Agenda item
CIPFA Financial Management Code and Redman Review - Progress Report
This report is to update the Committee on progress to implement the CIPFA Financial Management Code and the Redmond Review of Audit and Transparency in Local Authority Financial Reporting.
Minutes:
Francis Austin, Financial Consultant, introduced a report updating the Committee on progress with implementation of the CIPFA Financial Management Code and the Redmond Review of Audit and Transparency in Local Authority Financial Reporting.
In considering the report the Committee noted:
· The background to introduction of the CIPFA Financial Management (FM) Code and Redman Review as set out within section 4 of the report. The Code had been designed to support good practice in financial management and to assist local authorities in demonstrating their financial sustainability and included six core principles (within a Statement of Principles of Good Financial Management) to be used as benchmarks against which all financial management should be assessed. These principles had been translated into a series of Financial Management Standards (FMS), which the focus was now around implementing.
· That whilst compliance with the FM Code and FMS was a requirement, their implementation also presented a wider opportunity to focus on the delivery of other tangible benefits and improvements.
· The background to the Redman Review, as detailed within section 4.4 of the report which had been focussed on oversight of local audit, and the transparency of local authority financial reporting. This had included identifying the requirement for each Local Authority Audit Committee to include independent members, which was already the case in Brent. Recommendations had also included simplification of local authority accounts, including a service based outturn statement, which whilst accepted by CIPFA in principle had not yet been formally incorporated within the Code of Practice on Local Authority Accounting. Whilst further details were therefore awaited from CIPFA on the detailed requirements, it was confirmed that preparatory work aligning the review recommendations had already informed the wider project and work around implementation of the FM Code.
· The FM Code had also sought to consolidate existing codes of practice and guidance into a coherent model for effective financial management. This had been based around two main strands - a joined up long term financial planning process backed by good governance with implementation providing an opportunity to introduce further financial management arrangements aimed at driving value for money and providing assurance on long term financial planning and financial sustainability.
· Brent was required to have detailed plans in place to implement the FM Code by the end of the 2021/22 financial year with the report detailing current progress on the core workstreams (as set out within Appendix 1), the recommended approach and next steps in the process. The project was expected to move into delivery phase early in 2022 with a series of quick wins due to be delivered by the end of March 2022 and the remainder of the workstreams targeted to complete by December 2022.
· In terms of progress to date, Brent’s position in relation to compliance was identified as mixed. Members were, however, assured that this did not signify anything was deficient but reflected the fact that the FM Code had combined existing requirements with new activities e.g. Financial Resilience Assessment. Where there were existing statutory or professional requirements Brent was therefore in full compliance, however, where CIPFA had introduced a new requirement this reflected the need for existing activities to be adapted in order to satisfy the new requirements within the Code.
· The significant focus and challenges in terms of the work required in developing the new processes and procedures to support the move towards introducing and embedding a longer term financial planning framework that could be focussed around the different financial planning activities already in place as well as on securing the necessary financial sustainability and risk assessments required under the Code.
The Committee was then invited to raise questions on the report, which are summarised below:
· Having noted the progress to date in terms of delivery of the workstreams and overall project, members sought further details on any areas within the FM Code which Brent had not been identified as at least already partially meeting. In response the Committee was reminded that the Code included a number of new requirements, such as the need to produce a Financial Resilience Assessment and it was in these areas that work needed to be focussed in order to adjust existing activities to satisfy the Code. Details on the current levels of compliance had been set out within Graph 1 included as part of the report.
· The need identified that in order to ensure successful implementation of the Code this was undertaken on the basis of practicable and meaningful processes which could be easily understood.
· Details were sought on the main ways in which it was felt the Code would impact on the current role and operation of the Council’s Finance function and team. In response members were advised that the main change would involve the introduction of a longer term financial planning framework, given the current challenges created by the more short term nature of Government Spending Reviews and Funding Settlements and the electoral cycle. The Council had already introduced a Medium Term Financial Strategy designed to take a longer term view in relation to financial planning, however it was recognised that this move towards more longer term planning would also need to be accompanied by the necessary cultural change, which members expressed support for given the positive opportunities identified in terms of being able to plan more effectively for the future in way that was not only ambitious, but was also prudent, cost effective and sustainable.
· It was asked whether the Council were currently on target to meet the requirements of the FM Code, to which it was clarified that the Council were on track.
As no further issues were raised it was RESOLVED to note the report and progress being made in terms of implementation of the FM Code.
Supporting documents:
- 9.xx.CIFPA Financial Management Code Assessment 07122021 Full Report v2.0.pdf (003), item 10. PDF 792 KB
- 10a.Appendix 1 Current Brent Position, item 10. PDF 535 KB
- 10b.Appendix 2 Workstream Summary, item 10. PDF 434 KB
- 10c.Appendix 3 High Level Timeline, item 10. PDF 572 KB