Annual Governance Statement 2022-23
North Lanarkshire Council · 29 June 2023
Back to Audit and Scrutiny Panel — 29 June 2023 and its agenda
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref KH/SL Date 29/06/23 Annual Governance Statement 2022/23 From Katrina Hassell, Chief Officer (Business and Digital) E-mail HassellK@northlan.gov.uk Telephone 07903 096 121 Executive Summary The council is required to produce an Annual Governance Statement in line with The Local Authority Accounts (Scotland) Regulations 2014. This Statement requires to be included within the council’s Annual Accounts and it is subject to review by the external auditors as part of their year-end Annual Audit Report (AAR) process. The Statement for 2022/23, attached as Appendix 1, outlines the council’s governance arrangements for the last financial year and demonstrates how the council complies with the Delivering Good Governance in Local Government: Framework (2016). It also supports the council’s Best Value duty in terms of securing continuous improvement. Included in the Annual Governance Statement is the annual Internal Audit opinion from the Chief Officer (Audit and Risk) on the council’s internal control systems which states that “reasonable assurance can be placed on the adequacy and effectiveness of the council’s framework of governance, risk management, and internal control for the year ended 31st March 2023”. The Annual Governance Statement is presented herewith for the consideration of the Audit and Scrutiny Panel. This has been prepared with evidence gathered from various different sources - which includes the annual opinion from the Chief Officer (Audit and Risk), the annual Assurance Statement / Checklist from each Chief Officer, and the review and refresh of the Chief Officer’s elements and mechanisms in the Strategic Governance Framework - to ensure that it properly reflects the effectiveness of the council’s governance arrangements during 2022/23. Recommendations It is recommended that the Audit and Scrutiny Panel: (1) Consider and note the Annual Governance Statement for 2022/23, and (2) Confirm the inclusion of the assurance statement regarding the management of the risk of fraud and corruption in the Annual Governance Statement for 2022/23, as set out in section 2.1.3 (3). The Plan for North Lanarkshire
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1. Background 1.1 The production of the council’s Annual Governance Statement is underpinned by statute through the Local Authority Accounts (Scotland) Regulations 2014: • Regulation 5(2) requires an authority to conduct a review at least once in each financial year of the effectiveness of its system of internal control. • Regulation 5(3) states that the findings from the review at 5(2) “must be considered at a meeting either of the local authority or of a committee of the local authority whose remit includes audit or governance functions”. • Regulation 5(4) requires that for a local authority in Scotland the statement is an annual governance statement. • Regulation 5(5) states that the annual governance statement must be signed by the Chief Executive and Leader of the Council. 1.2 Compliance with the legislation also ensures the council demonstrates its commitment to the good governance principles as set out in the Delivering Good Governance in Local Government: Framework (2016) and accompanying Guidance Notes for Scottish Local Authorities (2016) published by Chartered Institute of Public Finance and Accountancy (CIPFA) in association with Society of Local Authority Chief Executives (SOLACE). 1.3 The essence underpinning the Delivering Good Governance in Local Government: Framework is that local government develops and shapes its own approach to governance, taking account of the environment within which it operates. Within this context, it is therefore up to each local authority to: • Set out its commitment to the principles of good governance outlined in the Delivering Good Governance in Local Government: Framework. • Determine its own governance arrangements, or local code, underpinned by these principles. • Ensure that the local code operates effectively in practice. 1.4 In line with the Delivering Good Governance in Local Government: Framework all councils are required to test their governance arrangements (local code) against these principles by: • Reviewing existing governance arrangements. • Developing and maintaining an up to date local code of governance that takes into account the environment within which it operates and includes arrangements for ensuring ongoing effectiveness. • Reporting publicly on compliance with the local code on an annual basis, including how the governance arrangements have been monitored for effectiveness in the year and identifying planned changes. 1.5 The council’s own governance arrangements, or local code, is set out in the Strategic Governance Framework. The accompanying report to the Audit and Scrutiny Panel details the process in place for annual review, assessment, assurance, and reporting purposes and the role of the Strategic Governance Framework in terms of informing the Annual Governance Statement. Priority All priorities Ambition statement All ambition statements
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1.6 In line with the regulations set out in paragraph 1.1 and the good governance requirements outlined in paragraph 1,4, this report presents the Annual Governance Statement for 2022/23 to ensure due consideration by the Audit and Scrutiny Panel in line with the terms of reference for the Panel as set out in the Scheme of Administration “to review the Annual Governance Statement prior to approval 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”. 1.7 As part of the Annual Accounts for 2022/23, the Annual Governance Statement for 2022/23 is presented herewith for due consideration by the Audit and Scrutiny Panel in line with the requirement set out in paragraph 1.1 to ensure that the findings from the annual governance review are “considered at a meeting either of the local authority or of a committee of the local authority whose remit includes audit or governance functions”. Following Audit and Scrutiny Panel consideration, the Annual Governance Statement will be signed off by the Chief Executive and Leader of the Council. 2. Annual Governance Statement 2022/23 2.1 The Annual Governance Statement has been prepared with evidence gathered from various different sources to ensure that it properly reflects the effectiveness of the council’s arrangements during 2022/23. The information gathered to inform the evidence base is summarised in paragraphs 2.1.1 to 2.1.5 below. 2.1.1 Chief Officers have reviewed the effectiveness of governance arrangements within their area of responsibility by completing a Certificate of Assurance and updating a 78 point Checklist (covering the nine areas listed below) to support the preparation of statements on corporate governance and internal financial control for the year ending 31 March 2023: 1. The control environment. 2. Risk management. 3. Business planning, information, and reporting. 4. Financial control processes. 5. Project management. 6. Monitoring and corrective action. 7. Human resources. 8. Arm’s length bodies. 9. Assessing whether key controls have been applied during the year. Through this process Chief Officers have confirmed corporate governance arrangements and financial controls in their area of responsibility have been, and are, working well and there are (in their opinion) no significant matters arising which would require to be raised specifically in the Annual Governance Statement. 2.1.2 The council’s five arm’s length external organisations (ALEOs) have also reviewed the effectiveness of governance arrangements within their organisation by completing a Certificate of Assurance and updating a 61 point Checklist (covering areas 1 to 7 and 9 listed in paragraph 2.1.1 above) to support the preparation of the council’s statements on corporate governance and internal financial control for the year ending 31 March 2023. In this respect, the Chief Executive or Senior Representative for each of the ALEOs has confirmed corporate governance arrangements and financial controls in their
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organisation have been, and are, working well and there are (in their opinion) no significant matters arising which would require to be raised specifically in the council’s Annual Governance Statement. 2.1.3 In line with the guidance provided by the external auditors (Audit Scotland) in 2021, there are four specific CIPFA statements which the council is required to demonstrate it complies with in the Annual Governance Statement. (1) The CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). To enable the Chief Officer (Audit and Risk) to fulfil his role in this respect, the Corporate Management Team are required to ensure they “set out how the framework of assurance supports the Annual Governance Statement and identify internal audit’s role within it”. This assurance is provided through the Strategic Governance Framework which has undergone an annual review and refresh process in order to identify how the effectiveness of the council’s governance arrangements has been monitored and evaluated in the year, and which was endorsed by the Corporate Management Team at its meeting in June 2023. In line with the Public Sector Internal Audit Standards (PSIAS), and the council’s Internal Audit Charter, the Chief Officer (Audit and Risk) has provided an annual opinion on the “overall adequacy and effectiveness of the organisation’s framework of governance, risk management, and control”. Both the Business Management Team and Corporate Management Team considered and noted the Internal Audit annual report 2022/23 and annual opinion from the Chief Officer (Audit and Risk) on 8th and 16th June 2023 respectively. This report stated that the annual Internal Audit opinion is unqualified and offers a generally positive view of the council’s governance and internal control arrangements. More specifically the Internal Audit annual report 2022/23 states that it is the opinion of the Chief Officer (Audit and Risk) that “reasonable assurance can be placed on the adequacy and effectiveness of the council’s framework of governance, risk management, and internal control for the year ended 31st March 2023”. The CIPFA Statement considers this to be the most important output from the Chief Officer (Audit and Risk) and one of the main sources of objective assurance that the Chief Executive and the Corporate Management Team has to support the Annual Governance Statement. (2) CIPFAs Position Statement: Audit Committees in Local Authorities (2018). In this respect the activities and functions of the council’s Audit and Scrutiny Panel are required to reflect the standards set out in the CIPFA Statement. The Strategic Governance Framework sets out the evidence in this respect and confirms that during 2022/23 the purpose of the Audit and Scrutiny Panel was to “provide independent assurance to the council and those charged with governance on the adequacy of the council's risk management framework and internal control environment” and its activities included providing an “independent review of the council's governance, risk management, performance, and control frameworks and oversees the financial reporting and annual governance processes” - as set out in the Scheme of Administration (October 2022). The Panel’s specific duties are also reflected in the Scheme of Administration, in that it is the Panel’s remit to “review the Annual Governance Statement prior to
