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2023-03-31-accounts

Centre for

Governance and Scrutiny

Trustees’ Annual Report 2022/23

Charity Number:

Company Number:

1136243 5133443

Centre for Governance and Scrutiny Year ended 31st March 2023

Contents

CONTENTS

Chair’s Foreword Page 2
Report of the Trustees Page 4
Review of the year in summary Page 6
Structure, governance & management Page 10
Statement of Trustees’ responsibilities Page 14
Independent Auditor’s Report Page 16
Financial Statements:
Statement of Financial Activities Page 20
Balance Sheet Page 21
Statement of Cash Flows Page 22
Notes to the Financial Statements Page 23
Reference and Administrative Details Page 29

Centre for Governance and Scrutiny Year ended 31st March 2023

Chair’s Foreword

CHAIR’S FOREWORD

It would feel wrong to open this report without saying how very sorry we are about the death of Lord Bob Kerslake. As the many tributes make clear, Bob was a huge presence for the sector and a friend and mentor for many. For us, he made everything he chaired a masterclass in how to run a meeting and he never failed to add wisdom and humour to our work - we always felt very lucky that with all the large organisations he worked with he chose to continue to work with CfGS - and we are so very saddened by his passing.

The year has seen some other significant changes to the team at CfGS, as well as the Board of Trustees. In the board space, I stepped in from the deputy chair to take over from Bob and Jonathan Carr-West is now deputy chair.

Our Chief Executive, Andy Fry, resigned from CfGS due to family reasons in July 2022 and our Deputy Chief Executive, Ed Hammond stepped into the role of Acting Chief Executive for the remainder of the 2022-23 Financial Year. We are hugely grateful to Ed for his leadership of the organisation during this time and I want to thank him on behalf of the Board for his hard work and achievements during his time as Acting Chief Executive.

We began recruiting for the role of Chief Executive in December 2022 and we are very pleased to have appointed Mel Stevens who will be joining us in May 2023. Mel will join us with significant experience in local democracy and participatory processes and is an experienced leader who will be working closely with the staff and board to develop our new strategy and focus us on the many challenges that are surrounding our sector.

Our work continues as strongly as ever supporting local government in the crucial role it plays for people and places with training and development for elected members, supporting councils and other organisations to improve their governance and scrutiny culture as well as helping with governance design across a wide range of organisations.

With our continued partnership working and funding from the LGA, we are increasingly working with councils who are finding themselves in difficult financial situations. We are not alone in providing support and there are great organisations also doing important and valuable work that we are proud to work alongside LLG, ADSO and CIPFA. Looking forward, and as the landscape around support and

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Chair’s Foreword

interventions continues to evolve, we are well placed to be part of these conversations - helping to shape the sector's own response to the challenges it faces.

We have also been working with a number of organisations outside the local government sector, each of which have a strong vision for improved governance and decision making within their organisations – from housing to consumer co-operatives and institutes – culture, values and behaviours are the bedrock that good governance grows on. We value the diversity of this work and the additional perspective it provides for the work we do with local government.

CfGS is an organisation with strong foundations and deep roots in local government as well as significant experience in many connected sectors. Looking forward at the challenges that face so many organisations we are looking forward to shaping the next chapter of our work - please do get involved in that conversation and help us shape it.

Dr Catherine Howe, Chairman (on an interim basis)

Centre for Governance and Scrutiny

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Report of the Trustees

REPORT OF THE TRUSTEES

The Trustees present their annual report and audited financial statements. The Trustees have adopted the provisions of the Statement of Recommended Practice “Accounting and Reporting by Charities” (“FRS 102 SORP”) in preparing the annual report and financial statements of the charity.

The financial statements have been prepared in accordance with the accounting policies set out in notes to the accounts and comply with the charity’s governing document, the Charities Act 2011, Companies Act 2006 and relevant Accounting Standards. The Trustees consider that the current level of the organisation’s unrestricted funds and with the continuing likelihood of securing funding for periods beyond April 2024, CfGS has sufficient resources to continue as a going concern.

CfGS is a charitable company that promotes the value of scrutiny, accountability and good governance, both in the public sector and amongst other people and organisations who deliver publicly funded services.

In shaping the objectives of the charity and planning the activities undertaken, the Trustees have considered the Charity Commission’s guidance on public benefit.

CfGS’s purpose is to improve lives and places through effective governance and public scrutiny. We seek to achieve this by:

CfGS experienced challenges around its priorities and capacity during 2022/23. Trustees’ original expectation was that the organisation break even or make a small profit but the organisation ended up recording a deficit. More important than the fact that a deficit was recorded was the fact that the organisation was not sighted on that deficit until very late in the financial year – leading to significant action to address structural financial weaknesses that leads off from work putting in place more robust project management, quality assurance and resource management arrangements in the second half of the year. Through the latter part of 22/23, the staff team put in place efforts to stabilise core services, to manage capacity and to ensure that work is profiled, designed and delivered in a way that maximises profit margin while still maintaining high standards. The appointment of a new Chief Executive for the organisation will accelerate and deepen these changes. However, it is still the medium-term expectation that the organisation will continue to operate at a deficit as business processes are remodelled. The organisation’s strong reserves position supports this approach.

