Delivering Good Governance in Local Government: A Framework

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Delivering Good Governance in Local Government A
Framework
CIPFA BETTER GOVERNANCE FORUM
www.ipf.co.uk/governance

• Greg Marks CIPFA Better Governance Forum

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Introduction

• Intention information, examples, update,
  current position, help, enjoy.

• Content
• Current position
• Origins
• Influences
• Reasons
• Content of Framework
• Content of Accompanying guidance

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Current positionWhat are we talking about?

• Chartered Institute of Public Finance and
  Accountancy
• Society of Local Authority Chief Executives and
  Senior Officers

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Current position

• Joint document
• Draft summer 06
• Wide consultation/involvement 40 orgs
• Long lasting revision!
• Launch at CIPFA conference 12th-14th June
• Therefore expected final early June.

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Current positionas at today

• For Wales -
• CIPFA recommend as good practice now
• But likely adoption for 08/09, so SIC for 07/08
• For Police Authorities -
• Specific legislative differences, so separate
  guidance, but applicable England 07/08.

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Current position

• Includes need to review system of internal audit
• What is that and who to do is the subject of
  great debate
• Aware of need to issue revised Rough guide to
  the SIC is current will be issued timely
• Will say more than one way to do review
• AC emphasise the EA annual review is not for that
  purpose
• Doesnt rule out enhanced review, if you want.

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Origins - Corporate Governance

• A system by which companies are directed and
  controlled Cadbury 1992 (financial aspects of)
• provides an architecture of accountability
  the structures and processes to ensure companies
  are managed in the interests of their owners.
  Higgs 2002

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Origins Influences - Corporate Governance

• Cadbury financial aspects of corporate
  governance
• Greenbury directors remuneration
• Hampel consolidates above
• Turnbull managing risk
• Smith auditors
• Higgs non executive directors

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Influences and Reasons for - Corporate Governance

• Why?
• Various scandals since 70s.
• Rolls Royce, Leyland, BCCI, Poly Peck, Maxwell,
  Barings, Enron, World Com
• Common theme abuse of power

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Influences Reasons for - Corporate Governance

• Public sector? Similar - abuse
• Various scandals since 70s.
• T. Dan Smith, leader Newcastle Poulson Builder
  - contracts
• Lincolnshire - Speechley planning, influencing
  road route
• Cash for questions/peerages

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Influences and Reasons - foundations

• UK Public Expenditure 500b
• Good governance includes stewardship of it
• Raised profile e.g.s Nick Leeson, Maxwell,
  current e.g. ICG
• Reports e.gs LGov Keystone, Cadbury, Greenbury,
  Higgs
• Leading to Combined code on corporate governance
• No whole public sector equivalent, but Nolan
  principles, until
• Good Governance Standard for Public Services, and
  now -
• Managing the Risk of Fraud - Actions to Counter
  Fraud and Corruption
• And forthcoming LGov Good Governance Framework

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Reasons Example - every member of staff is
responsible for Acting with propriety in the
use of official resources and the handling and
use of public funds Conducting themselves in
accordance with the seven principles of public
life set out in the first report of the Nolan
Committee Standards in Public Life Being
alert to the possibility that unusual events or
transactions could be indicators of fraud
Reporting details immediately through the
appropriate channel if they suspect that a fraud
has been committed or see any suspicious acts or
events Cooperating fully with whoever is
conducting internal checks or reviews or fraud
investigations.
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Key elements of Corp Gov for LG are

• Standards ethics e.g. Codes of conduct
• Other Orgs regulatory framework e.g Central
  gov/NHS, legislation
• Stewardship public accountability e.g. budgets,
  accounts, PIs, CPA
• The Good Governance Standard e.g. review,
  challenge and question governance practice and
  seek improvements
• The Framework

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Corporate Governance

• There is much written down, codes, guidance
• Structures, methodologies
• Accountabilities, legislation
• - All fair enough
• But the key thing is not box ticking
• Difficult, but its culture/actions

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Delivering Good Governance in Local Government A
Framework
CIPFA BETTER GOVERNANCE FORUM
www.ipf.co.uk/governance

• CIPFA/SOLACE
• The Framework and Guidance

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Framework

• Endorsements
• This Framework emphasizes the importance of good
  governance to the wider outcomes of good
  management, good performance, and good public
  engagement. It puts high standards of conduct and
  leadership at the heart of good governance,
  placing responsibility on elected members and
  officers to demonstrate leadership by behaving in
  ways that exemplify high standards of conduct,
  and so sets the tone for the rest of the
  organisation.

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Framework

• Working group consisted of representatives from
  more than forty organisations
• Framework and guidance is now due to be issued
  in June

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Framework

• CONTENTS
• 1 INTRODUCTION
• 2 FRAMEWORK FOR THE DEVELOPMENT OF A LOCAL CODE
  
• 3 THE PRINCIPLES OF GOOD GOVERNANCE APPLICATION
• 4 ANNUAL REVIEW AND REPORTING
• SUPPLEMENT TO THE FRAMEWORK ANNUAL GOVERNANCE
  REVIEW AND REPORTING AND EXAMPLE OF ANNUAL
  GOVERNANCE STATEMENT

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Framework

• What do we mean by governance?
• Governance is about how local government bodies
  ensure that they are doing the right things, in
  the right way, for the right people in a timely,
  inclusive, open, honest and accountable manner.

