Internal Audit Report Strategic Planning

Report status Final

Report date January 2013

Financial Period 2012/13

Prepared by Jay Hussain (Haines Watts)

147

Executive Summary Objective of the audit

The overall objective of the audit was to ensure that an adequately

controlled strategic planning framework is in place that supports the

production of a robust strategic plan for the Service.

In arriving at our opinion the audit covered the following areas:

• A review of the business planning framework document, including

roles and responsibilities over planning initiation, development of the

plan, scrutiny and approval;

• linkages between strategic planning and financial planning;

• The Service’s communications arrangements and underlying

mechanisms such that it is transparent how stakeholder views inform

strategic objectives and underlying actions and decisions; and

• linkages between the Service’s strategic planning cycle and those of

partner organisations.

Key background information

Under the Fire & Rescue Services Act 2004 fire authorities are required to

plan for how they will use resources in the most effective way to save

lives, improve public safety and reduce the number of emergency

incidents. This is encapsulated in the Integrated Risk Management Plan

(“IRMP”) which in turn should reflect the strategic and operational

direction of the Service as well as providing the basis of its performance

management framework.

The key building blocks that support effective strategic planning have

therefore been in place within Fire Authorities as a result of the

requirement to produce IRMPs. The issue in recent years however has

been a tendency for the IRMP to become an overly copious document as

it set out in detail lists of actions, projects and initiatives to address risks.

In doing so it was overlapping with the Service’s overarching strategic

plan and operational strategies (e.g. People strategy, Operations

strategy). The new National Framework is clear that the IRMP’s key

purpose is to set out the key risks to communities, informed by analysis of

a range of intelligence source (e.g., demographics, social-economic

changes, climate change and historical record of incidents) and provide

key mitigating actions and controls. The IRMP is very much the risk

assessment exercise (strategic and operational) that informs the broader

strategic plan and so the two documents ought to go hand in hand.

Our opinion

Overall, based upon the work undertaken, we can give ADEQUATE

assurance on the level of control in place to manage the risks associated

with strategic planning.

Our opinion has been informed by the following key findings:

Areas of good practice:

• The business planning framework is embedded within the Service,

with good understanding by personnel of the process.

148

• The Strategic Plan and IRMP are now mutually exclusive but

complementary documents, with the latest incarnation of the IRMP

(2012-15) being consistent with the expectations of the new National

Framework;

• Roles and responsibilities for compilation of the Strategic Plan are

generally clear, with operational staff inputting into the compilation

process as appropriate;

• Governance structures, in particular scrutiny arrangements, over the

strategic planning process (including medium term financial planning

and strategic risk management) are in place and working effectively;

• The Service has an up to date communications strategy and

supporting consultation engagement strategy. It has also developed a

database of community interest groups numbering some 200 that

includes hard to reach, vulnerable and minority groups, feedback from

which is shared with Members and which is integrated into the

business planning framework;

• The planning process and actions to achieve the strategic objectives

recognise the balance between the maintenance of an effective and

efficient response service and longer term preventative work;

• Better alignment between CPU/operational priorities and strategic

objectives are being developed, with CPU managers demonstrating

sound understanding of how their work contributes to wider strategic

priorities; and

• Financial planning and risk assessment (as part of the IRMP

compilation) are integrated into the strategic planning process.

Areas for further improvement:

• The key actions underneath each of the strategic objectives within the

Strategic Plan currently do not link/have reference to the appropriate

Service Performance Indicators that would then help the reader gauge

progress against the strategic objectives;

• Following on from the above, the Strategic Plan currently does not

provide an overall assessment of the results achieved against the

strategic objectives. There is an assessment of successes but good

practice would require an explicit assessment against key objectives

and priorities including where desired outcomes have not/are not

being achieved;

• Though there is reference to it, there needs to be greater clarity within

the Strategic Plan itself as to how feedback from consultation has

been factored into/influenced the objectives and actions set out;

• A Change Board was established this year with the intention of

ensuring focus on the long term vision. However, its role remains

under review by the senior management team; and

• The strategic planning arrangements do not currently explicitly and

fully support actions that promote greater joint working with other

organisations in the immediate aftermath of serious incidents,

resulting in the Service’s resources being stretched as it helps victims

149

of such incidents get back to “normality”. We understand that

developments in these arrangements will be made following

finalisation of the Service’s long term vision (in December 2012).

150

Action Plan Explanation of priority ratings: Priority Explanation

High: Action that is considered imperative to ensure that the organisation is not exposed to high risks. Major adverse impact on achievement of organisational objectives if not adequately addressed.