In April 2022 the Trustee Board agreed a three-year Strategic Plan for the organisation. On the departure of the organisation’s Chief Executive in August 2022 Trustees’ concluded that this Plan was no longer fit for purpose, and agreed an

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Report of the Trustees

Interim Plan in October aimed at providing space and stability until a new permanent Chief Executive was able to develop and agree a longer term set of objectives. The Interim Plan provides the context for the remainder of this report, although it should be noted that the 22/23 budget was signed off (in March/April 2022) on the basis of the previous strategy.

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Report of the Trustees

REVIEW OF THE YEAR IN SUMMARY

Work areas in our Delivery Plan

While the Annual Report would ordinarily report progress against the Delivery Plan agreed at the start of the financial year, for 2022/23 the adoption of an Interim Plan later in the year demands a different approach.

Trustees’ intention in agreeing the Interim Plan was that action on its implementation would carry through into 2023/24, which a projected end-date (and agreement of a new longer-term strategy for the organisation) at the end of Q2 23/24. The organisation is still on track to meet this deadline.

Priority 1:
Maintain and further
develop
CfGS’s
expertise
and
reputation
in
local
government as the
foremost experts on
governance
and
scrutiny.		 How we planned to deliver this /how we have actually
delivered:
● Through building and delivering a support offer to
local government built around the core of the
successful delivery of our Memorandum of
Understanding with the LGA / Government (which
will be successfully renewed for 2023/24) /We
have successfully delivered our LGA MoU for
22/23, and negotiated deliverables for our 23/24
contract. Reflecting increased costs we have
agreed a higher day rate for this work;
● Through evolving that offer to offer more strategic
support to councils’ leadership – officer and
member
/
We
have
undertaken
work
to
systematise the methodology for some of our
strategic offers, and our approach to operational
communications has brought this offer to a wider
audience. We need to do more in Q1/Q2 23/24 to
enhance awareness, in particular by using our
existing networks and relationships to highlight our
distinctive offer on governance risk and resilience;
● Through effective evaluation of the work we
deliver, and a clear, evidence-based sense of our
impact overall, leading to refined products and
better marketing /We have successfully put in
place mechanisms for the evaluation of training
and development, of large-scale consultancy, and
in particular of our LGA contract;
● Through more intelligently using/deploying the
skills and expertise of our staff team and
Associates /We have reviewed our approach to
Associates, carrying out two development days
and researching pricing arrangements in order to
deploy them in a way that secures a reasonable
profit margin. We have sought to design project
delivery arrangements to move away from the
practice of a single team member/Associate

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delivering a project from start to finish, introducing
a team approach based on a better understanding
of where expertise and skills lie.
Priority 2:
Strengthen links with
our strategic partners,
both to deliver our
charitable object of
spreading awareness
of the principles and
practice
of
good
governance and to
ensure that we can
demonstrate
action
against our “theory of
change”		 How we planned to deliver this /how we have actually
delivered:
● Identify who our key partners and stakeholders
are, and identify areas of alignment and potential
joint working /we have strengthened our
relationships with key officers at the LGA, resulting
in mid-year changes to our accountability and
communications
arrangements.
We
have
deepened our strategic relationship with partners
such as ADSO and LLG, through working together
to
deliver
mutual
objectives
at
the
LGA
conference;
● Use our network of partners and stakeholders to
spread our message – and to market our products
–
with
our
target
audiences,
through
a
comprehensive communications and business
development plan /we have put in place a more
robust approach to communications, including the
more targeted use of newsletters – comms work
led to an increase in inward client enquiries in
Q3/4 compared to previous years;
● Play an active role in contributing to conversations
amongst our partners and stakeholders about the
good governance, with a particular focus on local
democracy, with a view to supporting ongoing
dialogue about how civic architecture is likely to
grow and transform in local areas /we have
pursued conversations with a range of partners (in
particular
in respect of English devolution)
although we have participated in limited sector
conversation on the way that civic architecture is
expected to grow and transform.
Priority 3:
Focus in our work an
awareness
of,
and
action on, equality,
diversity and inclusion
as a critical element
of good governance –
for
us,
for
our		 How we planned to deliver this /how we have actually
delivered:
● Integrating an awareness of EDI issues into how
we work with clients – bringing challenge on these
matters to the forefront of findings/actions /
progress has been limited – we have brought
more challenge to clients in conversations around
project initiation and the preparation of final
products, but this is yet to be translated into

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partners, and for our
clients		 formal, detailed changes to project methodologies
across the board;
● Ensuring that this feeds into the refinement of
existing products, and our strategic planning for
2023/24
onwards
/
review
of
project
methodologies will incorporate further action on
EDI.
Priority 4:
Ensure that we have
the
capacity,
skills
and
resources
in
place to provide for
CfGS’s
financial
sustainability		 How we planned to deliver this /how we have actually
delivered:
● Reflect on how we provide for meaningful and
high quality Board oversight to the work of CfGS’s
staff team /we have amended the format of
quarterly reports to Board and put in place a more
rigorous approach to 23/24 budget planning;
● Take action on the organisation’s future strategic
direction, to secure its position into the medium
term, by way of a strategy review that the
organisation’s new CEO can pick up and act upon
once they are appointed /the first (discovery)
phase of the strategy review was completed by
the end of Q4 22/23;
● Set realistic and evidence-informed financial plans
for the 2023/24 financial year /a delivery plan for
23/24 is in place that reflects the conclusion of this
plan, and the emergence of a new, long term,
strategy for the organisation.

