Corporate
Governance and Internatial Audit in Public Higher Education Institutions in
Portugal
Maria da Conceição da Costa Marques[1]
Institute of Accounting and
Administration (Portugal)
Referencia
norma APA: Marques, M. C. C. (2017). Corporate
Governance and Internatial Audit in Public Higher Education Institutions in
Portugal. Rev. Guillermo de Ockham, 15(1), In press.
Abstract
Governance covers a comprehensive analysis of how
higher education is governed. Governance comprises a complex set of aspects
such as the legal framework, the features of the institutions, the form of
relationship with the whole system, the funding model, as they are being held
accountable on how money is spent and the less formal structures and
relationships that affect behavior.The radical changes in the university
environment, has imposed changes within the higher education institutions
(HEIs). The massification of education and the reduction of the company's
willingness to fund the decrease in government funding and increasing
institutional autonomy have forced universities to adopt new forms of manageme In
Portugal, the Legal Regime of Higher Education Institutions (RJIES) sought to
promote meaningful change and a paradigm shift in the governance of these
institutions in Portugal. The main objective of this article is to understand
the consequences that the new regulations had in the governance of HEI and in
the adaptation of processes, in a context of reduction of higher education
funding.
Keywords: Higher Education,
University, Polytechnic, audit, corporate governance
Introduction
According
to the OECD (2012: 27; 2013: 43), higher education in Portugal has, in recent
decades, an undeniable evolution and an unquestionable way, thereby
contributing to economic, social and technological development of Portugal.
Article
76 of the Portuguese Constitution assigns to higher education institutions
(HEI) some flexibility of management. Indeed, it is recognized to HEI, given
its characteristics, a range of management autonomy that involves the
scientific freedom, pedagogical, administrative, financial and property and, in
a way, also allows them some flexibility in managing their human resources.
Indeed,
the Legal Regime of Higher Education Institutions (RJIES), approved by Law No.
62/2007 of 10 September, to introduce profound changes in university
management, establishes the possibility of these institutions "adopt an
institutional model of organization and management deemed most appropriate for
the performance of their mission, as well as the specificity of the context in
which they operate", subject to compliance with the law.
So, can
we speak of corporate governance (or governance) applied to the HEI? Barakonyi
(2007) identifies the main structural elements of a corporate governance
system, as follows:
•
Investors / shareholders - deliver (at risk) funds,
but do not have the responsibility of daily operations. They have limited
involvement in activities.
•
The executive managers - run the company, but do not
have the responsibility of providing funds.
•
The Board of Directors – represents the shareholders
(owners and investors) and protects their interests. Approves the main
strategic guidelines, formulates the basic social policies and ensure the
follow-up. Prepares and approves the long-term strategic decisions.
Companies
are essentially governed by a board of directors that oversees top management
with the agreement of the shareholders. The board's responsibilities are
directed to the company as a whole. It is concerned with defining the mission,
vision and strategy, the hiring or dismissal of the Chief Executive Officer
(CEO), monitors and controls, approves the use of funds and looks after the
interests of shareholders. The board of directors runs the company but does not
control it; so it is necessary to ensure the balance of interests of various
groups.
In the
case of HEI, the radical changes in the university environment imposed changes
within these organizations. The massification of education and the reduction of
the company's willingness to fund the decrease in government funding and
increasing institutional autonomy, have forced universities to adopt new forms
of management. Most universities have had need to change their educational
systems. As a result of the changes, the influence of the market and demanding
needs of society, strengthening the autonomy and accountability of the HEI, the
greater complexity of internal structures, have determined a new paradigm of
management. New ideas and new methods are adopted in the academic universe,
i.e. it needs to change the current system of corporate governance.
In
Portugal, the RJIES sought to promote meaningful change and a paradigm shift in
the governance of universities. The main objective of this article is to
understand the consequences that the new regulations had in the governance of
higher education institutions (HEIs), as well as in the adaptation of the
processes and in the reduction in the context of higher education funding.
