Archived decisions
APPENDIX
Annual Governance Statement for Hampshire County Council
And Hampshire Pension Fund
1. Scope of Responsibility
Hampshire County Council is responsible for ensuring that:
· its business is conducted in accordance with the law and to proper standards.
· public money is safeguarded and properly accounted for, and used economically, efficiently and effectively.
· pursuant to the Local Government Act 1999 it secures continuous improvements in the way in which its functions are exercised, having regard to a combination of efficiency, effectiveness and economy.
· there is a sound system of internal control which facilitates the effective exercise of the County Council's functions and which include arrangements for the management of risk.
These responsibilities also extend to the administration of the Hampshire Pension Fund, which is undertaken by the Pension Fund Panel. The Panel, which meets regularly, is comprised of County Councillors, representatives of Unitary and District Councils, co-opted Members from other employer organisations, pensioners and pension contributor's representatives. The Panel is also advised by an external independent adviser.
In accordance with the requirements in the Accounts and Audit Regulations 2003 as amended by the Accounts and Audit (Amendment) (England) Regulations 2006, this statement sets out how the County Council has sought to meet these requirements during 2008/2009.
2. The purpose of Corporate Governance
The system of Corporate Governance is based on an ongoing process designed to identify and prioritise risks to the achievement of the County Council's policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively, and economically.
The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness.
One of the key elements of the Corporate Governance regime and the production of the Annual Governance Statement is the methodology applied to obtain the necessary assurance. This has included:
· a detailed questionnaire being sent every two years to all Chief Officers
· a detailed questionnaire being sent to other Officers who undertake key corporate roles within the County Council.
· Consultation with other relevant Officers throughout the County Council
The questionnaires, which are revised and updated on each occasion, cover a wide range of Corporate Governance issues. They refer to the existence knowledge and application within departments of governance policies generally, but also concentrate on specific issues which have been identified as having greater significance to the County Council.
In line with the revised Internal Audit Strategy adopted by the County Council in December 2007, the key elements of the Corporate Governance framework are risk assessed and reviewed by Internal Audit over a 5 year period, drawing on the responses to the questionnaires. This testing is a significant piece of work for the internal audit team, on which on average over the past four years it has spent at least 100 days per annum.
The Internal Audit Team's work forms the basis of a report to the relevant Chief Officer or Key Corporate Manager for any follow up work necessary, and feeds into this Annual Governance Statement.
Departmental Corporate Governance Questionnaires and Corporate Governance Questionnaires were sent out to Chief Officers and Officers with key corporate roles in July 2008.
The system of Corporate Governance has been in place in the County Council for the year ended 31 March 2009, and up to the date of approval of the annual report and accounts.
This report outlines the internal control Corporate Governance environment in which the County Council operates, and reviews the effectiveness of the controls.
3 Establishing principal statutory obligations and organisational objectives
The County Council's Constitution, adopted from 1 September 2001, sets out the processes by which the County Council's policies are made and decisions taken. It sets out clearly the role of:
· The County Council
· the Leader
· Cabinet
· arrangements for the performance of regulatory functions.
· arrangements for scrutiny.
· the Standards Committee.
· the role of the Audit Committee (established to give added focus on governance and audit issues).
· key roles of the Chief Officers and Statutory Officers.
The Constitution also contains arrangements for the delegation of decision making to the above bodies and also to Chief Officers and others.
In addition, Appendices to the Constitution contain a range of Codes and Protocols including
· rules on Financial Regulations
· rules on Contract Standing Orders
· Codes of Conduct for Members and Officers
· Protocol for Member/Officers relations
Financial limits within these documents were reviewed and updated by the County Council at its meeting on 28 May 2007.
In order to ensure compliance with policies, procedures and statutory requirements the County Council has a range of controls and processes in place, as set out and reviewed below. These processes also help the County Council ensure the efficient effective and economical use of resources, to secure continuous improvement in the exercise of its functions, and to provide effective performance management and reporting.
The new Audit Committee will receive, regular reports from both external and internal audit, and the minutes of the Governance Committee meetings (the predecessor of the Audit Committee) demonstrate that effective action is taken where issues of non-compliance have been identified.
All County Council decisions are made in accordance with the County Council's Decision Making Protocol (agreed in 2001). The Protocol requires all reports for decisions, whether by the Executive or by Committee to be submitted in advance for both legal and financial consideration.