Consultancy and delivery highlights

Despite capacity constraints and other uncertainty CfGS has succeeded in winning a delivering a range of projects in 22/23 – although a lower number, and to a lower total value, than previous years. These projects reflect CfGS’s intention to expand its work away from the provision of technical advice on overview and scrutiny, and into more high-value, strategic support on broader corporate governance matters – including support to non-local government organisations.

Particular examples of projects delivered in part or in full during 22/23 include:

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Report of the Trustees

Performance against targets in local government delivery has been strong, but changes in the team starting at the end of 2021 have had a knock-on impact in performance in other areas, where capacity to undertake sustained business development was very limited, and where income was therefore significantly less than originally planned.

CfGS continues to work to increase the value of individual projects. Overhead in topping and tailing projects continues to be a challenge within resources, and overwork / overprogramming is a continual risk where demanding clients have high expectations in terms of both delivery, and relationship management. Our new arrangements for project sponsorship and leadership will, in 2023/24, bring more rigour into this space, and protect the organisation’s margin on both low and high value projects.

In terms of client delivery, the challenge for 2023/24 will be to ensure that the quality of delivery can be sustained, that cost pressures can be managed (and in so doing, that margins on individual projects can become more predictable) and how the organisation can build capacity and capability without exposing itself to financial risk.

Action on core services

The Interim Plan contained action on the improvement of core services.

Project and programme management .

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Communications

Evaluating impact and success

This involves implementing, and then reviewing, new systems for debriefing on completed projects with clients. From January 2023, we started to put in place new arrangements for evaluation, beginning with evaluation of certain historic projects before moving to put in place ongoing evaluation of all work from the start of 23/24.

Back office functions

This involves evaluating existing HR and finance support arrangements, and re-procuring if a more value for money solution can be identified. Trustees determined towards the end of 22/23 to investigate alternative options for HR, finance and other core services, with action being taken in early 23/24 to significantly reduce expenditure in these areas.

Product and business development

This involves refining existing product offers in light of evaluation feedback, and in light of further developments in the sectors in which we are active. It also involves reflection on the success or otherwise of our existing marketing arrangements and products. This work has not yet started.

Board development

This involves new arrangements for Board reporting as well as for communication with the Board between meetings. This work has not yet started.

The areas

During 2022/23 there have been a number of areas of core business for

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There are a number of areas that form our delivery plan as follows: -

  1. Delivering Programmes of work for major funders in the public sector

  2. Delivering Consultancy work for local authorities and other organisations

  3. Running Training Events & Conferences

  4. Back office Organisation

  5. Research

  6. Campaigns and Influence

Programmes

In the Programme area several work streams were undertaken, most of which related to work for the Local Government Association (LGA). The planned content of the improvement grant was changed to reflect the demands of supporting councils in the shift to online working and remote delivery. The support included new COVID-19 guidance, help-desk support, webinars and in-house training. Direct improvement support was also provided to a number of councils.

In addition, we undertook research into scrutiny policy and practice resulting in practical guidance and blogs (see research section below for more details). We also supported local government through the scrutiny network and attendance at regional meetings.

Consultancy

CfGS continued to secure a wide-ranging amount of business from its consultancy services. The volume and value delivered was lower than the previous year due to continued pressures on all sectors both local authorities and other organisations, but there was still a number of significant pieces of work and new projects undertaken.

We have carried out an increasing number Scrutiny Improvement reviews and training sessions for other local authorities. In total we worked with over 20 authorities throughout the year in this way.

In addition, we continued to support existing clients such as Mears PLC, National Housing Federation, Storengy and have supported new clients such as Coop.

Training Events & Conferences

Due to the continuing effects of the COVID-19 pandemic at the start of the year, face-to-face training, events and conferences were still impacted. However, we have now returned to delivering the vast majority of our training face-to-face as well as continuing to run free webinars on various topics, such as financial scrutiny and work planning.

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Organisation

The staff complement was an average 6.1 FTE for the year. There have been a number of significant staff changes during the year to include the recruitment of a new Chief Executive. We have also seen the creation of a new role of Senior Governance Consultant.

CfGS continued to be supported by a network of experienced, expert associates with a range of background in governance, local government, health, participation and brining research, transformation, organisational development and engagement skills. The model of a small core team supported by associates and partners, enables CfGS to create bespoke teams to meet client requirements whilst keeping overhead costs low.

The Chairman of our Board of Trustees stepped down from the Board in March 2023 after a long association with CfGS.

