A report on the Chartered Institute of Public Finance & Accountancy Financial Management Code, which sets out the standards of financial management for local authorities to assess themselves against.

The Committee received a report on the Financial Management Code 2019 (FM Code) (Appendix 1), which had been introduced by the Chartered Institute of Public Finance & Accountancy (CIPFA).  The Code set out the standards of financial management for local authorities.  Local authorities had been expected to comply fully with the FM Code from 1 April 2021.  The Guidance to the Code expected Authorities to be able to provide evidence that they had reviewed their financial management arrangements against the standards and that they had taken such action as might be necessary to comply with them.  Effectively, an annual self-assessment exercise had been required to assess compliance with the FM Code from 1 April 2021.

The 2024/25 self-assessment had identified significant progress in the following key areas:

i)     The external audit of the 2020/21 Statement of Accounts had given an unqualified opinion, reinforcing the improvements seen in the 2019/20 Statement of Accounts which were also unqualified. In addition, the external audit processes for 2021/22, 2022/23 and 2023/24 had all now been completed in line with the published audit “backstop” deadlines, albeit with “disclaimed” opinions. The Council had therefore effectively caught up in respect of its prior years’ Statement of Accounts processes.

ii)   Although the 2023/24 Statement of Accounts had received a disclaimed opinion, the external auditors had concluded that there were no significant weaknesses in arrangements to improving economy, efficiency and effectiveness for 2023/24; the 2022/23 conclusion had been that there was a significant weakness in this regard in relation to Children’s Services.

The report stated that this year’s self-assessment had identified that one standard (C - The leadership team demonstrates in its actions and behaviours responsibility for governance and internal control) had gone from a previous rating of ‘Green’ to ‘Amber’. All other standards remained as per the 2023/24 assessment.  A proposed action plan, setting out the required actions to improve those standards rated ‘Amber’ to ‘Green’ was set out in Appendix 1.

A total of 11 standards (65%) had been RAG rated as Green with the remaining 6 (35%) as Amber.  The results of the self-assessment indicated an overall rating of Amber.

Resolved:    That the findings of the 2024/25 Financial Management Code Self-Assessment be noted.