University Governance and Regulations

Forum

Delegations

“To delegate or not to delegate:

that is the question”Presentation by:

Michael KernUniversity SecretaryJames Cook UniversityFoundation PresidentAssociation of Australian University Secretaries

Overview of Presentation

What is a “delegation” - is it a core component of University Governance

Why are Universities able to delegate?

The power to delegate

Limitations on delegations within enabling legislation

Governance Best Practice - outside of the HE Sector

Overseas Governance Frameworks

Council Committees – AAUS 2016 sector scan

Core governance functions – AAUS 2016 sector scan

Key factors in determining the extent of delegations

Good governance practice - Principles

Councillor Protection and Rights

Council Evaluation

Councillor Remuneration

Councillor Selection

Councillor Induction

Councillor Development

Strategy FormulationVice-Chancellor OversightPerformance MonitoringOversight of Financial AffairsComplianceRisk ManagementDelegation of AuthorityPolicy Setting (Staff, Students, Other)Stakeholder CommunicationDecision Making

Framework for

University Governance

Role of the Council

Council StructureRole and Duties of Individual

Councillors

Role of Chancellor/Chair

Role of the Vice-Chancellor

Role(s) of Committees

Roles of Other University Bodies

Council Meetings

Agenda

Council Papers

Minutes

Council Cycle/Calendar

Committee Procedures

DefiningGovernance Roles

Improving CouncilProcesses

Key CouncilFunctions

CouncilEffectiveness

Council

Behavioural

Dynamics

University Governance Practice Framework

3

Adapted from G. Kiel, G. Nicholson, J.A.

Tunny & J. Beck, 2012, Directors at

Work: A Practical Guide for Boards,

Thomson Reuters, Sydney.

delegatus non potest delegare

English translation “a delegate cannot delegate”

2 key points:A person invested with a statutory power must exercise it personally, rather than delegate its exercise to others

A person to whom an authority or decision making power has been delegated to from a higher source, cannot, in turn, delegate again to another, unless the original delegation explicitly authorised it

However, for universities who are companies incorporated under the Corporations Act, directors have discretion conferred upon them by the Corporations Act (see Sec 198D) to delegate any of their powers, unless the company’s constitution provides otherwise.

The Voluntary Code

The Voluntary Code of Best Practice for the Governance of Australian Universities states that:

“a University’s governing body, while retaining its ultimate governance responsibilities, may have an appropriate system of delegations to ensure the effective discharge of these responsibilities”

The delegations triangle

Why are Universities able to delegate?

Without the power it couldn’t even if it wanted to

the capacity, size, structure, composition, appointment methods and the need for, confidential and independent decision making outside of, governing bodies in Australian universities’, means that they just can’t, or indeed, should not attempt to do everything.

Allows the governing body and the members of the governing body within the above constraints to be able to delegate responsibility so that the statutory obligations and duties and responsibilities can be effectively discharged

The power to delegate – JCU ActPART 2 THE UNIVERSITY AND ITS COUNCIL

Sect 11 Delegation(1) The council may delegate its powers under this Act to—

(a) an appropriately qualified member of the council; or(b) a committee consisting of appropriately qualified persons, but which

must include 1 or more members of the council; or(c) an appropriately qualified member of the university’s staff.

(2) However, the council may not delegate its power—(a) to make university statutes or rules; or(b) to adopt the university’s annual budget; or(c) to approve spending of funds available to the university by way of

bequest, donation or special grant.(3) Despite subsection (2)(c), the council may delegate its power to approve

spending of funds available to the university by way of bequest, donation or special grant if(a) the expenditure is for a matter funded by bequest, donation or special grant; and(b) the amount of expenditure for the matter is not more than $100,000.

The power to sub-delegate –JCU Act

PART 3 CERTAIN OFFICERS OF THE UNIVERSITY

Sect 32 Vice-chancellor

(1) There is a vice-chancellor of the university.

(2) The council must appoint a vice-chancellor whenever there is a vacancy in the office.

(3) The terms of appointment are as decided by the council.

(4) The vice-chancellor is the chief executive officer of the university and may exercise the powers and perform the functions conferred on the vice-chancellor by this or another Act or the council.

(5) The vice-chancellor may delegate powers of the vice-chancellor under this or another Act to an appropriately qualified member of the university’s staff. (same as CDU Act Sect 42(2)

The power to delegate & sub-delegate– Newcastle Act

PART 4 – FUNCTIONS OF COUNCIL – Division 1 – General

SECT 17 Delegation by Council

(1) The Council may, in relation to any matter or class of matters, or in relation to any activity or function of the University, by resolution, delegate all or any of its functions (except this power of delegation) to any member or committee of the Council or to any authority or officer of the University or to any other person or body prescribed by the by-laws.

