ITEM CA11
CABINET – 15 JANUARY 2008
CODE OF CORPORATE GOVERNANCE
Report by the County Solicitor & Monitoring Officer
1. The Audit Commission identifies the elements of good Corporate Governance as including: robust systems and processes; effective leadership and high standards of behaviour; a culture based on openness and honesty; and an external focus on the needs of service users and the public.
2. In 2001 CIPFA (Chartered Institute of Public Finance and Accountancy) and SOLACE (Society of Local Authority Chief Executives and Senior Managers), jointly with the Local Government Association and the Audit Commission, set up a Corporate Governance Working Party to draw together the principles identified by the Cadbury and Nolan committees and other work into a single framework of corporate governance for use in local authorities. The working party subsequently published a document providing guidance on corporate governance in local government and a framework to be followed as best practice for implementing corporate governance in individual authorities. It also has recently produced an updated Framework and Guidance “Delivering Good Governance in Local Government (2007)”.
3. The Framework and Guidance identifies six principles that should underpin the governance of each local authority, and a structured approach to assist individual authorities to achieve good governance:
4. Good governance means:
· focussing on the purpose of the authority and on outcomes for the community and creating and implementing a vision for the local area; · members and officers working together to achieve a common purpose with clearly defined functions and roles; · promoting the values for the authority and demonstrating the values of good governance through upholding high standards of conduct and behaviour; · taking informed and transparent decisions which are subject to effective scrutiny and managing risk; · developing the capacity and capability of members and officers to be effective; · engaging with local people and other stakeholders to ensure robust public accountability.
5. The Framework urges local authorities to test their structures against these principles by:
· reviewing their existing governance arrangements against the Framework; · developing and maintaining an up-to-date local code of governance including arrangements for ensuring its ongoing application and effectiveness; · preparing a governance statement in order to report publicly on the extent to which they comply with their own code on an annual basis, including how they have monitored the effectiveness of their governance arrangements in the year, and on any planned changes for the coming period.
6. The principles and advice in the CIPFA/SOLACE Framework and Guidance have been adopted widely by individual local authorities and incorporated into External Auditors’ judgements and Comprehensive Performance Assessments.
7. The preparation and publication of an annual governance statement in accordance with this Framework is necessary to meet the statutory requirement set out in Regulation 4(2) of the Accounts and Audit (Amendment) (England) Regulations 2006 for authorities to prepare a Statement on Internal Control in accordance with “proper practices”.
8. Internal control and risk management are increasingly recognised as important elements of good Corporate Governance. The scope of internal control spans a whole range of the Council’s activities and includes controls designed to ensure that:
· The Council’s policies are implemented in practice; · High quality services are delivered efficiently and effectively; · The Council’s values and ethical standards are met; · Laws and Regulations are complied with · Required process are adhered to; · Financial statements and other published performance information is accurate and reliable; · Human, financial, environmental and other resources are managed efficiently and effectively.
9. The Regulations place a requirement on the Council to conduct at least an annual review of the effectiveness of its internal controls corporate governance and identify areas where improvements can be made.
POSITION IN OXFORDSHIRE
10. The Code of Corporate Governance was first adopted by the Executive on 16 June 2004 and it invited the Corporate Governance Scrutiny Committee to consider the Code and to carry out an annual review and to report back to the Executive with proposals for any changes to the Code or other action to be taken.
11. The implementation of the Accounts & Audit (England) Regulations 2003 required the production of a Statement on Internal Control, which formed part of the Council’s Statement of Accounts. The Cabinet determined that this statutory assessment was the preferred assurance statement for the Council on corporate governance matters.
12. A working party under the direction of the County Solicitor has considered the new CIPFA/SOLACE Framework and Guidance, which provides additional requirements on the corporate governance assurance framework and has produced a new Draft Local Code of Corporate Governance.
13. This new Draft Local Code of Corporate Governance, attached at Annex 1 (download as .doc file), sets out how the Council complies with the requirements of the Code and identifies key documents, which provide detailed information as to how the Council ensures these Corporate Governance principles are adhered to. It has been considered by the Standards Committee, Audit Committee and the Corporate Governance Scrutiny Committee before being brought for formal approval by the Cabinet.
14. When a new Code of Corporate Governance is adopted by the County Council, it will be required to be reviewed annually and the recommendation of the Monitoring Officer, subject to Cabinet approval, is that the Corporate Governance Scrutiny Committee is the appropriate Committee to consider in detail the Code of Corporate Governance and to sanction and approve any amendments.
RECOMMENDATIONS
15. The Cabinet is RECOMMENDED to:
(a) receive the report;
(b) consider, comment and approve the Local Code of Corporate Governance; and
(c) confirm that the Corporate Governance Scrutiny Committee is the appropriate Committee to conduct an annual review of the Code of Corporate Governance for Oxfordshire County Council.
P G CLARK County Solicitor and Monitoring Officer
Background Papers: Nil
Contact Officer: Peter Clark Tel: (01865) 815363
January 2008
ANNEX 1OXFORDSHIRE COUNTY COUNCIL’S LOCAL CODE OF CORPORATE GOVERNANCEWHAT IS CORPORATE GOVERNANCE
1. The Audit Commission have defined corporate governance in the public services as “the framework of accountability to users, stakeholders and the wider community, within which organisations take decisions and lead and control their functions, to achieve their objectives”. They have further defined good corporate governance as including “robust systems and processes, effective leadership and high standards of behaviour, a culture based on openness and honesty and an external focus on the needs of service users and the public”.
