Source: http://www.admin.cam.ac.uk/reporter/2001-02/weekly/5861/5.html
Timestamp: 2017-11-21 23:25:58
Document Index: 608009316

Matched Legal Cases: ['§2', '§2', '§2', '§3', '§4', '§2', '§2', '§5', '§5', '§2', '§4', '§6', '§6', '§7', '§7', '§7', '§7', '§3', '§6', '§8', '§3', '§6', '§8', '§5', '§8', '§8', '§8', '§8', '§8', '§9', '§9']

Reporter 2/11/01: University of Cambridge
Review of University management and governance issues arising out of the CAPSA project
A report prepared for the Audit Committee and the Board of Scrutiny
Visiting Professor, Centre for Higher Education Studies,
and the Board of Scrutiny
Foreword 179
2 The management of the CAPSA project 180
The size of the University's administrative infrastructure 180
The reliance on external consultants 181
The selection of Oracle Financials 183
A comparison with Warwick 186
3 Who was in charge of the CAPSA project? 188
4 CAPSA: the underlying management issues 190
Under investment in the administrative infrastructure 190
The timing of the appointment of a Director of Finance 190
The composition of the CAPSA Steering Committee 190
The need for a 'business' strategy 190
The decision to give early retirement to Finance Division staff 191
The reliance on external consultants and project managers 191
The lack of a clear line of authority 191
5 The University's governance machinery and CAPSA 191
The audit function 191
Internal Audit 191
External Audit 192
Internal Audit and CAPSA 193
The Audit Committee 194
The Board of Scrutiny 195
The CAPSA Steering Committee 195
6 CAPSA: the governance issues 195
The effectiveness of the governance structure 195
The Council 196
Financial management 196
7 The Central Administration 197
Recruitment and retention 197
The Unified Administrative Service: the role of the Director of Finance 198
Professionalism in financial management 199
8 Strengthening the Council and its main committees 200
The Council 200
The Committees 200
Lay membership 200
The Audit Committee 200
Pro-Vice-Chancellors 200
The Regent House 201
9 Accountability 202
10 Recommendations 202
Appendix Contributors 204
This is not a comprehensive report on the governance and management of the University but a more limited document which seeks to show how weaknesses in these areas have contributed to the CAPSA problems. The effect is rather like driving a stake down through the University structure but it is important to recognise that the evidence of weaknesses that this process reveals does not constitute the whole story. Cambridge can justifiably claim by reference to the many league tables that are published in the media that it is academically the most successful university in the UK. Whilst this report is critical of some aspects of the overall management of the University, therefore, its criticisms should be seen in the wider context of this academic success.
The form of the Report is dictated by the need to identify the processes which contributed to the CAPSA problems and the Report needs to be read in conjunction with the report arising from Part A of the Inquiry, CAPSA and its Implementation, prepared by Professor Anthony Finkelstein. Chapters 2 and 3 isolate managerial / administrative issues relating to the planning and implementation of CAPSA and Chapter 4 sets out some conclusions as to how the University could have approached the introduction of CAPSA more effectively. In Chapter 5 the Report isolates governance issues and Chapter 6 sets out some conclusions as to the way the University's governance structures failed to address the CAPSA problems effectively. Chapters 7, 8 and 9 discuss issues that arise from these conclusions and Chapter 10 puts forward recommendations for future action.
I should like to pay tribute to the unfailing courtesy with which those who gave oral evidence to my part of the Inquiry invariably received my questions and for the openness of their responses. I hope they feel that the outcome has justified the time that they gave. I should also like to thank the Master and Fellows of Sidney Sussex College for providing me with such an agreeable base for my operations. Finally I must pay tribute to the efficiency and diplomatic skills with which the Inquiry was serviced by Dr Alan Winter, Secretary to the School of the Physical Sciences. His contribution in acting on my behalf to obtain documentation and arrange interviews and meetings was indispensable.
1.1 The review strategy approved by the Council calls for a two part study of which the second part provides an assessment, for the Audit Committee, of the course of the CAPSA project 'to identify weaknesses in and affecting the project and to evaluate the implications for the conduct of future projects', and an assessment, for the Board of Scrutiny, 'of the issues relating to policy formulation and governance within the University'. Specifically the terms of reference of the review required that Part B of the study should
'evaluate the findings of Part A in the broader context of the development of management and administrative systems in higher education institutions, and the particular needs of the University of Cambridge to modernise its management systems, and the relationship between such developments and issues of policy and governance in the University. It will seek to:
(d) make any other wider recommendation if appropriate'1.
1.2 This report seeks to answer the questions raised in Part B. As an essential element in the process any member of the University was invited to communicate with me direct2. The review as a whole (Parts A and B) has attracted some 60 individual written submissions and I have conducted individual interviews with 36 present or past members and employees of the University as listed in Appendix A.
1.3 Since it has been suggested that my conclusions were likely to support 'more managerialism and fewer academic checks and balances'3 let me affirm my agreement with the Wass Report as to the importance of the retention of the principle of Cambridge remaining 'a self governing community of scholars' for the continuance of 'the high quality of the University's academic work'4. I do not see any conflict in this with Franks' statement that 'the value of an efficient civil service in a university is that it makes it possible even with a complicated structure to practice control by academics of the policies that shape their environment'5. When I read in Dr Gordon Johnson's excellent introduction to Cornford's Microcosmographica Academica that 'We are still, many say, governed 'very badly' but that does not seem to affect the University's capacity to achieve academic distinction'6, sentiments echoed with various emphases by many of those who came to see me, I am bound to ask whether Harvard or Stanford, two obvious international competitors, would tolerate the implicit suggestion that their governance and management should be permitted to be less effective because their universities are outstandingly successful academically. Even less would they support the notion that ineffectiveness in these areas might be some sort of necessary concomitant of academic success as one or two of my respondents have implied. On the contrary, my starting point is that effectiveness in university governance and management should reinforce academic success.
1.4 Professor Longair, the Chairman of the CAPSA Steering Committee is quoted in a minute of Council on 25 September 2000 as saying that the CAPSA failure was 'symptomatic of the need to improve the central management of the University'7. In my interviews I constantly asked the question whether the CAPSA affair should be regarded as a one-off event or as a symptom of a wider problem. Almost every reply supported the latter view, although there was little consensus as to what the wider problem was. My conclusion is that the history of the CAPSA project does raise important management and governance issues for the University. Most universities currently installing major new financial systems have experienced technical difficulties of one kind or another, but the extent of the difficulties at Cambridge and the reaction to them within both the academic and non-academic communities point to more fundamental problems than simply the failure of a new financial system. These problems seem to me to be both of management and governance and, perhaps crucially, in the grey area that lies at the interface between the two.
2 The management of the CAPSA project
The size of the University's administrative infrastructure
2.1 Historically Cambridge has taken pride in the low percentage of its resources which it has spent on administration. Comparisons are always difficult to draw on the basis of published data, because organisational structures are different across even the pre-1992 universities. Highly centralised universities would expect to have higher administrative costs in the centre than highly decentralised institutions and it is not possible from the published data available to disaggregate administrative costs in academic departments or colleges from academic costs. Even with these caveats a comparison of Cambridge with other universities is striking. The percentage of reported total University expenditure devoted to the staffing costs of administration and central services was 2.6% in 1994-5, 2.6% in 1995-6, 2.7% in 1996-7, 2.7% in 1997-8, 3.0% in 1998-9 and 2.9% in 1999-2000 as against an average for English universities over the same period of 5.8%8. This discrepancy cannot be fully explained by the peculiarities of Cambridge's structure and suggests a significant under resourcing of these areas.
2.2 Over this period the structure of Cambridge financing has changed partly as a result of the University's own success in attracting support for research and partly because of the Government's policy of concentrating research funding into fewer universities. Thus according to the University's published accounts for 1999-2000, Cambridge's dependence on HEFCE funding plus home/EU fees has declined from 47% to 36% between 1992-3 and 1999-2000, and its income from research grants, contracts and 'other operating income' has doubled over this period9. The University's remarkable growth in funding for research from all sources, government and non-government, home and overseas, has inevitably placed an increasing burden on financial management because of the need to account for funds deriving from a wider range of sources and awarded on a variety of different terms, for different purposes, and for irregular periods.
2.3 In national published data it is not possible to disaggregate numbers of administrative staff performing a finance function, narrowly defined, from other administrative staff but a comparison with the University of Warwick, which has a turnover of about £170M as compared to Cambridge with over £350M, shows Warwick as having twice as many qualified accountants working in the central finance office of the University in 2001 as there were at Cambridge. At Cambridge there were only four qualified accountants in the central Finance Division team that selected and took over the implementation of the Oracle Financials system and they were all to leave the University's employment in 1999, three of them being granted early retirement by the University. No professionally qualified staff from the central Finance Division were committed full-time to the project group set up to implement CAPSA because none were available to be so appointed. At the same time there were only two qualified accountants employed in academic departments to implement a very powerful accounting system, which is accountant driven and which demands a high degree of technical accounting skills and financial awareness to maintain, both in the centre and in devolved functions in departments. A similar situation obtained in the Management Information Services Division (MISD) where there were too few and inadequately qualified staff for the tasks it was required to undertake. In December 1999 a paper presented to the Finance Committee and to the Planning and Resources Committee by the Director of MISD said 'There is a huge gap in both the skill set and the resources needed to implement and run a modern multi-ledger system'.
2.4 The position was made much worse by the problems of the retention and recruitment of qualified staff both in the Finance and MIS Divisions. Staff wastage ran at around 12% p.a. (in the Finance Division) in the calendar years 1995, 1996 and 1997 but rose to 37% in 1998, 36% in 1999, 25% in 2000 and by May 2001 had already hit nearly 20%. This staffing instability, together with the existing chronic underprovision, represented a fatal weakness in the implementation of a new financial system of this magnitude, even without allowing for the fact that in opting for a major new system the University was trying to bridge a gap caused by a failure over many years to invest in updating the previous system.
2.5 In fact the first major conclusion of this report is that from the time in 1996 when a commitment accounting project was initially proposed to the Finance Committee it should have been clear that Cambridge did not have the administrative infrastructure either in the centre or in departments to cope with the installation of a new University-wide financial system of the kind that was later to be offered by Oracle or SAP. The CAPSA story illustrates all the problems of long term under-investment: the University had failed to invest either in new financial systems or in sufficient qualified financial staff in the centre or in departments, and the implementation of a new system the size of Oracle Financials was at risk from the beginning. For the situation now to be rectified a very significant investment in qualified staff needs urgently to be undertaken; if this is not done Cambridge will not only fail to recoup even part of its investment in the new system but will not be able to meet its national and international obligations to account for the funds made available to it. Moreover the information structures, financial and administrative, that link the centre of the University to departments will further deteriorate and the University will fall further and further behind other universities in its adoption of IT driven administrative systems.
The reliance on external consultants
2.6 The University did not approach the question of updating its financial systems in a professional manner. The Internal Auditor's annual reports for 1993-4 and 1994-5 had drawn attention to the shortcomings in the University's management information systems but a Management Accountant (Mr C Lang) was not appointed until September 1995 and then only at the grade of Assistant Treasurer (he was promoted to the grade of Senior Assistant Treasurer in 1998). The development of a new commitment accounting system was left virtually entirely in this appointee's hands reporting, effectively, to the Treasurer rather than to the Deputy Treasurer who was formally in charge of the Finance Division.
2.7 Two sets of consultants were appointed on the Management Accountant's recommendation. The first, Tate Bramald Ltd, who specialised in advising charitable organisations, presented a report in December 1996, which was intended to provide an independent view of the broad functional requirements of a commitment accounting system. It was written after a brief, three day evaluation and was not a detailed report. On the basis of a paper by the Management Accountant (but after consideration by the Accounts Steering Group) the University's Resources Committee recommended an allocation of £377k (including some £110k for hardware in departments) to provide a commitment accounting system for departments which 'would record commitments alongside actual expenditure to allow a comparison against allocations of funds and highlight the up to date balance'. This would, it was argued, lead to improved purchasing and eliminate the need for 'shadow' systems which had grown up in departments. It was proposed that a 'front end' should link the system with the University's existing Oracle based accounts system. A cost benefit analysis suggested that savings of £1.5M per annum could eventually be achieved10. This recommendation was subsequently approved by the Council and the Treasurer sent a circular to departments on 30 April 1997 emphasising that 'the primary purpose of such a system will be to facilitate budgetary control within departments'. As background to preparing their report Tate Bramald were specifically informed by the Management Accountant and Mr D Whiting (Principal Accountant) that there were no plans to replace the University's core central accounting system.
2.8 The second consultant recommended by the Management Accountant, Bayles Consultancy Ltd. in the person of Ms Sue Baron, was recruited to conduct a review of departmental requirements11. Ms Baron herself believed that this exercise was designed simply to verify work that had already been done12; no letter of engagement can be found in the University's files. Bayles Consultancy was retained for two three month periods. As a result of Ms Baron's work a circular from the Treasurer dated 22 July 1998 announced that 'The Departments' needs proved to be so extensive that the review inevitably changed its focus to bring into consideration the replacement of the entire accounting system rather than adding a Commitment Accounting module to the existing structure'. The circular added, optimistically, 'It is evident that this approach is fully backed by departments who see it as being the only way forward to achieve responsible accounting to their users'13. It was on the slender basis of this review that the University entered into negotiation with a number of suppliers and a decision was taken by the Planning and Resources Committee to allocate £4.3M (later £4.72M) to install a new integrated accounting system (an Enterprise Resource Planning system) to replace the existing accounts system14. Ms Baron was then appointed by the University as Project Manager for the enlarged CAPSA project (as approved by the Planning and Resources Committee in February 1999), reporting to Mr N Robinson, the newly appointed Director of Management Information Systems as her line manager, but having 'full responsibility for delivering the CAPSA project on time and within budget'15. Ms Baron had no previous experience of working with a university; her appointment as Project Manager was mishandled in a way which led to a £30k compensation payment having to be made to the recruitment agency that had originally identified Bayles Consultancy for Mr Lang. Ms Baron resigned in August 1999 after criticisms of her work by the newly appointed Director of Finance and by KPMG which had been brought in to review the project. Mr Lang resigned in September 1999 on appointment to a senior post at another university.
