Section 2: Compliance
2.01 Alleged Irregularities
The University requires staff to act honestly and with integrity at all times, and to safeguard the institutional resources for which they are responsible.
Financial irregularities may include theft, fraud, bribery, money laundering, terrorist financing, breach of sanctions, conflicts of interest, non-compliance with the University’s Procurement Policy, or other financial malpractice or impropriety. The University is committed to ensuring that opportunities for any type of financial irregularity are reduced to the lowest possible level of risk, with the implementation of robust mechanisms for prevention and detection.
The University applies the principles, policies and procedures as outlined in this section in order to mitigate the risk of financial irregularity occurring and to detect and properly investigate any that do occur.
2.02 Delegation of Authority
The University employs a hierarchical Scheme of Delegation, approved by the University Court, which includes delegation of financial management across the University. This specifies delegation of authority for the following activities:
- Approval of budgets, projects, and spend in accordance with certain thresholds;
- Approval of financial related matters such as investment of surpluses, banking, borrowing and lending;
- Approval of business cases and strategy; and
- Approval of financial and commercial policies
Authority for financial management may only be delegated to University employees (individuals holding valid contracts of employment with the University or its subsidiaries). Honorary members of staff and affiliates are not employees for financial management purposes.
Where possible, delegation of authority is automated within the University’s finance system; for example, purchasing and budgetary authority.
Each level of the hierarchy will be able to delegate budgetary authority up to their specified limit. This will allow Heads of College and Heads of School and Administrative Services to delegate an appropriate level of responsibility to ensure efficient operation of the budgetary unit. It should be noted though that ultimate accountability for budgets cannot be delegated.
These Financial Regulations are subordinate to the Scheme of Delegation, and in the event of any discrepancies between the two, the Scheme of Delegation prevails.
2.03 Segregation of Duties
It is University policy that there must be a segregation of duties in place where staff perform financial management or purchasing functions. Examples include but are not limited to:
- Purchasing and payment processes;
- Banking, cash handling and treasury management;
- Endowment management; and
- Asset disposals.
Segregation of duties will be automated in the University’s finance system where appropriate, for example, supplier set up, purchase orders and invoices are processed and approved by different people. It will also be automated within any third party systems used by the University, such as banking systems.
2.04 Risk Management
The University appoints a Risk Manager, who reports to the Executive Director of Finance. The Risk Manager has responsibility for issuing a Risk Management Policy and updating this on a regular basis.
The Public Interest Disclosure Act 1998 gives legal protection to employees against being dismissed or penalised by their employers as a result of publicly disclosing certain serious concerns. The University has made provision to protect any employees who disclose information which they believe shows malpractice or wrongdoing within the University. These safeguards are documented in the Code on Public Interest Disclosure (Whistleblowing).
2.06 Fraud Risk Management
The Executive Director of Finance is responsible for adopting adequate fraud risk management procedures, sufficient to prevent, identify, report and investigate frauds and other types of financial irregularity.
If a staff member has any suspicion of a financial irregularity, involving either staff members or third parties, they must report their suspicion to allow proper investigation. The reporting and investigation process of all alleged financial irregularities is outlined in the University’s Fraud Risk Management Policy.
Additionally, the Chief Operating Officer and University Secretary, Executive Director of Finance, University Court or Audit and Risk Committee have the authority to request an investigation into matters involving irregularities or suspected irregularities in the exercise of the activities of the University.
2.07 Anti-Bribery and Corruption
The University has a zero-tolerance approach to bribery and corruption and is committed to preventing bribery and corruption by its staff or by any party acting on its behalf. The Chief Operating Officer is responsible for adopting a Bribery and Corruption Policy, and supplementary controls. Online training is available to all staff and is mandatory for all staff, including agents employed by the University, where their duties may place them in a situation where they might be exposed to bribery or corruption (as outlined in the policy).
2.08 Money Laundering / Terrorist Financing
The University is committed to ensuring that it is not used as a conduit for either money laundering or terrorist financing. The Executive Director of Finance is responsible for ensuring the University adopts policies and procedures to address any money laundering or terrorist financing risks that the University faces.
2.09 Code of Conduct and Conflicts of Interest
University employees and others with responsibility for administration or management of University funds must not use their authority or office for personal gain and must always seek to uphold and enhance the standing of the University. Any potential or actual conflicts of interest must be declared and addressed in accordance with the Conflicts of Interest Policy issued by the University Court Office. Additionally, Code of Conduct Guidance is established by the Executive Director of Finance, through the Procurement Office
2.10 Gifts and Hospitality
The Executive Director of Finance, through the Procurement Office, has responsibility to and authority to establish a Gifts and Hospitality Policy, outlining acceptable levels of gifts and hospitality which staff members may receive from or provide to third parties. The University’s gifts and hospitality policy will give due consideration to relevant HMRC and Bribery Act 2010 requirements.
2.11 Value For Money
The University is committed to securing value for money in the performance of all its activities. Adherence to the Financial Regulations is an essential element of the University’s strategy to achieve this.
The University is committed to complying with the relevant sanctions lists. Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group or individual that may include various forms of trade barriers, tariffs and restrictions on financial transactions. The University is required to comply with the sanctions laws and regulations of the UK, European Union, the United Nations and the United States, as well as any other applicable sanctions laws and regulations within the jurisdictions that our Banking Providers operate, such as Hong Kong. The University cannot transfer funds into the bank account of a recipient who is either specifically sanctioned or in a sanctioned country. Sanctions can change daily, and we must comply with them both directly and indirectly, i.e. we cannot trade with a company owned or controlled by a sanctioned individual.
Non-compliance with sanctions requirements is a criminal offence and can lead to extensive financial penalties and/or imprisonment.
The Executive Director of Finance is responsible for issuing a Sanctions Policy to assist the University comply with these requirements.
2.13 Contracting on Behalf of the University
Where contracts are agreed with external bodies they will almost always expose the University to legal liabilities. The University has a Legal Team, who are responsible for reviewing contracts referred to them. Staff are required to refer potential contracts to the Legal Team as outlined elsewhere in these Regulations, including Section 4: Income. Staff must also refer any potential contracts to the Legal Team where these include any amendments to previously agreed or approved terms and conditions. The Legal Team may engage the University’s external legal advisor when they consider specific subject matter expertise is required.
Any new or enhanced risks which the University may be exposed to as a result of the agreement, may require approval by SMG.
Contracts can only be signed in accordance with Ordinance No.177 (Execution of Deeds) or otherwise in accordance with the University’s formal delegated signing authority.