All reports are considered by appropriately qualified legal and finance staff with expertise in the particular function area. Legal staff have direct access to a well equipped library on site, and through the internet to the Lawtel electronic legal information system. Processes and policies within Legal Services have also been quality assured through the award of Lexcel which is the Law Society's quality accreditation scheme, annually reviewed by external independent assessors, and also through Investors In People accreditation.
All legal staff have access to training courses, and regular internal sessions are organised for the whole of Legal Services on topics of specific and general relevance to their roles and responsibilities. Senior lawyers within the service have regular meetings with Chief Officers and senior clients to assess performance, review future demands, and identify new legislative demands.
The County Treasurer operates a system of Devolved Finance Units, each with a Head of Profession working closely with the relevant Chief Officer and reporting to a Member of the Treasurer's Management Team. The Head of Profession and relevant Treasurer's Management Team Member work together to ensure that both corporate and departmental financial perspectives are taken into account in all papers for decision, and attend meetings to advise further as appropriate.
4 Mechanism in place to identify principal statutory obligations
The County Council sets out its priorities through the Corporate Strategy and Corporate Improvement Plan. In 2006 the Cabinet reviewed its aims and refined the previous six aims into a set of three Corporate priorities, introducing a greater emphasis on selecting priorities in the face of significant resource constraints. Since then, through `Driving Success', a new Corporate Improvement Plan has been developed which identifies the main improvement priorities at the corporate level, and establishes the framework for performance managing against this and partner priorities. Activities and targets against the Corporate Improvement Plan are drawn from more detailed corporate policies and plans and cascaded through Service Plans and Individual Performance Plans. The resources to deliver the Corporate Strategy are summarised in the Workforce Plan, the Asset Management Strategy, and the Revenue and Capital Budgets.
The Corporate Strategy links to the Hampshire Sustainable Community Strategy, which expresses the aims the County Council shares with strategic partners in Hampshire, the Local Area Agreement and the Local Public Service Agreement 2. It was prepared to reflect consultations with a wide range of stakeholders.
The Corporate Strategy also takes account of strategic partnership contributions, assessed through partnership agreements. Required contributions and income are built into the medium term Financial Plan and Budget Forecast. Separate accounts are maintained where the County Council is responsible for partnership accounting, for example, the Safety Camera Partnership.
The Corporate Strategy and Corporate Improvement Plan set out in one document the County Council's aims and Corporate improvement priorities. They establish links to departmental and operation plans which set out how the County Council intends to achieve them. They also show how the County Council responds to changes and challenges, identifies common aims with partners, linking to the Local Area Agreement, and sets priorities and targets for improvement.
The Corporate Strategy is approved by the Corporate Management Team (CMT), Cabinet and full Council, and forms the major part of the County Council's policy framework alongside the Sustainable Community Strategy and other major plans including the Children and Young People's Plan. The Corporate Strategy sets priorities for the life of the administration, and the Corporate Improvement Plan is reviewed annually. This is informed by the outcomes of consultation, performance results, benchmarking, review programmes and external inspections and factors such as local and national policies and initiatives. The Corporate Strategy and Corporate Improvement Plan are published on the County Council's website, and in hard copy for circulation internally and to key partners. Communication of the priorities is supported by other promotional activities including posters and a flash video, and provide a cornerstone for all internal and external communication activities.
The Corporate Improvement Plan element of the Corporate Strategy has been used as the basis for developing departmental service plans and individual performance plans for 2008/2009 and 2009/2010 so that the `golden thread' between the documents is strengthened and visible.
The County Council has published guidance on its integrated planning process which links workforce, budget and service planning into the County Council's Corporate Strategy and priorities. The Corporate Performance and Efficiency Group has responsibility for corporate performance management and will from June 2009 receive quarterly updates on key performance targets and measures. CMT and Cabinet will receive other corporate performance reports on a regular basis.
To help establish these Corporate Priorities the County Council has a corporate consultation plan agreed by CMT and Cabinet annually, which sets out proposals to consult with staff, residence and other stakeholders and partners. The research findings are published, in summary, on the County Council's website. The results help inform the development of the Corporate Strategy and are disseminated through CMT/Cabinet, DMT's, senior manager's seminars (Success Through People), and other staff communication mechanisms to inform service planning.
Clear guidance is set for the preparation of Service Plans and this guidance is accessible on the Performance Management Website. The guidance cross-references budget planning and workforce planning and is also available as an e-learning package. A `Corporate Threads Portal' has been developed, which supports service managers in taking account of Corporate Priorities in the planning and delivery of their services.
