December 2003/54
|
| To: | Heads of HEFCE-funded institutions Heads of universities in Northern Ireland |
| Reference: | 2003/54 |
| Publication date: | December 2003 |
Table of contents and introduction (read on-line)
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Template for annualised servicing costs of long-term borrowing (see Appendix 2)
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Table of contents
Introduction
General
Definitions
Application
Scope
Compliance with financial memorandum
Responsibilities of the Council
Responsibilities of the institution
Stewardship
Designation of principal officer
Financial management
Value for money
Provision of information
Legislative requirements
Subscription to HESA, QAA and the Higher Education Academy
Connection to JANET or SuperJANET
Risk management
Allocation and payment of funds
Estate management
General
Disposal of any interest in an Exchequer-funded asset
Sale
Leases
Transfers
Application of section 69(4) of the 1992 Act
Financial commitments
General
Long-term financial commitments
Short-term financial commitments
Monitoring of estate management and financial commitments
Costing and pricing of activities
Financial statements
Audit
Other matters
Consultation with HEFCE on mergers
Revision
Interpretation
Effective date
Signature of designated office holder
Appendices
Appendix 1 Flow chart for prior Council consent
Appendix 2 Areas where prior Council consent is required
Appendix 3 Decision-making delegated to the institution
Appendix 4 Clarification of annualised servicing cost (ASC) calculations
Appendix 5 Scope of the financial memorandum
Introduction
General
1. This memorandum sets out the terms and conditions for the payment by the Higher Education Funding Council for England (HEFCE) of funds to the governing body of (name of institution), out of funds made available by the Secretary of State for Education and Skills.
Definitions
2. In this memorandum, the following definitions apply.
academic year: the 12 months from 1 August to 31 July
accounting period: the period covered by the institution's audited financial statements, usually the 12 months from 1 August to 31 July
capital expenditure: expenditure used to create or purchase a new asset, replace an existing asset, or refurbish or remodel an existing asset
Chief Officer of the Council: the Chief Executive of HEFCE
connected institution: an institution receiving HEFCE grant funding from another HEI to whom it is accountable, rather than receiving funding directly from the Council
Council: the Higher Education Funding Council for England (HEFCE). See also 'predecessor Councils'
CUC: Committee of University Chairmen
deficit: the historical costs deficit as given in the 'Note of historical cost surpluses and deficits' in the Statement of Recommended Practice (SORP): 'Accounting in Higher Education Institutions'
Designated officer: head of an institution responsible and accountable to HEFCE (and ultimately to Parliament) for ensuring that the institution uses HEFCE funds in ways that are consistent with the purposes for which those funds were given, and complies with the conditions attached to them. These include the conditions set out in the Further and Higher Education Act 1992 and in this financial memorandum
DfES: Department for Education and Skills
Exchequer funds: Government grant or grant-in-aid - including grants paid on the advice of the University Grants Committee, grants paid by HEFCE and its predecessor Councils, grants paid by the DfES to former voluntary and direct grant colleges, and grants from the Research Councils. It does not include funds provided by a local authority
Exchequer-funded assets: assets acquired or developed, wholly or in part (including refurbishment), with Exchequer funds in the form of specific capital funds. This does not include assets where the ownership was transferred from a local authority to a higher education institution on or after 1 April 1989
FE college: a college in the further education sector
FRS: Financial reporting standard
GAAP: Generally accepted accounting principles
governing body: the university council, board of governors or other body ultimately responsible for the management and administration of the institution's revenue and property, and the conduct of its affairs
HEFCE: Higher Education Funding Council for England
HEI: higher education institution
HESA: Higher Education Statistics Agency
the institution: (name of institution)
JANET: the Joint Academic Network, an electronic network supported by the seven higher and further education funding bodies which links universities and colleges in the UK. SuperJANET is the enhanced network
lead accountability: refers to lead accountability in all institutions designated by the DfES as higher education institutions, except where the DfES has assigned the lead accountability role to the TTA. These will normally be institutions which receive 55 per cent or more of their recurrent grant (that is, the combined recurrent grant from the TTA and the Council) from the TTA
legally distinct entity: an organisation receiving HEFCE grant funding from an HEI to whom it is accountable, but operating independently from that HEI
licence: any licence other than a licence of residential accommodation to a registered student
LSC: Learning and Skills Council
month: calendar month
NAO: National Audit Office
overseas activities: those activities taking place outside the United Kingdom of Great Britain and Northern Ireland
PFI: Private Finance Initiative
PPP: public-private partnership
predecessor Councils: the Polytechnics and Colleges Funding Council and the Universities Funding Council, including responsibilities inherited from the University Grants Committee under the Education Reform Act 1988
providing body: the providing body of a former voluntary college directly funded by the DfES
QAA: Quality Assurance Agency for Higher Education
Secretary of State: the Secretary of State for Education and Skills
SSAP: Statement of Standard Accounting Practice
SuperJANET: see JANET
TTA: Teaching Training Agency
1998 Act: the Teaching and Higher Education Act 1998
1992 Act: the Further and Higher Education Act 1992
References to the financial position, financial statements, financial commitments or borrowing of the institution mean the consolidated financial position, financial statements, financial commitments or borrowing of the institution and its subsidiary undertakings, as defined in the Companies Act 1985 and revised by the Companies Act 1989, and in accordance with generally accepted accounting principles. Shall and must denote mandatory requirements, and should denotes the Council's view of good practice.
Application
3. This memorandum is in two parts. Part 1 (this document) sets out the terms and conditions which apply in common to those institutions listed in paragraphs 5 to 7. Part 2, the schedule for each institution, gives conditions specific to that institution, a schedule of funds available in the academic year, and the educational provision the institution has agreed to make in return for those funds. References to this memorandum embrace both Part 1 and Part 2.
4. Nothing in this memorandum shall require the institution to act in a manner which would cause it to lose its charitable status, or which would be inconsistent with its charter and statutes.
Scope
5. The terms and conditions in this memorandum apply to all institutions for which the Council has lead accountability.
6. The following sections also apply to any institution for which the TTA has lead accountability and which receives funds from the Council:
- Introduction (paragraphs 1-4)
- Compliance with financial memorandum (paragraphs 8-9)
- Responsibilities of the Council (paragraphs 10-12 and 14-15)
- Stewardship (paragraphs 16-17)
- Provision of information (paragraphs 26-30)
- Connection to JANET or SuperJANET (paragraphs 33-34)
- Allocation and payment of funds (paragraphs 36-48)
- Estate management (paragraphs 49-60)
- Financial commitments (paragraphs 61-66)
- Monitoring (paragraph 67)
- Other matters (paragraphs 80-84).
7. The following sections also apply, via Part 2 of the financial memorandum, to any institution for which the LSC has lead accountability and which receives funds from the Council.
- Introduction (paragraphs 1-4)
- Compliance with financial memorandum (paragraphs 8-9)
- Responsibilities of the Council (paragraphs 10-12 and 14-15)
- Stewardship (paragraphs 16-17)
- Provision of information (paragraphs 26-30)
- Connection to JANET or SuperJANET (paragraphs 33-34)
- Allocation and payment of funds (paragraphs 36-39 and 45-48)
- Other matters (paragraphs 80-84).
Compliance with financial memorandum
8. The responsibility for ensuring that the institution complies with this memorandum and related guidance rests with the governing body of the institution.
9. In exercising its powers under this memorandum, the Council will act reasonably at all times.