Annual report of the directors
1 The directors present their report and the audited financial statements for the year 1 August 2004 to 31 July 2005. This report has been prepared in accordance with the company's Memorandum and Articles of Association, applicable law and the requirements of the Statement of Recommended Practice, Accounting and Reporting by Charities, October 2000 (the Charities Statement of Recommended Practice (SORP)).2 The directors of the company are also its trustees under the terms of the Charities Act 1993.
Status
3 The Quality Assurance Agency for Higher Education (QAA) is a private company limited by guarantee and a registered charity. The liability of the members in the event of winding up is limited to an amount not exceeding £1 per member.
4 The company's members as at 31 July 2005 are:- Universities Scotland (UScotland)
- Universities UK (UUK)
- Higher Education Wales (HEW)
- Standing Conference of Principals (SCOP).
Objects
5 The objects of QAA, as set out in its Memorandum and Articles of Association, are:
- the promotion and maintenance of quality and standards in higher education provided by, or in collaboration with, UK universities and colleges
- the enhancement of teaching and learning, and the identification and promotion of innovation and good practice in teaching and learning
- the provision of information and the publication of reports on quality and standards in higher education provided by, or in collaboration with, UK universities and colleges
- the provision of advice to governments, as requested, on access course recognition and in relation to all or any of the above objects.
6 QAA's mission is to safeguard the public interest in sound standards of higher education qualifications and to encourage continuous improvement in the management of the quality of higher education. To achieve its mission, QAA works in partnership with the providers and funders of higher education, the staff and students in higher education, employers and other stakeholders, to:
- safeguard the student and wider public interest in the maintenance of standards of academic awards and the quality of higher education
- communicate information on academic standards and quality to inform student choice and employer understanding, and to underpin public policy making
- enhance the assurance and management of standards and quality in higher education and promote a wider understanding of the value of well-assured standards and quality
- promote a wider understanding of the nature of standards and quality in higher education, including maintenance of common reference points, drawing on UK, other European, and international practice.
7 QAA's main business is to review and report on higher education (HE) providers' management of their responsibilities for the quality of student learning opportunities and the standards of academic awards. It does this at institutional level through a comprehensive programme of audits of institutions' management of quality and standards, and at subject level by reviewing the quality and standards of teaching and learning in particular subjects, programmes or institutions (as specified by contract with funding bodies, government departments or regulatory bodies). In addition, QAA advises governments on applications for the grant of degree-awarding powers (DAP) and university title (UT); manages The QAA Recognition Scheme for Access to HE in England, Wales and Northern Ireland; and audits collaborative arrangements between UK higher education institutions (HEIs) and partners in the UK and overseas that offer programmes leading to the award of degrees of UK institutions.
8 QAA has a leading role, working with its partners and key stakeholders in HE, in the development, maintenance and updating of the elements of the Academic Infrastructure – the Code of practice for the assurance of academic quality and standards in higher education (the Code of practice), the higher education qualifications frameworks, subject benchmark statements and programme specifications – and related developments such as work with the sector on the development of student progress files. In Scotland, QAA manages the programme of enhancement themes established and embedded as part of the overall Scottish Quality Enhancement Framework.
9 QAA is fully engaged in European and wider international developments, is a member of a number of international organisations, an active player in international projects, and acts as the UK 'eyes and ears', both for the HE sector and government departments, on European developments.
Review of activities for the year
10 QAA's annual and medium-term objectives and programmes of work are determined through its business planning and budgeting process. The Annual Operating Plan 2004-05 (AOP) and budget were determined in the light of the mission, purposes and objectives set out in the Strategic plan 2003-05 published in March 2003. The activities for the year were funded primarily through contracts with the HE funding bodies and government departments and through individual subscriptions from HEIs. The first section of this report follows the structure of the purposes, objectives and tasks set out in the AOP, and summarises the main points from QAA's monitoring of achievement against the objectives and tasks.Strategic purpose: Safeguard the student and wider public interest in the maintenance of standards of academic awards and the quality of higher education
Corporate objectives
- Conduct of review and audit programmes.
- Development of new audit and review methods.
- Evaluation of transitional arrangements and institutional audit in England and Northern Ireland.
- Advice to governments on applications for DAP and UT.
- Modernisation of the Access to HE scheme in England, Wales and Northern Ireland.
Achievements
11 In England, QAA carried out 49 institutional audits in the third year of the programme of audits that was established under the 2002 transitional arrangements. The first two of a programme of audits of collaborative provision were also completed.
12 The Chairman and one other Board member were able to observe parts of two different audits. Both reported very favourably in relation to the rigour of process and the sensitivity to environment and context shown by the audit teams.
13 In summer 2005, the report of the Quality Assurance Framework (QAF) review group in England was published, alongside the underlying research carried out by consultants. The QAF report attested to the benefits and value of QAA's work in the transitional period since 2002 and indicated the direction for the further evolution of the audit method. QAA will consult on a revised institutional audit method in 2005-06 with a view to its introduction in the following academic year.
14 In Scotland, six ELIR reviews were completed, as well as an annual discussion with each Scottish HEI. QAA also carried out seven academic reviews of subjects in Scotland, including one re-review.
15 In Wales, one institutional review was completed as well as one review process in association with an application for DAP. In Northern Ireland, two institutional audits were completed.
16 An audit of UK collaborative provision in three Gulf states - UAE, Oman and Bahrain - was carried out. Also, a considerable amount of planning and preparation was undertaken to prepare for an audit of UK collaborative links with the People's Republic of China in 2005-06.
17 QAA carried out two developmental engagements in English HEIs (thus completing the programme agreed in 2002), one academic review of a subject in an English HEI and 41 academic reviews in English further education colleges (FECs). The programme of academic reviews of subjects included a number of re-reviews (second reviews of provision that initially had been judged to be unacceptable). The method for review of HE provided in FECs from 2006-07 will be subject to redevelopment and piloting. QAA will put its proposals to the Higher Education Funding Council for England (HEFCE) in due course, taking due account of the inspection frameworks managed by the statutory inspection bodies, the need for better coordination between the inspection bodies and QAA, and the continuing development of FECs as providers of HE.
18 Also in England, QAA carried out a programme of 68 reviews of Foundation Degree provision (HEFCE contract) and one review of a school of osteopathy (new contract with the General Osteopathic Council (GOsC)).
19 Thirty-four applications for the grant of UT or DAP were under consideration during the year. This was a significant increase in workload and arose primarily as a consequence of the implementation of the new (2004) criteria for DAP and UT in England and Wales. Recommendations in respect of 15 applications were put to government departments. In each case, QAA's advice was accepted.
20 QAA completed one review of an Access to HE Authorised Validating Agency (AVA) and published a new Key Statistics leaflet for 2005. QAA was commissioned by the Department for Education and Skills (DfES) to look at the potential for wider development and modernisation of the Access to HE scheme. A report was submitted to the DfES in May 2004. QAA established a number of development groups to advise on the implementation of the key recommendations. The overall framework for the Access to HE scheme has been renewed, including a new method for reviewing AVAs and for licensing new AVA regional structures.
21 QAA's programme of Major Review and subject benchmarking under contract with the Department of Health (DH) in England - in partnership with the strategic health authorities, the Health Professions Council, the Nursing and Midwifery Council and the Workforce Development Confederations - started in 2003-04. Thirty-one Major Reviews were completed in 2004-05. In the course of the year, the scope of the contract was extended, and QAA now carries out a wider range of work for the DH than had originally been envisaged, including publication of newsletters and management of consultations on the wider Partnership Quality Assurance Framework for Healthcare Education in England.
22 In terms of QAA's participation in international review processes, the work on the Trans-European Evaluation Project (TEEP) was completed and reports were published through European Association for Quality Assurance in Higher Education (ENQA). A new programme of transnational review work involving chemistry departments in the UK and Denmark was developed in 2004-05, with the involvement of the Royal Society of Chemistry.
