Annual report of the Corporate Governance Committee

Report: 5
Date: 11 July 2005
By: Treasurer

Summary

The report summarises the work of the Corporate Governance Committee for the year 2004/05.

A. Recommendation

That members agree the report as representing the Committee’s work over the last year for submission to the Authority.

B. Supporting information

Introduction

1. The Authority requires each committee to produce an annual report on its activities. The reports are intended to give a general indication of member performance. They will also provide material for incorporation into the Authority’s published annual report.

Meetings and membership

2. The Committee has met on four occasions during the year at appropriate points in the annual audit cycle.

3. The Panel comprises four members. Jennette Arnold has been Chair of the Committee for the year. Other members have been Rachel Whittaker (Deputy Chair), Toby Harris and Elizabeth Howlett. Richard Stephenson, Group Director of HSE for TfL is a co-opted member.

Responsibilities

4. The Authority at its annual meeting on 8 July 2004 established the Corporate Governance Committee as a new committee. The Committee fulfils the Authority’s duties in relation to internal and external audit and scrutinises the draft accounts on behalf of the Authority. In both cases, the Committee approves the annual audit programme. It has general oversight of the effectiveness of the control systems in operation. The Committee has a remit to keep the MPA risk management strategy under review and endorse an annual programme of risk management activity for the MPS, receiving progress reports and an assessment of achievement after the end of the year. The Committee also satisfies itself on an annual basis, that the MPA and MPS health and safety plans are sufficient to discharge the Authority’s Health and Safety responsibilities, that the plans are being implemented, that targets in relation to health and safety performance are being achieved and any topical issues are brought to notice.

Accounts

5. The Committee reviewed the draft final accounts for 2003/04 and agreed drafting amendments. The Committee recommended their approval by the full Authority.

External audit

6. The Committee received the external auditor’s annual audit letter on conclusion of the 2003/04 audits. The external auditor was again able to provide an unqualified audit opinion on the accounts. He stated that ‘overall, the quality and timeliness of the draft accounts improved again this year’. Whilst warning against complacency, the auditor’s letter pointed to improvements in the MPA’s financial health, the systems of internal financial control, arrangements for maintaining standards of financial conduct and for preventing and detecting fraud and corruption, and did not identify any major weakness in the Authority’s arrangements for ensuring the legality of its significant financial transactions.

7. Under the general heading of ‘Performance’, the auditor noted that the Authority had been assessed as ‘fair’ following their initial performance assessment (IPA) of the Authority. The auditor noted that the creation of the MPA represented a major challenge in policing in London, presenting new and more robust opportunities to hold the MPS to account for policing the capital. The auditor noted that the Authority has risen to this challenge and is putting appropriate building blocks in place, including overseeing a stronger financial infrastructure, a substantial increase in police numbers and has increased diversity in the MPS workforce. The auditor did identify that further development work was required and this is being addressed.

8. The auditor noted that the HMIC, as part of his baseline assessment of the operational effectiveness of the MPS, has concluded that its performance was good in most areas. Other performance reviews by the auditor have identified good practice but also a need to:

• Strengthen performance information systems. While the Best Value Performance Plan (BVPP) was compliant with legislative requirements, some performance indicators were unavailable and the auditor had to issue an ‘except for’ qualification on the BVPP. Their review of crime records also identified weaknesses in compliance with the National Crime Recording Standard (NCRS) and Home Office Counting Rules;
• Improve the process made in implementing activity based costing arrangements. Further work was necessary to meet National Policing Plan requirements; and
• Improve the consistency with which agreed recommendations arising from the work of external review agencies, including audit and inspections, are implemented. Reviews over a range of areas assessing use of resources identified good practice as well as opportunities for improvement.

9. External audit reports on specific subjects are generally considered by the committee with the appropriate responsibility. The Corporate Governance Committee has received regular reports on the progress of the external audit programme.

Internal audit

10. The Committee has received progress reports on the Internal Audit programme for 2004/05 and has considered the Director of Internal Audit’s annual report. The annual report showed continuing improvement in the overall control assessment with significant progress in areas, which have previously been the subject of internal audit review. In particular, high-risk audit recommendations are generally being implemented in a timely manner. The report also reflects maintenance in the improvement in the performance of internal audit with 90% of the systems audit programme completed within the year.