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approval and consider whether it properly reflects the risk environment and supporting assurances, taking in to account Internal Audit’s opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control.” (3) The CIPFA Code of Practice on Managing the Risk of Fraud and Corruption (2014). This statement looks for compliance in terms of developing a strategy and identifying the risks. In this respect the council has a number of policies and procedures in place as noted below: • Corporate Anti-Fraud Policy and Response Plan - last updated in June 2017. Findings reported to the Audit and Scrutiny Panel in May 2023, from an Internal Audit corporate governance review, show an update is underway and expected to be completed by October 2023. • Whistleblowing Procedure - last update approved in March 2023. • Gifts and Hospitality and Conflicts of Interest procedures for employees - guidance in this respect was incorporated into the Employee Code of Conduct in 2018. Chief Officers are required to maintain corresponding registers for their services that are submitted for review and assurance purposes annually. The 2022/23 review of Registers found no significant trends or issues of concern that required to be reported to the Corporate Management Team. • Employee Code of Conduct - last update approved in March 2021. Findings reported in May 2023 from an Internal Audit corporate governance review show an update is underway and due to be completed by September 2023. • Code of Conduct for Chief Officers - last update approved in June 2023. • Information Security Policy - last update approved in June 2023. • Cyber Security - a review and assessment was undertaken in February 2023 using a structured format (using templates and guidance created by the National Audit Office, National Cyber Security Centre (NCSC), and the Scottish Government). This assessment - categorised as reasonable assurance - determined the council has robust and effective information governance arrangements, duly recognises the risks associated with cyber security threats, and operates practices commensurate with the good practice recommended by bodies such as the National Audit Office. The identification of risks is carried out in line with the council’s Risk Management Strategy and through the risk for serious organised crime, fraud, and corruption which sits within the Corporate Risk Register. The Chief Officer (Legal and Democratic) - the council’s Monitoring Officer - is the identified lead for this risk. The CIPFA statement also requires responsibility to be acknowledged. In this respect the Internal Audit annual report 2022/23 from the Chief Officer (Audit and Risk) specifies that Internal Audit “has responsibility for investigating, as appropriate, alleged frauds and irregularities brought to our attention in accordance with the council’s anti-fraud policy. Where detailed work is carried out, the findings are reported to the Chief Executive and/or the relevant Chief Officer with recommendations made which are designed to address any weaknesses identified. Such work is reported to the Audit and Scrutiny Panel, as appropriate, in line with the approved Internal Audit reporting protocol which forms part of the Internal Audit Charter.” The Internal Audit annual report 2022/23 from the Chief Officer (Audit and Risk) has confirmed that “All audit investigations of suspected fraud and/or irregularities are reported to the Panel in line with the agreed Internal Audit reporting protocol. I am also pleased to be able to report that there were no material frauds or
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irregularities identified in 2022-23 that I require to bring to your attention”. Having considered information presented above to support the council’s arrangements to manage the risk of fraud and corruption and, in line with the CIPFA Statement, the Audit and Scrutiny Panel are asked to approve the following statement for inclusion in the Annual Governance Statement prior to signing off by the Chief Executive and Leader of the Council: “Having considered all the principles, I am satisfied that the organisation has adopted a response that is appropriate for its fraud and corruption risks and commits to maintain its vigilance to tackle fraud”. (4) The CIPFA Statement on the role of the Chief Financial Officer in Local Government (2016). It is specified in this CIPFA Statement that the Annual Governance Statement is required to “address the authority’s arrangements for financial and internal control and for managing risk”. This is addressed through the annual audit opinion provided by the Chief Officer (Audit and Risk), referenced above. The extent of the council’s compliance in this respect (and the role of the Chief Financial Officer therein) is further demonstrated through the biennial self- evaluation exercise (undertaken in 2022) which concluded that the council’s financial management practices comply with all aspects of the CIPFA Financial Management Code. The self-evaluation also confirmed that the council’s Chief Financial Officer operates in a way that is consistent with the CIPFA Statement. 2.1.4 Various self-evaluation exercises have been undertaken as part of the council’s governance, performance management, and continuous improvement arrangements. This has been undertaken in line with the Strategic Self-Evaluation Framework and rolling review programme which was approved by the Audit and Scrutiny Panel as at November 2022. During 2022/23 two self-evaluation exercises were completed in terms of the following. More detail in this respect is contained within the Annual Governance Statement. • Project management. • Risk governance arrangements in respect of DigitalNL. 2.1.5 The evidence has also included an annual review and refresh of the council’s Strategic Governance Framework and its supporting review programme which is set out in the accompanying report to the Audit and Scrutiny Panel. In this respect: • An annual review process is in place to fulfil the requirements of the national Delivering Good Governance in Local Government: Framework. This process also sets out the role of the Chief Officers and Elected Members who are responsible for determining and implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. • The annual review and update of the Strategic Governance Framework was endorsed by the Corporate Management Team at their meeting in June 2023 in line with their role to identify any improvement actions and/or future planned developments in relation to key governance arrangements and continuous improvement activity. • In line with the annual review process, each of the elements and mechanisms within the Strategic Governance Framework have been reviewed with updates made as required to the relevant documentation and hyperlinks, as well as the review timeframe, date of next update, and assessment of the current position
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(which includes the corresponding RAG status). This process ensures all elements and mechanisms are as up to date as they require to be while providing a method by which to identify and prioritise items requiring to be reviewed and updated further. • The annual assessment process in place through the Strategic Governance Framework and its accompanying review programme has been recognised as an area of good practice in the latest two annual Internal Audits on Corporate Governance. In May 2023 it was cited that there are “formal and generally robust arrangements in place to ensure that such reviews are undertaken on an annual basis”. • The Internal Audit on Corporate Governance also reported in May 2023 on the assessment of the council’s local code against the Delivering Good Governance in Local Government: Framework and found that this process was “generally robust”. The findings also noted that the assessment had indicated a “high level of compliance with the Corporate Governance framework, which was broadly consistent with Internal Audit’s assessment of Principles C and D”. 2.2 The evidence presented above in section 2.1 (paragraphs 2.1.1 to 2.1.5), and the results of these processes, are considered sufficient to support the Chief Executive and the Leader of the Council signing the Annual Governance Statement (after due consideration by the Audit and Scrutiny Panel) and stating that reasonable assurance can be placed on the adequacy and effectiveness of the corporate governance systems operating within the council, and that the council complies with relevant corporate governance principles in all significant respects. Next steps 2.3 As part of the annual process, the Annual Governance Statement for 2022/23 will be reported publicly through the website to demonstrate the council’s compliance with the principles of good governance. Information will also be included to demonstrate how the governance arrangements have been monitored for effectiveness in the year and planned changes will be identified. 3. Measures of success 3.1 Measures of success include the production of an Annual Government Statement in line with the Local Authority Accounts (Scotland) Regulations 2014 and Delivering Good Governance in Local Government: Framework (2016). This includes that is reviewed by the Corporate Management Team who agree its submission to the Audit and Scrutiny Panel, signed off by the Chief Executive and Council Leader, approved by the Audit and Scrutiny Panel, included in the Annual Accounts, and reported publicly on the council’s website. 4. Supporting documentation 4.1 Appendix 1 - Annual Governance Statement 2022/23 Katrina Hassell Chief Officer (Business and Digital)
