Issues for Consideration by Governing Bodies and Executive Boards | Lessons Learnt from the University of Dundee (Part Two)

Accountability, risk, and governance lessons from the University of Dundee

This is part two of a four-part series, which presents some of the key learning points arising from the report by Professor Pamela Gillies into financial oversight and decision-making at the University of Dundee. It raises a number of questions for discussion by HE governors and leaders.

You can read the other blogs in the series here:

• Part one – Overview
• Part three – Financial management, operations and financial reporting
• Part four – Culture, challenge and openness

Accountability, risk and governance

Gillies identifies a range of gaps, failings, missed opportunities, structural and cultural issues in the University’s accountability and risk framework and governance arrangements:

UEG [University Executive Group] as a group failed throughout the latter part of FY24 to properly respond to the worsening situation and collectively failed to make appropriate disclosures under the Nolan Principles to FPC [Finance and Planning Committee] and Court.

FPC failed in its reviews of FY24 forecasts for FY25 (21 May 2024), and again at its following meeting on 10 October 2024. There was no unexpected event or culmination of unexpected events beyond those impacting the sector as a whole. The University was not ‘different’. This was an embedded issue and was reasonably foreseeable in May 2024.

Court failed in its governance responsibilities in June 2024. The failure of the University’s financial governance system was self-inflicted and experienced multiple times and at multiple levels. This led to a failure in identifying the worsening situation and not responding early enough.

The university failed to act following a big decline in overseas Postgraduate Taught (PGT) student recruitment in September 2023 and January 2024. Indeed, it continued to implement its plans for investment and growth and did not act until Q3 FY25 when a recruitment freeze was introduced. During this period staff numbers, and operational expenditure continued to grow, although the decline in student numbers and the wider environmental factors made the worsening financial position entirely predictable. No re-evaluation of plans or cost reductions were introduced, and the Principal and Vice-Chancellor delivered a very upbeat message to staff about the University’s position in March 2024.

The first of the six key elements set out in the Committee of University Chairs (CUC) Code concerns accountability:

The governing body is collectively responsible and accountable for institutional activities, approving all final decisions on matters of fundamental concern within its remit.

Within this broad requirement the Code also specifies that:

The governing body has overall responsibility for all decisions that might have significant reputational implications for the institution’s sustainability (including partnerships or collaborations). It therefore needs assurance that the institution:

a) meets all legal and regulatory requirements imposed on it as a corporate body;

b) complies with its instruments of governance such as statutes, ordinances and articles; and

c) meets the requirements falling upon the institution in respect of public funding issued by bodies, including income from the Student Loan Company.

The second key element in the CUC Code is sustainability, which is about the mission, strategy, aims and values of the institution:

In ensuring the sustainability of the institution the governing body actively seeks and receives assurance that delivery of the strategic plan is in line with legislative and regulatory requirements, institutional values, policies and procedures, and that there are effective systems of control and risk management in place.

This requirement for assurance is developed further in the Code as follows:

The governing body will need to receive regular, reliable, timely and adequate information to monitor and evaluate performance against the strategic plan. The governing body’s role is to have oversight of performance and constructively challenge it, encourage quality enhancement, maintain and raise standards, celebrate achievements and learn from difficulties.

The governing body needs assurance that the institution is meeting the conditions of funding as set by regulatory and funding bodies and other major institutional funders. These include: 

• the need to use funds in line with the principles of regularity, propriety and value for money; 
• robust systems of financial control and governance;

As will be seen when we turn to financial reporting and the broader cultural issues in parts 3 and 4, the information was not there, performance was not evaluated effectively and there was an absence of meaningful challenge. These, and other factors, constituted a fundamental failure of governance in the University.

The head of institution and the governing body

The CUC Code also includes a specimen ‘Statement of Primary Responsibilities’ for a governing body. This translates the key elements into specific responsibilities which every governing body should have adopted. Several of these refer to the relationship with the head of institution (HoI), including:

4. To delegate authority to the HoI for the academic, corporate, financial, estate and human resource management of the institution, and to establish and keep under regular review the policies, procedures and limits within such management functions as shall be undertaken by and under the authority of the HoI. 
5. To appoint the HoI as Chief Executive and to put in place suitable arrangements for monitoring their performance.

The Gillies report notes that the court was not perceived by most respondents who mentioned it

to be a forum for detailed discussion and debate especially about financial matters which were assumed to be ‘fine’ because the Principal had consistently told them ‘all was well’.

There was also an “unwillingness to challenge the Principal and UEG”, and very few people apparently dared to speak truth to power.

Effectiveness

Given the general lack of challenge to the principal and vice-chancellor and the inadequacies of financial reporting and monitoring, combined with the many other failings scattered across the report, it would be surprising if the University were delivering on the fifth of the CUC key elements, effectiveness:

The governing body ensures that governance structures and processes are robust, effective and agile by scrutinising and evaluating governance performance against this Code (and other Codes where an institution’s constitutional form requires it), and recognised standards of good practice.

One of the primary responsibilities as set out in the CUC Code is:

6. To establish processes to monitor and evaluate the performance and effectiveness of the governing body itself.

There is reference in the report to an external court effectiveness review taking place in July 2024, but it is not clear what the findings of this review were. The university’s response to Gillies says that the recommendations from the effectiveness review have been built into the wider action plan. However, in broad terms it would be difficult to make a case for the effectiveness of governance at the University given the scale and impact of the failings identified by Gillies.

