Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
Summary of the University’s Structure of Corporate Governance
The University is committed to best practice in all aspects of corporate governance. This summary describes the manner in which the University has applied the principles set out in the UK Corporate Governance Code, in so far as they apply to the higher education sector. The University has followed the internal control guidance for directors on the Code as amended by the British Universities Finance Directors Group, and has also aligned its practice fully against the principles set out in the Scottish Code of Good Higher Education Governance (Revised 2017). The purpose of this summary is to assist the reader of the financial statements to understand how the principles of good governance set out in both codes have been applied.
The University is not required to comply with the UK Corporate Governance Code. However, it has reported on its Corporate Governance arrangements by drawing upon best practice available, including those aspects of the UK Corporate Governance Code that it considers to be relevant to the company and best practice, and it has done so throughout the year ended 31 July 2019. The University Court also considers that the University is compliant with the principles of the Scottish Code of Good Higher Education Governance 2017.
Consistent with Article 4(9) of the University’s Statutory Instrument and the Scottish Code of Good Higher Education Governance (2017), the University Court has adopted a Statement of Primary Responsibilities which includes provisions relating to:
- determining the University’s mission and strategic vision, its strategic plan, key performance indicators (KPIs) and annual budgets, fostering an environment in which the objects of the University are achieved with due regard to the interests of students, staff, and other stakeholders;
- appointing a Chancellor;
- appointing a Principal and Vice-Chancellor of the University, including the terms and conditions attaching to such appointment, and putting in place suitable arrangements for reviewing their performance;
protecting the reputation and values of the University, and overseeing its activities; - ensuring, in conjunction with Senate, the quality of institutional educational provision and adequate provision for the general welfare of students;
- ensuring that non-discriminatory systems are in place to provide equality and diversity of opportunity for staff and students;
- ensuring adherence to the funding requirements specified by the Scottish Funding Council in its Financial Memorandum and other funding documents;
- ensuring the establishment and monitoring of systems of control and accountability, including financial and operational controls and risk assessment, clear procedures for handling internal grievances and “whistleblowing” complaints, and for managing conflicts of interest; and
- monitoring institutional performance against plans and approved KPIs which, where possible and appropriate, should be benchmarked against other comparable institutions.
The full Statement of Primary Responsibilities can be found as part of the Court Members’ Handbook on the University website.
The University Court is responsible for the University’s system of internal control, and for reviewing its effectiveness. This system relies on management informing the University Court of any potential internal control issues and proposing to the University Court any necessary remedial action. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable, and not absolute, assurance against material mis-statement or loss.
The University Court is satisfied that there is an ongoing process for identifying, evaluating and managing the University’s significant risks, which has been in place throughout the year ended 31 July 2019 and up to the date of approval of the annual report and financial statements. This process is regularly reviewed by the University Court, and accords with the Turnbull guidance, as applicable to the higher education sector. The University has in place a business continuity and risk management and policy framework for the whole organisation. In addition, each of the key areas within the institution, including the Executive Board, has in place local procedures detailing action to be taken in response to a potential or actual disaster. Risk management is a standing item on the agenda of the Executive Board and the Audit and Risk Committee, and regular reports are made to the University Court.
The University Court comprises lay and other categories of persons appointed under the University’s Statutory Instrument. The majority are non-executive, and the roles of Chair and Vice-Chair of the University Court are separated from the role of the University’s chief executive, the Principal and Vice-Chancellor. Under the 2007 Order of Council, the University Court delegates to the Principal and Vice-Chancellor the organisation, management and discipline of the University. In discharging these functions, the Principal and Vice-Chancellor is subject to the general control and direction of, and is accountable to, the University Court but otherwise has all powers and duties of the University Court in relation to these functions. The University maintains a register of interests of members of the University Court and senior officers, which is published on the University website.
To assist members in the performance of their duties, members of the University Court were offered, and attended, several training and development opportunities during 2018-19. These included external training sessions, discrete development and planning away days, as well as presentations on strategic themes relevant to the work of the University at each Court meeting.
Training and development opportunities offered to Court members in 2018/19 included:
- Leadership Foundation for HE (Advance HE) – New Governors Scotland module – 24 October 2018, Edinburgh
- Onboard Training - The Effective Audit and Risk Committee: 22 October, Edinburgh: 10 December, Stirling: 4 July 2019, Stirling
- On board Training - Essential governance training for Board Members and Audit Committee Members, 10 December, Stirling.
- Leadership Foundation for HE (Advance HE) - Governance in Scotland: What’s changing? 20 February 2019
- Scott Moncrieff Non-Executive Directors Forum, ‘ Learning Lessons’, 13 March, Glasgow
- Leadership Foundation for HE (Advance HE): Rethinking Governance online course.