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The Delivering Good Governance in Local Government: Framework (2016) positions the attainment of sustainable economic, societal, and environmental outcomes as a key focus of governance processes and structures. As such this is reflected in the Strategic Governance Framework. If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Development and publication of the Annual Governance Statement ensures the council complies with the CIPFA Statement on the Role of the Chief Financial Officer in Local Government 2016 in terms of financial controls. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☒ No ☐ If Yes, have all relevant legal impacts been discussed and agreed with Legal and Democratic? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Production of the council’s Annual Governance Statement is underpinned by statute through the Local Authority Accounts (Scotland) Regulations 2014, as noted in paragraph 1.1. 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk
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Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The Delivering Good Governance in Local Government: Framework (2016) positions the attainment of sustainable economic, societal, and environmental outcomes as a key focus of governance processes and structures. As such this is reflected in the Strategic Governance Framework. 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Through publication of the Annual Governance Statement on the website, the council will ensure it meets the requirements to report publicly on compliance with the principles of good governance. 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Development and publication of the Annual Governance Statement in line with the Local Authority Accounts (Scotland) Regulations 2014, the principles set out within the Delivering Good Governance in Local Government: Framework (2016), and in line with the Best Value duty, contributes towards the mitigation of the risk on the Corporate Risk Register for Governance, Leadership, and Decision Making. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒
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If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐
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Appendix 1 Annual Governance Statement 2022/23 1. Scope of responsibility 1.1 North Lanarkshire Council is committed to ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded, properly accounted for, and used economically, efficiently, and effectively. 1.2 The council also has a duty under the Local Government in Scotland Act 2003 to demonstrate Best Value by securing continuous improvement in performance. Good governance is central to meeting Best Value obligations as effective governance and accountability arrangements, with openness and transparency in decision-making, schemes of delegation, and effective reporting of performance are essential for taking informed decisions and ensuring effective scrutiny of performance and stewardship of resources. 1.3 To maintain compliance in terms of ensuring good governance and delivering continuous improvement, the council has adopted the principles and requirements of the Delivering Good Governance in Local Government: Framework (2016) and accompanying Guidance Notes for Scottish Local Authorities (2016) published by Chartered Institute of Public Finance and Accountancy (CIPFA) in association with Society of Local Authority Chief Executives (SOLACE). 1.4 To ensure its good governance arrangements are sound and the highest standards are met, the council has set out its commitment to the national principles of good governance by determining its own governance structure (local code) underpinned by these principles. This local code is set out in the Strategic Governance Framework. 1.5 In discharging these duties Chief Officers and Elected Members are responsible for determining and implementing the council’s governance arrangements and ensuring the local code, the Strategic Governance Framework, is assessed on an annual basis to ensure ongoing effectiveness and compliance. 1.6 To support the discharge of these duties, the council has arrangements in place through the senior management team structure which includes a four weekly Business Management Team meeting which is responsible for monitoring the efficient and effective operation of the council and ensuring that pursuit of the long-term vision set out in The Plan for North Lanarkshire is underpinned with the relevant assurances and corporate governance controls. Standing agenda items for finance, governance, risk, performance, and human resources further demonstrates the ongoing commitment to ensuring corporate governance arrangements are in place and remain effective. The ongoing commitment of the Corporate Management Team is demonstrated through their evaluation role in the annual review of the Strategic Governance Framework. 1.7 Independent and objective assurances are provided by Internal Audit whose function is designed to add value and improve the council’s operations. This in turn helps the council accomplish its strategic ambitions by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of the council’s risk management, internal control, and governance processes. The council’s internal audit arrangements are consistent with the CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). 1.8 Internal Audit activity is planned to enable an independent opinion to be given by the Chief Officer (Audit and Risk) on the adequacy and effectiveness of internal controls within the council, including the systems designed to achieve the strategic ambitions of the council and those that manage the material risks faced by the council. It is noted,
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however, that the presence of an effective internal audit function contributes towards, but is not a substitute for, effective control. It is primarily the responsibility of line management to establish internal controls so that council activities are conducted in an efficient and well-ordered manner, to ensure that management policies and directives are adhered to and that assets and records are safeguarded. 1.9 The purpose of the Audit and Scrutiny Panel, whose activities and functions comply with the standards set out in CIPFA’s Position Statement: Audit Committees in Local Authorities (2018), is to provide independent assurance to the council and those charged with governance on the adequacy of the council's risk management framework and internal control environment. In this respect, the Panel is responsible for providing an independent review of the council's governance, risk management, performance, and control frameworks, and overseeing the financial reporting and annual governance processes. It oversees the council's internal and external audit arrangements, helping to ensure efficient and effective assurance arrangements are in place. It also undertakes the scrutiny function within the council’s governance framework and undertakes in-depth examination of particular areas of policy and/or service delivery with a view to making recommendations for improvement. 1.10 This statement also covers the organisations consolidated in the council’s Group Accounts. 2. Strategic Governance Framework 2.1 Aligned to the national Delivering Good Governance in Local Government: Framework, the council’s local code of governance is set out in the Strategic Governance Framework which was initially approved by the Audit and Scrutiny Panel in February 2020 and has been subject to a review and refresh process annually thereafter. The Strategic Governance Framework sets out the elements and mechanisms which form the council’s local code of governance and demonstrates North Lanarkshire Council’s commitment to the principles of good governance. 2.2 The Strategic Governance Framework is one of six inter-related strategic frameworks that aim to maintain a corporate one council approach across the organisation. They are key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work, while ensuring each stage of delivery towards achieving the overall vision is appropriately planned, guided, implemented, and governed. 2.3 The council recognises that a crucial aspect in delivering good governance is the way that it is applied. The ethos of good governance cannot be achieved by structures, rules, and procedures alone. Effectively, good governance needs to be embedded within the council and its culture and the need for, and value of, good governance must be explicit. As such, any references that require to be made to any one of the frameworks supporting The Plan for North Lanarkshire references them all together for completeness and to raise awareness of the role of good governance in delivering the strategic ambition. The role of, and need for, good governance is also reiterated in the Guidance accompanying the Report Template which requires to be used for all council internal reporting purposes. More importantly, the Strategic Governance Framework review and refresh process carried out by the Corporate Management Team annually ensures that good governance is supported from the top of the organisation. 2.4 The Strategic Governance Framework outlines the elements and mechanisms in place to ensure appropriate oversight and governance of The Plan for North Lanarkshire and supporting Programme of Work and enable the council to monitor the delivery of its ambitions while ensuring arrangements for corporate governance, risk management, and internal financial controls are sound. This is based on the following: • Identifying and setting out the council’s long-term strategic ambition and priorities in The Plan for North Lanarkshire and ensuring the vision for inclusive growth and prosperity for all is embedded throughout all other policy statements agreed by the council, as well as all
