Sources of assurance

4.1 As noted in paragraph 2.3, the annual review process is an important aspect of the work undertaken each year to assess the effectiveness of the council’s governance arrangements and systems of internal control and establish the evidence base to inform the Annual Governance Statement.  As such, various elements and mechanisms, and roles and responsibilities, play a key role in this process.  These sources of assurance are listed below:

1. Compliance with the CIPFA Position Statement: Audit Committees in Local Authorities (2018). 
2. Compliance with the CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019). 
3. Compliance with the CIPFA Statement on the role of the Chief Financial Officer in Local Government (2016). 
4. Compliance with the CIPFA Code of Practice on Managing the Risk of Fraud and Corruption (2014). 
5. Compliance with the Public Sector Internal Audit Standards (PSIAS).
6. Chief Officers year end good governance assurance certificates and checklists.
7. Arm’s length external organisations (ALEOs) year end good governance assurance certificates and checklists. 
8. Annual review and update of the local code of governance review programme (i.e. the Strategic Governance Framework). 
9. The Annual Audit Report (AAR) process undertaken by the external auditors, together with the national approach to auditing Best Value through thematic audit work.
10. Findings from other audit, scrutiny, or inspection bodies in relation to service specific assessments.
11. The role of the council’s senior management team structure of meetings in respect of good governance, assurance, and continuous improvement.

Assessment of assurance

4.2 Each of the assurance sources listed in paragraph 4.1 has undergone a review and assessment process to ensure the information reported in the Annual Governance Statement reflects the most up to date position and provides the relevant assurances in respect of the council’s governance arrangements and system of internal control.  A summary of these assurance assessments is noted in paragraph 4.3 below at points (1) to (11).

4.3 While individually each of these 11 sources of assurance are supported by separate processes and arrangements, collectively the provide an evidence base that is aligned in support of the one council approach that underpins implementation of The Plan for North Lanarkshire. As such, where improvements have been made during the year, or found to be required moving forward, these are highlighted within each item.

1. Compliance with the CIPFA 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 2023/24 the purpose of the Audit and Scrutiny Panel, as set out in the Scheme of Administration (March 2024), reflects the standards set out in the CIPFA Statement in that its role 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”. 

The Scheme of Administration confirms that the Audit and Scrutiny 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.”

The Scheme of Administration also sets out the Audit and Scrutiny Panel’s specific duties in relation to the Annual Governance Statement which is 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.”

During 2023/24, the Audit and Scrutiny Panel held its meetings as scheduled once every cycle, with a special meeting held at the end of June 2023 and the end of October 2023 to support the council in discharging its duties in respect of the year end Annual Accounts.  A summary of agenda items considered by the Audit and Scrutiny Panel during the year is contained in the extract below.

Summary of Audit and Scrutiny Panel agenda items during 2023/24

• Internal Audit - four progress reports following 21 audits which resulted in 62 recommendations, four follow up reports of actions previously agreed by management in response to audit recommendations, a range of follow up in-depth reports from Chief Officers in relation to audits (mandatory training, pre-employment checks, debt recovery, equality audit progress, use of teaching supply staff, and school funds and school trips), an update on the National Fraud Initiative, two reports in relation to Accounts Commission publications (the annual local government overview and local government financial bulletin), the Internal Audit annual plan, and the Internal Audit annual report and audit opinion.
• Risk management - four risk management updates in respect of the Corporate Risk Register, with one report providing the updated Corporate Risk Register for 2023/24 and another report advising of a new approach to include a summary of key service risks from service risk registers to enable Elected Members to have sight of those risks with the highest residual risk scores, and one risk deep dive into raising educational attainment and closing the attainment gap. 
• Financial management - one report in relation to the unaudited Annual Accounts for 2022/23 and one in relation to the audited Annual Accounts for 2022/23.
• External audit - with reports in relation to the Audit Scotland annual audit plan, the council’s Annual Audit Report (AAR) and accompanying year end statements, and an outcome report from the Best Value thematic audit.
• Scrutiny - four reports arising from Panel member led scrutiny (in relation to supported businesses, provision of a payment solution for laundries in towers, compensation for compulsory purchase orders, and housing refurbishments), four quarterly performance assurance review reports providing a composite summary of all performance reports considered by the council committees in the previous cycle, two reports providing an assurance update in terms of the governance, financial governance, and risk management arrangements within each arm’s length external organisation (ALEO), an annual performance report in complaints handling, two updates in relation to the scrutiny work programme, an update on the new national approach to auditing Best Value, and five reports providing an update in relation to aspects of the frameworks supporting The Plan for North Lanarkshire and Programme of Work (the Strategic Governance Framework, Strategic Self-Evaluation Framework, Project Management Framework and future quality assurance role of the Panel, Performance Reporting Schedule, and the corresponding Annual Position Statement for the frameworks), and the Annual Governance Statement.