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Framework

• The preparation and publication of an annual
  governance statement in accordance with this
  Framework is necessary to meet the statutory
  requirement set out in Regulation 4(2) of the
  Accounts and Audit Regulations 2006 for
  authorities to prepare a statement of internal
  control in accordance with proper practices.
  The supplement to this Framework serves to define
  such proper practices

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Framework

• Takes 6 core principles and 20 supporting
  principles from the Good Governance Standard
• To achieve good governance, each authority should
  be able to demonstrate that they are complying
  with the core and supporting principles contained
  in this Framework and should therefore develop
  and maintain a local code of governance
  appropriate to their circumstances comprising the
  requirements for best practice outlined

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Framework
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Framework

• Withdraws SIC from after 31st March 2007
• Includes pro forma Good Governance Statement
• Defines GGS as proper practice
• Signed by Leader CX

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Guidance

• This guidance note relates to Delivering Good
  Governance in Local Government A Framework (the
  Framework) and is intended to be used as best
  practice for developing and maintaining a locally
  adapted code of governance.
• The purpose of this guidance note is to assist
  authorities in reviewing the effectiveness of
  their own governance arrangements by reference to
  best practice, using self assessment, in a period
  of significant change.

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Guidance

• Contents
• 1 GOOD GOVERNANCE IN LOCAL GOVERNMENT
• 2 FUNDAMENTAL PRINCIPLES OF CORPORATE GOVERNANCE
• 3 STRUCTURE OF THE GOVERNING BODY
• 4 GOOD PRACTICE EXAMPLES AND CASE STUDIES
• 5 SCHEDULE TO ASSIST IN PUTTING EXAMPLES INTO
  PRACTICE
• 6 ASSESSMENT QUESTIONS FOR AUTHORITY MEMBERS AND
  AUTHORITIES TO ASK THEMSELVES
• 7 FURTHER GUIDANCE ON AUDIT COMMITTEES, STANDARDS
  COMMITTEES AND SCRUTINY
• 8 FURTHER GUIDANCE ON RISK MANAGEMENT

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Guidance

• The Framework is intended to be followed as best
  practice for developing and maintaining a locally
  adopted code of governance and making adopted
  practice open and explicit.
• This guidance note is aimed at assisting
  authorities in
• considering how they might go about reviewing
  their governance arrangements
• developing and updating their own local codes of
  governance
• demonstrating compliance with the principles of
  good governance.

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Guidance

• Section 2 outlines how good governance principles
  have developed.
• Section 3 describes how the governing body
  operates in local government.
• Section 4 provides good practice examples and
  case studies.
• Section 5 includes examples of the systems,
  processes and documents that might be cited by an
  authority as evidence of compliance with good
  practice.
• Authorities should not, however, feel constrained
  by either the format or the examples listed.
  Useful references and tools available to local
  authorities for self-assessment purposes are also
  listed. Authorities might find this a practical
  way of approaching the task.

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Guidance

• Section 3 how the governing body operates
• The governing body of an organisation has overall
  responsibility for directing and controlling that
  organisation.
• The full councils responsibilities include
• agreeing the councils constitution comprising
  the key governance documents including the
  executive arrangements and making major changes
  to reflect best practice
• agreeing the policy framework including the
  community strategy and other key strategies
• agreeing the budget.
• The executive is responsible for
• proposing the policy framework and key strategies
• proposing the budget
• implementing the policy framework and key
  strategies.

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Guidance

• Section 4 good practice e.gs case studies
• Good Governance means focusing on the purpose of
  the authority and on outcomes for the community
  and creating and implementing a vision for the
  local area
• Welcome constructive challenge as an opportunity
  to learn and improve performance. It may come
  from a variety of forms external audit,
  regulatory, inspection, peer review, commissioned
  consultants or input from other high performing
  authorities.

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Guidance

• Section 4 continued
• Case study 1
• A council which was not performing well
  according to its CPA in 2004 was able to
  transform itself into a council described as
  strongly performing by the Audit Commission
  within two years. This was achieved by a radical
  transformation of its governance processes. The
  key areas addressed link to the six principles
  contained in the good governance Framework and
  are set out below

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Guidance

• Section 5 schedule to help put principles into
  practice
• The illustrative tables overleaf show
• how the principles of good governance should be
  reflected
• the requirements that need to be reflected in a
  local code
• examples of systems, processes and documentation
  that may be used to demonstrate compliance
• self-assessment tools and useful references.

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Guidancesec 5 cont
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Guidance section 6

• ASSESSMENT QUESTIONS FOR AUTHORITY MEMBERS AND
  AUTHORITIES TO ASK THEMSELVES
• 1 Good governance means focusing on the purpose
  of the authority and on outcomes for the
  community and creating and implementing a vision
  for the local area
• How clear are we about what we are trying to
  achieve as an authority?

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Guidance

• 7 FURTHER GUIDANCE ON AUDIT COMMITTEES, STANDARDS
  COMMITTEES AND SCRUTINY
• 8 FURTHER GUIDANCE ON RISK MANAGEMENT

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Questions?Greg.marks_at_ipf.co.uk07811 332257