2.9 The process by which these consultants were appointed, one of whom was to become the CAPSA Project Manager, and both of whom were crucial to the formulation of a policy towards the updating of the University's financial system, was seriously flawed. (It was also regarded as unsatisfactory at the time by some members of the Finance and MISD staff.) Not to have subjected their appointment to some form of public competition against a clear statement of need, and then to have relied so heavily on their advice, represented a recipe for future difficulties. Cambridge's problems were not unique, and many universities in the mid-1990s were considering the replacement of outdated financial accounting systems with new advanced integrated systems. What held many back was a concern about the capital cost, a consideration that does not seem to have weighed anything like so heavily in Cambridge. It was well known in Cambridge that the University's financial management information systems were weak and it is hard to believe that, if there had been any serious dialogue with other universities at a professional level the approach to Tate Bramald would not have taken place on the basis that it did. The University of Newcastle, for example, in the same year used Ernst and Young, a much larger and more experienced firm in public sector financial systems, to advise them. Ernst and Young advised Newcastle to examine its underlying business processes before embarking on procurement. This was undertaken as a major consultative exercise within the University. Cambridge on the other hand, began with a minimalist departmentally-based approach and then swung round to a big system solution but appointed, without any form of public competition, a consultant originally identified through a small recruitment agency, to project manage what, by any standards, was an extremely challenging assignment recognised to be of great importance to the University.
2.10 No business process analysis was ever undertaken on a University-wide basis, least of all one which sought to rationalise existing practices. If the University at a senior level had taken real ownership of the project its first task should have been to establish machinery to bring forward proposals to establish a common framework within which departments and the University could work. The legacy financial system had been very much tailored to desired departmental practice and any new financial system would have been bound to require considerable rationalisation of departmental practice. What happened, however, was that the Bayles Consultancy exercise of consulting departments on their requirements released a surge of departmental demands, many of which were inconsistent and not compatible with the installation of a new integrated system. It is clear that rather than face up to the arguments that would have had to take place before various individual (and sometimes idiosyncratic) departmental practices were changed those responsible believed that change could be driven by the implementation of the new system. This failure to reconcile conflicting demands and gain acceptance that some rationalisation of departmental practice would have to take place lies at the root of the feeling in departments that promises implicitly made during the consultation have not been kept.
2.11 There was no one in the centre of the University who had the background and experience to undertake the installation of a new financial system: the Treasurer was not financially qualified; the Deputy Treasurer had an army background and had no experience of modern accounting systems; the Management Accountant, newly recruited, was young, inexperienced and ambitious; the Principal Accountant, although highly knowledgeable about the existing legacy system, had never worked outside Cambridge and had taken his accountancy qualifications while working within the University. This contributed to the over reliance on inappropriately appointed consultants. When a Director of Finance with good experience of university finance was appointed (in July 1999) she immediately called for a review of progress that confirmed the need for the establishment of a major change to the financial coding structure which in turn required a new chart of accounts. This should have been foreseen as soon as a decision to consider the Oracle Financials system was made. The result was a considerable increase in the cost of the project from £4.72M to over £8M and the imposition of a major additional task in the implementation of a new system by August 2000. Once again, however, a decision was taken to appoint an external consultancy team (KPMG) to undertake a key task without any form of public competition and without any clear statement of need. On this occasion pressure of time was the excuse, because without the backup of a large team the implementation date could not possibly have been met, but the effect of the decision was to deny the University the opportunity to stand back and assess the consultants' ability to undertake the task effectively. Moreover, since KPMG were the University's External Auditors and, in the interregnum between the resignation of the Internal Auditor and the appointment of RSM Robson Rhodes to replace her, had also been the University's Internal Auditor, the decision should have raised serious questions, which were never addressed, of conflict of interest. (This is not to say that a conflict of interest occurred.) The University needed a KPMG management team because it was itself inadequately staffed for the CAPSA project, but it was also inadequately staffed to interface effectively with KPMG or with Oracle. The University thus became far too reliant on KPMG and Oracle with serious consequences for the success of the project.
The selection of Oracle Financials
2.12 Not surprisingly, in the light of the above, the selection process for a preferred supplier was also flawed. Since no adequate business process analysis had been undertaken the team charged with the selection was much more reactive than proactive to the type of systems available. As in the case of most other UK universities that were engaged in the exercise about this time, the two major suppliers to emerge were SAP and Oracle. The University failed to observe EC procurement requirements and having informally identified one preferred supplier had to reopen the process under a procedure by which the two leading tenderers re-submitted their tenders for consideration under an approved framework agreement through a specialist unit of the Treasury16. This was an administrative bungle; professionally it should not have occurred, but it had no bearing on the actual choice. Significantly it was one of the two tenderers who drew the University's attention to its failure to follow EC procurement rules.
2.13 The actual choice of supplier was handled in a highly participative way - a fact that is not always remembered by CAPSA's many critics. The Oracle system was sent to be tested by the Department of Engineering and by the Fitzwilliam Museum (representing large and small users) and SAP by the Department of Pathology and the Programme for Industry Office. At this stage the question of changing the chart of accounts was not on the agenda. No consultation was undertaken with other UK universities engaged in similar exercises, except with City University, which was not thought to offer proper comparison, and Imperial College which had not at that stage decided on the system it was going to adopt. Since Oracle Financials was essentially a US product it was suggested that some consultation should be undertaken with US universities and a visit was arranged by the Management Accountant to CalTech. Whatever the original intention, the visit itself represents high farce and seems to have been undertaken with the sole purpose of providing support for a decision already taken. It involved the members of the Accounting Project Group flying to California and back in a period of about 48 hours during which on landing they spent part of a morning, lunch and an afternoon in CalTech talking to officers of a University where the system was not yet live. No serious examination of the system was possible in this time and nothing whatever was learned apart from the debilitating effects of flying to and from California without a stopover.
2.14 At their meeting on 9 December 1998 the Planning and Resources Committee had agreed to allocate a figure of £4.3M for the project and decided, because no funds had been put in the Estimates, that the sum should be withdrawn from Chest capital and that a Sinking Fund should be established to replenish the figure over a ten year period17. (No mention of taking inflation into account is made and no Sinking Fund was ever established.) The Committee also approved the proposal to appoint an external project manager and Ms Baron was subsequently appointed. At its meeting on 15 February 1999 the Committee received a report from the Deputy Treasurer which raised the estimate from £4.3M to £4.72M18. (This was later discovered to be a miscalculation because it omitted the cost of liability for VAT, a basic professional error. The VAT figure was later to rise to £366k19). The minute of the Planning and Resources Committee said that 'The project should pay for itself by the end of the third year, by which time over £5M of savings should have been achieved'. This statement was based on a paper entitled 'CAPSA Cost Benefit Review' which purported to show that benefits, reaching £7.195M, would be achieved by 1 March 2002. These benefits, it was alleged, would arise from increased research grant overheads, more effective purchasing arrangements, and staff savings. It is hard to credit the naivete of these assumptions. The paper included an Annex on risks which amounts to less than one side of foolscap. Its quality can be measured by the assignment of only medium risk to project drift to plan. Under the heading 'Control' the document stated: 'Detailed project plans are in place and deliverables will be tightly managed against that plan20.' Neither statement proved to be correct. Even without the benefit of hindsight it is difficult to imagine a less professional document. Nevertheless, the Committee approved the new figure of £4.72M, gave the project the go ahead and appointed a Steering Committee (the CAPSA Steering Committee) for Ms Baron to report to.
2.15 By the summer of 1999 the implementation of the CAPSA project should have been well underway. However, some significant changes in personnel and direction were then to take place. The first was the decision to give the Deputy Treasurer and the Principal Accountant early retirement effective from 31 July. The Deputy Treasurer's departure did not affect the project because although he was formally in charge of the Finance Division he had taken little active part in the project. The departure of the Principal Accountant, and of Ms Searle who resigned at the same time, although both took a negative view of the CAPSA project, represented a serious blow to the implementation programme because of their detailed understanding of the legacy financial system. (It has been suggested that Mr Whiting was expected to continue in some part time capacity but no such condition was laid down when early retirement was granted and whatever informal understandings did exist were dissolved by the way subsequent negotiations were conducted.) The Management Accountant, who had been the main instigator of the project, also resigned on appointment to a post at another university. In the meantime Mr Nick Robinson had been appointed to a new post of Director of MISD from January 1999 and Ms Adrienne Rudkin had been appointed to a new post of Director of Finance from July 1999, in establishment terms replacing the Deputy Treasurer. Mr Robinson was appointed line manager of the project and the MISD was transferred from reporting to the Treasurer to reporting to the Registrary. The effect of the early retirements and resignations was to further deplete an already chronically understaffed Finance Division.
2.16 In June 1999 questions were raised about over-expenditure on the project and further foreseeable overspends; KPMG were asked to review the systems used within the project to ensure that costs were adequately recorded and reported, and that mechanisms for predicting the eventual costs for the completed project were in place21; Ms Baron resigned. The KPMG review was intended to be no more than a three and a half man day project. The review report, however, offered a very severe commentary on the implementation programme concluding that 'in its current form, the project is unlikely to succeed'. On the question of cost control, the report indicated, investigation had shown that the anticipated problems could be sorted out reasonably satisfactorily but there were wider problems about the implementation programme: there was no project plan that dealt with the overall project - the Oracle documents were 'reasonably well drafted' and covered a number of the expected headings but 'what is missing is a similar project plan from the University that deals with the project as a whole'. The risk, the report went on, of having a project plan drafted by a supplier was that the University does not 'buy in' to it, (for example there were no identified University 'owners' for the individual modules), and that the plan is drafted to suit the supplier rather than the University as customer. The report then went on to criticise many of the project's assumptions: that the University would be able to commit 60 man days of effort to evaluate the Research Grants and Treasury modules (even without the early retirements this would have been a significant redirection of effort for the Finance Division); that three or four years level of Oracle applications experience was present in the University team for interface and legacy development work (a significant overestimate of the University's capacity); and most significantly that the chart of accounts would not need to be changed. The KPMG report called this last 'a naïve assumption' because of the complexities of the Oracle system and of the University's own business functions, and from their experience of other Enterprise Resource Planning implementations22. The new Director of Finance fully agreed with KPMG's assessment. Overall the report was a serious indictment of the University's preparation for the CAPSA project which had been the product of under investment, inexperience and an assumption that it was appropriate to rely on external bodies to manage what University staff should have managed themselves.
2.17 At this point the CAPSA project was in turmoil: the project had been inadequately planned and functionally mishandled, the costs were accelerating, the Finance Division, already underprepared and understaffed, had lost most of its senior staff and the University was now being advised, both by KPMG and by its new Director of Finance that the project plan had to be subjected to a major variation to include a revision of the chart of accounts. It is clear that at this point it would have been better to have opted for a 2001 start date rather than 1 August 2000 but the pressures both from departments for the promises on commitment accounting to be realised and from higher bodies in the University because of statements made to committees, to the external auditors, and to HEFCE Auditors, encouraged the belief that the project's momentum could be recaptured for an August 2000 start date if competent project management could be introduced. A more experienced Director of Finance might have advised against but Ms Rudkin, a highly competent and effective individual, believed that the onus was on her to deliver a system by August 2000. Perhaps most serious was that KPMG consultants, now appointed to manage the project by the Director of MISD, did not apparently foresee the problems or warn of the risks of an August 2000 start date, in the light of their own experience of installing Enterprise Resource Planning systems elsewhere and of the warnings that KPMG were issuing as the University's external auditor (see below paragraphs 5.7 to 5.10). Even for a university well organised and appropriately staffed for the purpose which had committed itself fully to the procedural changes implied by the acceptance of the Oracle Financials system, a full implementation in one year would have been a struggle, but in the Cambridge situation it was a very high risk strategy. In December the Planning and Resourses Committee and Council approved a revised budget of £7.6M23 (though this was to rise to £8M).
2.18 The problems, however, were as follows:
(a) The new Director of Finance was not familiar with the University and should have been given a period to acclimatise herself to the very different culture and size of Cambridge as compared to the London Business School, her immediately previous employer. In addition she arrived at the point when the Finance Division was decimated by early retirements and resignations, and the cumbersome and restrictive mechanisms employed by the University for recruiting professional staff (see below, paragraph 7.4) meant that a great deal of her time had necessarily to be spent on the recruitment of new staff. At times during the year the Finance Division had 40% staff vacancies.
(b) The creation of a chart of accounts to match the requirements of the new Oracle system imposed a further task on an already over burdened timetable. The new chart was not finally approved until 9 November 1999.
(c) The absence of experienced Finance Division staff in post meant that too much reliance had to be placed on the KPMG and Oracle teams which were themselves dependent on specialists brought in for short periods sometimes at high per diem rates who were unfamiliar with University needs in detail.
(d) The consultation with departments undertaken by Bayles Consultancy, itself a flawed exercise, was overtaken by the change in the character of the project, the change in the personnel involved, and the pressures imposed by a start date in 2000. It is wholly unsurprising that departments feel that expectations raised in the consultation exercise have not been met.
(e) The training programme was not attuned to the needs of the University and was poorly delivered, a problem exacerbated by the lack of financially qualified people in departments and by the fact that departments had simply not been prepared for the changes, as they would have been if a proper business processes plan had been drawn up and agreed in advance.
(f) System testing was inadequate.
(g) The Director of Finance, the newly appointed Finance Division staff and the members of the University project management team were working extraordinary hours under far too much pressure.
