Agenda item

This report provides an update on the outcome of the work to implement CIPFA’s Financial Management (FM) Code and the independent review by Sir Tony Redmond into the effectiveness of external audit and transparency of financial reporting in local authorities (the Redmond Review).

Francis Austin (Finance Analyst) introduced a report providing an update on the outcome of the work undertaken (since the previous report to the Committee in December 2021) to implement CIPFAs Financial Management (FM) Code and the recommendations within the independent review by Sir Tony Redmond into the effectiveness of external audit and transparency of financial reporting in local authorities, known as the Redmond Review.

In considering the update in relation to the CIPFA FM Code the Committee noted:

·             The progress update provided within section 4.6 of the report in relation to the outcome of the seven initial workstreams and associated activities within the project plan designed to support implementation of the FM Code with all tasks initial identified as having successfully been completed.

·             The benefits identified in relation to the work undertaken to ensure the Council’s financial management arrangements were compliant with the FM Code in terms of providing a foundation and catalyst for future review of the Council’s financial position and in providing the necessary financial resilience and sustainability given the current economic and financial pressures faced by the authority.

·             The scope which had also been identified, in completing the original project plan relating to the Financial Resilience Assessment, to deliver further areas for improvement in relation to the following areas:

Ø   Performance Management – This would involve further potential alignment and cross referencing of performance, financial and risk management information to provide a full picture of the Council’s service delivery supported by more regular and formal benchmarking.

Ø   Links to Other Plans – This would involve the potential to more clearly articulate links between key policy plans (Borough Plan) and forward financial plans (Medium Term Financial Strategy (MTFS), Capital Strategy) in a joined-up policy and financial framework.

Ø   Effective Medium and Long-Term Planning – This would involve the potential for further work to be undertaken on risk identification and management supported by more robust modelling of demographic and other service pressures as a means of enhancing the budget setting and medium-term financial planning process over both the medium and longer term including a focus on identifying significant known and forecast resource requirements.

The Committee was then invited to raise questions on the update provided in relation to implementation of the FM Code, which are summarised below:

·             In response to a query relating to the status of activity within the Performance workstream, confirmation was provided that notwithstanding the further areas of potential improvement identified, the initial activity identified had been completed.

·             In recognising the benefits identified from the work undertaken in relation to the FM Code, further details were sought on the specific outcomes delivered as a result that impacted on the Council’s financial planning process.  Specific outcomes identified in response included amendments to the Council’s main financial reports designed to reflect the enhanced longer term financial planning framework and focus around the revised MTFS and Prudential Indicators; the introduction of a new cycle for the financial year linking the budget setting, monitoring and outturn process into a coherent long term strategy; revision of the Reserve Strategy to include an assessment of the robustness of estimates and adequacy of reserves in the main budget setting report along with improved stakeholder engagement and scrutiny.

·             Given the changes introduced to the main budget reports the Committee highlighted a need ensure that the alignment of key financial strategies and programmes with the Committee work programme was kept under review to ensure a joined up approach was maintained as part of the Financial Planning and budget setting process, which Minesh Patel (as Corporate Director Finance & Resources) advised would be picked up as part of the ongoing development of the Committee’s work programme.

·             Further details were sought, as part of the changes which had been outlined in relation to the MTFS and overall financial planning process, on the robustness of the details included relating to the Asset Renewal Strategy and Housing Revenue Account (HRA) Business Plan.  In response, the Committee was advised that the work undertaken as part of the Financial Resilience Assessment and work to develop the financial planning process had included assurance around the Asset Management Plan and the provision of a more strategic overview as part of the MTFS.

·             In response to a query relating to the engagement of internal and external audit in the process, the Committee were advised that the work undertaken through the FM Code programme had been subject to review by both internal and external audit.  The internal audit had provided assurance in relation to oversight and governance, development of the MTFS high risk action plans and financial resilience action plans with ongoing work to be covered as part of the risk-based approach towards development of the Internal Audit Plan. In terms of external audit, the work had been covered as part of the review of the Council’s arrangements for securing Value for Money in the use of its resources, which had included assessments in relation to financial sustainability, governance and improving economy, efficiency and effectiveness which were all aligned with key aspects of the FM Code and on which no significant weaknesses had been identified.

In thanking officers for the work undertaken the Committee advised they were minded, in order to continue monitoring progress on the delivery of the areas for improvement identified as part of the ongoing development and implementation of the FM Code, to include a further monitoring update on this within the Committee’s work programme for 2024-25.

The Committee then moved on to consider the update provide in relation to progress on implementation of the Redmond Review, with the following key points noted:

·             The proposals put forward by CIPFA in relation to addressing the recommendations arising from the Redmond Review as part of their proposed changes to the Code of Practice on Local Authority Accounting (ACOP), which had included the proposed addition of a summary of financial information to the main narrative report in the accounts.  Details of the main areas to be covered within the summary financial information had been set out in section 5.3 of the report.

·             As the requirements governing narrative reports already enabled local authorities to disclose additional information (provided it was consistent with the main accounts) members were advised that the ability to add the additional information included as part of CIPFA’s proposal was already in place, with Brent already providing additional disclosures within its narrative report.  In terms of early preparation for implementation of the changes identified, the Council was already planning to incorporate CIPFA’s proposal and add a summary of financial information section to the narrative report within the Statement of Accounts for 2024-25.

The Committee was then invited to raise questions on the update provided in relation to the Redmond Review, which are summarised below:

·             In welcoming the proposals outlined as a means of further enhancing transparency and clarity in terms of information being provided within the accounts the Committee also recognised the need to ensure an appropriate balance was maintained in relation to the level of information being provided, which it was agreed should be subject to ongoing review as part of the plan and timetable for closing of the 2024-25 Statement of Accounts.

As no further issues were raised the Chair thanked officers for the update and progress made in implementation of the FM Code and Redmond Review and it was RESOLVED:

(1)    To note the report with work on the CIPFA FM Code now complete and future work on the Redmond Review to be incorporated within the plan and timetable for the closing of the 2024-25 Accounts.

(2)    That a further update be provided for Committee during 2024-25 on progress in implementing the areas for improvement identified within the report as part of the ongoing development and implementation of FM Code.