MPS Corporate governance - Framework update

Report: 9b
Date: 14 March 2008
By: Director of Strategic Finance on behalf of the Commissioner

Summary

This report provides an overview of the Metropolitan Police Service (MPS) corporate governance work programme. It includes an update on the plans set out at the end of last year to further develop the current MPS corporate governance framework, including a summary of the findings of the gap analysis carried out against the final version of the CIPFA / SOLACE corporate governance guidance and the programme of work developed in response to this. The framework supports the Service in carrying out its functions in accordance with the powers delegated to the Commissioner by the MPA.

 Audit and inspection play an important role in the development of the MPS corporate governance framework. The MPS is subject to audit and inspection by, in particular by HMIC, Audit Commission and the MPA. A report is also on the Committee’s agenda which sets out an MPS Audit and Inspection Strategy and associated Implementation Plan as a means of ensuring the MPS engages positively with these services and uses audit and inspections to improve the services it delivers.

This Committee is also considering the Scheme of Delegation for the MPS, which came into effect on 1 October 2007. The Scheme was developed in line with good governance practice and in support of compliance with the MPA Standing Orders. The scheme forms an integral element of the MPS’s corporate governance framework and system of internal control.

A suite of organisational performance indicators to assist the Service and the Authority in measuring compliance with the Framework has been developed and was considered by the Performance Board on 27 February.

This work complements the corporate governance protocol developed by the MPA and will ensure the MPS continues to develop a robust infrastructure to support future needs. The Service will continue to work closely with the MPA in progressing this work.

The MPS Management Board considered this report on 20 February 2008.

A. Recommendation

That the report be noted.

B. Supporting information

Current Corporate Governance Arrangements

1. The MPS is striving to achieve excellence in corporate governance. To do this, a corporate governance framework must be in place that supports our highest priority, delivering quality policing. It must also build on the work that has already been carried out to develop the corporate values of the MPS. This means embedding a culture of openness, integrity, accountability and equality, working closely with the MPA to ensure the framework properly reflects the Service’s accountability to the Authority and the needs of the MPA’s governance arrangements.

2. Management Board has approved the Temple model of corporate governance. This is an established model of corporate governance that reflects current good practice and was set out in detail in the last report corporate governance report to this.

3. Supporting documents and processes back up each pillar, and provide the robustness needed for the corporate governance framework. This approach also ensures that the model can be tailored to reflect the specific mission, values and governance arrangements of the MPS. The December report mapped the elements of this model to the CIPFA / SOLACE guidance.

Results of gap analysis

4. CIPFA/SOLACE guidance “Delivering Good Governance in Local Government: Interim Guidance Note for Police Authorities and Forces in England and Wales” was published in September 2007. This guidance is intended to assist police authorities and forces in implementing the CIPFA/ SOLACE Good Governance Framework in a policing context.

5. Work has been carried out to map the current MPS Corporate Governance Framework against the elements of the CIPFA/ SOLACE Good Governance Framework. Though an on-going part of the corporate governance work programme will be to ‘reality’ test this analysis to see how embedded the different elements of the MPS Framework are across the Service, the findings have been used to inform the development of the corporate governance work programme for 2008/09.

6. The MPS appears to comply with the majority of the relevant requirements of the CIPFA / SOLACE guidance. However, the following gaps have emerged from the exercise:

1. Development of minimum standards to inform the setting up, operation and winding up of partnerships
2. Review of risk management policy and process in light of Internal Audit recommendations; requirements of ALARM Risk Management Framework for the Police Service; and the British Standard for Risk Management
3. Action to ensure deployment of MPS Scheme of Delegation
4. A requirement to further embed and mainstream environmental impact analyses of policies, plans and decisions.
5. Guidance on Annual Assurance Statement deployment requires the addition of "Complaints Management" and "Partnerships" sections to the MPS Internal Control Framework and widens the legal compliance section. Work on developing a partnership management framework and complaints management has commenced and should be embedded in our governance work programme. Management Board considered a report in this on 4 March, which recommended leads for these areas.

7. Work is already underway in some of these areas and progress is set out below. Where this is not the case, these areas and the CIPFA / SOLACE requirements will now be explored in more detail to assess the level of work required and, if appropriate, to scope a project for delivery.

8. In addition, work will be undertaken to refresh some of the elements in the existing Corporate Governance Framework to ensure they continue to be fit for purpose and to consider how they link together in a way that is meaningful to staff and other stakeholders. The nature of corporate governance means that lots of work currently underway directly supports one or more of the pillars in the temple model. Priority areas, which we will need to demonstrate are embedded to comply with the CIFPA / SOLACE guidance feature in the table below.