Methodology
The basic
methodology for the preparation of this article was the qualitative approach to
a problem that, in addition to being a choice of the investigator, is
justified, above all, to be an appropriate way to understand the nature of a
social phenomenon. The qualitative aspect of an investigation may be present even
on information obtained in essentially quantitative studies. There is a
methodological guidance of naturalistic character - characteristic of
qualitative approaches - when, for example, indicators and descriptors used in
instruments, are primarily obtained from the direct observation of the contexts
in analysis.
For the
preparation of this article it was used qualitative research and literature
search in order to study the underlying complexity to the problem of corporate
governance in the public sector, analyze the interaction of certain variables
and understand and classify dynamic processes experienced by social groups.
A
literature search was made based on a survey of theoretical references,
published written and electronic media, such as books, papers and web sites
pages.
In turn,
the exploratory research aimed to provide greater familiarity with the issue,
to make it more explicit in the construction of hypothesis.
Theoretical
basis
Context
approach
According
to Elena & Sánchez (2013: 48) currently HEIs are critical actors in a
knowledge-based economy. They are essential for the production, transmission
and dissemination of knowledge and are at the forefront of the political
agenda.
Recently,
the governments of the OECD, almost without exception, have been reforming,
revised or restructure their higher education systems (HES). Behind such
reforms are profound changes in its objectives and the challenges it faces, the
character of its institutions and the type of customers. It is now better
understood that universities and other higher education institutions need to
adapt to a more complex environment in which expectations and recognition of
higher education have changed.
Governance
covers a comprehensive analysis of how higher education is governed. Governance
comprises a complex set of aspects, namely: the legislative framework, the
characteristics of the institutions, the form of relationship with the whole
system, the financing model of the institutions, as they are being held
accountable on how this money is spent, as well as less formal structures and
relationships that affect the behavior.
Fielden
(2008: 2) argues that the governance of higher education "translates the
structures, processes and activities that are involved in the planning and direction
of the institutions and the people who work in higher education."
Also Altbach
(2008: 10) says that in the new university governance, academic weight in the
control of the core decisions is decreasing. There is supremacy on behalf of
management, efficiency, accountability and emphasis on management practices
arising from the private sector and business, so the government is being
replaced by the management.
In line
with the ideas advocated by the OECD, among the many factors that now influence
the approaches to higher education governance are particularly important the
five following elements:
·
The debate over whether markets are efficient in
allocating services such as education, and if it lead to results that serve the
public interest;
·
The role of a new approach to the management of public
bodies, often called new public management, which in other areas is related to
promoting greater efficiency and responsiveness. In universities, the idea of
"management" sometimes leads to distrust approaches, so this tool has
had trouble finding wide acceptance.
·
The appreciation by many higher education institutions
of their autonomy. It does not mean "academic freedom", although the
two concepts are related, but rather the ability and the right to an
institution to determine its own field without undue state interference. That
autonomy is a relative concept, which exists in different degrees in different
contexts.
·
The important implications of funding resulting from
the huge expansion in enrollment, which transformed the higher education in an
elite sector, came to a sector that covers a large part of the population.
Governments must finance the expansion of higher education and take into
account that their citizens have to pay more taxes to maintain the institutions
accountable for results. The governance of higher education is closely related
to its financing.
·
The growing importance of market regulation, through
setting standards and performance monitoring
in higher education systems that are increasingly diverse with the risk
of becoming too diffuse. Quality assurance agencies were almost unknown in
higher education 20 years ago; now they are common.
Corporate
Governance in Higher Education
The Report of the Committee on the Financial Aspects of Corporate
Governance (the Cadbury report) defined corporate governance as "the
system by which organizations are directed and controlled". He identified
the three fundamental principles of corporate governance (corporate governance)
as: (a) opening; (b) integrity; and (c) accountability.
These principles are relevant to public sector entities as are for
private sector entities. They apply equally to all public sector entities,
regardless of the governing bodies are elected or appointed, and wants to
integrate or not a group of people or an individual.
The three principles identified in the Cadbury Report (1992: 15):
openness, integrity and accountability were built and redefined in order to
reflect the public sector context, as shown in Table 1. From the fundamental
principles is possible to deduce a set of recommendations on governance.
