Education Division Update - Comment July 2008

Published: 21st July 2008

COMMENT

University push to lure foreign students branded "unsustainable"

The number of foreign undergraduates at British universities leapt 8 per cent to almost 50,000 last year.

The Quality Assurance Agency for Higher Education, which is funded partly by the government, warned in a report of "concerns [that] the number of international students was being increased in an unsustainable fashion at some institutions".

The agency called for "more attention [to be paid] to the impact this would have on their services to support international students and the student body overall" - raising fears that some universities might be swamped by the special needs of foreign students".

Tax Planning for Alumni

There is an opportunity for any education body which is a charity to target unused pension funds as a source of donations.

If someone with a private pension fund takes an unsecured pension at the age of 75 and dies with funds remaining (assuming there is no surviving spouse) there is a penalty tax charge (in the region of 82%) on the remaining funds passing to the family. However if the funds pass to charity the tax charge is avoided. Accordingly many alumni would rather see 100% of the money pass to charity than 18% pass to the family (as there are normally other significant funds that the family will receive).

In the event that there is a surviving spouse they can take a pension from the fund during their lifetime but then the unused fund is still subject to the tax charge on their death.

Universities may wish to campaign to alumni and benefactors asking that they be nominated as the beneficiary of any unused pension funds.

"A strong message on compliance"

In the context of growing attention on combatting bribery an increased vigilance by prosecuting authorities institutions are well advised to consider these recommendations as a guide to structuring their own policies and systems for eradicating bribery and corruption.

Key recommendations of the Woolf report, which may be considered by educational institutions include:

Role of the board/members

• The board should adopt a global code to reflect the institutions high standards of ethical business conduct.
• The institution should have ethical conduct as a standing item on its board meeting agenda.
• The board should at regular intervals, for example, every three years, publish an independent ethical audit of ethical business conduct and the management of reputationial risk.

Role of internal committees

• A corporate responsibility committee (CRC), which is responsible for the oversight and reporting of standards of ethical business conduct, should be established.
• Ethical business conduct should be assessed in all audit reports.

Role of senior managers

• Senior executives and managers should have their contribution to achieving high standards of ethical conduct reflected in their appraisals.
• There should be a senior executive who has the responsibility for ensuring high standards of ethical conduct and who has direct access to the Board of Governors/members.

Payments and gifts

• Facilitation payments to overseas organisations should be eliminated. In countries where it will take longer to eliminate these payments, all such payments should be reported to the board.
• A central register should be established for each country to monitor spending on gifts and hospitality on individuals and customers. The institutions policy on gifts and hospitality should be circulated.

Role of advisers

• The policy by which advisers are appointed should be fully codified and interviews for this position should involve a robust procurement process.

As business practices face renewed scrutiny from global regulators, it is vital to implement policies along the lines of those proposed by Lord Woolf. But it is the next step that is most critical: that is, the capability to successfully follow those policies on a day-to-day basis at every level of the institution.

This will not eradicate all risks. However, there are a small number of practical steps that all institutions can take to minimise risk and increase the chance that any violations are brought to management's attention.

• Write it down and file it. Whenever an institution is going to interact with anyone who might fall into the definition of "foreign official", make sure that there is a clear, open purpose to the relationship and that there is a written document setting it out in detail. Ensure that any deliverables are set out and performed. Any reason for non-performance should be recorded in writing.

One of the most potent weapons available to an investigator is a lack of written records; it is open to them to fill that void with conjecture and assumption.

• Lead from the top. The culture in an Institution is set by its leadership, from the V.C./Principal down to first-line managers.
• Be consistent. If an Institution has a policy of abiding by applicable rules and regulations, make sure that this is reflected in everything the institution does.
• Make it easy to speak up. Provide easy and confidential channels for employees to raise concerns.

Spread the word. Put in place formal training on compliance (including refresher training each year). Management should be the first to receive it.