A self-evaluation of the Audit and Scrutiny Panel was undertaken in 2023 and the resultant outcome report and improvement plan was approved by the Panel in November 2023.  This followed an Internal Audit review in 2021 which recommended that the Audit and Scrutiny Panel should, in line with good practice, periodically undertake a self-evaluation of how effectively it is discharging its role. 

The improvement plan set out two areas for improvement for implementation during 2024 in relation to (i) formally establishing a regular face to face learning and development programme for the Audit and Scrutiny Panel to ensure members of the Panel have the appropriate skills and knowledge and (where required) access to relevant training and resources to effectively undertake their role, and (ii) ensuring the Audit and Scrutiny Panel continues to effectively discharge its duties and can demonstrate that it adds value to the organisation.   

The improvement plan also noted that the Audit and Scrutiny Panel agreed to continue to evaluate the effectiveness of the Panel in discharging its duties - in line with the principles set out in CIPFAs Position Statement: Audit Committees in Local Authorities (2018), the supporting Audit Committees Practical Guidance for Local Authorities (2018) document, and the Best Value Guidance (2020) - initially through an annual self-evaluation exercise, with the frequency of follow up self-evaluations to be determined by the extent of improvements required following the 2024 self-evaluation exercise.

In December 2023, the Council meeting formally agreed one of the improvement actions in respect of amending the governance arrangements and removing the scope for substitute members to attend Audit and Scrutiny Panel meetings given the importance of Panel members having appropriate training, knowledge, and understanding and recognising the role that consistency in involvement has in terms of ensuring ongoing Panel effectiveness.  This improvement action aims to ensure that Members attending Panel meetings have appropriate training, knowledge, and understanding of the work of the Panel and that this is enhanced over time through ongoing and consistent involvement in the Panel’s business.

2. Compliance with the CIPFA Statement on the role of the Head of Internal Audit in public service organisations (2019)

To enable the Acting Chief Officer (Audit and Risk) to fulfil the role in this respect, the council’s senior management team is 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 sets out the role of Internal Audit and depicts in a diagram the steps in the annual review process which informs the content of the Annual Governance Statement.  The Strategic Governance Framework undergoes a review and refresh exercise each year to ensure it remains up to date in reflecting the council’s governance arrangements and it is reviewed and endorsed annually by the council’s senior management team.

In line with the CIPFA statement, the Acting Chief Officer (Audit and Risk) has also provided an annual opinion for 2023/24 on the “overall adequacy and effectiveness of the organisation’s framework of governance, risk management, and control” through the Internal Audit annual report. In line with the Public Sector Internal Audit Standards (PSIAS), and the council’s Internal Audit Charter, the council’s senior management team (through both the Business Management Team and Corporate Management Team) considered and noted the Internal Audit annual report 2023/24 and annual opinion from the Acting Chief Officer (Audit and Risk) on 30th May 2024 and 7th June 2024 respectively.  The Internal Audit annual report 2023/24 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 2023/24 states that it is the opinion of the Acting 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 2024”.

The CIPFA Statement considers the annual opinion from Internal Audit to be the most important output and one of the main sources of objective assurance that the Chief Executive and the council’s senior management team has to support the Annual Governance Statement.  The annual Internal Audit opinion is set out in more detail in paragraph 4.3 (5) below.

During 2023/24, an External Quality Assurance Review (EQAR) of the council’s Internal Audit function assessed compliance with the Public Sector Internal Audit Standards (PSIAS).  An important element of the PSIAS is a requirement for an independent EQAR to be conducted at least once every five years and reported to key stakeholders including senior management and an audit committee; the results of the latest EQAR were reported to the Audit and Scrutiny Panel in May 2024.  This includes an action plan with findings, responses, and planned actions that have been agreed by Internal Audit management for implementation during 2024/25.

3. Compliance with 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 Acting Chief Officer (Audit and Risk), referenced in paragraph 4.3 (2) above.  In this respect the annual opinion of the Acting Chief Officer (Audit and Risk) has reported in the Internal Audit annual report 2023/24 that their work “suggests that, despite the ongoing significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the council.”

The extent of the council’s compliance in this respect (and the role of the Chief Financial Officer therein) is further demonstrated through the self-evaluation exercise (undertaken in 2022/23) 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.  The improvement actions identified through this self-evaluation (to ensure future budget engagement exercises with the public and external stakeholders are more focused so that consultation around budget setting is more meaningful, and to develop robust training for stakeholders to help build capacity, knowledge, and accountability for financial provision across the council) were fully implemented by the end of 2022/23.

