Corporate Governance Statement
Summary of the Universitys Structure of Corporate Governance
The University is committed to best practice in all aspects of corporate governance. This summary describes the manner in which the University has applied the principles set out in the UK Corporate Governance Code, in so far as they apply to the higher education sector. The University has followed the internal control guidance for directors on the Code as amended by the British Universities Finance Directors Group, and has also aligned its practice fully against the principles set out in the Scottish Code of Good Higher Education Governance (Revised 2017 and updated 2023). The purpose of this summary is to assist the reader of the financial statements to understand how the principles of good governance set out in both codes have been applied.
The University is not required to comply with the UK Corporate Governance Code. However, it has reported on its Corporate Governance arrangements by drawing upon best practice available, including those aspects of the UK Corporate Governance Code that it considers to be relevant to the company and best practice, and it has done so throughout the year ended 31 July 2023. The University Court also considers that the University is compliant with the principles of the Scottish Code of Good Higher Education Governance 2017 (update published March 2023).
Consistent with Article 4(9) of the Universitys Statutory Instrument and the Scottish Code of Good Higher Education Governance (2017), the University Court has adopted a Statement of Primary Responsibilities that includes provisions relating to:
- determining the Universitys mission and strategic vision, its strategic plan, key performance indicators (KPIs) and annual budgets, fostering an environment in which the objects of the University are achieved with due regard to the interests of students, staff, and other stakeholders;
- appointing a Chancellor;
- appointing a Principal and Vice-Chancellor of the University, including the terms and conditions attaching to such appointment, and putting in place suitable arrangements for reviewing their performance;
- protecting the reputation and values of the University, and overseeing its activities;
- ensuring, in conjunction with Senate, the quality of institutional educational provision and adequate provision for the general welfare of students;
- ensuring that non-discriminatory systems are in place to provide equality and diversity of opportunity for staff and students;
- ensuring adherence to the funding requirements specified by the Scottish Funding Council in its Financial Memorandum and other funding documents;
- ensuring the establishment and monitoring of systems of control and accountability, including financial and operational controls and risk assessment, clear procedures for handling internal grievances and whistleblowing complaints, and for managing conflicts of interest; and
- monitoring institutional performance against plans and approved KPIs which, where possible and appropriate, should be benchmarked against other comparable institutions.
The full Statement of Primary Responsibilities can be found as part of the Court Members Handbook on the University website.
The University Court is responsible for the Universitys system of internal control, and for reviewing its effectiveness. This system relies on management informing the University Court of any potential internal control issues, and proposing to the University Court any necessary remedial action. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute, assurance against material mis-statement or loss.
The University Court is satisfied that there is an ongoing process for identifying, evaluating and managing the Universitys significant risks, which has been in place throughout the year ended 31 July 2023 and up to the date of approval of the annual report and financial statements. This process is regularly reviewed by the University Court, and accords with the Turnbull guidance, as applicable to the higher education sector. The University has in place a business continuity and risk management and policy framework for the whole organisation. In addition, each of the key areas within the institution, including the Senior Leadership Team (SLT), has in place local procedures detailing action to be taken in response to a potential or actual disaster.
Risk management is a standing item on the agenda of the Senior Leadership Team and the Audit & Risk Committee, and regular reports are made to the University Court.
The University Court comprises categories of persons appointed under the Universitys Statutory Instrument, an amended version of which came into force on 1 October 2019. The majority of the membership is non-executive, and the roles of Chair and Vice-Chair of the University Court are separated from the role of the Universitys chief executive, the Principal and Vice-Chancellor.
Under the 2007 Order of Council, the University Court delegates to the Principal and Vice-Chancellor the organisation, management and discipline of the University. In discharging these functions, the Principal and Vice-Chancellor is subject to the general control and direction of, and is accountable to, the University Court, but otherwise has all powers and duties of the University Court in relation to these functions. The University maintains a register of interests of members of the University Court and senior officers, which is published on the University website.
To assist members in the performance of their duties, members of the University Court were offered, and attended a number of training and development opportunities during 2022-23. Members also received presentations on strategic themes relevant to the work of the University at each Court meeting. Training and development opportunities offered to Court members included:
- New Governors of Scottish HEIs, October 2022
- Governor Development Programme event for Scotland, May 2023.
- Introduction to Race Equality e-learning programme, March 2023 on-line
- Equality and Diversity Training, March 2023 - on-line
New members also received a formal induction session supported by the Court Members Handbook, published originally in October 2016 and updated annually.
In accordance with the Financial Memorandum with the Scottish Funding Council (SFC), the University Court is responsible for setting the strategic direction of the University, the approval of overall institutional budgets and major developments and the receipt of regular reports from executive officers on the day to day operation of its business and its subsidiary companies.
The University Court has five Ordinary meetings per annum, and has provided delegated authority to a number of Committees, as set out below. In line with good governance, the discussion and decisions of the University Court have been recorded in the form of confirmed minutes approved by members.
