Agenda item

Briefing note

The Board considered a briefing note in respect of the CIPFA Finance Management (FM) Code which provided guidance and sustainable financial management in local authorities. By complying with the principles and standards within the code, local authorities would be able to demonstrate the foundations for strong financial sustainability.

CIPFA’s Financial Management Code (FM Code) provided guidance for effective and sustainable financial management in local authorities, helping to provide a level of assurance that authorities were managing resources effectively.

The Code required authorities to demonstrate that the processes they had in place satisfied the principles of goodfinancial management. It identified risks tofinancial sustainability and introduceda frameworkof assurance. Complyingwith thestandards setout inthe Code was the collective responsibility of elected members, together with the Chief Executive, Chief Finance Officer and their professional colleagues in the leadership team. Complying with the Code would help strengthen the framework that surrounded financial decision making.

The broad headings of the CIPFA FMStandards in the Code which local authorities should comply with were:

·  Responsibilitiesof theCFO andLeadership Team

·  Governanceand FinancialManagement Style

·  Longto MediumTerm FinancialManagement

·  TheAnnual Budget

·  StakeholderEngagement andBusiness Plans

·  MonitoringFinancial Performance

·  ExternalFinancial Reporting

The first full year of compliance to the Code was 2021/22. As this was during the pandemic period, it was initially expected that the ‘direction of travel’ was positive.  Last reported by Coventry to Finance & Corporate Services Scrutiny Board (1) in 2022, a strong ‘direction’ was reported.  At the time, out of 17 standards, 14 were demonstrated as met (Green) with 3 rated as requiring improvement (amber) as follows:

-  The leadership team was able to demonstrate that the services provided by the authority provide value for money

-  The authority has carried out a credible and transparent financial resilience assessment

-  The CFO has personal and statutory responsibility for ensuring that the statement of accounts produced by the local authority complies with the reporting requirements of the “Code of Practice on Local Authority Accounting

An updated review of the standards by Finance Officers on behalf of the Councils Leadership Team concluded that the City Council continued to be compliant with the vast majority of the standards expected of Local Authorities. This was demonstrated in the table at Appendix A of the briefing note which set out all the individual standards, and the measures in place to ensure robust standards of financial management.  Out of the 17 standards, 14 continued to be fully met (Green) with 3 remaining as amber indicating that improvement was required.  These were the same 3 as previously reported (above), and whilst improvements have already been made on each, more are considered required in order to be able to fully demonstrate delivery in full.  Leadership Board is well aware of those matters of concern and as such, relevant actionshave beenidentified toaddress theseas well as other continuous improvement requirements to ensure ongoing compliance of other standards.

In overall terms however, the Councilhad satisfied CIPFA’srequirement todemonstrate compliance with the Code.

It was proposed that the Council’s compliance with the FM Code was, in future, reviewed annually and reported to Scrutiny as part of the Council’s annual process to update its Annual Governance Statement process.

The Board questioned officers and the Cabinet Member on several points arising from the presentation including the following:

·  In light of recent events leading to authorities issuing S114 notices, Members asked about this City Council’s decision-making process in such an event.  Members requested a briefing note explaining the procedure.

·  In response to a question on property valuations, the Board noted that action was continuing to strengthen the core accounting and property valuation functions

·  Expected data on KPI performance

RESOLVED that the Board:

(a)  Notethe contentsof theassessment of the Council’s level of compliance withthe CIPFA Financial Management Code included in Appendix A.

(b)  Requested that a briefing note be drafted and circulated to Members explaining what the City Council’s process would be in the event of issuing a Section 114 Notice.