Statement of internal control – interim report

Report: 11
Date: 16 March 2006
By: the Treasurer and Commissioner

Summary

The MPA has been required to include a Statement of Internal Control in its financial statements since 2003/04, including details of the system of internal control and risk management, the key controls, and how effectively they are being deployed, highlighting any significant internal control issues and the relevant actions being taken to address them.

This report provides an update on progress in addressing the significant internal control issues included in the statement of accounts for 2004/05, and also outlines the process for producing the statement of internal control for 2005/06

A. Recommendation

That

1. members note the progress in addressing the significant internal control issues included in the 2004/05 Statement of Internal Control;
2. note the process for producing the Statement of Internal Control for 2005/06; and
3. agree a report on the draft Statement of Internal Control is brought to the Corporate Governance Committee on 19 June.

B. Supporting information

Statement of internal control

1. In accordance with the Accounts and Audit Regulations, 2003 there is a statutory obligation on the MPA to publish a Statement of Internal Control (SIC) in the annual accounts setting out details of the MPA/MPS system of internal control and risk management, the key controls and how effectively they are being deployed.

2. The Authority is also responsible for ensuring that there is a sound system of internal control which facilitates the effective exercise of the Authority’s functions and which includes arrangements for the management of risk. In exercising this responsibility, the Authority places reliance on the Commissioner to support the internal control and risk management process as the majority of the MPA’s controls are deployed within the MPS. Hence in exercising its statutory responsibilities under the regulations, the Authority places reliance on the commissioner to deploy, maintain and monitor internal control and risk management processes.

3. The MPS evidence these controls through the production of it’s own SIC. This is then consolidated with the MPA’s own SIC (which also identifies those risks it faces on its own account) to produce an overarching statement for inclusion in the statement of accounts.

Significant issues

4. The SIC includes details of any significant internal control issues and the actions to be taken to deal with these. In 2004/05 thirteen issues were included. Extensive progress has been since made in addressing each of the issues, details of which are attached as Appendix 1.

5. The intention is to monitor progress in addressing significant issues more closely in the future, with a mid year progress report to be made to Corporate Governance Committee in the future.

Process for 2005/06

6. The information gathering process for the 2005/06 SIC will be broadly similar to 2004/05. The MPS will look at ten control areas they have identified as being key to internal control, and a template for each area of control has been forwarded to a 'co-ordinator' for completion and will be signed off by a Management Board representative. The ten areas of control identified as being key are:

• Facilitating effective strategy, policy and decision making
• Performance management
• Change management
• Compliance management
• Risk management
• Financial management
• Information management
• Community/partnership working
• Individual professional standards
• People management

7. The templates are to be returned to the MPS Business Risk Management Team and will be used to form the basis for the initial draft. This will then be updated once business groups submit their risk registers, before being signed off by the Commissioner mid May and submitted to the MPA.

8. The MPS SIC will provide the MPA with the assurances that the MPS have in place a sound system of internal control and risk management, and will be used to form the foundations of the MPA’s own SIC which they are statutorily obliged to publish as part of the Statement of Accounts.

9. The MPA Treasury Team will be preparing the MPA SIC in consultation with Internal Audit and SMT, using (for consistency) the same ten control areas as the MPS. The SIC will also contain a summary of the Director of Internal Audit’s review of effectiveness on the system of internal control of both the MPA and MPS.

10. The overarching SIC will be reported separately to Corporate Governance Committee for approval on 19 June, and will also be included in the draft statement of accounts to be considered at Committee on that day.

C. Race and equality impact

The MPA will ensure that equality and diversity issues are fully considered in completing the SIC.

D. Financial implications

A sound system of internal control is vital in ensuring that financial management is effective.

E. Background papers

• Statement of Accounts 2004/05

F. Contact details

Report author: Annabel Adams, Deputy Treasurer, MPA.

For information contact:

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

Appendix 1

Progress on SIC 2004/5 action plan

1. To further deliver an effective police service across London

The Met Modernisation Programme (MMP) is being developed to deliver the recommendations of the Service Review, and the corporate review that is now complete. The new Strategy, Modernisation and Performance Directorate are responsible for managing the corporate strategy process and MMP.

2. To ensure that effective decision-making at the right levels is embedded across the MPS

The Management Board Operating Framework, of which the Investment Board and Performance Board are key elements, is in deployment.