2.19 With hindsight it is easy to see that the decision to go live on 1 August 2000 should not have been made, and should have been changed as late as May or even July 2000. The former Director of Finance (Ms Rudkin resigned in November 2000), now believes, in the light of information which later became available to her, that the decision to go live should not have been taken. She gave me the following reasons for going ahead:
(a) There had already been one postponement; the project lacked credibility within the University and would have lost a great deal more with a further postponement.
(b) The legacy system was seriously inadequate and could not be continued - breakdowns were occurring at regular intervals in the pensions and payroll software.
(c) There was an unwillingness at more senior levels to concede that the wrong software had been chosen.
(d) Another significant sum would have had to be found by the University because the internal staffing situation was such that the University would have had to continue to rely on outside consultants.
(e) The University was under threat of losing a great deal of VAT refund money - Cambridge had been the only university unable to provide information to the Customs and Excise officers for the partial exemption calculations.
(f) There was a need to satisfy HEFCE Auditors after the HEFCE Audit visit in June 2000.
(g) The KPMG project management team had given reassurances and a great deal of work had been done to eliminate bugs in the system.
2.20 Robson Rhodes, the University's Internal Auditors, who were members of the CAPSA Steering Committee, were commissioned to report to the Audit Committee in June 2000 on ongoing project management controls (further comment on Robson Rhodes' role as Internal Auditors appears below, paragraphs 5.12 and 5.13). Their report to the Audit Committee, dated 30 June 2000, made the point that although software faults which had come to light during systems testing and the first phase of user acceptance testing had mostly been solved some remained which 'clearly had to be fixed ahead of the go live date. … However, further software faults have been identified which the project team fear that Oracle may not be able to solve in time for the go live date'. Their report goes on:
'The project team has formed the view that if Oracle make insufficient progress in fixing the problems identified within a set timetable, a decision may need to [be] taken to defer the project and not go live on 1 August. There are serious implications attached to this:
There is a reluctance to run with two financial systems in any one financial year. If 1 August 2000 is not achieved, there is a suggestion that the next possible implementation date is 1 August 2001. There would be a loss of momentum and enthusiasm for CAPSA as a result which could mean:
a need to retrain and retest;
having to support the existing systems for another year;
knock-on impacts on other projects.
We are not aware that detailed contingency plans have been developed to manage possible delays in the project, either for the full one year being suggested or for any interim period. After the difficulties that were encountered in April / May we wrote to the Director of MISD (Mr Robinson who was formally the line manager of the project) recommending that contingency plans should be developed. Given the problems being encountered now this recommendation still stands.'
Robson Rhodes summarised the main issues as follows:
'The major software faults that remain to be resolved by Oracle. If corrected in time they need to adequately tested and accepted.
There is no slack in the project timetable so further errors or faults could have a disproportionate adverse impact on the project timetable.
The lack of contingency plans'24.
2.21 There is no evidence that this paper was ever considered by the CAPSA Steering Committee but it was discussed by the Audit Committee on 5 July 2000. The Committee were reassured that while critical software problems remained 'none could at this stage be foreseen to jeopardise the planned implementation' and the Committee accepted the view that 'an overall delay in implementation would not be practical because of the loss of momentum, even though it would, in theory, be feasible to continue to use the old accounting system if there was a critical failure affecting CAPSA'25. This was a limp response: no hard questions were asked about contingency planning; reassurances were accepted without question in respect to software problems; no questions appear to have been asked about timescales.
A comparison with Warwick
2.22 One of the striking points about the CAPSA exercise was how little Cambridge sought to compare experiences with other UK universities going through similar exercises at about the same time. It is useful to compare the CAPSA operation with another university's installation of a modern integrated financial system because it throws up some important differences of approach. (Warwick is used for illustrative purposes only; Newcastle would have been an equally good example.) Like Cambridge, Warwick was concerned about its lack of commitment accounting and the matter was brought to a head in the summer of 1997 when a significant and unbudgeted overspend took place in an IT networking project. A committee of enquiry, chaired by a senior lay member of the University's Finance and General Purposes Committee, recommended that the University could no longer delay the introduction of a new integrated financial system and the Finance and General Purposes Committee accordingly allocated funds for the project and set a budget, with an expenditure limit, and a date for completion. The Registrar, in consultation with the Finance Officer, established a project steering group which was to be chaired by the Academic Registrar. This was a large group which contained two senior professors and the University Librarian, chosen for their interest and experience, together with an experienced and respected departmental administrator from a large experimental science department, the Director of the Computer Services Unit, the Director of MIS, the Finance Officer (who was in charge of the project), his two deputies, the Senior Assistant Registrar in charge of the Research Office, the Director of Personnel Services, the Estates Officer and the Internal Auditor. At no stage was a representative of the actual software supplier given a place on the group. The group met on seven occasions between December 1997 and June 1998. It established user groups in the following areas: academic departments; project accounting; inventory/procurement; academic trading; academic services; finance office/central administration; and technical issues. Each group held user confidence days.
2.23 A project team of twelve was assembled and their salaries represented part of the budget for the project; many were drawn from the central Finance Office. This team was then accommodated separately and took no part in the central financial management of the University. A Request for Information document was sent to 26 prospective suppliers as part of the EC Procurement Procedure and 15 responses were received by the closing date at the end of February 1998, two being for hardware and 13 for software. The 13 were reduced to five and questionnaires were sent to all the reference sites quoted by the suppliers. Subsequently a significant number of university sites were visited by the project team. Formal reports were prepared by each user group, by the project team and by the visitors to each site and a separate report was compiled on the finance systems in use at comparable universities. In the end, competition was reduced, as at Cambridge, to Oracle and SAP. Significant doubts were expressed about the VAT and Research Grants modules put forward by Oracle. Further negotiation brought the price down to within the budget set by the Finance and General Purposes Committee. (Halfway through the implementation it became clear that a further £500k would be required both to give additional support for the implementation in departments and to take advantage of the opportunity to incorporate building maintenance immediately into the new system. A submission was made to and approved by the Finance and General Purposes Committee.) SAP was awarded the contract and the new system went live on 1 August 2000. There were initial complaints from departments about the complexity of the new system but within six months it was possible to say that the implementation had proved to be successful although some humanities and social science departments found it demanding to operate.
2.24 Constitutionally the Project Advisory Group at Warwick reported to the Administrative IT Committee chaired by the Registrar (which was itself a sub-committee of the University's IT Policy Committee) but because of the size of the University's investment in the project - some £2.5M - it also made regular reports to the Finance and General Purposes Committee. One other result of the original committee of enquiry, however, was that the Registrar brought forward proposals for a merger of the Computer Services Unit, which served the academic community, with the MIS unit, which served the administrative departments. The earlier overspend had led to some dismissals, and a new Director of IT Services was appointed with the Computer Services and MIS units brought together to work as a genuinely integrated team. This proved to be an effective change professionally as it offered more variety of work and career opportunities for staff and it has integrated much more effectively the IT solutions to administrative systems in academic departments and in the central administrative departments. The new Director is line-managed by the Registrar who also chairs the budget group of the IT Policy Committee in order to ensure that there is adequate financial control over what has become a very complex area of expenditure, but the policy as a whole for University IT development is set by the IT Policy Committee, a joint Committee of the Council and the Senate chaired by a Pro-Vice-Chancellor.
2.25 Some comparisons with the practice at Cambridge are worth noting:
(a) The budget was set at the outset of the project and the project had to be managed within it, not as at Cambridge where a sum had to be found at each stage to pay for what was being proposed; at Warwick no plans were drawn up or tenders sought from suppliers until the project had been approved and a budget allocated, while at Cambridge much of this had been undertaken before a committee decision was sought.
(b) The Project Advisory Group was much larger but, because it contained most of the senior officers who were to be users of the system and who would be managerially reliant on its effectiveness, the group remained close to the project. The CAPSA Steering Committee, though smaller, was much less closely connected to the project.
(c) The Finance Officer, reporting to the Registrar, was formally in charge of the project and if it had failed he would have been held responsible. He regarded it as his professional responsibility to bring the project through on time and within budget. At Cambridge it is impossible (see Chapter 3) to identify who was actually responsible for the project.
(d) All the senior administrative officers were involved and reports had to be made to the Finance and General Purposes Committee. At Cambridge there was very little detailed involvement of the Principal Officers and, while the minutes of the CAPSA Steering Committee were sent to the Finance Committee and the Treasurer attended the meetings, the Finance Committee did not take a close interest in the progress of the project.
(e) Close academic departmental involvement was maintained throughout (though with 36 academic departments this was a much less complex task than at Cambridge); the departmental administrator on the Project Advisory Group was a key link with the experimental science departments at Warwick.
(f) The project team of twelve contained a significant number of staff from the central Finance Office. Warwick did not employ external consultants to assist with the implementation other than those committed by SAP and its commercial partner, as provided for in the initial contract, but relied on its own staff. From the outset it was made clear that there could be no temporary recalls from the project team to the provider departments. At Cambridge the project team was constantly depleted by recalls to cover normal duties. As at Cambridge, however, the project manager had to be replaced when problems began to emerge at the implementation stage. At Warwick she was succeeded by an existing member of staff.
(g) A merged IT Services Department, which was formed concurrently, is now providing an effective service to the University.
(h) At the tender stage the Oracle Research Grants module as well as the VAT module were identified at Warwick as weaknesses. At Cambridge, Oracle was thought to have stronger functionality 'especially in the Research Grants area'26.
(i) The Internal Auditor was a member of the project advisory group and reported on his findings to the Audit Committee, but SAP representation was by invitation only to report on particular items. The University was careful to keep an arms length, customer-contractor relationship with the commercial suppliers.
3 Who was in charge of the CAPSA project?
3.1 This Report is about process; in any project involving the expenditure of university funds it is important to be able to identify the authority for expenditure and management. One of the most significant aspects of the CAPSA story is the difficulty of identifying which body or individual was actually in charge, or could be said to have had real ownership of the project.
3.2 From 1996, when the first commitment accounting proposals were developed (and put to the Resources Committee in January 1997) until February 1999, responsibility appears to have lain directly with the Treasurer. She, however, has always made it clear that the Deputy Treasurer was responsible for the management of the University's finances. Nevertheless from the evidence I have received, the Management Accountant appears to have worked, for all practical purposes, direct to the Treasurer on this development. Thus in a formal sense the appointment of Tate Bramald and the initial appointment of Ms Baron as Bayles Consultancy fell under the Treasurer's responsibilities although the actual day to day decision making was made by the Management Accountant. Indeed the University's Joint Committee on Central Administrative Computing (JCCAC) were told that the Management Accountant was the project leader27 though I have come across no evidence that this was ever formalised as in the later case of Ms Baron.
3.3 In February 1999, on the authority of the Planning and Resources Committee, Ms Baron was appointed Project Manager reporting to Mr Nick Robinson, the new Director of MISD who had taken up his post in January 1999. Ms Baron's contract, however, specified that she had full responsibility for delivering the project (see above paragraph 2.8). On the appointment of Mr Robinson the MISD transferred from the Treasurer to being formally answerable to the Registrary. This move was in line with practice in most universities where MIS often began as an adjunct to a finance or bursar's office but transferred to the Registrar as MIS became a central administrative service. The JCCAC, which had acted as a coordinating body, was dissolved by the Finance Committee when Mr Robinson was appointed on the grounds that he would be responsible for coordination and would be holding regular meetings with the three Principal Officers28. In the meantime, the Principal Officers appointed the CAPSA Steering Committee 'to oversee the implementation of the Project'29. This Committee, which began meeting on 22 March 1999, was given the following terms of reference:
To receive monthly reports from the Project Manager on the progress of the implementation and to compare this with the implementation plan.
To consider and approve any necessary departure from the plan especially in the light of implications for the final target date.
To approve single items of expenditure in excess of £50k or to agree delegation of this responsibility to the Director of MIS.
To provide quarterly reports to the Principal Officers for onward transmission to the Central Bodies.
To draft a final Report on the implementation of the CAPSA system for publication.
3.4 When Ms Baron resigned the CAPSA Steering Committee were apparently not involved in the appointment of KPMG to manage the project and KPMG's appointment was merely reported to the Committee at their meeting on 6 September 1999. In spite of this, on 18 October, according to the minutes, the Committee authorised the Director of MISD to extend KPMG's letter of engagement30.
3.5 When I asked individual witnesses who they thought was in charge a variety of negative answers were given: the Treasurer took the view that her Deputy was in charge of the Finance Division and that Ms Baron had been appointed Project Manager of the CAPSA project (Ms Baron, when interviewed, believed that the Treasurer actually controlled the project although she herself was answerable to the Director of MISD who now reported to the Registrary). The Director of MISD told me emphatically in the very brief conversation I had with him that he was only responsible for 'pay and rations' for the project and that his Deputy was actually in charge. Mr Robinson had no particular background or experience in implementing large financial systems, having previously worked for Lloyds TSB in their property services area. It was reported to me by several people that Mr Robinson was not even aware of the CAPSA project until after he had taken up his post. The Director's Deputy, a long serving officer and currently Acting Director, has no background in financial systems other than that acquired through his career at Cambridge. The new Director of Finance who took up her post in July 1999, although responsible for driving much of the project after her arrival, nevertheless regarded the Director of MISD as ultimately in charge although there was general agreement from all my respondents that he took little detailed part in the project, partly because he was heavily involved in other projects like the University Card and partly because, like the Finance Division, MISD was very short of staff. Members of the University at large might have thought that the CAPSA Steering Committee was in charge but its terms of reference provide no justification for this: it was not a management committee but a committee to oversee the project. In practice although its terms of reference required it to do so it did not make quarterly reports to the Principal Officers but only sent them copies of its minutes. The Treasurer was a member of the Committee but attended only 17 out of 30 meetings because of pressure of other business.