Research

Research outputs continue to focus on CfGS’s core local government audience. We continue to expand the audience for these products beyond overview and scrutiny practitioners (officers and members). In 2022/23 research output was exclusively funded through the improvement services grant, and took the form of a number of short, and longer-form, practical guidance publications on matters of importance to elected members and the governance professionals who support them.

Campaigns and influence

Campaigning activity in 2022/23 focused on continued bolstering and supporting for the role of good governance. Campaigning for the need for the continuation of remote council meetings continues. We were an active and leading player in the establishment and operation of the Remote Meetings Partnership, bringing together partners at a senior level across the sector to discuss these issues.

Also at the national level, CfGS continues to engage in MHCLG’s Governance Framework Panel (both strategic and operational), which is a forum for discussion on the local authority governance and accountability landscape; we continue to enjoy a good relationship with the NAO, relevant Select Committees and MHCLG civil servants.

With the publication on the Health White Paper, a new campaigning priority around health scrutiny emerged in late 2020/21. We continue to work closely with scrutiny practitioners and DH civil servants to ensure that the powers enjoyed by scrutiny continue in the (at time of writing) forthcoming Health Bill. In this, we are working with the LGA and NHS Confederation.

On wider matters relating to system change we are working closely with NHS England / NHS Improvement on the development of system-wide guidance which will frame cross-sector relationships in the new health landscape.

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The publication of our governance risk and resilience framework (as described above) has continued to raise our profile as we continue with ongoing campaigning work on political culture.

Overall financial performance

Notwithstanding the deficit for the year, the financial position of CfGS remains robust, with a reserves figure at year-end of £335k. Income for the year was £577k which was a small increase on the previous year’s figure of £572k. Our expenditure was £596k (an increase from £531k in 2021/22).

Looking at our individual areas of operation, on Programmes our income was slightly lower than the previous year at £180k, whilst expenditure was significantly lower. Consultancy income increased to £393k from £331k, whilst expenditure increased to £114k. There was no Annual Conference in 2022-23, but the 2023-24 Annual Conference took place in June 2023.

Organisational costs overall costs were £473k up from £443k, mainly due to higher staff costs.

STRUCTURE, GOVERNANCE & MANAGEMENT

Governing document

The Centre for Governance and Scrutiny (CfGS) is a company limited by guarantee. Originally formed in 2004, it changed its name from the Centre for Public Scrutiny Limited in September 2020 to better reflect the nature of the advice and services that it provides.

The Memorandum and Articles of Association (M&AA) were amended in 2010 and the organisation was registered by the Charity Commission as a charity in June 2010. In 2012 members of the charity amended the M&AA again to remove the requirement to have an annual meeting and in June 2020 they were revised again to more accurately encompass the public benefits provided to its clients.

Appointment of Trustees

As provided for in the M&AA, which require a majority of independent Trustees, During 2022/23 CfGS had six independent Trustees and three Trustees nominated by its founder and corporate members (the LGA, CIPFA and LGIU). Independent Trustees are recruited through open advertisement and appointed by the Board, following interview by a sub-committee consisting of the Chair and a member Trustee and with the advice of the Chief Executive. The Board of Trustees also has power to seek additional independent Trustees to fill any identified skills gaps that may result from open recruitment exercises, ensuring the Board retains the right mix of skills, experience and expertise.

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Trustees’ induction and training

CfGS provides an induction for new Trustees, which comprises key Charity Commission and other guidance on the role of Trustees, CfGS governing documents and key policies (equalities and diversity, whistle-blowing, interests and hospitality, data protection and information policies) as well as background information on the work of CfGS, the business plan, risk assessment, most recent audited accounts and annual budget and a selection of recent research and other publications as an introduction to what CfGS does.

As CfGS is a social purpose consultancy expert in all aspects of governance and scrutiny, we were pleased that the Charity Governance Code was updated during the year. This has provided us with useful guidance to look at ourselves and see where we can seek to improve. Work will be ongoing on this.

Organisational structure

The Board of Trustees meets at least four times a year to agree the business plan and annual budget, monitor performance and financial information, agree staff pay and the executive directors' targets and appraisal, as well as key policies, the risk assessment and other matters as it may determine. There is no formally constituted audit committee and audit matters are reported and taken at ordinary meetings of the Board.

During 2022/23 attendance at Board meetings was:

Lord Bob Kerslake (Chair) 4/5 meetings
Catherine Howe (Vice-Chair) 5/5 meetings
Cllr Graeme Coombes 2/5 meetings
Jonathan Carr-West 3/5 meetings
Andrew Burns 4/5 meetings
Helen Bailey 4/5 meetings
Caraline Johnson 5/5 meetings
Juliet Baker 5/5 meetings
Radhika Vaidya-Sahdev 5/5 meetings

A Chief Executive is appointed by the Board with delegated authority to manage the day to day running of the charity and delivery of its objectives in accordance with the agreed business plan and budget and has delegated responsibilities for the operational management of the Centre, including finance, employment matters and continued staff development.

