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Delivering Good Governance in Local Government: A Framework

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Title: Delivering Good Governance in Local Government: A Framework


1
Delivering Good Governance in Local Government A
Framework
CIPFA BETTER GOVERNANCE FORUM
www.ipf.co.uk/governance
  • Greg Marks CIPFA Better Governance Forum

2
Introduction
  • Intention information, examples, update,
    current position, help, enjoy.
  • Content
  • Current position
  • Origins
  • Influences
  • Reasons
  • Content of Framework
  • Content of Accompanying guidance

3
Current positionWhat are we talking about?
  • Chartered Institute of Public Finance and
    Accountancy
  • Society of Local Authority Chief Executives and
    Senior Officers

4
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.

5
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.

6
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.

7
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

8
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

9
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

10
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

11
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

12
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.
13
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

14
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

15
Delivering Good Governance in Local Government A
Framework
CIPFA BETTER GOVERNANCE FORUM
www.ipf.co.uk/governance
  • CIPFA/SOLACE
  • The Framework and Guidance

16
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.

17
Framework
  • Working group consisted of representatives from
    more than forty organisations
  • Framework and guidance is now due to be issued
    in June

18
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

19
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.

20
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

21
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

22
Framework
23
Framework
  • Withdraws SIC from after 31st March 2007
  • Includes pro forma Good Governance Statement
  • Defines GGS as proper practice
  • Signed by Leader CX

24
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.

25
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

26
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.

27
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.

28
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.

29
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.

30
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

31
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.

32
Guidancesec 5 cont
33
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?

34
Guidance
  • 7 FURTHER GUIDANCE ON AUDIT COMMITTEES, STANDARDS
    COMMITTEES AND SCRUTINY
  • 8 FURTHER GUIDANCE ON RISK MANAGEMENT

35
Questions?Greg.marks_at_ipf.co.uk07811 332257
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