3.6 It is also unclear at the senior policy committee level where true responsibility lay. The Joint Committee on Central Administrative Computing (JCCAC) brought forward proposals to the Finance Committee to nominate Oracle as the preferred suppliers and to adopt 1 August 2000 as the target date for implementation, based on the Bayles Consultancy Interim Report, and these were formally approved by the Finance Committee. The relevant minute makes it clear that no contract should be signed with Oracle until the Committee, and the Planning and Resources Committee, on behalf of the Council, were satisfied by a final report. No report came back to the Finance Committee, however, but in the meantime the Planning and Resources Committee, at its meetings on 9 December 1998 and 15 February 1999, went ahead to allocate the funding, accept a cost-benefit analysis which was later shown to be fallacious, and approve the appointment of a project manager31. The explanation appears to be that once the Planning and Resources Committee had decided the Finance Committee felt absolved from further decision making. The minutes of the Finance Committee show that throughout it received and noted minutes from the CAPSA Steering Committee, but at no time sought to intervene, ask questions, or saw the need to report any concerns to the Planning and Resources Committee which had allocated the funding.
3.7 This leaves the two project managers themselves, both external appointees. Whatever shortcomings there may or may not have been in Ms Baron's period of project management it is very clear that the University gave her little help and support once she was appointed to the post. In May 1999 Mr Collett-Fenson, Secretary (Finance) of the Engineering Department, concerned at the way the project seemed to be going, set up, in consultation with Ms Baron, an Accounts Policy Working Group comprising three financial administrators from departments and three from the Finance Division (including Mr Whiting and Ms Searle who were to leave in July 1999). The purpose of the Group was to agree accounting policy and provide answers to Ms Baron on accounting matters including creating the new chart of accounts which it was now clear was needed to match the demands of the Oracle system. The establishment of the Group was approved by the Treasurer at a meeting between her and Ms Baron on 7 June 1999 (evidence provided by Mr Collett-Fenson and by Ms Baron). Mr Collett-Fenson's action illustrates only too clearly the extent to which the Project Manager was working in isolation. At its meeting in October 1998 the JCCAC were advised that the added involvement of the three Principal Officers was needed and the Committee recommended to the Finance Committee that they 'should be closely involved in determining and monitoring the management issues arising out of the project'32 but this did not take place and with the Director of MISD interpreting his role in the way that he did, and with the CAPSA Steering Committee exercising an overseeing rather than a managerial role the Project Manager's task was made much more difficult especially bearing in mind Cambridge's complex structure and her lack of university experience. Relations were much closer when the second external project manager, Ms Bryant, was appointed from KPMG, because by this time the University had a Director of Finance who was fully appreciative of the need to drive the project. But by then much of the damage had already been done, especially as there was never any serious consideration of deferring the start date beyond August 2000.
3.8 From a formal point of view the University thought it was obtaining a degree of accountability by establishing the CAPSA Steering Committee but while this was a hardworking Committee, meeting thirty times, it was not an effective mechanism for supervising a project of this kind because ultimately it had no management responsibility and did not have a membership that was professionally relevant to what was being developed. It was therefore not close enough to the project and had no power, or responsibility, except in monitoring the financial outflows, to give direction to the project, even if it had had the expertise to do so. (One member, Mr Collett-Fenson, is entitled to feel that he was an exception to this criticism, having set up the Accounts Policy Working Group and having warned strongly against going live in August 2000.)
3.9 On the management side also the arrangements were defective. On the one hand Ms Baron's contract gave her 'full responsibility' for delivering the project but the person appointed as her line manager, the Director of MISD, did not monitor her performance or the progress of the project. The Principal Officers, who set up the CAPSA Steering Committee, did not receive the reports they should have done, but one of their number, the Treasurer, was a member, if an infrequent attender at the meetings, and she had an overall responsibility for finance in the University. The Registrary had no direct connection with the project and had not been in post when the original commitment accounting proposal was devised though he formally signed the contract with Oracle, and the Director of MISD reported to him. These arrangements were ambiguous and ill defined: the University lacked an effective management structure to drive a project of this kind through to completion.
3.10 For the future development of the system I strongly support the spirit of the Interim Director of Finance's recommendation in his paper 'CUFS Future Development', 27 June 2001.
'Ownership of the system needs to be clarified. It cannot be vested in a committee but must be in an individual, almost certainly the Director of Finance. This post must be given the authority to dictate (with appropriate checks and balances) how the system is used, the roles of individuals who have access to the system, the responsibilities of departments. In return the Finance Division will need to ensure that it can provide the right levels of support to departments in order that they can deliver. Vesting authority in an individual in this way may well be seen as anathema to some but many administrators would welcome clear directives to help them undertake the responsibilities of what are substantially amended roles'33.
4 CAPSA: the underlying management issues
The following conclusions summarise the underlying management issues which contributed to the CAPSA difficulties:
Under investment in the administrative infrastructure
4.1 The University had under invested over many years in its administrative infrastructure. It needed to build up its Finance Division, both in numbers and in professional expertise to be in a position to approach the implementation of a large, modern, integrated accounting system. Concurrently steps should have been taken to ensure that MISD was staffed appropriately to support a move towards a greater reliance on IT based administrative systems throughout the University.
The timing of the appointment of a Director of Finance
4.2 A Director of Finance should have been appointed in 1995-6, at the beginning of the process to modernise the University's accounting system, not in 1999 after the critical decisions had been taken, and should have been put formally in charge of the project with the Project Manager reporting to him/her. The role of MISD should have been to provide IT support, but not to lead the project, and the Director of MISD should not have been expected to act as line manager / project leader, or whatever role he was originally envisaged as playing.
The composition of the CAPSA Steering Committee
4.3 The membership of the CAPSA Steering Committee was not well suited either for oversight / steering, which would have required more technical expertise and being closer to the project, or for management, which would have required more senior members including some major potential users of the system. It would have been very much preferable if an advisory committee of major users with an independent chairman had been appointed either by the Finance Committee or the Planning and Resources Committee (whichever it was decided should be the responsible authority) rather than by the Principal Officers. This advisory committee should have reported formally and regularly on progress against agreed targets to the committee which had appointed it. Executive responsibility, however, should have been clearly delegated to one officer, the Director of Finance, assuming that the Director's reporting function to a Principal Officer had been clearly defined (see paragraph 7.5 below). This Principal Officer would then have been formally accountable to the Council for the success of the project.
The need for a 'business' strategy
4.4 A first task for a Director of Finance, appointed in 1995-6, should have been to lead a review of the University's accounting system and make recommendations for change. This would have provoked a debate about the need to rationalise both central and departmental practice and about the advantages of embarking on installing an integrated system. Whichever way that debate might ultimately have been resolved it would have clarified the University's position before a new software system was sought. It would also have given departments due notice that their own financial administrations needed strengthening.
The decision to give early retirement to Finance Division staff
4.5 The decision to grant early retirement to Finance staff should have been taken, after consultation with the Director of Finance, in 1995-6, not in 1999 and without such consultation, so that replacements could have been in post well before the exceptional demands imposed by a system change had to be faced. The departure (not all on early retirement terms) of four professionally qualified staff, within one month in July 1999, three of whom were integral to the project, imposed a serious added complication to a project that was already in difficulty, and should not have been allowed to occur. The implication for the CAPSA project of the management decision to grant such retirements either cannot have been understood or was consciously ignored.
The reliance on external consultants and project managers
4.6 The heavy reliance on consultants, itself the product of a lack of internal professionally qualified staff, and a lack of experience, and the absence of due process in appointing them, left the University over-dependent in key areas on external advice which neither fully comprehended nor was fully able to adjust to the special complexities of Cambridge. Project management in this context is a role for University staff; consultants, if required, should have been selected from a list of tenders against clear definitions of need.
The lack of a clear line of authority
4.7 The University lacked a clear management structure, interpreted in its broadest sense, to drive the project forward, and any sense of ownership of the project amongst the Principal Officers. When the project ran into difficulties no senior committee or Officer could be identified as having final responsibility for making it a success or rescuing it from failure. Nor was there any person or any body with the authority to vary the start date of August 2000 and to defend that decision publicly.
5 The University's governance machinery and CAPSA
5.1 In Cambridge, as in any of the pre-1992 universities, management and administration are conducted under the authority of a governance structure headed (in Cambridge) by the Regent House and the Council, the latter being described in the Statutes as 'the principal executive and policy making body of the University' with 'general responsibility for the administration of the University … and for the management of its resources'34. The history of CAPSA has extended over at least five years and has already consumed in cash terms over £9M of University resources, a figure which takes no account either of any income lost since August 2000, because of dependence on an inadequate accounting system, or of the further funding that will be required to make the system functional. The question must, therefore, be asked whether the responsible bodies in the governance structure were made aware of these problems and what action they took, or directed to be taken, to deal with them.
5.2 The importance of the audit function has greatly increased in public and private sector organisations since the Cadbury Report on Corporate Governance in 1994. It is now recognised that effective audit is a key element in the successful management of modern organisations because, inter alia, it provides management with independent warnings when things may be going wrong. Cambridge's sensitivity to this requirement was demonstrated by its decision, following the Wass Report, to establish the Board of Scrutiny in addition to an Audit Committee. Cambridge, like all UK universities, is required to comply with the terms of the Financial Memorandum, issued by the Higher Education Funding Council for England (HEFCE) as a condition of the University receiving public funds. The Financial Memorandum requires that the University's governing body must ensure that 'it has a sound system of internal financial management and control' and that the University must have an audit committee and internal and external audit in accordance with HEFCE's Audit Code of Practice35. One of the key requirements of this Code is that the audit committee should provide an annual report which should include 'the committee's opinion on the extent to which the governing body may rely on the institution's internal control system and the arrangements for promoting economy, efficiency and effectiveness in the discharge of its responsibilities'36.
5.3 The University did not establish an internal audit service until 1993 when it appointed as Internal Auditor, Ms Janice Vale, who had an internal audit background in a large company and in banking. In her 1995-6 Annual Report to the Audit Committee she stated:
'Our 1993-4 and 1994-5 reports drew the attention of the Audit Committee to shortcomings in the University's management information systems … Whilst we are satisfied that day to day 'processing' controls generally operate effectively across the University we continue to be concerned at the lack of management information available … it is clear that the development of management information systems will require a long term resourcing commitment … the lack of detailed guidance and training for accounting and administrative staff also continues to be a source of concern'.
5.4 The same report expected the commitment accounting system, which was then being contemplated, to take up to three years to install and notes that the Management Accountant's action plan deferred considering significant areas of necessary work within the next three years because of 'current resourcing levels and competing demands upon development of staff'37. These concerns were repeated and re-emphasised in Ms Vale's report for 1996-7 and in her final report in 1997-8.
5.5 In 1997-8 the Internal Auditor's annual report explicitly addressed the requirement by HEFCE that the Internal Auditor should give his/her overall conclusions on the adequacy of the University's systems of internal control. The report highlighted continuing specific areas of concern: these were the University's management information systems, the requirement for a long term resourcing commitment to put right weaknesses, the slow progress in developing a management accounting strategy, the weaknesses in monitoring and control systems, and deficiencies in the research grants debt collection system. The report noted the proposals then going to the Planning and Resources Committee (November 1998) for the new integrated accounting system, but commented that: 'the timescales for implementation appear to be extremely ambitious in view of the University's lack of experience in managing such a major development and existing pressures on resources'. The report concluded as follows:
'It is clearly difficult to give the Committee full reassurance that the University's systems of financial control are sound when reporting on such entrenched weaknesses in management information systems and in the area of research grants administration. Whilst we have tended to the view that these weaknesses are likely to result in inefficiency and lost opportunity rather than financial loss due to fraud or mismanagement, we are not able to give that comfort in the light of possible losses in the area of research grants.
Our conclusions are based not simply upon these examples of current shortcomings in the system of control but also upon the absence of mechanisms to put right issues which have been reported over a long period of time by both internal and external auditors at Audit Committee level'38.
This represents a serious indictment not just of the accounting systems but of the University's ability or willingness to take appropriate action to put matters right. The report's comment on the proposed timescale of the implementation of the new CAPSA system was not heeded. On Ms Vale's resignation the University briefly employed KPMG as internal auditor, before appointing Robson Rhodes, an external accountancy firm, as an alternative to making a new internal appointment.
5.6 Robson Rhodes' internal audit reports take up from where Ms Vale's left off. Their first report, for 1998-9, notes Ms Vale's concerns about the state of the management information systems, but says that they will be resolved by 'a properly controlled implementation of CAPSA'39. (The external auditors' Management Letter for the same year suggests that an earlier draft of this Report, linking Ms Vale's comments with the delay in implementing CAPSA from 1999 to 2000, represented 'an overall qualified audit opinion'.) However Robson Rhodes' concern about the lack of management information systems was reiterated in their 1999-2000 annual report40. In a progress report delivered mid way through 1999-2000 they also commented strongly on an inadequate provision of professional financial support at departmental level. This drew a ready response from the Director of Finance who agreed that it was a serious problem across the University and in the Finance Division 'which should be tackled on an urgent basis' but pointed out that there were few incentives to persuade departments to ensure that resources were allocated to accounting duties rather than for academic purposes41.
5.7 KPMG have been the University's External Auditors for some 15 years. Their Management Letters issued to the University are very full and include a 'Management Response' prepared by the University to points raised. In their 1995-6 letter KPMG specifically addressed the weaknesses of the legacy accounting system and commended the introduction of a commitment accounting system, but included the following warning:
'Care will be needed to achieve a successful implementation of such a system. It is not uncommon with such a project for costs to be underestimated and for the implementation timetable to be too optimistic. To obtain maximum benefit the system will need to be adopted by most departments and so extensive consultation will be necessary.'
The 'Management Response' contained the confident statement 'we hope to make considerable progress during the financial year'42.
