Corporate Governance Committee Legacy Report

Report: 15
Date: 12 December 2011
By: Chief Executive

Summary

This report provides an overview of the achievements of the MPA Corporate Governance Committee and outlines how its work will be taken forward in the Mayor’s Office for Policing and Crime from January 2012.

A. Recommendation

That Members:

1. Note the report and agree its submission to the January 2012 meeting of the Full Authority

B. Supporting information

Role and Purpose of the Corporate Governance Committee

1. Since its creation in 2004 the MPA Corporate Governance Committee has played a key role in enhancing public trust and confidence in the governance of the MPA and MPS. It has provided independent assurance of the adequacy of the risk management framework and the associated control environment, independent scrutiny of financial and non-financial performance to the extent that it has affected the MPA’s exposure to risk and impacted on the control environment, and overseen the financial reporting process.

2. The Committee’s remit has included;

• Considering the effectiveness of the MPA/MPS risk management arrangements, the control environment and associated anti-fraud and anti-corruption arrangements.
• Seeking assurances that action has been taken on risk-related issues identified by internal and external auditors and inspectors.
• Being satisfied that the MPA assurance statements, including the Annual Governance Statement, properly reflect the risk environment and any actions required to improve it.
• Approving internal audit’s strategy, plan and monitoring internal audit performance.
• Reviewing summary internal audit reports and the main issues arising, and seeking assurance that action has been taken where necessary, particularly in relation to high risks.
• Receiving the annual report of the Director of Audit, Risk and Assurance.
• Considering the reports and recommendations of external audit.
• Ensuring effective relationships between external and internal audit and that the value of the audit process is actively promoted.
• Reviewing the financial statements, external auditor’s opinion and reports to members, and monitoring management action in response to the issues raised by external audit.
• Ensuring the MPA and MPS health and safety plans have been effective in discharging the Authority’s health and safety responsibilities.

3. The following paragraphs summarise the key achievements of committee and how its work will be carried forward under the Mayor’s Office for Policing and Crime from January 2012.

Internal Control Environment

4. The committee has overseen a considerable improvement in the internal control environment since 2004. It has received annual reports from the Director of Audit, Risk and Assurance and ensured appropriate action has been taken to address the risk and control issues that have emerged. On a quarterly basis it has reviewed progress made in implementing internal and external audit recommendations with a particular focus on high risk areas. In recent years there has been an increased rate of implementation of recommendations and the number of high risk recommendations has significantly reduced.

5. Annual Governance Statements, which provide an overall assurance on the effectiveness of the governance arrangements in the MPA and MPS and highlight areas for further improvement, have been reviewed each year by the committee. Members regularly reviewed the supporting action plans which had a particular focus on improving the internal control environment, embedding risk management and compliance with procurement regulations.

6. Members have scrutinised quarterly reports on the development of the MPS corporate governance framework which have demonstrated considerable progress in key aspects of governance. Strands of work completed in support of strengthening the framework include; implementing the developing resource management programme, developing a strategic approach to organisational learning, improving the compliance framework, reviewing all forms of public consultation, reviewing the MPS Environment Strategy and developing the Corporate Social Responsibility Strategy and enhancing fraud awareness. A recent report to the committee confirmed many of these areas are now embedded in MPS business and a new set of priorities has been agreed for future improvement.

7. The committee has also had a specific remit in overseeing improvements to key aspects of the control framework that have been identified as a result of internal audit review/investigation and/or external review. Significant work in this area includes overseeing; improvements to the management and control of the business charge card system following the AMEX card investigation; the implementation of KPMG’s recommendations on treasury management made as a result of the collapse of the Icelandic banks; the implementation of recommendations on compliance with procurement regulations and legislation arising from the award of contracts to Impact Plus.

Risk Management

8. The committee has overseen the development and improvement of the MPA and MPS risk management framework, approving the respective risk management strategies and improvement plans. It has regularly reviewed both the MPA and MPS assessments of key strategic risks and sought assurance on the effectiveness of the control measures in place to mitigate them.