The Corporate Strategy priorities are set out in the County Council's Corporate Strategy web pages.
A comprehensive Communications Strategy has also been developed and implemented to inform external and internal audiences of the County Council's new Corporate Strategy objectives using a wide variety of traditional and innovative communication routes.
5 Effective Corporate Governance arrangements are embedded within the County Council
The Monitoring Officer and the Chief Internal Auditor (for the Section 151 Officer) have close working relationships both between themselves, and with the Standards Committee, and the Audit Committee.
The Standards Committee has responsibility for maintaining high standards of probity amongst Members through the provision of advice and training and by carrying out investigations of complaints received.
The Monitoring Officer has undertaken a review of the systems of internal audit and the results of this are referred to throughout this statement.
Responsibility for overseeing Corporate Governance was formally delegated and documented through the Constitution to the Governance Committee. The terms of reference for the Governance Committee were contained within the Constitution, and the Governance Committee included among its Members the leaders of the three political parties. This was the situation for several years and the involvement of these senior politicians demonstrated the stature and the effectiveness of the Governance Committee when regular internal audit reports have been submitted for consideration and future action.
Notwithstanding the success of the Governance Committee its terms of reference mean that it is not wholly independent of the Executive. The County has therefore, at its meeting on 15 June 2009, established a new Audit Committee with more audit focused terms of reference. In accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) guidance the Chairman of the new Audit Committee will not be a members of the Executive. The function of the Governance Committee relating to Member's allowances will now be undertaken by a new Members Allowance Scheme Panel.
Internal Audit is required to comply with the CIPFA Code of Practice for Internal Audit in Local Government in the UK 2006 and its prescribed professional standards. External assurance that these standards are met is provided through regular inspections by the Audit Commission, ISO quality accreditation assessors, and specialist inspectors of services within the education and social care fields who need to place reliance on the work of internal audit.
The Governance Committee approved the Internal Audit Strategy and Plan for 2008/2009 and the New Audit Committee will continue to monitor performance and the progress of significant issues including the implementation of audit recommendations. This plan was based on a revised future Audit Strategy for 2008 to 2013, as approved by the Governance Committee at its meeting in December 2007.
The Chief Internal Auditor has provided an Annual Statement of Assurance on the effectiveness of the control framework which is considered in conjunction with the Final Accounts.
The Annual Audit and Inspection Letter for 2008 (based on data from 2007/2008) commented positively on the Council. The District Auditor commented that:-
`In all major respects the Council's arrangements for maintaining a sound system of internal control are above minimum requirements with a strong performance in many areas'
6 Performance management arrangements are in place
Performance management arrangements in the context of the setting of corporate aims and objectives and cascading these through the County Council through Service Plans and the Individual Performance Plan process are described above.
In addition, individual Departments have developed their own regimes for approving and monitoring objectives and targets set in Service Plans. Service Reviews are now instigated through the Service Planning process, while the Corporate Review Programme focuses on cross cutting and strategic issues, paying attention to efficiency and value for money.
All performance measures, both national and local are known and responsibility allocated through the service planning process. Both external and internal audit reports include reviews of key performance indicators, systems and data quality with consequent reports to management.
Performance Management arrangements are enhanced by a thorough and fully embedded system of budget forecasting and monitoring which focuses on:
· annually updated three year budget projections and a three year capital programme.
· detailed quarterly budget monitoring reports on revenue and capital to the relevant executive Member.
· ability of Select Committees to scrutinise monitoring reports.
· overall budget monitoring report to Cabinet on a quarterly basis.
The corporate performance reporting process covers:-
· national performance results - these are incorporated in the corporate performance results: half yearly report in November/December and full year report in May/June
· results against Corporate Improvement Plan targets/priorities - these form the major part of the corporate performance results
· reports against departmental/service targets/priorities - reports go to Departmental Management Teams and Cabinet portfolio holders half yearly and should be monitored regularly by service managers and DMT level managers
· individual performance reports - every line manager considers performance results at least on an annual basis, though usually more frequently. The process is evaluated by Investors in People accreditation.
Poor performance is escalated to CPEG (Corporate Performance and Efficiency Group) through performance reporting to the managerial/political level which can agree remedial action. Once remedial action is agreed, it is implemented through service plans.
Performance information is updated and published with year-on-year comparisons of achievement against performance targets on the website which is accessible internally and externally.