5.8 In the following year the Management Letter addressed both CAPSA and the need for an IT strategy in some depth. On the former it warned that the system's specification drawn up by Ms Baron on the basis of user needs, must take account of efficiency. It went on:
'An unlimited amount of user needs can be incorporated into any new system, provided there is an unlimited budget available to pay for them and unlimited time to implement the system. The following areas should be considered:
Features of the specifications should be ranked according to priority, to allow their cost to be assessed against their benefits;
User needs should be considered both on the basis of current systems and on likely future systems'.
5.9 On the question of an IT strategy for administrative computing the Management Letter stressed the need for a University-wide approach and the importance of examining the 'business' strategy first to ensure that the needs of the University were appropriately clarified before a detailed IT strategy was drawn up. It commented on the lack of coherence in the University's current arrangements with many departments developing bespoke systems and argued that the new strategy needed to encompass 'agreed policy decisions as to what areas of IT should be covered by standardised University-wide procedures and what areas can be left to the discretion of departments'. The Letter went on:
'The last point may require some revision in governance structures such that, where necessary, departments might be required to use certain systems. For example, it may be that an individual system is perceived by a particular department as being the best solution to the department's needs, yet a University-wide solution would provide more value for money for the University as a whole. Also if the University is to obtain and use efficiently prepared management information, certain systems must be used by all departments.'
The 'Management Response' was that the development of a University-wide IT strategy for administrative computing would 'require additional resource and will demand that time be given by a large number of staff, including the most senior members of the administration, all of whom are already working at full capacity'.
5.10 The Letter raised significant questions about the authority of the Finance Division vis a vis departments in regard to the monitoring and reviewing of accounting entries and recommended a 'high level review of the operating and reporting structure and a clear definition of lines of responsibility and authority between the various non-academic central and departmental functions' to improve the University's operational efficiency and the quality of financial information. The 'Management Response', however, effectively passed the buck: it said that it recognised that the external auditors were continuing to point up an 'underlying dichotomy in the University's management and administrative system, that of the role of the centre vis a vis relatively autonomous departments' but that while external (i.e. HEFCE and other bodies) processes, and 'the demands of efficiency and value for money' might indicate the need for more unified controls, 'the culture of the University remains in favour of the dissipation of power and authority. Until this essential conundrum has been resolved and a new paradigm established, it is difficult to see how more than modest progress can be made'43.
5.11 In the Management Letters for 1997-8 and 1998-9 comments were repeated about the need for an IT strategy for administrative computing to be prepared but none was forthcoming. A document was produced by the Director of MISD for the Information Strategy Group in June 1999 but this cannot be described as offering a strategy but simply a list of areas that needed to be addressed without priorities and without costs. No administrative IT strategy document has ever been approved by the University.
Internal Audit and CAPSA
5.12 Robson Rhodes, as the Internal Auditors, had membership of the CAPSA Steering Committee where there was criticism of their failure to attend meetings more regularly. They were required to prepare a special report on the progress of the CAPSA project in mid 1999, and terms of reference were agreed early in April. The report did not, however, become available until late August, and was not considered by the Audit Committee until November, by which time KPMG had already been asked to report on the project's financial status and the Project Manager had resigned. This was unsatisfactory; however, the report's diagnosis was very clear. It drew attention to the failure to monitor the Project Manager's work adequately and to the fact that there was no individual or body within the University 'who has taken responsibility and been held accountable for the project'. It recommended that University management take a more active and operational role, that project sponsors be appointed to take responsibility for recommending to the Steering Committee whether the system should go live, that a project management team be established in which the Directors of Finance and MISD should have an operational role, and it criticised the failure of the specification of requirements, the training programme and the internal control and security arrangements44. Because this report followed rather than anticipated the crisis of July / August 1999 it appears not to have commanded much attention. The internal auditors produced a second report in January 2000 where they made a number of technical points but included the suggestion that the original cost benefit justification paper presented to the Planning and Resources Committee in February 1999 should be reviewed and the £11M benefits revalidated and updated. No one, the report pointed, 'appears to be accountable for delivering these benefits'45. The suggestion was not acted upon.
5.13 In April 2000 Robson Rhodes presented proposals to the Audit Committee for an enhanced internal audit input to the project in terms of options for additional 15, 22 or 34 day pre-implementation reviews at a figure of £17k for the 34 day option. It was regrettable that the Audit Committee did not take up any of these options. There had been criticisms within the Audit Committee of Robson Rhodes' performance but in the light of the £8M the University was already by this time spending on CAPSA the cost of the review they proposed was small especially when set against the potential value of the additional man days reporting. The CAPSA Steering Group on the advice of the project management team thought the additional time spent on the reviews 'would add little to value to the project' and supported the Audit Committee's decision46. Robson Rhodes' report to the Audit Committee in June 2000 (see above, paragraph 2.20) was, however, very much to the point and it is unfortunate that it was not given more weight.
5.14 These audit reports, internal and external, while variable in quality, convey a significant range of concerns. The issue of the lack of adequate financial management information systems is addressed in every report from 1995-6. Questions such as the critical lack of resources and of professionally qualified manpower, the failure to establish a business strategy for IT development, the failure to produce an IT administrative computing strategy, the problems of reconciling departmental and central financial practice and the need to tackle the issue of obtaining real financial benefits from the new system, the warnings about timescales for the implementation of new accounting systems, are all recorded and should have generated serious consideration and action from the various responsible bodies in the University, but did not do so. The Audit Committee's own Annual Reports to the Council tended to be bland documents which, where they repeated critical statements or warnings in the internal or external auditors' reports, did so without reflecting any urgency for action. On the occasion of the Internal Auditor's strongly worded statement at the end of her 1997-8 report the Chairman met the Vice-Chancellor to voice the Committee's concerns but although the situation had not changed materially in 1998-9 and 1999-2000 no further special action was taken to draw the Council's attention to the problems. In 1997-8 while noting the comments in the Internal Audit Report and in the External Audit Management letter the Audit Committee reported that they had 'been assured that progress is being made to address them'47. In 1998-9 the Committee reported that they had 'monitored the development of this (the CAPSA) project closely and are satisfied with the progress being made'48.
5.15 In December 1998 the Committee received a briefing on CAPSA from the Management Accountant. The Note of the meeting recorded that while the Committee did not wish to 'dampen enthusiasm for the project' they felt there was 'a need to caution the management team over a number of issues' which were listed as:
'realism over the timescale of the implementation;
the need to conduct a full and appropriate assessment of risks;
the need to clarify the cost benefits;
identification of post-implementation costs;
the need to manage change within the University (both in terms of business systems and cultural change);
ability to secure appropriate and high-calibre staff for the project team;
capacity for departments to release the number of staff required; and the broad structure of the project team'.
In the discussion the Committee noted 'that Enterprise Resource Projects (ERPs) were notorious for their late delivery' and were concerned at the 'extremely short timescale envisaged'. They also 'questioned the assumption made that all departments would be keen and willing to take on board a new, centralised accounting system'49. Following this meeting the Chairman of the Committee wrote to the Registrary to draw the attention of the Principal Officers to three points in particular - the cost benefits of the project, the need for greater realism over the timetable, and the ability to secure staff of an appropriate calibre for the project team50. In his reply the Registrary said that the letter had been discussed with the Principal Officers and, while the risks were recognised, it was believed 'that the project is fundamentally sound and necessary but it will require strong project management and high level direction'. On the cost-benefit question the Registrary noted that the Planning and Resources Committee (which had agreed to commit £4.3M to the project on 9 December 1998) would be considering the cost benefits at its next meeting (15 February, when the predicted costs had escalated to £4.72M). On the timetable question, the Registrary pointed out that the start date was now August 2000, not 1999, but on staffing he agreed 'that this may not be straightforward'. He went on to say, 'I cannot provide full reassurance on the points you raise'51. The Audit Committee did not follow this up in spite of the Internal Auditors' report only six months later (quoted above in paragraph 5.12) which repeated concerns which the Committee itself had noted, and in spite of abundant evidence that the project was receiving neither the 'strong project management' nor the 'high level direction' that were the Registrary's requirements for reducing risk. Nor did the Committee even include a mention of its concern in its Annual Report for 1998-9.
5.16 In the following year's Annual Report the Committee noted that there were difficulties in recruiting staff for CAPSA owing to the depressed salaries in higher education but concluded 'they believe that these difficulties are being addressed and they wish to record their view that the University has made progress in this area in the last three years'52. This report is dated 1 December 2000 at a time when the University had lost both its Directors of Finance and MISD and was having extreme difficulties in recruiting financially qualified staff.
5.17 The Audit Committee did not provide the rigorous, independent view of the University's affairs that the University needed. It was too much part of the 'system', too ready to accept reassurances, and not willing to make statements that would be uncomfortable to higher bodies. However, the Council, the Finance Committee, and the Principal Officers also received the reports of the Internal Auditor (after 1996-7) and the External Auditors' Management Letters, and were in a position to make their own assessments. These reports gave the University full and explicit warnings of the fundamental problems that underlay the CAPSA project but they did not prompt effective action from the bodies statutorily charged to receive them.
5.18 The Board of Scrutiny adopted a more urgent tone without, however, having any greater effect. In its First Report the Board warned of the need to provide adequate resources on the MIS side if the introduction of management accounts was to be achieved53. In its Second Report, the Board drew special attention to Cambridge's low level of expenditure on central administration and urged that the University needed a strong central administration to deal with the pressures of accountability and that such deficiencies as there currently were, were the product of under resourcing54. In its Third Report the Board recommended a further strengthening of the CAPSA team55 and, while in its Fourth Report it welcomed the significant resources that were now being devoted to CAPSA, it also noted the excessive pressures on some officers in the Central Administration56.
The CAPSA Steering Committee
5.19 These were not the only warnings that University bodies received, however. Problems of under resourcing, loss of staff, staff recruitment difficulties and the need for the KPMG Project Manager to obtain the release from normal duties of key staff assigned to the project were reported to the CAPSA Steering Committee on 19 April and 18 October 1999, 10 January, 14 February, 14 March, 17 April, 15 May (when the Director of Finance reported she had 19 vacancies in her Division all of which needed filling by 1 August), 12 June, 14 August, 4 September and 26 September 2000 - more than one third of its meetings - without the Steering Committee making any representations to higher bodies to take some action to relieve the difficulties. Since the CAPSA Steering Committee minutes were circulated to the Finance Committee one must assume that the Finance Committee was also aware of the problems. Indeed they had been spelled out to the Committee in some detail by the Treasurer as early as November 199757.
6 CAPSA: the governance issues
The following summarises the governance issues which contributed to the CAPSA difficulties.
The effectiveness of the governance structure
6.1 The main decision-making bodies of the University were appraised of the serious problems that beset the CAPSA project and of the warnings that were being given as to the progress of the project. Although some strengthening of the manpower resources for the project took place it was for the most part too little and too late. Consciously or unconsciously, committees chose not to ask questions or to initiate action to remedy the problems. The Audit Committee failed to draw the problems directly to the Council's attention and appear to have glossed over statements in audit reports which, in other organisations, would have set alarm bells ringing. Of course, the University's decision-making bodies had much else on their minds and the overall pressure of University business did not encourage intervention in matters which seemed to be being handled by an appropriately appointed committee but such issues represent a test of the vigilance of governance structures, and in this case the structure must be said to have failed. Indeed it confirmed the view put to me by many people, both academics and administrators, that the University's committee system is ineffective because it does not translate information gathering and discussion into action. The first Director of Finance told me that among her main reasons for resigning in October 2000 was the conviction that the University was unable to solve its problems. As the Internal Auditor said in her 1997-8 report there is an 'absence of mechanisms to put right issues which have been reported over a long period of time'58.
6.2 In the Regent House Discussion of 10 October 2000 the Registrary expressed his regret 'that on this occasion the service provided by the Central Administration has not matched our expectations'59. But the CAPSA story does not represent simply a failure of administration. In the same Discussion Dr Gillian Evans pointed out that it was 'the Council, which was ultimately responsible under the Statutes'60. She is right: CAPSA represents a corporate failure, a failure of management that derives at least as much from a failure of governance as of administration. The Council has a 'general responsibility for the administration of the University … and of the management of its resources'61. It also has the power 'to take such actions as are necessary for it to discharge these responsibilities'62 and to recommend financial allocations from the Chest63. The University, nevertheless, suffered from a sustained under investment in professionally qualified administrative staff and in the financial systems necessary to run a major research university. The Council did not ensure that the issues surrounding the different administrative/financial practices between the central university and its departments had been addressed effectively. This was a prerequisite for investing in a modern accounting system and was the subject of warnings by the auditors and by the Board of Scrutiny64. These are issues that must now be addressed to avoid future crises of the kind provoked by CAPSA. It would be exceedingly unwise to authorise any further investment in IT based systems in the area of finance, personnel and payroll, or student administration until progress has been made in these areas. Council must now also take steps to ensure that its committee structure is more effective in helping it to carry out its responsibilities.
6.3 The University's provisions for the management of its finances raise a number of issues which also call for serious review. The core of the concern voiced by both internal and external auditors was the absence of an effective and reliable financial management information system. This was first raised by the Internal Auditor in her 1993 annual report and to the substance of her 1995-6 report and the report of the external auditors in the same year have been referred to above (paragraphs 5.5 and 5.6). To the extent that the Oracle Financials system is still not working effectively, with many departments choosing not to participate fully, these concerns have still not been dealt with and there must be a question as to how this is reflected in the University's accounts.