Risk management

One of the other dimensions of the effectiveness element of the Code relates to the response to strategic risks:

The governing body needs to focus on strategic risks and emerging opportunities for the institution and have enough flexibility to respond to these quickly and effectively.

Gillies makes a number of references to the lack of action on identified risks, including in relation to a new digital system intended to support student recruitment named Blueprints. The worsening of the student number growth risk is reported to a number of committees:

The risk register reviewed by both UEG and ARC [Audit and Risk Committee] increased the risk of the inability to meet budgeted student growth to ‘red’ in March 2024 to a score of 16 (on a typical ‘5×5 score card’) – based on the international visa changes but with no mention of Blueprints. Indeed, at the same meeting the risk of the inability to deliver major capital projects was rated as green with a score of 6. When reviewed by the same groups in October 2024 the growth risk had risen, further impacting financial sustainability but again with no mention of Blueprints.

At the ARC meeting on 12 March 2025, an update to the Risk Register was given. The register notes the ‘inability to recruit students’ risk had a High-Risk score (25) and was increasing partly due to challenges with the Blueprints system.

It is not clear what action, if any, was taken as a result of this change in risk profile (but note that the outcome of the March ARC meeting is unknown as the minutes followed the conclusion of the review).

Gillies draws two general lessons from this example of a failure properly to manage a changing level of risk:

2. Active and critical appraisal and challenge of the Risk Register;
3. Where there are obvious sensitivities (high risk rating) on student recruitment or financial sustainability, there should be regular updates to the Finance Committee (or equivalent) as a check and balance on budgets and forecasts;

The critical nature of student recruitment to the university’s ambitions for growth and its failure on several occasions to get close to its targets also demonstrates the vital significance of key indicators such as progress towards recruitment targets as means of early warning of issues to come. Dundee’s operations appeared not to fully take this into account until it was too late (despite warnings in relation to the Blueprints system and from the vice-principal International as noted in the report). The importance of awareness on the part of executives and governors of progress towards hitting student recruitment targets, which delivers a large element of income for many institutions, is hard to overstate.

Specific governance issues

Gillies makes a number of specific observations on governance practices at the University. The report is somewhat critical of the role of ARC, and there is clearly a view that the committee was insufficiently curious about identified risks and problems but also not as robust it should have been in tackling known problems. As stated in the general lessons section:

11. The ARC should be able to stand back on any matter and review or enquire. The ARC should be the conscience of the University – the ultimate back stop for any matter.

In common with many institutions the university had the chair of FPC in attendance at ARC, and vice versa, but the report’s view is that this arrangement compromises the objectivity of the ARC chair and the independence of ARC. This is something for governing bodies to consider for the future.

In similar vein, the report identifies another structural governance risk:

13. In extremis, and it is seen (UK wide), institutions have a habit of forming a ‘Committee of Chairs of Committees’ or similar. In doing so, the Chair of ARC automatically loses their objectivity. The ‘conscience of the University’ is lost and objectivity over new and emerging risks can readily be overridden by a bias from prior (and detailed) consideration in a different context to ARC’s considerations;

Moreover, this kind of informal committee can end up bypassing formal governance structures in a quite unhelpful way, even where terms of reference are properly articulated and approved by the governing body (which did not appear to happen at Dundee).

Governance operations

Element 5 of the CUC Code includes the stipulation:

The Secretary (or Clerk) is responsible to the governing body for the provision of operational and legal advice in relation to compliance with governing instruments, including standing orders. They are also responsible for ensuring information provided to the governing body is timely, appropriate and enables informed decision making.

There are many examples in the report of vital papers for major University committees being provided late, extremely late (even retrospectively), or not at all and, even where they were circulated, not always being fit for purpose.

Timely distribution of properly-formulated papers is a governance fundamental and has to be a core part of ensuring effective operations. Accurate minuting is another absolute requirement and again there are comments of bias and other inadequacies in the report.

Discussion points for governing bodies and executive boards

• Is the governing body fully sighted on the principal risks facing the institution and the mitigations in place?
• Do the governing body and executive board have full oversight of the latest key performance indicators, including comprehensive, timely and accurate financial information and any leading indicators such as student recruitment data?
• Is the governing body satisfied that it could demonstrate that its audit and risk committee is sufficiently independent?
• When was the last time the governing body reminded itself of its duties and primary responsibilities under the CUC Code/Scottish Code? Is the governing body confident that it is properly executing its legal responsibilities, requirements of public funding bodies and lenders and its duties as set out in the Code and governing instruments?
• How effective is the institution’s approach to the identification, oversight, monitoring and response to strategic risks? Is risk front and centre in governing body/executive board discussions?
• Are the arrangements adequate to guarantee the advance preparation, quality and timely provision of papers and other material to support effective decision-making by the governing body/executive board?

How can we help?

You can find the other three sections of this four-part note via the following links:

• Part one – Overview

• Part three – Financial management, operations and financial reporting

• Part four – Culture, challenge and openness

If you would like any further information or support in relation to higher education governance issues, then please do get in touch with our expert education team.