Luton's plan broke basic finance rules

March 4, 2005

Luton University repeatedly ignored basic financial practice during a now-abandoned undertaking to build a multimillion-pound student plaza, documents released under the Freedom of Information Act reveal.

The Times Higher reported last year that the university wrote off £50,000 when it scrapped an undertaking to build the plaza.

Internal audit documents reveal "deficiencies in the planning, project management and financial control of the project, and failures to adhere to the university's overall financial regulations".

The documents, released under the Act to a former member of Luton staff, show that the institution made four separate serious breaches of its own financial regulations during the early stages of the project, including failing to put contracts out to tender and failing to have signed contracts in place.

The university paid £500,000 in invoices with no purchase orders during the early stages of the project in 2002 and 2003.

Roger Kline, head of the universities department at lecturers' union Natfhe, said the news was particularly alarming given recent wide-ranging redundancies at the university.

"This explains why the current vice-chancellor put an immediate halt to this project," he said.

"One wonders how many jobs might have been saved if proper financial governance procedures had been in place at the time."

According to a summary report prepared for a university audit committee meeting in November 2003, several "serious control issues" were highlighted in an audit of the plaza project.

"Only limited assurance can be drawn as to the adequacy of the management of controls and processes to date," it says.

The report says that there was no competitive tendering process to appoint architects for the project, "which was contrary to financial regulations".

"The project management organisation was also appointed without formal tendering procedures having been undertaken," it says. The organisation was appointed on the recommendation of the architect.

The report discloses that there were no signed contracts for the architect, the multi-services engineer or quantity surveyor.

It says: "Work on the project had proceeded over a period of about a year... without the university's interests being safeguarded through contractual protection."

There was concern over the lack of purchase orders. "The situation regarding the issue of purchase orders to consultants engaged on the student plaza project was most unsatisfactory and represented a significant breach of financial regulations," the report says.

"About three quarters of the expenditure invoiced had not been subject to the raising of purchase orders. In monetary terms this meant that about Pounds 499,000 of the £638,000 so far invoiced was not related to purchase orders."

In a separate report to governors in January 2004, Alan Cook, chair of the audit committee, says: "The management of the project has been the subject of an internal audit report, which drew attention to the deficiencies in the planning, project management and financial control of the project, and failures to adhere to the university's overall financial regulations."

A spokeswoman for Luton said: "The audit identified breaches in our financial regulations but also acknowledged that the procedures had been amended so that no such breach could take place in future. None of those staff responsible for the breaches now works at the university."

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