MOPC governance arrangements

Report: 14
Date: 12 December 2011
By: Chief Executive

Summary

This report summarises how the MOPC intends to establish an effective governance framework in accordance with the Police Reform and Social Responsibility Act 2011 and relevant guidance. In particular, it focuses on the development of the MOPC financial governance arrangements (including external and internal audit and audit committee requirements) in line with the statutory Policing Protocol and Financial Management Code of Practice (currently in draft).

A. Recommendation

That Members note:

1. The development of the MOPC governance arrangements in line with relevant legislation and guidance.

B. Supporting information

Police Reform and Social Responsibility Act 2011

1. The Police Reform and Social Responsibility Act 2011 gives the MOPC responsibility for the totality of policing within the Metropolitan Police District. It requires the MOPC to hold the Metropolitan Police Commissioner to account for the operational delivery of policing including in relation to the Strategic Policing Requirement published by the Home Secretary. The Act does not impinge on the common law legal authority of the office of constable, or the duty of constables to maintain the Queen’s Peace without fear or favour.

2. The MOPC and Metropolitan Police Commissioner are established in law as corporations sole within the 2011 Act. Both are, therefore, enabled by law to employ staff (although under phase one of the transfer to the new arrangements MPS staff will be employed by the MOPC and under the direction and control of the Metropolitan Police Commissioner). The Metropolitan Police Commissioner is charged with the impartial direction and control of all constables and staff within the MPS. The staff of the MOPC are accountable to the directly elected holder of that office.

3. The public accountability for the delivery and performance of the Metropolitan Police Service rests with the MOPC on behalf of their electorate. The MOPC is accountable to the electorate; the Metropolitan Police Commissioner is accountable to the MOPC. The Police and Crime Committee of the London Assembly is empowered to maintain a regular check and balance on the performance of the MOPC in that context.

Statutory Policing Protocol

4. The statutory Policing Protocol (“the Protocol”) has been issued in accordance with the requirements of the Police Reform and Social Responsibility Act 2011. In relation to London, it sets out how the functions of the MOPC, Metropolitan Police Commissioner and the Police and Crime Committee will be exercised in relation to each other.

5. It sets out the high level financial responsibilities of the MOPC and Metropolitan Police Commissioner, making clear the former is ultimately accountable to the public for the management of the Police Fund while the latter has day to day responsibility for managing their allocated budgets following the approval of the MOPC.

6. The staff of the MOPC and the constables and staff of the MPS are expected to have regard to the Protocol. Under the Protocol all parties will abide by the seven principles of public life set out by the Committee on Standards in Public Life known as “the Nolan Principles”.

7. The governance arrangements for the MOPC are being developed in line with the Police Reform and Social Responsibility Act 2011, the statutory Protocol, the Home Office Financial Management Code of Practice [1] and existing guidance on financial and governance matters which will continue to apply to the MOPC. The transition to the new arrangements is due to take place mid January 2012.

Financial Management Code of Practice

8. The Home Office Financial Management Code of Practice (FMCP) will provide clarity around the financial governance arrangements within the police service in England and Wales.

9. In London, the MOPC will be the recipient of all funding, including the government grant and precept and other sources of income, related to policing and crime reduction and all funding for the MPS must come via the MOPC. The Metropolitan Police Commissioner is accountable to the law for the exercise of police powers, and to the MOPC for the delivery of efficient and effective policing, management of resources and expenditure by the MPS.

10. Both the MOPC and the Metropolitan Police Commissioner are required to appoint a designated Chief Finance Officer. The statutory responsibilities of both CFOs are largely identical and their roles and responsibilities are defined in the FMCP. However, given that the MOPC has a statutory responsibility for the Police Fund, under the Code, the CFO of the MOPC will have the ultimate responsibility for the fiduciary duty to the local taxpayer and is therefore the publicly accountable CFO. In practice, the Code is the mechanism for guiding how the CFOs should operate effectively to reflect the legal and financial implications of having two corporations sole and two audited bodies.

11. The Code gives direction on; accounting arrangements, strategic and financial planning, budget preparation, taxation, asset management, corporate governance, treasury management, property, contracts and procurement. It also states that a scheme of consent, standing orders for contracts and detailed financial regulations should be drawn up to enable effective accountability and govern the relationship between the two bodies.