Related parties

Trustees verbally declare any potential conflict of interest at the beginning of each board meeting. In addition, a register of interests is completed by Trustees every year. In order to be fully transparent about its work. In 2022/23, CfGS declares the

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Centre for Governance and Scrutiny Year ended 31st March 2023

Report of the Trustees

following financial connections with the Local Government Association, which is a major funder of CfGS:

The Local Government Association (LGA) is a member of CfGS and has a nominated Trustee on CfGS’s Board. Cllr Graeme Coombes held this responsibility independently during the year. CfGS paid a service charge to the LGA of £43,600 in 2022/23 (£43,600 in 2021/22) for a range of services, including management accounting, finance system, payroll and other HR support.

Two staff members were seconded to CfGS during 2022/23. CfGS reimbursed their employers for all their salary costs. These secondments were of benefit to CfGS and it is intended that secondments will continue for CfGS.

Risk management

The Trustees’ risk management strategy includes:

During 2022/23 our actions to mitigate identified higher risks and their impact were as set out below.

STRATEGIC RISKS

Risk that CfGS is unable to adapt to changing political and environmental circumstances.

Mitigations implemented: Close monitoring of political and policy developments including close liaison with members of both Trustee and Advisory Boards.

Impact: Assists organisation in being flexible and responsive.

OPERATIONAL RISKS

Risk that the organisation is not set up to successfully deliver objectives.

Mitigations implemented: Ongoing organisational reviews as personnel change to ensure there is sufficient capacity and skills, as well as ensuring that staff feel valued and their morale is maintained.

Impact: The implementation of a revised organisational structures have delivered more business opportunities, which are being converted into more profitable work. Capacity is augmented when required by the use of consultants and working in partnership with other organisations. Revised methods of work are introduced and

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Report of the Trustees

monitored, including home working with regular meetings, to ensure productivity and well-being is maintained.

FINANCIAL RISKS

Risk that CfGS is exposed to problems relating to profitability, liquidity and cash flow.

Mitigations implemented: Close working relationships with important stakeholders such as LGA and CIPFA is maintained to ensure we are close to the local authority sector. In addition, we have increased our focus on business development in associated sectors to local government and in providing governance assistance to organisations in a variety of other sectors.

Impact: LGA and CIPFA relationships remain secure, whilst increasing business opportunities have been identified and converted.

REPUTATIONAL RISKS

Risk that CfGS is not able to gain new business or that any work undertaken is adversely viewed.

Mitigations implemented: Careful selection of private sector partners, use of consultants to assist with capacity, heightened awareness when undertaking work in in sensitive areas.

Impact: Repeat and new business being won, but caution is exercised in undertaking work in sensitive areas.

LASTING EFFECTS OF THE PANDEMIC

The lasting effects of the pandemic have changed some of the ways that CfGS works. Whilst it is our preference to deliver training in person, we have the flexibility to deliver both training and consultancy remotely where necessary. In addition, all of our staff are now employed on home-working contracts. However, the CfGS staff do come together at least once a month in person as a team. The benefits of working from home we feel give a better work-life balance for staff and there are also considerations on lowered impact to the environment through less commuting together with a reduction in overheads for CfGS.

Investment powers and policy

Under the Memorandum and Articles of Association, the Trustees have the power to:

The income and property of the Charity is required to be applied solely towards the promotion of its objects.

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Reserves

The Board monitors the overall financial position of CfGS at each Board Meeting, this includes the unrestricted and restricted reserve funds (information provided by the Lead Accountant of LGA who provide financial guidance to CfGS). It also requests interim reports in between when deemed necessary.

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Centre for Governance and Scrutiny Statement of Trustees Responsibilities Year ended 31st March 2023

STATEMENT OF TRUSTEES' RESPONSIBILITIES IN RESPECT OF THE TRUSTEES’ ANNUAL REPORT AND THE FINANCIAL STATEMENTS

The Trustees (who are also directors of the Centre for Governance and Scrutiny for the purposes of company law) are responsible for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 The Financial Reporting Standard Applicable in the United Kingdom and Republic of Ireland (FRS 102).

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period.

In preparing these financial statements, the directors are required to:

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company's transactions and disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the charitable company and to prevent and detect fraud and other irregularities.

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Provision of information to Auditors

In so far as the Trustees are aware:

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Centre for Governance and Scrutiny Statement of Trustees Responsibilities Year ended 31st March 2023

This confirmation is given and should be interpreted in accordance with the provisions of section 414 of the Companies Act 2006.

Approved by the Board of Trustees on 24 October 2023 and signed on their behalf by

Dr Catherine Howe

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Centre for Governance and Scrutiny Independent Auditors’ Report Year ended 31[ st ] March 2023

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE CENTRE FOR GOVERNANCE AND SCRUTINY

Opinion

We have audited the financial statements of the Centre for Governance and Scrutiny (the ‘charitable company’) for the year ended 31 March 2023 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

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Centre for Governance and Scrutiny Independent Auditors’ Report Year ended 31[ st ] March 2023

Other information

The other information comprises the information included in the Report of the Trustees, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained within the Report of the Trustees. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors’ report included within the Report of the Trustees.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the Statement of Trustees’ Responsibilities, the trustees (who are also the directors of the charitable company for the purposes of company

21

Centre for Governance and Scrutiny Independent Auditors’ Report Year ended 31[ st ] March 2023

law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

22

Centre for Governance and Scrutiny Independent Auditors’ Report Year ended 31[ st ] March 2023

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:

www.frc.org.uk/auditorsresponsibilities

This description forms part of our auditor’s report.

