Agenda item

Annual Governance Review and Annual Governance Statement 2020/21

The purpose of this report is to enable the Audit Committee to review the final Annual Governance Statement for 2020-21 and consider whether it properly reflects the risk environment and supporting assurances, taking into account Internal Audit’s opinion on the overall adequacy and effectiveness of the Council’s framework of governance, risk management and control.

Annual Governance Review and Annual Governance Statement 2020/21

The purpose of this report was to enable the Audit Committee to review the final Annual Governance Statement for 2020-21 and consider whether it properly reflected the risk environment and supporting assurances, taking into account Internal Audit’s opinion on the overall adequacy and effectiveness of the Council’s framework of governance, risk management and control.  (A copy of the report has been filed with the signed minutes).

The report was presented by J, Willis, Interim Executive Director of Finance and S151 Officer who highlighted the main points of the report and advised that the final Annual Governance Statement (AGS) for 2020-21 took account of the S114 Notice, the final report of the Caller Review and other significant events that occurred post 31 March 2021.

Councillor Jackson commented that he had been very critical of past governance reviews from the Council.  However, he felt this Annual Governance Review was laudable, the three lines of defence were detailed, and the overall objectives were good.  But he felt that it still did not detail what would happen if the three lines of defence were breached.  He also felt that Audit Committee’s role was not fully established within the document to ensure it would provide an independent review of the Council’s governance, risk management and control frameworks and oversee the financial reporting and annual governance processes.  He questioned how Audit Committee would ensure the procedures and processes of the Council followed good governance, particularly in light of the Caller Report recommendations. 

The Chair stated that he thought the report did clearly set out the responsibilities of the Audit Committee and showed that it would have a key role in addressing the lessons learnt from the Caller Review.

J. Willis confirmed that Audit Committee had a key role in ensuring that lessons learnt, and actions agreed following the Caller Report were acted upon.  A request for Audit Committee to receive regular Caller Report progress reports had already been made and would take place.  Internal Audit also produced regular assurance reports to Audit Committee which gave an opinion on the adequacy of the governance arrangements.  Audit Committee also had an essential role in overseeing governance processes and ensuring follow up in terms of agreed actions from previous annual governance statements.  She commented that maybe in the past Audit Committee had not asserted its role enough.  However, Audit Committee were in full control of their own work programme, and it would be up to Members to determine how much involvement they wanted to have in monitoring the implementation of the agreed actions set out in the governance statement.

The Chair agreed that the Committee needed to decide how they wanted to be updated on these issues, whether that be in a cyclical way or a more granular approach.  Officers confirmed that there was no issue in bringing reports or providing information to Audit Committee.

Councillor Dale commented there was not enough detail within the governance statement.  The statement quoted that during the latter part of 2020 and early 2021 it became apparent that there were significant weaknesses in the Council’s corporate governance arrangements.  However, there was no detail as to what the significant weaknesses were, how they were recorded or how the weaknesses came to light.  She felt that by having more information regarding governance and where it went wrong measures could be put in place to ensure such things did not happen again.  J. Willis advised that Audit Committee along with two statutory officers, the Leader of the Council and the external auditor had all raised concerns about past governance arrangements.  In this instance the mechanism for addressing the issues raised was to commission the Caller Review and the issuing of the S114 report.  It was widely recognised that there were issues which needed to be properly investigated and rectified.  Councillor Dale felt that this information should have been included to provide clarity and detail on the severity of the weaknesses found. 

Councillor Oliver stated that the Caller Review was only necessary because the governance arrangements had failed or been overridden.  The findings and recommendations from the Caller Report needed to be fully addressed and progress monitored regularly.  The work of the Caller Review Working Group needed to be meaningful and properly scrutinised by Audit Committee and that of the relevant Scrutiny Committees.  Robust mechanisms were needed to ensure that there were safe places where concerns could be voiced and heard along with procedures in place to deal with any breaches of the three lines of defence.

P. Topping commented that he had similar concerns to that of Councillor Jackson about where Audit Committee sat within the Annual Governance Statement but stated that the response from the Section 151 Officer had been extremely helpful in alleviating his initial concerns.  He asked if there was clarity in the minds of officers on the relationship and responsibilities of the Challenge Board, the Members’ Oversight Group, the Programme Group and Full Council and the reporting and information sharing between them.  J. Willis advised that it was very early on in the process with the Challenge Board just being established.  The Caller Report Action Plan was being broken down into much more granular detail to clearly identify for each recommendation the responsible officer, work packages, timescales and resources for delivery.  The overall aim was to ensure the Caller Review recommendations were delivered in a joined-up way.  However, expectations about timescales for implementing all of the recommendations from the Caller Report needed to be realistic.  There would be an important role for the Audit Committee to ensure that the longer term improvements were delivered in full and embedded in the organisation.

P. Topping commented on the recent changes to the Adult Social Care Partnership with Northumbria Healthcare NHS Foundation Trust, the new partnership with Harrogate and District NHS Foundation and creation of the Integrated Care Boards.  He suggested this may be an area of interest to Audit Committee because of all the recent changes within the NHS.  J. Willis agreed with the comments made and stated there were also a number of significant reforms happening in Adult Social Care such as the Fair Cost of Care Review and changes to charging arrangements which would need monitored to ensure services were not destabilised during the transition period.

RESOLVED that Audit Committee:

(a)      Approve the final Annual Governance Statement (shown in Appendix A)

(b)      Note the further planned improvement actions, to strengthen the Council’s governance arrangements following the?recent Independent Review of Governance (the ‘Caller Review’) and the issue of the S114 Report.

At this point Councillor Cessford left the meeting while the next item was to be considered.  C. Waddell declared an interest as he was the external auditor for West Yorkshire Pension Fund and therefore also left the meeting for the duration of the agenda item.