6.4 From a financial management point of view, however, the absence of monthly or two monthly University management accounts, which should include departmental figures, is even more serious. With the experience of chairing a budget committee myself, which reviewed a university's finances against estimates in close detail every two months, I find it hard to imagine how Cambridge can steer itself financially through the year. The Management Accountant was asked in 1995-6 to develop procedures for the production of quarterly management accounts and the external auditors advised that a timetable for their production should be agreed and implemented. The Management Letter for 1995-6 stated:
'We would underline the importance of producing interim financial information in the form of management accounts. Ideally management accounts should be derived directly from the accounting system, i.e. without the need for re-analysing large amounts of information through spreadsheets as is the case at present. It is of course important that information on the system is up to date and to this end the speed of processing of information from departments should be reviewed and improved. We understand that currently invoices can take at least four weeks to be processed onto the system'.
The Management response to this was terse: 'These observations do no more than state the obvious … A timetable for the production of quarterly management accounts will be agreed as soon as possible'65. The Board of Scrutiny in its First Report also called for the provision of management accounting procedures as a matter of urgency66 and expressed concern about the slow process in its Third Report67. No interim management accounts have yet been produced. It needs to be emphasised that a university does not need to have an Enterprise Resource Planning system to produce management accounts; they could have been produced part manually and part using the legacy accounting system if there had been the will and the manpower to do it. The University needs to make this an absolute priority task for the new Director of Finance and should be ready to fund whatever resources are required to produce them.
6.5 The funding for CAPSA was never put into the University's financial estimates, even though the Treasurer was fully cognisant and indeed was the main advocate for a more professional approach to management accounting. The allocation of £4.3M in 1998 was made by top slicing expenditure mid-year and was intended to be repaid through a Sinking Fund spread over ten years. This Sinking Fund was, however, never established (although there was no formal committee decision not to do so) and when the further investment had to be made up to the figure of £8M this was funded through the Quinquennial Equalisation Fund.
6.6 Part of the difficulty lies in the role of the Finance Committee. Traditionally, in universities, a Finance Committee exercises general financial supervision over the whole institution on behalf of the governing body, including reviewing interim management accounts, taking responsibility for a close scrutiny of the annual accounts and making recommendations to accept them to the governing body. In 1998 the Treasurer advised the Finance Committee that 'it was not clear that the Council through its Finance Committee was currently able to carry out its duty under Statute F.I.1(a) 'to exercise general supervision over the Chest and over the finances of all institutions in the University other than the University Press''68 because of the lack of high level financial information about the University and a consequent inability to monitor financial performance. As a paper by the Treasurer to the Committee indicates the Committee continues to lack the financial information which it requires to exercise this supervisory role three years later69. This obviously reduces the Council's ability 'to keep under review the University's financial position'70.
6.7 The Finance Committee also carries out the very large tasks of advising the Council on the care and maintenance of all University sites and buildings, of considering new building proposals and advising on the building programme generally. If and when the new accounting system begins to deliver proper financial management information it would seem desirable that the Finance Committee should concentrate its attention on financial management questions, with building and property matters transferred to another body. Perhaps one reason why the Committee has not taken a more direct and active role in ensuring that resources were made available and that an effective accounting system was in place is because of the pressure of business on the buildings and property side. In the rest of higher education it is impossible to imagine a lay chairman of a finance committee being willing to countenance his/her committee being unable to consider management accounts and having so little real financial supervisory power over an institution's affairs.
6.8 This Report has noted above the University's failure ever to establish a Sinking Fund for the allocation of £4.3M and later £4.72M, the omission of VAT costs from that figure, the Planning and Resources Committee's acceptance of a cost benefit analysis on CAPSA which produced wholly speculative savings of £11M, the failure of the Finance Committee ever formally to approve the CAPSA go ahead in 1998, the failure to follow up the Internal Auditors' suggestion that the cost benefit analysis should be revisited to establish whether in practice any savings were likely to be made, and the granting of the privilege of early retirement to members of the Finance Division without reckoning on the impact it would have on the CAPSA project. All this suggests that committees' checks on financial matters, and particularly on some expenditure items, are not as firm as they might be. The situation can only have continued because Cambridge has not been under the same pressure over resources as many other institutions. If it had, it would have been forced to place much more emphasis on how its resources were managed, and the delays and under investment would have been more quickly remedied. Effective resource management gives an institution more choices for investment in new ventures and academic support; ineffective resource management dissipates resources and encourages slow response times, concealment of error, and financial underperformance. The University needs a much more robust approach to financial management issues.
7 The Central Administration
7.1 When the Wass Committee recommended the creation of a unified central administrative service it could not have anticipated that twelve years later this recommendation would not yet have been fully implemented. It cannot be argued that there is a 'right' way to structure the administration of a university because there is the evidence of several alternative approaches operating in successful institutions but when institutions are under pressure from financial stringency, competition or from external forces, both political and regulatory, the need for internal coordination, the most effective deployment of resources, and the coherent development of policy is at a premium and points strongly to the kind of unified administration which Wass recommended. Cambridge, to an extent that exceeds any other UK university, is sensitive to the growth of central executive or bureaucratic power bases, but the solution to this concern must be to strengthen governance structures, and make them more effective, so that they can ensure administrative accountability. The CAPSA story illustrates the problems that arise when responsibility is diffused between committees and amongst different officers.
7.2 The Council's statement of 18 June 2001 sets out the constitutional position of a Unified Administrative Service admirably71. It also draws attention to the very high percentage of turnover amongst administrative staff. This is not just a reflection of competitive salaries in the private sector, but evidence given to me suggests very strongly that much of it is attributable to low morale and on this I agree with Professor Spencer's remarks at the Regent House Discussion of 1 May72. One relatively senior administrator, who accepted a post at Cambridge at a much lower salary than he was receiving in the private sector because he was genuinely interested in working in Cambridge, gave me as his reason for resigning the unwillingness of the University to reach decisions, one way or another, on issues with which he was professionally involved. Another said that the difficulty of working to the University's committee system was that you never knew when a decision had actually been made. Indecisive committee decision-making is demotivating for those charged with trying to implement the decisions especially when it is accompanied by an institutional inequality between administrators and academics. The fact that senior officers, at Director level, are often not offered College Membership can be, and is interpreted as, an indication that they are not fully accepted in the academic community and it reduces their effectiveness because it cuts them off from an important engagement with the social and intellectual life of the University. If the difficulty is the burden of the cost of membership falling on a college the University should find some way to cover it to ensure that its senior administrative staff are able to participate in the collegiate life of the University on a similar basis to their academic colleagues. While professionally there is a great deal to be said for the philosophy of 'growing your own' administrators through careful recruitment at junior levels and effective career monitoring and mobility within the University there is always the need in a big university to keep open the possibility of seeking to attract able people from other universities and professions. There is significant mobility nationally within the university administrative profession, especially at levels of the national administrative grade 4 and above, and on the whole this is healthy because it spreads good practice and broadens the experience of able staff. The University should be more part of this than it is but to do so it needs to present itself as offering a satisfying working environment in which people's careers will flourish. Able university administrators are not looking to take over management from the academic community - they would not be successful in their profession if they were - but they will not be tolerant for long of tortuous decision-making processes which greatly increase their work load, of financial management which is less than professional, and of a sense of unequal status.
7.3 Most universities have recognised as a fact of life that to attract and retain professionally qualified staff in certain areas, accountants and IT specialists being the most notable (perhaps especially in Cambridge where private sector competition is so high), salary supplements have to be offered. This is no more welcome to academic administrators, where such supplements are generally not necessary, than to academics themselves, but if it is forced on a university by market conditions then it is most unwise to resist it because as the CAPSA project has demonstrated the failure to make necessary appointments or appointments of the right calibre can ultimately impose a burden on everyone. What many universities do is to maintain grading comparability amongst all administrative staff but recognise that higher salaries may be required in certain posts or professional areas.
7.4 The CAPSA story highlights a number of weaknesses in staffing procedures that need to be addressed. The first is the timescale and laborious processes which are involved in making administrative appointments and the second, which is linked to the first, is the practice of making appointments to unestablished posts which have to be limited to three years in the first instance. The Interim Director of Finance reported to me that on arrival it took him three months to get approval for vacancies to be filled and six months to get approval for new posts. When recruitment has then to involve a two stage process: interview and decision to recommend by an appointing panel made up of the professionals in the area, and then a further interview and decision by a University standing committee drawn primarily from the academic community, it is not surprising that vacancies are difficult to refill and that those staff remaining in post spend much of their time covering work arising from vacancies. In finance or IT areas good candidates are not going to stay on the market while the University goes through lengthy bureaucratic appointing processes. The result will be that the University is forced to make appointments of much lower calibre than is required simply to fill vacancies. Equally, in many professional areas, given the general uncertainty about the economy and the job market, individuals will not accept posts which are even only nominally for three years, especially if acceptance involves a domestic move to Cambridge. The University needs therefore to reform its structures. Many universities now allocate a fixed budget to the Registrar for central administrative purposes and leave him/her the task of managing the staffing establishment for the central administration within it: this eliminates the need to gain approval to fill vacancies and gives flexibility in terms of the ability to restructure when vacancies appear. If that is not acceptable in Cambridge the process of approving the refilling of vacancies needs to be greatly streamlined, and questions need to be asked as to the added value that a standing appointments committee for posts below the level of Director can usefully add to the judgement of professionals in the field, especially when balanced against the problems arising from delay in bringing the appointment process to a conclusion in a market where the University is competing for good candidates with organisations that can offer higher salaries for equally challenging work, and can reach decisions quickly. Other universities certainly do not handicap themselves in this way.
The Unified Administrative Service: the role of the Director of Finance
7.5 A third point arises from the organisation and lines of responsibility within the Unified Administrative Service. In her letter of resignation the first Director of Finance set out a number of reasons for her departure of which the first was the ambiguity of her reporting responsibilities. She commented on the considerable tensions that had been caused by the proposals to refocus the roles of the Principal Officers and the extent to which that had affected her position and she advised that clear reporting lines and management responsibility needed to be established before the appointment of her successor73. These ambiguities remain, however, in that the further particulars for her replacement, while making it clear that the Finance Division is part of the central administration and as such its Head would report to the Registrary, nevertheless state 's/he will work closely with the University Treasurer who is the Council's principal adviser on the University's assets and investments, reporting to the Vice-Chancellor'74. This glosses over the wording of Statute D Chapter V which states that the Treasurer is the Council's principal financial officer and adviser on financial matters and is the Secretary to the Finance Committee. A yet further version of the relationship of the Director of Finance to the Treasurer, and by implication to the Registrary, appears in the Financial Regulations75. If the Director of Finance is responsible for no more than the management of financial services, as could be inferred from the further particulars, then it is questionable whether the University has a truly Unified Administrative Service. The management of financial services is intimately bound up with the requirements of financial policy, and the possibility of conflict and ambiguity in this most sensitive of areas must be acute. It is not made clear, for example, in the further particulars which officer is professionally responsible for the University's Accounts. More to the point, if a Director of Finance were found to be mishandling a future upgrade of the Oracle Financials system which Principal Officer should intervene - the Registrary as Head of the Unified Administrative Service within which the Finance Division is located, or the Treasurer who is the Council's principal financial officer? Which of these two officers is actually responsible for proposing a budget to the University for the upgrade and ensuring that expenditure does not exceed it?
7.6 The Council's Report on the Unified Administrative Service says obscurely that the Treasurer will exercise 'functional management alongside the administrative management exercised by the Registrary' over the Finance and Research Services Divisions and the Estate Management and Building Service76. Neither 'functional' nor 'administrative' management is defined and appear to be left open to interpretation by the officers concerned. This is a recipe for future misunderstandings. We have seen with CAPSA how on the one hand the Director of MISD was regarded as in charge but interpreted his role quite differently. Even worse is the danger that the Director of Finance who is the person best qualified to give advice about the University's financial position (and who will presumably be the person who attends the British University Directors of Finance Group on behalf of the University) might not be in a position to give it (the previous Director of Finance was asked by the Treasurer not to attend the Investment Sub-Committee). Several of those giving evidence to me confirmed that the failure of the University to reach an unambiguous decision about a Unified Administrative Service lay at the heart of some of the difficulties over CAPSA because it was never clear which of the Principal Officers should actually have taken the responsibility, when things were seen to be going wrong, of taking charge and sorting them out. The present arrangement perpetuates the ambiguity which the previous Director of Finance found so unsatisfactory and which lays the University open to confusion and risk. The risk is particularly acute in areas of capital expenditure and in the general areas of policy and financial planning.
7.7 One of the intentions in the Wass recommendations was to bring all administrators, whether in departments or in the centre, into a common service. This was rejected by the University. Nevertheless there are aspects of this issue which are important to follow up. The CAPSA project has revealed very large gaps of perception between departments and the Central Administration, and the CAPSA difficulties have reinforced a tension which is unproductive and harmful to the University. The Registrary already leads a staff development programme for administrative staff throughout the University. This needs to be enhanced and given a wider brief, and a budget, by the University, to establish a regular and structured programme of training and information seminars for administrative staff with the aim both of improving the professional skills and career prospects of university administrators serving in any department or division of the University and of keeping them informed of developments in policy at the national level or within the University itself. Such a programme would warrant a special appointment but it would be important that the Registrary himself remained firmly in charge.
Professionalism in financial management
7.8 A second area is the maintenance of appropriate standards of financial management. The CAPSA project has illustrated the wide divergences of financial practice between the centre and departments and the lack of professionally qualified staff serving in finance positions in departments. Integrated accounting systems need to be supplemented by working relationships to be effective; as always the system is only as good as the data fed into it. A separate professional financial reporting line needs to be established between the Director of Finance and the head of financial administration in each department, where such a post exists. This is not intended to recreate the Wass recommendation in another form or to undermine the relationship between the departmental head of financial administration and his/her head of department but as a step to ensure that the Director of Finance can begin to take responsibility for keeping staff professionally up to date on developments in the University's financial systems and to require them to abide by the University's financial regulations and procedures as approved by the appropriate bodies. It is inevitable that accounting and other financial systems will become more complex over the years and, as departments engage in financial relationships with a wider spectrum of organisations, it is important that the Cambridge devolved structure does not lead to irregularities or communication gaps which could jeopardise the overall functioning of the University. There are too many examples in the commercial world of the activities of subsidiaries wreaking havoc on a parent company for the University not to wish to take all possible steps to supplement the principles of departmental autonomy with arrangements designed to protect itself from difficulty in modern tax and regulatory conditions.
