PURPOSE

1. To inform Members about the new requirement for the Local Authority to adopt a Statement of Internal Control.

BACKGROUND

2. Members of the Standards Committee will be familiar with the principle that audit arrangements, both internal and external, for the Local Authority have moved rapidly over the last few years from being almost entirely focussed on accounting for financial resources into a wider evaluation of the quality of corporate governance.

3. In this context corporate governance means all those arrangements which relate to the lawful and efficient running of the Local Authority, including those grouped under the heading of ethics and probity which form the core of the Terms of Reference of the Standards Committee.

4. The Statement of Internal Control is designed to accompany the annual publication of the accounts of the Local Authority. In relation to the financial year 2003-2004 the exercise will be conducted on a voluntary basis before becoming a statutory requirement in subsequent years.

5. The obligation is on the Chief Executive Officer and the Leader of the Council to sign a statement that sufficient systems are in place to ensure good governance. The draft document produced by the Isle of Wight Council separates this into nine areas as set out below.

· governance issues

· prioritisation and planning

· performance management

· risk management

· procurement

· project management

· financial controls

· human resources

· external inspections

6. The first chapter, reproduced as appendix 1, on governance issues, will be of a particular significance to Members of the Standards Committee as elements of it both reflect the activity of the Standards Committee and inform the work which it has, and will, undertake.

7. The current draft of the relevant chapter of the statement on internal control is set out for Members’ information.

8. Members will note the structure of the draft statement which requires various officers of the Local Authority with knowledge of, and responsibility for various processes to provide assurance to the Leader and the Chief Executive Officer to enable them to sign the statement in due course.

9. The Standards Committee merits a detailed and specific reference at paragraph 1.4 in the draft.

PROPOSAL

10. The current draft requires the Monitoring Officer to provide assurance that the Standards Committee is lawfully constituted and adequately resourced.

11. It is suggested that a new assurance is added as follows:-

“Chairman of Standards Committee - that the Standards Committee has been able to undertake its planned work programme and has been able to determine any issues referred to it by the Standards Board For England.”

RECOMMENDATIONS

That the Standards Committee notes the draft arrangements for producing a Statement of Internal Control and recommends the addition of a reference to the Chairman of the Standards Committee in the assurance process.

BACKGROUND PAPERS

Contact Point : John Lawson, 823216 ([email protected])

JOHN LAWSON

Monitoring Officer

1. Governance Issues

1.1 Council constitution

1.2 Executive decision making

1.3 Scrutiny role – Select Committees

1.4 Standards Committee

1.5 New legislation

1.6 Monitoring Officer role

1.7 S151 Officer role

1.8 Delegated Authority

1.9 Member/Officer Protocol

2. Prioritisation and planning processes

2.1 LSP

2.2 Corporate Planning

2.3 Service and Team Planning

2.4 Resource Prioritisation

2.5 Asset management strategy and capital strategy

2.6 Development Review Process

3. Performance management

3.1 BVPP

3.2 QPMR Reports

3.3 Priority Improvement Areas

3.4 Service Unit performance management framework

4. Risk management framework

4.1 General framework

4.2 Business continuity

4.3 Health & Safety Policy

4.4 Information Management

5. Procurement strategy

5.1 General framework

5.2 Strategic Procurement and Gateway reviews

5.3 Contract Standing Orders

6. Project management

6.1 Corporate framework

7. Financial controls

7.1 Financial Regulations

7.2 Budget Management and Financial Control

7.3 Accounting Standards

7.4 Financial Statements and Annual Report

7.5 Internal Audit

7.6 Audit Panel

7.7 Counter Fraud Unit

7.8 Separation of Duties As opposed to Internal Check

7.9 Fraud policy

7.10 External audit

8. Human resources issues

8.1 Overall HR strategy and policies

8.2 People Management

8.3 Equalities

9. External Inspections

9.1 CPA

9.2 IDeA

9.3 Ofsted

9.4 CSCI

9.5 Benefits Fraud Inspectorate (BFI)

1 Governance Issues

1.1 Council constitution

The council is required to publish and maintain a constitution which complies with a Directive issued by the Secretary of State in December 2000. Adoption of the constitution is a function of the Full Council.

The constitution must deliver efficient, transparent and accountable decision making, and be regularly reviewed to ensure it delivers that objective.

The Monitoring Officer has an obligation under the existing constitution to advise on necessary amendments.

Further information: The constitution; Constitutions Direction 2000

Assurance required:

Monitoring officer to confirm constitution is lawful, up to date and fit for purpose, identifying where necessary any need to amend.

1.2 Executive decision making

The Executive is responsible, by law, for the majority of the functions of the local authority, within the budget and policy framework set by the Full Council. It also has a duty to propose the terms of the annual budget and of a number of policies and plans for adoption by the Full Council.

Executive decisions can be taken by the Executive collectively (where the decision is of corporate significance, affects a number of service areas or is otherwise sensitive or controversial), by individual portfolio holders (where the decision significantly affects a service area or benefits from being taken publicly) or by officers acting under delegated powers.

It is necessary for decisions taken by members to be taken lawfully, efficiently, transparently and accountably, in the light of all relevant information and advice.

By use of the forward plan member decisions will be available for consideration by select committees, advertised in advance to the public and known to Strategic directors and specialist advisors in time for advice and recommendations to be made to the decision maker.