University Court members engaged additionally in detailed discussion at a Strategy Day held on 26 April 2023. The event provided members with the opportunity to discuss and agree matters of strategic importance under the following topics:
- A Sustainable University Ensuring our Success
- Financial modelling to 2027 revisited
- Student Number Growth Plan: Opportunities and Challenges
- Land Development
- Innovation and Enterprise: Building forward
Each of the standing Committees of the University Court is formally constituted with published terms of reference, and with membership comprised mainly of lay members of the University Court, one of whom is the Convener. Lay members are represented on the Equality and Diversity Committee and the Health and Safety Committee, both of which report to the University Court.
The Audit & Risk Committee meets times annually to discuss audit, risk and control matters, with the Universitys external and internal auditors in attendance as appropriate. Recent practice has seen the committee hold one of its meetings jointly with the Finance & Estates Committee.
The Committee considers detailed internal audit reports and recommendations for the improvement of the Universitys systems of internal control, together with management responses and implementation plans. It also receives and considers reports from the Scottish Funding Council where such reports impact on the Universitys business, and monitors adherence to the regulatory requirements. It reviews the Universitys annual financial statements. Members of the Senior Leadership Team attend the Audit & Risk Committee as necessary but are not in membership. The Committee meets at least once a year with the external auditors for independent discussion in the absence of executive officers. The identification, assessment and management of risk is a standing item at each meeting of the Committee, and these matters are reported thereafter to the University Court.
The Finance & Estates Committee reviews and recommends to the University Court the Universitys financial strategy, as well as the annual revenue and capital budgets. It monitors performance in relation to approved budgets and borrowings through the use of key performance indicators, and through a review of quarterly and annual financial reports. The Committee also considers matters relating to the development and maintenance of the Universitys estate.
The Audit and Risk Committee and the Finance and Estates Committee held a joint meeting in November 2022 at which the year-end financial statements relating to 2021/22 were presented for discussion and agreement.
The Nominations Committee makes recommendations to the University Court on appointment to vacancies in the University Court lay membership, and on appointment to vacancies in the standing committees of the Court in line with each respective committees skills matrix. The Committee met three times during the period of review and conducted one round of lay member appointments.
The Senior Management Remuneration Committee develops, on behalf of the University Court, senior management remuneration policies and processes for final determination by the University Court. The Committee determines and reviews the salaries and terms and conditions of the Principal and members of the Senior Leadership Team in line with agreed policies, and in accordance with good corporate and higher education governance. The Principal attends meetings of the Committee, but is not a member, and does not participate in any review by the Committee of their own remuneration or reward package. The Committee also reviews arrangements in place for determining the salaries of those senior staff with Professorial title. The Committee met twice during the period of this review. The committee met in December 2022, and agreed the application of the National Annual Pay Award to members of the Senior Leadership Team in fulfilment of Paragraph 5.8 of the Senior Management Remuneration Review Policy. No applications for incremental awards were received. The Committee also convened in June 2023 to consider revisions to the Senior Management Remuneration Review policy, discussed and agreed at its meeting in December 2022. Further work on the policy will be undertaken in late 2023.
The Senior Leadership Team comprises the Principal, the Deputy Principal, the Vice-Principal and University Secretary, the Chief Operations Officer, and the two Deans of School. It receives reports on key performance and risk indicators and discusses any control issues brought to its attention. The Senior Leadership Team and the Audit & Risk Committee receive regular reports from the internal auditors, with the Audit & Risk Committees role in this area being confined to a high level review of the arrangements for internal financial control. The University Court receives reports on risk and control issues from management and the Audit & Risk Committee as appropriate.
Higher Education Governance (Scotland) Act 2016
The Higher Education Governance (Scotland) Act 2016 (Commencement, Transitory, Transitional and Savings Provisions) Regulations 2016 were laid in Parliament on 24 November 2016, and came into force on 30 December 2016. The University Court has assessed in full the impact of the key provisions of the Act on the Universitys governance arrangements, including those concerning the election of the senior lay member of the governing body, and the composition and size of the Court and the Senate. The 91心頭, Edinburgh (Scotland) Amendment Order of Council 2019 came into force on 1 October 2019.
The requirements for membership of the academic board of a higher education institution have been met fully. The Order of Council 2007 does not set out in detail the composition of the Senate, but rather states simply that the Court shall establish a Senate which shall be constituted and regulated in a manner specified by the Court from time to time on the recommendation of the Principal. Consequently, there was no requirement to amend the Order of Council to bring it in line with the legislation.
The University Court completed a full mapping of its alignment with the requirements of the revised Scottish Code of Good Higher Education Governance on its publication in 2017. The one outstanding matter arising from that mapping was concluded on 1 October 2019, with the publication of the amended 91心頭 Order of Council which established rules that formed the basis of the Chair of Court election in January 2021. In the opinion of the University Court, the University complied with the principles and provisions of the 2017 Scottish Code of Good Higher Education Governance throughout the year to 31 July 2023.
