The governance and regulatory function of the HEA operates as an integral part of the broader role of the organisation. The HEA is required by legislation to allocate funding to HEIs, to provide policy advice and to exercise certain regulatory functions in respect of almost all publicly funded HEIs.
The funding remit includes the development of appropriate funding models and is concentrated on: ensuring transparency and fairness in allocations; accountability in terms of monitoring application of funding for the purposes intended; and oversight of the financial health of the individual HEIs and the system as a whole. Alongside this funding role, the HEA provides advice to the Minister on the development of higher education and research and is the agency of record for data on the HE system. (1) The HEA brings the following values to bear in all its interactions with the HEIs:
- Respectful of institutional autonomy, within an accountability framework.
- An open and inclusive approach through constructive consultation.
- Openness, fairness and transparency.
- Accountability to the Minister for the achievement of objectives.
- Commitment to evidence based policy development.
- Understanding of the multi-annual context underpinning HEI operations
There are five core aspects of the governance relationship between the HEA and HEIs as set out below.
Strategic Dialogue Process and Performance Compacts
The HEA mandate encompasses the responsibility to create a well-coordinated system of higher education institutions which is capable in its totality of delivering on national objectives set for the system by the Minister. This aspect of the role requires the HEA:
- To focus on outputs and the performance of each HEI, and the system as a whole.
- To negotiate a compact with each HEI reflecting its distinct mission.
- To monitor performance against agreed deliverables, and
- To provide funding based on performance
Performance against the compacts is monitored via a system of annual reporting and a strategic dialogue process, whereby the HEA meets with each individual institution to review performance and confirm good ongoing governance and accountability of the public funding distributed in each case.
Annual Governance Reporting
All HEIs are required to submit an Annual Governance Statement and Statement of Internal Control to the HEA, based on a revised template covering a comprehensive list of governance requirements, with non-compliance in any matter to be identified within the statement. Significant onus is placed on the Governing Body and its Chair properly scrutinising the information that forms the basis of the Governance Statement. Indeed the statement requires that the regularity of Governing Body and Internal Audit Committee meetings is set out and clarification that the effectiveness of the Governing Body is the subject of ongoing review. From 2014/15, the annual governance statement must be submitted to the HEA within 6 months of completion of the financial year. In addition, HEIs are expected to flag all major governance issues to the HEA on an ongoing basis. The template used for the Annual Governance Statement for all Universities and specialist colleges is set out as Appendix 2 and the template for Institutes of Technology is set out as Appendix 3.
ECF and Other HR Reporting
In addition, HEIs are required to report on a quarterly basis on core and non-core staffing in line with the principles set out in the Employment Control Framework (see Appendix 4). A Delegated Sanction Agreement which will replace the Employment Control Framework (ECF) is currently being finalised and this will maintain the quarterly reporting requirement. HEIs are required to seek case-by-case HEA approval for re-engagement of retired staff under the conditions set out in the ECF, and Universities are also required to report twice a year on any appointments made under the Departures Framework at levels of remuneration beyond established salary scales (see Appendix 5). Any other requests relating to staffing outside the terms of the ECF (e.g. rebalancing of grading structure, regrading of positions) requires sanction from the Department of Education and Skills and Department of Public Expenditure and Reform, but should be raised in the first instance with the HEA.
Annual Accounts and Statements of Internal Control
Each HEI is currently required to have draft accounts and statements on systems of internal control, in the format specified by the HEA, ready for review and certification by the Comptroller and Auditor General within a specified period of the end of the financial year. The C&AG report will identify any areas of non-compliance with governance, regulatory or financial requirements, including any issues around the institution as a going concern. Once the accounts are certified by the C&AG, each HEI must submit them to the HEA and the Department within one month to allow their presentation to the Oireachtas within three months of certification, as set out in Government Circular 7/15. The HEA will request written clarification from the relevant HEI on any issues identified within the C&AG certification of the accounts. New timeframes around the preparation of accounts and statements on internal systems of control are currently being implemented, with institutions required to submit within 6 months of year end (YE) for 2014/15, 4 months for YE2015/16, and 3 months for YE2016/17 (see Appendices 6 and 7).
The ongoing responsibilities and arrangements between the HEA and HEIs are set out in a financial memorandum which is signed by each institution on an annual basis (see an example of a signed copy in Appendix 8). These include:
- Agreement on budgets and financial plans
- Provision of required Recurrent Grant Allocation Model (RGAM) returns
- Compliance with public pay policy
- Adherence to the borrowing and departures frameworks (if applicable)
- Compliance with public sector capital expenditure requirements
- Compliance with public sector procurement requirements
- Compliance with the process for land purchases (IoTs only)
All HEIs are required to demonstrate a balanced recurrent budget in any financial year, and failure to do so means that the HEA must consider them as vulnerable. Under Section 37 (5) of the Universities Act, universities are required to provide a formal written declaration of a deficit expected to occur within the current calendar year (see Appendix 9 for an example of this letter). A formal HEA policy is in place with regard to the interventions required when an Institute of Technology acquires this vulnerable status (see Appendix 10). While the diversity of the funding base and differences in legislation means that no equivalent formal policy is in place for Universities and specialist colleges, the minimum requirement for any HEI considered vulnerable remains the same: that it must supply the HEA with a detailed 3 year financial plan demonstrating how it will move back into surplus and ensure ongoing sustainability within this period. Any failure to do so will result in further direct intervention from the HEA. In addition, Universities are required to report annually on their position regarding the Framework for Borrowing and Loan Guarantees, which allows borrowing by these institutions within certain parameters (see Appendix 11). The Institutes of Technology are also required to seek approval from the HEA on the acquisition of any additional land or property, with a protocol in place to underpin the Authority’s decision-making in this regard (see Appendix 12)
Rolling Governance Reviews
To consider good practice and issues in greater depth with regard to particular governance themes, a series of rolling reviews of corporate governance compliance with relevant Codes of Practice will be conducted across the higher education sector. A panel of suitably qualified companies that can perform such reviews has been selected by the Department of Education and Skills via a competitive tendering process, and the HEA will draw on this panel to conduct each review. The review will focus on a particular aspect of governance compliance, with each theme and associated terms of reference to be agreed with the Department in advance. The first rolling review is focusing upon procurement and commenced in the second quarter of 2016. The terms of reference for the first rolling review is provided as Appendix 13.
These six core components reflect a range of governance arrangements between the HEA and HEIs. The Protected Disclosures Act 2014 also allows for any employee of an HEI to make a disclosure to the Chief Executive Officer of the HEA on any matter relating to the funding, planning and development of higher education and research in the State. The HEA has a process in place for receiving these disclosures and takes appropriate action on any governance issues identified via this process with regard to an HEI.