Governing bodies need to be aware of their responsibilities with regard to trading and commercial activities and commercial ventures such as subsidiary companies, joint ventures and overseas collaborations. For many institutions such developments are relatively new and outside mainstream teaching and research. They are, however, growing rapidly under pressure from government, and the risks involved may be very different from those which the institution is used to. This is one area where specific expertise may be sought on the audit committee, through co-option. It is important that this area is regularly included on the internal audit plan.
There may also be issues relating to the student union. In legal terms the union may be a separate entity (if it is established as a company limited by guarantee) from the institution or its status may be less clear. The audit committee may have no formal role in relation to its finances or accounting, but the governing body will receive a copy of the student union’s audited accounts (which are often audited by another firm than the institution’s auditors) as part of its annual decision making on the level of grant to award the union. Institutions have a statutory obligation to keep a watching brief over the financial viability of their student union
Whatever the legal position of the union, the institution could face significant financial or reputational risks if the student union gets into difficulties.