8 Strengthening the Council and its main committees
8.1 I have no doubt that the Council and its main committees need to be strengthened if they are to carry out their functions effectively. They need to develop a stronger and more professional ethos, to take greater cognisance of the extent of their managerial responsibilities and be willing to act on them. Being a non-executive director of an organisation which, conservatively estimated, has a turnover of £350M, is a serious job and not one to give to someone who is unprepared for the responsibility and unable to give sufficient time and energy to it. Members of Council need 'training' through seminars and workshops (a programme has been established by the Committee of University Chairmen which might serve as a model) so that they can be effective in identifying issues which need to be addressed. Most university governing bodies have carried out effectiveness reviews in the last two or three years and I would strongly suggest that Cambridge should also do so. The Council needs to recognise that the management of a major university in modern conditions requires a greater degree of professionalism than may have been needed in the past.
8.2 The Council should be able to rely on its committees to offer it specialist advice and recommendations. I have suggested above that with a new management accounting system in view it would be timely to separate a concern for property and building from the Finance Committee so that the Finance Committee could concentrate on its financial functions and a new Estates and Building Committee could take on the other functions (the very large building programme, estimated at a cost of £350M, which the University is contemplating would reinforce the arguments for such a separation of functions). The Planning and Resources Committee also needs strengthening: on many occasions the membership actually present seems to be quite small and less than the number of officers in attendance. However, the functional relationship with the Finance Committee needs redefining to prevent the duplication evident in the discussions of CAPSA (see above, paragraph 3.6). While its allocations to the CAPSA project may not be typical the Planning and Resources Committee needs to reflect on why it approved what was in fact four escalations in the cost of the project without challenging the figures, asking who was in charge of the project and demanding accountability, and without scrutinising the cost benefit analysis for the project more carefully.
8.3 The question has been raised whether the Council would be strengthened by the presence of lay members. I think it might be, if lay members can be found who genuinely bring some additional expertise and qualities of judgement and who are able to devote the necessary time which an understanding of the University's business needs. On the other hand, I think it would be most valuable if laymen were to serve on all the committees dealing with finance, investments, building and property, but the lay membership needs to be sufficiently large to be able to make an impact on the work of the committees. Such members should be identified much more for their extensive professional experience outside Cambridge and their ability to bring real expertise to the committees than because they have had some previous connection with Cambridge.
8.4 Whereas on the committees referred to in paragraph 8.3 above I would expect the lay members to be in the minority I believe that on the Audit Committee they need to be in the majority and that the Committee should have a lay chairman recognised for his/her ability to take an external and critical view of the University's affairs. There is perhaps a natural tendency in Cambridge to seek to rebuff criticism and to be reluctant to take on board doubts and warnings expressed from outside. The reports of the internal and external auditors provide ample evidence of this. No doubt the Audit Committee's annual reports were constructed as much as anything with external reactions in mind but in practice they were not sufficiently forthright to alert the Council, as they should have done, to the scale of the weaknesses in the University's financial systems or to the auditors' timely concerns about CAPSA. A strong and, where necessary, questioning Audit Committee is a benefit to a university although it may constitute an often uncomfortable bedfellow.
8.5 Draft proposals are under consideration in the University about changes in governance arrangements77. A key step in the strengthening of the Council must be the establishment of four Pro-Vice-Chancellor posts, instead of the current two, each with a clearly defined portfolio, to assist in the management of the University and ensure that decisions taken by committees that they chair are implemented. I do not disagree with the portfolios suggested by the Joint Committee and the proposed allocation of 60% of the Pro-Vice Chancellors' time to university business seems appropriate. I would not support the idea that has been voiced that they should become executive Pro-Vice-Chancellors with administrative staff formally attached to their Offices as this would create ambiguity and potential conflict both with the statutory bodies and with the functions of the Registrary and the staff of the Unified Administrative Service. It is currently proposed that the four Pro-Vice-Chancellors might serve for three or four years but my assessment is that three years is too short a period and five years is preferable in order to ensure full effectiveness.
8.6 My concern over the proposed structure, however, is that this division of portfolios does not explicitly provide a strengthening of the structure to remedy some of the weaknesses illustrated by the CAPSA project. I have been very struck by the extent to which departments seem unaware of external developments, particularly of a regulatory kind which affect the running of the University, and they therefore attribute restrictions on their freedom to an over-centralising zeal in the Old Schools. As an example a senior Professor described to me with passion an attempt by the University to circumscribe his power in respect to purchasing, but the circular to which he was referring, when I had tracked it down, was a consultation document only and was a model of explanation as to the rules on purchasing being imposed on universities (as well as on public sector bodies generally) by the Public Accounts Committee via HEFCE which largely involve learning from good practice in the private sector78. In a large, very active University, with a very high degree of devolution to departments, it is natural that some tensions will arise between departments anxious to maintain their standing in the face of international competition and the Central Administration which has to respond to a regulatory climate which is designed to force change on institutions which receive public money. The sense of promises unmet which has been generated by CAPSA has worsened these tensions and it is imperative for a good relationship to be restored; the present climate puts the University at risk. While I am reluctant to propose the creation of a fifth Pro-Vice-Chancellorship I can see no better way to demonstrate the need for the appointment of a Pro-Vice-Chancellor with a portfolio to keep under review the internal functioning of the University, its internal communication systems and relations between the departments, the central bodies and the colleges. Improving the internal climate of the University must be a major objective and will not be achieved overnight. The identification of a senior appointment to concentrate on the effective internal governance of the University would represent a major commitment to improving the running of the University.
8.7 Anyone from outside the University who has read or been present at Regent House Discussions, particularly those in relation to CAPSA79 and the Unified Administrative Service80 must be surprised at their tone and the freedom with which personal criticisms are ventilated. Without in any way seeking to minimise the causes or the depth of concern shown by some of the contributors it is questionable whether such a response is appropriate in a university environment where traditionally civil discourse between members, whether staff or students, is regarded as essential for the exchange of ideas. Certainly it places the hard pressed university administrator in an unenviable position whether or not he/she is guilty as charged. The Regent House might wish to consider some code or standing orders to deal with this if for no other reason than that the risk of criticism in this form will certainly act as a deterrent to people who might otherwise be attracted to senior positions in the University, whether as Pro-Vice-Chancellor, Principal Officer or Director.
8.8 However this relates to only one aspect of relations between Council and the Regent House. Irrespective of the Regent House's legal powers as the governing body of the University, the existence of a forum where individual views can be expressed about university matters, especially in a university like Cambridge where the channels of communication seem to be poor, is valuable. But the Discussions are far less valuable if the Council itself does not take the opportunity to explain those policies which are subject to criticism and to rebut, where appropriate, arguments which in its view may not be soundly based. In the CAPSA Discussion, Professor Longair made a model exposition of the history of the CAPSA project but in the Discussion of 10 July, for example, where members of the University took issue about a circular put out by the Director of Personnel dated 4 April 2001 in relation to the use of the web for illegal activities, neither the Director nor the Chairman of the Personnel Committee were present. No explanation was given on behalf of the Council, under whose ultimate authority the circular was issued, as to the legal situation in regard to communications on the web or as to the reasons why the circular had been issued, rightly or wrongly, in the form that it was81. There will always be dissentient voices in a university like Cambridge where academic freedom and the right of individual members of the University to express their views are highly prized, but the Council weakens its own position both in the University and externally if it allows such views to pass unchallenged where it thinks they should be answered, and if it does not assert itself by replying in the Discussion through one of its officers or committee chairmen to defend its actions or actions taken in its name, rather than by a written response later. This would raise the quality of debate and understanding within the University of the governance and management issues which the University has to contend. It has been put to me that one reason why governance and management issues, including the creation of senior posts in the Unified Administrative Service, have not been addressed more transparently is a longstanding reluctance to face scrutiny or criticism in the Regent House. Whether or not this is a correct interpretation it would seem to me much healthier for the Council to engage full frontally in robust discussion in the Regent House than allow comments and criticisms, which then find their way into the media, to be made without answer, explanation or refutation until some time later. Moreover, for those whose task it is to implement the decisions of the Council it offers some support to their morale to hear their actions defended by those under whose authority they were taken.
9.1 The CAPSA difficulties have illustrated the lack of clearly defined principles of accountability or of a culture of accountability within the University. It is not clear that anyone or any committee could be said to be in charge of the CAPSA project yet expenditure is rising beyond £9M. The internal and external auditors made significant comments to the University about systemic weaknesses in financial information systems and management accounting and specifically on points to do with the CAPSA project but no individual or committee was apparently accountable for ensuring that these comments were acted upon or refuted. Committees made recommendations to be rubber stamped at Council with the result that neither the committees nor the Council felt fully accountable for the decision. The Council has 'general responsibility for the administration of the University'; the Registrary is 'under the direction of the Council' and 'the principal administrative officer of the University' but in practice, while Council may be formally accountable for administrative failures, responsibility for the implementation of policy is best vested in the hands of individuals, whether the Vice-Chancellor acting on behalf of the Council or the Registrary acting on its instruction or under its general authority. Most universities have drawn up a statement of levels or hierarchies of accountability within their institution and in Cambridge it would seem appropriate that the Audit Committee should be charged to do that and bring a set of proposals to Council.
9.2 In the meantime there would be value in establishing a formal reporting relationship between the Registrary and the Vice-Chancellor. The Vice-Chancellor is, by decision of the Regent House, 'the designated Officer' (Accounting Officer) under the terms of HEFCE's Financial Memorandum and the Statutes give him 'the power to ensure that all University officers duly perform their duties' but that is not the same as ensuring that the Registrary has a regular reporting relationship to the Vice-Chancellor in respect to the day to day functioning of the administration of the University. This would not conflict with the Registrary's responsibility to Council but would give the Vice-Chancellor a more direct role of intervention in any future CAPSA-like scenario, as might be necessary especially bearing in mind his responsibilities under the Financial Memorandum.
10.1 I set out below a list of formal recommendations which arise from the Report's findings. They are designed to address the particular weaknesses and shortcomings that bear on the CAPSA project together with some others that are related but have rather broader significance. There are some issues, however, that do not lend themselves to formal recommendations and which relate to the organisational framework and culture of the University. In many ways these issues created the climate in which the kinds of problems that CAPSA threw up could flourish.
10.2 The first of these is the relationship between the Central Administration and the Departments. This has been significantly worsened by the CAPSA affair. Some of the recommendations below are designed to address this issue but there is a long tradition of suspicion if not hostility which will not be overcome easily. Taking steps to bridge the gulf that currently exists must be a key task for the leadership of the University in the future. Much more important developments than the installation of new integrated IT systems may otherwise be put at risk.
10.3 A second issue is the lack of respect for the professional and the preference for the amateur approach in both governance and management. This is very much contrary to modern trends and is likely to cause the University increasing difficulty in the future in its relation to the external world, including Government. The CAPSA project is a good example of what can happen when an institution does not adopt a professional approach to managing a complex but essentially routine operation.
10.4 Finally the University needs to find a way to retain its all important tradition of academic self government while at the same time preventing it from lapsing into cosiness and injecting into its governance a set of more rigorous and self-critical attitudes. The University needs to adopt a more accountable culture where individuals can be held responsible for their actions (or inactions) and where committees are more questioning because they may be held responsible if their recommendations to higher bodies can be shown to have been arrived at without proper scrutiny. The Council's accountability to the University for its responsibilities under the Statutes needs also to be given emphasis. If University committees had asked more questions in the initial stages and accountability had been more clearly defined the CAPSA problems would have been identified earlier and could have been addressed more effectively.
10.5 My detailed recommendations are as follows:
(1) The University needs to consider a substantial further investment in administrative support in the centre and in departments to enable the Oracle Financials system to be effective and in order to be able to extend and upgrade it. This support must include the recruitment of a significant additional number of qualified accountants with good professional backgrounds (§2.1-2.5).
(2) In any future projects of the CAPSA type the University must ensure that there is someone clearly identified as the project leader and that the project manager is a member of the University's staff. Where consultants are required they should only be appointed after a proper tendering procedure against a clear specification from the University (§2.6-2.11, §2.25(c), §3.1-3.10, §4.3).
(3) The University Computing Service and MISD should be merged and the Director of the new IT service, who should report to the Registrary, should be required as a priority to produce a University IT Strategy, which should include an administrative IT strategy, for the approval of the Council via a University IT Committee to be chaired by a Pro-Vice-Chancellor (§2.24, §2.25(g), §5.9, §5.11).
(4) The University should not embark on any substantial administrative IT project until it can be assured that the implementation of Oracle Financials is reasonably complete. No new project should be undertaken without a business strategy, without an assessment of the staffing implications and how they can be met, and without a budget being approved in advance and included in the University's forward estimates (§2.10, §4.4, §6.5).
(5) The Council should require the Director of Finance as an absolute top priority to produce comprehensive University management accounts for consideration by the Finance Committee on at least a two monthly basis effective from the beginning of 2002-3 and should ensure that he is provided with the manpower resources to achieve this (§6.3-6.4).
(6) The University should take steps to improve the effectiveness of the recruitment and retention of senior administrative staff. These should include paying salary supplements, at a pre-agreed level, to attract professionally qualified staff to permanent posts in key areas, a streamlining of the interview process so that only one decision-making body is involved, and the provision of college membership to staff of appropriate seniority (§7.2-7.4).
