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27 February 2003 Minutes

Board of Scrutiny

Minutes of the Meeting Held at Noon on

Thursday 27 February 2003 at Selwyn College

 

Present: Stephen Cowley, Christopher Forsyth, David Howarth, Elisabeth Leedham-Green, Susan Lintott (for the second half of the meeting), Robin Lachmann, Jack MacDonald, Timothy Milner, Oliver Rackham, Jennifer Rigby, John Spencer, Helen Thompson.

 

Apologies: Robin Lachmann.

 

1)      Minutes of the meeting of 13 February 2003. Subject to final editing by the Secretary and the Chairman, these were approved.

 

2)      Matters arising (other than ones covered below).

 

a)      The Chairman reported that he had written to the Registrary asking whether the Council had been informed of the nature of the primate centre when the Report requesting permission to construct the centre was approved.  

b)      It was reported that Helen Thompson would meet representatives from SAWAG on 10 March 2003.

 

3)      Governance:

 

a)      Gordon Johnson's THES article. It was reported that the Chairman had written a letter to the THES in response to Gordon Johnson’s article. It was due to appear on 28 February 2003. It was noted that in the article Dr Johnson had not disclosed that he had been Chairman of the Governance Committee. It was reported that the Governance Committee had been discharged at the last Council meeting.

 

b)      Anne Campbell (including article in Varsity). It was noted that her article (which has since appeared on the EducationGuardian website) does not seem to have been based on a balanced briefing (e.g. she suggests that Grace 3 of the governance proposals would have made the Vice-Chancellor more accountable, and believed that the governance proposals addressed the problems that resulted in CAPSA). The Board wondered who had briefed her.  It was resolved to write to her (including our flysheet and governance response), and to seek a meeting with her.

 

Action: The Secretary and Chairman to write to Anne Campbell.

 

c)      Planning for the Discussion. It was agreed to hold an extra meeting on 6 March 2003 at 12.00 in order to prepare for the Discussion on 11 March 2003. There was a Discussion (a) as to the type of person who might serve on a potential Syndicate, and (b) how the membership of such a Syndicate might be decided (e.g. nominations from multiple bodies such as Council, the General Board, the Consultative Committee, the Audit Committee, the Colleges Committee and possibly ourselves). It was reported that in his Darwin Lecture Malcolm Grant had advocated a very open and consultative approach as regards his commission on GM foods; maybe there were lessons there for such a Syndicate.

 

d)      Rerun graces. It was reported that the three Graces that had supposedly passed were being rerun in order to correct oversights. The Board resolved to have nothing to do with the rerun of these Graces, and to let that be known to anyone who asked.

 

4)      Planning for the 8th Report. There was a need to start planning for the 8th Report now. There was a need for a meeting with the Registrary before then. We also need to try and find someone to provide administrative help. For that we need a person specification.

 

Action: David Howarth to write a person specification.

 

5)      Any other business.

 

a)      The meeting with Malcolm Grant to discuss the Financial Working Party report will take place on Wednesday 5 March. It was suggested that the report will suggest lifting the freeze on posts, and will suggest that we need to plan better for the future.

 

Action: The Chairman to ask for a copy of the report in advance of the meeting.

 

b)      It was noted that there would be Scrutiny elections next term.

 

6)      The Director of Finance, Andrew Reid. The Director of Finance (DoF) arrived at about 13.00. He provided a copy of the auditor’s management letter (both preliminary and final versions). He noted that the letters were not particularly helpful, but that the Audit had been rigorous, it had been a good exercise, and CUFS had helped significantly. The Board thanked him and his team for the improvement in the presentation of the accounts.

 

As regards that Lauterpacht centre, the DoF agreed that it was not finance’s finest hour. An investment had been double counted by a junior member of staff as a result of an unclear report from CUFS. He informed the Board that the form of the reports from CUFS had now been improved, and procedures had been improved. He emphasised how good the training courses for CUFS were, and that more of the University needed to go on them. He noted that they took ½ day. It was suggested that many PIs did not have ½ day to spare, but that drew little sympathy from the DoF. The question also arose that if CUFS was so good, and if the courses so good, how did the junior member of staff come to make the mistake?

 

There was a discussion of the Research Grant Module (RGM). The DoF noted that there was the odd fundscheck failure and the odd miscalculation of indirect overheads, and that the RGM’s performance was acceptable 99.5% of the time. PIs should encounter few problems. The problems were with the invoicing and billing to sponsors, with fundscheck failures and with failures to calculate overheads. Within RSD there were workarounds, but these were manpower intensive (as a result RSD had had to employ extra staff, especially to clear the backlog). The University was not billing sponsors as fast as might be ideal, although what was going out was reasonably accurate.  The University was moving to proper accounts billing, and less fire-fighting was now needed as workarounds were found. There was now a better working relationship with Oracle, with new patches being added (e.g. there had been a recent patch to help cure the fundscheck failures). The DoF stated that there should now be only the odd fundscheck failure if a grant was properly setup, e.g. if failed purchase orders were cleared, and if those using the system went on the appropriate training courses.