12. The MOPC scheme of consent, contract and financial regulations and decision making framework are currently being drawn up. They will cover each aspect of the Code and how they relate to the MOPC and the MPS and will collectively form the MOPC Control Framework.

13. On corporate governance, the Code states that an independent Audit Committee should be established in line with best practice. It recommends that this be a combined body which will consider the internal and external audit of the elected policing body and the force. The committee will advise the MOPC and Metropolitan Police Commissioner according to good governance principles and to adopt appropriate risk management arrangements in line with proper practices. The Code states that the Committee should comprise of between 6 and 7 members (although CIPFA guidance states 3-5 members is appropriate) who are appointed by competitive recruitment and are independent.

14. The MOPC intends to establish a combined Panel to perform the functionality of an Audit Committee overseeing both the MOPC and the MPS. The purpose and remit of the Panel will be drawn up to meet the requirements of CIPFA guidance on Audit Committees. It is also intended that the Panel will play a key role in ensuring the MOPC and MPS obligations under Equalities legislation and Health and Safety legislation are effectively discharged.

15. The membership of the Panel will reflect the full range of its responsibilities regarding, audit, risk management, financial reporting, equalities and health and safety.

16. The MOPC and Metropolitan Police Commissioner are required to maintain effective internal audit of their affairs by the Accounts and Audit (England) Regulations 2011. In addition to enabling the MOPC and the Metropolitan Police Commissioner to fulfil their requirements in relation to these Regulations, internal audit is needed to satisfy:

• the MOPC and the Metropolitan Police Commissioner that effective internal control systems are in place; and
• the external auditor that financial systems and internal controls are effective and that the Police Fund is managed so as to secure value for money.

17. Under the Code the MOPC and Metropolitan Police Commissioner should look to minimise duplication and bureaucracy and to maximise VfM when designing their internal audit arrangements. It therefore, recommends establishing an internal audit function which would be owned by the MOPC and cover both bodies. This will be provided by the Directorate of Audit, Risk and Assurance who will continue to operate in line with required best practice.

18. The Director of Audit, Risk and Assurance will draw up the internal audit plan in consultation with the MOPC and MPS for approval by the Panel who will monitor progress against the approved plan.

19. The Audit Commission is responsible for the appointment of external auditors in England to bodies subject to audit under the Audit Commission Act 1998. The MOPC and the Metropolitan Police Service are now both audited bodies. It has been agreed that the same external auditor will be appointed to audit both bodies.

20. The Code of Audit Practice prescribes the way in which external auditors appointed by the Audit Commission carry out their functions. The appointed external auditor is required to satisfy themselves that:

• accounts are prepared in accordance with the relevant regulations;
• they comply with the requirements of all other statutory provisions applicable to the accounts;
• proper practices have been observed in the compilation of the accounts; and
• the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness.

Police and Crime Committee

21. The Police and Crime Committee of the London Assembly will be responsible for scrutinising the MOPC to promote openness in the transaction of police business and also to support the MOPC in the effective exercise of their functions.

22. The London Assembly is currently establishing the terms of reference and membership for the Police and Crime Committee which will perform the function of a Police and Crime Panel in accordance with the requirements of the Police Reform and Social Responsibility Act 2011 and relevant guidance.

23. The Local Government Association (LGA) has produced guidance which covers the role, composition and rules of procedure for Police and Crime Panels.

C. Other organisational and community implications

Equality and Diversity Impact

1. The MOPC Control Framework is being drawn up to ensure that the MOPC statutory responsibilities in relation to Equalities under the Police Reform and Social Responsibility Act 2011 are effectively discharged.

Consideration of Met Forward

2. The strategic aims and objectives of the MOPC will be published in the Police and Crime Plan which will continue to focus on reducing and fighting crime and improving value for money.

Financial Implications

3. There are no direct financial implications arising from this report.

Legal Implications

4. The governance arrangements are being developed to ensure that MOPC statutory duties and responsibilities under the Police Reform and Social Responsibility Act 2011 are effectively discharged.

Environmental Implication

5. There are no direct environmental implications arising from the report.

Risk Implications

6. A risk management strategy and corporate risk assessment and management framework are being developed to support the MOPC in effectively managing key strategic risks.

D. Background papers

None

E. Contact details

Report author: Julie Norgrove, Director of Audit Risk and Assurance, MPA

For information contact:

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

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