Review of Effectiveness
The University Court has established as a Key Performance Indicator of the effectiveness of its performance, and of its Committees, Full alignment with the Scottish Code of Good Higher Education Governance. Throughout 2022-23, the University Court reviewed a full suite of Key Performance Indicators (KPIs) that it has established as part of its wider assessment of its effectiveness.
The Scottish Code of Good Higher Education Governance requires that governing bodies keep their effectiveness under review, as set out under paragraph 49 of the Code:
Paragraph 49
The governing body is expected to review its own effectiveness each year and to undertake an externally facilitated evaluation of its own effectiveness and that of its committees, including size and composition of membership, at least every five years.
In early 2022 we conducted our five yearly externally facilitated Court Effectiveness review, having extended the timeline for this because of the impact of COVID on University business. A Court Effectiveness Steering Group was established to oversee the review, and its work was facilitated by Advance HE. The scope of the review was defined as being to provide an evaluation of the effectiveness of the current arrangements for Court and Senate. The overarching judgement arising from the review was that the University Court continues to have in place effective arrangements to meet its key obligations, as set out in the University Court Statement of Primary Responsibilities. Based on the evidence considered, the review concluded that the Court could have full confidence in 91心頭s arrangements for academic assurance and enhancement, noting that quality mechanisms are applied consistently, including across online, international and collaborative provision.
The action plan to address recommendations arising from the Court Effectiveness Review Report was a standing item on Courts agenda during Session 2022/23. All actions arising from the review were completed by June 2023.
Equality and Diversity
While responsibility for mainstreaming equality and diversity within the University rests with all staff and students, the University Court is, as a matter of law, responsible for ensuring compliance with the Equality Act 2010 and for ensuring that the University meets its public sector equality duty (PSED) and the specific duties relevant to Scotland. The University Court exercises such oversight through the Equality and Diversity Committee (EDC), which is responsible to the University Court for the development of the strategic framework for equality in service provision and in employment across the University.
Embedding equality and diversity in our governance structures and in our strategic planning process is critical to mainstreaming equality and diversity, as is defining responsibilities, setting performance measures and monitoring progress against those measures. The Universitys Mainstreaming Report and Equality Outcomes, which sets out progress on mainstreaming equality and establishes a number of outcomes for the period 2021-25, was approved by the Court in April 2021. Progress on the achievement of our Equality Outcomes were published in April 2023.
The University is committed to ensuring that the University Court, Senate and all committees and decision making bodies of the University are representative of its community. In particular, the University is committed to achieving the following goals and targets:
- Achieving practical gender balance amongst lay members of Court. Practical gender balance will be achieved where the lay membership of Court constitutes not less than 40% of either gender.
- Undertaking an annual review of the equality and diversity characteristics of the Court or as a specific need for review is identified.
- In undertaking any recruitment activity concerning the appointment of lay members of Court, the Court will have regard to equality and diversity characteristics of the Court and will take positive actions to increase the likelihood of applications being submitted from applicants that would enhance the representative character of the Court.
The outcomes established in these reports, and within the Universitys Outcome Agreement with the SFC, form the basis of the Equality and Diversity Committee Action Plan, updates to which were reported at each meeting of the University Court.
During 2022-23, we continued to reflect on the balance of diversity on the Court, while maintaining the gender balance required under the Gender Representation on Boards legislation. The gender balance of membership at the time of writing is 52% female and 48% male, with female lay members continuing to account for 47% of the membership.
System of Internal Financial Control
The key elements of the Groups system of internal financial control include the following:
- clear definitions of the responsibilities of, and the authority delegated to, heads of academic divisions and support units;
- a comprehensive medium and short-term planning process, supplemented by detailed monthly income and expenditure reports, and annual capital budgets;
- monthly review of financial results involving variance and KPI reporting and updates of forecast out-turns;
- clearly defined and formalised requirements for approval and control of expenditure, with investment decisions involving significant capital or revenue expenditure being subject to formal detailed appraisal and review according to approval levels;
comprehensive financial regulations, detailing financial controls and procedures; - an independent professional internal audit team whose annual programme is approved by the Audit & Risk Committee.
The Audit & Risk Committee, on behalf of the University Court, reviews the effectiveness of the Groups system of internal financial control as part of a rolling programme. The Committee has formed the opinion that the Universitys systems provide a reasonable basis for maintaining control and ensuring the achievement of economy, efficiency and effectiveness. In reaching its opinion, the Committee has taken into account the opinions of the internal and external auditors, as well as information and representations provided by University management to the Committee and to the University Court. The Committee has noted that University management is continuing to work towards further strengthening of the control environment with a particular focus on those areas of significant risk within the wider control framework. Any system of internal financial control can, however, only provide reasonable, but not absolute, assurance against material mis-statement or loss.
油
On behalf of the University Court
Pamela Woodburn, Chair and Sir Paul Grice, Principal & Vice-Chancellor
13 December 2023
