04/01 - February

FINANCE STATISTICS RETURN REVIEW: CONSULTATION DOCUMENT

This Circular sets out proposals in respect of the future collection of information about the finances of higher education institutions. The proposals follow a fundamental review of the current Finance Statistics Return. You will be asked to comment on a number of specific issues, relating to the structure and content of a new record, as presented in this Circular, but are also welcome to make other, more general, comments if you wish. You are requested to respond by 26 March 2004.

Introduction

The collection of statistical data about the finances of higher education institutions has had only limited updates since 1994/95, and this is the first occasion when HESA has undertaken a fundamental review. Since 1994/95 HESA has collected a range of data that both duplicates and expands on the institutions’ published audited accounts. Updates to the record have been made over the years to reflect changes in the FE/HE SORP (Statement of Recommended Practice: accounting for further and higher education) and changes to funding arrangements. But the core elements of the record have remained unchanged.

The review has been conducted by a review group that, in addition to representatives from all of HESA’s statutory customers, has included members from BUFDG and SCOP FOG representing the institutions. The outcomes from this review are presented in this Circular for consultation. The resulting new record will be implemented for the 2004/05 reporting period, i.e. data will first be due to HESA towards the end of 2005.

Proposals

Format

It is proposed that the format of the return (i.e. spreadsheet tables) remains unchanged and the proposed tables are therefore presented in this way.

Attached to this document are two versions of the proposed new finance record. The first (Annex A) sets out the data that both meets the requirements of statutory customers and takes account of suggestions from other members of the review group. These proposals represent a reduced data requirement when compared with the current FSR, but continue to include some items that although no longer needed by statutory data users, the review group recognised are used by institutions when undertaking comparative analysis. Institutions would not have access to this comparative information from any other source. Annex B shows a further reduced set of data that would do no more than meet the requirements of HESA’s statutory customers.

In responding to this consultation institutions should consider both the value to them of the additional information included in Annex A and the cost in providing it. If there is a consensus that some or all of the additional information is useful to institutions, then all institutions will be required to return this data. If there is no consensus in respect of any of the additional information, HESA will discuss with its sector stakeholders appropriate data collection arrangements to meet some institutions’ needs.

Content

Tables (Table numbers as in the current FSR have been retained at this stage).

Table 1 to 3 will continue to replicate the main statements from institutions’ published accounts. As has always been the case, minor changes will be made to these as necessary over time to reflect changes to the FE/HE SORP. The tables as presented with this consultation reflect the SORP to be used from 2003/04 onwards and further updates will be made as necessary. Tables 1 and 2 remain requirements of the statutory users; Table 3 does not. Table 3 is, however, included in Annex A for completeness. It is understood provision of this information would not involve institutions in an additional workload – the table will need to be prepared for inclusion in audited accounts.

Table 4

It is likely that statutory data users will no longer require this table and they proposed its deletion from the record for the future. This is, however, subject to a decision to be taken at the Performance Indicators Steering Group (PISG) meeting due to take place in March. The review group acknowledged, however, that this data is widely used by others, particularly in institutions, and that it may be that these and other users will require its continued inclusion in the record. This table is therefore included in Annex A.

This table has been updated to reflect proposed changes to cost centres, set out below.

Table 5a and 5b

In the short term, Table 5a will remain unchanged from the current record. However, it is acknowledged that changes will be needed to reflect new fee arrangements once introduced. It is possible that in future this table may need to be redesigned to reflect different fee regimes in different administrations, however it is not possible to specify at this stage how this might look. Further review is likely to be needed ahead of the 2006/07 reporting period.

It is proposed that Table 5b be simplified in several ways. Currently Head 5 Endowment and Investment Income has several sub-heads; these are proposed for removal, only a total figure will be required in future. It is also proposed that the amount of detail required under Head 4 be reduced. In particular under Head 4a, it is proposed that instead of the current eight sub-heads there should be only two: income from public sources and income from private sources. Head 1 in this table provides detail of Funding Council Grants. This detail remains in Annex A, but statutory customers have indicated that only a total is required, no additional breakdown to sub-heads.

Table 6

Currently Table 6 collects staff costs split across two columns (Academic and Other). This split remains a requirement of statutory users in Wales, and is used in the current Performance Indicators, although, as with Table 4, this continued requirement will be considered at the next PISG meeting. Again, given the use understood to be made of this data by others, Annex A reflects the proposal that the two columns continue to be collected from all institutions.

It is proposed that Head 4 Premises contains a less detailed set of sub-heads – repairs and maintenance and other operating expenditure, and Head 7 Other Expenditure contains no sub-heads.

This table has also been updated to reflect proposed changes to cost centres, set out below.

Table 7

It is proposed that the current disaggregation of major and minor works be removed and a single head for ‘buildings’ be introduced.