More recently, the external auditors Annual Audit Report (AAR) in October 2023 has continued to report positively on the council’s approach to financial management and financial sustainability.

4. Compliance with 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. 

The Strategic Governance Framework sets out the evidence in this respect and shows that the council has a number of policies and procedures in place which are kept under review and regularly updated as required.  The key policies and procedures are listed below:

• Counter Fraud Policy - following a review of the council’s anti-fraud arrangements, an updated Counter Fraud Policy was approved by the Policy and Strategy Committee in September 2023.  This sets out the council’s expectations (that extend to all individuals and organisations with whom it deals) in terms of acting honestly and with integrity and in safeguarding public resources.   
• National Fraud Initiative (NFI) - the council actively seeks to detect fraudulent activity through participating in the NFI, this is a comprehensive data matching exercise between public bodies to highlight potential frauds and errors. Internal Audit plan and co-ordinate the submission of data and investigation of matches identified.  The latest report in respect of the progress made in the follow up of matches was reported Audit and Scrutiny Panel in May 2024.
• Whistleblowing Procedure - an annual review process is in place in respect of the use of the procedure and to identify any amendments required to the procedure.  An updated Whistleblowing Procedure was approved by the Policy and Strategy Committee in March 2023, and the outcome of the latest annual review is scheduled to be reported to Committee in June 2024.
• Gifts and Hospitality and Conflicts of Interest procedures for employees - guidance in this respect was incorporated into the Employee Code of Conduct in 2018.  Since then, a process has been in place whereby Chief Officers are required to submit their up to date Service Registers annually (as part of the Chief Officer’s Assurance Certificate and Checklist process) for independent review and reporting to the council’s senior management team.  E-mail announcements (in April 2024) reminded all employees of their obligations in respect of conflicts of interest and gifts and hospitality; this also provided links to the supporting guidance and employee declaration forms.  The 2023/24 review of Registers found no significant trends or issues of concern that required to be reported to the senior management team.
• Employee Code of Conduct - the latest update was approved in March 2021. Findings reported in May 2023 from an Internal Audit corporate governance review show an update was underway and due to be completed by October 2023.  Work is now currently underway with Chief Officers to review and update the content of the existing council Code of Conduct with a view to seeking approval of the revised policy at Committee in cycle 3 of 2024.
• Code of Conduct for Chief Officers - the latest update in this respect was approved by the Policy and Strategy Committee in June 2023.  The Code of Conduct for Chief Officers provides a framework within which Chief Officers of the council are expected to undertake their duties in a manner which meets the required standards for good governance.
• Councillors Code of Conduct - this is approved by the Scottish Parliament and issued by Scottish Ministers.  The Standards Commission for Scotland is responsible for the enforcement of the code of conduct. It also has responsibility for issuing guidance to assist local authorities and councillors about the code of conduct and also for hearing complaints about a councillor.  The latest code and relevant guidance was published in December 2021 and was shared with new and returning Elected members following the local government elections in May 2022 with training provided on the content; this Code of Conduct available from the council’s website.
• Information Security Policy - the latest update in this respect was approved by the Policy and Strategy Committee in June 2023.  The Information Security Policy, which includes cyber security, aims to protect the council’s information systems and physical assets including supporting processes, networks, and equipment.  As a biennial policy this is next scheduled to be updated in 2025.
• Cyber security - a review and assessment was undertaken in 2023 through 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 outcome report from this assessment was submitted to the Audit and Scrutiny Panel in February 2023.
• Risk Management - the identification of risks is carried out in line with the council’s Risk Management Strategy (which was updated in March 2023) 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 specific risk.

The CIPFA statement also requires responsibility to be acknowledged.  In this respect the Internal Audit annual report 2023/24 from the Acting 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 counter 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 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 2023/24 from the Acting Chief Officer (Audit and Risk) has confirmed that “Audit investigations of suspected fraud and/or irregularities are reported to the Panel in line with the agreed Internal Audit reporting protocol. Apart from the whistleblowing allegations received by Audit Scotland regarding the existing Mears LLP housing and property maintenance contract, details of which were reported as part of the routine progress report at the May 2024 Panel, I am pleased to be able to report that there were no other weaknesses, material frauds or irregularities identified during 2023/24 that I require to bring to your attention.”

As reflected in the Internal Audit annual report 2023/24, the weaknesses noted above were reported to the Audit and Scrutiny Panel in May 2024. The audit report in this respect lists the issues arising, key findings, and conclusions. It also sets out five recommendations for action which are accompanied by the agreed management response in terms of the next steps, responsibilities, and deadlines.