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strategic management, service delivery, and corporate governance approaches. • Establishing the six inter-related strategic frameworks (Policy, Governance, Performance, Self-Evaluation, Project Management, and Demonstrating Improved Outcomes for Communities) that aim to maintain a corporate one council approach across the organisation, and ensuring these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work through a regular review and refresh programme. • Establishing a strategic planning process through the Programme of Work which is framed within the context of the local demographic, social, and economic profile that shaped The Plan for North Lanarkshire. This approach enables a recurring, dynamic, and cohesive approach to developing the programmes, projects, and activities required to realise the vision for inclusive growth and prosperity for all, with corresponding arrangements in place (through the Strategic Policy Framework) to ensure a consistent approach to establishing the strategies, policies, and plans required to achieve the intended outcomes. • Standing Orders that allow the council to delegate decision making to committees, sub- committees, or officers and sets out the rules which apply to the running and operation of council and committee meetings. • A Scheme of Administration which clearly sets out functions, terms of reference, and powers of the council and its committees and sub-committees and which is aligned to the organisational structure to facilitate decision making in line with the council’s strategy. • A Scheme of Delegation to Officers which sets out the functions delegated to the Chief Officers of the council. • Financial Regulations and a Scheme of Financial Delegation which, as an integral part of the council’s framework of internal financial controls, are designed to ensure effective stewardship of council funds. Compliance with these regulations ensures that public money is safeguarded and properly accounted for, and all financial transactions are undertaken in a manner which demonstrates openness, transparency, and integrity. The Financial Regulations form a key part of the overarching Financial Strategy and the corporate governance arrangements of the council. • The Financial Strategy which is the overarching framework that establishes the financial strategies and policies to ensure effective financial governance, planning, and management and, as such, sets out the responsibility for safeguarding public funds within the council. It also sets out the role and responsibilities of the Chief Financial Officer, in line with the corresponding CIPFA Statement (2016). The strategies and policies covered by the Financial Strategy include the Capital Strategy, Treasury Management Strategy, Revenue Budget Strategy, the Medium-Term Financial Plan, and the Financial Regulations and Scheme of Financial Delegation. • A Risk Management Strategy which sets out a clear direction for how the council will identify, assess, and manage the risks faced in providing high quality public services and delivering The Plan for North Lanarkshire. The strategy is intended to ensure that the council is risk aware rather than risk averse and that the management of risk is embedded in the council’s policies, procedures, culture, and practices. It is designed to ensure that key decisions are taken with an understanding of risks and their effective control. • Risk management arrangements which form an important element of good corporate governance and are designed to ensure that the council operates systematic and logical processes for managing risks within a comprehensive framework, ensuring that identified risks are managed consistently, effectively, efficiently, and coherently across the organisation. These arrangements include regular oversight of the council’s risk management arrangements and management of key corporate risks by the Audit and Scrutiny Panel. • Codes of Conduct for Elected Members, Chief Officers, and Employees which provide frameworks within which individuals are expected to undertake their duties in a manner which meets the required standards for good governance. This includes ensuring declarations of interests, and declarations for conflicts of interest and gifts and hospitality, are appropriately (and regularly) made and published. • Ensuring legislative obligations are fulfilled through the statutory officer roles, i.e. the posts of head of paid service, monitoring officer, chief financial officer (section 95 officer), and the chief social work officer. • An Anti-Fraud Policy and Fraud Response Plan which sets out the council’s expectations (that extends to all individuals and organisations with whom it deals) in terms of acting honestly and with integrity and in safeguarding public resources. • A Whistleblowing Procedure which provides a mechanism for employees of the council, and other workers within the council, to report a concern about serious wrongdoing within the council and to do so with security and in confidence. • A senior management team structure which comprises a Business Management Team (to monitor the efficient and effective operation of the council and ensure pursuit of the long-term vision set out in The Plan for North Lanarkshire is underpinned with the relevant assurances and controls in terms of corporate governance, risk management, and financial
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management), and a Corporate Management Team (to ensure strategic oversight, direction, and a one council approach in terms of delivery of the vision through the Programme of Work. This is supported by a meetings structure comprising service Senior Management Teams focussing on the operational delivery of service remits, and an Operational Management Team to cascade the context, deliverables, and accountabilities and ensure consistency of message in terms of the long-term vision and day to day delivery through the Programme of Work. All Chief Officers are members of the Corporate Management Team; this includes those Chief Officers who hold a statutory officer role. • An Audit and Scrutiny Panel whose activities and functions comply with the standards set out in CIPFA’s Position Statement: Audit Committees in Local Authorities (2018), and whose purpose is to provide independent assurance to the council and those charged with governance on the adequacy of the council's risk management framework and internal control environment. • A Strategic Performance Framework which sets out performance measurement at three levels in order to collectively provide an overview of performance (over time and compared to targets) to help understand the impact of council activities on improving services and outcomes for the people and communities of North Lanarkshire. These measures also allow for day to day activities, and progress towards achieving the long-term vision set out in The Plan for North Lanarkshire, to be regularly monitored, reported, assessed, and scrutinised. • Formal reporting arrangements through an annual Performance Reporting Schedule that comprises Chief Officer reviews at service committees, corporate reporting, and service specific reporting to meet both business and statutory obligations and which is underpinned by five non-negotiable standards that support regular performance assurance reviews. • Comprehensive revenue budget and capital expenditure guidelines, with well-established processes and systems to ensure regular monitoring and reporting, as well as oversight and scrutiny through the senior management team structure of meetings and Elected Members. • A range of programme and project Boards and working groups aligned to the delivery and governance requirements for specific Programme of Work items, e.g. Strategic Capital Delivery Group, DigitalNL, Hub Delivery Programme Board, and Data Governance Board. • An Information Governance Policy Framework, comprising policies in terms of records and information management, data protection, information handling and classification, information risk, information security, and payment card industry data security to ensure proper recording of information, appropriate access to that information including by the public, and compliance with legislation. • An Information Security Policy which includes cyber security and aims to protect the council’s information systems and physical assets including supporting processes, networks, and equipment. This is essential to ensure the council can continue to operate and successfully deliver its functions, while finding the right balance between the benefits and risks to the processing of information. • Publicly available complaints and freedom of information procedures with management, monitoring, and performance reporting arrangements. • A range of employment and other policies, and associated guidance documents and forms, which promote and support ethical behaviour and standards of conduct by employees. An employee Performance Review and Development (PRD) process and access to a range of training and development programmes and opportunities through LearnNL for both employees and Elected Members. • Workforce plans that include an analysis of the risks and issues facing the current workforce and identify the gaps in terms of fulfilling service provision and delivering on priorities and the long-term vision in the future. • Independent and objective assurances provided by Internal Audit whose function is designed to add value and improve the council’s operations. The Internal Audit function operates within the Public Sector Internal Audit Standards (PSIAS) and the council’s Internal Audit Charter. The service undertakes an annual programme of work approved by the Audit and Scrutiny Panel which is based on the Internal Audit Annual Plan. This plan is risk based and is periodically updated to reflect evolving issues and changes. • Independent and objective assurances provided by the external auditors through the Annual Audit Report (AAR) process and other audit, inspection, and regulatory bodies. 3. Review of effectiveness of governance arrangements 3.1 The Annual Governance Statement has been prepared with evidence gathered from various different sources to ensure that it properly reflects the effectiveness of the council’s arrangements during 2022/23. The information gathered to inform the evidence base is summarised in paragraphs 3.1.1 to 3.1.6 below.