The Audit Commission's report on the 2008 Performance Plan indicates satisfaction that the Plan includes those matters prescribed in legislation and statutory guidance and was appropriately published. The Audit Commission had no matters to report to the County Council, nor any recommendations to make on procedures in relation to the Plan
The performance frameworks are regularly reviewed and updated to take account of changes in organisational structure, new Government initiates, new internal performance measures and other factors including external or internal review of the arrangements
The County Council scored the highest Four Star Comprehensive Performance Assessment by the Audit Commission which assesses the management of the authority and the performance of the services the County Council delivers. In addition the County Council was rated as Improving Strongly which again is the highest rating and indicated the direction and pace of performance improvement and their view as to how likely this is to be sustained. The assessment also includes a specific judgement on the County Council's Use of Resources and whether it provides Value for Money, on both counts the County Council was rated as four out of four. For more information see the following link: http://www3.hants.gov.uk/cpa/
7 Focusing on the purpose of the County Council and on outcomes for the community and creating and implementing a vision for the local area
The County Council has achieved this through the development, implementation and publication of the Corporate Strategy and the underpinning Corporate Improvement Plan, which is regularly reviewed, and its cascading through to service delivery via Departmental Service Plans and Individual Performance planning.
This objective is also achieved though the adoption of a Sustainable Community Strategy which was revised during 2007/2008, and which provides a common vision to the County Council's partners, ensuring that their work is understood and agreed by all parties.
Annual reports are published via the County Council's Performance web pages which communicate the County Council's activities and achievements as well as its financial position and performance.
The County Council considers that the achievement of value for money in the delivery of its services is fundamental. The County Council's performance against this criteria can be demonstrated by the following factors:
· benchmarking of spend compared with service quality i.e. lower
· quartile council tax and `excellent' rated performance
· all Gershon targets for efficiency gains exceeded
· integrated planning which links corporate priorities and areas for improvement to the budget setting decision process
· high levels of capital investment which shows that short term gains are not pursued at the expense of long term value for money
· a `good' score of 3 in the Audit Commissions overall Use of Resources assessment and for the value for money component of that assessment in particular.
The County Council has an effective and comprehensive department and corporate complaints system which allows for any failures in service delivery to be properly dealt with, and to allow lessons to be learned.
8 Members and Officers working together to achieve a common purpose with clearly defined functions and roles
The County Council has a comprehensive Constitution, accessible on its website, which sets out the roles of the Council, Cabinet, Executive Members, Committees, the Chief Executive who is allocated the role of Head of Paid Service, Chief Officers and other senior Officers.
The Constitution also allocates the statutory roles of Section 151 Officer to the County Treasurer and that of the Monitoring Officer to the Deputy Head of Legal Services. Details and descriptions of both roles and their responsibilities are contained within the Constitution.
The relationship between Members and Officers is enforced by an established Member/Officer protocol.
The County Council has appointed and maintains an Independent Remuneration Panel pursuant to the requirements of the Local Authorities (Members Allowances) (England) Regulations 2003 which meets in open session. The Panel will make recommendations to the New Members Allowances Scheme Panel and the Members Allowances Scheme Panel, having considered those recommendations, makes recommendations to full Council.
The overall governance of Officer's remuneration is managed through the Employment in Hampshire County Council Committee (EHCC), which considers all policy matters relating to employment, terms and conditions.
9 Promoting values for the County Council and demonstrating the values of good Governance through upholding high standards of conduct and behaviour
The County Council's Constitution is founded on it operating in an open and transparent way, and for the Leader of the County Council and the Chief Executive to set the tone for the organisation by creating a climate and culture of openness, support, and respect.
The County Council is committed to the highest ethical standards and has adopted a wide range of policies to re-enforce this philosophy as well as procedures to investigate them should the need arise. These policies and procedures include:
· Members and Officers Codes of Conduct
· Member/Officer protocol
· Standards Committee
· Complaints Procedures
· Anti fraud and corruption policy
· Standing Orders governing the conduct of Council business
· Contract Standing Orders
· Financial Regulations
· Guidance on Partnerships
· Performance Management system
· Investors in People and a system of individual performance plan appraisal
An effective Standards Committee is in place, which has taken on in accordance with the Standards Committee (England) Regulations 2008, responsibility from the Standards Board for England for the local initial assessment (and where appropriate investigation and determination) of complaints against Members of the County Council. In the year 2008/2009 no complaints against any County Councillor have required investigation either by the Standards Board or the Standards Committee.