5. Compliance with the Public Sector Internal Audit Standards (PSIAS)

This requires the Chief Officer (Audit and Risk) to provide the Audit and Scrutiny Panel (and the Chief Executive and the council’s senior management team) with an annual summary of the work undertaken by Internal Audit and an annual independent opinion on the council’s corporate governance, risk management, and internal control arrangements.

The independent and objective assurances provided by Internal Audit are 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). 

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, 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.

In Internal Audit annual report for 2023/24, the Acting Chief Officer (Audit and Risk) provides an overview of the activities of the Internal Audit section for the year 2023/24.  This included highlights of issues arising from Internal Audit activity during the year and an extract in this respect is set out in the table below.

Extract from the Internal Audit annual report for 2023/24, May 2024

In the Internal Audit annual report for 2023/24, presented to the Chief Executive and both the Business Management Team and Corporate Management Team in May and June 2024 respectively, the Acting Chief Officer (Audit and Risk) provided an overview of Internal Audit activity against the 2023/24 Annual Plan and includes details of when each assignment was reported to the Audit and Scrutiny Panel (where not yet formally reported, status and expected dates are given). Key issues arising from Internal Audit outputs are highlighted in the Internal Audit Progress report tabled at each meeting of the Panel.

In the Internal Audit annual report for 2023/24, the Acting Chief Officer (Audit and Risk) also highlights issues arising from Internal Audit activity during the year; an extract from this report is noted below.

1. A small number of audit assignments were reported during 2023/24 which offered only limited assurance. In all cases, management committed to a range of relevant improvement actions, some of which have already been completed, and we will continue to monitor progress on these issues during 2024/25 to provide senior management and the Panel with further assurance that relevant key controls are operating effectively.
2. In addition, it is worth highlighting our work on the procurement and single bidder risk mitigation aspects of the Housing and Corporate Repairs contract award processes, which contains a non-standard audit conclusion because of the scope and nature of that work. Our report concluded that the governance arrangements in place for the Enterprise Project were adequate and appeared robust, and that the project was being managed in line with corporate expectations in a manner consistent with good practice. However, we identified the need for management to ensure a comprehensive and objective performance management framework is established with supplier performance assessed using clear, objective, and meaningful metrics supported by an adequately resourced, balanced contract management team with an appropriate range of skills.
3. Overall, I am satisfied that the council’s internal control and governance arrangements remained adequate and appropriately robust throughout 2023/24.
4. The results from our detailed 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 generally positive with no significant weaknesses or areas of concern highlighted.
5. Our work also suggests that, despite the ongoing significant and increasing challenges, key financial controls and financial management arrangements continued to operate to a generally high standard within the council.
6. 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. Apart from the whistleblowing allegations received by Audit Scotland regarding the existing Mears LLP housing and property maintenance contract, details of which were reported as part of the routine progress report at the May 2024 [Audit and Scrutiny] Panel, I am pleased to be able to report that there were no other weaknesses, material frauds or irregularities identified during 2023/24 that I require to bring to your attention.
7. Our report detailing the findings and conclusions arising from our work on the whistleblowing allegations received by Audit Scotland contained several recommendations designed to address the identified weaknesses and to seek to ensure that any future contract management and oversight arrangements are more robust. Many of the recommendations in this report are broadly consistent with, or cover similar aspects to, those raised at b) above. In response to both reports, management have committed to a range of detailed improvement actions, and we will monitor progress on these issues during 2024/25.
8. Although there are no issues that require me to qualify my annual opinion, there are a small number of areas that I would wish to highlight, and which will continue to be the focus of future audit coverage:

• Given the key role effective contract and supplier management plays in ensuring that the council can deliver against its operational and strategic ambitions, we will undertake early and ongoing work, as necessary, to provide assurance on the adequacy and effectiveness of the council’s management arrangements surrounding the mobilisation and implementation of new contract management arrangements for both recently approved contracts awarded via the Enterprise Project. With regards the new housing and corporate property maintenance contract, this will also involve specific, detailed follow-up of agreed actions arising from the investigation report on the Audit Scotland whistleblowing allegations.
• The last year has seen the development of new internal governance structures designed to ensure the delivery, co-ordination, direction, and oversight of planned activities for the refreshed Programme of Work to 2028. These developments have also incorporated progression of an audit action, that has been outstanding for some time, around 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. Internal Audit will undertake specific work in the year ahead regarding the implementation and effectiveness of these arrangements now they are operational.
• In last year’s annual report, it was commented that, in recent years, we had identified several areas in respect of the council’s arrangements for paying staff, where controls were inadequate or not operating as intended, which meant that at that time it was assessed that risks in this area remained high. Although some management action has been taken in the last 12 months to begin to address these issues, my assessment in this area remains the same, and as such, this will be subject to further audit coverage in 2024/25.
• In a number of areas, in recent years, Internal Audit reports have 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 in accordance with the Three Lines of Defence Model, we will again this year continue to challenge management across the range of our planned audit work about how they themselves routinely gain assurance on compliance and the effectiveness of identified key controls.

