ANU governance ‘largely’ fit for purpose

Audit finds shortcomings in Australian university’s capital works, budget, fraud control and executive pay arrangements

November 29, 2021
Source: iStock

The Australian university that reveals more than any other about how much it pays senior staff has been chastised for lax oversight of executive remuneration, with an audit of the Australian National University (ANU) finding that its reporting of senior administrators’ earnings is out of step with federal legislation.

The commonwealth auditor-general has urged ANU to ensure that its monitoring and reporting of senior executive pay comply with the rules, and to reassure its council that its senior management remuneration framework is “appropriate”.

The suggestion features among six recommendations in a report into ANU’s governance and control framework. The university has accepted all six and says it has begun implementing them.

The audit was launched after 2019 investigations of four other commonwealth entities raised questions over whether their governance arrangements were “fit-for-purpose” to deal with “disruptive events”. ANU has since experienced the turmoil of severe bushfire smoke, a catastrophic hailstorm and two major cyberattacks, and it endured the worst pandemic-induced financial damage of any Australian university.

The institution’s A$314 million (£168 million) 2019 surplus collapsed into an A$18 million deficit last year, mainly because of a A$172 million crash in investment income and an A$82 million downturn in international students’ fees.

The audit found that the university’s governance was “largely fit-for-purpose” but criticised its financial and risk management arrangements, highlighting “deficiencies” in its capital works, budget, delegations management and fraud control systems.

The report cites a A$303 million student accommodation project that was put on ice in 2020 as a Covid austerity measure, but would have been “paused regardless” because of design, planning, budget and contract management issues that emerged during construction.

A consultant’s review found that key planning documentation had never been developed and the university had no detailed capital investment plan or guidelines for developing business cases for capital works.

Another consultant’s report, commissioned to investigate an earlier fraud, found problems with the university’s financial policies and processes and the computing systems used for budget management.

The audit also found that the university had failed to complete updates to its financial delegations framework, undertake some fraud risk assessments or implement five of six promised improvements to its fraud control framework.

The university said the pandemic and natural disasters had presented “an enormous, complex and long-term challenge for our staff and students, our research, our financial health and the campus itself. The ANU’s robust governance arrangements have…served the university well in the most trying of circumstances. An established culture of continuous improvement prepares us well to address areas identified for improvement.”

The audit also found that ANU’s annual reports did not explain how remuneration had been determined for any executive apart from the vice-chancellor, whose pay had been benchmarked against comparable overseas institutions.

“The governance arrangements provide largely effective oversight of the management of the ANU, except in relation to senior executive remuneration,” the report says.

This finding may alarm other universities given that ANU publishes a detailed breakdown of payments to its 10 “key management personnel”, by name, along with indicative breakdowns of the earnings of about 400 other highly paid staff. Most institutional annual reports reveal only the approximate pay of a dozen or so unnamed executives.

“Our disclosure of executive salaries forms part of our maturing approach to reporting and commitment to transparency,” an ANU spokesman said.

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