CIPFA response to NAO report on Local Government Governance

15-01-19

CIPFA CEO, Rob Whiteman, today welcomed the NAO’s report on Local Government Governance, which surveyed auditors and S151 officers about their existing governance arrangements:

“Given the significant financial and delivery challenges authorities face, no authority should be complacent about the adequacy of its governance. There were a lot of positives in today’s report, which highlighted that the majority of S151 officers are satisfied with their current arrangements. However, it also showed there are pockets of variation which mean some S151 officers feel better placed than others to fulfil their role and provide oversight.

“The survey also found that while 87% of S151 officers who reported directly to the chief executive or similar strongly agreed that they were able to provide unfettered advice to the senior leadership team, this dropped to 52% when it came to S151 officers who did not have this clear reporting line. This pattern was repeated across every question where these S151 officers were asked about their ability to execute their duties, which is very concerning.

“CIPFA has repeatedly called on S151 officers to be placed in a position where they can directly communicate any concerns they may have to the chief executive and to others on the senior leadership team. Any local authorities who have other types of governance arrangements should be very careful to ensure that the role of their S151 officer is in no way hindered, and able to justify why they think this is the case.

“The report also highlighted that audit committees should be strengthened. We think the first step in improving audit committees would be to make them a mandatory requirement, as they already are in Wales and Combined Authorities. Making greater use of independent co-opted members, alongside mandatory training and robust reporting responsibilities, are essential improvements to governance in local authorities.

“By following principles of best practice governance local authorities can provide greater assurance about their financial position and ensure that any signs of trouble are recognised early when action can be taken. This is particularly important now, when we are in a time of unprecedented uncertainty for local government, with commercialisation and growing pressure on the finances of the sector meaning the overall risk profile is increasing. 

“Among the recommendations was for MHCLG to assess the sustainability of internal audit, with focus groups describing resource pressures as well as the complexity of new commercial and partnership arrangements. While internal audit was shown to be effective at most authorities, it is important to manage any risks posed to its future viability by these growing challenges.

“Good governance is integral to improving overall resilience and financial management, and ensuring the long term sustainability of local government. Together with Solace, CIPFA sets the principles of good governance for local government. It is against these principles that authorities must measure themselves in their Annual Governance Statement. We will continue to support and advise local authorities on their governance arrangements.”

CIPFA events in London, Birmingham and York in February and March will be an opportunity to learn more on these issues as part of a holistic view of good governance.

ENDS

For further information please contact the CIPFA press office on T: 020 7543 5703 

About CIPFA 

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. CIPFA shows the way in public finance globally, standing up for sound public financial management and good governance around the world as the leading commentator on managing and accounting for public money.

Further reading

Delivering Good Governance in Local Government, Framework, CIPFA and Solace 2016 

CIPFA Statement on the Role of the CFO in Local Government 

CIPFA’s Position Statement, Audit Committees in Local Authorities and Police 2018