Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

1. Executive Summary

This report sets out a proposal to:

1.1 Alter the current committee arrangements to replace the Governance Committee with a new Audit Committee for `audit' and other relevant functions, currently discharged by Governance Committee.

1.2 Establish a new Members Allowances Scheme Panel to carry out functions currently undertaken by Governance Committee in respect of the Members Allowances Scheme.

1.3 Transfer responsibilities in respect of the monitoring of provisions relating to call-in and urgency currently undertaken by Governance Committee and referred to at Part 1 Chapter 10 Paragraph 10.3(a) and Part 3 D Paragraph 1.17 of the Constitution to Policy and Resources Select Committee.

2. Contextual information

2.1 Since 2004, the Council has operated a Governance Committee with the terms of reference set out in Chapter 10 of the Constitution and reproduced at Appendix 1. These cover all aspects of governance, including the consideration of matters typically dealt with by audit committees. The Constitution requires that the membership of Governance Committee includes the leaders of all three political parties. The Leader chairs the Committee.

2.2 This arrangement has worked well in that it has provided a high profile demonstration of the Council's desire to respond positively to audit issues. However, this has meant that the Governance Committee is not independent of the Executive. Such independence is seen as good practice by, for example, the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Audit Commission in the framework for both the Comprehensive Performance Assessment (CPA) and the successor Comprehensive Area Assessment (CAA). Indeed, the District Auditor raised this matter in his last assessment of the Council's CPA Use of Resources.

2.3 It is judged that the existing arrangements have achieved their goal in terms of raising the profile of the issues and that it would now be appropriate to move to different arrangements in line with such guidance.

3. Proposal for an Audit Committee

3.1 The CIPFA Code of Practice for internal audit in local government (2006) states that the purposes of an audit committee are:

· to provide independent assurance of the adequacy of the risk management framework and the associated control environment

· to provide independent scrutiny of the authority's financial and non-financial performance to the extent that it affects the authority's exposure to risk and weakens the control environment, and

· to oversee the financial reporting process.

3.2 The current Governance Committee also discharges functions of the County Council relating to elections. These functions are contained within the Local Authorities (Functions and Responsibilities) (England) Regulations 2000 (as amended) Schedule 1 Paragraph D1-17 (`the Functions Regulations'). These are Council functions which cannot be the responsibility of the Executive. It is proposed that these functions are included within the terms of reference of the Audit Committee.

4. Proposed Terms of Reference of the Audit Committee

It is proposed to base the Audit Committee terms of reference on CIPFA's three-strand model as above, but with some adjustments to maximise continuity with existing arrangements, as follows:

4.1 Audit Activity

· to receive and consider reports from the County Treasurer on internal audit strategy, planning and delivery, including in particular the Chief Internal Auditor's annual report and opinion.

· to liaise with the Audit Commission over the appointment of the Council's external auditor.

· to receive and consider reports from the external auditor and any national agencies as may report on the County Council's performance, inspection or audit.

4.2 Regulatory Framework

To monitor the roles, processes and behaviour that affect the way that governance is exercised within the County Council and in particular:

· the adoption, review and amendment of the Corporate Governance Framework for the Council.

· to consider the effect of the authority's risk management arrangements, the control environment and associated anti-fraud and anti-corruption arrangements, seeking assurances as necessary that action is being taken on risk-related areas identified by auditors and inspectors.

· to receive and form a view on internal assurances of governance practice and to be satisfied that the authority's assurance statements, including the Annual Governance Statement, properly reflect the risk environment and any actions required to improve it.

· to consider the Council's compliance with its own and other published standards and controls.

· to make recommendations to the Council for the making or amending of financial regulations, standing orders related to contracts or regulations related to the conduct of the Council's business.

4.3 Elections

· functions relating to elections as specified in Schedule 1 Paragraphs D1-17 of the Functions Regulations

4.4 Committee arrangements

The Audit Committee will consist of seven members. The Chairman will not be a member of the Executive.

5. Proposed Terms of Reference for the Members Allowances Scheme Panel

5.1 The current Governance Committee also discharges functions in respect of the consideration of recommendations of the report of the Independent Remuneration Panel and makes recommendations to the Council for approval of the Members Allowances Scheme. By virtue of Regulation 2(5) and Regulation 2(6) of the Functions Regulations, functions in respect of the making of the Members Allowances Scheme cannot be the responsibility of the Executive, and this function is reserved in the Constitution to full Council. It is proposed to transfer functions recommendations on the Members Allowances Scheme currently discharged by Governance Committee to a Members Allowances Scheme Panel.

6. Proposed terms of reference of the Members Allowances Scheme Panel

6.1 Members Allowances Scheme

· To consider the recommendations of the report of the Independent Remuneration Panel and make recommendations to the Council for approval of the Members Allowances Scheme.

7. Recommendations

It is recommended that the Council:

7.1 Approve the setting up and terms of reference for the Audit Committee which replaces the Governance Committee. Part 1, Chapter 10 of the Constitution will be amended accordingly.


7.2 Approve the setting up and terms of reference of the Members Allowances Scheme Panel and recommend them for incorporation into the Constitution.

7.3 Approve the amendment to the terms of reference for Policy and Resources Select Committee referred to at Paragraph 1.3 of this Report and recommend them for incorporation into the Constitution.

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

Integral Appendix B

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

1.1. Equality objectives are not considered to be adversely affected by the proposals of this report.

2. Impact on Crime and Disorder:

2.1. The proposals in this report are not considered to have any direct impact on the prevention of crime.

3. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

· No specific changes

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

· No specific proposals affecting adaptation to climate change

Integral Appendix 1

Chapter 10 - The Governance Committee

10.1 The Governance Committee

The Council has set up a Governance Committee to monitor, review and report to the Cabinet the governance arrangements of the County Council.

10.2 Composition

The Governance Committee will be composed of five members.  The Leaders of the three political groups on the Council and two additional members appointed by the Council.

10.3 Role and Function

The Governance Committee will monitor the rules, processes and behaviour that affect the way that governance is exercised within the Council with regard to

a.  The operation of the provisions relating to call-in and urgency set out in Part 3D paragraphs 1.16 and 1.17 and submitting an annual report to Cabinet if necessary.

b.  Functions relating to elections as specified in Schedule 1 paragraph D1-17 of the Functions Regulations.

c.  The adoption, review and amendment of Corporate Governance Framework for the County Council.

d.  To receive and consider reports from the County Treasurer on internal Audit Strategy, planning and delivery.

e.  To receive and consider reports from District Audit and such other national agencies that may report on County Council performance, inspection or audit.

f.  To make recommendations to the Council for approval, the making or amending of standing orders relating to contracts and financial standing order or regulations related to the conduct of the Council's business."

g.  To consider the recommendations of the report of the Independent Remuneration Panel and make recommendations to the Council for approval of the Members' Allowances Scheme.

h.  To receive and consider reports from the Pension Fund Panel.

i.   To approve the County Council's Statement of Accounts should it not prove possible to complete the statement for submission to the County Council within the government's required timescale