Traditionally, the Annual Governance Statement outlines issues identified during the Internal Audit programme of work for the previous year (2022/23) and includes an update providing details of the actions taken to address each issue.  In the annual opinion provided by the Chief Officer (Audit and Risk) for 2022/23, there were no issues that required the Chief Officer to qualify their opinion.  A small number of areas were highlighted which were noted would continue to be the focus of future audit coverage during 2023/24.  As such, the extract from the Internal Audit annual report for 2023/24 sets out the latest position in this respect.

6. Chief Officers year-end good governance assurance certificates and checklists  

This requires Chief Officers to review various aspects within their service areas and advise of any specific issues which require to be identified in the Annual Governance Statement. 

Through this process Chief Officers have reviewed the effectiveness of governance arrangements during the year within their area of responsibility by completing a Certificate of Assurance and updating a 73 point Checklist to support the preparation of the council’s statements on corporate governance and internal financial control for the year ending 31 March 2024.

Following a review of the 14 certificates and checklists completed for 2023/24, 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.

Following recommendations from an Internal Audit review of corporate governance in 2023, the process to obtain the relevant assurances from Chief Officers was reviewed and refreshed in advance of the 2023/24 year end process.  This resulted in the following improvements being implemented:

• Each of the 73 points (questions) was reviewed and updated (where required) to ensure clear alignment to one or more of the principles and/or sub principles in the CIPFA Framework. This approach supported the information that already exists in the Strategic Governance Framework Review Programme by ensuring the questions that are asked in the Checklist do not duplicate information that can already be obtained from other existing sources and/or processes. Where appropriate for added context, alignment to the governance and accountability theme in the national Best Value guidance (2020) was also reflected.
• For each question there is now a clear differentiation between (a) asking for a tangible item that can clearly be evidenced (e.g. documents, plans, procedures, etc), and (b) asking for an opinion that will require supplementary context to substantiate its point (i.e. asking if something is systematically deployed across a service or is operating effectively).  For questions in respect of (a) the evidence that a tangible item exists was not (in the main) required be submitted as part of the annual Checklist process.  The onus is on each Chief Officer to ensure that this evidence is readily available and can be produced should it be requested at a later date for any specific purpose or audience.
• Where it is appropriate to do so, questions follow certain aspects of a self-evaluation type structure, i.e. they ask if there is an approach in place, and/or if an approach has been systematically deployed and implemented in all relevant areas of the council and understood by all, and/or if the approach and its deployment are regularly reviewed to assess effectiveness.

In addition, Chief Officers were asked two specific questions in relation to improvements within their area of service which sought (a) their opinion if the recommendations from the work of others (internal audit, external auditors, and external audit and inspection bodies, etc) had informed positive improvement(s) within their service, and (b) if all improvement / corrective actions recommended through the work of others had been implemented / acted upon within their service.  The review of the 14 checklists completed for 2023/24 showed that where there had been recommendations made Chief Officers responded positively in respect of both of these aspects.  It should be noted though that not all improvement / corrective actions had yet been implemented as they were not yet scheduled to be so and while it was considered that recommendations made from the work of others are in the main helpful in addressing areas for improvement within the service, there are a small number of examples whereby corrective actions could have a negative impact on the resources required for small gain. 

7. Arm’s length external organisations (ALEOs) year end good governance assurance certificates and checklists

This requires the Chief Executive or Senior Representative of each ALEO to review various aspects within their service areas and advise of any specific issues which require to be identified in the Annual Governance Statement.

Through this process the council’s five arm’s length external organisations (ALEOs) have also reviewed the effectiveness of governance arrangements during the year within their organisation by completing a Certificate of Assurance and updating a 70 point Checklist to support the preparation of the council’s statements on corporate governance and internal financial control for the year ending 31 March 2024.

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.  The exception to this, is the matter in relation to the whistleblowing allegations received by Audit Scotland already covered in the Internal Audit annual report in paragraph 4.3 (5) above.

The improvements made to the Chief Officer year end Checklist noted in paragraph 4.3 (6) above, were also implemented for the ALEOs checklist. 

