The Committee is asked to review and approve the Annual Governance Statement and Local Code of Corporate Governance. ,
Theresa Mortimer, Chief Internal Auditor (CIA), presented the report. It was explained that the Council was required under the Accounts and Audit Regulations 2015 to produce an Annual Governance Statement (AGS) which was a public statement, detailing how the Council directs and controls its resources, which is to be signed by the Leader of the Council, Chief Executive and Director of Strategic Finance. It was noted that the AGS was published alongside the Annual Statement of Accounts.
Members were informed that GCC operate through a governance framework that had been summarised within a revised Local Code of Corporate Governance 2016/2017 which was consistent with the seven core principles of the CIPFA/SOLACE Delivering Good Governance in Local Government framework, 2016 edition.
The CIA explained the Council’s Local Code of Corporate Governance was a public statement of the Council's commitment to these principles and specifically identified the key actions taken by GCC in relation to each of the core principles. It was noted that the code was reviewed and updated annually and should be read in conjunction with the AGS.
The CIA explained that to enable the development of the AGS, an embedded assurance framework was required, that not only provided the relevant assurances, but also a framework that underpinned and evidenced the statements made within the AGS.
A strengthened governance assurance process was developed and implemented during 2016/17 to provide a framework for the annual assessment of the effectiveness of the governance arrangements operating within the Council. This included the relevant Lead Cabinet Member overview and oversight, governance assurance statements obtained from Directors and Heads of Service and robust challenge by the Council’s Statutory Officers i.e. Chief Executive, Monitoring Officer and Director of Finance.
Members were informed that following the review, four key improvement areas were identified to further enhance the governance arrangements. These were identified within the AGS action plan and related to:
1. Future Financial Sustainability;
2. Ofsted Inspection of Children’s Services;
3. Implications of the Policing and Crime Act; and
4. Contracting / Commissioning Care Services.
The CIA explained that the Committee would receive updates on actions taken to address the issues identified to the January 2018 Committee meeting.
Members were reminded that the CIA had provided a detailed presentation on the AGS and the Local Code of Corporate Governance at the recent training session.
In response to a question, members were informed that whilst there were generic principles/assessments that were required to be covered within the statement, the AGS included reference to all the key governance issues that had occurred during 2016/2017. In addition, the key improvement areas identified, including the actions taken in response to the Ofsted inspection, were detailed within the action plan, which was attached to the AGS.
It was noted that there was reference within the AGS to the Ofsted Inspection. Some members welcomed this statement. However, some members felt there had been significant failures by the Senior Leadership Team and as Councillors, found it difficult to comprehend the failures. It was suggested that lessons learnt should be reflected within the AGS. The CIA explained that the AGS was a high level strategic document and that the action plan attached to the AGS is reported back to the Committee. The Director of Strategic Finance explained that any amendment to the AGS would require the approval of the Chief Executive and the Leader of the Council, as it was not within her remit to amend the document.
A member of the Committee referred to the Ofsted Inspection Report which was conducted in 2011, which was not deemed to be a very positive report then. Members felt they should have been made aware of the issues sooner. A member exclaimed that if the Council had cultural issues in one service area, how officers/members would know if the Council had similar cultural issues within other service areas. Discussions were then held in relation to whistle blowing and commented how many members of staff would truly have the courage to question their line managers.
Members vigorously debated the cultural issues facing the Authority. The Committee questioned why five years on, the service was still inadequate and why should it be such a surprise if the previous Ofsted Inspection rated the service as inadequate. The Director of Finance reminded the Committee that the County Council meeting on 28th June 2017 had debated the Ofsted report and had agreed by a series of governance actions in response to the Ofsted Inspection. The Committee requested that these agreed actions at County Council should be included within the AGS Action Plan. The CIA advised that any changes to the AGS would need to be approved by the Leader and the Chief Executive. The Director of Strategic Finance would seek their support and amend the AGS accordingly.
The CIA also advised that a number of audit days had been set aside within the Internal Audit Plan to provide relevant independent assurances in relation to the Ofsted inspection actions.
During the discussion, the issue of 100% business rates was raised. The Director of Strategic Finance informed the Committee that the 100% business rate retention proposals had been put on hold nationally and the Authority were awaiting any further announcements on the scheme. She also advised that the Authority had signed up for the four year funding deal and were currently awaiting the Autumn Statement and any further announcements regarding local government funding. It was noted that the Gloucestershire S151 group were modelling 100% rates retention to understand whether a pilot a pilot scheme would be financially beneficial to Gloucestershire.
The majority of members felt the AGS was a comprehensive document, which contained a good description of the Council’s Framework. However, some members felt it was deemed slightly too complicated for public consumption. It was suggested that the document should clearly state how the Authority was performing against the Framework.
The CIA reiterated that the AGS was a high level statement, to show that the Authority was complying with the national CIPFA/SOLACE guidance. Members were reminded that there were links within the AGS and associated Local Code of Corporate Governance for the public to view the underlying documents which support the AGS. In addition, the CIA explained that she benchmarked the requirements against other County Council’s statements to ascertain good practice. The CIA also followed national guidance and utilised relevant publications on good governance, which included Grant Thornton’s publications.
The Committee recognised that the AGS was much shorter than previous statements and did welcome the shorter version.
It was also suggested that the term ‘To the best of our knowledge’ on the certification document (pg. 269) be removed and replaced with ‘we are confident that’. The CIA explained that you can never provide 100% assurance that the key risks have been identified and managed. The Council has good governance frameworks in place, based on good practice; however, the effectiveness depends on compliance with these frameworks. The CIA explained that the certification statement is as recommended within the CIPFA / SOLACE guidance. Liz Cave, Grant Thornton explained that legal advice would need to be sought if changes were required, as this was a national document. Officers explained that they too were frustrated but it was not possible to give a 100% assurance and it was not within their gift to amend the AGS certification.
The Committee was reminded that the Statement of Accounts and AGS should be read in conjunction to give a balanced view.
During the discussion, members agreed that the Committee would receive updates on the AGS actions taken to address the issues identified, at the January 2018 Committee meeting.
It was agreed, albeit with one abstention from Councillor Hay, to accept the Annual Governance Statement and Local Code of Corporate Governance 2016/17, subject to the inclusion of the actions as agreed at County Council on the 28th June 2017, within the AGS Action Plan.
That the Committee reviewed and approved the Annual Governance Statement and Local Code of Corporate Governance 2016/17, and the actions planned by the Council to further enhance good governance arrangements, subject to the inclusion of the actions as agreed at County Council on the 28th June 2017, within the AGS Action Plan.
That the Committee would receive an update on actions taken to address the governance issues identified, at the January 2018 Committee meeting.