Financial Reporting

9. On behalf of the Authority, each year members have scrutinised the MPA annual accounts prior to publishing and given full consideration to the District Auditor’s Annual Governance Report and Annual Letter. They have ensured appropriate management action has been taken to address the recommendations made. In recent years the District Auditor has given an unqualified opinion on the financial statements and concluded that the MPA has proper arrangements to secure economy, efficiency and effectiveness in its use of resources. The committee has also overseen the considerable progress made in implementing the recently adapted International Financial Reporting Standards.

Internal and External Audit

10. The committee has ensured that an effective internal audit service has been provided, approving the internal audit strategy and work plans and monitoring audit performance. It has approved external audit plans and fees and ensured the co-ordination of internal and external audit activity. Members have ensured that appropriate management action has been taken to address issues raised by internal and external audit and has played a key role in supporting and promoting the work of auditors.

Counter Fraud Activity

11. Members have given support and commitment to the development of an effective Anti Fraud Strategy and implementation plan for the MPA and MPS. This has been supported by a fraud awareness and education programme that has been delivered jointly by the MPS, Directorate of Audit Risk and Assurance and the Audit Commission. Following the next series of workshops, due to be undertaken in January 2012, over 850 MPS employees will have received this training. The committee also recently endorsed the use of a Fraud Risk Analysis completed by the Directorate of Audit Risk and Assurance which is being promoted as an area of best practice by the National Fraud Authority.

Health and Safety

12. Members have enhanced the level of reporting and governance of the MPA/MPS health and safety arrangements. On a quarterly basis they have reviewed health and safety performance, monitored emerging trends and sought assurance that appropriate management action was taken as necessary.

13. The committee has ensured an appropriate response to legislative changes and requirements such as the Corporate Manslaughter and Corporate Homicide Act 2007, and overseen the implementation of recommendations arising from a joint MPA/MPS external independent audit of health and safety. It saw the publication of a joint MPA/MPS Health and Safety Policy supported by a joint statement of intent signed by the Deputy Mayor for Policing and the Commissioner. The implementation of the MPA/MPS health and safety assurance process has made a significant contribution to the effectiveness of the governance framework. The Commissioner and all MPS heads of business units now sign an annual assurance statement to confirm they have met the required standards and have produced an action plan to address any areas identified for improvement.

Officer Support

14. The Chair and members of the committee acknowledge and are grateful for the commitment, support and work of both MPA and MPS officers in achieving the above. The Chair would also like to acknowledge the contribution of the two co-opted committee members who have provided expertise in the areas of Health and Safety, and Risk Management.

Future under the Mayor’s Office for Policing and Crime

15. The MOPC governance arrangements are being developed to meet the requirements of the Police Reform and Social Responsibility Act 2011, supporting statutory Protocol, Home Office Financial Management Code of Practice, and existing guidance on financial matters which will continue to apply to the MOPC.

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

17. The implementation of internal and external audit recommendations will continue to be monitored by the Panel together with any areas identified for improvement in the Annual Governance Statement and supporting assessments.

C. Other organisational and community implications

Equality and Diversity Impact

1. All reports provided to the Corporate Governance Committee have included relevant data and information on equalities and diversity for consideration in the context of the issue being reported.

Consideration of MET Forward

2. The work of the Corporate Governance Committee has supported all strands of MET Forward and has made a key contribution to fighting crime, securing value for money and increasing confidence in policing.

Financial Implications

3. The Committee has provided independent scrutiny of financial performance. An increased awareness of emerging financial risks has improved oversight in this area and reduced the risk of potential loss. Actions taken to address internal and external audit recommendations have mitigated risks of financial loss, waste and/or abuse.

Legal Implications

4. Where appropriate the committee has considered the legal implications in the reports it has received. The MOPC governance arrangements are being designed to meet statutory requirements.

Environmental Implications

5. Where appropriate, the committee has considered the environmental implications arising out of reports it has received.

Risk Implications

6. In providing independent assurance on the adequacy of the risk management framework and internal control environment and overseeing actions taken to address any issues arising, the committee has reduced the MPA and MPS exposure to 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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