In line with previous years good practice, six monthly reporting continued during 2023/24 to provide the Audit and Scrutiny Panel with oversight and assurance of governance, financial governance, and risk management arrangements within each ALEO.

8. Annual review and update of the local code of governance review programme (i.e. the Strategic Governance Framework)

The council’s local code of governance has been developed taking into account the local environment within which the council operates which is set out above.  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.

The council’s local code of governance is set out in the Strategic Governance Framework which is one of six inter-related strategic frameworks  that aim to maintain a corporate one council approach across the organisation.  These frameworks are key to evaluating the success of The Plan for North Lanarkshire and assessing delivery of the Programme of Work, while ensuring each stage of delivery towards achieving the overall vision is appropriately aligned, planned, guided, implemented, monitored, and governed.

As such, the Strategic Governance Framework:

• Gathers together all existing governance arrangements into a list of elements and mechanisms that demonstrates the council’s compliance with the 7 principles, 21 sub principles, and 91 behaviours and actions contained within the CIPFA Framework.  By  collating all existing elements and mechanisms (produced by the respective Chief Officer) into the one local code for annual review, assessment, assurance, and reporting purposes, the Strategic Governance Framework and its Review Programme provides an efficient mechanism through which the annual review can be undertaken.  This also ensures appropriate oversight and governance of The Plan for North Lanarkshire and supporting Programme of Work and enables the council to monitor the delivery of its ambitions while ensuring arrangements for corporate governance, risk management, and internal financial controls are sound.  A summary of the current position regarding the elements and mechanisms in the Strategic Governance Framework review programme is set out in the table below.
• Sets out the role of the Chief Officers and senior management team, Elected Members, and the Audit and Scrutiny Panel who are responsible for determining and implementing the council’s governance arrangements, ensuring the local code is assessed on an annual basis to ensure ongoing effectiveness and compliance, and identifying any improvement actions and/or future planned developments required in relation to the council’s key governance arrangements and continuous improvement activity.
• Comprises a diagram that depicts the steps in the annual review process which ensures that the council’s governance arrangements are regularly assessed for ongoing effectiveness within the context of The Plan for North Lanarkshire and provides evidence to inform the content of the Annual Governance Statement.
• Remains under review through the annual review process whereby each of the elements and mechanisms in the review programme are examined and updated as required to reflect the relevant documentation and hyperlinks, as well as the review timeframe, and date of next update. 
• Is supported by an annual assessment of the current position of the elements and mechanisms in the review programme to ensure they remain timely and effective in supporting delivery of The Plan for North Lanarkshire.  This involves assigning a corresponding RAG status to provide a method by which to identify and prioritise items requiring to be reviewed and updated further.  The latest position following the 2023/24 year end review identified no Red elements or mechanisms, two Amber, and the rest were Green.  For the two assessed as Amber (i.e. Employee Code of Conduct and employee engagement and wellbeing), there is a commitment by the respective Chief Officer to ensure an update is undertaken during 2024/25.  

Extract summarising the current position regarding the elements and mechanisms in the Strategic Governance Framework review programme

• The council’s long-term strategic ambition and priorities in The Plan for North Lanarkshire and ensuring the vision therein - for inclusive growth and prosperity for all (to bring equal benefits and a fairer distribution of wealth to all North Lanarkshire’s people and communities) - is embedded throughout policy statements agreed by the council, as well as strategic and financial decision making, strategy and policy development, everyday service delivery activities, and corporate governance approaches across the organisation.
• Six inter-related strategic frameworks (Policy, Governance, Performance, Self-Evaluation, Project Management, and Demonstrating Improved Outcomes for Communities) which ensure a one council corporate approach to evaluating the success of The Plan for North Lanarkshire and assessing delivery of the Programme of Work (while ensuring each stage of delivery towards achieving the overall ambitions is appropriately aligned, planned, guided, implemented, monitored, and governed).  To ensure these frameworks remain fit for purpose, and aligned to The Plan for North Lanarkshire and Programme of Work, all are on a regular review and refresh programme.
• 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.  While stabilising the strategic direction of the council, the Programme of Work allows for appropriate flexibility in the operational delivery of many complex inter-connected programmes, projects, and plans to ensure a dedicated focus on improvement change, and delivering services that improve the lives of local people.  A supporting governance framework and annual review process enables a recurring, dynamic, and cohesive approach to the ongoing development of the Programme of Work and ensures it remains current, relevant, and deliverable.
• A Strategic Policy Framework which sits beside the Programme of Work in the strategic planning process to ensure that strategy and policy remain connected to 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.
• Standing Orders that allow the council to delegate decision making to committees, sub-committees, or officers and which set out the rules that 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, including reference to any Officer listed as being provided with a delegation is, de facto, deemed to hold a politically restricted post (in accordance with legislation).
• 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 maintenance of a Corporate Risk Register, Service Risk Registers, Project Risk Registers, and regular oversight of the council’s risk management arrangements and management of key corporate risks by the Audit and Scrutiny Panel and Corporate Management Team, and other governing bodies as required.
• 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.
• A Counter Fraud Policy 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 (Public Interests Disclosure) 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 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 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 council’s senior management team structure of meetings and Elected Members at committee.
• 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, six Strategic Programme of Work Boards, 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.
• Strategic Workforce Plans, supported by service specific workforce plans, which identify the actions required to address workforce gaps and set out detailed service level actions to address 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 now and 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.