Member decisions must be taken and recorded publicly, except where the law provides otherwise. Decisions by officers must be subject to a proper, proportionate and auditable record.

Further information: Scheme of Delegations & Protocol on Decision Making within Constitution; Resolutions of Full Council; Executive Decisions; Local Government Act 2000 s13; Functions & Responsibilities Orders

Assurance required:

Monitoring Office and Chief Finance Officer confirming that decision making is lawful, efficient, transparent and accountable.

1.3 Scrutiny role – Select Committees

The Council’s Overview and Scrutiny is provided through the following

six Select Committees.

Economic Development, Planning, Tourism and Leisure Services.

Education, Community Development and Lifelong Learning (Children’s Services).

Environment and Transport.

Fire and Public Safety.

Resources.

Social Services, Housing and Benefits (Adult Services).

In addition the Health and Social Care Act of 2001 provided explicit power for local authorities with responsibility for Social services to scrutinise health services within the authority’s area. Since January 2003 this responsibility has fallen within the remit of Social Services, Housing and Health Select Committee.

The law requires the Council to establish committees to review and scrutinise decisions and make recommendations and/or reports to the Full Council and the Executive. The requirement extends to the review and health policy and to making recommendations to health an other public agencies.

1.4 Standards Committee

The council is obliged by law to establish a Standards Committee to promote high standards of ethical conduct by elected members; determine any complaints against members referred to it and to discharge similar functions in relation to Town and Parish Councils.

The Standards Committee must have a majority appointed as independent members, including it’s chair, who are not elected members of the council.

Further information: Article 9 of the Constitution; Standards Committee annual report.

Assurance required:

Monitoring Officer – that the Select Committee have adequate support and have adopted and undertaken a programme of work with clear outputs designed to deliver continually improving services.

1.5 New legislation

Under corporately agreed procedures, the Head of Legal and Democratic Services has a responsibility to identify any piece of new legislation with corporate effect.

In relation to any such legislation Directors Group will agree an action plan (covering some or all of a 15 point checklist) for preparing the authority for compliance.

Further information: Report to Directors Group December 2003.

Assurance required:

Head of Legal and Democratic Services to confirm whether any legislation with corporate effect is imminent and if so that a corporate action plan has been agreed.

1.6 Monitoring Officer role

S5 Local Government and Housing Act 1989 (as amended) requires the authority to designate one of it’s officer as Monitoring Officer and to provide adequate resources to discharge their responsibilities. The Monitoring officer has a personal responsibility to report any actual or likely unlawful act and/or any actual or likely act of mal-administration.

Further information: The Monitoring Officer – loose leaf publication by Wragge and Co.

Assurance required:

Chief Executive Officer to confirm that the Council has appointed both a Monitoring Officer and a Deputy Monitoring Officer has been made and that arrangements and resources are adequate.

1.7 S151 Officer role

The Council is required under Section 151 of the Local Government Act 1972 to make arrangements for the proper administration of their financial affairs and to secure that one of their officers has responsibility for the administration of those affairs.

This role is carried out by the Chief Financial Officer, who sits on the Directors’ Group and attends all meetings of the Executive to provide financial advice. Subsequent legislation requires the Chief Financial Officer to advise the Council on the robustness of its budget and the adequacy of its reserves, and to carry out an on-going monitor of financial performance against budget.

Further information: Chartered Institute of Public Finance and Accountancy guidance on the Role of the Chief Financial Officer

Assurance required:

Chief Financial Officer - Statutory and code of practice responsibilities are being discharged.

1.8 Delegated Authority

The vast majority of decisions taken in the discharge of the myriad functions of the local authority are taken by officers, under powers delegated to them by elected members.

These decisions will vary widely in value, service significance and degree of complexity., from a purely administrative decision to refuse a benefit entitlement (affecting only one individual) through the granting of a planning consent (affecting a whole neighbourhood) to staffing decisions which can affect the provision of a whole service.

Each and every decision must be properly, proportionately and auditably recorded. Equally important is the need to be able to demonstrate a chain of delegation from the member decision making body to the officer taking the decision.

Since June 2001, the functions of the local authority are split into Executive and Council side functions. The Executive and Full Council must each, therefore, determine to delegate functions to officers. This is done by the adoption of a scheme of delegations, showing powers delegated to Strategic Directors

Assurance required:

Monitoring Officer to confirm that Scheme of Delegations is lawful and efficient and has been properly adopted by the Executive (in relation to Executive Functions) and Full Council (in relation to Council side functions)

Directors/Heads of Service to confirm that auditable authorisations are in place for more junior staff to use delegated authority.

1.9 Member/Officer Protocol

Good member/officer relations are essential to the efficient discharge of local authority functions, and a clear statement of the respective roles and responsibilities is essential to the development and maintenance of those good relations.

It is therefore necessary to adopt and periodically review a protocol setting out the respective roles and ground rules for interaction between officers and members.

Further information: Member/Officer Protocol in constitution

Assurance required:

Monitoring Officer to confirm that a Protocol is adopted and fit for purpose.

PURPOSE

PROPOSAL

RECOMMENDATIONS

CONTENTS

2. Prioritisation and planning processes

5. Procurement strategy

7. Financial controls

8. Human resources issues