3. To further embed the management of risk and reduce the level of risk to an acceptable level

The implementation of the risk management strategy continues including an MPS-wide risk training and awareness programme supporting the development of risk registers at corporate, business group and (B)OCU levels.

The latest annual risk register refresh is under way. (B)OCU and department registers are due to be refreshed by end March 2006, Business Group registers by end April 2006. The register of corporate risks will then be reviewed again, alongside a review of the process by which the register is maintained. The Business Risk Management Team are developing a tool for assessing the quality of the risk register process and an enhanced Key Performance Indicator.

4. To further enable the MPS to plan for major business disruption via business continuity planning

The MPS has brigaded resources dedicated to emergency planning, business continuity management and London Resilience into one command within Central Operations. The business continuity management methodology is enhanced to include improvements identified through an annual high risk self review process.

5. To further implement the management of change programmes across the MPS

The Met Modernisation Programme (MMP) has been set up to co-ordinate and help support the implementation of major changes. The changes are those set out in the 3 year plan (2006 – 2009) and therefore include delivering key Service Review proposals, as well as existing major change such as C3i. The MMP is supported by a programme team reporting to a programme manager and programme director, who is a member of management team.

6. To ensure the effective deployment of national policing standards

Quarterly reports to Management Board track progress on compliance with National Standards and Codes of Practice.

7. To assist in bringing closer together, resource allocation and planning

The implementation of the Medium Term Financial Planning process helps ensure that the goals of the organisation are achievable with the available resources. The role of Investment Board and its Appraisal Panel also assists here. Further development work is underway in order to further improve these process in 2006/07.

8. To ensure that intelligence led policing continues to be integrated in to the MPS

An MPS Intelligence Steering Group has been established to drive intelligence development. Each Business Group ACPO Lead has an Intelligence Implementation Lead who is responsible for driving the implementation of intelligence development within each business group. These individuals are assisted and further guided by the Intelligence Standards Unit (ISU). Plans are in place to address National Intelligence Model (NIM) minimum standards, however due to scale of delivery the timescales cannot be met. Many of the IT issues will be common amongst other forces and reliant to a certain degree on the national solution to data warehousing (see below).

9. To continue with the effective management of MPS policies

The Policy Unit (previously the Policy Clearing House) has been reviewed and now forms part of the Strategy Unit. The Policy Unit continues to develop and monitor the policies of the MPS

10. To ensure continuous improvement in the ways in which the MPS manage its information

The implementation of the Information Management Strategy, role of the Information Management Authority, business change programmes and METSEC (Metropolitan Police Security System for all information handling) Programme Board help ensure that the MPS manages its information in a trusted, accessible and usable way. Two specific initiatives should ensure significant improvements in managing information.

1. Bichard - led by Director of Intelligence (AC Alan Brown). Nationally this is the IMPACT Programme which contains four strands as follows:
   1. EIPLX - Enhanced Interim Police Logo Crosscheck
   2. INI - Impact Nominal Index
   3. CRISP - Cross regional Information Sharing Platform
   4. MOPI - Management Of Police Information.

A senior police officer or senior member of police staff leads each Bichard strand.

2. CRISP is the national solution to information sharing, but before this may happen each force has to have a data warehouse system. The MPS are developing a Corporate Data Warehouse (CDW) as its solution to the national CRISP project. A Business Case to deliver the CDW has been approved by the MPA.

11. To continue to manage the performance of people across the MPS

The Strategy, Modernisation and Performance Directorate and Performance Board are the mainstay of MPS performance management.

12. To continue the effective delivery of the outsourcing programme with maximised benefits

The Outsourcing Programme Team continues to manage the outsourcing programme with assistance from internal support teams (e.g. HR, Procurement and Finance). The team reports to the Outsourced Services Steering Group, chaired by the Director of Resources, who is a member of MPS Management Board. All strands are delivered against an implementation model to ensure that benefits are maximised, and risk registers are regularly reviewed.

13. To continue to respond robustly to the Diversity imperative

The MPS Diversity strategy went to Full Authority on 23 February 2006 and was approved. The Director of Recruitment holds a monthly scrutiny panel looking at all diversity actions including those from Morris etc. and Commission for Racial Equality (and any other action list with a diversity focus). Update papers are also provided to the MPS Management Board on request. HR also provides an update and attends the monthly Race Relations Amendment Act Meeting chaired by the Diversity & Citizen Focus Directorate where progress reports are given.

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