Dear Vice-Chancellor or Principal
HEFCE financial returns: Transition to the new SORP
1. HEFCE seeks to align the financial templates it uses for annual accountability purposes to the model formats in the Statement of Recommended Practice (SORP) for financial reporting by further and higher education institutions. The Higher Education Statistics Agency (HESA) uses the same approach for its annual financial data collection.
2. The new SORP that was approved in 2014 will introduce significant changes to the way that the sector reports its financial performance from 2015-16. The changes stem from new accounting principles and reporting formats introduced by the Financial Reporting Council in Financial Reporting Standard 102 (FRS102). Among other things, the transition arrangements in FRS102 will require institutions to restate their 2014-15 audited financial statements and the opening balance sheet for that year. This restated information will appear in, and be audited as part of, institutions’ 2015-16 financial statements – the first to be prepared in the new format.
3. HEFCE has considered what financial information to collect during the transitional period, and we have discussed our proposals with the Financial Reporting Group of the British Universities Finance Directors Group (BUFDG). The returns in question are the financial forecasts submitted by 31 July 2015 and 2016, and the financial statements submitted by 1 December 2015 and 2016. The schedule in Annex A sets out the information we intend to collect in each of those returns.
4. We are already working with BUFDG and HESA on financial indicators under the new FRS102-based SORP. However, the timetable set out in Annex A means that we will not receive restated (unaudited) financial statements for 2014-15 until July 2016. We intend to make the July 2016 templates available by 31 March 2016 (earlier if possible), and will encourage institutions to submit restated information for 2014-15 as soon as possible. We hope that this will enable us to develop and calibrate new (or recalibrate existing) key financial indicators in good time for our reviews of the December 2016 return of audited information.
5. We believe that publishing these requirements now will enable institutions to plan appropriately. As usual, we will provide detailed guidance for each return in due course.
Professor Madeleine Atkins