Clarification relating to a decision made by the University Collegium on 15 June
At its meeting in May, the University Collegium requested clarifications on, for example, the principles and allocation of joint expenses to education and research at the university level and in every faculty, the university's property strategy analysis in written format, and information about the processing of proposed changes concerning the Board’s minutes on 24 November 2021.
At is June meeting on 15 June 2022, the University Collegium adopted the 2021 financial statements and annual report. The proposed decision on the agenda was to grant discharge from liability for the Rector and the Board of Directors. Olli Silvén submitted a counterproposal to the item that was supported by Jari Laru. After a vote, the Rector and the Board of Directors were granted discharge from liability for 2021 with the following exception: the Rector and the 2021 chairperson of the Board of Directors will not be granted discharge from liability with regard to three issues that were included in the request for further information submitted by the Collegium in May.
As a clarification to the Collegium’s decisions relating to each item:
Reporting of overhead costs, and unit-specific profit and loss account
In relation to the allocation of overhead costs, the Collegium was provided with the financial statements material and also a report on overhead costs for the allocated costs and the faculties’ allocation principles.
Once the minutes for the Collegium’s meeting on 15 June 2022 were completed, it emerged that the Collegium’s discussion pertained to a unit-specific profit and loss account in the notes of the financial statements information. The unit-specific profit and loss account is calculated in accordance with the reporting and financial codeset specified by the Ministry of Education and Culture, and it is a way of reporting the university’s result alongside the actual profit and loss account. Unit-specific details are used for monitoring the operations of universities from the university system’s perspective.
The reporting and financial codeset of the Ministry of Education and Culture steers the principles by which overhead costs are allocated to universities for tasks specified in the Universities Act. In the calculation, items of returns and costs on the profit and loss account are divided to the main tasks based on the distribution of hours in the allocation of working hours. The calculation is made at the level of profit centres (faculty units), meaning that the distribution of the unit’s allocation of working hours determines the share of returns and costs that are allocated to research, teaching, and social and artistic activities. Joint costs, such as support tasks at the unit, are allocated to units as part of this calculation.
Costs of support service units are allocated to main tasks in the first phase on the basis of the nature of the support unit and in the second phase based on the distribution of the profit centre’s main tasks. Support units in teaching are allocated to the share of teaching activity of joint expenses, and support units in research to the share of research of joint expenses. Costs of other support units are allocated first on the basis of the number of employees to basic units (faculties’ profit centres and separate units), and there to the main tasks on the basis of their distribution of working hours. Training schools are presented as a separate entity in the calculation.
Detailed information about reporting, allocation of working hours, coefficients of social security expenses and overhead costs coefficients that the University of Oulu follows in its reporting is available in the document called Codeset of Financial Management at Universities OKM/2/500/2018 (dated 30 November 2020).
Property strategy analysis consists of reviews made and Board decisions as the matter progresses
In its request for clarification, the Collegium asked for the submission in an electronic format of the property strategy analysis or the distribution of a link where it can be read.
The annual report contained an unfortunate, ambiguous formulation that led to an interpretation that the property strategy analysis would be a certain individual document. In fact, the university’s property strategy analysis consists of reviews made from different perspectives and decisions the Board of Directors has made as the matter has progressed. This process is still in progress. The property strategy analysis has been reviewed from the perspectives of the university’s future outlook and needs, the trend in the financial and rental situation, cost comparisons between different construction or repair investment options, and risk assessments. The reports made were submitted to the Collegium.
Processing and documentation of proposed changes concerning the minutes of the Board of Directors of 24 November 2021
The Collegium was provided with the rules of procedure of the university’s Board of Directors that also describes practices on minutes.
Minutes are prepared by the secretary of the meeting. Minutes include the background and grounds of the decision, the proposed decision, and the decision made by the Board of Directors. The name of the presenter is stated in matters that are decided on. The minutes include any dissenting opinions, any votes taken, and disqualification of members of the Board of Directors. Minutes drawn of meetings of the Board of Directors are signed by the chairperson and the secretary.
The Rector of the university serves as the presenter of the Board of Directors but does not participate in the preparation or checking of minutes.
The auditing practice in denial of discharge from liability is extremely strict
The performance of an audit of a public university and the position and responsibility of auditors are governed by the Finnish Auditing Act. The appointment of auditors is one of the University Collegium’s duties. The audit of the financial statements of the University of Oulu and the university group has not revealed matters that would prevent the auditors from submitting a ‘standard auditor’s report’. The audit of governance by the auditors did not bring up circumstances that affect discharge from liability.
In practice, the granting of discharge from liability means that the Collegium does not propose a claim for damages from members of the Board of Directors or from the Rector for their actions and management of duties during the previous financial year. In the Finnish Universities Act, denial of discharge from liability is connected to the bringing of legal action for damages.
The auditing practice in denial of discharge from liability is extremely strict, so a body or person whose discharge from liability is denied must be guilty of an act or omission that may result in liability for damages towards the university, or the body or person has violated the Universities Act or the administrative rules. Furthermore, the liability for damages or the violation of the law/rules must be material and the likelihood of creation of liability for damages must be probable.