Strategic purpose: Communicate information on academic standards and quality to inform student choice and employer understanding, and to underpin public policy making
Corporate objectives
- Production of reports on time and to standard.
- Introduction of a new series of enhancement publications.
- Establishing consumer needs as the focus of reports and publications.
- Review of the publishing policy.
Achievements
23 To be effective, QAA has to communicate the results and benefits of its work. As well as the publication of written reports, regular discussions are held with the funding and representative bodies through the Sounding Board group and through attendance at meetings of the representative bodies' Teaching, Quality and Lifelong Learning Group and the funding councils' teaching and learning and quality assessment committees. QAA provides regular reports to, and papers for, those bodies, as required. higher quality and QAA's Annual Report receive a wide distribution and some press coverage. The Chief Executive, the heads of groups and assistant directors engage regularly with institutions, subject associations and professional, statutory and regulatory bodies (PSRBs) by speaking at conferences, providing briefings and attending meetings. QAA's website is a major vehicle for communication.
24 As well as maintaining close working relations with the HE sector representative bodies, the HE funding bodies and the relevant government departments, QAA also has close relations with a wide range of other bodies and agencies, such as the Association of Colleges, the Higher Education Statistics Agency, the University and Colleges Admissions Service, the Association of University Administrators, the Qualifications and Curriculum Authority, the Qualifications, Curriculum and Assessment Authority for Wales, the Association of Scottish Colleges and the Scottish Qualifications Authority.
25 QAA prepares many reports on quality and standards in HE each year. Over 180 reports (institutional audit reports, academic review reports, Major Review reports, overseas audit reports, collaborative provision reports and Access to HE reports) were published in 2004-05. QAA also published further contributions in the Learning from… series, designed to promote and share good practice - Learning from continuation audit and Learning from developmental engagements. The first publications in the new Outcomes from institutional audit series were published. These are based on thematic analysis of the findings in institutional audit reports and are designed to provide prompt and focused feedback and information to the universities and colleges while the programme of audits is still in progress. Editions of higher quality – QAA's newsletter – were published in October 2004 and February and June 2005. QAA's Annual report 2003-04 was published in March 2005. All published reports are available both in hard copy and on QAA's website.
26 The institutional liaison scheme is now fully in place. QAA liaison officers for each institution have been allocated and liaison visits have started. All institutions that wish to be part of the liaison scheme have received at least one liaison visit. The scheme improves two-way communication and builds trust between QAA and institutions, and also provides a channel for intelligence on good practice or emerging issues that can inform QAA's quality enhancement agenda. The first liaison conference was held in 2005, and the Annual report on the liaison scheme 2004-05 will be published on the website in autumn 2005.
27 QAA has been actively engaged in a variety of training and briefing events with National Union of Students (NUS), NUS (Scotland), NUS (Wales), individual students' unions and the National Postgraduate Committee. QAA's institutional audit and review processes, including DAP and UT scrutinies, provide greater and more explicit student involvement than previous audit/review processes, and in Scotland there is a student member of the review team. There has also been dialogue with Information, Advice and Guidance workers to help focus on the needs of potential students, and there are proposals to set up student focus groups to inform future publications in the Learning from… series. QAA and UCAS published jointly How do I find the right course for me? which guides potential students through the range of sources of information available to them, to help inform their HE choices. QAA supports the sparqs (student participation in quality scotland) initiative in Scotland.
28 We have continued to strengthen employer links, whether through liaison with the UK Inter-Professional Group, Confederation of British Industry, Institute of Directors, Engineering Council, the regional development agencies and the sector skills councils, or through employer involvement in working groups, round table meetings, and on the Board itself through the Board's independent membership. We have also worked closely with the Council for Industry and Higher Education and other business/education interests, including Foundation Degree Forward and Manchester Enterprise. However, we recognise that strengthening our work with employers is an area where we have more to do, and this will be a priority in the new (2006-11) strategic plan.
29 QAA carried out extensive work internally to review its house style, to promote clarity of communication and ease of access. The revised house style was implemented in spring 2005 and will be reviewed in autumn 2005.
Strategic purpose: Enhance the assurance and management of standards and quality in higher education and promote a wider understanding of the value of well-assured standards and quality
Corporate objectives
- Review progress against the QAA Communications strategy.
- Establish the working relationship with the new Higher Education Academy (HEA).
- Development and dissemination of themes, messages and good practice from review and audit reports, institutional liaison, collaborative work with the sector and stakeholders.
- Maintenance of the enhancement-led institutional review (ELIR) enhancement strategy in Scotland.
- Strengthening of QAA's position as a source of knowledge and expertise.
Achievements
30 In March 2003, the Board adopted a communications strategy to help achieve the objectives it had set itself in the Strategic plan 2003-05. Taking a more systematic approach to the building of relationships with the sector and other key stakeholders (including students (potential and actual), employers, and the PSRBs), and providing clear, reliable and accessible information appropriate to those various audiences, are key elements of the strategy. In December 2004, the Board was pleased to note the positive progress that had been made in delivering the strategy. The Communications strategy will be reviewed in early 2006 in line with the priorities and ambitions in the new strategic plan that will cover the period from 2006 to 2011.
31 A major focus of the Communications strategy in 2004-05 has been the redevelopment of the QAA website to improve its navigability and access, including highlighting information that might be of particular interest to particular groups – students, employers, HE staff. The website was re-launched in March 2005. In Scotland, a separate enhancement themes website has been developed to support and communicate that area of work.
32 Informal and formal feedback from institutions suggests that engagement with QAA's review processes makes a positive contribution to institutions' capacity to manage quality and standards. This happens through the process of preparing for an external review, including the preparation of a self-evaluation, and through the engagement with a review team made up of peers drawn from across the sector and the professions. The reviewers' findings are set out in published reports which include short summaries. The reports point to specific areas for consideration and improvement, and that advice is followed up in subsequent engagements.
33 A more formal examination of the benefits secured through QAA's review and audit processes has come through the evaluations carried out by the QAF Review Group (HEFCE, SCOP and UUK in the lead, with research carried out by consultants) in England and through the Lancaster group (a team of action researchers from the University of Lancaster) in Scotland. The Lancaster review in Scotland is a continuous one that will run through the first ELIR cycle, up to 2008. The team has already identified that the ELIR method is meeting the purpose for which it was established, but has also identified areas where refinements can be introduced. The QAF review group in England has confirmed the benefits and value of QAA's work over the past three years (the 'transitional period') and confirmed the basis for the future evolution of the audit method. The QAF group will now go on to look at the implementation and success of the Teaching Quality Information (TQI) and National Student Survey elements of the overall framework, including QAA's role within TQI.
34 The QAA enhancement strategy is evolving as circumstances change. The strategy has a number of components: to support academic standards and their quality assurance through maintenance, updating and enhanced application of the Academic Infrastructure; to support continuous improvement in institutions' quality assurance systems and in external audit and review activities; and to contribute to, stimulate, and sometimes lead on national and international developments and projects. Under this umbrella there is a broad portfolio of work including development of the qualifications frameworks, the subject benchmarking scheme, updating of the Code of practice, development of the new Outcomes from institutional audit series, the institutional liaison scheme and an extensive range of collaborative and project work with institutions, students, and stakeholders. This has become an increasingly important and influential part of QAA's overall portfolio of work.
35 QAA also seeks to support institutions though the now well established Learning from… series, through the new Outcomes from institutional audit series, through the institutional liaison scheme, through publication of leaflets, guides and briefings, including on European and other international developments, and through articles and updates in higher quality.