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3.1.1 Chief Officers have reviewed the effectiveness of governance arrangements within their area of responsibility by completing a Certificate of Assurance and updating a 78 point Checklist (covering: the control environment, risk management, business planning / information / reporting, financial control processes, project management, monitoring and corrective action, human resources, arm’s length bodies, and assessing whether key controls have been applied during 2022/23) to support the preparation of the council’s statements on corporate governance and internal financial control for the year ending 31 March 2023. • Through this process Chief Officers have confirmed corporate governance arrangements and financial controls in their area of responsibility have been, and are, working well and there are (in their opinion) no significant matters arising which would require to be raised specifically in the Annual Governance Statement. 3.1.2 The council’s five arm’s length external organisations (ALEOs) have also reviewed the effectiveness of governance arrangements within their organisation by completing a Certificate of Assurance and updating a 61 point Checklist to support the preparation of the council’s statements on corporate governance and internal financial control for the year ending 31 March 2023. • In this respect, the Chief Executive or Senior Representative for each of the ALEOs has confirmed corporate governance arrangements and financial controls in their organisation have been, and are, working well and there are (in their opinion) no significant matters arising which would require to be raised specifically in the council’s Annual Governance Statement. 3.1.3 Compliance with four specific CIPFA statements. (1) The CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). To enable the Chief Officer (Audit and Risk) to fulfil his role in this respect, the Corporate Management Team are required to ensure they “set out how the framework of assurance supports the Annual Governance Statement and identify internal audit’s role within it”. This assurance is provided through the Strategic Governance Framework which has undergone an annual review and refresh process in order to identify how the effectiveness of the council’s governance arrangements has been monitored and evaluated in the year, and which was endorsed by the Corporate Management Team at its meeting in June 2023. In line with the Public Sector Internal Audit Standards (PSIAS), and the council’s Internal Audit Charter, the Chief Officer (Audit and Risk) has provided an annual opinion on the “overall adequacy and effectiveness of the organisation’s framework of governance, risk management, and control”. Both the Business Management Team and Corporate Management Team considered and noted the Internal Audit annual report 2022/23 and annual opinion from the Chief Officer (Audit and Risk) on 8th and 16th June 2023 respectively. This report states that the annual Internal Audit opinion is unqualified and offers a generally positive view of the council’s governance and internal control arrangements. More specifically the Internal Audit annual report 2022/23 states that it is the opinion of the Chief Officer (Audit and Risk) that “reasonable assurance can be placed on the adequacy and effectiveness of the council’s framework of governance, risk management, and internal control for the year ended 31st March 2023”. (2) CIPFAs Position Statement: Audit Committees in Local Authorities (2018). In this respect the activities and functions of the council’s Audit and Scrutiny Panel are required to reflect the standards set out in the CIPFA Statement. The Strategic Governance Framework sets out the evidence in this respect and confirms that during 2022/23 the purpose of the Audit and Scrutiny Panel was to “provide independent assurance to the council and those charged with governance on the adequacy of the council's risk management framework and internal control
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environment” and its activities included providing an “independent review of the council's governance, risk management, performance, and control frameworks and oversees the financial reporting and annual governance processes” - as set out in the Scheme of Administration (October 2022). The Panel’s specific duties are also reflected in the Scheme of Administration, in that it is the Panel’s remit to “review the Annual Governance Statement prior to approval and consider whether it properly reflects the risk environment and supporting assurances, taking in to account Internal Audit’s opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control.” (3) The CIPFA Code of Practice on Managing the Risk of Fraud and Corruption (2014). This statement looks for compliance in terms of developing a strategy and identifying the risks. In this respect the council has a number of policies and procedures in place as noted below: • Corporate Anti-Fraud Policy and Response Plan - last updated in June 2017. Findings reported to the Audit and Scrutiny Panel in May 2023, from an Internal Audit corporate governance review, show an update is underway and expected to be completed by October 2023. • Whistleblowing Procedure - last update approved in March 2023. • Gifts and Hospitality and Conflicts of Interest procedures for employees - guidance in this respect was incorporated into the Employee Code of Conduct in 2018. Chief Officers are required to maintain corresponding registers for their services that are submitted for review and assurance purposes annually. The 2022/23 review of Registers found no significant trends or issues of concern that required to be reported to the Corporate Management Team. • Employee Code of Conduct - last update approved in March 2021. Findings reported in May 2023 from an Internal Audit corporate governance review show an update is underway and due to be completed by September 2023. • Code of Conduct for Chief Officers - last update approved in June 2023. • Information Security Policy - last update approved in June 2023. • Cyber Security - a review and assessment was undertaken in February 2023 using a structured format (using templates and guidance created by the National Audit Office, National Cyber Security Centre (NCSC), and the Scottish Government). This assessment - categorised as reasonable assurance - determined the council has robust and effective information governance arrangements, duly recognises the risks associated with cyber security threats, and operates practices commensurate with the good practice recommended by bodies such as the National Audit Office. The identification of risks is carried out in line with the council’s Risk Management Strategy and through the risk for serious organised crime, fraud, and corruption which sits within the Corporate Risk Register. The Chief Officer (Legal and Democratic) - the council’s Monitoring Officer - is the identified lead for this risk. The CIPFA statement also requires responsibility to be acknowledged. In this respect the Internal Audit annual report 2022/23 from the Chief Officer (Audit and Risk) specifies that Internal Audit “has responsibility for investigating, as appropriate, alleged frauds and irregularities brought to our attention in accordance with the council’s anti-fraud policy. Where detailed work is carried out, the findings are reported to the Chief Executive and/or the relevant Chief Officer with recommendations made which are designed to address any weaknesses identified. Such work is reported to the Audit and Scrutiny Panel, as appropriate, in line with the approved Internal Audit reporting protocol which forms part of the Internal Audit Charter.” The Internal Audit annual report 2022/23 from the Chief Officer (Audit and Risk) has confirmed that “All audit investigations of suspected fraud and/or irregularities are
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reported to the Panel in line with the agreed Internal Audit reporting protocol. I am also pleased to be able to report that there were no material frauds or irregularities identified in 2022-23 that I require to bring to your attention”. (4) The CIPFA Statement on the role of the Chief Financial Officer in Local Government (2016). It is specified in this CIPFA Statement that the Annual Governance Statement is required to “address the authority’s arrangements for financial and internal control and for managing risk”. This is addressed through the annual audit opinion provided by the Chief Officer (Audit and Risk), referenced above. The extent of the council’s compliance in this respect (and the role of the Chief Financial Officer therein) is further demonstrated through the biennial self-evaluation exercise (undertaken in 2022) which concluded that the council’s financial management practices comply with all aspects of the CIPFA Financial Management Code. The self-evaluation also confirmed that the council’s Chief Financial Officer operates in a way that is consistent with the CIPFA Statement. 3.1.4 Various self-evaluation exercises have been undertaken as part of the council’s governance, performance management, and continuous improvement arrangements. This has been undertaken in line with the Strategic Self-Evaluation Framework and rolling review programme which was approved by the Audit and Scrutiny Panel as at November 2022. During 2022/23 two self-evaluation exercises were completed in terms of: • Project management. This self-evaluation supported the review and refresh of the corporate project management model to ensure the council’s arrangements remain fit for purpose and able to effectively support delivery of The Plan for North Lanarkshire. This followed recommendations arising from Internal Audit reports on managing strategic change and the governance of capital projects. The review was also considered necessary in light of the changes in the council’s operating environment since the implementation of the model in 2018. These changes had led to a rapid evolution of programmes and projects across the council, as well as increasing complexities in the delivery of many of these, and a growing need for good governance and good project management to set up and deliver a wider range of projects at pace and scale (particularly during the pandemic), and ensure these are well-directed, delivered to time, cost, and quality targets, and provide the expected benefits and improved local outcomes. To support the review, a group was established comprising officers from across council services with practical on the ground experience of project management in both construction and non-construction projects. Following work to collate and analyse the information collected through the review, five themes on areas for improvement consistently emerged. Three of the areas for improvement related to the development of the refreshed Project Management Framework which was completed and published across the council in December 2022. One area for improvement related to ongoing training, staff learning and development, and awareness raising in line with the refreshed Framework for which a programme was launched council wide in March 2023. A series of full day training courses (aimed at employees with no project management experience, new to the council, or for those who required a refresher) and half day training courses (aimed at employees with some project management experience, or for those who are currently responsible for delivering on council projects) is now in place for the remainder of 2023. The remaining area for improvement relates to enhancing opportunities for more collaboration, sharing, and learning for which a Yammer site has been established for further development and roll out later in 2023. • Risk governance arrangements in respect of DigitalNL. This self-evaluation supported the annual review of the existing risk management arrangements and risks for both the DigitalNL programme and Business and Digital. In light of the fast evolving environment and many moving parts within which the service’s wide range of programmes and projects operate - programmes and projects which often call upon the same resources - it was considered essential that the Business and Digital
