- Executive summary
- Annual assurance return
- Annual monitoring statement
- Corporate planning statement
- Audited financial statements and financial forecasts
- Financial commentary
- Audit committee annual report
- External audit management letter
- Internal audit annual report
- Higher Education Students Early Statistics return and Research Activity Survey
- Transparent Approach to Costing return
- Annex A Financial health of the HE Sector
- Appendix A Actual financial results for 2008-09
- Appendix B Future financial sustainability
1. This report gives an overview of the outcomes of the review of annual accountability returns for 2008-09. The outcomes are based on information provided by higher education institutions (HEIs) in December 2009 (and January 2010 for the Transparent Approach to Costing return). In addition, the report also provides an overview of the financial health of the higher education sector in England.
2. The outcomes of our reviews of all the annual accountability returns fed into the risk assessments and risk letters to institutions as well as informing the continuing dialogue with each institution. This publication provides some general feedback points for consideration by all institutions.
3. The overall financial results for the sector in 2008-09 show a fairly sound financial position albeit a marginal deterioration on the previous year. At the end of 2008-09 the sector had strong cash balances and healthy reserve levels, which will provide some cushion for the likely risks the sector now faces.
4. There are undoubtedly going to be increased pressures on public finances which, together with significant pressures on expenditure, will create a different financial picture for the sector. In the past decade the sector has seen its overall financial position strengthen, but this has been on the back of significant income growth rather than cost reductions. The future may be different.
5. The sector continues to operate on very fine margins, so small changes can have a material impact on the financial performance of the sector. HEIs need to generate surpluses to provide the positive cash flow to fund future developments, to the extent that these are not met from capital funding. The actual level of such surplus needed will vary, depending on the circumstances of individual HEIs. In the medium to long term, some institutions will need to generate even larger surpluses to help cover the full economic costs of their activities and to provide cover for risk/uncertainty.
6. There are some areas in which institutions could improve their reporting, including demonstrating economy, efficiency and effectiveness (value for money). In our dialogue with institutions it is clear that the pursuit of value for money is a high priority, but the reporting of the activity and achievement could become more explicit. By being more explicit in reporting areas of efficiency it becomes easier for us to identify and quantify efficiency savings across the sector. We remind institutions that there is a requirement under the Financial Memorandum with HEFCE to ensure that public funds are spent on the purposes for which they are intended, and that good value for money is obtained.
7. In 2008 we made it a condition of funding that all institutions' audit committees provided an opinion on management and quality assurance of data submitted to the Higher Education Statistics Agency and to HEFCE and other funding bodies. This was requested in the Financial Memorandum with HEIs that took effect from 1 August 2008.
8. We expect all institutions to comply with this mandatory requirement in 2009-10. We remain concerned that some data received from HEIs are not accurate or do not comply with funding rules. It is strongly recommend that all institutions undertake a formal review of existing arrangements.
9. No action is required: this report is for information.