36 In Scotland, work on the 2003-04 Enhancement Themes – Assessment and Responding to Student Needs – was completed in autumn 2004 and the reports were published in 2005. The approach to the Enhancement Themes has evolved in the light of the first year's experience. In future, these will run over longer periods of time to allow for greater institutional engagement with them, in ways that fit better with each institution's needs and planning and review cycles. Steps are also in place to promote greater student engagement with the Themes. Two new Themes were established in 2004-05, as well as a five year rolling plan through to 2010, and establishment of the Scottish Higher Education Enhancement Committee to manage strategically the development of the themes and support institutional management of enhancement. The Enhancement Themes website was launched in 2005.
37 QAA, in partnership with UUK, SCOP and HEFCE and the other HE agencies played an active role in the work of the Teaching Quality Enhancement Committee that led to the establishment of the HEA. QAA and the HEA have already established productive working relations and a programme of joint projects. It is in the interests of both bodies that there should be a clear public understanding of their different and complementary functions. Each Chief Executive attends the meeting of the other body's Board as an observer.
38 QAA has worked closely with UUK and SCOP in a series of 'round table' events designed to provide opportunities for HE staff and institutions to discuss and consider a wide range of topics: the diversity of institutional practices concerning external examining; the implications of credit accumulation and transfer systems for the management of quality and standards; the implications of credit-based funding; implications of the TQI requirements; the maintenance and updating of the Code of practice and the other elements of the Academic Infrastructure; the preparation of programme specifications for public information, and their use in internal review and external audit, and the range of approaches and level of data used or required.
39 All students' unions receive higher quality, and students have been involved in working groups, for example those on the Code of practice on complaints and the development of progress files. There have also been informal meetings with NUS officials on specific issues, a member of staff has specific responsibility for student liaison, and there is significant student involvement in the institutional audit/review methods. QAA has strengthened its work with NUS in each part of the UK and with other student bodies to ensure that students are able to maximise their opportunities to participate in the institutional audit method, and that they are able to get the maximum benefit from it. QAA has participated in training for students' union sabbatical officers and has prepared materials to help provide clear information for potential students and careers services. The QAA Board of Directors and the QAA Scotland Committee benefit from having a student presence at their meetings.
40 The full implementation of the institutional liaison scheme was achieved in 2004-05. With one or two exceptions all institutions are participating in the liaison scheme. Both they and QAA are finding it useful, both for relationship building and for information sharing (see paragraph 26 earlier).
41 QAA commissioned consultants to advise it on the scope of the potential market for providing a wider range of services to a wider range of clients, and on the implications – legal, constitutional, taxation, charitable – if it were to develop in this way. The Board has considered this matter carefully and thoroughly over the year. Although the consultants had identified a potentially large overseas market for QAA services, there were also concerns about the appropriateness of that and the risks involved. The Board has taken a more pragmatic approach, that seeks to strengthen the QAA's capacity to manage a wider range of contract business, and with an initial focus on developing a wider range of business within the UK, including PSRBs where there is considerable scope for rationalising the different 'regulatory' bodies' demands on institutions. This 'rationalising regulation' theme is one of the key strategic themes in the new strategic plan.
42 QAA's Welsh Language Scheme was approved by the Welsh Language Board and implemented in October 2003. The operation of the Welsh Language Scheme will be reviewed in 2005-06.
Strategic purpose: Promote a wider understanding of the nature of standards and quality in higher education, including maintenance of common reference points, drawing on UK, European and other international practice
Corporate objectives
- Maintenance and updating of the Academic Infrastructure (the Code of practice; the frameworks for HE qualifications; subject benchmark statements; programme specifications) and HE progress files.
- Contribution to European and other international developments.
Achievements
43 The Academic Infrastructure sets the framework within which academic standards and quality in higher education can be expressed and understood. Development and maintenance of the Academic Infrastructure are key aspects of QAA's work. QAA will review the overall operation of the Academic Infrastructure in 2005-06.
44 The qualifications frameworks evolve in the light of experience of their use, the development of new qualifications, the development of systems of academic credit and their relationship with other qualifications frameworks including European developments. QAA is fully engaged in the maintenance and updating of the qualifications framework in Scotland and the qualifications framework in England, Wales and Northern Ireland.
45 The use of programme specifications, both as a tool for internal quality assurance and as a tool for public information, is becoming increasingly embedded. QAA will evaluate the development and use of programme specifications in 2005-06.
46 QAA is now in the process of reviewing the sections of the Code of practice in the light of developments since they were first published. The revised sections on external examining, collaborative provision, and postgraduate research degrees were published in 2004-05, together with Guidelines on the accreditation of prior learning. Work has started on reviewing and revising another four sections.
47 The publication of subject benchmark statements at undergraduate level was a task given to QAA in the 1998 Dearing report. The programme has broadened out considerably since then and now covers honours level, master's level and Foundation Degree benchmark statements, as well as benchmark statements in healthcare subjects and benchmark statements specific to Scotland. In total, QAA has published 69 benchmark statements. QAA has considered ways in which it might be possible to support subject communities that wished to take a benchmarking initiative in respect of subjects or levels that had not been benchmarked as part of the original programme, or wished to update current benchmark statements, and has developed a 'benchmarking recognition scheme' under the stewardship of a steering group chaired by Professor David Eastwood, a member of the QAA Board. The recognition scheme was fully implemented in autumn 2004. A conference on the issues that arise around the benchmarking of master's degrees was held in spring 2005. A programme of benchmarking is also being carried out under contract with the DH in England as part of the wider Major Review framework for healthcare programmes in England.
48 In terms of relations with overseas and international bodies, QAA is active in the ENQA and the International Network of Quality Assurance Agencies. It is closely involved in the ENQA TEEP. QAA has good relations with a number of other European agencies and maintains close contact with DfES, as the lead government department on the Bologna Declaration. The Board has reviewed and endorsed the importance of QAA's international work for UK HE, and revised its policy in this area to take a more proactive approach, particularly in the light of developments in Europe. The Board receives each year a report on European and other international developments. The QAA Chief Executive, as a member of ENQA, played an active part in the development of European standards and guidelines for quality assurance in higher education and quality assurance agencies. QAA will be reviewed against the standards for agencies in the next five years, in order to comply with ENQA membership requirements. QAA has established a new International Collaboration team to further its international strategy.
49 At the Board's meeting in March 2005, Professor Christian Thune, President of ENQA, gave the Board a general overview of European developments, and covered a number of specific areas including the Bologna process, the work of ENQA, the (then) forthcoming Bergen Ministers' meeting, the ENQA standards and guidelines, and the proposed European register of quality assurance agencies.
50 QAA meets requests, where possible, to brief international visitors either in Gloucester or Glasgow or at external venues, for example, in London. Fifty-five parties of international visitors were received between August 2004 and July 2005 (44 in the same period in 2003-04). These were mainly overseas government officials or senior university staff. The visitors have come from Australia, Canada (x3), China (x7), Croatia, Denmark, Egypt, Finland, Germany, Greece, Hong Kong, India, Iraq, Japan (x3), Jordan (x2), Malaysia (x4), Mexico, Namibia, the Netherlands, New Zealand (x2), Norway, Pakistan, Palestine, the Philippines, Russia, Saudi Arabia (x4), Serbia and Montenegro, South Africa (x4), Sudan, Thailand, Tunisia and USA (x2). There have been Assessment workshops in Scotland as part of the Enhancement Themes work - keynote speakers have included visitors from Australia, New Zealand and USA.
51 Presentations have been given at international conferences in the following countries: Albania, Australia, China, Croatia, Finland, France, Germany, Holland, Republic of Ireland, Israel, Italy, Japan, Latvia, Mozambique, Namibia, New Zealand, Romania, Russia and South Africa. Invitations to participate in projects have been received from various organisations including the Organization for Economic Co-operation and Development/United Nations Educational, Scientific and Cultural Organization and the United Nations Educational, Scientific and Cultural Organization-European Centre for Higher Education.
52 A member of QAA staff took part in the process of considering, and advising the New Zealand government on, an application for university title in that country (March 2005).
