register and report back to the Committee.

It was agreed that all the observations and suggested amendments arising from the discussion of the draft AGS  would be incorporated into the draft.

Taking into account all the observations and concerns of the Committee, on a motion by the Chair it was:

RESOLVED

i)                    That, having reviewed the supporting information, the draft AGS for 2008/09, which will be amended to reflect all the views and concerns of the Committee expressed during the discussion of the draft, be approved.

ii)                  That the approval timescale and process for the draft AGS be noted.

Cllr Butcher requested that his objection to the approval of the draft AGS be recorded, as he felt that the draft inadequately addressed the governance shortcomings raised in respect of safeguarding and treasury management during 2008/09.