(2) If a function of the Council is delegated to the Vice-Chancellor in accordance with subsection (1) and the instrument of delegation authorises the sub-delegation of the function, the Vice-Chancellor may (subject to any condition to which the delegation is subject) sub-delegate the functionto any person or body referred to in subsection (1).

Reliance as a defenceSECT 189 - Reliance on information or advice provided by others

If:

(a) a director relies on information, or professional or expert advice, given or prepared by:

(i) an employee of the corporation whom the director believes on reasonable grounds to be reliable

and competent in relation to the matters concerned; or

(ii) a professional adviser or expert in relation to matters that the director believes on reasonable

grounds to be within the person's professional or expert competence; or

(iii) another director or officer in relation to matters within the director's or officer's authority; or

(iv) a committee of directors on which the director did not serve in relation to matters within the

committee's authority; and

(b) the reliance was made:

(i) in good faith; and

(ii) after making an independent assessment of the information or advice, having regard to

the director's knowledge of the corporation and the complexity of the structure and operations of

the corporation; and

(c) the reasonableness of the director's reliance on the information or advice arises in proceedings

brought to determine whether a director has performed a duty under this Part or an equivalent general

law duty;

the director's reliance on the information or advice is taken to be reasonable unless the contrary is proved.

Delegations as a defence

Division 1- General duties

SECT 190 - Responsibility for actions of delegate

(1) If the directors delegate a power under section 198D, a director is responsible for the

exercise of the power by the delegate as if the power had been exercised by the directors

themselves.

(2) A director is not responsible under subsection (1) if:

(a) the director believed on reasonable grounds at all times that the delegate would

exercise the power in conformity with the duties imposed on directors of the

company by this Act and the company's constitution (if any); and

(b) the director believed:

(i) on reasonable grounds; and

(ii) in good faith; and

(iii) after making proper inquiry if the circumstances indicated the need for inquiry;

that the delegate was reliable and competent in relation to the power delegated.

Governance Best Practice – outside HE Sector

ASX - Lay solid foundations for management and oversight – clear roles and responsibilities –identify matters expressly reserved to the board and those delegated to management

GIA – Clear guidelines for boundaries between Board and Mgt – statement of matters reserved for the board, a delegation of authority policy, delegations instrument with approved delegations

AICD - Clarity regarding individual director responsibilities, organisational expectations of directors and the role of the board – also need clear documented delegations of authority from the board to the CEO and the management team

GIA -The Corps Act/constitutions can foster a belief in the community that directors have responsibility for operational management, without realisingthat the delegation of authority is how directors effect their power to manage the affairs of the coy.

Overseas Governance Frameworks –Delegations and Committees

Frameworks in the HE Sector outside of Australia

Overseas Governance Frameworks –Delegations and Committees

England’s CUC

A Gov Body has a responsibility for all decisions that might have significant reputational or financial implications. It must therefore seek assurance (including significant partnerships hat the institution meets all legal and regulatory requirements imposed on it as a corporate body, and in this regard seek assurance that decisions which might have significant reputational or financial risks undergo a rigorous process of due diligence by adopting a clear scheme of delegation and asking its Audit Committee to ensure due diligence .

Overseas Governance Frameworks – Ireland3.1.1.3 The governing authority should have a formal schedule of matters

specifically reserved to it for decision to ensure the proper management and control of the university, including the various statutory functions reserved to the governing authority in the Universities Act 1997:

Section 18 - Functions of a Governing Authority; (a) to control and administer the land and other property of the university,(b) to appoint the chief officer and such other employees as it thinks necessary for

the purposes of the university,(c) to determine the membership from time to time of the governing authority,(d) to perform such other functions as are imposed on it by or under this or any

other Act or by its charter, if any, statutes and regulations.Section 25 - StaffSection 27 - Academic CouncilSection 34 - Strategic Development PlanSection 35 - Quality AssuranceSection 36 - Equality Policy

3.1.2.3 A Chairperson should take particular care that the governing authority observes the principles of good governance, and that committees which play a central role in the proper conduct of the governing authority’s business report back appropriately.

Overseas Governance Frameworks – ScotlandStatement of Primary Responsibilities -Main Principle – Number 5

Delegation of powers

Where permissible, the governing body may delegate authority or allocate some of its work to committees, grant delegated authority to the chair or a committee to act on its behalf, and delegate responsibility to the Principal and other officers of the Institution. Such delegations must be clearly defined in writing and be formally approved by the governing body. Having delegated authority to other bodies or individuals to act on its behalf, the governing body is nevertheless still ultimately accountable and has to accept corporate responsibility for the actions taken.

It is common practice for the governing body to delegate some of its powers and to allocate some of its work to committees. In deciding which tasks or responsibilities should be delegated to committees, the governing body should retain a formal schedule of matters reserved to it for its collective decision. Such matters are likely to include final decisions on issues of corporate strategy, the review and approval of the Institution’s annual budget and Annual Report, and the appointment and dismissal of the Principal and of the secretary to the governing body.

