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Institutions' finances

Universities are accountable to us, and ultimately to the National Assembly for Wales, for the way they use our funds. We have a number of processes in place through which we ensure that the funds we allocate are used properly and that institutions' financial health is sound.

Memorandum of Assurance and Accountability

We have a Memorandum of Assurance and Accountability: circular W15/32HE with each university, which sets out the terms and conditions for payment of HEFCW grant.

Annual accounts

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 2017.

As part of out Strategic 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.

Financial sustainability

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 TRAC project was developed by the Joint Costing and Pricing Steering Group (JCPSG) until 2005, when its remit was taken over by the British Universities Finance Directors Group (BUFDG) and the Costing and Pricing Group.

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.

TRAC dispensation rates for 2017-18

Updated indirect and estates cost rates have been announced for HE institutions to use when applying to the OSI Research Council for grants for research projects on full economic cost basis. These rates apply from April 2017 until the end of March 2018, and were set by representatives of the Department for Business, Innovation and Skills (BIS), the Research Councils and UK HE Funding bodies.

Dispensation rates for 2017-18 and upper and lower quartile rates

Recent Developments

Considerable effort have been made by the FSSG, the TRAC DG, and the TRAC Support team to improve access to, and usage of, TRAC by institutions. The TRAC Guidance has been rewritten and 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 let 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.

TRAC Guidance

The latest guidance on the use of TRAC can be found at:

The TRAC Guidance 
Guidance for Senior Managers and Governing Body members can be found at:

Guidance for Senior Managers and Governing Body members

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