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MAIDSTONE BOROUGH COUNCIL

AUDIT COMMITTEE

7 JUNE 2010

REPORT OF THE CHIEF EXECUTIVE

Report prepared by Paul Riley 

1.              ANNUAL GOVERNANCE STATEMENT

1.1           Issue for Decision

1.1.1      To consider the draft Annual Governance Statement for 2009/10 to be signed by the Chief Executive and the Leader, and included in the Statement of Accounts.  The combined Statements will be submitted to Audit Committee for approval on the 17 June 2010.

1.2           Recommendation of the Chief Executive

1.2.1      It is recommended that Audit Committee:

a)     Consider and endorse the Annual Governance Statement                            attached at APPENDIX C.

1.3           Reasons for Recommendation

1.3.1      The Accounts and Audit Regulations previously required that the Statement of Accounts included a Statement of Internal Control, to be signed by the Chief Executive and Leader, which identified the key controls in operation within the Authority to give assurance to the production of the Statement of Accounts.

1.3.2      This requirement has been updated by the June 2007 CIPFA/SOLACE publication entitled Delivering Good Governance in Local Government (Framework) is considered ‘proper practice’.  Therefore, the production of the Annual Governance Statement and the revised Local Code of Corporate Governance, detailed elsewhere on this agenda, are based on this publication.

1.3.3      Audit Committee are reminded that in 2006 the Regulations were amended to add the following:

Regulation 4 – this requires the findings of the review of the system of Internal Control (now the Annual Governance Statement) to be considered by a committee of the relevant body, or by members of the body meeting as a whole.

Regulation 6 – this requires bodies to review the effectiveness of their system of internal audit once a year and for the findings of the review to be considered by a committee of the body, or by the body as a whole, as part of the consideration of the system of Internal Control referred to in Regulation 4.

1.3.4      The review of the system of internal control covered by the Annual Governance Statement required by Regulation 4 is dealt with by this report.  Members are reminded that the statement appended to this report is for final approval.  The statement will return to the next meeting of the Audit committee as a signed element of the Statement of Accounts for formal approval by the Committee.

1.3.5      In accordance with the Accounts and Audit Regulations a report is presented to this meeting of the Audit Committee by the Head of Internal Audit and Risk Management which includes a review of audit work during 2009/10.  A review of the “effectiveness of the system of internal audit” will be provided to the meeting of the Audit Committee on 21 June 2010.  This annual review is backed up by the results of review by the external auditors of the Internal Audit service reported to a previous meeting.  This confirmed that Internal Audit meet the 11 standards of the CIPFA Code of Internal Audit.

1.3.6      The overall assurance framework for assessing the Annual Governance Framework is shown in APPENDIX A.

1.3.7      The Annual Governance Statement covers arrangements to:-

The attached APPENDIX B shows recommended best practice for the review of the Annual Governance Statement and the assurance gathering process.  The evidence assembled for the current review is shown as a Background Document.

1.3.8      Attached at APPENDIX C is the draft Statement for 2009/10 which has been compiled and updated based upon the Statement approved in June 2009 for the financial year 2008/09.

1.3.9      Officers’ views have been obtained on the revised Statement along with external validation, particularly through external audit assessment.  The draft Annual Governance Statement has been reported to Cabinet on 20^th May 2010 and any response or actions taken will be reported to the Audit Committee at the meeting.  If the Committee feels that there are any errors or omissions then they will have a responsibility to refer this back to the Cabinet for consideration, and if they feel strongly that any issues have not been sufficiently addressed then the matter may be referred to Council.

1.3.10   Best practice has identified that the auditors should be presented with a Statement of Evidence to back up the Annual Governance Statement and this has been produced and is available as part of the Local Code of Corporate Governance.

1.3.11   An action plan has been prepared including proposals to address those areas where the Statement identifies that further work would be beneficial to the overall governance arrangements.  The action plan forms part of the overarching Corporate Improvement Plan.

1.4           Alternative Action and why not Recommended

1.4.1      The Annual Governance Statement is a necessary part of the Statement of Accounts and must, therefore, be ultimately agreed by Council.  However, it is possible for members to disagree with the detail of the Statement and to ask for further details to be included or evidence to be produced.  However, it must be acknowledged that the Accounts and Audit Regulations require the full statement of Accounts to be agreed by Council before the end of June 2010.

1.5           Impact on Corporate Objectives

1.5.1      The Statement incorporates best practice as anticipated by the Core Values included in the Strategic Plan.

1.6           Risk Management

1.6.1      The Statement incorporates the essential elements of a well managed Council which ensures that many elements of the Strategic Risk Register are addressed.

1.7           Other Implications

1.7.1      None.

1.8        Relevant Documents

1.8.1   Appendices

APPENDIX A – Annual Governance Statement Framework

APPENDIX B – Annual Governance Statement, Assurance Gathering Process

APPENDIX C – Annual Governance Statement

1.8.2   Background Documents

Minutes of the Corporate Governance Officer Working Group
Local Code of Corporate Governance
Accounts and Audit Regulations 2003 (as amended in 2006)
Evidence to support the Annual Governance Statement

IS THIS A KEY DECISION REPORT?   Yes                                               No     If yes, when did it first appear in the Forward Plan?   ..     This is a Key Decision because: ..   .       Wards/Parishes affected: ..   ..