APPENDIX 1

Purpose : For Decision

REPORT TO THE EXECUTIVE

Date : 9 FEBRUARY 2005

Title : ANNUAL AUDIT AND INSPECTION LETTER – 2003/4

REPORT OF THE PORTFOLIO HOLDER FOR RESOURCES

IMPLEMENTATION DATE : 21 February 2005

SUMMARY/PURPOSE

1. To report the 2003/4 Annual Audit and Inspection Letter to the Council. The Council's Relationship Manager and District Auditor - Stephen Taylor - will make a presentation to the meeting and will be able to answer Members questions on the Letter.

BACKGROUND

2. The Audit Commission produce an “Annual Letter” for each local authority in the country which summarises the conclusions and significant issues arising from their audit and inspection programme.

There are a number of key elements which are addressed in the Letter:

· Financial aspects of the Council’s corporate governance arrangements (the Council’s accounts and financial standing, systems of internal financial control, standards of financial conduct, etc)

· The Council’s performance management arrangements (use of resources, performance information, Best Value Performance Plan, etc)

· The outcome of service inspections undertaken over the year

· CPA Improvement report (assessing the Council against the CPA criteria)

3. A copy of the Annual Letter is attached (Appendix 1).

4. The key messages from the Letter are as follows :

· The Council is continuing to make progress on its corporate governance arrangements and drive through an ambitious change programme.

· The Council has remained focused on its improvement priorities, is strengthening its strategic planning framework and is well-placed to further improve both governance and service delivery

· In CPA terms, our overall performance is assessed as “fair”.

· Benefits and Use of Resources have both continued to improve and were scored a maximum “4 out of 4”.

· Environment Services has improved from a 2 out of 4 in the previous Letter to a score of 3.

· With the exception of Housing, all other service blocks have maintained scores of 3 out of 4. Housing has remained at 2 out of 4.

· Our progress on modernising the Fire & Rescue Service is judged to be “poor”.

· The Council’s accounts were given an unqualified audit opinion and our overall corporate governance arrangements were considered to be satisfactory although it is considered that attention needs to be given to long-term financial planning and further developing our internal control self-assessment framework.

 5. The Letter highlights a number of areas where action is required by the Council. Specifically, it is recommended that the Council needs to :

· Maintain the momentum of change and remain focused on our key priorities.

· Ensure that we have the capacity and range of management skills needed to progress the change and improvement agenda.

· Sustain the drive to create a performance management “culture”.

· Integrate medium-term financial planning into our performance framework.

· Tackle areas of under achievement.

· Ensure that the fire modernisation agenda is urgently addressed.

STRATEGIC CONTEXT

6. The Annual Audit and Inspection letter is a key report to members on the Council's progress against the various elements of the national Improvement programme for local government. It gives an independent and authoritative assessment of how the Council is performing and the prospects of improving from a 'fair' to a 'good' ranked authority in the next CPA assessment which will take place in 2006/7.

7. Our response to the recommendations contained in the Letter will be incorporated in the 2005/6 Annual Action Statement which will come before the Executive in due course. It will also be necessary to reflect the action required in individual Service Plans and the various statutory plans. Progress on addressing the issues identified in the Letter will continue to be monitored through the Quarterly Performance Management Report (QPMR).

FINANCIAL / BUDGET IMPLICATIONS

8. No financial implications arise from consideration of the Audit and Inspection Letter.

LEGAL IMPLICATIONS

9. The Audit and Inspection Letter is prepared to meet the requirements of the Statement of responsibilities of auditors and audited bodies issued by the Audit Commission. The responsibilities of the Audit Commission and its Inspectors are detailed in the Audit Commission Act 1998 and the Local Government Act 1999.

OPTIONS

10. The Executive has an obligation to receive the Letter and members may wish to take the opportunity to question the Council's Relationship Manager & District Auditor as to its context and content. There are, therefore, no options to be considered arising from this report.

EVALUATION/RISK MANAGEMENT

11. Given the obligation of the Council to receive, consider and respond to the Letter, the issue of risk relates to the substantive response which will be contained in the Annual Action Statement for 2005/6.

RECOMMENDATIONS

That the Executive:-

(a) Receive the Audit and Inspection Letter 2003/4 and question the Council's Relationship Manager and District Auditor as to its content.

(b) That the Executive receives a further report adopting the 2005/6 Annual Action Statement including the corporate responses to the issues raised in the Letter.

(c) That progress against the Letter continue to be monitored through the QPMR process.

BACKGROUND PAPERS

2003/04 Best Value Performance Plan and Best Value Performance Indicators Audit - November 2004

2003/4 Annual Action Statement

Contact Point : John Bentley, Head of Corporate Policy and Communications

( 823346. e-mail [email protected]

M FISHER Chief Executive Officer

REG BARRY Portfolio Holder for Resources