Corporate Governance

The Cadbury Report  looked at those aspects of corporate governance specifically related to financial reporting and accountability - specifically the control and reporting functions of PLC boards and the role of auditors. The Cadbury Report defined corporate governance as 'the system by which organisations are directed and controlled'.

After the publication of the Cadbury Report the public sector recognised its value - particularly as this was the time of the Nolan Committee and concerns of sleaze in public life - and started to look at corporate governance but tended to focus more on the accountability and control aspects of governance. There followed a series of initiatives to improve corporate governance in the different services of the public sector, however there was no major work undertaken in local government.

Much of the present Government's modernising agenda - democratic renewal, community leadership, accountable and responsive services etc - concerns the need for authorities to review the various processes and systems they have for managing both their own internal affairs and their relationships with key stakeholders. Together, these systems comprise corporate governance and are directly relevant to councils and to the government's aim of democratic renewal.

As part of the modernising agenda councils will be subject to a 'Comprehensive Performance Assessment' by the Audit Commission, which will judge them as either 'high performing', 'striving', 'coasting' or 'poor performing'. When making this judgement the Commission will take into account the outcomes of a corporate governance self-assessment - which will have been undertaken by the Council - and the content of a 'corporate governance code' which will have been developed using the outcomes of the self-assessment.

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• Local Code of Corporate Governance 131kb