Table I - Governance
Principles in Public Sector Context
|
Governance
Principles in Public Sector Context |
|
|
Openness |
Openness is
necessary to ensure that stakeholders can have confidence in the
decision-making process and actions of public sector entities in the
management of its activities and in the individuals within them. Being open
through meaningful consultation to stakeholders and communication of
complete, accurate and clear information that leads to effective and timely
action, resisting the necessary scrutiny. |
|
Integrity |
Integrity
comprises the actual operations and completeness. It is based on honesty and
objectivity and high standards of propriety and probity in the management of
public funds and resources and management of the entity's affairs. It is
dependent on the control board effectiveness and on the personal standards
and professionalism of the individuals within the entity. It reflects both in
decision-making processes of the organization and the quality of its financial
reporting and performance. |
|
Accountability |
Accountability
is the process by which public sector entities and the individuals within it
are responsible for their decisions and actions, including the management of
public funds and all performance aspects, and to submit to the appropriate
external scrutiny. The accountability is achieved when all parties have a
clear understanding of clearly defined responsibilities and of roles through
a robust structure. Indeed, accountability is the obligation to account for a
responsibility conferred. |
Source: IFAC (2001:12)
IFAC,
through the Study No. 13, considers that these core principles are mirrored in
each of the dimensions of the governance of public sector entities, namely:
•
Patterns
of behavior - has to do with how the organization's management
exercises leadership in determining the values and norms of the organization
that define its culture and the behavior of everyone in it.
•
Structures
and organizational processes - considers how the top
management in organizations is named and is organized as well as their
responsibilities are defined, and how is carried their accountability.
•
Control
- refers to the connection of the various controls
established by the organization's top management to assist in achieving the
entity's objectives and determining the effectiveness and efficiency of
operations. Takes into account the reliability of internal and external
reporting, compliance with applicable laws and regulations and internal
policies.
•
External
Reporting - includes how the organization's top management
demonstrates its accountability in the management of public funds and their
performance in the use of resources.
As relates to the behavior patterns, through the
figure 2 we can analyze the detail in which this principle materializes.
Table
2 - Behavior
Patterns
Source: IFAC (2001:14)
Behavior patterns
Leadership -
members of the governing bodies of public sector entities need to exercise
leadership according to high standards of behavior, which can serve as a model
for others within the organization.
Probity and decorum - All
civil servants should have a conduct which works in accordance with high
standards of behavior, as this may turn out to be reflected in its reputation
and at the entity. In particular, civil servants should be trusted in public
funds management. They must demonstrate: (a) probity in handling assets and
resources entrusted to them; (b) care in safeguarding the property, assets and
confidential information, by ensuring that they are not stolen, abused, or
damaged; (c) compliance with the rules and procedures of the organization,
especially in the accounting aspects; (d) economics to avoid waste and
extravagance; and (e) personal honesty in claiming expenses and ensure that
assets and public funds are not used for private purposes.
Codes of Conduct - the
governing bodies of public sector entities should adopt a formal code of
conduct that defines the standards of behavior that members of the governing
body individually and all the entity's employees are required to subscribe.
Objectivity, Integrity and Honesty
- the governing bodies of public sector authorities need to establish
appropriate mechanisms to ensure that members of the governing body and its
employees are not influenced by prejudices, preconceived ideas or conflicts of
interest.
Relationships:
1.
The
public and people from other organizations
Public
servants must uphold the reputation of the entity dealing with the general
public and people from other organizations: (a) in an appropriate and courteous
manner; (b) in a timely, reliable, and, where appropriate, confidential basis;
and (c) an open, fair and efficient manner.
2.
Employees
All civil
servants have a general duty to treat colleagues with respect, namely: (a) be
open, honest and courteous; (b) they must have due regard to health, personal
safety and well-being of others; and (c) avoid harassment, discrimination or
abuse of any kind.
3.
Structures
and Organizational Processes
Statutory accountability - the
governing bodies of public sector entities need to establish effective
mechanisms to ensure compliance with all applicable laws and regulations and
other relevant statements of best practice.
Provision of public money accounts
- the governing bodies of public sector entities need to establish appropriate
measures to ensure that public funds and resources are adequately protected and
economically are used efficiently, effectively, with due property, and
according to law enforcement authorities or other rules governing their use.
