Agenda item

Report by the Head of Corporate and Community Services.

The Committee considered a report by the Head of Corporate and Community Services (circulated previously) regarding the Annual Governance Statement 2018/19.

The Head of Corporate and Community Services advised that the Annual Governance Statement 2018/19 was presented to the Committee on an annual basis to set out the governance arrangements and core principles of the Council. He added that the report for consideration at the meeting was up to the period ending 31st March 2019. The statement explained how the Council had complied with the code and that it had met the requirements of the Accounts and Audit Regulations in relation to the publication of a statement of internal control.

He outlined the key elements of the Council’s Governance Framework, which were detailed in in sections 3.1 to 3.6 of the report.

He explained how the Council had complied with the Framework in relation to the key arrangements that were in place to meet the core principles, which were as follows:

·         Principle A - Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law.

·         Principle B - Ensuring openness and comprehensive stakeholder engagement.

·         Principle C and D - Defining outcomes in terms of sustainable economic, social and environmental benefits and determining the interventions necessary to optimise the achievement of the intended outcomes.

·         Principle E - Developing the entities capacity, including the capability of its leadership and the individuals within it.

·         Principle F - Managing risks and performance through robust internal controls and strong public financial management.

·         Principle G - Implementing good practices in transparency, reporting and audit to deliver effective accountability.

He highlighted the following points to the Committee:

·         Internal Audit was responsible for objectively reviewing the Council’s internal systems of control with a view to reporting on and making recommendations to management withregard to their effectiveness for managing business risk and achieving theorganisation’s objectives. Internal audit reviews were designed to assess the effectiveness of the internal controls on which the council relied for managing risk. There was an annual risk-based internal audit plan approved by the Audit Committee. During the year Internal Audit undertook 17 audits. Audit Recommendations are reported to SMT on a regular basis.

·         The External Auditors appointed by the Council were Grant Thornton. The 2017/18 Annual Audit Letter (received in August 2018) provided an unqualified opinion on the Council’s accounts but made some recommendations in relation to financial savings targets to 2021/22 and in respect of the reporting for the 21:21 programme. The reporting of progress in relation to 21:21 now occurred as part of the quarterly business report and so this recommendation had not been carried forward to the Action Plan. The MTFP was reviewed in February/March 2019 but further work needed to be undertaken to bridge any funding gaps in subsequent years. This was reflected in the Action Plan.

·         The Local Government Ombudsman (LGO) reported to all Councils on an annual basis. The report for the year 2017/18 indicated that 23 complaints were received, which was consistent with the level of complaints over the previous five year period. The Investors in People (IIP) and Local Government Association (LGA) Peer Review were referenced in the previous Annual Governance Statement. The Council had not yet implemented the whole range of recommendations and so an action had been included in the Action Plan.

·         No formal reports had been made by any statutory officer.

·         The Senior Management Team (SMT) met each week to develop policy issues and also considered internal control issues, including risk management, performance management, compliances, efficiency and value for money, and financial management. All members of SMT had responsibility for maintaining a system of sound internal controls and management processes within their area of responsibility, and for reviewing their effectiveness. Each member of had completed an Assurance Statementfor their area confirming that a sound system of internal control had been in place throughout the financial year, and identified any areas that were less robust. Any issues identified as part of these had been incorporated into the Action Plan.

·         The Council had considered the outcomes of the governance arrangements referred to in the Annual Governance Statement 2018/19. One significant issue in relation to business continuity had been identified and had been outstanding for some time. Other issues identified related to the development of an action plan to implement recommendations from the Investors in People (IIP) report and the Peer Review together with the development of a savings plan to plan for budget reductions during the period 2020/21 – 2022/23 as part of  the Medium Term Financial Plan. There were also plans to implement a system to report breaches to the Governance Committee. He added that with a new administration in place following the elections in May 2019 he would like to undertake another Peer Review to baseline the Council in 2019.

In response to a number of questions the Head of Corporate and Community Services and Head of Resources advised the following:

·         In relation to principles C and D and the provision of workshops for new Councillors as part of Growing North Devon, the Committee was advised that whilst Growing North Devon was a priority, creating communities was also an important element and that all Members would be involved in that process going forward.

·         In relation to cyber security and the provision of a backup mechanism on site, the Committee was advised that there were backup facilities at both Brynsworthy Environment Centre and at Lynton House. However, Senior Management Team were mindful that Lynton House was located within a flood plain. With that in mind there were plans for future investment as part of capital resources to enable more data recovery storage within the cloud. The provision of offsite backup systems was also an item on the Corporate Risk Register and there were firewalls in place, which were patched every week to ensure that they were fully updated. The Council also had cyber-attack insurance, which would enable systems to be up and running quickly should such a threat occur.

·         The Business Continuity Plans were not yet completed with some additional work required to develop specific recovery plans to address key systems.

The Chairman and the Committee welcomed and supported the possibility of another Peer Review.

RECOMMENDED that the Annual Governance Statement proceed to Council for adoption as an accompaniment to the Statement of Accounts for 2018/19.