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Delivering Good Governance in Local Government Framework - a review of the key principles
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Delivering Good Governance in Local Government Framework - a review of the key principles

CIPFA has updated "Delivering Good Governance in Local Government: Framework", with effect from financial year 2016-17 (2016 Framework).  This blog is interested in the updated key principles as well as the requirements for the annual governance statement.

The previous CIPFA framework had been in effect ever since 2007 (with an addendum in December 2012) (2007 Framework).  During that period, local government has necessarily been transforming itself taking opportunities and overcoming challenges in the dual contexts of drastic economic downturn and significant changes in central government policy and legislation, not least in the direction of localism and local accountability. 

Local authorities must still prepare an annual governance statement (Statement), "in accordance with proper practices in relation to accounts" , i.e. the 2016 Framework , and critically review  their own unique governance structures each financial year, considering the extent to which those structures are effective and demonstrate in practice the key principles set out in the 2016 Framework. 

Whilst the content of the Statement is broadly the same as the 2007 Framework, the key principles underpinning it are substantially different from the principles in the 2007 Framework.  They reflect the desirability of behavioural shifts of emphasis towards greater transparency and local engagement, towards tighter financial control, value for money and risk-management, and towards outcomes-based vision, action-taking and performance. 

The key principles, set out in Chapter 6 of the 2016 Framework, are now:

  • Behave with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law;
  • Ensure openness and comprehensive stakeholder engagement;
  • Define outcomes in terms of sustainable economic, social, and environmental benefits;
  • Determine the interventions necessary to optimise the achievement of the intended outcomes
  • Develop the entity’s capacity, including the capability of its leadership and the individuals within it
  • Managing risks and performance through robust internal control and strong public financial management
  • Implement good practices in transparency, reporting, and audit to deliver effective accountability

The Statement should contain:

  • an acknowledgement of responsibility for securing sound governance arrangements
  • a brief but meaningful statement of review of the effectiveness of governance arrangements (Review)
  • a commitment to monitoring implementation of the agreed action plan 

The Review should comprise:

  • a description of the various governance roles and responsibilities within the governance structure of the local authority
  • a genuine assessment of the effectiveness of governance arrangements in supporting planned outcomes
  • an opinion on the level of assurance the governance arrangements can provide and as to their continuing fitness for purpose (in accordance with the 2016 Framework)
  • an agreed action plan, including actions taken and/or proposed, to deal with governance issues identified in the review
  • a report of how issues identified in the previous Statement have now been resolved

The local authority must  consider the findings of the Review by a committee or by members of the authority meeting as a whole and approve the Statement by resolution of a committee, or members of the authority meeting as a whole in advance of the approving the statement of accounts.

In addition, in accordance with the 2016 Framework, the Statement should:

  • add value to the local authority's governance
  • be focussed on planned outcomes and value for money, and related to the local authority's vision for the area
  • be signed by the leader and chief executive or equivalents
  • be included in the local authority's statement of accounts (as should the statement now required under section 54 of the Modern Slavery Act 2015)

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