(7) The roles of the Director of Finance and the Treasurer within the Unified Administrative Service need to be clarified and resolved so as to eliminate ambiguity and future misunderstanding. The Director of Finance should be regarded as responsible for the preparation and presentation of the University Accounts and as having professional responsibility for drawing up the University's forward financial plans, including the annual estimates. He should also be designated as the officer in charge of the financial system (§7.5-7.6).
(8) A new professional reporting line should be established between the senior financial administrator in each department or budgetary unit and the Director of Finance. This should not be regarded as undermining the administrator's responsibility to the head of department but as a necessary step to improving the professional linkage between the Director of Finance and the financial management of departments (§7.8).
(9) The Council should allocate a budget to the Registrary to enhance the existing programme of staff development for administrators in the University (§7.7).
(10) The Council should review the functions of the Finance Committee with a view to ensuring that the Committee can concentrate on its role of supervising the University's finances and advising the Council on the University's financial position, and should establish a new main committee to deal with all matters of buildings, property and the University estate (§3.6, §6.6-6.8, §8.2).
(11) The Council should review the relationship between the Planning and Resources Committee and the Finance Committee to ensure that overlaps in the business of the two bodies are as far as possible eliminated and that the Finance Committee is fully recognised as being responsible for the financial systems, financial management information, and for monitoring the management accounts of the University (§3.6, §6.6-6.8, §8.2).
(12) The Audit Committee should be reconstituted so that it has a lay chair and a majority of lay members appointed by the Council for their professional expertise and experience in similar roles in corporate life (§5.2-5.17, §8.4).
(13) The Council should carry out an effectiveness review of its own operations to ensure that it is fully equipped to match the responsibilities placed on it by the Statutes and by the requirements of HEFCE. As part of this review it should consider the need to engage more fully in Discussions of the Regent House (§8.1, §8.8).
(14) The University should consider adding a fifth appointment of Pro-Vice-Chancellor to the four currently proposed by the Joint Committee on Governance, with a portfolio to review the internal functioning of the University and to improve the relationship between the departments, the centre, and the colleges (§8.6).
(15) The Regent House should consider establishing standing orders which encourage the discussion of issues and processes but protect individual University officers from personal abuse (§8.7).
(16) The Council should ask the Audit Committee to prepare a statement on accountability processes within the University (§9.1).
(17) In addition to his statutory responsibility to the Council there should be a formal statement establishing that the Registrary has a reporting relationship to the Vice-Chancellor for the functioning of the University's administration (§9.2).
List of those who gave oral evidence in respect of Part B of the CAPSA Inquiry
Dr Kirsty Allen Administrator, Faculty of Law
Professor Tony Badger Chairman, Audit Committee
Dr Richard Barker Member, Audit Committee
Ms Sue Baron Former CAPSA Project Manager and Managing Director, Bayles Consultancy
Dr Nicholas Branson Deputy Registrary
Professor Sir Alec Broers Vice-Chancellor
Mr Stephen Brooker Member, Audit Committee
Mr Gale Bryan Member, Audit Committee
Mr Richard Collett-Fenson Head of Financial Administration, Department of Engineering, and Member, CAPSA Steering Committee
Mr Peter Deer Director of Personnel
Ms Judith Drinkwater Secretary, Faculty of Architecture and History of Art, and Member, CAPSA Steering Committee
Professor Anthony Edwards Professor of Biometry
Mr Colin Edwards Finance Division
Dr Gillian Evans Faculty of History and Former Member of Council
Dr Rudolph Hanka Former Chairman, Joint Committee on Central Administrative Computing
Ms Celia Hewetson Secretary, School of Humanities and Social Sciences
Ms Tamara Hug Administrator, Department of History and Philosophy of Science
Ms Iris Hunter Assistant Secretary, Audit Committee
Dr Gordon Johnson Member of Council, and Chairman, Working Party on Governance
Mr Keith Johnson Financial Accountant, Finance Division
Mr Melvyn Keen Interim Director of Finance
Mr Alan Kirby Assistant Secretary, Department of Pathology
Mr Alan Lees Partner, Robson Rhodes
Dr Susan Lintott Member, Board of Scrutiny
Professor Malcolm Longair Chairman, CAPSA Steering Committee
Mrs Anne Lonsdale Pro-Vice-Chancellor
Mr James Matheson Member, Audit Committee
Dr Tim Mead Registrary
Mr Andrew Reid Director of Finance
Ms Adrienne Rudkin Former Director of Finance
Professor Jeremy Sanders Head of Department, Chemistry, and Member, Audit Committee
Mr David Sandham Acting Director of MISD
Professor Malcolm Schofield Member of Council and General Board, Chair of the Working Party on Pro-VC's and VC
Dr David Smith Secretary, Board of Scrutiny
Mr Nigel Smith Partner, KPMG
Professor John Spencer Professor, Faculty of Law
Dr David Thompson Faculty of Divinity, Former Chairman, Audit Committee
Ms Janice Vale Former Internal Auditor
Mr David Whiting Former Principal Assistant Treasurer
Professor Geoff Whittington Professor of Financial Accounting and Former Member, Audit Committee
Mr Stephen Whittle KPMG
Professor Alan Windle Professor of Materials Science
Mrs Joanna Womack Treasurer
List of those who made written contributions to the CAPSA Inquiry
Mr Paul Aslin Secretary, Institute of Astronomy
Ms Margaret Benton Secretary to the Head of Department, Anaesthesia
Ms Kath Burton Accountant, Department of Physics
Ms Ann Cartwright Administrator, CRC/Wellcome Institute
Professor Krishna Chaterjee Department of Medicine
Dr Bill Colledge Department of Physiology
Dr Douglas deLacey Computer Officer, School of Arts and Humanities
Mr Bob Dowling University Computing Service
Ms Fiona Duncan Administrator, Department of Physiology
Ms Clare Ellis Department of Physiology
Professor John Gray Department of Plant Sciences
Ms Margaret Greeves Fitzwilliam Museum
Ms Jean Hewitt Secretary, Institute of Biotechnology
Ms Fay Hider Accountant, Computer Laboratory
Ms Jackie Jenkins Manager, Wolfson Brain Imaging Unit
Ms Pat Kelly Faculty of Classics
Mr Alan Kirby Accountant, Department of Pathology
Dr Shui Lam Secretary, School of Technology
Mr George Lindley Department of Engineering
Dr Mark Manning Computer Officer, Department of Materials Science and Metallurgy
Ms Sue Martin Laboratory Manager, Department of Obstetrics and Gynaecology
Mr James Matheson Head of Computing Services, Department of Engineering, Member of Council, Member of Audit Committee
Mr Duncan McCord Department of Engineering
Mr Matthew Moss Secretary, Department of Plant Sciences
Ms Alexandra Nutt Personnel Division
Dr Len Packman Department of Biochemistry
Professor Tim Pedley Head of Department, Applied Mathematics and Theoretical Physics
Professor Michael Pepper Department of Physics
Dr David Phillipson Director, Museum of Archaeology and Anthropology
Ms Sally Pinnock Secretary, School of Clinical Medicine
Mr John Ray Chairman, Faculty Board of Oriental Studies
Mr Lloyd Retallick Development Systems Manager, MISD
Ms Sue Round Faculty of Music
Dr Michael Rutter Computer Officer, Department of Physics
Mr David Sandham Acting Director, MISD
Dr Mike Sayers Director, University Computing Service
Professor John Spencer Faculty of Law
Ms Lina Undicino Secretary, Faculty of Classics
Ms Christine West Administrator, Isaac Newton Institute for Mathematical Sciences
Ms Carol Whatling Personnel Division
Professor Andrew Wyllie Head of Department, Pathology
1 Council Notice of 29 January 2001, Reporter p. 202, 31 January 2001.
2 Reporter p. 754, 31 May 2001.
3 Discussion of the Second Report of the Council on the Office of the Commissary, Reporter p. 777, 6 June 2001.
4 Report of the Syndicate appointed to consider the government of the University, paragraph 4.2, Reporter p. 620, 19 May 1989.
5 University of Oxford, (1964) Report of a Commission of Inquiry under the Chairmanship of Lord Franks, OUP, paragraph 551.
6 Johnson, G, (1994) University Politics, F M Cornford's Cambridge and his Advice to the Young Academic Politician, CUP, p. 83.
7 Council, Minute 7, 25 September 2000.
8 Resources of Higher Education Institutions, HESA 1994-5, 1995-6, 1996-7, 1997-8, 1998-9, 1999-2000.
9 Abstract of Accounts for the year ending 31 July 2000, Reporter Special No. 8, 20 December 2000.
10 Resources Committee, Minute 4, 21 January 1997.
11 Finance Division Circular C12(98), 20 April 1998.
12 Evidence given by Ms Baron.
13 Finance Division Circular C25(98), 22 July 1998.
14 Planning and Resources Committee, Minute 57, 9 December 1998.
15 Oracle Engagement Plan for the CAPSA Project at Cambridge, Appendix B, Role of Cambridge Project Manager, 22 February 1999.
16 Planning and Resources Committee, Minute 57, 9 December 1998.
17 Planning and Resources Committee, Minute 57, 9 December 1998.
18 Planning and Resources Committee, Minute 70, 15 February 1999.
19 Finance Committee paper FC(99)143, 1 December 1999.
20 Planning and Resources Committee paper PRC(84), 15 February 1999.
21 Correspondence between The Director of Finance and KPMG, 13 August 1999.
22 KPMG Report, 27 August 1999.
23 Planning and Resources Committee, Minute 125, 24 November 1999.
24 Audit Committee, Paper on the status of Internal Audit work on the CAPSA project, prepared by Robson Rhodes, 30 June 2000.
25 Audit Committee, Minute 35, 5 July 2000.
26 Planning and Resources Committee paper, CAPSA Assessment and Recommendations Report, prepared by Ms Baron for the meeting on 9 December 1998.
27 Joint Committee on Central Administrative Computing (JCCAC), Minute 5(v), 7 February 1997.
28 Finance Committee, Minute 793, 3 March 1999.
29 CAPSA Steering Committee Final Report, The Implementation of CAPSA, 24 January 2001.
30 CAPSA Steering Committee, Minute 42, 18 October 1999.
31 Finance Committee, Minute 730, 4 November 1998.
32 JCCAC, Minute 2, 23 October 1998.
33 Finance Committee paper FC(01)119 of 11 July 2001.
34 Statute A, Chapter IV, paragraph 1(a).
35 HEFCE, Model Financial Memorandum 2001, paragraph 20.
36 HEFCE, Audit Code of Practice Circular 1/00, January 2000.
37 Internal Audit, Annual Report to the Audit Committee 1995-6.
38 Internal Audit, Annual Report to the Audit Committee 1997-8.
39 Internal Audit, Annual Report to the Audit Committee 1998-9.
40 Internal Audit, Annual Report to the Audit Committee 1999-2000.
41 Audit Committee, Common Themes and Significant Issues from the Robson Rhodes Progress Report, Director of Finance, 25 May 2000.
42 KPMG Management Letter, 15 January 1997.
43 KPMG Management Letter, 3 March 1998.
44 Robson Rhodes, Pre-implementation Review of CAPSA, First Interim Report to Management, 25 August 1999.
45 Robson Rhodes, Pre-implementation Review of CAPSA, Second Interim Report to Management, April 2000.
46 CAPSA Steering Committee, Minute 95, 17 April 2000.
47 Audit Committee, Annual Report, 1997-8, paragraph 8, 22 February 1999.
48 Audit Committee, Annual Report, 1998-9, paragraph 8, 14 December 1999.
49 Audit Committee, Note of briefing presentation on the CAPSA Project, 18 December 1998.
50 Letter from Chairman of Audit Committee to the Registrary dated 21 December 1998.
51 Letter from the Registrary to the Chairman of the Audit Committee, 7 January 1999.
52 Audit Committee, Annual Report, 1999-2000, paragraph 7, 1 December 2000.
53 Board of Scrutiny, First Report, 21 May 1996, paragraph 11.
54 Board of Scrutiny, Second Report, 2 June 1997, paragraph 6.
55 Board of Scrutiny, Third Report, 1 June 1998, paragraph 6.
56 Board of Scrutiny, Fourth Report, 8 June 1999, paragraphs 24 and 4.
57 Finance Committee, Minute 575, 19 November 1997.
58 Internal Audit, Annual Report to the Audit Committee 1997-8.
59 Discussion of 10 October 2000, The University's new on-line accounting system (CAPSA) and its implementation, Reporter, p. 86, 18 October 2000.
60 Ibid. p. 94.
61 Statute A, Chapter IV, paragraph 1(a).
63 Statute F, Chapter I, paragraph 1(b).
64 Board of Scrutiny, Second Report, 2 June 1997, paragraph 15.
65 KPMG Management Letter, 17 January 1997.
66 Board of Scrutiny, First Report, 21 May 1996, paragraph 9.
67 Board of Scrutiny Third Report, 1 June 1998, paragraphs 4, 5 and 6.
68 Finance Committee, Minute 713, 7 October 1998.
69 Finance Committee, Paper FC(01)11 The Role of the Finance Committee 17 January 2001.
70 Statute F, Chapter I, paragraph 1(b).
71 Reporter , p. 827, 20 June 2001.
72 Discussion of the Report of the Council on the Unified Administrative Service, Reporter p. 661, 10 May 2001.
73 Adrienne Rudkin, letter to the Registrary, 16 October 2000.
74 Further Particulars, post of Director of Finance, 2000-1.
75 The Financial Regulations, Finance Division Circular C.35(2000).
76 Reporter, p. 561 21 March 2001.
77 Joint Committee on Governance, Governance: the Central Bodies: A Discussion Paper.
78 Circular, Procurement Process Financial Thresholds, Ref C.6(01), 25 June 2001, issued by the Interim Director of Finance.
79 Reporter p. 86, 18 October 2000.
80 Reporter p. 661, 10 May 2001.
81 Reporter, p. 971, 18 July 2001.