Gillies Report Released: “Financial Oversight Lacking When Most Needed”

Nick Whelan and Eva Milne

Today the findings of the SFC's independent investigation into Dundee University’s financial mismanagement have been released, and they confirm what was already largely suspected.

Today's Townhall Meeting

Earlier this week, the findings of the AAB Financial Accounts review were released and reveal a trend of ‘inadequate financial reporting’ to by University Executive Group (UEG), as reported by The Courier.

In short, the investigation found that senior university management,

failed to provide a clear picture of the universities financial position to the UEG who require accurate financial information to make informed strategic decisions for the university and meet its short-term obligations.

The investigation accounts for the period of August 1, 2019, to October 31, 2024. BDO, an international audit and accountancy firm was commissioned by the university upon the announcement of the £30m deficit to carry out the probe.

The AAB Financial Accounts review found that the reporting of the university’s cash position was,

‘inconsistent throughout the period under review with most of the papers omitting any form of cash reporting’

Additionally, the AAB review found that the university continued a course of ‘significant capital expenditure’ throughout what was already a difficult financial period.

Today’s publication has highlighted numerous issues regarding decision making processes, and a lack of transparency across the university. Despite the UEG insisting the financial pressures were ‘sector wide’ the report noted that,

‘the University of Dundee is the only one of the nineteen Universities and specialist institutions to have suffered a financial collapse’.

The report continued, noting that the causal factors of the financial failure uncovered by the investigation are unique to the University of Dundee. The key elements of the report can be divided into three sections; financial management, financial reporting, and governance and oversight. The highlights of the report include;

1. [The] UEG and Court should have been aware of the worsening financial situation by early December 2023 or March 2024.

2. There were multiple opportunities for UEG to challenge financial assumptions and decisions, which were not taken.

3. The governance structure failed to provide adequate oversight, leading to a lack of timely responses to financial issues.

4. Cultural issues within the University contributed to financial difficulties, including a lack of transparency and openness to challenge.

5. Leadership styles discouraged dissenting voices, impacting decision-making and financial governance.

6. Key signs of financial distress were not reported to the University Executive Group (UEG) or Court in a timely manner.

7. The Court was only fully informed of the financial situation in November 2024, despite earlier warning signs.

8. The quality and accuracy of financial information provided to governance bodies were inadequate, leading to misunderstandings about the University’s financial health.

9. The University failed to adjust its expenditure profile in response to declining income, leading to a cash outflow of £17.1 million in FY24.

It appears a culture has been allowed to develop in which information flows have been prevented, whether deliberate or otherwise. As such, key decisions have been made down the chain of management regarding the university's finances and future on the basis of false, incorrect or absent information.

However, questions have been raised over the effectiveness of the inquiry due to the lack of clear information available to staff members who contributed to the investigation. Question 9 of the report asks, “The extent to which these bodies were left with a false impression of the University’s financial health” and draws upon occasions were their was a lack of communication. For example,

“Throughout FY24 there was a lack of adequate financial reporting through to UEG and, as a direct result, also through to FPC and Court. The reporting that did exist (UEG through to FPC and Court) was incomplete and there was of a collapse of financial governance”.

Former senior management, including Iain Gillespie, are due to appear before the education committee in Holyrood next week. It is expected they are to be probed on the findings of this investigation and the accounting reviews reported on this week.

The Jute Journal will provide coverage of these hearings, student and staff thoughts and a run-through of where the university stands today.