10 Taking informed and transparent decisions which are subject to effective scrutiny and managing risk
The County Council's Constitution together with its decision making protocol ensures that appropriate legal and financial advice is given and also that decisions made are open and transparent. The County Council determined several years ago that openness in the individual Executive Members decision making would go beyond minimum Statutory requirements by ensuring that, subject to confidential items, all such decisions would be made in pubic.
Advice is available to Members from lawyers in Legal Services on any aspects of the Members Code of Conduct or conflicts of interest that may arise either before or at the point where a decision is to be made.
Within their own areas of responsibility, Executive Members, Committee Chairmen and Vice Chairmen, Minority Group Spokespersons and Local Members are routinely briefed in relation to pending business. After County Council elections, all Members receive induction training, both generic and specific, to support them in the exercise of their duties as County Councillors. Ongoing training is additionally available through the County Council's own established monthly half day briefing programmes and via external seminars, conferences and briefings. Hampshire Learning Centre also provides developmental opportunities, their work proceeding against a background of related Member work being undertaken by the Association of Hampshire and Isle of Wight Local Authorities, and the Improvement and Development Agency.
There is a well established Reporting Concerns at Work (whistleblowing) Policy in place, with good evidence of its use.
The role of Monitoring Officer, supported by other Members of Legal Services, is also critical in ensuring that all decisions made are legally and soundly based.
The County Council has an effective system of scrutiny via dedicated Select Committees. This includes specific annual scrutiny reviews of the budget planning and final accounts processes.
Executive decisions are recorded in accordance with the requirements of the Local Authorities (Executive Arrangements) (Access to Information) (England) Regulations 2000. Internal protocols govern not only the format of reports but also legal and financial requirements by way of consultation internally, including as indicated the Head of Legal Services and the County Treasurer. Internal protocols also govern the preparation and publication of the County Council's Forward Plan, and the publication of all County Council, Cabinet, Executive Member and Committee Agenda, Reports and Minutes.
There is a comprehensive risk management framework in place with effective processes for reporting on risk. Through the Risk Management Board, chaired by the Chief Executive, risk management is embedded into the culture of the County Council so as to better influence decision making. Regular briefings on risk are made to the Executive Member with responsibility for risk management and regular reports on were risk made to the Governance Committee (and will continue to be made to the Audit Committee) and the Policy and Resources Select Committees.
11 Developing the capacity and capabilities of Members and Officers to be effective
All new Officers and Members joining the County Council undergo a Corporate Induction Programme.
For Officers the Corporate Induction Programme is underpinned by a service-specific induction. The Individual Performance Planning (IPP) process ensures that Officers identify and update their knowledge and skills on a regular basis. In addition IPP facilitates the identification of training requirements. This is subsequently used to develop departmental training and development plans.
The skills required by Officers to undertake their roles are identified within the person specification for the particular job in question, and an assessment is made of the individual's competence against these during the selection process. Further skills assessment for Officers is undertaken during the annual IPP process and these are incorporated within service and departmental training plans.
Officer's skills are developed on a continuing basis through the County Council's IPP process. The County Council's Management and Leadership Competencies form the basis of how managers and leaders within the County Council need to develop themselves and others to be even more effective. Implicit within the Competencies is a recognition that to be fully effective, individuals need to be able to positively challenge and scrutinise information presented to them. The "Vision and Direction" and "Stakeholders' and Partnerships" Competencies also identify the need to work with others, particularly when expertise is not available internally.
The County Council operates with a clearly defined structure and succession planning is undertaken via departmental workforce plans, which are produced on an annual basis.
As indicated a revised Member's Induction Programme is in place and will be used for new Members after the election in June 2009.
A new Member's Development Programme ensuring that Member's' skills and knowledge can be updated on a regular basis is also currently being implemented. In addition to generic skills development the programme also includes personal one-to-one coaching to develop performance.
The County Council's Performance Management Framework was reviewed in 2008 and a new, strengthened corporate Performance Management Framework was developed and implemented over 2008/09 called `Driving Success'. The Corporate Improvement Plan element of the Corporate Strategy has introduced high profile accountability for improvement priorities, and as indicated Departments are using the plan on the basis for developing departmental service plans and individual performance plans for both 2009/20010 and 2010/11.
At a strategic level the relationship between the targets and activities in the Corporate Strategy, expressed in the old Corporate Business Plan, had been aligned with the Corporate Budget and Workforce Plan. Focus now turns to ensuring appropriate links are made to the new Corporate Improvement Plan.
