News

 

KCG News in brief

The shared services Consortium, Kingston City Group (KCG), has been operational for six 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, and at Bournemouth University 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, administrative staff, and turnover of nearly £1.5m per annum.

 

 

The KCG Managing Director, Maria Vetrone, said:

 

“The KCG Consortium is now in its seventh year of operations and has established itself as a stable and viable service provider in the Higher Education (HE) sector in London and the South East. The KCG Consortium Board of Management admitted 14 Member institutions in the first six years of business, which represents large expansion in a short space of time. We move into 2011/12 with 13 Member institutions after some rationalisation of our portfolio of institutions, and welcome Regent's College London to the membership, our first private university. We generate fees to the value of nearly £1.5m per annum in total to cover our costs, and we have a permanent dedicated staff base of 13. The services that we provide to institutions that are not Members of the KCG Consortium continue to increase. We are currently working with the University of Bedfordshire and with the HEFCE Equality Challenge Unit.

 

The changing HE environment is placing pressure on HE institutions to increase academic quality, ensure financial sustainability, and meet the increasing expectations of students. Funding for learning and teaching will be directly influenced by the choices of students and allocated through publicly funded tuition fee loans. HE institutions are considering very seriously their options for finding efficiencies, making savings, maximising income and maintaining high standards of services and facilities. They will need to reflect on whether to redesign their strategies and structures and how they deliver their core services. HE institutions will increasingly seek to differentiate themselves in their offers and pricing and this is likely to result in a more diverse provision of length of course, mode of delivery, location, intensity of study and breadth of course offering. This will create opportunities for existing HE institutions but also for new providers 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 rising up 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 HMRC has recently outlined proposals to treat the sharing of various 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.  For KCG, the HMRC proposals also present opportunities for our auditors to focus their work with the Member institutions on overall performance improvement in a new funding environment. In addition, the proposals present opportunities for KCG to expand its activities significantly on the removal of the VAT barriers in the delivery of shared services across the membership.

 

We are continuing to review our audit methodologies and business model, particularly in the context of such extensive change within the HE sector currently. Our three year KCG Business Plan 2009-2012 was intended to drive significant growth and economies of scale for our Member institutions, with the objective of doubling our operations and income within this planning period, which we generally achieved.  This additional growth is important to maintain the Consortium's financial stability and continued reliance on economies of scale to spread our cost base in order to remain competitive. Since 1 August 2009, we have admitted three institutions to the membership that are based outside of London (ie in Kent and on the south coast).

 

Our main challenge for the next year or so is to complete the achievement the objectives within our Business Plan 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 for 2013-18 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 great deal 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. We also continue to work closely with our External Collaborative Partner, RSM Tenon.

 

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 managing to generate 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.

 

As a result, however, our services are not inexpensive. The vast majority of our cost base is staff, and our staff are all qualified and experienced professionals. This elevates the cost of our service provision although we maintain our competitiveness because we are not for profit, have low overheads, and we generate VAT savings for our Member institutions through the use of the shared services model. Our Member institutions endorse the view that our services "add value" and deliver significant value for money where more basic and relatively cheaper internal audit provision cannot.

 

I have been very grateful for the support, professionalism, and encouragement provided by the KCG Board over the last six 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 last six 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 series of seminars and workshops for HE Chairs of Audit Committee and HE executive management during 2011/12.  Details will be announced in March 2012.

 

 

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