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Contents

  • Executive summary
  • Introduction
  • The future context
  • Guidance
    • Annual assurance return
    • Annual monitoring statement
    • Audited financial statements
    • Financial results and forecast tables
    • Financial commentary on past performance and future prospects
    • Audit committee annual report
    • External audit management letter
    • Internal audit annual report
    • Value for money report
    • Transparent approach to costing return
    • Higher Education Students Early Statistics Survey
  • Submission of the returns
    • Feedback
    • Freedom of information
    • Queries
  • Annex A Sample annual monitoring statement 2011
  • Annex B Financial results and forecast tables 2011: guidance
  • Annex C Financial commentary template
  • Annex D Sample financial tables
  • Annex E Annual assurance return template
  • List of abbreviations

Executive summary

Purpose

1.   This document asks higher education institutions (HEIs) to send us their annual accountability returns for 2011. The accountability returns form a significant way in which HEIs can demonstrate accountability for the public funds distributed to them.

Key points

2.   The accountability returns enable HEFCE to reassess HEIs' overall risk assessments and to ensure that HEIs are meeting their accountability responsibilities.

3.   The various returns cover financial performance, financial sustainability, risk management, control and governance, value for money, and the management and quality assurance of data. In addition to the documentation requested in the annual process itself (as detailed below) we will also consider other sources of assurance.

4.   For this year's process we are deferring the submission of financial forecast data (relating to the academic years 2012-13 to 2014-15) until 20 June 2012. The decision to defer submission of the financial forecasts has been taken due to the degree of uncertainty in the sector about, amongst other things, student number limits, future HEFCE funding and student recruitment in the new fee regime. Whilst not eliminating all of the uncertainty, deferral should enable institutions to produce more reliable forecast information for both HEFCE and internal use as the outcomes of the HEFCE grant letter from BIS as well as the implications of the teaching funding consultation outcomes should be known. BUFDG, on behalf of the sector, has been consulted on the change. We require that both the December submission of the 2011 annual accountability returns and the submission of full financial forecasts information in June 2012 to be approved by the governing body. If the change in submission dates presents timetabling difficulties for governing body approval we would be content for approval to be delegated to the Chair or to the Finance Committee or equivalent and retrospective approval at the next governing body meeting. If this creates difficulties for institutions we request that they contact their HEFCE Assurance Consultant to discuss.

5.   Following our review of the returns we will notify each HEI of our risk assessment through a letter to the chair of the governing body and head of HEI. This is an annual process, but we may revisit an HEI's overall risk assessment at any time if there is a significant change in circumstances. Until a new letter is issued HEIs can assume that the last risk assessment letter is still valid. We remind all HEIs of their obligation, under the Financial Memorandum with HEFCE, that they should inform us of any material adverse change in their circumstances (see 'Model Financial Memorandum between HEFCE and institutions', HEFCE 2010/19).

6.   The documents to be sent to us, and their submission dates, are as follows:

Annual assurance return 
Annual monitoring statement (AMS)
Audited financial statements 
Financial results and forecast tables to 2011-12
Financial commentary on assumptions for 2011-12 forecasts
Audit committee annual report 
External audit management letter and management responses
Internal audit annual report
Value for money report (optional)
1 December 2011
Higher Education Students Early Statistics Survey (HESES) 2011-12 return 9 December 2011
Transparent Approach to Costing (TRAC) return 31 January 2012
Financial forecast tables, 2011-12 to 2014-15
Financial commentary on future financial sustainability
20 June 2012

7.   This publication gives guidance on the returns that are to be submitted to us by 1 December 2011 and, in the case of TRAC, by 31 January 2012. Note that this guidance lays out the minimum requirements for submission, and we request that HEIs provide all of the requested information in the return; for example, please ensure that your financial commentary answers all of the questions in the guidance. This publication also providers initial guidance on the financial forecast tables and commentary to be returned in June 2012, though we expect to re-issue guidance in early spring next year.

8.   Detailed guidance on the requirements of the HESES return is provided in a separate HEFCE publication, 'HESES11: Higher Education Students Early Statistics Survey 2011-12' (HEFCE 2011/27). Please note that HEFCE has issued advanced notification of changes to the HESES return for 2011-12 ('Advance notification of changes to HESES and HEIFES for 2011-12', HEFCE Circular letter 17/2011).

9.   We will primarily use the information collected to:

  1. Monitor the use of our funds for the purposes intended.
  2. Assess compliance with the Financial Memorandum (HEFCE 2010/19).
  3. Form a basis for discussion with HEIs about their progress in key areas, their priorities for strategic development, and their current and future performance.
  4. Largely determine our risk assessments of each HEI.
  5. Identify trends across the sector and advise the Secretary of State for Business, Innovation and Skills on the needs and development of the higher education sector.

Action required

10.   The returns must be submitted by the deadlines shown in paragraph 17 via the HEFCE extranet. The required documents are:

  • scanned PDF copy of the completed annual assurance return (Annex E) with part 1 signed by the accountable officer and part 2 signed by an appropriately authorised trustee (note: part 2 is not required from HEIs that are either not a charity, or are registered with and make an annual return directly to the Charity Commission)
  • completed AMS template
  • scanned PDF copy of the signed audited financial statements
  • completed financial results and forecast tables
  • financial commentary (for which detailed questions are provided in paragraph 46 and an optional template is provided in Annex C)
  • audit committee annual report
  • external audit management letter and management responses
  • internal audit annual report
  • value for money report (optional)
  • completed TRAC return reporting for 2010-11.

Templates for the AMS, financial tables and TRAC return will be available by early October 2011. We will write to heads of finance and our AMS contacts in each HEI at the beginning of October with details on how to access the templates and how to return information to us.

Date: 1 September 2011

Ref: HEFCE 2011/28

To: Heads of HEFCE-funded higher education institutions, Heads of universities in Northern Ireland

Enquiries should be directed to:

HEFCE higher education policy advisers (on annual monitoring and data returns)
HEFCE assurance consultants or assurance advisers (for financial and audit accountability returns)
There are searchable contact details for HEFCE staff.