New members also received a formal induction session supported by the Court Members’ Handbook, published originally in October 2016 and updated annually.
In accordance with the Financial Memorandum with the Scottish Funding Council (SFC), the University Court is responsible for setting the strategic direction of the University, the approval of overall institutional budgets and major developments and the receipt of regular reports from executive officers on the day to day operation of its business and its subsidiary companies. The University Court has five Ordinary meetings per annum, and has provided delegated authority to a number of Committees, as set out below.
Each of the standing Committees of the University Court is formally constituted with published terms of reference, and with membership comprised mainly of lay members of the University Court, one of whom is the Convener. Lay members are represented on the Equality and Diversity Committee and the Health and Safety Committee, both of which report to the University Court.
The Audit & Risk Committee meets at least three times annually to discuss audit, risk and control matters, with the University’s external and internal auditors in attendance as appropriate. The Committee considers detailed internal audit reports and recommendations for the improvement of the University’s systems of internal control, together with management responses and implementation plans. It also receives and considers reports from the Scottish Funding Council where such reports impact on the University’s business, and monitors adherence to the regulatory requirements. It reviews the University’s annual financial statements. Senior executives attend the Audit & Risk Committee as necessary, but are not in membership. The Committee meets at least once a year with the external auditors for independent discussion in the absence of executive officers. The identification, assessment and management of risk is a standing item at each meeting of the Committee, and these matters are reported thereafter to the University Court.
The Finance & Estates Committee reviews and recommends to the University Court the University’s financial strategy, as well as the annual revenue and capital budgets. It monitors performance in relation to approved budgets and borrowings through the use of key performance indicators, and through a review of quarterly and annual financial reports. The Committee also considers matters relating to the development of the University’s estate.
The Nominations Committee makes recommendation to the University Court on appointment to vacancies in the University Court lay membership, and on appointment to vacancies in the standing committees of the Court in line with each respective committee’s skills matrix. The Committee forms the Appointing Committee for the election and appointment of the Chair of the University Court, as provided for in the Queen Ƶt University, Edinburgh (Scotland) Amendment Order of Council 2019. In assuming this role, the Committee acts in accordance with sections 3 to 8 of the Higher Education Governance (Scotland) Act 2016, and in line with the appointment process set out in Section 11 of the Standing Orders of the University Court approved by the University Court on 26 June 2019.
The Senior Management Remuneration Committee develops, on behalf of the University Court, senior management remuneration policies and processes for final determination by the University Court. The Committee determines and reviews the salaries and terms and conditions of the Principal and members of the Executive Board in line with agreed policies, and in accordance with good corporate and higher education governance. The Committee also reviews arrangements in place for determining the salaries of those senior staff with Professorial title.
The Executive Board comprises the Principal, the Deputy Principal and five senior officers of the University. It receives reports on key performance and risk indicators, and discusses any control issues brought to its attention. The Executive Board and the Audit & Risk Committee receive regular reports from the internal auditors, with the role of the Audit & Risk Committee in this area being confined to a high level review of the arrangements for internal financial control. The University Court receives reports on risk and control issues from management and the Audit & Risk Committee as appropriate.
Higher Education Governance (Scotland) Act 2016
The Higher Education Governance (Scotland) Act 2016 (Commencement, Transitory, Transitional andSavings Provisions) Regulations 2016 were laid in Parliament on 24 November 2016, and came into force on30 December 2016. The University Court has assessed in full the impact of the key provisions of the Act onthe University’s governance arrangements, including those concerning the election of the senior lay memberof the governing body, and the composition and size of the Court and the Senate. The Queen ƵtUniversity, Edinburgh (Scotland) Amendment Order of Council 2019 was laid before the Scottish Parliamenton 18 June 2019, and came into force on 1 October 2019.
The requirements for membership of the academic board of a higher education institution have been met fully.The Order of Council 2007 does not set out in detail the composition of the Senate, but rather states simplythat the Court ‘shall establish a Senate which shall be constituted and regulated in a manner specified by theCourt from time to time on the recommendation of the Principal’. Consequently, there was no requirement toamend the Order of Council to bring it in line with the legislation.
The University Court completed a full mapping of its alignment with the requirements of the revised ScottishCode of Good Higher Education Governance on its publication in 2017. The one outstanding matter arisingfrom that mapping was concluded on 1 October 2019, with the publication of the amended Queen ƵtUniversity Order of Council. In particular, the amended Order established rules that formed the basis of Chairof Court recruitment arrangements during 2019-20. Subject to this point, in the opinion of the University Court,the University complied with the principles and provisions of the 2017 Scottish Code of Good Higher EducationGovernance throughout the period 2019-20.