Communication with Stakeholders
The
governing bodies of public sector entities need to establish: (a) clear lines
of communication with the organization's stakeholders about the mission,
functions, goals and organization's performance; (b) adequate procedures to
ensure that these channels operate effectively in practice.
The
governing bodies of public sector entities need to establish an explicit
commitment to openness and transparency in all activities of the entity,
subject only to the need to preserve confidentiality in specific circumstances
where it is appropriate and proper to do so.
The
governing bodies of public sector entities shall make public the nomination
processes, and require publicly available the names of all members of the governing
bodies, along with their other relevant interests.
The
traditional model of governance of universities is collegial and consultative,
with large and broadly representative bodies and open forums to all academic
members of the university. According to the OECD (2003: 71) the operated
reforms in governance, had two main effects on internal governance: the
strengthening of the power of executive authorities within the university; and
an increase in participation in university governing bodies or supervisory
representative of bodies of people from outside the university.
Ploeg
& Veugelers (2008: 109) argue that in most countries there have been
efforts to strengthen the executive powers of institutional leaders, for
example in the UK in 1988, in Holland in 1997, Austria in 2002 and in Japan in
2004. The main common features concern a transfer of power to the Rector,
Vice-Rector or other administrative leaders, and a loss of authority by
traditional organs of power and decision-making. However, the strategies and
structures chosen to implement these reforms have varied widely.
These
changes are aimed at strengthening the overall energy loss faculty, increasing
the weighting of "general public" and outside interests contributed
to the strengthening of executive authorities. The manner in which these are
represented varies considerably.
In
following the advocated by the OECD (2003: 72) for example:
·
In the Netherlands, there have been legislative
changes, particularly in 1997 by the University Modernization Act, where the
leadership is divided between a dean with executive responsibility and a
Chairman of the Supervisory Board co-opted out of the University. This is
comparable to the American model of university with a Chair and Chairman of the
Board of Trustees (Neave, 2001). The recent reform of governance in Austria in
2002 (De Boer & File, 2009: 12) shows similarities with the reforms
operated in the Netherlands.
·
In Sweden, the Board of Directors has a majority of
external representatives of the trade sector, industry and regional authorities
(usually 8 external to a total of 15 members). In addition, since 1997 the
Chairman of the Board of Directors is no longer the vice-chancellor, but an
outside personality, well qualified and experienced, which is not an employee
in the institution, but appointed by the government.
Citing
Altbach (2008: 11), the academic standards of traditional decision-making, no
longer work well. The new governance arrangements, such as senates to manage
committees were established. These organs include managers and academics, and
in some cases students and stakeholders from outside the University. Academic
institutions and systems are performing experiments with management standards
that take into account the new realities of higher education.
Following
the ideas defended by Altbach (2008: 12) and IIA (2012: 10), accountability is
an additional reality, created by the size and complexity of institutions and
academic systems. Funders of higher education - usually government officials -
require information on the management and performance of the academy. This
requires a strengthening of management as well as the unprecedented data
collection on all aspects of university affairs. Internal data is needed to
ensure efficient management. Furthermore, performance indicators and other
reports should be generated for the lenders and other groups.
Consequently,
universities have become complex organizations that require sophisticated
management and new ways of governing an entrepreneurial academy (Clark, 1998).
These are, at the same time the communities and student bureaucracy. The
challenge of management and governance is to reconcile these different
realities and sometimes contradictory.
On
this understanding HEIs have been changing their governance models, with
particular relevance to new audiences, changes to the operation of internal
processes, diverse engagement with stakeholders, a perspective of combining
accountability with new demands for performance, assessed by criteria efficiency,
effectiveness and quality, while respecting their mission in higher education.
The
Public Higher Education Sector in Portugal and governance
The
current higher education system configuration in Portugal is based on a binary
system, since it includes, as part of the training, the subsystems of
university and polytechnic education. If we analyze the perspective of the
founding entity, there are subsystems of public higher education, higher
private and cooperative education, the concordat education and distance
learning.