Use of our report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Alastair Duke (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor

15 Westferry Circus

Canary Wharf

London E14 4HD

23

Centre for Governance and Scrutiny Statement of Financial Activities Year ended 31[ st ] March 2023

STATEMENT OF FINANCIAL ACTIVITIES

( incorporating an INCOME AND EXPENDITURE ACCOUNT) for the year ended 31 March 2023

Note
s
Income from:
Donations and grants
Grants receivable
3
Charitable activities
Conference and
Other Income
3
Projects and Services 3
Investment Income
Investment income
2
Total income
Expenditure on:
Charitable
activities
7
Total Expenditure
Net (expenditure)/income
Net Movement in Funds
Reconciliation of Funds:
Total funds brought forward
at 1 April
Total funds carried forward
at 31 March
14		 Unrestricte
d Funds
Restricte
d Funds
Total Funds
Total
Funds
2023
2023
2023
2022
£
£
£
£
180,000
-
180,000
183,620
9,000
-
9,000
37,215
383,838
-
383,838
350,778
3,801
-
3,801
315
576,639
-
576,639
571,928
596,177
-
596,177
531,469
596,177
-
596,177
531,469
(19,538)
-
(19,538)
40,459
(19,538)
-
(19,538)
40,459
354,175
-
354,175
313,716
334,637
-
334,637
354,175

There are no recognised gains or losses other than those disclosed above.

All of the above results derive from continuing activities and there were no acquisitions in the period.

All income and expenditure in 2022 was unrestricted.

The accounting policies and notes on pages 27 to 32 form part of these financial statements.

24

Centre for Governance and Scrutiny Balance Sheet Year ended 31[ st ] March 2023

BALANCE SHEET

Company Number 5133443

As at 31 March 2023

2023
Notes
£
Current assets
Debtors
10
127,766
Short Term Investments
2
252,032
Cash at bank and in hand
10,000
389,798
Creditors: amounts falling due within one year
Creditors falling due within one year
11
55,161
55,161
Net current assets
334,637
Total assets less current
liabilities
334,637
Charity Funds
Unrestricted Funds
14
334,637
Restricted Funds
14
-
334,637		 2022
£
89,912
313,746
10,000
413,658
59,483
59,483
354,175
354,175
354,175
-
354,175

These financial statements were approved by the Trustees on 24 October 2023 and are signed and authorised for issue on their behalf by:

DR CATHERINE HOWE

The notes on pages 27 to 32 form part of these financial statements.

25

Centre for Governance and Scrutiny Statement of Cash Flows Year ended 31[ st ] March 2023

STATEMENT OF CASH FLOWS As at 31 March 2023

Note
Cash flow from operating activities
12
Net cash flow used in operating activities
12
Change in cash and cash equivalents in the year / period
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
Cash and cash equivalents consists of:
Cash at bank and in hand
Short term deposits
Cash and cash equivalents at 31 March		 2023
£
(61,714)
(61,714)
(61,714)
323,746
262,032
10,000
252,032
262
262,032		 2022
£
17,821
17,821
17,821
305,925
323,746
10,000
313,746
323,746

The notes on pages 27 to 32 form part of these financial statements.

26

Centre for Governance and Scrutiny Statements Year ended 31 March 2023

Notes to the Financial

1. ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The Centre for Governance and Scrutiny is a public benefit entity as defined by FRS 102. The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102) issued in October 2019, the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102), the Charities Act 2011, the Companies Act 2006 and United Kingdom Generally Accepted Practice as it applies from 1 January 2019.

The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.

GOING CONCERN

The Trustees [who are also the directors of the Centre for Governance and Scrutiny (CfGS) for the purposes of company law] have prepared the accounts on a going concern basis. As described in the Report of the Trustees, during 2022/23 CfGS worked closely with the Local Government Association and the bodies under the Local Government Association’s control. The Trustees have considered the likely impact of COVID-19 on the operational activities of the organisation and are of the view that there is no material impact. The Trustees consider that the current level of its unrestricted funds and, given the continuing likelihood of secured funding for period through to 31 March 2024 and beyond, CfGS has sufficient resources to continue as a going concern for a period of at least twelve months from the date of approval of the financial statements.

FUNDS

Unrestricted funds are available for use at the discretion of the trustees in furtherance of the general objectives of the charity and which have not been designated for other purposes.

Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the charity for particular purposes. The cost of raising and administering such funds are charged against the specific fund. The aim and use of any restricted fund is set out in the notes to the financial statements.