Performance of the County Council as a whole will be monitored at the corporate level, through Driving Success, at least quarterly by the Corporate Management Team and at least every six months by Executive Members and Cabinet.
Performance information is published on the County Council's web pages for all to view at:
http://www3.hants.gov.uk/corporatestrategy/overview_of_performance.htm
12 Engaging with local people and other stakeholders to ensure robust public accountability
The County Council undertakes a programme of consultation with residents, business and other key organisations on a wide range of issues. The findings are disseminated across the whole organisation to influence policy and the decision-making process.
The County Council also places great emphasis on raising awareness amongst the general public on the work of the County Council.
For both consultation and communications the County Council draws on a number of strategies and documents:
· External Communications Strategy
· Annual Consultation Plan
· Best practice guidance
· Inter Faith Forum
· Community Involvement Strategy
· E-consultation database
Public accountability is further enhanced by the system of publicly accessible scrutiny committees operating at the County Council and as a trial basis a system of local area based Hampshire Action Teams.
The publication of a wide range of documents such as the following help to ensure that the Council is held to account:
· Corporate Strategy
· Driving Success - Corporate Improvement Plan
· Financial Statements and Accounts
· Policy and Resources Select Committee report to the Council on 27 September 2007
· Health Overview and Scrutiny report to the Policy and Resources Scrutiny Committee in April 2008
· Annual reporting to the wider public via special articles being published in the Council's newspaper "Hampshire Now"
13 Identify principal risks to achievement of objectives
The County Council has robust systems and processes in place for the identification and management of strategic and operational risk.
The County Council addresses the key risks to the people of Hampshire through its Corporate Improvement Plan and in partnership with other organisations, principally, through its Local Area Agreement. It has developed effective methods of communicating risk issues to the public and uses risk based approaches to support innovation and well managed risk taking, for example through a positive risk taking policy for social care.
The County Council manages the risks to its capacity to deliver services through a series of risk registers, at Corporate and Departmental level. These are subject to regular review through a formal reporting framework through its Risk Management Board, senior management teams and Elected Members.
Business continuity plans have been developed for critical services and there is a testing and review programme in place, supplemented by recent Internal Audit work.
The County Council has developed and uses a performance management framework that measures the maturity of its risk management arrangements. It provides assurance that:
· there is top down commitment to embedding and integrating risk management as routine business practice.
· risk policies and strategies are communicated effectively and made to work through a framework of processes.
· a core group of people have the skills & knowledge to manage risk effectively.
· approaches for addressing risk with partners have been developed and implemented.
· there is clear evidence that risk management is being effective and leading to the production of good results.
The County Council has developed comprehensive risk management arrangements for its Local Area Agreement, with risks shared amongst partner organisations and a clear reporting framework.
The County Council largely self-insures against risk, subject to the availability of catastrophic insurance. There is good evidence that the management of claims within Legal Services is in accordance with the Civil Procedure Rules and that appropriate reserves are placed on claims. Significant claims are regularly reviewed by the Monitoring Officer with the Head of Litigation and Procurement. The budget for dealing with these claims, and the contributions to be made to that budget by Departments reflects the sums identified within the reserve figures placed on all claims. There is evidence of monitoring the incidence of successful and unsuccessful claims and of feeding that information into the policy for risk financing accordingly. The system of self insurance is subject to internal audit, and review by external insurers.
14 Identify key controls to manage risk
The Authority has robust systems of internal control which includes systems and procedures to mitigate principal risks.
The financial management of the County Council is led by the County Treasurer, and is integrated with and influenced by the processes set out above. It includes processes for forward planning and expenditure, consultation on budget proposals, setting and monitoring income and budgets, and completion of final accounts. All are intended to be accurate, informative, timely and within statutory requirements. The approaches taken are summarised annually in the Financial Management Policy included in the County Council's Budget Book.
The Cabinet and County Council approve the annual Treasury Management and Investment Strategy together with outturn reports and external audit has confirmed compliance with the Prudential Code.
Financial Regulations and Contract Standing Orders are regularly reviewed with the most recent changes to Financial Regulations having been agreed by the Governance Committee in March 2008, prior to formal approval by the County Council. Work has commenced on the review of Standing Orders on Contracts, including reviewing the CIPFA contract procedure rules. The Corporate Services Review on Procurement and recent EU legislation and case law has identified a number of issues that need to be addressed in the revised Standing Orders on Contracts and it anticipated that this work will be completed before the end of the current year.
