1 THE ISSUE

1.1 This report presents the key implications of revisions to the Accounts and Audit Regulations and new guidance from CIPFA (Chartered Institute of Public Finance Accountants) and SOLACE (Society of Local Authority Chief Executives) on the requirement to carry out a new Annual Governance Review.

1.2 The two key implications are -

a) The need to revise our Local Code of Corporate Governance

b) Revising the methodology to carry out a wider governance review

1.3 These have been both reviewed by the Corporate Audit Committee, Cabinet and Senior Management.

2 RECOMMENDATION

2.1 The Council is asked to approve the proposed local code of Corporate Governance attached at Appendix 1

3 FINANCIAL IMPLICATIONS

3.1 There are no direct financial implications relevant to this report.

4 COMMUNITY STRATEGY OUTCOMES

4.1 Complying with a comprehensive Local Code of Corporate Governance will assist the Council and its Services to efficiently and effectively contribute to the Community Strategy Outcomes.

5 CORPORATE IMPROVEMENT PRIORITIES

5.1 Complying with a comprehensive Local Code of Corporate Governance will contribute to the achievement of the Council's priorities.

6 CPA KEY LINES OF ENQUIRY

6.1 The completion of an annual governance review and approval of an Annual Governance Statement will ensure that the criteria judgements recorded in the `Use of Resources' Key Lines of Enquiry 4.2 - The Council has arrangements in place to maintain a sound system of internal control - are met.

7 THE REPORT

7.1 In 2003 the Council adopted a Local Code of Corporate Governance based on joint guidance from CIPFA and SOLACE. The framework of systems and processes related to the key principles detailed in the Code have been reviewed and reported annually through the Council's Statement on Internal Control (SIC).

7.2 In 2006 the Accounts and Audit Regulations were updated and in 2007, CIPFA / SOLACE published revised guidance based on this entitled `Delivering Good Governance in Local Government'. This guidance was based on principles developed by the Independent Commission on Good Governance in Public Services.

7.3 It was therefore necessary to review and update the Council's Local Code based on this revised guidance and review its methodology for reviewing this code and its systems of governance.

7.4 The Corporate Audit Committee reviewed both of these areas on the 7^th February 2008 as well as consultation with Cabinet and Senior Management.

7.5 Good governance underpins the organisations ability to deliver its vision and priorities and the remainder of the report details context around what this means to this council under the following headings

a) What is the scope of responsibility for the Council in terms of its governance framework?

b) What is the purpose of the governance framework?

c) What systems and processes does the review of governance cover?

d) Who is involved in the annual review process and how is the Annual Governance Statement produced?

What is the scope of responsibility for the Council in terms of its governance framework?

7.6 The Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded, and properly accounted for, and used economically, efficiently and effectively.

7.7 It has a legal duty to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

7.8 In discharging this overall responsibility, the authority is responsible for putting in place proper arrangements for the governance of its affairs, facilitating the effective exercise of its functions, and which includes arrangements for the management of risk.

What is the purpose of the governance framework?

7.9 The governance framework comprises the systems and processes, and culture and values, by which the Council is directed and controlled and its activities through which it accounts to, engages with and leads the community.

7.10 It enables the Council to monitor the achievement of its vision, priorities and strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.

7.11 The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve aims and objectives.

7.12 The system of internal control is based on an ongoing process designed: to identify and prioritise the risks to the achievement of the Council's 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.

7.13 One of the intentions of the Framework document produced by CIPFA / SOLACE was to provide Councils with best practice for developing and maintaining a local code of governance.

7.14 The Council's revised Code attached to this report (Appendix 1) consists of a single page recording:

a) The Council's definition of Corporate Governance.

b) The key principles of Corporate Governance adopted.

c) Compliance with the Code (review & reporting).

7.15 Attached to the Code (Appendix 2) is a summary of the Council's `internal' values & behaviours and the detailed requirements to evidence compliance with the adopted key and supporting Corporate Governance principles.

What systems and processes does the review of governance cover?

7.16 It covers all significant corporate systems, processes and controls, spanning the whole range of Council activities, including in particular those designed to ensure :

1) Council policies are implemented;

2) Quality services are delivered efficiently and effectively;

3) Council's values and ethical standards are met;

4) Compliance with laws and regulations;

5) Financial statements and other published performance information are accurate and reliable;

6) Human, financial, environmental and other resources are managed efficiently and effectively.

Who is involved in the annual review process and how is the Annual Governance Statement produced? (Appendix 3)

7.17 The review is led by the Audit, Risk and Information Service but requires the involvement of the whole leadership community. The Corporate Audit Committee is responsible for overseeing the whole process.

7.18 Evidence will be collected from the systems and processes within the Governance and Assurance frameworks including self assessment by the leadership community of their own functions.

7.19 The Annual Governance Statement will be produced for approval by the leadership community in May/June and is formally adopted when the Annual Accounts are approved by the Corporate Audit Committee at the end of June.

8 RISK MANAGEMENT

8.1 A risk assessment related to the issue and recommendations has been undertaken, in compliance with the Council's decision making risk management guidance.

9 CONSULTATION

9.1 A copy of the code has been presented to the Corporate Audit Committee, Cabinet, Strategic and Divisional Directors for comment.

Contact person	Jeff Wring (01225 477323)
Background papers	Report to Council - 23rd January 2003 - Corporate Governance Arrangements; Report to Corporate Audit Committee - 7th February 2008 - Local Code of Corporate Governance
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