Table 8

Given the changes to pay arrangements currently being negotiated and the introduction of a new HESA staff record covering all staff in institutions, this table will no longer need to be included in the record, and so is proposed for deletion.

Cost Centres

Emerging from early discussions at the review group was the view that the cost centres as currently defined and used across the range of HESA data streams might no longer be the most appropriate way of allocating students, staff and money to units below the level of the whole institution. However, following further investigation, with a number of institutions and statutory customers, the review group agreed that what was required was a simplification of the current list of cost centres, not their replacement with something different. To this end a proposal for a reduced list of cost centres is attached as Annex C. Obviously, if this proposal is accepted it would be necessary for it to be implemented across the full range of HESA data streams. However, since the proposal is only for amalgamations of current cost centres to form a shorter list, it would be possible to stage implementation across the data streams, with HESA, during the transition period, undertaking amalgamation before onward use of the data.

HESA and the Funding Councils would issue documentation to assist institutions in allocating their departments to the new shorter list of cost centres.

Timing of collection

It has been suggested to the review group that the data collected in the FSR and compiled by HESA would be of more use to institutions if it could be made available more quickly, ahead of the budget setting taking place in institutions in spring each year. In order for HESA to be able to meet the needs of institutions, and also the requirements of its statutory data users, it will be necessary to review the timetable for submission of data. However, HESA is aware that it is unlikely to be possible to bring forward the submission date for data significantly, as this relies on the sign-off of audited accounts in institutions.

The following schedule for data submission is proposed from 2004/05 onwards, and institutions are asked to indicate whether this is feasible. If this schedule were accepted, it would be possible for HESA to produce the Finance Plus CD product in early March, making it of more immediate use to institutions.

Currently HEIs provide copies of their audited financial statements to Funding Councils/HESA and their Finance Statistics Returns to HESA by 31 December each year. If institutions indicate that they are able to comply with the proposed changes to the submission date for the Finance Statistics Return, it is likely that Funding Councils would also expect HEIs to submit their financial statements to them by the same date.

Possible future developments

In addition to the likely changes to Table 5a mentioned earlier to reflect changes in fee arrangements, two other possible future changes to FSR with a timescale beyond 2004/05 were identified during the review process.

Firstly, guidance for completion of the FSR will need to be revised to take account of the impact of the consequences of the development of the Transparent Approach to Costing (TRAC) methodology down to project level. The classification of costs as direct or indirect will also change, and this could impact on how expenditure is shown on the FSR. Nothing has been agreed at this stage. There remain a number of issues to discuss and resolve around the recording of income and expenditure on research grants and contracts. The purpose of raising this now is so that HEIs are aware of this forthcoming change. It will not affect the structure of the return but will affect the guidance about where specific items are included. This change may be implemented in 2005/06 (depending on how quickly HEIs are able to implement the TRAC methodology at project level) but will certainly impact from 2006/07, as the Research Councils begin to pay a proportion of full economic costs.

Secondly, the review group considered the possibility of adding some of the data requirements from the Higher Education Business Interaction (HE-BI) survey to FSR. The HE-BI survey collects and analyses numerical and qualitative data from all UK HEIs to determine the scale and range of the HE sector’s links with and contribution to the economy and society – alongside core teaching and research. (The survey is commissioned and currently collected by HEFCE on behalf of a group of stakeholders.) However, those involved with development of the HE-BI survey were of the view that the current survey had not yet reached a stable position where this might be appropriate. Additionally, since not all of the data collected in the HE-BI survey is financial, there would continue to be a need for a separate survey to collect the remaining information. However, it is possible that following further refinement of the HE-BI survey consideration might again be given to moving the financial items from it into FSR.

Action Required

Institutions are invited to comment on any of the issues raised in this Circular. In particular institutions are asked to consider the following questions:

1. Do you support the proposals to include tables/headings in the record over and above the minimum required by the statutory data users (having in mind that these reflect only data currently collected and no new or additional requirements)?
2. Do you agree with the proposals for a reduced number of cost centres (Annex C), created by amalgamating current cost centres?
3. Could your institution be in a position to meet a pre-Christmas (23 December) deadline for submission of both the FSR and audited accounts?

HESA would welcome comments on the detail of the draft templates for the record, as set out in Annex A and Annex B, and suggestions of any areas where institutions would welcome guidance in the operational documentation supporting the record.

Please send your comments to Catherine Benfield (catherine.benfield@hesa.ac.uk) by 26 March 2004.

Next Steps

The Review Group will consider the outcome of this consultation in April, before recommendations are presented to the HESA Board at the end of May. Operational documentation will then be issued to institutions before the start of the 2004/05 reporting period to which the new record relates.

Yours sincerely

C. Jane Wild
Director of Operations

Annex A (.xls) | Annex B (.xls) | Annex C (html)