THE CIPFA/SOLACE GUIDANCE AND FRAMEWORK
2. Corporate Governance as an issue came to prominence following the Cadbury Report in 1992, which was commissioned as a result of the Maxwell Pension and Bank of Credit and Commerce International (BCCI) scandals. The Cadbury Report identified the principles of good governance as integrity, openness and accountability. The report was first of several on corporate governance in the private sector. A series of reports from the Committee on Standards in Public Life (the Nolan Committee) addressed the issue of corporate governance in the public sector and the third report of the Committee in 1997 – which looked at local government identified seven principles of public life i.e. selflessness, integrity, objectivity, accountability, openness, honesty and leadership.
3. In 2001 CIPFA (Chartered Institute of Public Finance and Accountancy) and SOLACE (Society of Local Authority Chief Executives and Senior Managers), jointly with the Local Government Association and the Audit Commission, set up a Corporate Governance Working Party to draw together the principles identified by Cadbury, Nolan and other work into a single framework of corporate governance for use in local authorities. They subsequently published a document providing guidance on corporate governance in local government and a framework to be followed as best practice for implementing corporate governance in individual authorities. This Working Party has recently produced an updated Framework and Guidance entitled “Delivering Good Governance in Local Government (2007)”.
4. The Framework and Guidance identifies six principles that should underpin the governance of each local authority, and a structured approach to assist individual authorities to achieve good governance.
5. Good governance means: · Focussing on the purpose of the authority and on outcomes for the community and creating and implementing a vision for the local area · Members and officers working together to achieve a common purpose with clearly defined functions and roles · Promoting the values for the authority and demonstrating the values of good governance through upholding high standards of conduct and behaviour · Taking informed and transparent decisions which are subject to effective scrutiny and managing risk · Developing the capacity and capability of members and officers to be effective · Engaging with local people and other stakeholders to ensure robust public accountability.
6. The Framework urges local authorities to test their structures against these principles by: 1. Reviewing their existing governance arrangements against the Framework 2. Developing and maintaining an up-to-date local code of governance including arrangements for ensuring its ongoing application and effectiveness 3. Preparing a governance statement in order to report publicly on the extent to which they comply with their own code on an annual basis, including how they have monitored the effectiveness of their governance arrangements in the year, and on any planned changes for the coming period.
7. The principles and advice in the CIPFA/SOLACE Framework and Guidance have been adopted widely by individual local authorities and incorporated into External Auditors’ judgements and Comprehensive Performance Assessments.
8. The preparation and publication of an annual governance statement in accordance with this Framework is necessary to meet the statutory requirement set out in Regulation 4(2) of the Accounts and Audit (Amendment) (England) Regulations 2006 for authorities to prepare a statement of internal control in accordance with “proper practices”.
· Internal control and risk management are increasingly recognised as important elements of good Corporate Governance. · The scope of internal control spans the whole range of the Council’s activities and includes controls designed to ensure that: o The Council’s policies are implemented in practice; o High quality services are delivered efficiently and effectively; o The Council’s values and ethical standards are met; o Laws and Regulations are complied with o Required procedures are adhered to; o Financial statements and other published performance information is accurate and reliable; o Human, financial, environmental and other resources are managed efficiently and effectively.
9. The Regulations place a requirement on the Council to conduct at least an annual review of the effectiveness of its internal controls and identify areas where improvements can be made.
POSITION IN OXFORDSHIRE
10. The Code of Corporate Governance was first adopted by the Executive on 16 June 2004 and invited the Corporate Governance Scrutiny Committee to consider the Code and to carry out an annual review and to report back to the Executive with proposals for any changes to the Code or other action to be taken.
11. The implementation of the Accounts and Audit (England) Regulations 2003 required the production of a Statement on Internal Control, which formed part of the Council’s Statement of Accounts. The Council’s Cabinet determined that this statutory assessment was the preferred assurance statement for the Council on Corporate Governance matters. The Audit Committee have approved a Corporate Governance Assurance Framework which sets out the Corporate Governance arrangements within the Council and sets out the roles and responsibilities of key Officers, Councillors and Committees within that process.
12. A working party under the direction of the County Solicitor has considered the new CIPFA/SOLACE Framework and Guidance, and produced a new Local Code of Corporate Governance in accordance with the Framework and Guidance, which provides additional requirements on the corporate governance assurance framework.
13. This new Local Code of Corporate Governance sets out how Oxfordshire County Council complies with the requirements of the Code and identifies key documents, which provide detailed information as to how the Council ensures these Corporate Governance principles are adhered to.
14. This Code was recommended for approval by the Standards Committee on the 23 November 2007, Audit Committee on the 28 November 2007 and Corporate Governance Scrutiny Committee on the 20 December 2007. It was duly adopted by the Cabinet on the 15 January 2008. P G Clark County Solicitor and Monitoring Officer January 2008
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