BDO report out on USP allegations

By Samantha Magick

The Auckland-based accounting firm tasked with investigating allegations of mismanagement at the University of the South Pacific appears to have vindicated the University’s new Vice Chancellor, who first raised concerns about hiring, human resources and remuneration practices.

BDO has also stated that “further investigation is required” into the allegations and has made a significant number of recommendations relating to processes and policies at USP.

BDO was asked to conduct the investigation following allegations made by the recently appointed Vice Chancellor Professor Pal Ahluwalia about decisions made by his predecessor and other senior USP staff over a ten year period.

It says “oversight, governance and control of remuneration  is a key weakness across the university” and that four remuneration  mechanisms—inducement allowances, responsibility and acting allowances, bonuses and consultancy arrangements—“have collectively been exploited and have led to significant cash leakage across USP over a number of years.”

In a summary of its report released this morning, BDO says while the majority of decisions investigated were made within the powers of the (former) Vice Chancellor, “the rationale for many of the decisions taken is unclear.”

The summary does not state what decisions may have fallen outside this “majority of decisions.”

BDO says it’s clear that the USP’s human resources function has been “without consistent leadership for many years” and concludes “this lack of leadership has contributed to the weaknesses” across HR.

BDO says it was not able to trace all the allegations through documents because of the “level and/or quality of the documentation retained by USP…As a result BDO was not able to substantiate a number of the allegations.”

The summary does not state for which allegations the documentation held by USP was either inadequate or unavailable.

BDO also states that similar concerns had been identified by the USP’s internal audit service provider over the past few years, but it appears “the recommendations [made by the auditors] had been only partially implemented, or in some cases, not at all.”

BDO recommends:

  • A full review of the USP’s approach to inducement allowances
  • Development of a single, comprehensive policy for staff setting out its approach to responsibility and acting allowances
  • A full review of bonus calculations and payments
  • A forensic review of consultancy agreements that are currently active, or have been recently completed
  • A comprehensive structural review of the USP’s human resources function
  • A full review and amendment of the USP’s approach to the employment of people who have reached retirement age
  • Expansion of the role of the Remuneration Committee to include succession planning for all key senior roles across the USP.

BDO says with the airing of the allegations, USP has the “opportunity to reflect and take corrective action that will ultimately improve the culture and quality of education and research at USP.”

The Council of the University of the South Pacific has appointed a committee to implement the recommendations of BDO Auckland.