Table 1:  Priority work programme

9. The programme will need to be reviewed on a regular basis for example to reflect the outcome of this year’s PURE assessment and other work carried out by audit and inspection bodies throughout the year.

10. The work programme will be managed and monitored through the Corporate Governance Coordination Group. Progress will be reported in regular updates to the Performance Board and the MPA’s Corporate Governance Committee.

Update on work already underway

MPS Audit and Inspection strategy

11. The MPS Management Board has agreed an Audit and Inspection Strategy and Implementation Plan. It has also agreed to the Director of Strategic Finance leading discussions with the audit and inspection services, including the MPA, on the proposed draft protocol. This report, as amended to reflect initial discussions with the MPA Internal Audit Service, is also being considered by the Committee. This work will directly support the further development of the corporate governance framework and aims to ensure the MPS learns from audits and inspections and uses them to deliver improvements.

Scheme of Delegation

12. The MPS Scheme of Delegation is also being considered by the Committee. It sets out all significant functions and decisions which are delegated to officers (incorporating police officers and police staff) and which are of a statutory, financial or managerial nature, other than those of a purely operational nature. The MPS Scheme of Delegation is an integral element of the MPS Corporate Governance Framework and supports the MPA’s Standing Orders which include:

• Financial Regulations;
• Contract Regulations;
• Scheme of Delegation;
• Anti Fraud and Corruption Policy.

13. On 28 June the MPA revised its Standing Orders with an effective date of 1 October 2007. The Scheme of Delegation also became effective from 1 October 2007. The scheme and the changes to Standing Orders were launched on the MPS intranet and through the Management Board. Following discussion with MPA officers, some presentational changes have been made in respect to the delegations to the Commission and Director of Strategic Finance to improve the clarity of the Scheme.

Enhanced MPA/MPS Fraud and Corruption Awareness Strategy

14. Work has commenced on developing a joint MPA/MPS framework for improving the awareness of fraud and corruption. An Audit Commission toolkit is being prepared which includes the use of an online self-assessment questionnaire, tailored workshops and follow up sessions. Phase One of the process is intended to target the most senior levels within the MPS and will include senior finance and resources staff. Timescales for this phase are for completion by May 2008 and for the cascading of information to all levels of the organisation thereafter. There will also be the development of a module in the leadership training events covering fraud and corruption awareness.

MPS Partnership Framework, including partnership risk management standard operating procedure

15. The high-level framework for partnerships, the main purpose of which is to declare minimum standards of governance when entering into partnerships and give necessary support and assistance in partnership working, is currently being developed. The Standard Operating Procedure on risk management in respect of partnerships has been developed for inclusion into the framework. A workshop took place on 4 February with the express aim of gathering views from partnership practitioners from across the MPS on what they either need or would like to gain from such a framework or guidance document.

16. This workshop also introduced the work that is getting underway within the TP business group to map the various partnerships across the MPS and measure and maximise the benefits delivered from such partnership working. The high-level framework/toolkit is to be presented to the MPS Management Board in March with full guidance document planned to be implemented by end of April.

MPS Complaints and Compliments (policy and resource)

17. The Citizen Focus Policing Programme is managing the development of a service recovery process. This will deal with quality of service issues rather than the traditional complaints against police. It is intended that this new process would enable opportunities for service recovery by directly addressing customer concerns. In order to ensure an in-depth understanding of service recovery issues and the factors that drive a satisfactory resolution a roundtable exercise has been arranged, in partnership with the Institute of Customer Service, to capture best practice from leaders in service complaint handling. This exercise, which will include representatives from Territorial Policing, Directorate of Professional Standards, Central Communications Command, Human Resources and the Independent Police Complaints Commission, will produce the characteristics that should feature in such a process. This will then be drafted into a process and associated guidance written.

18. By working together with customer service experts, partners and colleagues in accordance with our corporate values, it is hoped to identify the methodology which will bring the maximum benefits to the MPS, the public and our staff with regard to the handling of service recovery issues.

Consolidated External Audit Action Plan

19. Strategic Finance continues to produce a monthly action plan, which identifies and monitors progress against financial audit recommendations. It incorporates recommendations arising from the Annual Audit letter, Interim Systems Audit, PURE and any outstanding queries from the HMIC Baseline Assessment and identifies issue owners at both Management Board and practitioner levels. This report is also reviewed on a regular basis by the joint Strategic Finance and Business Support working group, this ensures ownership of issues by Lead Accountants and that progress is formally monitored. It is intended that this plan will be developed to also incorporate internal audit recommendations.