As indicated, there is a Reporting Concerns at Work (whistle-blowing) Policy and Anti-fraud and Corruption Policy embedded into the County Council and fully accessible on the County Council's website.
There are registers of gifts and hospitality for both Members and Officers available for public inspection, and also direct access to the Monitoring Officer for any advice required on whether specific gifts or offers of hospitality should be accepted or politely declined.
A revised Members Code of Conduct was adopted by the County Council in 2007 and signed up to by all Members. Training sessions on the new Code were offered by the Monitoring Officer to all Members including co-opted Members, not only of the County Council but also the Fire and Police Authorities. In addition to this the Monitoring Officer has sent a copy of the Standard Boards Training DVD on the new Code of Conduct to every Member of the County Council (and Fire and Police Authorities).
A high level scheme of delegation is contained within the Constitution, and this is supplemented within each Department whereby the Chief Officer authorises other senior Officers to carry out allocated functions on their behalf.
The County Council produced its first formal Corporate Procurement Strategy (CPS) in 2003 and this was updated in 2006. Following completion of the Corporate Services Reviews a new CPS is planned in 2009. The current document is accessible to all employees of the County Council on its intranet, Hantsnet. Awareness and training sessions to support the County Council's procurement agenda have now been delivered to more than one thousand staff and further supporting information is available to staff electronically. The Strategy is approved by Members and the Corporate Procurement Network continues to monitor progress against action plans, though the strategy does now need a review to ensure it remains up-to-date.
The Director of Property, Business and Regulatory Services is the Corporate Management Team sponsor for the procurement agenda and progress reports are made to the Buildings, Land and Procurement Panel, which is chaired by the Leader of the County Council. The outcomes of the Corporate Services Reviews have been approved by the Council's Cabinet, and plans to implement the recommendations are being developed. Implementation of the recommendations of the Corporate Services Review will be a key task for 2009 and 2010.
The County Council has had written contract standing orders in place for many years, which have been formally approved and have been communicated to staff. To complement these, a `Best Practice Procurement Guide' was jointly produced, published and publicised on the Council's internal website in October 2008 by the Corporate Procurement team and Legal Services.
Significant progress has been made in embedding business continuity arrangements into the County Council. Potential critical service areas have been identified and prioritised across the Council's services against guideline criteria described in the Civil Contingencies Act 2004. This work was completed in 2007. Business impact analysis within the critical services is reaching completion and appropriate department and service plans developed as appropriate. A suite of business continuity plans consisting of corporate and incident management plans, together with template department incident and service recovery plans have been prepared. A scheduled programme of testing is being prepared and a database to record and monitor progress created. Regular testing of recovery plans for IT services takes place.
The County Council has an established Complaints Policy and Procedure which is reviewed on a quarterly basis. The procedure is compliant with all relevant statutory requirements, and details of the operation of the complaints regime can be found on the County Council's website. The County Council's leaflets and posters which highlight complaints procedures are published and available.
All complaints files are kept in locked and secure cabinets with restricted access.
An annual report on the Complaints Policy and procedure was submitted to the Governance Committee and to the appropriate Scrutiny Committee. Future reports will be submitted to the Audit Committee and Scrutiny Committees
The financial year 2008/2009 has seen continued development of the health and safety management arrangements. The Corporate Health and Safety Policy and Strategy have been reviewed and revised. A performance management framework and system of audits is in place.
It is a management responsibility to develop and maintain the internal control framework, and to ensure that the County Council's resources are properly applied. Internal audit is an assurance function that primarily provides an independent and objective opinion to the County Council on the control environment by evaluating its effectiveness in achieving the County Council's objectives. Within the County Council, internal audit assists managers by evaluating and reporting to them the effectiveness of the controls for which they are responsible.
The internal audit strategy and terms of reference for internal audit, approved by the Governance Committee, require the regular assessment and review of risks, controls and governance processes; and also the provision of an annual report and opinion from the Chief Internal Auditor. This is a key element of the assurance available to the Monitoring Officer in drafting the Annual Governance Statement.
Additional independent assessment of the internal control framework is provided by external audit reports, including the District Auditor's annual Management Letter, and the regular Use of Resources elements in the Comprehensive Area Assessment undertaken by the Audit Commission as part of the statutory performance assessment process.
15 Obtain assurances on the effectiveness of key controls
Appropriate assurance statements are received from designated internal and external assurance providers.
