External governance reviews: guide for FE college corporations and designated institutions

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This guidance explains the purpose and benefits of external governance reviews and how to approach them. It will help you to:

identify what a review should achieve
understand how to prepare for and approach a review
select a reviewer

Who this guidance is for

This guidance is for governors, charity trustees, governance professionals and senior college staff in:

further education (FE) corporations
sixth-form college corporations
designated institutions funded by the Department for Education (DfE)

Overview

Since 2021 to 2022, it has been a funding requirement that FE corporations, sixth-form college corporations and designated institutions must:

have an external governance review every 3 years
have an annual governance self-assessment
share the results and associated actions with the department on request

When to have an external governance review

You were required to have an external governance review (which should not be a peer or auditor鈥檚 review) between August 2021 and July 2024, and must have one every 3 years after that.

A governance self-assessment is due every year from 2021 to 2022 onwards, except in the year of an external review.

Benefits of an external governance review

Strong governance is fundamental to:

delivering high-quality education
safeguarding funds and assets
fulfilling the 6 main duties of trustees under charity law

An external governance review independently evaluates governance effectiveness.

The benefits of an external review include:

an expert, independent view of governance effectiveness, impact and boardroom culture, bringing fresh insight and broader governance perspectives
stakeholder confidence that a board understands its responsibilities, is accountable and committed to continuous improvement
an opportunity to build on strengths and to address any identified weaknesses
encouraging openness and enhancing board members鈥� engagement in governance development and good practice

Preparing for a review

Board members, the governance professional and senior executive staff would be expected to be involved in a planning process before a review is commissioned. Things to consider for the plan include:

key roles and responsibilities
terms of reference for the reviewer
the process for selecting a reviewer
timing of the review
costs and budget

The reviewer will need access to people, meetings and documents, so the board will need to think about allowing time for the reviewer to:

have one-to-one meetings with the chair, a selection of board members, the governance professional and senior executive leaders
gather views from students, a range of college staff and key external stakeholders
observe agreed board and committee meetings
provide regular feedback to the board and governance professional as the review progresses, so findings and recommendations can be tested

Selecting an external governance reviewer

Your board is responsible for choosing a suitable reviewer.

The reviewer should:

be external, objective and independent
be an expert with relevant experience or qualifications such as:
- experience of governance in the charity or education sector
- an advanced Chartered Governance Institute qualification
- a track record of carrying out reviews
have strong communication and interpersonal skills
offer good value for money

Governance reviews are available from:

charity or education governance advisory bodies
independent charity, FE and higher education (HE) consultants
professional bodies and the National Council for Voluntary Organisations (NCVO)

Services for charities can be cheaper than those for the private sector. It is good practice not to use the same individual reviewer for more than 2 consecutive reviews.

The review should not be a peer review process.

Your board should agree the terms of engagement with the reviewer at the outset.

Setting the scope and objectives of an external governance review

At the start of the process, governors should work with the reviewer to help determine the scope of a review, which must be framed by the key principles of the governance code a board uses. However, the review should provide more than a view of how well a board has observed these principles. It should also:

consider the overall effectiveness of governance, including the impact of board behaviours
support continuous improvement by recommending actions to strengthen governance culture, policies and practices, where appropriate

As part of consideration of the overall effectiveness of governance, the review may explore areas including:

how board members discharge their role as charity trustees
the effect of board culture on decision-making, including encouraging appropriate challenge and contribution, and on the culture and tone of an organisation
the impact of governance, including policies, practices and structures
how the board sets and communicates strategy
how the board models and promotes good diversity practice
governor recruitment, induction, development and succession-planning
the role, input and influence of the governance professional
governor, chair, governance professional and senior leadership team dynamics and effectiveness of working relationships
the board鈥檚 interaction with students and stakeholders

Findings and follow-up

The reviewer would be expected to:

present the review as a report to your board
have an open discussion with your board about the findings and recommendations

Board members are responsible for:

implementing the recommendations through an action plan with a clear timetable
reviewing the plan regularly

Remember to think about board capacity and whether any support will be needed to take forward change.

Transparency and accountability are fundamental to ensuring public trust and confidence in how a charity is run and to the Seven principles of public life.

Boards are required to report when an external review was carried out, and by whom, in their annual report and financial statements.

Also, it is recommended that an overview of the review be available on your organisation鈥檚 website, for example in the annual report. This overview should contain:

a summary of the review outcomes
highlights from your action plan, with updates following the annual governance self-assessment

Your board should:

invite your reviewer to comment on the summary of the review outcomes before publication
confirm it has agreed the summary with the reviewer in the statement of corporate governance and internal control in your accounts, or on your college website

DfE may have discussions with you about:

your governance review outcomes
the progress of the action plan to identify good practice that can be shared with other institutions鈥� governing bodies
how best to support you in addressing areas for development

Feedback

To provide feedback about this guidance, please contact: FE.GOVERNANCE@education.gov.uk

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