Capital and Revenue budget and business planning

20. Work continues as part of the 2008/09 business planning process to integrate the business/financial planning framework reflecting a developing approach to strategic planning in the MPS aiming to ensure that financial planning and budgeting are driven by strategic priorities and business needs and that resources are allocated in line with the MPS objectives.

21. The 2008/09 MPS/MPA business plan outlines our strategic objectives and plans to deliver these, including: business group responsibilities; performance measures and targets; the anticipated funding to support the planned activities; as well as proposed efficiency savings.

22. The planning framework will continue to be developed and further integration between finance and planning will emerge as the 2009/10 budget process commences. The strategic vision for this work stream is that it will become the essential business tool that will form the basis of the MPS financial and performance setting process, building on the strong operational performance focus already in place.

Risk management

23. The MPS Corporate Risk Register, and the process by which risks are identified for inclusion in the register, is to be the subject of a thorough - but quicktime - review led by the Directors of Strategy and Risk Management. The monthly corporate business risk report process will be held in temporary abeyance until this review is complete and the way forward approved by Management Board.

24. Various 'risk' indicators are to be included in the MPS suite of corporate organizational health indicators. The Director of Risk Management has been tasked to consider and report on the need for any further measures around the embedding of risk management. Any such additional indicators are likely to be either existing measures or natural business products that provide a proxy for risk management through measurement of outcomes. Pending the updating of the ALARM / Audit Commission risk KPIs, and Management Board agreement to any additional risk measures, the MPS proposes to evaluate progress in embedding business risk management on the basis of the 'risk' indicators in the corporate suite.

25. The Director of Risk Management is to chair the group tasked by the ALARM Board to work with the Audit Commission to refresh the existing national risk management indicators. The group is currently in the development stage.

26. It is expected that the formal report on the audit of MPS corporate risk assessment and risk management will be received shortly. A draft report has been received. The final product is likely to differ from the draft only in terms of correction of factual inaccuracies. A management response to the report is therefore already being worked up for approval by the Directors of Strategy and Strategic Finance.

Environmental impact analyses

27. A methodology for conducting environmental sustainability appraisals has been developed. An appraisal is now required for all proposals considered by Investment Board. A process has also been put in place to review business cases considered by Assessment Panel. Work is on going to improve consistency in applying sustainability appraisals across the Service and to mainstream sustainability into all decision making processes.

Development of corporate health organisational performance indicators

28. On 27 February, the MPS Performance Board agreed a suite of corporate health organisational performance indicators. The purpose of corporate health indicators is to provide the management board of an organisation with a tool to improve its ability to manage effectively and to provide accountability to its stakeholders. Reporting against a set of indicators gives a snapshot of the organisation’s capacity and compliance with its corporate governance arrangements, and in doing so, helps determine how well it manages its key resources, including staff and finances.

29. A set of 60 indicators spanning the three ‘pillars’ of the MPS corporate governance framework (using existing data) was agreed. A hierarchy of reporting arrangements has been established which will result in a headline set of 16 indicators being reported to the MPS Performance Board quarterly. More detailed information will be held locally to support further investigation if required and reported on an exception basis. The headline set of indicators can be found at Appendix 1.

C. Race and equality impact

The model of corporate governance set out in this report is based on the principles of openness; integrity; accountability and equality. The development of the framework therefore should have a positive race and diversity impact by ensuring that these principles inform the way in which the MPS operates. Furthermore, improved communication of the corporate governance framework aims to help staff understand how to apply these principles in their day-to-day work.

D. Financial implications

The work streams identified will be delivered within existing budgets.

E. Legal implications

The establishment of, and compliance with, a robust corporate governance framework will assist the MPS in ensuring its services are delivered having due regard to the statutory framework within which it must operate.

F. Background papers

1. MPS Audit and Inspection Strategy
2. MPS Scheme of Delegation
3. CIPFA/SOLACE consultation – Good Governance in Local Government
4. CIPFA/SOLACE – Delivering Good Governance in Local Government, Interim Guidance Notes for Police Authorities and Forces in England and Wales
5. MPS Corporate Governance Framework including financial control to Corporate Governance Committee, Report 8, 7 December 2007,

G. Contact details

Report author: Lucy Dunn, Resources Directorate, MPS.

For information contact:

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

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