Leighton Andrews says universities must deliver value for money
A major review into the way Welsh universities are run is expected to be ordered by the education minister.
Leighton Andrews wants to ensure they deliver value in spending £400m a year and contribute towards the assembly government's economic and social aims.
The review will focus on whether university governors are strong enough to hold management to account.
It is the second review Mr Andrews has ordered since he became a minister in Carwyn Jones' new administration.
Mr Andrews will suggest there could be independent representatives on university boards, with external support for board members to help them in the role.
Colette Hume, BBC Wales' education correspondent
Lots of the issues Leighton Andrews wants the review to look at are well known - universities working closer together, transparency of funding and moves to bring higher education closer to communities - and widening access to those people who don't have experience of higher education.
On top of this universities are increasingly having to see themselves as businesses - competing for prestigious projects and attracting internationally recognised academics to their top departments.
The universities are already changing. Swansea has come under fierce criticism from lecturers' unions for proposals to close certain departments and focus attention on big scientific and business projects rather than the traditional academic subjects.
This review may pose difficult questions for the future of some of the smaller institutions which perhaps don't have the very powerful and high profile research and development facilities of the likes of Cardiff, Swansea and Bangor.
The minister said: "Higher education in Wales receives over £400m a year in public money and I want to ensure that there is proper and transparent accountability for how that money is spent."
He added a previous review of higher education by Professor Merfyn Jones had identified the need for the sector to be more committed "to delivering our national policies".
"We are demanding significant changes to delivery and I want to see higher education institutions - their business plans, learning programmes and research and knowledge transfer activities - more tightly linked with their local communities, the needs of the Welsh economy and the needs of learners in the 21st Century."
Mr Andrews said the review needed to be more than just a consideration of "doing the same things but better".
"There are numerous examples of excellence in HE in Wales and some areas of outstanding strength, which is a cause for congratulations.
"But as it says in our HE Strategy, 'higher education needs to change, and change fast'.
"Members of governing bodies have an important role in this to ensure that Wales achieves distinction not only at home, but internationally as well."
The announcement comes just weeks after the Higher Education Funding Council for Wales raised the possibility of compulsory redundancies and course cutbacks because of a squeeze on budgets.
Richard Davies, vice-chancellor of Swansea University, welcomed the review and said universities could always improve.
"It is entirely appropriate for a new minister to ask tough questions and issue challenges to us. These are exciting times and there's much to be done," he said.
Andrew Wilkinson, head of the chairs of Wales' universities, added: "We warmly welcome the work that is to go on and, indeed, that tallies very well with some work that the chairs have already commissioned in order to ensure that the standards of governance - as we move into more testing times - are very, very robust."
Margaret Phelan, Wales official for University and College Union Cymru, said: "We welcome the review and see it as a positive step by the assembly government.
"In particular we welcome the emphasis on strengthening scrutiny, audit and strategic planning.
"As part of this process the review must look to strengthen the voice of staff and students in holding university leadership to account and to making a genuine contribution to the strategic direction of institutions."
In January, Mr Andrews ordered a review into how funding at all levels of education in Wales was allocated.
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