Paragraph
2 of Article 3 of Law No. 62/2007 of September 10 states that "the
organization of the binary system should meet the requirements of an
increasingly diversified demand for higher education geared to the needs of
those who graduate high school and of those seeking vocational and professional
courses and learning throughout life."
The
Basic Law on Education (Education Act), approved by Law No. 48/86 of 14
October, amended by Law No. 115/97 of 19 September and by Law No. 49/2005 of 30
August, determined a reorganization in respect of degrees conferred by various
subsystems, which admitted the existence of four degrees: the Bachelor's
degree, a degree, a Masters and a Doctorate, offered by the university and the
polytechnic.
The
legal regime of degrees and diplomas of higher education was approved by
Decree-Law 74/2006, of March 24, as amended by Decree-Law No. 107/2008 of 25
June, and by Decree law No. 230/2009 of 14 September. This regime admits that
in the higher education system start to be awarded the degrees of bachelor,
master and doctor, but only the universities can confer the three degrees, but
polytechnics are restricted to the first two.
Taking
into account the 2012 Eurydice report, which considers that "university
education aims to ensure solid scientific and cultural preparation, provide
technical training to enable it to perform professional and cultural
activities, fostering the development of conception capabilities, innovation
and critical analysis. This education is provided at universities and
non-integrated universities".
In
turn, according to the same source "polytechnics aims to provide a solid
cultural and top-level technique, develop the capacity of innovation and
critical analysis and imparting scientific knowledge of theoretical and
practical nature, with a view to exercise professionals activities. This
education is provided at specialized higher institutions. "
Mobility
between the two subsystems (university and polytechnic) is guaranteed through
the principle of mutual recognition of the value of training and skills
acquired.
The Ministry
of Education has the tutelage of public higher education institutions, which
enjoy administrative, educational, financial and scientific autonomy. Dependent
public higher education institutions from other ministries observe a dual
control system: the general control by the ministry on which they depend and
the pedagogical and scientific supervision are exercised by the ministry on
which they depend and the Ministry of Education.
The private
higher education institutions are subject to the Ministry of Education and are
governed by the Statute of Private and Cooperative Education.
The
Portuguese Catholic University enjoys a special status under the Concordat
signed between the Portuguese State and the Holy See.
The public
higher education institutions enjoy autonomy recognized under the legal regime
of higher education institutions, approved by Law No. 62/2007 of 10 September,
leaving it to the State the responsibility to ensure their effectiveness and
unity of action. The Ministry of Education ensures the global coordination
mechanisms.
Collaborate in
this coordination, the Council of Rectors of Portuguese Universities (CRUP),
the Coordinating Council of Higher Polytechnic Institutes (CCISP), and the
Coordinating Council for Private and Cooperative Education (CCEPC). As advisory
bodies also cooperates the National Council of Education and the Council for
Higher Education.
In Portugal
the public higher education consists of the following institutions:
Table 3 – Public Higher Education Institutions in Portugal
|
University Institutions |
Polytechnic
Institutions |
|
IUL - Lisbon University Institute Open University University of the Azores University of Algarve University of Aveiro University of Beira Interior Coimbra University University of Évora University of Lisbon University of Madeira University of Minho Universidade
Nova de Lisboa University
of Porto Technical University of Lisbon University of Trás-os-Montes and Alto Douro |
Polytechnic Institute of
Beja Polytechnic Institute of
Cávado and Ave Polytechnic Institute of
Bragança Polytechnic Institute of
Castelo Branco Polytechnic Institute of
Coimbra Polytechnic Institute of
Guarda Polytechnic Institute of
Leiria Polytechnic Institute of
Lisbon Polytechnic Institute of
Portalegre Polytechnic Institute of
Porto Polytechnic Institute of
Santarém Polytechnic Institute of
Setúbal Polytechnic Institute of
Viana do Castelo Polytechnic Institute of
Viseu Polytechnic Institute of Tomar |
Source: Prepared by own
Each
one with their organic unity of teaching and research, giving them, in
accordance with the Official Public Accounting Plan for the Education Sector
(POC-Education), approved by Decree 794/2000 of 20 September, the allocation of
Public Group. For that reason they are required to submit consolidated accounts
with auditor's report.