53 ENQA-related projects have included TEEP, TEEP II and the Quality Convergence Study of Quality Assurance in conjunction with Comité National d'Evaluation France, as well as the organisation of a conference for European agencies involved in institutional reviews, held in Bath in December 2004.
54 The Chief Executive signed a new Memorandum of Understanding with the Higher Education Quality Committee of the Council for Higher Education, QAA's counterpart body in South Africa, in February 2005 and renewed an existing Memorandum of Understanding with Lembaga Akreditasi Negara (National Accreditation Board) in Malaysia in July 2005. QAA also has a Memorandum of Understanding with the Hussein Fund for Excellence in Jordan.
55 QAA has a good working relationship with the British Council. Many of the parties of visitors received by QAA are sponsored by the British Council. QAA has provided expert speakers for events organised or supported by the British Council in the UK and overseas. QAA staff have also acted as tutors on British Council sponsored staff development programmes for evaluation agencies in India, Indonesia and South Africa. The British Council made an important contribution to the success of the preliminary trip to the People's Republic of China in spring 2005 (part of the planning for the overseas audit in the People's Republic of China in 2006).
56 QAA, with the British Council, ran a three day seminar at the end of July 2005 for 18 delegates from 10 different countries. The event was titled 'Quality and Standards in UK Higher Education: the methods and approaches to institutional audit'. The seminar was delivered by QAA staff and it took the form of the normal auditor training with contextual information for those attending. The feedback from the delegates indicated that it had been successful and discussions are taking place with the British Council with a view to repeating the event next year.
QAA as an organisation
57 QAA takes an active approach to maintaining and improving its own infrastructure and capacity. In this way we can improve our services to HE providers and stakeholders, improve our support for review and audit teams, deliver our services in the most efficient and cost effective way, and develop our strategies, policies and management capacity to meet legal requirements and stakeholder needs. The priorities in 2004-05 included:
- the assessment of QAA's information needs and updating the QAA Information strategy
- further development of QAA process and service standards and key performance indicators
- investment in the development of staff
- Investor in People (IiP) reaccreditation
- achievement of BS7799 information security
- completion of the current programme of value for money projects.
Achievements
58 An Information Management Working Group has been established and the process of redeveloping the QAA's Information strategy and supporting procedures is well advanced. The Information Management Working Group will also look at the implications of the Freedom of Information Act 2000 for QAA and in particular the expectations and good practice in the legislation relating to disclosure of information and how this should be applied in QAA's context. This will be discussed by the Board during 2005-06. QAA was pleased to be accredited BS7799 during the year for its information security arrangements. This followed an initial information audit and a programme of systems and staff development with an external consultant.
59 Under the terms of our responsibilities under the Race Relations (Amendment) Act 2000, we will collect and publish data on the composition of our workforce, and will be looking more broadly over 2005-06 at our responsibilities under equalities legislation, in relation to gender, disability and race.
60 The Human resources strategy and forward plan are reviewed each year by the Executive and the Board. The annual staff survey provides valuable insights and pointers to areas of improvement. QAA places great weight on staff development and training, was accredited as an IiP in 2003, and will have its first IiP review in 2006.
61 Restructuring in the Reviews Group and the Scottish Office have been completed. Staffing levels and structure are reviewed periodically and annually as part of each year's planning and budgeting process. With the redesignation of QAA Scotland (formerly the QAA Scottish Office) as a separate Group, QAA has five operational Groups. The five-Group structure is well embedded, but is operated flexibly and there is a considerable amount of cross-Group working.
62 Efficiency, effectiveness and economy are addressed through QAA's business planning and budgeting processes. The identification of a programme of work for the coming year, set out in a budgeted annual operating plan, is discussed with the funding and representative bodies. Those bodies have a legitimate expectation of efficiency and economy in our work and submit our proposals to close scrutiny. The agreements reached with those bodies are subsequently captured in contracts (with the funding bodies) and institutional subscription levels (agreed with the representative bodies), to deliver the agreed programme of work. Performance against objectives is closely monitored and QAA reports regularly to its main partners.
63 QAA implemented a revised operational planning framework, in the light of experience of planning and monitoring over previous years. There were two main thrusts behind the initiative: first, to emphasise local (Group, team or individual) responsibility for planning and monitoring operational plans at the Group level; and second, to emphasise the integration of activities, monitoring, budgeting and risk management as a planning whole. The revised framework was published in Planning framework 2004-05 and guided QAA's operational planning for the year 2004-05. The local operating plans (LOPs) of the five Groups informed the preparation of QAA's budget and summary AOP, which themselves formed the basis for agreeing the 2004-05 programmes of work and contracts with the funding and representative bodies. The framework was evaluated in autumn 2004 in time for the 2005-06 planning process.
64 The introduction of the revised planning framework has improved planning and monitoring. In particular, the introduction of LOPs has promoted the importance of monitoring against plans, and in turn has provided the basis for more systematic quarterly reporting to the Board. We are working on the development of QAA service standards and performance indicators.
65 QAA has continued to progress its value for money projects with completion of the programme of value for money reviews in line with the forward plan. The establishment of a formal contracts register was one important achievement in 2004-05. A revised forward plan for the next phase of reviews will be drawn up in 2005-06.
66 The effectiveness of our internal communications is reviewed regularly and there have been important advances though staff briefing arrangements, reporting arrangements to the Senior Management Committee (SMC), internal publication of SMC and Executive Committee minutes, the continuing development of QAA's intranet, the development of electronic systems for reviewer communications within teams and with the office, and the redevelopment of the website.
67 In 2002-03, QAA worked with a firm of employment consultants to carry out a job evaluation exercise. This was important not only to resolve a number of anomalies arising from the transfer of staff from predecessor organisations but also to clarify and make explicit the relationships between posts and the means of job and pay progression. The results of the job evaluation exercise were used to inform and support a new pay and grading structure, which was implemented during 2003-04. The effectiveness of the structure will be evaluated in 2006.
68 QAA took out a lease on a two-three person serviced office facility in London, to provide a working base for staff when they were in London. The facility has been a success for those staff frequently in London, and the possibility of securing a more cost effective facility in London is now being looked at.
Governance and management
The QAA Board of Directors
69 The QAA Board of Directors has 14 members. Four members are appointed by the representative bodies of the heads of HEIs (HEW, SCOP, UUK and UScotland) (the representative bodies). Four members are appointed by the HE funding councils for England, Scotland and Wales and the Northern Ireland Department for Employment and Learning. The Board appoints six independent members itself. The Chairman of the Board is drawn from the independent members. All directors are non-executive and receive no remuneration from QAA. The only payments they receive are reimbursements of travel expenses incurred on QAA business.
70 Directors retire from membership of the Board by rotation based on length of service. Members are eligible to be reappointed on one occasion. Mr Graham Mackenzie and Professor Philip Robinson retired from the Board at the Annual General Meeting in December 2004. Dr Susan Atkins, Mr Andrew Ramsay and Professor Elaine Thomas were appointed to the Board to fill those two vacancies and one that had arisen in May 2004.
71 Details of the membership of the Board are given at the end of this section of the Directors' report.
Board effectiveness review
72 The Board has initiated a review of its own effectiveness. A two-stage process was adopted: first, for the Board to review its governance arrangements, as expressed in its own Code of best practice for members of the QAA Board (Code of best practice), against recent governance guidance, in particular the new Committee of University Chairmen (CUC) Guide, revised Charity Commission guidance, and the Good Governance Standard for Public Services, and to revise its Code of best practice as necessary; second, for the Board then to gauge its own effectiveness against the standards and expectations expressed in the revised Code of best practice. The first stage was completed in summer 2005 and the revised Code of best practice is available on the QAA website.