Key controls relating to risks, internal control (including financial management ), and governance processes are identified by managers as part of the governance framework and recorded on regular returns. These are consolidated into the risk registers at corporate and departmental level and the Corporate Governance questionnaires retained by the Monitoring Officer as part of the assurance framework. Internal Audit, as part of its planned review of internal controls regularly evaluates the key controls to determine their adequacy and also carries out tests to confirm the level of compliance. Together the results of each review enable an audit opinion on effectiveness to be provided to management, and any recommendations for improvement to be agreed. This assurance is given to each manager in respect of the controls they are responsible for in the form of an audit report and regular summaries are provided for Chief Officers and the Governance Committee to ensure each level of the County Council's management is kept informed of findings and opinions.
External sources of assurance include the regular provision of inspection and assessment reports by the Audit Commission (as the designated external auditor), and statutory inspections of adults social care services, and children's services. These reports are subject to consideration by senior management and Members of the County Council, and appropriate response to any recommendations for improvements are agreed. These reports and responses are normally approved in public and published.
16 Evaluate assurances and identify gaps in control/assurance
The County Council has made adequate arrangements to identify, receive and evaluate reports from the defined internal and external assurance providers to identify weaknesses in controls.
The Monitoring Officer with the assistance of the Chief Internal Auditor has undertaken this analysis, the results of which are contained throughout this Annual Governance Statement.
17 Action plan to address weaknesses and ensure continuous improvement of the system of corporate governance
The County Council's Human Resources Department needs to seek agreement to and to implement the County Council's new Leadership and Management Strategy and its Talent Management Strategy
The Corporate Services Review on Procurement and recent EU legislation and case law has identified a number of issues that need to be addressed in revised Standing Orders on Contracts and it anticipated that this work will be completed before the end of the current year.
In addition to the work done in 2007/8 to increase awareness of Corporate Governance the County Council will continue to develop this area by;-
· bringing together existing corporate information policy and guidance on governance and ethics into one clearly signposted website.
· Developing a package (including e-learning) specifically for governance and ethics aimed at existing managers, and which will then feed into role induction for all new managers. It is being developed by HLC in conjunction with Legal Services, Treasurer's Consultancy and Internal Audit and will be rolled out in the autumn.
18 There is a robust mechanism to ensure than an appropriate action plan is agreed to address identified control weaknesses and is implemented and monitored.
In response to the Action Plan identified in the 2008 Annual Governance Statement;-
· the County Council has adopted the CORVU system for all performance and other data collection and storage
· the performance management system and Driving Success, as described in this statement, incorporate the introduction of the national indicator set
· the CPA recommendation from 2007 has been addressed through a review of the County Council's relationship with the third sector and work to develop a strategic action plan for future working. The action plan is due to be approved by the Cabinet after the County Council Elections on 4 June 2009
· The profile of risk management has been raised through the introduction of a training and competencies strategy, publication of an e-learning package and a programme of briefings for Members through select committees and workshops
· The County Council has, in conjunction with partner organisations, developed a bespoke framework for risk management for the Local Area Agreement. This includes;-
· a shared protocol on risk
· a shared strategic risk register
· formal consideration of risk at target setting and implementation stages
· risk based performance reporting
· The County Council has strengthened the coverage of Corporate Governance through the corporate e-induction process thus, for example, Corporate e-Induction and mandatory e-learning now covers areas such as whistle blowing, rights and responsibilities of staff, security of IT, risk management, equality and diversity, sustainability, business continuity, data protection and freedom of information, and 234 managers attended training this in the first quarter of 2009.
· The County Council has reviewed the information on Corporate Governance on Hantsnet and Hantsweb
· The County Council has covered Corporate Governance in management training events for new managers. For example, 40 managers per quarter pass through the `Essentials of Management' programme, and 130 managers attend the New Managers Conference in 2008/09
· The County Council established a new Audit Committee at its meeting on 15 June 2005 with audit focused terms of reference to replace the existing Governance Committee. In accordance with CIPFA guidance the Chairman of the new Audit Committee will not be a Member of the Executive. The non audit function of the Governance Committee relating to Member's allowances will be undertaken by a new Members Allowance Scheme Panel
Declaration
We have been advised on the implications of the result of the review of the governance framework by the Audit Committee and a plan to address weaknesses and ensure continuous improvement of the system is in place.
We propose over the coming year to take steps to address the above matters to further enhance our governance arrangements. We are satisfied that these steps will address the need for improvements that were identified in our review of effectiveness and will monitor their implementation and operation as part of our next annual review.
Signed: Signed:
Date: Date:
Chief Executive Leader of the Council