The resolution adopted by the Public Accounts Committee INFORMATION requested that the Auditor General perform a value-for-money audit

Value for money is a generic term for an audit that encompasses economy, efficiency and effectiveness issues in an organization.

Under Section 13 of the Audit Act these engagements are referred to as special audits and examinations. It is important the reader understand the approach used in these audits and the expectations that are reasonable. The most prevalent form of reporting currently used in this type of audit is direct reporting. This was the approach we used in our audit at the University. Under this form of reporting, observations and recommendations are made on the adequacy of management systems and practices relative to the economical, efficient, and effective administration of financial and human resources. We also consider whether the public and the Members of the Legislative Assembly are being provided with accountability information.

8.6 The environment we faced in undertaking this audit should be put in context. Dr. Epperly, the former President, strongly opposed this audit and deemed it an intrusion on the independence of the University by government. As well, senior management by and large opposed the idea of an audit being done. Some members of the Board of Governors were against the idea and the Student Union also had concerns. This was not a situation conducive to carrying out an audit.

8.7 Before the audit began, I met with the former President and explained that this audit was not requested or controlled by government but was based on a motion by the Legislative Assembly.

The Auditor General is a servant of the Legislative Assembly independent from government and the scope of my audit work was not determined by government. This is a significant point which assured the University that the audit would be independent and objective. I met with members of the Student Union and explained our intended approach and sent a letter to each member of the Board of Governors explaining the process. In addition, senior staff met with senior management at the University. These meetings proved worthwhile. Our mandate was recognized and accepted. Also during these discussions I emphasized that the audit, because of its scope and limitations, would not pose any threat to academic freedom. After

these initial discussions, cautious but complete cooperation was extended to us by University management. In fairness, the University has never been exposed to an audit of this nature and we made every effort to alleviate the apprehensions that were evident.

8.8 It is also useful to provide some background on the state of affairs at the University when we began the audit. The University has been in the throes of change and reorganization for the past three years. In 1995 an outside evaluation of the University was in process and shortly thereafter a consultant’s report was released that recommended substantive changes to the structure and operations of the University. At the same time the University initiated a strategic planning process. The resultant report Charting Our Future contained an ambitious program to deal with a number of strategic issues. When the former President, Dr. Epperly, was appointed in 1995 she was immediately faced with addressing these reports. One of the most difficult areas targeted by the former President was the reorganization of the University. The University had not experienced a major reorganization of this nature since its inception over 25 years ago and this posed a major challenge for the former president to implement.

When we arrived a revised management structure was in place, however, many other initiatives outlined in Charting Our Future were still in process. They were also conducting separate studies and reviews of a number of administrative and academic functions. For example, studies of the Registrar’s office and campus security, were underway and research had been independently reviewed.

8.9 These developments were positive steps by the University but made it difficult in some instances from an audit perspective because a number of changes were pending. In addition, President Epperly resigned for health reasons in June. This was unfortunate because even though she opposed the audit, Dr. Epperly was cooperative and provided input helpful to us as the audit progressed. The University is still working on a number of the projects initiated by former President Epperly. Suffice to say we did not enter a static environment and this did not make it any easier for the audit staff or staff at the University.

8.10 The University is a large and complex institution with expenditures of approximately $50 million and faculties and schools for the Arts, Science, Nursing, Education, Business and Veterinary Medicine programs. It would not be practical to attempt to audit every

program and activity in each of these areas. The audit covered the key programs and activities keeping in mind their significance in dollar terms and the impact on the students and general public. In addition, strong emphasis was placed on the governance structure and the accountability framework in place to answer for the responsibilities conferred under the University Act.

8.11 The starting point for the actual audit work was the University Act. The University derives its existence and authority as an institution of higher learning from legislation passed by the Legislative Assembly. In this sense the request for the audit came appropriately from the Legislative Assembly, the body the University is ultimately answerable to for carrying out the responsibilities under the University Act. The University Act spells out the objects and powers of the University, its governing structure, and powers of the Board of Governors, the Senate, the President and other officers and appointed individuals.

8.12 Given the skepticism of some University management and faculty on the appropriateness of the Auditor General examining its affairs, I knew performing this audit would be challenging. I understood that my office may be perceived by some as naive to the realities of the current university environment. That is why extra time and effort were taken to obtain a good knowledge of UPEI’s operations before the actual audit work commenced. In addition, we reviewed other initiatives on university governance and accountability that were done or were underway in other jurisdictions. There are a proliferation of studies, commissions of inquiry, independent reports, and other initiatives on this subject across Canada, the United States, and Europe. These endeavours provided numerous conclusions and recommendations, some of them conflicting. The subject of university governance and accountability has been studied extensively and these efforts are generating interest and discussion by all concerned. It was useful to review the documentation on many of these initiatives.

There are many common problems that surface in many of these studies but each university is unique and must focus on the mandate it is answerable for under its enabling legislation.

8.13 In addition, I met with representatives from the Maritime Provinces Higher Education Commission and reviewed the impact of their work on UPEI’s programs and activities. Annual reports from other Atlantic universities were obtained where feasible. I met with

an executive committee member from Queen’s University who served on various task forces and committees dealing with university governance and accountability. Also, outside expertise was used to assist us in auditing some aspects of the academic programs and the information technology at the University. I met with experts on governance and accountability issues at the CCAF (Canadian Comprehensive Auditing Foundation) who have dealt with the university community and are advocating improvements in accountability and governance in universities and colleges. However, the bulk of the audit effort was undertaken by the dedicated efforts of highly qualified professional audit staff from my office. This was a major challenge for them and I am very appreciative of their professionalism and dedicated efforts. Also, the management and staff at the University were very helpful and I express my appreciation to them for their patience and cooperation.