Why do we need a Cruachan Dam to control a burn?

25th October 1996 at 01:00
It has been interesting serving as the resident heidie on the local FE college's board, moving from the staid protection of the local council to the bracing uplands of "standing on our own two feet". On the whole, we have made a fair fist of running our own show (salary negotiations excepted). Staff have shown great willingness to address productivity imperatives. Curriculum developers have displayed initiative and imagination. Administrators have faced up squarely to the demands of financial effectiveness and efficiency. The result? Student numbers have increased steadily and this year are up significantly on last session's.

But, especially in financial matters, things can go decidedly pear-shaped if complacency or carelessness sets in: which is why the Government, however trustworthy those in charge might be, insisted on the introduction of financial checks as part and parcel of ourmanagement system.

We were required to have a finance committee. (Not being a financier, my role on it has been to ask the simple questions no one else dares ask - I'm told I have a gift for it.) The finance committee checks -on behalf of the board - that the principal and the finance officer are doing their stuff. However, the Government was insistent that we made sure that we did not slip up and required us also to haveauditors.

For me, finance was not home territory; seeking the expert view was, therefore, common sense - but we have two sets of auditors. We required internal auditors to keep an eye on the finance committee, who would keep an eye on the finance officer, who would keep an eye on theadministration, on behalf of the board of management.

Our internal auditors are a large, highly respected national company. They exude utter financial rectitude. But this was not enough. We were also required to have external auditors - another highly respected etc, etc.

I thought it was over the top having to ask auditors to audit auditors. Not a bit of it. Three years after our incorporation, we have been enjoined to constitute from our board members an audit committee which will interpose itself between finance committee and the auditors, in order to spot malfeasance and incompetence early.

I ask myself: to what end do we - who have engaged the services of a principal and a finance officer to manage finance wisely and well - have to have not only a board of management, external and internal auditors, a finance committee but an audit committee as well?

I make that six different checking systems. Yet, I would suppose a managing director runs his or her firm under the eagle eye of a single auditor - with(perhaps) some direction from a board. Is the contrast not just a little too stark?

I have two questions. The first concerns possible governmental perceptions about the - I do not want to be indelicate, but the word is - trust they can place in unsalaried public bodies. Is there a view that the less you are paid in making financial decisions, the more you requiremonitoring?

The second question is about market forces. Is the system of which I complain none the less cost-effective?

It all costs money - and yet it doesn't. In the case of the auditors, their fees are real and feature in the accounts. In the case of committee members, their valuable time is of considerable worth but, not being an actual cost, fails to find a place in the accounts.

How many times have we seen in Scotland such headlines as "College audit uncovers shortfall"? Seldom, if ever. By comparison, what is the monetary equivalent of auditors' fees and of the time given by board members to service the above monitoring systems to prevent such headlines? I suggest we have here the equivalent of a Cruachan Dam being built tocontrol a burn.

The motivating force of all this is,of course, that of the politician making sure he is seen to be making sure - at no extra cost.

"If you pay peanuts, you get monkeys." Could the ultimate version of this saying be "Pay nothing; get a quango - and worry about your investment"? Surely not. Does a college board of management really need an audit committee to monitor the external auditors, who monitor the internal auditors, who monitor the finance committee, which monitors the finance officer, who monitors the principal?

We may be on the bracing uplands, standing on our own two feet, but we can't move for the fences.

Charles Smith is headteacher of Airdrie Academy.

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