A board assurance framework for the further education sector, by the further education sector
Recent years have been challenging times for many institutions in the further education sector. With these challenges has come a greater focus on governance and governing. It is critical for Boards to have a full and accurate picture of what is going on in an organisation to be able to respond in a timely and appropriate manner.
Back in 2015, the Government started a series of area-based reviews, with the intention of ensuring there was the right capacity in each area to meet the needs of students and employers, provided by financially stable institutions. This programme ended in 2017 and led to a number of mergers of institutions. In 2016 the Government consulted on introducing an insolvency regime for the further education sector. The regime commenced in January 2019 and has already been used for two colleges.
In the light of the area reviews and the (at the time) potential introduction of the insolvency regime, the Association of Colleges (AoC) West Midlands region carried out a project to assess the extent to which a sample of colleges were implementing more robust processes for management of key risks and the provision of assurance to the board. The project was supported by the Education and Training Foundation and RSM joined the AoC in delivering it.
The principal intended outcomes of the project were to:
|①||increase governors’ understanding of the need to strengthen assurance arrangements in the light of sector developments;|
|②||assess the effectiveness of current assurance and risk management processes at a small number of colleges in the light of current recommendations and the lessons learned from governance failure in other sectors; and|
|③||promote the introduction of more robust assurance and risk management procedures and processes which will mitigate college failure.|
The project methodology included interviews of key individuals at five colleges and a workshop on board assurance. The project outcomes were reported in 2017 and can be found here.
Participants found the project and workshop useful and proposed that it be taken further to develop a proforma board assurance framework for the sector. RSM and the AoC (later joined by Stone King) have facilitated workshops in most regions to compile examples for a proforma sector board assurance framework.
Each workshop included refresher presentations from RSM on risk management and the principles of a board assurance framework. The majority of the time was in group work on risk themes to identify the potential causes and effects of risks, the controls that a typical college would have in place as mitigation and how the board could gain assurance that those controls were working. This involved consideration of the ‘three lines of defence’.
Explicit confirmation or reporting by those directly responsible for the application of or management of controls (for example management accounts).
Other scrutiny or advisory functions within the organisation, for example the finance committee reviewing or challenging financial transactions and budgets.
Independent review of controls or activities eg internal audit, or a specialist review by an external organisation.
Delegates were a mix of clerks, finance directors and governors (mainly audit committee members) and worked in multi-disciplinary teams with colleagues from other colleges.
Following the workshops, RSM entered the results of the discussions into the 4Risk module of Insight4grc, RSM’s proprietary Governance Risk Compliance software and shared with delegates.
The combined outcome from the workshops is included in this document.
This data has been gathered over the period February 2018 to July 2019. The early data reflects the views on risks at the time and has not been updated. The objective is to provide an example of how to establish a board assurance framework and prompts on content, rather than to give a proforma to copy.
The workshops concentrated on the causes of risks, controls and assurances. In order to provide a full example of what a framework looks like RSM have added risk scores and review actions.
The result is a large document and we would not expect any individual institution to have a framework this big but please use it for ideas and training.
Colleges have been reviewing their arrangements and a number have suggested additional events to further develop their thinking. We have a range of activities planned, including:
- presentation/discussion at Governance Professionals Conference in January 2020;
- presentation/discussion at regional events;
- webinars for governors;
- workshops on addressing specific risks; and
- specific college projects.
If you would like any further information on how RSM and our partners can support governance professionals, governors and board activity please contact Stephanie Mason, Head of Further Education, Skills and Academies.