The
model of governance of HEI is defined in Law No. 62/2007 of 10 September, which
approved the RJIES, which introduces a new range of options for governance of
HEIs in Portugal. This new model is concerned to ensure that HEIs make
strategic decisions based on rationality and efficiency of operation, quality
and results, and at the same time, overcome weaknesses in the application of
previous law of university autonomy, specifically in which concerned the
authenticity of the processes of participation, accountability, Rector
competitiveness and lack of concern for management (Pedrosa et al, 2012: 32).
As advocate Mano & Marques
(2012: 725), with this new law, "is intended to address the weaknesses of
European traditional systems of governance, and to this end, will seek
organizational and functional solutions to the modern theory of organization
and institutional management or operation of American universities of
excellence".
With the approval of RJIES changes
occurred in the form of election (Articles 85 and 102), skills profiles of the
organs (Articles 82 and 77), structure of government, opening to the society
(Article 81), participation of students (articles 81 and 104), Scientific
Councils (Article 102), Creation of the Board of Management (Article 95),
Educational Council (Article 104), Senate (Article 77) and Diversity of the
statutes (articles 67 and 96).
The
changes recommended by the RJIES, according to Marques (2011: 121), besides
consolidating the governance conditions of universities, in that it
differentiates the degree of responsibility of the different bodies (teachers,
students and staff) in the management, has implications in the mode of the
constitution of the management bodies, in its functions, organization,
operation and competencies.
HEI
Bodies:
Table 4 – Higher Education Institutions Bodies
|
Universities |
Polytechnics |
Composition |
|
General Council |
General Council |
Composed of 15-35 members |
|
Rector |
President |
Is the highest
authority of government
and external representation of the respective institution. |
|
Board of Management |
Board of
Management |
Up to five members |
Source:
Prepared by own
The
General Council is composed of 15-35 members, depending on the size of each
institution, its schools and research units. The members of the General Council
are representatives of academics and researchers (55%), student representatives
(15%) and publicly recognized external representatives (30%).
The
general council has the following main responsibilities elect their president
by an absolute majority; approve its own statute; approve changes to the
statutes; organize the election procedure and elect the Rector, under the law,
the statutes and the regulations; consider the acts of the rector or president
and the board of management; propose initiatives deemed necessary for the
proper functioning of the institution; perform other duties as prescribed by
law or the statutes.
The
powers of the rector or the president are direct and represent the university,
the university institute or polytechnic institute, respectively. It is a
superior organ of government and external representation of the respective
institution, responsible for the political leadership of the institution
chairing the management board. Its powers are described and listed in Article
92 of the RJIES.
The
management board is responsible for the administrative, patrimonial and
financial management of the institution as well as the management of human
resources and it shall be applicable current legislation for public bodies with
financial autonomy. It is responsible for establish the fees and dues and may
delegate to the organs of the organizational units and managers of services the
skills considered necessary for a more efficient management.
Internal audit and governance
Audit
activities in the public sector and reporting relationships exist between
different jurisdictions and different forms of government. The key point,
however, is that the audit activities of the public sector must be configured
correctly to enable public authorities fulfill their duty of accountability and
transparency to the public and achieve their goals effectively, efficiently,
economically and also ethics.
Governance
is defined as the combination of processes and structures implemented by the
board to inform, direct, govern and monitor the activities of the organization
in achieving its goals. In the public sector, governance relates to the means
by which goals are set and met. It also includes activities to ensure the
credibility of a public body, to ensure equitable provision of services, and
ensure appropriate behavior of government employees, reducing the risk of
public corruption.
Audit is
one of the pillars of good governance in the public sector. By providing
impartial and objective assessment on how public resources are managed in a
responsible and effective way to achieve the desired results, auditors help
public sector organizations to achieve accountability and integrity, improve
operations and inspire confidence in citizens and stakeholders. The role of the
public sector auditor is to support the governance and oversight
responsibilities, with insight and foresight. The audit assists in the
supervision of public sector entities, in that it analyzes their activities, if
is doing what it is supposed to do and serves to detect and prevent public
corruption.