73 In the second stage, Board members will complete individual questionnaires asking them to judge the Board's effectiveness against the standards and expectations set out in its Code of best practice. Those questionnaire responses will help set the agenda for the final stage of the review when the Board meets at its away day in October 2005.
Board responsibilities
74 QAA welcomed the publication of updated CUC guidance on corporate governance in 2004, which included the recommendation that a governing body should publish a statement of its primary responsibilities. As part of the first stage of its effectiveness review, the Board has adopted the following statement of its primary responsibilities and has included this statement in its Code of best practice. The Board's primary responsibilities are as follows:a to approve the mission and strategic vision of QAA, strategic plans, annual operating plans and key performance indicators, and to ensure that these meet the interests of stakeholders
b to delegate authority to the Chief Executive for the corporate, financial, estate and personnel management of the organisation, and to establish and keep under regular review the strategies, policies, procedures and limits for such management functions
c to ensure the establishment and monitoring of systems of control and accountability, including financial and operational controls and risk management, and procedures for handling internal grievances, conflicts of interest and whistleblowing
d to ensure processes are in place to monitor and evaluate the performance and effectiveness of QAA against the plans and approved key performance indicators, which should be, where possible and appropriate, benchmarked against other comparable organisations
e to establish processes to monitor and evaluate the performance and effectiveness of the Board itself
f to conduct its business in accordance with best practice in corporate governance and with the principles of public life drawn up by the Committee on Standards in Public Life; and in accordance with the duties and responsibilities of company directors and charity trustees
g to safeguard the good name and values of QAA
h to appoint the Chief Executive, and to put in place suitable arrangements for monitoring his/her performance
i to appoint the Company Secretary and to ensure that, if the person appointed has managerial responsibilities in the organisation, there is an appropriate separation in the lines of accountability
j to be the employing authority for all staff in QAA and to be responsible for establishing a human resources strategy
k to be the principal financial and business authority of the company, to ensure that proper books of account are kept, to approve the annual budget and financial statements, and to have overall responsibility for the company's assets, property and estate
l to be the company's legal authority and, as such, to ensure that systems are in place for meeting all its legal obligations, including those arising from contracts and other legal commitments made in the company's name and
m to ensure that the company's constitution is followed at all times and that appropriate advice is available to enable this to happen.
Board observers
75 The Board formally adopted a framework for considering when and in what circumstances it might be appropriate to grant observer status at its meetings.
76 The Board invited Ms Jane Tory of DfES to attend its meetings as an observer on behalf of government education departments.
77 Ms Natasha Hirst, President of NUS Wales, retired as the student observer on the Board having served for two years. The Board invited Mr Andre Oboler, a postgraduate student in computing at the University of Lancaster, to succeed Ms Hirst as student observer.
78 The Board invited Professor Paul Ramsden, Chief Executive of the HEA to attend its meetings as an observer. The QAA Chief Executive attends HEA Board meetings in the same capacity.
Meetings of the QAA Board of Directors
79 The QAA Board of Directors held six meetings between August 2004 and July 2005, including an informal away day in October 2004, which focused on long-term strategy, as a first step in developing QAA's next strategic plan.
QAA strategic plan
80 Much of the Board's discussions over the year 2004-05 has been about the future directions and strategy of QAA, including the purposes, benefits, nature, evolution and amount of its work. QAA's next strategic plan will cover the period from 2006-11. The Board endorsed a draft for consultation with the sector and stakeholders in July 2005. The new plan will be published by March 2006.
81 The new strategic plan will have a companion volume, setting out strategic directions for QAA's work in Scotland. This will be the subject of a separate consultation in Scotland in autumn 2005.
82 In October 2004, the Board conducted an interim review of its achievement of the aims it set itself in the Strategic plan 2003-05. That review will be updated and completed in autumn 2005 and a report will be published on the QAA website. A summary of the report will also be published in the new strategic plan.
Register of Board members' interests
83 The Register of Board members' interests was updated in April 2005. The Register includes the Chief Executive, the directors of QAA's operational groups, and the three observers (representing government departments, the HEA and students) who attend Board meetings, as well as the Board members themselves. It includes details of current employment, and connections with HEIs and other bodies, is reviewed annually and whenever there are changes in the Board's membership, and is available to the public on request.
Board committees
84 The Board has seven committees. They advise on governance matters (Audit Committee, Remuneration Committee and Nominations Committee), QAA business in Scotland (the QAA Scotland Committee) and Wales (the Advisory Committee for Wales), DAP and UT (Advisory Committee on Degree Awarding Powers), and the management of the Access to HE scheme in England, Wales and Northern Ireland (Access Recognition and Licensing Committee). The minutes of each Board committee are received at the next available Board meeting. All committees operate under terms of reference and with membership specified by the Board.
85 Membership of the Board's Committees was updated in the light of retirements from, and appointments to, the Board. A new vacancy arose in February 2005 and there will be further vacancies to fill arising from the normal pattern of retirements from, and appointments to, the Board in December 2005.
Seventh Annual General Meeting of the members of the company
86 The seventh Annual General Meeting was held in December 2004. It received and adopted the Directors' report and financial statements for the year ended 31 July 2004, with the auditors' reports thereon. It resolved to reappoint Mazars as QAA's external auditors for a further year.
Annual Report
87 The Annual Report 2003-04 was published on 18 March 2005, following a reception held in the British Library, London. Dr Kim Howells MP, Minister for Higher Education, was the guest speaker.
Subscribers' meeting
88 QAA held its fifth annual Subscribers' meeting in May 2005 in Cardiff, and was pleased to welcome Jane Davidson AM, Welsh Assembly Minister for Education, who provided a comprehensive review of developments in post-compulsory education in Wales.
89 The main part of the meeting provided an important opportunity for QAA to discuss with universities and colleges the progress of its work and to brief them on a number of developments, including the main themes and ideas that were emerging through the preparation of QAA's new strategic plan for the period 2006-11, developments in Europe, and developments in relation to qualifications frameworks and academic credit.
Risk management
90 QAA's risk management arrangements were strengthened in 2004-05. The risk management strategy and policy, and the risk management guidelines for staff, have all been reviewed, updated and republished. At the local, operational level, the revised planning framework emphasises the importance of risk management as part of an integrated approach to planning and monitoring, and the Group LOPs developed for 2004-05 reflected this approach. At the strategic level the Executive monitors the strategic risks that could influence achievement of QAA's Strategic plan 2003-05. These are reviewed periodically and brought to the Board through the Audit Committee. The Audit Committee received a full report on strategy, policy, practice and the management of risks at its meeting in June 2005 (Board, July 2005).
91 As the new strategic plan is finalised, a new strategic risk register will be developed.
Audit Committee
92 The Audit Committee comprises four Board members and one member who is neither a director nor an employee of QAA (Mr Clive Halton). Two new Board members - Mr Andrew Ramsay and Professor Elaine Thomas - joined the Audit Committee to fill vacancies left by the retirements of Professor Philip Robinson and Mrs Valerie Stead. Mr Halton retired from the Audit Committee in February 2005, having served two terms of office.
93 During the past year, the Audit Committee has held two meetings. It has concentrated on the following areas of work:
- approval of QAA's financial statements
- approval of the QAA finance strategy
- review of the risk management and value for money strategies
- review of financial reporting processes and information
- evaluation of the work of internal and external auditors
- and review of the internal audit programme.
It has agreed revisions to QAA's financial regulations and budget manual.
Nominations Committee
94 The Nominations Committee's membership comprises four Board members. Its main role involves advising the Board on the procedures to be followed in appointing independent directors to the Board, and making recommendations for the appointment of independent directors.
95 Two of the independent members of the Board retired from the Board in 2004. The Nominations Committee conducted a thorough search process, including public advertisement and interviews. Its recommendations were endorsed by the Board in October 2004. Two new Board appointments were made – Dr Susan Atkins and Mr Andrew Ramsay – and two other candidates were placed in the reserve pool for further consideration when vacancies next arise. Following her appointment to the Board, Dr Atkins was appointed a member of the Committee. The Committee's current members are the Chairman, Dr Atkins, Professor Susan Bassnett and Mr Mike Killingley.
