Contact: Jeff Pattison/Ejner Knudsen, ext 7321/7403

1 Summary

1.1 In January 2003 the Standards Committee adopted on behalf of the County Council the Code of Corporate Governance and agreed that the Monitoring Officer should monitor compliance with the Code both corporately and departmentally. A report to the Committee at its meeting on 28 October 2003 considered progress made to monitor compliance with the Code. In particular it considered the preliminary results from questionnaires that had been circulated both corporately and departmentally.

1.2 This report gives feedback on the conclusions reached by Internal Audit who have undertaken a review of the evidence of compliance contained within the previously submitted questionnaires. The report identifies the key issues arising and a note of the further actions required to be undertaken both corporately and departmentally. This report is submitted in compliance with the Code of Corporate Governance and also satisfies Aim 6 of the County Council's Corporate Strategy - Developing Councillors and Staff.

2 Background

2.1 In order to demonstrate that the Code of Corporate Governance is effective and being complied with, the Standards Committee agreed that the Monitoring Officer should carry out an annual review and report the findings to the Standards Committee. A fundamental aspect of this review was that the Chief Internal Auditor should, through the normal annual audit process, validate the actions and procedures in place to satisfy the requirements of the Code of Corporate Governance and submit reports on this to the Monitoring Officer so that he can review and submit an evidence based report to the Standards Committee.

2.2 In accordance with this approach in May 2003 the Monitoring Officer circulated questionnaires to all chief officers in respect of their departments and lead officers in respect of corporate requirements for return by the end of May 2003. It was pleasing to note at the time that all questionnaires were submitted within the timescale requested. The completed questionnaires were then shared with Internal Audit and they have, in accordance with their normal audit plan, sought evidence to justify the comments contained within the respective questionnaires and also generally to ensure compliance with the requirements of Corporate Governance. It is the results of this internal review which are the subject of this report to Committee.

2.3 Members will recollect that in the previous progress report to the Committee on 28 October and solely as a result of the preliminary analysis of the questionnaires returned, there were several issues which arose and which the Monitoring Officer and the Chief Internal Auditor, required particular attention to be given. As it was not possible for Internal Audit, in view of the resources available to them, to carry out a fully detailed review of all aspects of Corporate Governance, particular focus has been given to those areas which appeared from the results of the questionnaires to justify further detailed consideration. These areas were:-

· Partnership arrangements - comprehensive lists of partnership arrangements appeared not to be always maintained by departments and the practice of documenting the framework for each partnership is varied. Guidance was issued by the County Treasurer's Professional Services Section to ensure that, on an incremental basis, the most significant partnership arrangements are properly controlled.

· Not all departments have a formal documented scheme of delegated authority for decision-making by nominated officers within the department, who exercise discretions on behalf of their chief officer. These arrangements also need to be kept fully up-to-date.

· There were a variety of responses to questions surrounding the County Council's Reporting Concerns at Work Policy. The issues revolved around how well known the policy was and if issues did arise, how they were documented. Another issue arose regarding whether or not the County Council should adopt a separate Fraud and Corruption Policy.

· Issues around whether officers were sufficiently aware of the Register of Officers' Interests, Gifts and Hospitality.

· Codes of Conduct for Staff being monitored only by reference to complaints received.

· Performance Indicator data is not collected and used for monitoring performance in all areas.

3 Results of the Review of Corporate and Departmental Effectiveness of Corporate Governance Arrangements

3.1 The conclusions of the review of adherence to Corporate Governance guidelines are satisfactory, especially in the light of the wide spectrum of activities considered. All of the areas referred to in paragraph 2.3 have been specifically considered and recommendations made only where there is an ongoing issue.

3.2 The Schedule referred to in the Appendix indicates those areas where more significant recommendations have been made. Other recommendations of a more minor nature have also been put forward but not referred to in this report as they do not expose the organisation to significant risk and are simply areas where management should consider taking action to improve the system.

3.3 A brief synopsis of the corporate and departmental reviews are as follows:-

3.3.1 Corporate Review

The Corporate Review indicates that there is an effective framework of Corporate Governance to ensure that the County Council is appropriately directed and controlled. It also opines that there are no significant opportunities for improvement in the performance of the system.

3.3.2 Departmental Review

In considering the control framework for departments, the internal review gives one of at least four possible opinions. These are categorised as follows:-

Good - A comprehensive system of control is in place to ensure the achievement of system objectives, good management and to protect the organisation against loss.

Effective - Key controls exist to enable the achievement of system objectives and to protect the organisation from material loss, although opportunities exist to strength the control system.

Basic - There is a basic control framework in place but there are gaps which weaken the system and losses or failure to achieve system objectives could occur.

Inadequate - Controls are considered to be insufficient with the absence of at least one critical control mechanism. In the case of all departmental reviews, the assessment undertaken is that at least an effective framework of control exists by which the department is directed and controlled.

In the case of all departments, their control framework has been placed in the "Effective" category.

3.4 There are a small number of recommendations which fall within the significant category. The majority of these are in respect of the need on the part of some departments to have a clear written record where decision-making has been delegated to members of staff. That is not to say that delegated decision-making has not been clearly given to members of staff, but this may have arisen either verbally or through custom and practice. The requirement is, therefore, to have a written record of these internal department delegations and to ensure that they are kept up-to-date when, for example, staff changes or reorganisations take place.

3.5 There is also a consistent need for departments to evidence partnership agreements. Once again, that is not to say that information does not exist on these partnership agreements, it most certainly will for the most significant ones, but that there is a need for this to be fully documented and to include categories of information that otherwise might be contained in disparate sources.

3.6 A final recommendation which is relevant to more than one department is the need for staff to have greater awareness of registers which exist for them to declare interests in contracts and the receipt of gifts and hospitality.

3.7 Over all, the review of Corporate Governance as applied to departments, is a satisfactory one with a relatively small number of recommendations being made. Notwithstanding this, attention must be given to all recommendations and each departments' response and actions following on from those recommendations will be reviewed in the future during normal internal audit inspections.

4 Recommendation

That the Standard Committee note and endorse the review of Corporate Governance arrangements as effecting both corporate and departmental requirements, and the recommendations contained within the Schedule of the Appendix.

Section 100D - Local Government Act 1972 - Background Papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published Works

2. Documents which disclose exempt or confidential information as defined in the Act.

None.

Summary of annual internal audit opinions and main issues arising from corporate governance reviews 2003/04