According
to the IIA (2012: 16) the insight helps decision makers by providing an
independent assessment of government programs, policies, operations and
results. In turn, identifies trends and emerging challenges. Auditors use tools
such as financial audit, performance audit, investigations and consulting
services to perform each of these functions.
According
to Christ et al (2013: 4) sometimes companies change the internal auditors of
the internal audit function for the operational management. The internal audit
function is thus used as a management training camp, and understanding how this
practice affects monitoring the effectiveness of the internal audit function is
essential for a comprehensive understanding of the impacts of internal audit in
corporate governance.
Thus, the
evidence on the consequences of using internal audit as a management training
field is important for investors, boards of directors, audit committees and
management. These stakeholders rely on the internal audit function to monitor
effectively the financial information and to understand how the rotation of the
internal auditors to management positions can impact the role of internal audit
and ensuring the quality of financial reporting.
In
addition, regulators must understand how the use of the internal audit function
as a management training field affects the quality of financial reporting so
that they can determine the potential consequences of this practice and how it
should be addressed.
In
Portugal the internal audit in the public sector will already usual, especially
in large organizations. With regard to higher education, their presence is
relatively recent and not widespread.
Law
No. 8/90 of 20 February, part of the reform of financial administration of the
State includes in Article 12 the existence of internal control organs,
independent of the respective governing bodies since they have administrative
and financial autonomy.
In
turn, Decree-Law No. 166/98, of 25 June establishing the internal control
system of financial administration of the state, abbreviated as SCI, under the
responsibility of the Government and in particular liaison with the Ministry of
Finance. The SCI is considered to be structured in three levels of control,
designated operational, sectoral and strategic, and defined according to the
nature and scope of intervention of the services that integrate it.
In
order to verify that HEIs have internal control body, was made up a survey on
the websites of these organizations and it was concluded that few entities
still holds that body, as can be seen from the following outcome.
Table
5 - internal audit bodies in HEI
Source:
Prepared by own
Conclusions
In the
decades of 1990/2000 there were no major reforms in higher education governance
in Portugal. Higher Education Institutions were able to defend their autonomy
from the government. The strong dependence that universities have of public
funds and the mechanisms that provide these funds are other important
institutional barriers to change.
HEIs are
working consistently to find funding and regulation criteria at the same time
they wish to strengthen their market position. There is an emphasis on
institutional strategy and a move to withdraw power to individual departments.
The external members are now part of the governing bodies that were once
dominated by academics. The directors are selected for their leadership skills,
as well as for his academic performance.
No
corporate governance system is fully proof of fraud or incompetence. The
important thing is to know how far these distortions may be discouraged and how
quickly can be known. The risk could be reduced if the participants in the
governance process are effectively responsible.
The audit
of the public sector is fundamental to good public governance, so keep the
right resources, with a term of time set within the reach of the organization's
governance objectives. And should provide answers to the whole range of the
entity's activities.
Although
auditors may be able to add value to any organization segment for which can
provide objective assurance of independence, each public sector entity requires
some form of independent audit activity, which has the authority to assess a
wide range of public sector activities.
Audit
activities are often provided by complementary external and internal audit
entities. However, in some small entities from the public sector, an auditing
entity itself or an entity that is a mix of internal and external audit
features, can be construed as appropriate.
The audit
of the public sector strengthens public governance, supports accountability and
protects the fundamental values of public sector entity, ensuring managers and
employees to conduct the activities transparently, fairly and honestly and with
fairness and integrity. officials Elected and appointed at all levels of the
public sector should support audit activities by establishing effective audit
functions, independent and meet all the key elements.
Since the
HEI in Portugal are generally large organizations, the audit function can prove
to be a powerful tool to support and prevention in the exercise of governance
of these institutions.
Finally,
the step forward is to have a clear definition of responsibility and acceptance
by everyone involved, and high standards of efficiency and integrity are
expected of them. Continually arise expectations about the organizational
environment and the corresponding response is expected by all stakeholders,
directors and auditors.
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[1] Coordinator Professor of Higher Institute of Accounting and Administration
of Coimbra e-mail: mmarques@iscac.pt; conceicao.m@netcabo.pt