Review of Effectiveness
The University Court has established as a Key Performance Indicator of the effectiveness of its performance, and of its Committees, ‘Full alignment with the Scottish Code of Good Higher Education Governance’. The detailed work undertaken during 2018-19 on the revision of the Queen Ƶt University Order of Council, and in particular the establishment of rules for the appointment of the Chair, provided the Court with the necessary assurance that the University is fully aligned with the Code. That is on the basis that the full mapping undertaken in 2017-18 identified the incorporation of such rules within a revised Order of Council as the one action outstanding.
The Court undertook its Annual Effectiveness Review in February 2019. The review was conducted by means of an online survey comprising Likert scale questions and opportunities for members to provide free text comments, and a session facilitated on 7 February 2019 (day 2 of the annual Court Away Days) by Professor Graham Caie, Convener of the Audit and Risk Committee. A significant majority of respondents ‘strongly agreed’ or ‘agreed’ that the elements necessary for effective governance identified in the questionnaire were in place. The review identified a number of areas where enhancement to a process or to information provided to members of the Court and its committees was suggested as beneficial. Those enhancements have been put in place for 2018-19.
Throughout 2018-19, the University Court reviewed a full suite of Key Performance Indicators (KPIs) that it has established as part of its wider assessment of its effectiveness.
Equality and Diversity
While responsibility for mainstreaming equality and diversity within the University rests with all staff and students, the University Court is, as a matter of law, responsible for ensuring compliance with the Equality Act 2010 and for ensuring that the University meets its public sector equality duty (PSED) and the specific duties relevant to Scotland. The University Court exercises such oversight through the Equality and Diversity Committee (EDC), which is responsible to the University Court for the development of the strategic framework for equality in service provision and in employment across the University.
Embedding equality and diversity in our governance structures and in our strategic planning process is critical to mainstreaming equality and diversity, as is defining responsibilities, setting performance measures and monitoring progress against those measures. The University’s Mainstreaming Report and Equality Outcomes, which sets out progress on mainstreaming equality and establishes a number of outcomes for the period 2017-2021, was approved by the Court in April 2017. The report can be found here.
The University’s Gender Action Plan 2017-20 restates the University’s commitment to ensuring that the University Court (Court), Senate and all committees and decision making bodies of the University are representative of its community. In particular, the University is committed to achieving the following goals and targets:
- Achieving practical gender balance amongst lay members of Court. Practical gender balance will be achieved where the lay membership of Court constitutes not less than 40% of either gender.
- Undertaking an annual review of the equality and diversity characteristics of the Court or as a specific need for review is identified.
- In undertaking any recruitment activity concerning the appointment of lay members of Court, the Court will have regard to equality and diversity characteristics of the Court and will take positive actions to increase the likelihood of applications being submitted from applicants that would enhance the representative character of the Court.
The outcomes established in these reports, and within the University’s Outcome Agreement with the SFC, form the basis of the Equality and Diversity Committee Action Plan, updates to which were reported as part of the University’s Public Sector Equality Duties in April 2019.
At the time of writing, the gender balance of membership of Court sits at 53% female and 47% male. Equality Monitoring was extended to all Court members during 2017/18.
System of Internal Financial Control
The key elements of the Group’s system of internal financial control include the following:
- clear definitions of the responsibilities of, and the authority delegated to, heads of academic divisions and support units;
- a comprehensive medium and short-term planning process, supplemented by detailed monthly income and expenditure reports, and annual capital budgets;
- monthly review of financial results involving variance and KPI reporting and updates of forecast out-turns;
- clearly defined and formalised requirements for approval and control of expenditure, with investment decisions involving significant capital or revenue expenditure being subject to formal detailed appraisal and review according to approval levels;
- comprehensive financial regulations, detailing financial controls and procedures;
- an independent professional internal audit team whose annual programme is approved by the Audit & Risk Committee.
The Audit & Risk Committee, on behalf of the University Court, reviews the effectiveness of the Group’s system of internal financial control as part of a rolling programme. The Committee has formed the opinion that the University’s systems provide a reasonable basis for maintaining control and ensuring the achievement of economy, efficiency and effectiveness. In reaching its opinion, the Committee has taken into account the opinions of the internal and external auditors, as well as information and representations provided by University management to the Committee and to the University Court. The Committee has noted that University management is continuing to work towards further strengthening of the control environment with a particular focus on those areas of significant risk within the wider control framework. Any system of internal financial control can, however, only provide reasonable, but not absolute, assurance against material mis-statement or loss.
On behalf of the University Court
Sir Paul Grice
Principal & Vice-Chancellor
Dr Frances Dow, CBE
Chair
27 November 2019
