Annual Governance Statement

Report: 10
Date: 15 June 2009
By: Treasurer

Summary

The Authority is required to include an Annual Governance Statement in its financial statements. The Annual Governance Statements includes details of governance arrangements, highlighting how effectively they are being deployed and identifying significant governance issues and actions being taken to address them. In producing the Annual Governance Statement reliance is placed on the Annual Assurance Statement produced by the Metropolitan Police Service.

A. Recommendation

That

1. members agree the Authority’s Annual Governance Statement for inclusion in the statement of accounts for 2008/09; and
2. note the Metropolitan Police Service’s Annual Assurance Statement

B. Supporting information

1. In accordance with the Accounts and Audit Regulations 2003 as amended by the Accounts and Audit (Amendment) (England) Regulations 2006, there is a statutory responsibility for the Authority to publish a statement of internal control. In previous years this responsibility has been met through the production of a Statement of Internal Control, which, following approval at Corporate Governance Committee and Full Authority, was published in the annual accounts.

2. Following publication of the CIPFA/SOLACE guidance note “Delivering Good Governance in Local Government: the framework” and the police specific “Interim Guidance Note for Police Authorities and Forces” the requirement is now met through the publication of an Annual Governance Statement (AGS).

3. The AGS subsumes and broadens out the requirements of the Statement of Internal Control and is now more of a general certification about governance issues rather than just a certification of the propriety of internal systems of control.

4. As in previous years the Metropolitan Police Service (MPS) has produced a separate statement, now known as the Annual Assurance Statement. This includes details of governance arrangements within the MPS as well as what was included in the past in the MPS Statement of Internal Control. In producing the Annual Governance Statement reliance has been placed on the Annual Assurance Statement.

5. The Annual Governance Statement and Annual Assurance Statement are attached at Appendix 1 and 2 respectively. A summary of the contents is provided below:

Governance framework

6. The Annual Governance Statement provides details of the 12 areas of governance that are seen as being key to the Authority’s overall governance framework. These are as follows

• Identifying and communicating the Authority’s vision of its purpose and intended outcomes for citizens and service users
• Reviewing the Authority’s vision and its implications for governance arrangements
• Measuring the quality of services for users, ensuring they are delivered in accordance with the Authority’s objectives and that they represent the best use of resources
• Defining and documenting the roles and responsibilities of the Authority and MPS
• Developing, communicating and embedding codes of conduct, defining the standards of behaviour for members, officers and staff
• Reviewing and updating standing orders and supporting documentation
• Undertaking the core functions of an Audit Committee
• Ensuring compliance with relevant laws and regulations, internal policies and procedures and that expenditure is lawful
• Whistle blowing, receiving complaints from the public and handling citizen and other redress
• Identifying the development needs of members and senior officers in relation to their strategic roles, supported by appropriate training
• Establishing clear channels of communication with all sections of the community and other stakeholders, ensuring accountability and encouraging open consultation
• Incorporating good governance arrangements in respect of partnerships

Review of effectiveness

7. This section provides details of the role played by parts of the organisation seen as being key in maintaining and reviewing the governance framework.

8. In addition to the maintenance and review of governance that takes place as a matter of course throughout the year, the Authority are obliged to conduct an annual review of the effectiveness of the governance framework. The outcomes of this inform the significant issues section of the AGS.

9. The review was undertaken by senior officers within the organisation and used various sources of information to inform it. These included:-

• Reports produced by both internal and external auditors and the HMIC
• Reports received throughout the year by the Authority’s Committees especially Corporate Governance Committee.
• The MPS Annual Assurance Statement
• The Director of Internal Audit’s Annual Report including his review of effectiveness.
• The Police Authority Self Assessment (PASA) framework (attached at Appendix 3 for information)

10. In addition as part of the process a review was undertaken of the Authority’s local code of corporate governance.

Significant Governance Issues

11. During 2008/09 the MPS have continued to strengthen their corporate governance arrangements through implementation of the corporate governance framework.

12. However there are areas where improvements are needed as evidenced by the review of effectiveness. This review, has identified four significant governance issues which are as follows:-The review of effectiveness has identified four significant governance issues which are as follows:-

13. Risk management – Although improvements have been made in risk management including the development of a corporate risk register, business group registers and supporting frameworks there are a number of areas where improvements are still needed.

14. Procurement – The MPS continue to make improvements to procurement to reduce the incidents of non compliance. In 2008/09 this has included the implementation of a contracts database and the continued roll out of purchase to pay. There however continues to be concerns in this area especially with regard to reliance on contracts either not let competitively or extension of existing contracts on a single tender basis. In addition, whilst the MPS have made improvements to pay and career progression within procurement services, problems in recruiting are impacting on procurement’s services ability to keep on top of tendering and contract management issues. Implementation of the revised procurement strategy is seen as being key in improving controls in this area.

15. Internal Control – As at the 31 March 2008 the Audit Commission was satisfied that the Authority had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources and issued an unqualified value for money conclusion for the year ended 31 March 2008. This represented an improvement on 2006/07 when the value for money conclusion was qualified due to weaknesses in the Authority's arrangements for maintaining internal control. However further improvements are needed with both the Audit Commissions annual audit letter and the Director of Internal Audit’s annual report highlighting the need for an improved system of internal control..

16. Community engagement – as evidenced by the PASA framework there is a need to review the Community Engagement Strategy to ensure we have a standardised approach to engaging with communities.

17. As with previous years, progress in addressing these issues will be closely monitored by Corporate Governance Committee on a quarterly basis.

18. It is important to recognise the improvements made to date Whilst the MPS continue to make improvements to Corporate Governance through implementation of the various strands of their Corporate Governance Framework.

C. Race and equality impact

The Authority will ensure that equality and diversity issues are fully considered in the Annual Governance Statement

D. Financial implications

Effective governance arrangements are essential in ensuring effective financial management

E. Background papers

• None

F. Contact details

Report author: Annabel Adams

For information contact:

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

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