Governance standards in the UK public sector need a “transformative overhaul”, according to the Chartered Institute of Public Finance and Accountancy (CIPFA).

In comments (automatic download) on a consultation launched in March by the Committee on Standards in Public Life – Accountability Within Public Bodies – CIPFA says with a general election looming, standards in public life “continue to be a key concern for all citizens”. It says there is an “urgent need for decisive action to bolster accountability and restore public trust”.

Overcoming barriers

With that in mind, CIPFA is calling on public bodies to “safeguard stability”, through a focus on four critical areas:

Governance failures – CIPFA says root causes of governance failures include dysfunctional relationships between senior officers and elected representatives, insufficient seniority among key officers and constraints imposed by the political cycle.

Local authorities must therefore “confront these issues head-on” with the aid of “empowered internal mechanisms” such as audit committees, along with scrutiny supported by robust training and resources, it says.

Ethical standards – the Nolan Principles, also known as the Seven Principles of Public Life, apply to anyone who works as a public office-holder, says CIPFA, and must be integrated across every aspect of public sector governance, underpinning member codes of conduct and professional standards.

Data-driven risk management – effective data usage requires public bodies to overcome barriers such as outdated IT systems, while ensuring data privacy and interconnectivity.

Trust, transparency and effective oversight – bodies should provide senior officers and elected representatives with comprehensive training and support to foster a culture in which employees can safely raise concerns.

Combined with peer support and mentoring, a strong standards regime is crucial for counteracting unethical pressures and promoting continuous improvement. In tandem, CIPFA is calling for greater transparency in public decision-making. “Engaging the public in budget and financial strategy consultations enhances understanding and trust,” it says.

Escalating concerns

In its consultation response, CIPFA outlines several issues within public bodies that could impede the expert input of audit professionals.

In particular, it warns that scrutiny teams, audit committees and internal audit may not have a high enough profile, which means they may not be as effective as they should be. In bodies where internal audit operates to a narrow scope, or there are weaknesses within the team, there may be gaps in auditors’ coverage of critical areas. Their work may lack impact and, as such, their recommendations may not be respected and actioned.

“The audit committee should be a mechanism to escalate concerns in governance, risk management and internal control, and to strengthen internal accountability,” CIPFA says in its response. “Where the committee is uncertain of its role, lacks training or suffers from splits and tensions among its members, it can fail to address problem areas.”

If the audit committee is not highly regarded among elected members of staff, it may struggle to have influence, CIPFA adds. In addition, committees with no independent members may lack valuable knowledge and experience, further reducing their effectiveness.

Receptive to learning

CIPFA’s response recommends that public bodies should have in place an assurance framework to support the leadership team. It defines that framework as: “The means by which leaders, managers and decision makers have confidence that the governance arrangements that they have approved are being implemented, operating as intended, and remain fit for purpose.”

It also urges bodies to be receptive to learning, recommendations and interventions from external peers and regulators. “Learning from good practice elsewhere or lessons-learned from failures in other bodies should be a regular practice,” the response says. “Peer-review or inspection reports should be considered seriously rather than defensively.”

CIPFA Governance Adviser Diana Melville said that ensuring good governance in the public sector and harnessing data-driven risk management is needed now more than ever. “At a time when public trust in service delivery is fragile, compounded by budget constraints and rising demand, a targeted focus on governance and accountability is essential,” Melville said.