Finance trio go as deficit revealed

April 18, 1997

THE University of Luton has been rocked by the shock revelation of serious deficits. Three top finance officers had their contracts terminated when the university discovered that an expected Pounds 1 million surplus last year had become a Pounds 1 million-plus deficit.

Between 30 and 40 posts have already been lost, all new recruitment has been frozen and more job losses are expected. Unions are discussing with management where the axe is likely to fall. All staff aged over 50 have been asked to volunteer for early retirement or redundancy. Compulsory redundancies could follow.

Vice chancellor Tony Wood has written to academics explaining that the financial situation had come as a shock and was still not entirely clear. He said there was no question of fraud. It was "pure bad financial accounting".

"Large numbers of debtors were put on the list who didn't owe us money and in some cases didn't even exist," he said. These mistakes were only identified a month before the end of the financial year and other mistakes made in previous financial years are still being untangled. They are expected to take about three years to rectify.

"We are still not 100 per cent clear exactly what the situation is," he said. "We are still digging out one or two of the previous practices which would have cast doubt on the true financial position, but we are pretty well there now."

He said the entire management had found themselves in a difficult position. "Of course I should have known about what was going on but how can I manage an institution if I'm not given the correct information?" he said.

The problems came to light last summer when the finance director realised he had made a mistake shortly before auditors were due to inspect the accounts. His contract was terminated and the controller of finance and deputy controller of finance left over the next few months. Since January, the department has been restructured and new safeguards have been introduced. The university is advertising for a new director of finance.

Dr Wood said the financial difficulties had been made worse by a drop in Government grant to all universities. Luton would be underfunded by about 3 per cent next year. "We have had a double hit. One imposed by our own inadequacies, plus one from the Government," he said. This means it will have to make savings of about Pounds 1.3 million next year.

Frank Carr, branch chairman of the lecturers' union Natfhe, meets managers formally next week.

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