Medium: Action that is considered necessary to avoid exposing the organisation to significant risks.

Low: Action that is considered desirable and should result in enhanced control or better value for money. Minimal adverse impact on achievement of the organisation’s objectives if not adequately addressed.

151

Finding Risk Recommendation Priority Management Action

1 The strategic planning framework The Service has committed to a longer term vision (taking it to 2020), which will compel it to, even more than before, review its long range planning “thinking” and associated processes. There was acknowledgement during discussions with senior management that the current business planning framework ought to therefore be reviewed to ensure that it remains fit for purpose.

The current business planning framework may not be fit for purpose going forward. For example, longer range planning in light of the long range vision, would require a greater level of scenario planning.

Given the Service’s efforts to transform services going forward, encapsulated in its longer term vision, a review of the planning framework should be undertaken to ensure that it remains effective an efficient.

The Strategic Planning Framework has been reviewed and the framework now includes an annual scenario planning exercise. Target date: With immediate effect.

2 Strategic objectives It is currently not overtly clear within the Strategic Plan which of the Service Performance Indicators (“SPI”) (as reported periodically to Members already), contributes to the strategic objectives, specifically the outward objectives 1 to 3.

Progress against the key strategic objectives cannot be readily gauged in an efficient way.

In accordance with best practice the Service should consider highlighting more clearly within the Strategic Plan how the relevant SPIs contribute to the strategic objectives.

The Strategic Plan 2013/16 is in draft at present and does include specific mention of which SPIs relate to which Strategic Objective Responsibility: Assistant Chief Fire Officer /Director of Safety Target date: 1st March 2013

152

Finding Risk Recommendation Priority Management Action

3 Whilst there is a section in the Strategic Plan that describes successes and performance it does not provide a rounded précis of results achieved against the strategic objectives. Similarly, in the Annual Performance Report there is scope to make a clearer the link between the “strategic context” and performance measures.

It is unclear to stakeholders where the headline areas of improvement lie and more importantly how this information can then be used to determine how the Service can improve.

The Strategic Plan (and Annual Performance report) should explicitly refer to those areas relating to the strategic objectives where progress/achievement has fallen short of expectations, the reasons for the under-achievement and remedial actions that will be taken to ensure improvements going forward.

This is already in place within the Service as part of the Performance and Risk Framework but will in the future also be built into the SP and Annual Performance Report Responsibility: Assistant Chief Fire Officer /Director of Safety Target date:1st March for SP and 30th September 2013 for the next Annual Performance Report

4 Partnership working There is a consensus amongst senior management that there will be some merit in working more closely with other organisations better. The formal mechanism for doing this however remains variable, although it is acknowledged that the Local Resilience Forum for example provides a sound platform upon which to develop arrangements for joint strategic planning, particularly with the police.

Potential efficiencies in how community risks and wider requirements are assessed and reflected in the respective strategic plans of the various major partners may not be fully exploited.

As part of the Service’s commitment to effective partnership working, areas of potential synergies around strategic planning, notably building on existing mechanisms such as the Local Resilience Forum, to develop concerted actions to achieve respective objectives should be explored.

Work with the LRF, and individual partners, is continuing and a number of areas are already progressing where there are areas of synergy, notably shared volunteers with the Police and improving community preparedness with a range of partners. This will continue as part of the work with the LRF and other multi agency arrangements.

153

Finding Risk Recommendation Priority Management Action

5 The current planning arrangements do not fully support actions that promote greater working with other organisations in the aftermath of major incidents -e.g. flooding. We understand however that the nature and extent of the Service’s role in helping people get back to normality following such incidents is very much contingent upon the Service’s Vision being approved in December 2012.

In the aftermath of a major incident the Service’s capacity may be stretched and the burden of responsibility is not proportionately distributed amongst the various organisations.

We concur with the CFO’s view that strategic planning and the various strategies should, where appropriate, provide signposts to other resources and organisations in meeting potential future objectives around recovery. This will alleviate pressures on Service resources and foster greater partnership working with the private sector and volunteer bodies.

Signposting is taking place at local level and at Strategic level now forms a key part of the Integrated Risk Management Plan approved by the Authority on 14th Dec 2012

6 Consultation The Service has made good progress in developing a database of community groups (over 200) that includes minority and vulnerable/hard to reach communities. How work with these groups shapes and informs Service objectives and underlying actions however is unclear within the Strategic Plan itself- i.e. there is no explicit link between the work that the Service undertakes on consultation and detailed actions set out in the strategic plans.