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risk profile be considered as a composite in order to continue to facilitate good governance and proactively support delivery of the actions that will enable achievement of the digital ambition. The findings from the self-evaluation exercise were reported to the Business and Digital Delivery Board in December 2022. Three areas for improvement were identified for the improvement plan (ensuring a central approach to capturing / updating / reviewing / discussing / managing all risks together, deploying the one approach across the whole of Business and Digital, and ensuring ongoing learning, development, and action). Implementation of these areas for improvement will be monitored by the Business and Digital Delivery Board to ensure they have oversight of all inter-related risks and issues and the supporting risk management arrangements. 3.1.5 The evidence has also included an annual review and refresh of the council’s Strategic Governance Framework. In this respect: • An annual review process is in place to fulfil the requirements of the national Delivering Good Governance in Local Government: Framework. This process also sets out the role of the Chief Officers and Elected Members who are responsible for determining and implementing the council’s governance arrangements and ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance. • The annual review and update of the Strategic Governance Framework was endorsed by the Corporate Management Team at their meeting in June 2023 in line with their role to identify any improvement actions and/or future planned developments in relation to key governance arrangements and continuous improvement activity. • In line with the annual review process, each of the elements and mechanisms within the Strategic Governance Framework have been reviewed with updates made as required to the relevant documentation and hyperlinks, as well as the review timeframe, date of next update, and assessment of the current position (which includes the corresponding RAG status). This process ensures all elements and mechanisms are as up to date as they require to be, while providing a method by which to identify and prioritise items requiring to be reviewed and updated further. • The annual assessment process in place through the Strategic Governance Framework and its accompanying review programme has been recognised as an area of good practice in the latest two annual Internal Audits on Corporate Governance. In May 2023 it was cited that there are “formal and generally robust arrangements in place to ensure that such reviews are undertaken on an annual basis”. • The Internal Audit on Corporate Governance also reported in May 2023 on the assessment of the council’s local code against the Delivering Good Governance in Local Government: Framework and found that this process was “generally robust”. The findings also noted that the assessment had indicated a “high level of compliance with the Corporate Governance framework, which was broadly consistent with Internal Audit’s assessment of Principles C and D”. 3.1.6 Comments made by the external auditors and other audit and inspection bodies, feedback from Elected Members and committees in their scrutiny role, and issues considered by the Audit and Scrutiny Panel in line with their audit, governance, and scrutiny roles. 4. Continuous improvement 4.1 The Plan for North Lanarkshire sets the long-term strategic direction for the council, partners, and other stakeholders and, most importantly, for each unique local community and the people who Live, Learn, Work, Invest, and Visit within North Lanarkshire. It’s a Plan with a shared ambition of inclusive growth and prosperity for all and a fairer distribution of wealth across all local communities. The Plan provides a very clear and compelling narrative for the shared ambition which the council (and partners) are working towards; a narrative that has become well embedded throughout the strategic management, service delivery, and corporate governance approaches across the council.
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4.2 The vision was shaped by the area’s demographic, social, and economic profile which at the time showed a positive picture in terms of economic growth, inward investment, employment, and educational attainment, but still unacceptably high levels of deprivation and child poverty and clear areas of inequity and inequality. This meant that not all North Lanarkshire’s people were sharing equally in the improving picture, and there was an element of social exclusion across some towns and communities. A suite of 28 high level health check indicators was therefore identified to collectively provide the context for North Lanarkshire as a place. Since The Plan for North Lanarkshire was established in 2019, these indicators have continued to provide a robust, consistent, and independent way of assessing progress - the most recent results were reported to the Policy and Strategy Committee in March 2023. The suite of indicators has also played an important role in terms of informing the council’s strategic planning process through the Programme of Work. 4.3 As the delivery vehicle for the shared ambition, the Programme of Work provides a roadmap for work across council services and with partners. An annual strategic planning process enables a recurring and dynamic approach to realising the shared ambition. It enables delivery of the long-term vision to be informed by a strategic planning process that is framed within the context of the local demographic, social, and economic profile that shaped The Plan for North Lanarkshire, as well as the latest national policy changes and developments. This process also ensures a more targeted and cohesive approach to establishing the programmes, projects, and activities required to achieve the intended outcomes. 4.4 Achievements to date (reported to the Policy and Strategy Committee in March 2023) highlight developments that are key to creating the economic, social, and community conditions that will enable local people and communities (and the place that is North Lanarkshire) to thrive. These focus on the investment made to establish the solid foundations required to support the place based ambition. This includes the provision of high quality housing, hubs at the heart of local communities, transformations to town centres, and enhancements to active green spaces to bring physical and mental benefits. This is supported by growing transport links, an enhanced digital infrastructure, and a network of active travel routes, all of which is aimed at boosting the local economy, attracting inward investment, securing improved opportunities and outcomes for employment, education, housing, and leisure, and creating places where people want to Live, Learn, Work, Invest, and Visit. The council’s commitment made in 2022 - for itself and the area of North Lanarkshire - to achieve net-zero by 2030 through the Action on Climate Together 2030 Plan, aims to further support delivery of the place based ambition. 4.5 The fifth iteration of the Programme of Work (to 2028) was approved in March 2023. This longer-term approach reflected the need to reframe the Programme of Work in line with the latest North Lanarkshire context presented through the suite of 28 health check indicators. This evidence base shows positive trends in a number of key economic indicators (such as gross weekly pay, people claiming employment related benefits, and growth in North Lanarkshire’s economy), as well as significant improvements in educational attainment for all pupils gaining 5+ awards at level 6 and for pupils living in the 20% most deprived areas, leavers achieving a positive post school destination, and school exclusion rates. These trends were considered particularly significant given the extent of the impact of the pandemic that is evident in certain indicators. However the trends also show that challenges remain, reiterating the need for a new approach to the development of the fifth iteration of the Programme of Work. This was considered crucial to ensure a heightened and more strategic focus on not only sustaining the economic and community aspects, but also on ensuring a more targeted approach to improving social conditions and outcomes. 4.6 Sitting alongside the Programme of Work - as a key aspect of the council’s strategic planning framework - is the Strategic Policy Framework. This specifies the hierarchy of strategies, policies, and plans which underpin delivery of the long-term vision set out in The Plan for North Lanarkshire and ensures that strategy and policy remain connected to
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delivery in order to collectively facilitate a co-ordinated approach to identifying the resources and working practices needed to support delivery of the long-term vision. Through a structured approach, the Strategic Policy Framework aims to ensure that strategies, policies, and plans are formulated, developed, implemented, monitored, and reviewed in a consistent and transparent manner across the council. The annual update to the Strategic Policy Framework was approved by the Policy and Strategy Committee in March 2023. The supporting review programme ensures each of the strategies, policies, and plans are up to date, reviewed and updated at an appropriate interval, and reported to the relevant committee. A guidance document accompanies the Strategic Policy Framework to support the development and monitoring processes for strategies, policies, and plans, and ensure ongoing openness and engagement through stakeholder consultation. 4.7 Key to assessing the success of The Plan for North Lanarkshire and monitoring delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall ambitions is appropriately planned, guided, implemented, and governed) are six inter-related corporate frameworks: • Strategic Policy Framework • Strategic Governance Framework • Strategic Performance Framework • Strategic Self-Evaluation Framework • Project Management Framework • Framework for Demonstrating Improved Outcomes for Communities 4.8 To ensure these frameworks remain aligned to The Plan for North Lanarkshire and Programme of Work, all are on a regular review and refresh programme. This also helps the council to ensure it is proactive in responding to social, economic, and environmental trends and changes in legislation and governance, as well as the broad range of national policy changes and new developments. 4.9 The Strategic Governance Framework has been developed taking into account the local environment within which the council operates. It brings the principles of good governance together with legislative requirements and management processes by which the council is directed and controlled and through which it is accountable to, engages with, and leads the local community. This aims to ensure the council is able to effectively pursue the long-term ambition set out in The Plan for North Lanarkshire, while ensuring this is underpinned with control and the management of risk, and: • Resources are directed in accordance with agreed policies and according to priorities and in line with corporate project management procedures. • There is sound and inclusive decision making. • There is clear accountability for the use of those resources in achieving defined outcomes for service users and local communities. 4.10 The annual review process in place through the Strategic Governance Framework ensures that the council’s governance arrangements are regularly assessed for ongoing effectiveness within the context of The Plan for North Lanarkshire. 4.11 Aligned to the seven themes in the national Best Value guidance, the council’s Strategic Self-Evaluation Framework is framed around three questions (How well are we doing? How do we know? and How can we do better?) and supported by a rolling review programme. This approach provides a regular mechanism to assess the council’s functions and activities and identify areas for improvement within the context of fulfilling the vision set out in The Plan for North Lanarkshire. 4.12 The 2021/22 Annual Governance Statement reported on five self-evaluation exercises undertaken during the year (as noted below) for which the findings were relatively positive:
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• Compliance with the CIPFA Financial Management (FM) Code. • Adequacy and effectiveness of the revised Corporate Management Team arrangements. • Risk governance arrangements in respect of DigitalNL. • Whether the arrangements for the Data Governance Board (DGB) adequately contribute to the achievement of the council’s vision as detailed in the Roadmap. • The effectiveness of current arrangements for the North Lanarkshire health and social care IJB and how well the Board meets its intended outcomes. 4.13 These five self-evaluation exercises resulted in 18 areas for improvement being identified and captured in supporting improvement plans. In general these aimed to further strengthen existing arrangements, rather than address any significant issue in terms of effectiveness. 13 actions (on four of the improvement plans) have subsequently been implemented in full during 2022/23. Full implementation of the remaining actions in the fifth improvement plan has been impacted by a significant cross council file migration process which called upon the same resources as the actions in the improvement plan; progress in this respect is being managed through the Data Governance Board to ensure full implementation during 2023/24. 4.14 The Strategic Self-Evaluation Framework is reviewed and refreshed annually and the latest update in October 2022 introduced a corporate approach to Options Appraisal. While the use of options appraisal was already widespread across the council, a corporate approach was formalised at this time to ensure that the outcomes from such exercises continue to provide the relevant assurances that service provision is efficient and effective and represents value for money, and that decisions made remain consistent with the strategic direction for the council, as set out in The Plan for North Lanarkshire. 4.15 Six monthly reporting during 2022/23 has continued to provide the Audit and Scrutiny Panel with oversight and assurance that governance, financial monitoring, performance reporting, and risk management arrangements within the council’s Arm’s Length External Organisations (ALEOs) are progressing satisfactorily, are suitably robust, and provide assurance that service delivery reflects Best Value. The reports have also highlighted external impacts on company operations (such as any residual after-effects of the pandemic, inflation (particularly in terms of energy costs), and the cost of living crisis) and have identified company responses and safeguards put in place to maintain service delivery and ensure business continuity. 4.16 Following publication of the Accounts Commission’s Best Value Assurance Report (BVAR) for North Lanarkshire Council in May 2019, updates on implementation of the eight recommendations for improvement were reported to the Policy and Strategy Committee in September 2019 and again in March 2020. The report in March 2020 consolidated the eight improvement actions within the Programme of Work to strengthen a corporate and integrated approach to improvement that supports delivery of The Plan for North Lanarkshire. The external auditors Annual Audit Reports (AARs) have provided annual updates in this respect, with the most recent for 2021/22 (reported to the Audit and Scrutiny Panel in December 2022) concluding that two more of the improvement actions were now complete (i.e. six in total). The good progress made in implementing the recommendation in terms of the Strategic Performance Framework and reporting schedule (to support delivery of The Plan for North Lanarkshire and its scrutiny by Elected Members) was noted and this BVAR recommendation was subsequently completed by the end of 2022/23. The one remaining BVAR recommendation in terms of falling satisfaction levels reflects a moment in time that pre-dates the pandemic and, as such, discussions are underway with the external auditors in terms of its ability to be implemented in the post pandemic environment. 4.17 While the pandemic continued to impact on the council’s delivery of planned day to day activities and achievement of strategic priorities during 2021/22, it is recognised in the annual audit opinion from the Chief Officer (Audit and Risk) that 2022/23 saw a more typical and stable year for council operations. This supported the development of Workforce Plans during 2022/23 that included an analysis of the risks and issues facing
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the current workforce and identified the gaps in terms of fulfilling service provision and delivering on the priorities and long-term vision in the future. 4.18 The more stable operating environment also supported the further delivery of phase one of the Leadership and Operating Model to maximise the use of existing assets to provide shared hub facilities across local areas for the use of the council’s workforce. In this respect phase one directly supported the council’s future workplace ambitions and proposed hybrid working approach. It also provided the ability to review and refine the model and arrangements at an early stage by discovering what works through dialogue with services, teams, and individuals. The offer of additionality to office space, through the hub facilities, further supported the council’s recovery from the pandemic. 4.19 As part of the transition towards new town and community hubs, three early adopter hubs were introduced in phase one of the Leadership and Operating Model. The hubs have played a key role in supporting agile employees to access flexible workspaces, rebuild social connections, and reverse the social isolation experienced during the pandemic and improve health and wellbeing. This approach has also enabled communities to have more direct access to the services they need and meant that staff were closer to the communities they work in. This model supports the focus on creating a positive workplace experience for all employees and ensuring the council retains its position as an employer of choice in an increasingly competitive labour market context. In this respect a 12 months extension to the Hybrid Working Scheme (to March 2024) was approved at the Policy and Strategy Committee in March 2023 and a commitment was made to explore opportunities for a permanent scheme during this time, to provide increased flexibility for hybrid staff while ensuring performance, productivity, and employee wellbeing are maintained. 4.20 While 2022/23 may have seen a more stable year for council operations compared to recent years, recovery from pandemic changed the landscape within which The Plan for North Lanarkshire requires to be delivered. The impact of inflationary pressures (such as rising contract costs, availability of suppliers and service providers, increasing costs and availability of supply chain materials, and escalating energy prices) had implications on the ability of the council to maintain a seamless approach to delivering services and progressing capital programmes that seek to mitigate against the range of different and complex economic, social, and health issues that exist. Locally, inflationary pressures created significant cost of living implications for the people and communities of North Lanarkshire, exacerbating conditions for those in the most vulnerable situations. As such, in November 2022 a range of measures were agreed to be introduced to assist local residents with the cost of living crisis. This included drop in spaces, a helpline, provision of advice, guidance, and signposting through the creation of a website, and a range of media campaigns. 5. Current year issues arising from Internal Audit activity during 2022/23 5.1 In his Internal Audit annual report for 2022/23, presented to the Chief Executive and both the Business Management Team and Corporate Management Team in June 2023, the Chief Officer (Audit and Risk) provided an overview of the activities of the Internal Audit section for the year 2022/23. 5.2 This included highlights of issues arising from Internal Audit activity during the year. In this respect, the comments from the Chief Officer (Audit and Risk) were as follows: • A small number of audit assignments reported during 2022/23 offered only limited assurance. In all cases, management committed to a range of relevant improvement actions, some of which have already been completed. In this respect Internal Audit will continue to monitor progress on these issues during 2023/24 to provide senior management, and the Audit and Scrutiny Panel, with further assurance that relevant key controls are operating effectively. • In the 2021/22 Internal Audit annual report, the pandemic had meant the council had needed to respond to challenges arising from the public health emergency, often at