 

Action: The Secretary to check re fundscheck failures.

 

In summary, a solution to the RGM problems seems to be in sight. The problems that remain should not be affecting departments and/or PIs, although the reporting from the RGM still needs to be made more user friendly.

 

The DoF explained that he was the University’s risk officer, and was on the University’s risk committee. He believed that Malcolm Grant had chosen the members of the committee who include the Treasurer (who had Y2K experience), Andrew Thompson, the Chairman of the Audit Committee, Malcolm Longair (as a representative of a large science department), and Anne Davis. One of the aims of the committee was to embed a risk culture. The DoF agreed that risk had not always been evaluated effectively, and that he thought that if the risk committee had existed both CMI and CAPSA would have been looked at differently. He thought that the risk committee could help in improving decisions.

 

The DoF reported that about 20% of the members of the Assistant Staff Pension Fund are members of CUP and UCLES. As a result provisions of FRS17 can be used so that the pension fund does not appear on the balance sheet. In July 2000 there was about 135% cover on the Minimum Funding Requirement (MFR), but of course since then there have been significant falls in the price of equities as a result of the bear market. Questions were asked as to whether MFR was the correct measure to assess the viability of the fund, as to what the position of the fund was in July 2002 and what it was likely to be in July 2003, as to whether there would be a deficit and a possible hit to reserves if the fund were brought onto the balance sheet, and as to whether the Financial Working Party had considered this risk. The DoF stated that the risk was being monitored, but it was not clear to the Board that the University had adequately assessed the risk (even though it was apparently not forced to by FRS17).

 

There was a discussion of the fund for land and buildings. Members of the Board noted that asset sales reduce income and therefore asked whether that reduction in income had been fully taken into account. Similarly had the rate of return on cash (as a result of a sale) been taken into account, and which body decided which assets should be sold? It was not clear to the Board who saw the whole picture.

 

The DoF described the structure of the Finance Division. There are three subdivisions: financial operations (headed by a Principal Assistant Treasurer), financial services (headed by the Deputy Treasurer), and financial systems.

 

The DoF was asked about the financial implications of the Freedom of Information act. He said that such matters had not yet been considered in detail.

 

The Board asked about the cost of legal advice, and the significant increase in legal costs the occurred last year. The DoF said that he had noted the increase previously, and investigated it; however he could not recall the details immediately (although he thought that the EU procurement had not been a significant expense). He said that David Parsons (based in RSD) was the University’s corporate lawyer. He said that costs incurred in a planning appeal, e.g. that over the primate house, would be charged to relevant project rather than being charged to central funds. He repeated that he was concerned with value for money, and would seek it by tendering, etc. When asked about how one assesses value for money for legal services, the DoF said that was really a question for the Registrary.

 

When asked about the accounts of the Museum of Archaeology and Anthropology the DoF said that Statutes trump Ordinances that trump the “blue book”. The Board approved.

 

The DoF was asked why the expenditure on general consultancy had increased significantly in the last year. He promised to come back with an answer.

 

The DoF was asked about the HEFCE audit letter. He said that the Board should ask for that from the Registrary. He noted that the Auditors had not signed off the accounts as being true and fair. He said that a working group was investigating what to do with the accounts as regards integrating the Press and Local Examinations Syndicate account.

 

In response to a question the DoF noted that the securities element of the endowment (about 60%) was managed by one firm. He said that the investment committee was happy with the risk of having all the University’s endowment funds with one fund manager, but that   the investment committee reviewed this decision regularly. He said that counter party risk, investment style, management style, etc. were discussed regularly at the investment committee. The Board tentatively raised the question as to whether it might see the minutes. The DoF said the committee were not wedded to management by one firm and had moved from Foreign & Colonial. The question was raised as to whether the Wood-Mackenzie performance index is the right benchmark; the DoF had no firm view. He said that the investment committee did assess risks. The Board wondered whether the same academic discipline was applied within such committees as to research. The Board noted that the management letter had raised the issue of the management of investments.

 

The DoF said that it was conventional for a development office to cost approximately 15 –20% of the funds raised. When asked whether the development office was value for money he referred to the development office’s own Report. The Board noted that it was difficult to identify from the accounts what funds had been raised by the University, e.g. it was difficult to identify donations.

 

7)      Date of the next meeting. The next meeting will be held on Thursday 6 March at noon in Selwyn College.