96 All new Board members and the new student observer attended induction sessions at the head office in Gloucester.
Remuneration Committee
97 The Remuneration Committee's membership comprises four Board members - the Chairman, Professor David Eastwood, Mr Mike Killingley and Mr Robin Vaughan. The Committee advises the Board on the performance and remuneration of the Chief Executive and his senior colleagues, the executive directors of the operational groups.
98 The Remuneration Committee commissioned an initial job evaluation of the three executive Director posts – Director of Reviews, Director of Administration and Director of Development and Enhancement – in spring/summer 2004. A more comprehensive job evaluation and remuneration survey in regard to those posts was carried out by external consultants in autumn 2004. The consultants' report confirmed that executive salaries were consistent with the market for comparable posts in comparable organisations. The Remuneration Committee also reviewed the framework for determining directors' remuneration and implemented that revised framework at its meeting in summer 2005. At the same meeting, and on the recommendation of the Chief Executive, it agreed that the post of Head of the QAA Scottish Office should be redesignated as Director of QAA Scotland, with effect from 1 February 2005. The Board endorsed the revised framework and the Remuneration Committee's recommendations on remuneration and post title at its meeting in July 2005.
Representations
99 The Board considered and adopted procedures for the consideration of representations (appeals) in relation to judgments of 'no confidence' arising from Major Review of healthcare programmes.
100 The Board considered three representations (appeals) against the outcomes of reviews. After careful consideration in line with the published procedures for each case, the Board confirmed the reviewers' judgments and rejected the representations.
Trustee Indemnity Insurance
101 During the year QAA purchased Directors and Officers Liability Insurance (which included Trustee Indemnity Insurance) at a cost of £1,785 for the annual premium.
Financial review
102 QAA's 2004-05 activities were funded primarily through contracts with the HE funding bodies, the DH and through subscriptions from HEIs: it does not raise income through fundraising. Additional income was generated through applications from HEIs seeking UT or DAP, investment income, conference income and income from the sale of publications.
103 QAA's surplus for the year ended 31 July 2005 was £43,332 (2004 – £3,771), bringing the accumulated funds at 31 July 2005 to £3,003,706.
104 Total incoming resources rose by £1,315,877 (12.9%) to £11,538,239 between 2003-04 and 2004-05. Income is split between activities in furtherance of charitable objectives and income from other activities as follows:
2004-05 |
2003-04 | |||
|
£ |
% of | £ |
% of | |
Income from activities in furtherance of charitable objectives |
11,300,190 |
97.9% |
10,029,785 |
98.1% |
Income from other activities |
238,049 |
2.1% |
192,577 |
1.9% |
|
|
|
|||
|
11,538,239 |
100.0% |
10,222,362 |
100.0% | |
|
|
|
|||
105 Income from activities in furtherance of the charities objects which forms 97.9 per cent of total incoming resources (2004 – 98.1%) is shown in the table below:
2004-05 |
2003-04 | |||
|
£ |
% of |
£ |
% of | |
Contracts to support review activity |
6,916,252 |
61.3% |
5,648,864 |
56.3% |
Contracts to support development and enhancement |
523,376 |
4.6% |
733,775 |
7.3% |
Income from applications for university title and degree awarding powers |
240,103 |
2.1% |
103,513 |
1.0% |
Subscriptions |
3,608,400 |
31.9% |
3,522,889 |
35.1% |
Other related income |
12,059 |
0.1% |
20,744 |
0.2% |
|
|
|
|||
|
11,300,190 |
100.0% |
10,029,785 |
100.0% | |
|
|
|
|||
The income from subscriptions is also used to support review activity and development and enhancement.
106 The increase in income from contracts to support review activity is attributable to an increase in Foundation Degree reviews, institutional audits and reviews for the DH.
107 The decrease in income from contracts to support development and enhancement is attributable to work undertaken for the DH in 2003-04 being completed.
108 Subscription rates for HEI subscribers remained unchanged and this is reflected in the similar income levels in 2003-04 and 2004-05.
109 Income from other activities forms 2.1 per cent of total incoming resources (2004 – 1.9%). Investment income, the interest earned on QAA's bank deposits, increased by £52,143 to £232,720 between 2003-04 and 2004-05, largely due to the increased interest rates. Other income fell to £5,329.
110 Total resources expended rose by £1,276,316 (12.5%) to £11,494,907 between 2003-04 and 2004-05 and can be summarised by activity as follows:
2004-05 |
2003-04 | |||
|
£ |
% of |
£ |
% of | |
Review activity |
6,852,960 |
59.6% |
6,149,768 |
60.2% |
Development and enhancement |
1,954,682 |
17.0% |
1,841,995 |
18.0% |
Access, university title and degree awarding powers |
586,565 |
5.1% |
362,977 |
3.6% |
Support costs |
1,927,113 |
16.8% |
1,671,883 |
16.4% |
Management and administration |
173,587 |
1.5% |
191,968 |
1.9% |
|
|
||||
|
11,494,907 |
100.0% |
10,218,591 |
100.0% | |
|
|
||||
111 The increase in costs attributable to review activity and development and enhancement are resultant from the net increase in QAA activity in these areas.
112 A further analysis by category is as follows:
2004-05 |
2003-04 | |||
|
£ |
% of |
£ |
% of | |
Staff and related costs |
4,862,959 |
42.3% |
4,425,824 |
43.3% |
Reviewer costs |
4,405,127 |
38.3% |
3,622,763 |
35.5% |
Premises and office costs |
871,434 |
7.6% |
893,103 |
8.7% |
Information systems support |
221,906 |
1.9% |
267,575 |
2.6% |
Publications |
230,867 |
2.0% |
155,444 |
1.5% |
Professional fees |
145,711 |
1.3% |
44,083 |
0.4% |
Depreciation |
204,984 |
1.8% |
247,838 |
2.4% |
Other costs |
551,919 |
4.8% |
561,961 |
5.5% |
|
|
|
|||
Total resources expended |
11,494,907 |
100.0% |
10,218,591 |
100.0% |
|
|
||||
Reviewer costs include travel and subsistence costs incurred by and fees paid to reviewers, auditors and other non-QAA staff.
113 Staff and related costs increased by £437,135 (9.9%), partly as a result of an increase in the number of full-time equivalent staff and partly as a result of the annual pay award.
114 Reviewer costs increased by £782,364 (21.6%) as a result of a further increase in review activity and development and enhancement work since 2003-04.
115 Premises and office costs decreased by £21,669 (2.4%), mainly as a net result of increased premises costs in 2004-05 offset by the £90,000 increase in the provision for reinstatement of premises made in 2003-04.
116 For the 2005-06 budget, evidence-based budgeting was used combined with a rigorous challenge process which will ensure accurate and meaningful budgets against which QAA can measure its financial performance.
Reserves policy
117 QAA's Reserves policy sets the target level of reserves equal to four to six months' fixed costs: at current levels of expenditure this sets the target level at £2.33 – £3.50 million. QAA holds reserves for three main reasons:
- to secure its long-term position
- to deliver the medium-term objectives in the Business Plan by ensuring that reserve levels provide a cushion against medium-term business risks, and take full account of the costs of medium-term objectives and
- to ensure that it can carry out the programme of work detailed in the next year's annual operating plan - for example, to ensure it could survive in the short-term should agreements with key funders fail to be reached by the start of the financial year.
The policy allows the directors to meet their obligations under the Companies Acts and to comply with Charity Commission guidance.