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quite short notice which had created consequential impacts on governance, internal control, and risk management arrangements. In the 2022/23 report, it is noted that 2022/23 saw a more typical and stable year for council operations. • The results from detailed Internal Audit work examining the council’s corporate governance arrangements suggest that compliance with the requirements of the corporate governance framework adopted by the council continued to be positive with no significant weaknesses or areas of concern highlighted. • Internal Audit work also suggests that despite significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the council. • Audit investigations of suspected fraud and/or irregularities are reported to the Audit and Scrutiny Panel in line with the agreed Internal Audit reporting protocol. In this respect, the Chief Officer (Audit and Risk) reported that there were no material frauds or irregularities identified in 2022/23 that required to be brought to the attention of the Audit and Scrutiny Panel. • While there are no issues that require the Chief Officer (Audit and Risk) to quality his annual opinion, there are a small number of areas highlighted which will continue to be the focus of future audit coverage: - A significant proportion of the council’s budget is spent on staff costs. The council’s arrangements for paying staff reflect the varied nature of the workforce and the complexity of the council’s terms and conditions. In recent years, Internal Audit has identified a number of areas where controls are inadequate or were not operating as intended. While these are not sufficiently material to require the overall audit opinion to be qualified, the assessment of the Chief Officer (Audit and Risk) is that the risks in this area, more generally, appear higher than previously considered and this will be reflected in future audit coverage. - Internal Audit has for a number of years been critical of the council’s performance reporting arrangements, particularly in relation to reporting on operational performance to Elected Members and other stakeholders. In 2022/23, a report was issued which provided only limited assurance and to which management provided a clear commitment to address weaknesses identified. In recent months, as part of wider revised approach to performance reporting, regular reports on performance are now being submitted to council committees. Future audit coverage will assess the adequacy and effectiveness of such reporting. - Internal Audit has been critical of the council failing to report progress on key projects and programme of work activities in a single place which would better allow stakeholders to exercise more effective monitoring, oversight, and scrutiny and to better hold senior management to account. Originally highlighted in December 2019 and subsequently in a number of other audit reports, progress addressing this recommendation has been slow. Changes in governance associated with the recently revised Programme of Work may provide greater scope for this to be addressed and Internal Audit will continue to monitor activity and update the Audit and Scrutiny Panel as management plans to address this become clearer. - The council recently approved a refreshed Programme of Work to 2028 and significant new internal governance structures designed to ensure the delivery, co- ordination, direction, and oversight of planned activities are planned. While the details of these new governance arrangements are still taking shape, Internal Audit will monitor future implementation and effectiveness of these arrangements as part of future audit work, once they are finalised and operational. - Recent work on contract management identified a number of issues requiring to be addressed by management, including ensuring awareness by relevant staff of expected roles and responsibilities and the need to introduce more effective compliance monitoring arrangements. Given the key role effective contract and supplier management plays in ensuring that the council can deliver against its operational and strategic ambitions, Internal Audit will continue to monitor planned management actions in this area to ensure that these are implemented and deliver more consistent compliance with corporate expectations. - In recent years, Internal Audit work has seen an increasing number of areas where they have identified inadequate management oversight and/or
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understanding of the extent of compliance with key management arrangements and/or the effectiveness of key controls. In a number of areas, Internal Audit reports provided management with information on failures to comply with expected controls, procedures or guidance that should reasonably have been identifiable at an earlier stage if line management’s own arrangements were more robust. Given the irregular and/or cyclical nature of Internal Audit’s coverage and consistent with the Three Lines of Defence Model, they will continue to challenge management across the range of their planned audit work about how they themselves routinely gain assurance on compliance and the effectiveness of identified key controls. 5.3 Overall, the Chief Officer (Audit and Risk) reported that he was satisfied that the council’s internal control and governance arrangements remained adequate and appropriately robust throughout 2022/23. 6. Previous year issues - 2021/22 6.1 The table below outlines issues identified during the Internal Audit programme of work for the previous year, 2021/22. An update providing details of the actions taken to address each issue has also been included. Issue raised Action taken Programme of Work reports to committee are considered not to always easily allow elected members to monitor and/or assess progress against plans (timescales and budgets). Similarly, there is currently no mechanism to easily allow senior management to review progress across the range of Programme of Work activities. Management has previously committed to improving the ability of key stakeholders to monitor the progress of major projects / programme of work activities. As reported to the Audit and Scrutiny Panel in May 2023 - through the Internal Audit report which follows up on actions previously agreed by management in response to audit recommendations - the recent changes in the council’s governance arrangements will impact on the oversight and reporting of key corporate projects. The Programme of Work to 2028 (approved at the Policy and Strategy Committee in March 2023) now comprises seven overarching themes which require to be integrated and aligned with the existing programmes and projects and the existing investment from the Strategic Capital Programme in order to prioritise activities and develop supporting delivery plans. The tasks in this process have been clearly defined and were approved by the Corporate Management Team in April 2023. Work to progress this will take place over the next 12 months with interim updates on progress scheduled to be presented to the Corporate Management Team in August 2023 and February 2024 for submission thereafter to the Policy and Strategy Committee. The Strategic Capital Delivery Group has recently agreed a new approach to the reporting of capital projects, which would include senior management team oversight and is currently under development. The Internal Audit comment in respect of this response states “We acknowledge the change in direction of travel with the recently refreshed programme of work and the planned development of governance arrangements associated with this. We have assessed the residual risk as ‘Medium’ as the recommendation has not yet been fully addressed. It is Internal Audit’s view that the original audit recommendation can be addressed as part of actions scheduled during the next 12 months. This will include ensuring that the refreshed governance arrangements incorporate reporting on progress of all key corporate projects (both capital and non-capital) and the consideration of timely remedial action to ensure that projects are delivered successfully and on time.” Implementation of effective, timely, and regular performance reporting on key strategic and operational performance measures to the Corporate Management Team and Service Committees has been significantly As reported to the Audit and Scrutiny Panel in May 2023 - through the Internal Audit report which follows up on actions previously agreed by management in response to audit recommendations - a report submitted to the Corporate Management Team in December 2022 outlined the Performance Reporting Schedule for 2023 to 2024, which will facilitate scrutiny and challenge by the senior management team and Elected Members. This was also reported to the Audit and Scrutiny Panel in February 2023. Indicators within the Strategic Performance Framework are being reviewed and updated in line with the development of Chief Officers’ reporting to committee as per the Performance Reporting Schedule. The review and update of
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impacted over the last two years due to the need to respond to, and prioritise resources as a result of, the pandemic. indicators and targets within the Strategic Performance Framework is nearing completion and the updated suite of measures and targets are scheduled to be made available for oversight and challenge by the Business Management Team in 2023 in line with their new governance and assurance role. Final developments to the Strategic Performance Framework will be considered in line with the requirements of the new Programme of Work and its associated delivery plans. The list of Calculating Officers and Verification Officers clearly show the corresponding service for each indicator in the Framework. The Internal Audit comment in respect of this response states “We acknowledge that there has been significant action taken to address the recommendation made and that the requirements of the new Programme of Work and its associated delivery plans will be taken into consideration when finalising the review of performance measures and targets. We consider the revised timescale to be reasonable and have assessed the residual risk for this recommendation as ‘Low’.” A range of significant actions in relation the council’s current and future operating model have been set out and linked to a range of planned developments impacting upon workforce, digital transformation, service re-design, assets, and governance. The issue raised relates to how these actions are managed and progressed and the extent to which these contribute towards the achievement of the council’s ambitions. A report submitted to the Policy and Strategy Committee in March 2023 provided an update on the council’s Leadership and Operating Model, for which a three phased approach to the model over a 10 year period was initially approved in December 2021. The report in March 2023 outlined what had been delivered in phase one and set out a 2-year plan for phase two as an integrated provision that depends on strategic alignment between projects and programmes delivering against The Plan for North Lanarkshire. The report stressed the importance of an iterative phased and structured approach to engaging and involving partners, stakeholders, the community, and the voluntary sector with the new ways of working together that are required. At this time approval was granted on the 2-year plan in order to grasp the challenges and opportunities ahead and move towards the longer term operating model. As reported to the Audit and Scrutiny Panel in May 2023 through the quarterly risk management update, the risk on the Corporate Risk Register for the Target Operating Model - ensuring resources (workforce, digital and assets) and service delivery are fully aligned to support the successful implementation of the council’s future operating model - is currently under development. 7. Certification 7.1 In compliance with the Delivering Good Governance in Local Government: Framework (2016) the council has systems in place to review and improve the governance and internal control environment throughout the year. Issues for action have been identified and implementation will be monitored and reported as part of the next annual review. 7.2 It is our opinion that reasonable assurance can be placed upon the adequacy and effectiveness of North Lanarkshire Council and its Group systems of governance. The annual review process has demonstrated sufficient evidence that the council’s corporate governance arrangements have operated effectively, and the council and its group companies comply with the relevant corporate governance principles in all significant respects. Chief Executive Leader of the Council