Inspectors said work conducted by Essex Youth Offending Service (YOS), which is one of the largest YOT areas in England and Wales, with the fifth highest volume of post-court cases and the second highest population, is carried out to "an exceptionally high standard."
Children and young people, together with their parents and carers, were found to be meaningfully involved at every stage and made a valuable contribution to quality assurance of cases.
"There is a strong strategic and operational leadership and a well-functioning board that has a good understanding of performance and the challenges of practice," the report states.
"The staff group is skilled and highly motivated to achieve the best outcomes for the children and young people they work with."
Inspectors also praised relationships between partner agencies and described the approach taken to quality assurance as "an exemplar of good practice".
Essex is the second youth offending team in England to be rated outstanding under the current inspection framework - Hertfordshire being the other.
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