INCOME POLICY

All incoming resources are included in the Statement of Financial Activities (SoFA) when the charity is legally entitled to the income, after any performance conditions have been met, when the amount can be measured reliably and when it is probable that the income will be received.

Income from donations is recognised on receipt, unless there are conditions attached to the donation that require a level of performance before entitlement can be obtained. In this case income is deferred until those conditions are fully met or the fulfilment of those conditions is within the control of CfGS and it is probable that they will be fulfilled.

Government and other grants are recognised at fair value when the charity has entitlement after any performance conditions have been met, it is probable that the income will be received and the amount can be measured reliably. If entitlement is not met then these amounts are deferred.

Investment income comprising only bank interest on short term deposits is recognised on a receivable

27

Centre for Governance and Scrutiny Statements Year ended 31 March 2023

Notes to the Financial

basis.

RESOURCES EXPENDED

Expenditure is recognised on an accruals basis. This occurs when a legal or constructive obligation commits the Centre to the expenditure.

Irrecoverable VAT is charged against the category of resources expended from which it is incurred.

Any costs of generating funds comprise the costs associated with attracting voluntary income.

Charitable expenditure comprises those costs incurred by CfGS in the delivery of its activities and services for its beneficiaries. It includes both the costs that can be allocated directly to such activities and those costs of an indirect nature necessary to support them.

Grants payable to third parties are included in expenditure on charitable activities. Where unconditional grants are made, these amounts are recognised when a constructive obligation is created, typically when the recipient is notified that a grant will be made to them. Where grants are conditional on performance, then the grant is only recognised once any unfulfilled conditions are outside of the control of the charity.

All costs are allocated between the expenditure categories of the Statement of Financial Activities on a basis designed to reflect the use of the resource. Costs relating to a particular activity are allocated directly: others are apportioned on an appropriate basis.

ALLOCATION OF SUPPORT COSTS

Support costs are those that assist the work of CfGS but do not directly represent charitable activities and include office costs, governance costs, and project management costs. They are incurred directly in support of expenditure on the objects of the charity. Where support costs cannot be directly attributed to particular headings, they have been allocated to those activities on a consistent basis related to time spent in furtherance of CfGS's objects.

The analysis of these costs is included in note 8.

CORPORATION TAX

CfGS is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable company for UK corporation tax purposes. Accordingly, the charity is potentially exempt from taxation in respect of income or capital gains received within categories covered by Chapter 3 Part 11 Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

2. INVESTMENT INCOME

All of the investment income arises from interest bearing deposits. CfGS participates in arrangements in which surplus cash balances are deposited with borrowers on the Local Government Association (LGA) Group’s approved list. CfGS’s investments are pooled with those of other entities that have adopted the LGA Group Investment Strategy. Group Investments are typically for periods of up to six months and as such the loan amount is a reasonable assessment of fair value. Lending of up to £3m of the total funds held for up to one year is permitted. The counterparty list is currently restricted to major UK financial institutions, the larger UK building societies, and AAA-rated money market funds.

28

Centre for Governance and Scrutiny Statements

Notes to the Financial

Year ended 31 March 2023

The LGA Group Investment Strategy strictly applies credit limits for all of the above financial institutions to ensure that deposits are spread across a number of its approved counterparties. No credit limits were exceeded during the year and CfGS does not expect any losses on short term investments.

29

Notes to the Financial

Centre for Governance and Scrutiny Statements Year ended 31 March 2023

3. INCOME

. INCOME
Income from donations and grants
Voluntary Income and Grants
Income from charitable activities
Services recharged
Conferences and other income		 2023
£
180,000
383,838
9,000
572,838		 2022
£
183,620
350,778
37,215
571,613

Voluntary income and grants mainly relate to funding from other related sector bodies. It is allocated to the main activities of the charity. Services recharged include publications, consultancy and project delivery. All of the above income was attributable to unrestricted funds in both 2022 and 2023.

4. AUDITOR’S REMUNERATION

The auditor’s remuneration amounts to an audit fee of

Audit fees 2023
£
3,500		 2022
£
3,500

No non-audit fees were paid in the year to the auditor (2022 £nil).

5. EMOLUMENTS

During 2023 no Trustee received any emoluments in respect of services to CfGS (2022 – £nil). Reimbursement of expenses to no (2022 – none) Trustees for travel and accommodation totalled £0 (2022 – £0).

6. EMPLOYEES

Agency staff fees
Secondments
Staff
Total staffing costs		 2023
£
30,584
-
326,332
356,916		 2022
£
-
-
346,518
346,518

The Chief Executive (CE) of Centre for Governance and Scrutiny is the only member of key management personnel. During the year the incumbent retired from the post and a new CE was being actively recruited. The total cumulative benefits paid during the year were £108,690 (2022 £122,369).

Staff are on CfGS's payroll and have access to contributory pension arrangements.

30

Notes to the Financial

Centre for Governance and Scrutiny Statements Year ended 31 March 2023

The number of staff (FTE) earning more than £60k of benefits during the year was 1 (2022 3 persons), excluding employer pension costs, in the ranges below.

