In recent years the higher education sector has reported a sound overall financial performance in their financial statements, although there continue to be significant variations in the financial performance of individual institutions.
However, the sector has reported an overall deficit each year through their Transparent Approach to Costing (TRAC) returns, which suggests that more work is required to make institutions sustainable.
The HE Code of Governance, published by the Committee of University Chairs, and the Scottish Code of Good HE Governance require that governing bodies rigorously assess the sustainability of the institution and its plans.
It is therefore important that there is an understanding of the difference between the financial performance reported in the financial statement and the TRAC returns. This is what is referred to as the sustainability gap. The gap could indicate that institutions may not be planning sufficiently to be sustainable.
What does this guide cover?
'‘Mind the gap’ – Understanding the financial sustainability challenge' provides some additional context and understanding of the relationship between the surpluses in the financial statements, the estimated sustainable cost of institutions, and the gap between them.
It also explores the role of Governing Bodies in overseeing their institutions’ progress towards achieving financial sustainability, and provides some guidance on the considerations they should make.
Who should read the guide?
The guide should be shared and discussed with Governing Body members, Finance and Audit Committees and Executive teams.