Financial memorandum

The financial memorandum between HEFCE and the institutions we fund sets out the terms and conditions for payment of HEFCE grants.

Each year we draw up a funding agreement, also known as Part 2 of the memorandum. This gives:

conditions specific to the institution
the funds available to the institution
the educational provision the institution has agreed in return for those funds.

Each institution must have proper systems for managing and controlling its finances, and must submit annual audited financial statements.

Institutions' finances are monitored through regular financial returns and contact with our staff. This helps us to identify and minimise any risks at an early stage.

We issue an annual 'Accounts Direction' detailing the information institutions must disclose in their annual financial statements.

As far as possible the accountability process between HEFCE and institutions will be concentrated into an exchange of documents and dialogue during a specific period (currently December) each year – this is known as the annual accountability return.

Our aim is to minimise our demands on institutions and as far as possible to rely on data and information that they have produced to meet their own needs.

Audit Code of Practice

Our Audit Code of Practice sets out our requirements for institutions' internal and external audit arrangements and gives the broad framework in which they should operate.

The code is now published as an annex to the financial memorandum. HEFCE's assurance and institutional risk service provides guidance and support to institutions in this area, including up to date guidance on value for money and data assurance.

Sector impact assessment

In developing the revised financial memorandum, we undertook a formal assessment of the impact it will have on the HE sector in terms of regulatory burden, equality and diversity, and sustainable development.