The annual review and update of the Strategic Governance Framework is reviewed and endorsed each year by the council’s senior management team (through both the Business Management Team and Corporate Management Team) in line with their respective governance, strategic oversight, assurance, and continuous improvement roles in respect of the council’s governance arrangements and delivery of The Plan for North Lanarkshire.

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”. 
• This audit also reported 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”.

More recently, the Internal Audit annual report 2023/24 and annual opinion from the Acting Chief Officer (Audit and Risk) concludes that “The results from our detailed 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 generally positive with no significant weaknesses or areas of concern highlighted.”

9. The Annual Audit Report (AAR) process undertaken by the external auditors, together with the national approach to auditing Best Value through thematic audit work

Published in May 2019, the North Lanarkshire BVAR comprised eight recommendations for action by the council.  Various updates have been provided to committee since and the external auditors Annual Audit Report (AAR) has provided updates every year in terms of completed recommendations.  The Annual Audit Report (AAR) in October 2023 reported that all eight recommendations had been fully implemented and were now complete.

The outcome report following the introduction of the new national approach to auditing Best Value in 2023 through thematic audit work (on the leadership of the development of new local strategic priorities) was reported to the Audit and Scrutiny Panel in October 2023 and the Policy and Strategy Committee in 2023.  This recognised the clear ambitious vision in The Plan for North Lanarkshire and found that the vision has been driven by effective leadership and is supported by a range of performance indicators and performance reporting arrangements.  The report concludes positively on the council’s approach to citizen and community engagement and recognises the council’s commitment to reducing inequalities and tackling poverty.  The report also comments positively on the alignment of strategic and operational delivery plans (with the council’s financial, asset, and digital plans), the collaborative working between Elected Members and officers, and the council’s approach to self-evaluation which supports continuous improvement.

The outcome report following the Best Value thematic audit work contained a small number of audit recommendations and management responses, including planned actions, responsible officers, and timescales. Progress in terms of implementing these actions is monitored by Internal Audit and reported to the Audit and Scrutiny Panel.

• The council should look to improve its existing processes for engaging elected members on the overall strategic planning process.
• The council should consider how it measures the level of engagement with communities and equalities groups.
• The council should work with members to understand the reasons for the poor attendance to ensure its training and development programme is fit for purpose.

The external auditors latest Annual Audit Report (AAR), reported to the Audit and Scrutiny Panel in October 2023 presented key matters arising from each of the main areas of work undertaken by the external auditor.  This included the audit of the financial statements and issues relating to the council’s financial management and financial sustainability, vision leadership and governance, best value arrangements, and the use of resources to improve outcomes.  The report contained the external auditor’s audit opinion on the 2022/23 financial statements as well as a number of issues where action was required during the audit process and/or scope for further improvement existed.  The report also contained a small number of audit recommendations and management responses, including planned actions, responsible officers, and timescales. Progress in terms of implementing these actions is monitored by Internal Audit and reported to the Audit and Scrutiny Panel.

10. Findings from other audit, scrutiny, or inspection bodies in relation to service specific assessments

A dedicated page on the council’s website provides a central location for reporting on findings and recommendations from all national audits and inspections. This continues to be kept up to date as and when new reports become available nationally.  Inspection reports published during 2023/24 include the following: 

• Progress visit to evaluate the effectiveness of the community learning and development partnerships’ approach to self-evaluation and planning for improvement, and consider progress made against identified priorities in their community learning and development plans - February 2024.  Inspectors noted that no further action was required following this inspection and also identified some aspects of effective practice that the council were asked to share with HMIe to support practitioners elsewhere. The report suggests some minor areas of potential improvement which will be taken into consideration when reviewing and updating the community learning and development plan in 2025.
• Joint inspection of services for children and young people at risk of harm in North Lanarkshire community planning partnership led by the Care Inspectorate in collaboration with Education Scotland, Health Improvement Scotland, and His Majesty’s Inspectorate of Constabulary in Scotland - October 2023.  As there were no specific recommendations made by inspectors based on their assessment that the partnership had not already identified and were acting on, the recommendations were incorporated into the Child Protection Committee business and improvement plan and will be monitored through this Committee accordingly.
• Annual assurance statement produced for the Scottish Housing Regulator (SHR) to demonstrate the council meets all legal obligations associated with housing and homelessness services, equality and human rights, and tenant and resident safety - August 2023.  As per the SHR’s requirements the Annual Assurance Statement for 2022/23 was signed off by the Housing Committee in August 2023.