Consultation exercises may become an end in themselves and stakeholders will not be able to see how community views are translated into objectives and actions.

An overarching “output” analysis capturing the key messages emanating from the various consultation initiatives should be produced that is then integrated into the strategy formulation process. The key consultation messages and how they shape strategic objectives and plans should be included in the Strategic Plan.

Set up internal process whereby key findings from consultations are fed into strategy formulation process. Consultation input and impact also recorded in Strategic Plan. Responsibility: Corporate Communication Manager Target date: July 2013

154

Finding Risk Recommendation Priority Management Action

7 Strategic action planning Discussions with the Planning & Performance Team (“P&P”), together with the findings of previous audits, indicated that programme management arrangements require further improvement. This is important if the various, often multi layered initiatives that collectively contribute to the achievement of strategic objectives, are to be managed in a concerted manner. In recognition of this we understand that the P&P team will appoint an individual to specifically fill this capability gap.

The absence of effective programme management increases the risk of individual projects potentially overlapping (both in terms of their specific aims as well as the resources devoted to them). How individual projects collectively contribute to the achievement of strategic objectives becomes difficult to assess.

Programme management arrangements should be developed and put into place as soon as possible. Holistic reporting of how various projects are contributing to key objectives should be submitted as part of the performance reporting framework.

Agreed. Responsibility: Performance Manager Target date: 1st September 2013

8 Governance structures The Service has recently established a Change Board. We understand that the primary aim of this Board at inception was to ensure that the Service’s various initiatives and change programmes remain focused on the long term vision. Discussions with senior management have indicated however, that this purpose and overall effectiveness of the Board remains under review going forward.

Duplication of effort and resources with existing governance mechanisms, notably the Service Delivery Boards and the Performance & Risk Board.

We concur with the Service’s intention to keep the role and value of the Change Board under review. As part of this, the roles, responsibilities and strategic accountability of the existing Service Delivery Boards should be re-visited and reinforced.

Agreed. Responsibility: Chief Fire Officer Target date: 31st March 2013

155

Finding Risk Recommendation Priority Management Action 9 Strategic planning and underlying

actions are driven by financial constraints, with currently lesser emphasis on a process where options are put forward at the start of the planning process and an assessment then being made over affordability of initiatives/action versus priorities (though it is acknowledged that decision conferencing remains a component within the business planning framework).

Going forward, particularly in light of the longer term vision, there may be a divergence between financial and corporate planning resulting in all service delivery options not being fully considered and assessed.

As the Service looks to a longer term vision and how it intends to aspire to this it should introduce high level scenario analysis that sets out worst and best case scenarios. This in turn will pave the way for a “no surprises” decision making environment by allowing Members in particular to get an early indication of what the Service may look like in the future. In doing so it will support amendments to strategic objectives and underlying actions as appropriate.

Agreed. Responsibility: Assistant Chief Fire Officer /Director of Safety Target date: Complete. This now features in the Strategic Planning Framework on an annual basis.

156

Appendix A – Definition of assurance opinions

Level of Assurance

Definition

Substantial There is a sound system of internal control designed to achieve the system objectives.

Adequate While there is a basically sound system of internal control designed, there are weaknesses, which put some of the system objectives at risk.

Limited Weaknesses in the design of the system of internal controls are such as to put the system objectives at risk.

None Control design is generally weak leaving the system open to significant error or abuse.

157

The matters raised in this report are only those that came to our attention during the course of the audit work and are not necessarily a comprehensive statement of all the weaknesses that exist or of all the improvements that may be required. Whilst every care has been taken to ensure that the information in this report is as accurate as possible, it is based on the information provided and documents reviewed. No complete guarantee or warranty can be given with regard to the advice and information contained within the report. We emphasise that the responsibility to implement a sound system of internal controls rests with management and that our work should not be taken as a substitute for this responsibility. Our work has been considered to identify material irregularity which has a reasonable possibility of discovery, however, this does not provide absolute assurance that material error, loss or fraud do not exist. This report is intended solely for the use of the Audit, Performance and Scrutiny Committee and Senior Management of the Fire Authority. The dissemination, distribution, copying or disclosure of this report or its contents is prohibited unless prior written permission is obtained by HW Controls & Assurance. No responsibility to any third party is accepted as the report has not been prepared and has not been intended for any other purpose.

© 2012 HW Controls & Assurance. All rights reserved. The Haines Watts Group 30 Camp Road, Farnborough, Hampshire, GU14 6EW.

158