11. The Committee has approved the Internal Audit plan for 2005/06 based on an updated audit needs assessment and risk analysis for five years ahead. The plan envisages increased internal audit time spent on BOCU/OCU reviews consistent with the extension of devolved management. There will also be increased emphasis on audit’s advisory role assisting the MPS in a range of developments and the aim to provide further risk and control awareness training to the MPS.

Risk management

12. The Committee received reports from the MPS confirming the process for reporting risk within the Metropolitan Police Service and the involvement of the Committee in exercising oversight of MPS risk management and corporate risks. External Audit reviewed risk management in the MPS and their report set out findings as part of the 2003/04 audits. The report is essentially interim recognising the work currently in progress to develop risk management and will be revisited in twelve months time. The main outcomes are that the MPS has appointed a dedicated Director of Risk Management, developed a strategy and policy for risk management within the Service and formed a Corporate Risk Management Group. Currently the Service is working toward implementation of this strategic approach to risk management on the basis of a programme of activity overseen by the MPS Corporate Governance Strategic Committee.

13. The Committee received a report on the application of the requirement for a sound system of internal control and risk management. It was agreed that the Commissioner would sign an annual Statement on Internal Control setting out details of the system of internal control and risk management, the key controls, and how effectively they are being deployed. This necessitated the deployment of an assurance gathering process within the Service led by the Corporate Risk Management Group (and a parallel process for the Authority).

Health and Safety

14. The Committee has been working to specific focussed objectives:

• Agreeing the priorities for health and safety. The Committee approved the revised joint policy on health and safety in the MPS, and added a foreword by the Chair by the Authority and by the Chair of the Corporate Governance Committee. The Committee has approved the MPA policy on health and safety within the Authority and the plans to implement it.
• Ensuring the discharge of legal duties in relation to health and safety matters with particular regard to the safety, health and welfare of police officers and police staff, people in the care and custody of the MPS, and all members of the public on police premises or property. The Committee is informed of any contact the MPS has with the Health and Safety Executive. Accordingly, a report was received informing members of the result of the Health and Safety Executive’s inspection of the MPS in relation to fast roads policing and Police Community Support Officers (PCSOs).
• Ensuring appropriate health and safety, management systems, arrangements and procedures both to meet legal requirements and to assess and control risks are in place. The Committee has received regular reports updating members on MPS performance against plans and targets in relation to health and safety matters including:
  • Fatalities (staff, contractors, public, detainees)
  • Major incidents
  • Near miss
  • Other specific KPIs

15. The number of reported injuries had remained constant and there was a marked downward trend in major injuries, both set in the context of an increasing workforce.

16. The Authority is represented on the MPS Strategic Health and Safety Committee and to help members further assess the control of risks, all are provided with copies of the minutes.

• Ensuring the audit of health and safety management systems, policies, arrangements and procedures, as necessary, and to review progress with the implementation of recommendations arising from such audits. The review of health and safety management systems and the Audit Plan is not yet complete, however the Committee will approve a list of audits planned for year and monitor the audits conducted.
• To provide a conduit for the expression of health and safety concerns. All staff associations have been invited to, and attend, meetings of the Committee so that any issues can, if necessary, be raised direct.

Next year

17. In the forthcoming year, the Committee will continue to oversee the internal and external audit programmes. The Committee will be looking for continuing improvement in the Director of Internal Audit’s rating of the adequacy of internal control in the MPS. In reviewing the accounts, the Committee will consider particularly the statement of internal control, which was a new requirement for 2003/04, ensuring that the letter of assurance from the Commissioner on internal control and risk management meets the requirements of the statement on the system of internal control that the Authority now has to provide with the annual accounts. The Committee will continue to take a lead on behalf of the Authority in overseeing risk management arrangements in the corporate governance structures of both the MPA and the MPS and in particular monitoring the progress of the MPS risk management programme and the internal control actions detailed in the Annual Statement. It is anticipated that further progress will be made in the assurance that MPS and MPA Health and Safety plans are sufficient to discharge the Authority’s responsibilities and in particular that the plans are being implemented.

C. Race and equality impact

The Committee addresses equalities aspects if and when they arise in relation to its business.

D. Financial implications

The cost of the Committee’s activities is met within the MPA’s directly managed budget.

E. Background papers

None

F. Contact details

Report author: Ken Hunt, Treasurer, MPA.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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