Universities and colleges still face serious challenges in improving quality management, according to a report out today.

But funding cuts may hamper their attempts to tackle weaknesses, say the authors of Learning from Audit 2 from the Higher Education Quality Council.

Although most of 48 institutions whose quality monitoring arrangements the council scrutinised between April 1994 and July 1995 accepted the importance of quality assurance, there were problems.

These included variations in assessment and published marking criteria, exposed by the widespread introduction of modular systems.

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The report comments: "The problem of reconciling different assessment cultures in different disciplines, such as the greater dispersion of marks awarded in the sciences than in the humanities and social sciences, became acute in modular circumstances."

The audits - mostly of former polytechnics, higher education colleges and University of London colleges and schools - also confirmed worries that the tutor system is under strain. This mirrored findings in the first Learning from Audit report two years ago, which focused on old universities.

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Another continuing weakness was the role of external examiners, who were "too often used inconsistently within institutions and were sometimes asked to perform duties outside stated regulations".

The report says modularity is significant in raising awareness of academic quality and standards.

The greatest threat to quality continues to be funding cuts. It says: "The assurance of quality is undoubtedly expensive: the question being asked by many institutions is whether it is becoming too expensive."

It also questions the wisdom of a system under which all the big prizes are for high quality research rather than teaching, when quality assessments have indicated a relationship between the two.

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"This raises serious questions about the balance between these two principle activities of higher education, their inter-relationship and resourcing arrangements. If they are closely linked, then a more integrated approach to their funding may be required," add the authors.

Learning from Audit 2 is available from the Support Section, UCAS, Fulton House, Jessop Avenue, Cheltenham, price Pounds 12.