Audit reveals some Welsh colleges still ignoring best practices

July 30, 1999

Conflicts of interest, secret decision making, unaccountable leadership and poor control of public money continue to blight college management, according to a report on further education in Wales by the public spending watchdog, writes Phil Baty.

The report by the National Audit Office found that the Further Education Funding Council for Wales is failing to identify colleges heading for financial crises. The funding council has been told by the NAO to toughen-up on problem colleges.

A high standard of teaching in colleges has been maintained in the face of a "severe funding squeeze", which has left the sector facing a forecast deficit of Pounds 6 million this year, compared with a combined Pounds 200,000 million deficit last year, the report says.

But the NAO found that while the number of colleges in deficit has risen from nine last year, to a forecast 14 this year, colleges still ignore best practice in financial management and governance.

The NAO visited eight of the sector's 28 colleges in 1997 and 1999 and found that after two years, and despite such scrutiny, many of the colleges had failed to put in place proper procedures.

Half of them had strategic plans with "significant weaknesses" and half had "poor procedures" for budget setting and financial reporting. Follow-up visits found "limited progress in this area". Just 25 per cent of all the colleges had human resource strategies, with the rest operating on a "piecemeal basis".

Governance, although generally "adequate" at the eight colleges, needed improvement. All eight had registers of interest, but the NAO found three "where governors had taken part in college business where there was a potential conflict of interest".

The NAO also found cases where departing principals sought to select their successors; where clerks to governing bodies were not sufficiently independent; where governors had no procedures for assessing the performance of the principal; and where governors were not being given proper financial information by managers.

The FEFCW, had "generally sound" systems for helping institutions in financial difficulty, but was "less successful" at spotting those heading for trouble. The NAO said the council should review its financial monitoring.

The FEFCW has been advised to introduce termly reviews of each college's overall performance and to require all institutions to have their five-year financial forecasts and mid-year returns certified by external auditors.

The FEFCW said it welcomed the report and was working "vigorously" to secure improvements in governance and management in the sector.

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