Governance report
Principles of governance
The principles of the governance structure of PSAA are set out in the Articles of Association and the Memorandum of Understanding, such that the company:
- has a governance structure which transmits, delegates, implements and enforces decisions appropriately;
- has trustworthy internal controls to safeguard, channel and record resources as intended;
- works cooperatively with partners while supporting the Board’s duty to protect PSAA’s independence;
- operates with propriety and regularity in all its transactions;
- treats its counterparties fairly, honestly and with integrity;
- offers appropriate redress for failure to meet agreed standards; and
- gives timely, transparent and realistic accounts of its business and decisions.
Governance structure
PSAA is a private company established under the Companies Act 2006, without share capital and limited by guarantee. It is wholly owned by the Improvement and Development Agency (IDeA), which in turn is wholly owned by the Local Government Association (LGA).
The primary duty of the company is to discharge the statutory objects and powers set out in its Articles of Association in accordance with the Companies Act 2006 and the company’s founding documents. The principal legislation governing the statutory functions of PSAA is the Local Audit and Accountability Act 2014.
The role of the IDeA, as founder of the company, is to support PSAA in discharging its functions and achieving its objectives. The IDeA acknowledges the independence of the company and the responsibility for running the company as that of PSAA and the Board.
PSAA’s governance structure and corporate governance framework are underpinned by the standards promoted by the Committee on Standards in Public Life.
The PSAA Board
The Board as a whole is legally responsible for the management and stewardship of the company in the discharge of its purpose and powers in accordance with the Companies Act 2006 and the company’s founding documents. The Board alone is responsible for agreeing the company’s strategy, and for determining its budget.
The Chairman of the Board is a non-executive director, appointed by the IDeA in February 2015 and re-appointed in September 2017 for a further three years. Three of the remaining four non-executive directors were appointed by the Chairman, with the approval of the IDeA, in December 2014 and re-appointed in September 2017 for a further three years. A fifth director was appointed in December 2017 for a period of three years.
The Chairman is the leader of the Board, working closely with the Board, the Chief Executive and the staff of the company. Board members act collectively, and do not have individual executive authority.
Board members attended the following meetings during 2019/20:
| Board members | Position | Board meetings |
| Steve Freer | Chairman | 6/6 |
| Caroline Gardner | Non-executive director | 6/6 |
| Clive Grace | Non-executive director | 6/6 |
| Stephen Sellers | Non-executive director | 6/6 |
| Keith House | Non-executive director | 6/6 |
Audit committee
The audit committee is chaired by Caroline Gardner, a non-executive director of PSAA. Membership of the audit committee comprised of Stephen Sellers, Keith House, and an independent member, Kathryn Cearns, who has a professional background in financial reporting. Kathryn was appointed for a second three-year term during the 2017/18 financial year however due to other work commitments she will be leaving at the end of July 2020. We are currently in the process of recruiting an independent member to succeed her.
The audit committee is responsible for scrutinising the company’s internal controls, key risks and risk management, and spending. Broadly, the audit committee is required to oversee production of the annual accounts, consider appointment of the internal and external auditors, and scrutinise aspects of PSAA’s financial, accounting, risk management and governance arrangements and policies.
Chief Executive
The company’s Chief Executive has executive responsibility to the Board for the work of the company and for its staff, and ensures that the Chairman and Board have timely, accurate and clear information to carry out their responsibilities.
The Board has delegated authority to the Chief Executive for the day-to-day management of the company, with responsibility for the overall organisation, management and staffing and for its procedures including conduct and discipline.
The arrangements for the aspects of the company’s operations for which the Chief Executive is responsible are set out in the scheme of delegation in the PSAA corporate governance framework and are reflected in the Memorandum of Understanding. The Chief Executive receives assurance from the company’s senior managers on the correct operation of these arrangements, and aspects of the arrangements are subject to annual review by the company’s internal and external auditors.
Corporate governance framework
PSAA’s corporate governance framework is published on the company’s website. The corporate governance framework sets out clearly which matters are delegated and which are reserved to the Board, and incorporates the company’s financial policies. The Board and audit committee review the framework regularly. It was reviewed during 2019 and updated in December 2019.
PSAA’s arrangements in relation to risk management are covered in the Strategic Report included in this Annual Report.
PSAA’s internal auditors, TIAA Limited, presented their annual report in October 2019, confirming substantial assurance in all areas reviewed, covering: income flows, the distribution process and a governance review.
By order of the Board
Steve Freer
Chairman
20 July 2020