News

 

KCG News in brief

The shared services Consortium, Kingston City Group (KCG), has been operational for seven years, delivering a full range of internal audit, risk management, governance, and other management assurance services to its Member institutions. The KCG Consortium’s Head Office is based at Kingston University, the Consortium’s host Member institution. KCG Consortium staff are permanently based at various locations including Kingston University, Goldsmiths University of London, the University of Westminster, the London School of Hygiene & Tropical Medicine, the University of Kent, the University of Roehampton, Southampton Solent University, Bournemouth University, and the University of Bedfordshire for current service provision requirements. Staff are also semi-permanently based at other Member locations. The KCG Consortium currently operates with 13 professional permanent staff and a number of administrative staff, with turnover of nearly £1.5m per annum.

 

 

The KCG Managing Director, Maria Vetrone, said:

 

“The KCG Consortium is now in its eighth year of operations and is fully established as a stable and viable Internal Audit service provider in the Higher Education (HE) sector in London and the South East. We have enjoyed significant expansion in the membership in these years. We move into 2012/13 servicing 13 HE institutions and welcome the Royal Academy of Music to the membership.

 

The HE environment has changed signficantly in the last year or so, and as expected is placing enormous pressure on HE institutions to increase academic quality, ensure financial sustainability, and meet the increasing expectations of students. Funding for learning and teaching is now directly influenced by the choices of students and allocated through publicly funded tuition fee loans. Student applications and enrolments dropped significantly for 2012/13 entry to HE institutions, resulting in large reductions in income for many universities. HE institutions have been considering very seriously their options for finding efficiencies, making savings, maximising income and maintaining high standards of services and facilities. They have redesigned their strategies and structures and made changes in how they deliver their core services. HE institutions are actively seeking to differentiate themselves in their offers and pricing and it is already clear that this is resulting in more diverse provision of length of course, mode of delivery, location, intensity of study and breadth of course offering. This is creating opportunities for existing HE institutions but also for new providers (ie private HE institutions and FE Colleges) entering the HE market with flexible and cost-effective delivery models.

 

The next few years are going to be difficult for the sector. However, this is an opportunity for the sector to demonstrate that it can offer innovative and creative solutions to these challenges. The sharing of services between HE institutions is now at the top of the HE agenda as a result. This has been difficult to achieve in the sector up to now because of the VAT barriers in HE. However, the Finance Act 2012 now allows the sharing of services between HE institutions as VAT exempt. If realised, HE institutions could work much more closely together to realise significant cost and efficiency savings and enhance overall institutional effectiveness in key adminsitrative areas. For KCG, the cost sharing exemption presents opportunities for our auditors to focus their work with the Member institutions on overall performance improvement in a new funding environment. In addition, KCG is looking to take advantage of the cost sharing exemption to be able to provide services to the membership fully exempt of VAT without the need for joint employment of KCG staff. This will simplify our arrangements for our Member institutions whilst offering even greater cost savings and more streamlined operations.

 

We are always reviewing our audit methodologies and business model, particularly in the context of such extensive change within the HE sector currently. We are aligning our methodologies to the EFQM Model and have recently been independently quality assured against the International Professional Practices Framework (IPPF) published by the Global Institute of Internal Auditors (IIA).

 

Our main challenge for the next year or so is to convert successfully to a new business model and corporate structure that will allow the membership to use the cost sharing exemption in the Finance Act 2012. We are refreshing our KCG Business Plan and will re-launch the KCG Consortium with an Annual Conference in the summer. All of this will be delivered whilst maintaining our high quality standards and competitiveness, for which we continue to be regarded in the HE sector. The KCG Board is keen to ensure a sustainable and managed increase in the Consortium's business for the benefit of all of the Member institutions, and to allow a base for the development of additional income streams and continued financial investment in the Consortium’s infrastructure. Our new Business Plan is being prepared and will set the direction for KCG's next phase of growth and development.

 

The key to our success in the delivery of our services to date is the quality of our professional staff. Our auditors at all levels are passionate about their work and take pride in their performance, always striving to deliver high quality professional services for all of our Member institutions. We employ and retain only the highest quality staff, all of whom are professionally qualified accountants and internal auditors with significant experience of the HE sector. Our standards are high and we expect a lot from all of our staff in terms of professionalism and competence, drive, passion for the work of the Consortium and charisma, and ability to work at senior levels with our Member institutions to deliver a high impact and strategic internal audit and management assurance function.

 

As a Consortium, we also maintain strong links with the accountancy and audit profession to keep our audit knowledge and methodologies up to date and fresh. The majority of our staff have trained with, or have experience of, the Big 4 accountancy and audit firms, and maintain contact with their previous employers on a regular basis. This has been immensely beneficial for the Consortium and we strive to continue to maintain these relationships with the industry.

 

It has been, and continues to be, a real challenge to persuade the HE sector in London and the South East to consider an alternative to outsourced and in-house Internal Audit arrangements, but we are succeeding and still generating a significant amount of interest. We believe that the KCG Consortium offers a very different and more valued Internal Audit service than the more traditional arrangements can provide, because our our cost base and business model is different. Our staff have already gained many years of experience in the audit of the HE environment and know the sector well, and they are all qualified accountants, auditors and management consultants who have trained with the Big 4 accountancy and audit firms. The quality and professionalism of our people, together with their seniority, accumulated knowledge of HE, modern audit skills and techniques, and on-going permanent/semi-permanent presence on site makes us genuinely different to in-house audit teams and our outsourced competitors. This alternative shared services/ shared cost model has demonstrated some very real benefits to the Consortium's Member institutions.

 

I have been very grateful for the support, professionalism, and encouragement provided by the KCG Board over the last seven years. The Board takes a strong interest in the business of the Consortium, which has contributed significantly to the Consortium’s continued success. The role performed by the host Member institution, Kingston University, is also a significant contributory factor in the success of KCG.

 

We have very much enjoyed working with our Member institutions over the years. The establishment and expansion of the Consortium has been exciting for all those involved. I believe that we have made a very positive contribution to our Member institutions, whether through the initiation of change in organisational and management structures, identification of savings opportunities, or simple strengthening of governance and internal control arrangements.

 

We hope to continue to serve our Member institutions in a professional manner and in a way that will always add value to the achievement of their strategic corporate objectives.”

 

 

Other News in brief

• The KCG Consortium is planning to deliver a KCG Annual Conference in 2012/13.  Details will be announced in May 2013.

 

 

News from the accountancy and audit industry

We provide links to other accountancy and audit websites for additional news and general information regarding internal audit, risk management and governance arrangements:

 

KPMG

 

 

PricewaterhouseCoopers

 

 

Ernst & Young

 

Deloitte

 

 

RSM Tenon

 

 

Grant Thornton