Archived decisions

Hampshire Fire and Rescue Authority Item

Governance Committee

15/03/20058 November 2007

Corporate Governance Framework

Report by the Chief Officer

Contact: David Howells, Director of Corporate Services, 02380 626833

Jeff Pattison 01962 847321

1

Summary

1.1

In March 2005 the Committee prepared a corporate governance policy and accompanying code of practice. This was based on the then current guidance published jointly by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE). These two documents were subsequently approved by the Authority in May 2007. Since then, three annual Statements of Internal Control have been produced in accordance with the framework set out in the policy and code.

1.2

Following a review - again carried out by SOLACE and CIPFA - of the implications of the Accounts and Audit Regulations 2003, Incorporating Accounts and Audit (Amendment) (England) Regulations 2006, new guidance has recently been published in relation to the corporate governance framework which has the effect of re-defining the core principles to be incorporated into the Code of Local Governance to be adopted by local authorities. It is disappointing that the review working party did not include a representative from a (single-purpose) fire and rescue authority.

1.3

The main outcome for the governance process is the need to produce and publish an Annual Governance Statement which would replace the former Statement of Internal Control. This would still need to be approved by the Governance Committee. This requirement is mandatory and is to take effect from the start of the current (2007/08) financial year: i.e.. retrospectively!

1.4

Further guidance has been promised to assist authorities in meeting these and some other new requirements including an annual review of the system of internal audit, and additional documentation to identify the `map' of assurance sources available to the organisation. This has not yet been received.

2

RecommendationError! Bookmark not defined.

2.1

That the Governance Committee note that the Authority's Corporate Governance arrangements will need to be reviewed and updated in the light of new mandatory requirements; but that the Clerk be instructed to write to the Audit Commission expressing concern about the retrospective nature of the new arrangements and the lack of definitive, specific and timely advice for fire and rescue authorities.

3

Approach

3.1

Since the introduction of the original guidance there have been some changes made almost on an annual basis in response to the specific requirements of central government, or the Audit Commission as its inspectorate, or CIPFA/SOLACE as the original sources of guidance and best practice. The new guidance is still far from complete, but it is evident that a comprehensive review and updating of the Authority's corporate governance policy and code necessary.

3.2

It is significant the CIPFA `Rough Guide to Practitioners' stresses that the new Annual Governance Statement (AGS) "...should be reviewed at least once a year but should not be seen simply as an end of year activity to comply with legislation ... [and that] ... for this process to add value to the organisation, assurances on the effectiveness of controls over key risks should be obtained throughout the year. This will allow the organisation to take remedial action necessary at the earliest opportunity, thereby improving the corporate governance framework.". It is therefore especially disappointing not to have definitive guidance available more than half way into the financial year.

3.3

As outlined in paragraphs 1.2 and 1.3 the new requirements are more fundamental in nature because they redefine the core principles needing to be recognised in the Authority's local Code and Framework, and introduce new terminology for describing various policies and procedures within it.

3.4

Some level of stability in external expectations over governance arrangements is important if the Authority is to be able to demonstrate real progress and improvement. Compliance with these expectations can involve significant investment in resources and it is to be hoped that this latest guidance will remain consistent for at least the next five years. Every effort will therefore be made to minimise the actual changes needed in the Authority's procedures and processes. It does, however, seem inevitable that a significant training and awareness exercise will be need to be conducted to `embed' the new arrangements once they have been developed and approved.

3.5

It is proposed to complete the necessary work to develop a new corporate governance framework and code of practice for the Governance Committee's meeting in March 2008. All supporting processes will also need to be reviewed to ensure the most efficient method of producing the Annual Governance Statement.

4

Resource Implications

4.1

No specific resource implications have been identified at this stage.

5

Equality Impact Assessment

5.1

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.

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:

"None"

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