CommitteesWhere a committee is acting under delegated powers it should submit regular

written reports to the governing body on decisions that it has taken on the governing body’s behalf.

Council Committees – AAUS 2016 sector scanAverage and (range) of number in use 9 (4 – 21)

No correlation between size of Councils and number of committees in use

Lack of clarity on websites as to:Whether the Academic Board was a committee of the CouncilWhether the sub-cttees of Academic Board were governance ctteesWhether the entity/s responsible for oversight of controlled entities was

a committee of the CouncilWhether sub-committees were governance committees or advisory

Core Committees: Chancellor’s/Executive/Immediate Business Academic Board (Ed, Res, Qual, Appeals, Pgms, Stds, HDR, Medals) Finance/Plannning/Resources (Investments, Tenders, Commerc’n) Audit/Risk/Compliance (Governance) Nominations/Senior Appts Remuneration/Snr Exec Review Estate/Infrastructure/Campus Development Human Resources/People & Culture Holding Company (Controlled Entities, Associated Entities) Ceremonial/Awards/Honorary Awards

Core Governance Functions – AAUS 2016 Survey

Membership matters – Chancellor/VC/CAB/Gov Appts/ Council Appts Constitutional and identity matters – Act, Constitutions Planning – Strategic/Academic/Financial – setting, reviewing and monitoringGovt Policy environment – Local, State and Federal Performance Monitoring - against Perf measures Ceremonial and Awards – Medals/Dist Profs/Emer Prof/Hon DocsReporting - Stat Accounts/Significant Accounting Policies/Annual ReportMaterial Resource Acquisitions and Disposals/Investments/Borrowings Physical and Virtual infrastructure planningHuman Resource – Planning/Remuneration/Reward/AccountabilityDelegations and PoliciesAudit/Risk/Compliance – Int/Ext Audit, Risk Appetite, Contingent Liabilities Controlled/Associated entities – student related, IP, CommercialisationHealth, Safety and Environment– Estate, workplace, staff, students, visitors

* Source – 2016 Survey of Association of Australian University Secretaries

Delegations of Core Governance Functions – AAUS 2016 sector scan

Vast majority of Councils have retained approval authority for the core governance functions: Budget/Statutory Accounts/Strategic Plan/Financial Plan/Council Appointments/

Delegations

Other functions have been delegated to Committees: Policies and Committee constitutional documents/Risk Audit and Compliance matters/

Financial monitoring and performance management/ Senior staff conduct/Physical and Virtual infrastructure planning/Human Resource Planning Remuneration Reward and Accountability/Investment management and oversight/Ceremonial

Other functions have been delegated to Exec Mgt: Medals awards/Operational planning and execution

A significant amount of Councils engage their (numerous) committees and sub-committees to undertake the enquiries, review and amendment, before receiving a recommendation to approve (mention the rubber stamp V effective due diligence conundrum)

High degree of variability across universities in some areas

Councils appear largely disengaged from the academic side of the house leaving the Academic Board to tend to business there

Key Factors in determining the extent of delegations to Committees or Management

The Enterprise Risk Appetite and Risk Assessments Organisational context and culture – size complexity and nature Capacity of the GB (skill, expertise, experience), Committee or delegate The economic condition of the University (falling asleep at the wheel) The level of “trust” that exists between governance and management Robust systems of internal control through Frameworks, Policies, sufficient ,

appropriate and effective Reporting arrangements, Internal Audit Function, whistleblower systems, codes of conduct etc

Models/Frameworks - The permissible variations/exceptions for each Ability to cope with “acting” delegates Payment of remuneration to GB or Committee members or Directors Any non-delegable responsibilities – Fin Stats, Budget, WH&S PCBU The Accountability Framework – the ability to be able to satisfy both the

reliance defence and the delegation defence as required as a Council member

because you do not want surprises

Delegations - Good Governance Principles National Level:

Harmonisation of Delegation governance arrangements within Acts

Removal of restrictions/limitations on Delegations

Remove subordinate legislation options within Acts (eg Statutes)

University Level: [Geoff Kiel – 5 Principles]

Develop and maintain* a sound delegations Framework, Policy & delegations Registers

Ensure communication to and accessibility by users and those impacted

Training in the use/application of delegations

Appeals framework for staff and students which embraces procedural fairness

Ensure compliance with the Framework, Policy and Delegations

Maintenance* strategies might include [GIA & MK]:

Consider the key factors and their impact on your university at the time of any review

Continuous (at least bi-ennial) review of Council’s Reserve Powers

Continuous (at least bi-ennial) review of Council’s Delegations to and need for Committees

Continuous (at least annual) review of Management Reporting requirements to Council

Monitoring ineffective use, or mis-use, of Delegations

Variability permitted in Delegations – allowing a “governance by exception” approach