118 The current level of reserves is £3.00 million and falls within the target range.
119 At 31 July 2005 QAA's free reserves as defined by the Charities SORP were £2,666,993 (2004: £2,565,547).
Treasury management
120 The main principles underpinning QAA's Treasury policy are as follows:
- to ensure that QAA has adequate cash and working capital to enable it, at all times, to have sufficient funds available to achieve its business objectives
- to ensure that QAA investments are secure. This is achieved by ensuring that its authorised investments reflect a risk averse and prudent attitude towards the organisations with whom funds may be deposited, and limits its investment activities to those approved
- to ensure that QAA achieves the maximum return on its investments taking into account the other key principles
- to ensure that QAA minimises the risk of fraud or error in its treasury management activities. This is achieved by designing suitable systems, procedures and contingency management arrangements in order to minimise the risk of fraud or error.
121 During 2004-05, QAA achieved an average rate of return of 4.8 per cent which is an increase from 3.8 per cent achieved in 2003-04. The average Bank of England base rate during the year was 4.75 per cent (2004: 3.9%). Investment income in the year has been derived by managing cash balances held with Co-operative Bank plc and Abbey National plc.
122 Given QAA's current strategy of seeking to achieve a maximum return on its investments while maintaining a risk averse and prudent attitude, and given base rate changes and current market conditions, the investment rate of return was favourable.
123 QAA reviews its bankers annually as required by the treasury policy. Following a selective tender, Co-operative Bank plc was appointed to act as QAA's main banker at the Board meeting on 14 July 2004. During the year, QAA completed the transfer of QAA's banking activities to Co-operative Bank plc and closed its accounts held at Barclays Bank plc.
Looking forward to 2005-06
124 QAA's objectives and main tasks in 2005-06 are set out in detail in the 2005-06 Annual Operating Plan (AOP). The year 2005-06 includes the end of the period covered by the Strategic plan 2003-05. QAA will evaluate its performance against the strategic goals in the Strategic plan 2003-05, and will develop, consult on and publish a new strategic plan by March 2006. The objectives and tasks in the AOP will be kept under review as the new strategic plan evolves.
125 The AOP takes account of the principles and practice of good regulation that were developed initially through the work of the Better Regulation Task Force and the Better Regulation Review Group, and are now being taken forward through the Higher Education Regulation Review Group. QAA strives to ensure that its programmes of work and the underlying methods and processes are fit for purpose and proportionate to the objectives to be achieved. Regulatory Impact Assessments will be introduced where appropriate.
126 The AOP is underpinned by the detailed operational and process planning that is set out in the local plans of QAA's five operational groups. There is a good measure of continuity from previous years in the conduct of an extensive programme of reviews and audits, publication of reports, and maintenance and updating of the Academic Infrastructure. The AOP also shows important areas of change and development in 2005-06 in the light of changes in the external environment and in order that QAA can better meet the needs of its stakeholders, including:
a a further strengthening of QAA's international work
b strengthening QAA's capacity to manage a wider range of contract business
c improving the dissemination and publication of 'enhancement' materials - reports, publications, briefings - to support institutions' own enhancement agendas, including the enhancement themes programme in Scotland
d consolidation of the working relationship and joint activities with the HEA
e development of stronger relations with employer bodies and review of employers' information needs
f publication of a new QAA strategic plan covering the period 2006-11, with a companion statement on strategic directions in Scotland
g development of, consultation on and publication of a revised method for institutional audit in England and Northern Ireland
h initial stages in the development of a new method for the review of HE in FECs
i renewal of QAA's services to healthcare in England
j implementation of the revised Access to HE scheme in England, Wales and Northern Ireland
k implementation of a programme of reviews of postgraduate research degree provision in England, Wales and Northern Ireland and
l full implementation of QAA's role in the monitoring of TQI.
127 The priorities in the year in respect of QAA's own organisational development include the following:
a updating of resource strategies – communications, finance, information, personnel
b review of the arrangements for financing QAA's work after 2005-06, including the structure and level of institutional subscriptions, in the light of the medium term strategic perspective and estimated future patterns of work
c consideration of the implications for QAA of the expectations and good practice set out in the Freedom of Information Act 2000
d consideration of the implications for QAA of the 2005 draft statutory code on disability equality, and the establishment of the Equality and Human Rights Commission in 2007
e further development of QAA process and service standards and key performance indicators
f investment in the development of staff
g redevelopment of communication and information systems to support audit and review activity, remote working and central infrastructure functions and
h completion of the Board's effectiveness review.
128 The identification and management of operational risk is an integral part of each Group's responsibility for operational planning. The management and monitoring of the main operational risks are reported to the Executive each quarter. The Executive takes an active interest in the management of operational risks at Group level for three main reasons: first, to satisfy itself that QAA's business is being conducted to the appropriate standards and timescales; second, to reassure itself that operating risks are being managed appropriately through planning and monitoring mechanisms at Group level; and third, to allow it to take a view on any links between operational risks and strategic risks.
129 The main areas of operational risk in 2005-06 include:
- reviewers – numbers, recruitment, training, availability, conduct, performance
- reports and publications – audiences, preparation, deadlines, quality control, publication, distribution, use
- review outcomes – challenges, complaints, representations
- review processes or programmes -- short planning horizon, short notice changes; operational demands taking priority over developmental work
- development work – clarity of QAA role, responsiveness, changing priorities
- quality of management and planning information – ownership, integrity, reliability
- systems breakdown - failure of information technology and communications systems
- staffing - inadequate/over-stretched staffing, inappropriate staffing structures and human resources policies to meet changing needs
- control and compliance - finances, assets, expenditure, legislation, contracts, governance, risk management, new SORP, evolution of 'charities'.
Statement of directors' responsibilities
130 Law applicable to incorporated charities in England and Wales requires the directors (who are also trustees of the charity), for the purposes of company law, to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company at the end of the year, and of its financial activities for that period. All members of the Board are directors of the company.
131 In preparing the financial statements, the directors should follow best practice and
- select suitable accounting policies and then apply them consistently
- make judgements and estimates that are reasonable and prudent
- state whether applicable accounting standards and statements of recommended practice have been followed, subject to any material departures disclosed and explained in the financial statements and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume the company will continue in operation.
132 The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure the financial statements comply with the Companies Act 1985 and Charities Act 1993. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Legal and administrative information
QAA Board of Directors
Appointed by the Board
Mr Sam Younger (Chairman) | Chairman, The Electoral Commission |
Dr Susan Atkins | Chief Executive, Independent Police Complaints Commission |
Mr Mike Killingley | Former Senior Manager, Group Development Programmes, HSBC Bank plc |
Mr Graham Mackenzie OBE | Chairman of Energy Technique plc; former Chief Executive, Engineering Employers Federation (retired December 2004) |
Mr Andrew Ramsay | Executive Director, Engineering Council UK (appointed December 2004) |
Mrs Elizabeth Reid | Chief Executive, Specialist Schools Trust (appointed March 2001) |
Mr Robin Vaughan | Chief Executive and Registrar, Architects Registration Board |
Appointed by Higher Education Wales, Standing Conference of Principals, Universities Scotland and Universities UK
Professor Antony Chapman | Vice-Chancellor and Principal, University of Wales Institute, Cardiff |
Professor David Eastwood | Vice-Chancellor, University of East Anglia |
Professor Philip Robinson | Director, University College Chichester |
Professor Joan Stringer CBE | Principal and Vice-Chancellor, Napier University |
Professor Elaine Thomas | Rector, University College for the Creative Arts at Canterbury, Epsom, Farnham, Maidstone and Rochester |
Appointed by the Department for Employment and Learning, the Higher Education Funding Council for England, the Higher Education Funding Council for Wales and the Scottish Higher Education Funding Council
Professor Susan Bassnett | Pro Vice-Chancellor, University of Warwick |
Professor Arthur Lucas AO CBE | Former Principal, King's College London |
Professor Charles Munn OBE | Chief Executive, Chartered Institute of Bankers in Scotland |
Professor Stephen Tomlinson | Provost of the Wales College of Medicine, Biology, Life & Health Sciences and Deputy Vice-Chancellor, Cardiff University |
No Director had a beneficial interest in any contract with QAA. The directors are the trustees of the charity.