Range £k 2023
2022		 2023
2022
100-110
90-100 1 1
80-90 1
70-80 1

Number of staff

The average number of staff (FTE) analysed by function was:

Direct work 2023
6.1
6.1		 2022
5.0
5.0

7. EXPENDITURE ON CHARITABLE ACTIVITIES

Events
Commercial Programme
Other Programmes
Consultancy
Total		 2023
Activities
undertaken
directly
£
2023
Support
Costs
£
2023
Total
£
8,397
7,464
15,861
-
-
-
246,681
219,262
465,943
60,552
53,821
114,373
315,630
280,547
596,177		 2022
Total
£
485
2,518
27,745
500,721
531,469

£nil (2022 £nil) of the above costs were attributable to restricted funds. £596,177 (2022 £531,469) of the above costs were attributable to unrestricted funds.

Where support costs cannot be directly attributed to particular headings, they have been allocated to those activities on a consistent basis related to time spent in furtherance of CfGS's objects.

8. BREAKDOWN OF SUPPORT COSTS

. BREAKDOWN OF SUPPORT COSTS
Direction and management
Office Costs
IT		 2023
£
2022
£
134,711
169,342
131,506
70,589
14,330
18,693
280,547
258,624

9. EXPENDITURE ON OTHER COSTS

Meeting Costs
Legal and advertising costs		 2023
£
2022
£
103
716
5,585
2,099

31

Centre for Governance and Scrutiny Statements Year ended 31 March 2023

Notes to the Financial

Support costs
Audit Fees
Total
10. DEBTORS
Trade debtors
Other debtors – VAT Receivable
Other Debtors
Prepayments and Accrued Income
Total
11. CREDITORS
Trade creditors
Accruals
Earned Leave Liability
Other creditors & income in advance
VAT Payable
Total		 71,813
89,448
3,500
3,500
81,001
95,763
2023
£
2022
£
62,957
67,444
-
-
4
4
64,805
22,464
127,766
89,912
2023
£
2022
£
(1,118)
263
17,756
4,328
6,429
7,320
16,490
28,357
15,604
19,215
55,161
59,483

12. RECONCILIATION OF INCOME TO NET CASH FLOW FROM OPERATING ACTIVITIES

Net income for year
(Increase) in debtors
(Decrease)/Increase in creditors
Net cash flow from operating activities		 2023
£		 2022
£
(19,538)
(37,854)
(4,322)
(61,714)		 40,459
(24,518)
1,880
17,821

13. MEMBERS’ LIABILITY

The company is a registered charity and is limited by guarantee with no share capital. The liability of each member in the event of winding up is limited to £1.

14. FUNDS

Unrestricted Funds As at 1 April
2022
£
Income
£
Expenditure
£
As at 31
March
2023
£
354,175
576,639
596,177
334,637

32

Centre for Governance and Scrutiny Statements Year ended 31 March 2023

Notes to the Financial

Total 354,175 576,639 596,177 334,637

33

Centre for Governance and Scrutiny Statements Year ended 31 March 2023

Notes to the Financial

15. RELATED PARTY TRANSACTIONS

Reimbursed travel expenses of £0 (2022: £0) were paid to no (2022: no) Trustees in the year.

CfGS paid a service charge to the LGA of £43,600 in 2022/23 (£43,600 in 2021/22) for a range of services, including management accounting, access to a finance system, payroll and other HR support.

16. POST BALANCE SHEET EVENTS

There are no post balance sheet events requiring disclosure.

34

Centre for Governance and Scrutiny Reference and Administrative Details

REFERENCE AND ADMINISTRATIVE DETAILS

Registered name: Centre for Governance and Scrutiny Charity number: 1136243 Company number: 5133443 Registered address: 77 Mansell Street, London E1 8AN Website www.cfgs.org.uk Contact details: info@cfgs.org.uk 020 7543 5627

Trustees and directors

Lord Bob Kerslake Chair and Independent Trustee (Resigned 02/03/23) Dr Catherine Howe Chair and Independent Trustee (Appointed 25/04/23) Vice Chair and Local Government Information Unit (LGIU) - Jonathan Carr-West Nominated Trustee (Appointed 25/04/23) Andrew Burns Chartered Institute of Public Finance and Accountancy (CIPFA) - Nominated Trustee Cllr Graeme Coombs Local Government Association (LGA) - Nominated Trustee) Helen Bailey Independent Trustee Caraline Johnson Independent Trustee Juliet Baker Independent Trustee Radhika Vaidya-Sahdev Independent Trustee

Company Secretary

Matt Marsh Company Secretary

Senior Staff

Ed Hammond Interim Chief Executive ( Appointed 12/08/22) Andy Fry Chief Executive ( Resigned 11/08/22) Advisers Banker: Barclays, UK Banking, 1 Churchill Place, London, E14 5HP Solicitor: Local Government Group’s Legal Services Panel, which includes: Bevan Brittan, Pinsent Masons, Wragge & Co and Sharpe Pritchard Statutory Auditor: PKF Littlejohn LLP, 15 Westferry Circus, Canary Wharf, London E14 4HD

Advisers

35