MAIDSTONE BOROUGH COUNCIL
AUDIT COMMITTEE
18 JULY 2011
REPORT OF THE CHIEF EXECUTIVE
Report prepared by Paul Riley
Head of Finance & Customer Services
1. ANNUAL GOVERNANCE STATEMENT
1.1 Issue for Decision
1.1.1 To
consider the draft Annual Governance Statement for 2010-11 to be signed by the
Chief Executive and the Leader, and accompany the Statement of Accounts. This
is as required by the revised Accounts and Audit (England) Regulations 2011,
which came into force on 31st March 2011.
1.1.2 The
Statements will be submitted to Audit Committee for approval following the
annual external audit in September 2011. A draft report to the Committee is
elsewhere on this agenda.
1.1.3 Cabinet considered the Annual Governance Statement at its meeting on 13 July. A verbal update to the Committee on the outcome of that meeting will be given by officers.
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 A.
1.3 Reasons for Recommendation
1.3.1 The
Accounts and Audit (England) Regulations 2011 recognise the Annual Governance
Statement as a key statement in its own right. To this end it is no longer
required to be included in the Statement of Accounts. From 31st
March 2011 the regulations require that the Annual Governance Statement
accompanies the Statement of Accounts instead.
1.3.2 The Annual Governance Statement will be signed by both the Chief Executive and the Leader of the Council. The statement must identify the key controls in operation in the Council to facilitate the effective exercise of its functions.
1.3.3 It should be noted that 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 is based on this publication.
1.3.4 The
Accounts and Audit (England) Regulations 2011 make only minor changes to the
internal control requirements of the 2006 regulations. These are that:-
a) The
regulations now use the term Annual Governance Statement as the statement
produced as a result of the necessary annual review of internal control.
b) The Annual Governance Statement should remain a statement in its own right and accompany the Statement of Accounts rather than be included within it.
1.3.5 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 accompanying the Statement of Accounts for formal approval by the
Committee.
1.3.6 With
reference to Regulation 6, the Audit Committee, at its meeting in June 2011, considered
the report of the Head of Internal Audit and Risk Management which included a
review of audit work during 2010/11 with a recommendation that the Audit
Committee consider the effectiveness of internal audit. This annual review is
backed up by a three yearly review of Internal Audit by the external auditors
which took place in 2008/09 and confirmed that Internal Audit meet all 11
standards of the CIPFA code of Internal Audit.
1.3.7 Best
practice has identified that the Annual Governance Statement should be
considered separately from and before consideration of the Statement of
Accounts. The Statement of Accounts will be submitted for final approval in
September 2011.
1.3.8 The
Annual Governance Statement covers arrangements to:-
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Establish principal statutory obligations and organisational objectives |
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2. |
Identify principal risks to achievement of objectives |
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3. |
Identify key controls to manage principal risks |
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4. |
Obtain assurance on the effectiveness of key controls |
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5. |
Evaluate assurances and identify gaps in control/assurances |
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6. |
Prepare
an action plan to address weaknesses and to ensure continuous improvement of
the system of internal control |
1.3.9 Attached
at APPENDIX A is the draft Statement for 2010-11 which has been compiled
and updated based upon the Statement approved in June 2010 for the financial
year 2009-10.
1.3.10 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 13 July 2011 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.
1.3.11 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.
1.3.12 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 actions will be subsumed into 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 Audit Committee. However, it is possible for members to disagree with the detail of the Statement, 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 Audit Committee before the end of September 2011.
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. Financial
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2. Staffing
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3. Legal
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4. Equality Impact Needs Assessment
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5. Environmental/Sustainable Development
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6. Community Safety
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7. Human Rights Act
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8. Procurement
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9. Asset Management
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1.7.1 None.
1.8 Relevant Documents
1.8.1 Appendices
APPENDIX A 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 2011
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?
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This is a Key Decision because: ..
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Wards/Parishes affected: ..
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