Hampshire Fire and Rescue Authority Item

Governance Committee

15/03/2005 21 June 2007

Error! Bookmark not defined.Improving Scrutiny Arrangements

Report by the Chief Officer

Contact: David Howells, Director of Corporate Services. Telephone: 023 8062 6833

1

Summary

In response to comments made by the Authority's external auditors in their Annual Audit and Inspection Letter for 2006/07, proposals are made in this report to enhance the role of the Performance Review Committee in order to improve the effectiveness of the Authority's scrutiny arrangements.

2

RecommendationError! Bookmark not defined.

That it be a recommendation to the Authority:

That the terms of reference of the Performance Review Committee be extended to enable it: "to carry out joint member/officer pre - and post-implementation reviews of any major project, scheme, or key decision taken by the Authority or its standing committees".

3

Introduction Error! Bookmark not defined.and background

3.1

At its last meeting (30 April 2007) the Committee considered the Audit Commission's Annual Audit and Inspection Letter. The Letter incorporated the key findings and conclusions of the Use of Resources Assessment undertaken by the external auditors during the third quarter of 2006/07. The Authority received scores of 3 out of 4 on all elements of the Assessment except for `Internal Control' where a score of 2 out of 4 was awarded. Overall, however, it was pleasing that the Authority was assessed as `performing well' (i.e. 3 out of 4).

3.2

The auditor's commented that:

"Systems of internal control are generally sound but the Governance Committee does not fully meet best practice guidelines for independence and member involvement in the production of the Statement of Internal Control (SIC) could be further developed."

3.3

Members will recall discussing these particular issues at some length at the last meeting and they were also considered a few days earlier by the Finance and General Committee at its meeting on 26 April 2007. Representatives of the Audit Commission were present at both meetings to present the Annual Audit and Inspection Letter to Members and to hear the discussions that ensued.

4

Independence of the Governance Committee

4.1

The Clerk informed Members that the best practice guidelines referred to by the external auditors were developed with the `cabinet / executive' model of governance in mind. The guidelines seek to enhance the scrutiny function within local government, so it is wholly appropriate that any governance (or scrutiny) committee should, ideally, have members who are not involved in any of the executive functions. However, the `cabinet / executive' model is not operated in combined fire authorities and it was explained that there would be practical difficulties in appointing members to a governance committee who were not also needed to fulfil roles on one of other executive committees. The need to ensure the constitutional requirements for both member representation from the constituent authorities and achieve political proportionality on the standing committees makes this extremely difficult to achieve in practice given the current composition of the Authority.

4.2

In their more detailed comments (i.e. in the Use of Resources Assessment), the Auditors recommended that the Authority should:

"Consider [the] composition of the Governance Committee to ensure [that it] can demonstrate independence with some members who do not serve in other areas such as CMT".

During the discussions it was made clear that the joint member/officer Corporate Management Team (CMT) was not a standing committee of the Authority nor did it have any formal decision-making or executive powers. Indeed, the status of CMT has been the subject of two reports to this Committee in the past and Members will recall recommending to the Authority that, in order to ensure transparency of CMT's role, any member of the Authority may attend its meetings. This recommendation was agreed by the Authority.

4.3

Notwithstanding the practical difficulties of achieving the complete independence of the Governance Committee, Members were keen to explore what might usefully be done to improve the effectiveness of the Authority's scrutiny function. With this in mind, the Clerk and Director of Corporate Services have examined whether the arrangements operated by the constituent authorities might be emulated. However, while these did seem to be appropriate for a multi-functional authority operating a cabinet / executive governance model, they were considered to be overly complex and burdensome for a single-purpose combined fire authority operating the more traditional local government committee structure.

4.4

Other combined fire authorities have differently titled committees, but most are effectively variations of similar themes. Some combine the governance and scrutiny functions, others (like Hampshire) operate a separate performance review function. There does not appear to be a single `best practice' model. The important issue - as has already been acknowledged in discussions and by our auditors - is to develop arrangements that are considered to be highly effective at involving members in discharging the scrutiny function.

4.5

From what appears to operate in other combined fire authorities, it would seem that our own Performance Review Committee already undertakes a significant scrutiny and internal control function - particularly in the work it performs in `progress-chasing' the implementation of all internal audit report recommendations as well as the outcomes of best value reviews. It is suggested that its role could be enhanced to enable it to carry out occasional pre - and post-implementation reviews of significant projects and decisions. Such reviews could be undertaken by small joint member/officer task-and-finish working groups (similar to those used to carry out best value reviews). Composition of any working group would not normally include any member or officer directly or personally involved in original project or decision. The Committee could also call for specific or more detailed reports on any particular concern it may have about the lack of progress in implementing agreed audit and best value review recommendations.

5

Member involvement in the Statement of Internal Control

5.1

Our external auditors concluded that we need to:

"Demonstrate member involvement in preparing the annual Statement of Internal Control"

As with most other reports to the Authority and its committees, the Statement of Internal Control (SIC) is prepared by the officers (by the Director of Corporate Services in the case of the SIC) and presented to members for consideration and approval.

5.2

The latest Statement of Internal Control (for the financial year 2006/07) is, coincidentally, also on this meeting's agenda. As in previous years the Statement pulls together a summary of the key actions and activities that have taken place during the last year to ensure that effective internal audit and scrutiny processes and procedures are in place for both the strategic and the day-to-day management of the Service.

5.3

Given the level of hands-on involvement by Members in regularly reviewing the Strategic Risk Register and the Improvement Planning Register and through the detailed reports Members of the Performance Review Committee receive on all internal audit report recommendations, it is felt that Members are already fairly actively engaged in scrutiny activities during the year. This involvement will be made more explicit in future which, together with the recommendation to further enhance the role of the Performance Review Committee, should positively address the external auditor's comments.

6

Contribution to corporate aims and objectives

6.1

The recommendations of this report should help to ensure that future external assessments and inspections are positive and which are critical to the Authority being regarded as being amongst the top ten of best performing fire and rescue authorities.

7

Risk analysis

7.1

Failure to respond positively to conclusions agreed recommendations arising from external audit and inspection reports would risk damage to the Authority's reputation.

8

Resource Implications

8.1

There are no significant resource implications arising from the recommendations in this report except for the potential of additional workloads falling to senior managers and Members of the Governance and Performance Review Committees.

9

Equality Impact Assessment

9.1

There are no equality issues arising from the recommendations in this report and the proposals within this report are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1998, and the Race Relations (Amendment) Act 2000.

10

Consultation

10.1

The Authority's external auditors (Audit Commission) were provided with an early draft of this report and raised no concerns about the proposals.

Background Information (Section 100D of Local Government Act 1972)

The following documents disclose the 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 the report:

_ Audit Commission - Annual Audit and Inspection Letter - Hampshire Fire and Rescue Authority - March 2007 [presented to the Finance and General Purposes Committee and the Governance Committee in April 2007]

_ Audit Commission - Use of Resources Assessment 2006/07 - Hampshire Fire and Rescue Authority [presented to the Finance and general Purposes Committee in April 2007]

Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act.