11. The role of the council’s senior management team structure of meetings in respect of good governance, assurance, and continuous improvement

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. 

Following implementation of a single integrated corporate forum for all Chief Officers in April 2021, a  subsequent self-evaluation exercise in 2022 to review the effectiveness of the revised arrangements, concluded there was a clear vision and effective leadership with a sound approach that provides clear direction and several aspects of the new arrangements were highlighted as working well.  The combination of responding to and recovering from the pandemic while resuming business as usual activities at pace - had however intensified the volume of business that required to be discussed by the senior management team of the council which - along with the impact of workforce pressures, industrial action, inflationary pressures, the cost of living, external financial pressures, and large scale public sector reform -  significantly added to the agenda and to the risks facing the council.  For this reason, new arrangements in respect of the council’s senior management team and supporting structure of meetings were developed and implemented from January 2023.  This comprises four aspects, as follows:

• A Business Management Team whose role is “To monitor the efficient and effective operation of the council” and to secure the relevant assurances that “the council is able to effectively pursue the long-term ambition set out in The Plan for North Lanarkshire by ensuring this is underpinned with the relevant assurances and controls in terms of corporate governance [including performance, legal, and hr matters], risk management, and financial management.  This means the Business Management Team role is that of assurance, not directing or monitoring delivery unless the ongoing assessment of assurance requires improvement in this respect. A four weekly Business Management Team meeting is held which comprises standing agenda items for finance, governance, risk, performance, and human resources and further demonstrates the ongoing commitment to ensuring corporate governance arrangements are in place and remain effective. 
• The Chief Executive, Depute Chief Executive, Section 95 Officer, and Monitoring Officer are members of the Business Management Team as well as the Chief Officers of Audit and Risk, Business and Digital, People Resources, and Strategic Communications and Engagement.
• A Corporate Management Team whose role is “To consider the strategic context and environment within which the council is operating, understand the position of the organisation, and consider the future direction. To consider the implementation of strategic decisions at a council wide level and the impact on the delivery of The Plan for North Lanarkshire and Programme of Work. To agree the one council approach required in order to deliver on the council’s priorities (in partnership where required) in line with the strategic direction and monitor the delivery of the Programme of Work.”   This means the Corporate Management Team role has a focus on improvement over time in delivering the council’s strategic priorities through the Programme of Work.
• The Chief Executive, Depute Chief Executive, and all other Chief Officers are members of the Corporate Management Team.

Both the Business Management Team and the Corporate Management Team input to the annual Strategic Governance Framework review process and to the review of the evidence that informs the Annual Governance Statement (with a view to ensuring the council’s governance arrangements and systems of internal controls remain effective) and to identify any improvement activity or future developments required to support continuous improvement.  This ongoing commitment from the Business Management Team and the Corporate Management Team ensures that good governance is supported from the top of the organisation.

• Four Service Management Teams (SMTs) - the annual governance update report in December 2023 reiterated the four service groupings which were originally established in September 2018, and which have continued to operate effectively since, i.e. Chief Executive’s services, Enterprise and Communities, Education and Families, and Adult Health and Social Care.
• The focus for these four SMTs is therefore to manage the operational delivery of service remits.  They are also required to consider the implementation of strategic and corporate decisions at a service and/or service grouping level and to consider the context within which the service / service grouping is operating and ensure decisions made in terms of operational delivery are in line with good governance and support the successful delivery of the Programme of Work and The Plan for North Lanarkshire.
• Operational Management Team - formally established in April 2021, this forum comprises all senior managers and head teachers across the council.  It operates under the principles of engage, develop, support, and inform to connect managers and enable them to strengthen and support their teams to deliver on the Programme of Work in line with The Plan for North Lanarkshire.  This forum aims to provide a collaborative forum for discussions on the practical aspects of delivering the Programme of Work.  This group is not a decision making body; it is an information sharing forum.  Its focus is on providing opportunities to share and discuss significant strategic and corporate developments with the wider operational management team environment across the council.