Registration numbers
Company registration number: 3344784
Charity registration number: 1062746
Registered office and other offices
QAA's registered office is Southgate House, Southgate Street, Gloucester GL1 1UB.
QAA has offices at:
Southgate House, Southgate Street, Gloucester GL1 1UB
183 St Vincent Street, Glasgow G2 5QD
Bankers
QAA's bankers are:
Co-operative Bank plc
Gloucester Branch, 23A St Aldate Street, Gloucester GL1 1RU
and
Abbey National plc
Business Banking Centre, 301 St Vincent Street, Glasgow G2 5HN
Solicitors
QAA's solicitors are:
Mills and Reeve
Francis House, 112 Hills Road, Cambridge CB2 1PH
Auditors
A resolution to reappoint Mazars LLP as auditors to the company will be proposed at the Annual General Meeting.
The financial statements were approved by the Board on 1 December 2005 and were signed on its behalf by:
Sam Younger - Chairman
1 December 2005 - Date
Independent auditors' report to the members of The Quality Assurance Agency for Higher Education
We have audited the financial statements for the year ended 31 July 2005 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and related notes. These financial statements have been prepared under the historical cost convention and the accounting policies set out therein.
This report is made solely to the charitable company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the Statement of Directors' Responsibilities the charitable company's directors are responsible for the preparation of financial statements in accordance with applicable law and United Kingdom Accounting Standards.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' report is not consistent with the financial statements, if the charitable company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions with the company is not disclosed.
We read the Directors' report and consider the implications for our report if we become aware of any apparent misstatement within it.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state of the charitable company's affairs as at 31 July 2005 and of its surplus for the year then ended and have been properly prepared in accordance with the Companies Act 1985.
Funds from the Higher Education Funding Council for England and from other funding bodies with whom the company has contracted during the year ended 31 July 2005 have been applied in accordance with the terms of their respective contracts.
Mazars LLP
Chartered Accountants
and Registered Auditors
Clifton Down House
Beaufort Buildings
Clifton
Bristol
BS8 4AN
11 January 2006
Statement of financial activities for the year ended 31 July 2005
| Notes | 2005 |
2004 | ||
| £ |
£ | ||
Income and expenditure |
||||
Incoming resources Activities in furtherance of the charity's objects | ||||
Contracts to support review activity |
| 6,916,252 |
5,648,864 | |
Contracts to support development and enhancement |
| 523,376 |
733,775 | |
Income from applications for university title and degree awarding powers |
| 240,103 |
103,513 | |
Subscriptions |
| 3,608,400 |
3,522,889 | |
Other related income |
| 12,059 |
20,744 | |
|
|
|
|||
Total income from activities in furtherance of the charity's objects | 2 | 11,300,190 |
10,029,785 | |
Investment income – bank interest receivable |
| 232,720 |
180,577 | |
Other income |
| 5,329 |
12,000 | |
|
|
| ||
Total incoming resources |
| 11,538,239 |
10,222,362 | |
|
|
| ||
Resources expended |
| |||
Charitable expenditure |
| |||
Costs of activities in furtherance of the charity's objects |
||||
Review activity |
| 6,852,960 | 6,149,768 | |
Development and enhancement |
| 1,954,682 | 1,841,995 | |
Access, university title and degree awarding powers |
| 586,565 | 362,977 | |
Support costs |
| 1,927,113 | 1,671,883 | |
Management and administration |
| 173,587 | 191,968 | |
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|
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Total resources expended | 3 | 11,494,907 | 10,218,591 | |
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| ||
Net income | 4 | 43,332 | 3,771 | |
Fund balances brought forward |
| 2,960,374 | 2,956,603 | |
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| Fund balances carried forward |
3,003,706 |
2,960,374 |
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All activities are continuing. There were no gains or losses other than those disclosed in the statement of financial activities. QAA had no restricted funds.
The notes below form part of these financial statements.
Balance sheet as at 31 July 2005
| Notes | 2005 |
2004 | |||
| £ |
£ |
£ | £ | |
Fixed assets |
| ||||
Tangible assets | 8 | 336,713 |
394,827 | ||
Current assets |
| ||||
Debtors | 10 | 993,068 |
613,511 | ||
Cash at bank and in hand |
| 3,917,381 |
3,208,003 | ||
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|
|
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| 4,910,449 |
3,821,514 | |||
| Creditors - amounts falling due within one year | 11 | (1,953,456) |
(965,967) | ||
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|
| |||
Net current assets |
| 2,956,993 |
2,855,547 | ||
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|
| |||
Total assets less current |
| 3,293,706 |
3,250,374 | ||
Provisions for liabilities and | 12 | (290,000) |
(290,000) | ||
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|
| |||
Net assets |
| 3,003,706 |
2,960,374 | ||
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|
| |||
Represented by: |
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|
Unrestricted funds |
3,003,706 |
2,960,374 |
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The notes below form part of these financial statements.
The financial statements were approved by the Board on 1 December 2005 and were signed on its behalf by:
Sam Younger - Chairman
1 December 2005 - Date
Cash flow statement for the year ended 31 July 2005
2005 | 2004 | |
| £ | £ | |
Net cash inflow/(outflow) from operating activities (see below) | 623,528 | (1,543,100) |
Returns on investments and servicing of finance | ||
Investment income | 232,720 | 180,577 |
Capital expenditure | ||
Purchase of fixed assets | (146,870) | (229,603) |
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|
|
|
Increase/(decrease) in net cash | 709,378 | (1,592,126) |
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|
|
Reconciliation of net income to net cash inflow/(outflow) from operating activities
2005 | 2004 | |
£ | £ | |
Net income before transfers | 43,332 | 3,771 |
Investment income | (232,720) | (180,577) |
Depreciation | 204,984 | 247,838 |
Increase in debtors | (379,557) | (292,709) |
Increase/(decrease) in creditors | 987,489 | (1,411,423) |
Increase in provisions | - | 90,000 |
|
|
|
|
| Net cash inflow/(outflow) from operating activities |
623,528 | (1,543,100) |
|
|
|
Analysis of change in net cash
2005 | 2004 | |
£ | £ | |
Cash at bank and in hand at the start of the year | 3,208,003 | 4,800,129 |
Increase/(decrease) in net cash | 709,378 | (1,592,126) |
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|
Cash at bank and in hand at the end of the year | 3,917,381 | 3,208,003 |
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|
The notes below form part of these financial statements. (below)
Notes to the financial statements for the year ended 31 July 2005
1 Accounting policies
a Application of accounting policies
The following accounting policies have been applied consistently in dealing with items that are considered material to QAA's financial statements.
b Accounting conventions
The financial statements have been prepared under the historical cost convention in accordance with applicable Accounting Standards. The financial statements follow the Companies Act 1985 and the recommendations in the Statement of Recommended Practice (SORP) Accounting and Reporting by Charities, issued by the Charities Commission in October 2000.
c Reporting requirements
The Companies Act 1985 requires charities to produce an income and expenditure account where the disclosure requirements of FRS 3 cannot be met by the Statement of Financial Activities (SOFA). As QAA has no restricted funds and no recognised or unrecognised gains or losses, all disclosure requirements are met by the SOFA and therefore no income and expenditure account has been produced.
d Fund accounting
Unrestricted funds are incoming resources received or generated for expenditure on the general objectives of QAA. All QAA's funds in 2004-05 were unrestricted.
e Incoming resources
QAA's activities are funded primarily through contracts with the higher education funding bodies and the Department of Health, and through subscriptions from higher education institutions: it does not raise income through fundraising. All income has been accounted for on an accruals basis.