Each university must have robust systems for managing and controlling its finances, and must send its audited accounts to us annually. The accounts should be prepared in accordance with the Statement of Recommended Practice: Accounting for Further and Higher Education (SORP).
In addition, we issue an Annual Accounts Direction detailing any additional information we want universities to disclose in their accounts.
We publish information on the financial position of the sector each year, as shown by the latest audited financial statements.
Financial health monitoring
We monitor the financial health of universities in order to ensure that public funds and publicly funded assets are not being put at risk. We do this in part through our review of the annual accounts, but we also require universities to submit five-year financial forecasts to us. The detailed requirements are set out in our annual request for forecasts.
As part of out institutional engagement arrangements, we undertake regular Institutional risk reviews of each university in Wales. These combine financial health assessments with a range of other key risk areas.
The UK HE funding bodies have introduced arrangements to monitor and evaluate the sustainability of the UK research base. These measures are designed to provide assurance that the increasing level of investment in research is achieving the key objective of contributing to the sustainability of research institutions UK-wide.
In addition, there is a growing requirement for assurance on the wider financial sustainability of universities, and a number of metrics and key performance indicators have been introduced in the past few years to monitor and evaluate the past performance and future sustainability of Welsh universities.
The Transparent Approach to Costing and Pricing (TRAC)
The Transparent Approach to Costing and Pricing (TRAC) is the standard methodology introduced in 2000 for costing the main activities of higher education institutions. It fulfils a number of purposes, including supporting the accountability of institutions for the public funding they receive.
The development of the strategic, policy, cultural and technical issues around the use and development of TRAC is carried out by the Financial Sustainability Strategy Group (FSSG). In addition to the FSSG, there is a TRAC Development Group which oversees the more detailed development work of the TRAC project.
The TRAC Guidance has been updated to reflect the changes required by the implementation of Financial Reporting Standard (FRS) 102 and the new FE/HE SORP. A number of project initiatives have led to progress in TRAC for planners, further guidance for senior managers and governing body members, the establishment of an annual conference for TRAC Practitioners, the promotion of stronger links with institutions through higher profile attendance at Regional User Groups, and further work on financial sustainability monitoring.