Back to C14031
Version 1.0 Produced 2015-03-05
Purpose of the Finance Statistics Return (FSR)Back to top
- The annual Finance Statistics Return (FSR) is the main source of historical financial information on the total activities of all UK higher education providers (HEPs). The data supplied within
the return are required for the following reasons:
- To assist in the production of management information.
- To assist in the monitoring of the financial health of HEPs.
- To support policy formulation and decisions.
- To support proper reporting and accountability.
- To inform and report on the funding process.
- To advise the Office for National Statistics (ONS) on the overseas earnings of HEPs for use in the calculation of the Balance of Payments.
The UK funding councils intend to use data on research income within the Research Excellence Framework (REF). In particular income from charities will be disaggregated according to whether or not
it was gained through an 'open competitive process'. It is therefore important that income is split between that earned through 'open competitive process' and 'other income'.
Based on these uses, it is important that the return should be completed as consistently as possible between one HEP and another and between successive years.
In addition to the reasons listed above, HEFCE will be using research income from charities collected in the HESA FSR to inform the charity support element of its quality-related research
(QR) allocations. HEFCE intends to use the 2012/13 and 2013/14 HESA FSR data to inform the charity support allocations for 2015/16. HEFCE are no longer collecting data through
the Research Activity Survey.
HEFCE also uses data on research income from UK industry, research income from EU industry, plus research income from non-EU industry collected in the HESA FSR to inform the business element of
its quality-related research (QR) allocations.
The FSR provides details of the consolidated income and expenditure account, statement of recognised gains and losses, consolidated balance sheet and consolidated cash flow statement. The
figures recorded in the FSR must be the same as those recorded in the audited/published financial statements.
Accounting conventions for the FSRBack to top
All HEPs should prepare their annual financial statements in accordance with the 'Statement of Recommended Practice: Accounting for Further and Higher Education' (SORP), and comply
with the financial reporting requirements contained in any UK legislation relevant to their constitution, such as the Companies Act and the Charities Act. The FSR uses the principles in the SORP to
analyse the financial statements in greater detail than is required for published financial statements.
These notes of guidance reflect the SORP in agreement with the British Universities Finance Directors Group (BUFDG). In particular, the definition of terms and the explanatory notes should be
applied in completing the return. The principles of the SORP relating to the financial statements apply equally to the completion of the FSR. In addition, conventions relating to
discontinued/acquired operations, research grants and contracts, other services rendered and cost centres are set out and should also be followed by HEPs in preparing their FSRs.
FSR Tables 1-4 reflect the SORP published in October 2007. Minor changes will be made to these tables as necessary over time to reflect changes to the FE/HE SORP.
The SORP (October 2007) can be downloaded (.pdf file) from:
http://www.universitiesuk.ac.uk/highereducation/Documents/2007/SORP.pdf .
Conventions to be used in the FSR
Discontinued/acquired operationsBack to top
Discontinued or acquired operations, for which separate disclosure is required on the face of the income and expenditure account under Financial Reporting Standards (FRS) 3 {Reporting Financial
Performance} in the audited financial statements, should not be disclosed separately in the FSR. The individual elements of income and expenditure relating to such operations should be included
under the relevant individual Heads within the FSR.
Full economic costing (fEC)Back to top
The implementation of full economic costing (fEC) should not have any impact on the way in which HEPs account for research income in their financial statements. fEC is a methodology by
which a price is calculated and the only result is that the price, and hence income, should increase: the category of income remains the same, i.e. research grants and contracts. The costs of
HEPs' activities remain as they would otherwise have been. On the face of the income and expenditure account the categories of staff costs, other operating expenses, depreciation and
interest payable remain the same; for those HEPs that have disclosed the direct costs of research in the notes to the accounts, the same treatment is also appropriate.
Conventions relating to research grants and contracts and other services renderedBack to top
Research is to include research and experimental development. The definition of research, below, is taken from the 2002 Frascati Manual (ISBN 9264199039 - available from OECD via http://new.sourceoecd.org):
"Research and experimental development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and
society, and the use of this stock of knowledge to devise new applications.
The term R&D covers three activities: basic research, applied research and experimental development."
Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular
application or use in view. Applied research is also original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific practical aim
or objective. Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, which is directed to producing new materials,
products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed. R&D covers both formal R&D in R&D units and
informal or occasional R&D in other units.
The Frascati Manual lists situations where certain activities are to be excluded from R&D except when carried out solely or primarily for the purposes of an R&D project. These include:
routine testing and analysis of materials, components, products, processes, etc; feasibility studies; routine software development; general purpose data collection. The later stages of some
clinical drug trials may be more akin to routine testing, particularly in cases where the original research has been done by a drug company or other contractor.
The Frascati Manual contains the following examples of the type of work included under the three components of R&D:
- The determination of the amino acid sequence of an antibody molecule would be basic research. Investigations undertaken in an effort to distinguish between antibodies for various diseases would
be applied research. Experimental development would then consist of devising a method for synthesising the antibody for a particular disease on the basis of knowledge of its structure and
clinically testing the effectiveness of the synthesised antibody on patients who have agreed to accept experimental advanced treatment.
- Theoretical investigation of the factors determining regional variations in economic growth is basic research; however, such investigation performed for the purpose of developing government
policy would be applied research. The development of operational models, based upon laws revealed through research and aimed at modifying regional disparities, would be experimental development.
In some cases the classification between 'research grants and contracts' and 'other services rendered' may be borderline. In such situations, the Frascati Manual should be referred to in order
to determine the correct classification.
In Table 7 of the FSR, expenditure on Head 7 (Research grants and contracts) and Head 8 (Other expenditure) should consist of direct costs which are incurred and should be identical to the
audited/published financial statements.
Following a consultation on the use of cost centres in 2011, the list of cost centres changed for 2012/13 HESA collections. HEPs are
advised to read through the documentation to familiarise themselves with the revised cost centres.
Tables 5a, 5b and 7 break down income and expenditure by cost centre. A cost centre, as used for FSR purposes, represents a group of operations having similar characteristics and broadly
similar patterns of costs. HEPs allocate departments to cost centres or split departments across cost centres in consultation with the Funding Councils. Expenditure relating to administration
and central services, such as libraries and computer centres, should be shown under academic services, whereas expenditure relating to units (such as animal houses or engineering workshops)
servicing particular academic departments should normally be included under the associated academic cost centre. Central services have their own cost centre codes under Total Academic Services and
Central administration and services. For example, where telephone costs are charged to departments they should be included in academic departmental expenditure under the appropriate cost centre.
Postage costs should be similarly treated to the extent that the expenditure is charged to the academic department. The cost centre codes are the main references in the computerised record of
recurrent expenditure. They are also included in the HESA Student and Staff returns and, therefore, provide the main link between the FSR and these other returns.
It is imperative that the FSR is completed uniformly, and so all HEPs should follow the notes of guidance available. This will then allow the data to be compiled in a consistent manner
and for meaningful interpretations of the data to be made. All monies should be shown in units of £1,000 and where necessary be independently rounded to the nearest £1,000. For example,
£147,700 should be entered as 148.
The ordering and linking of the tablesBack to top
Table 1 (Consolidated income and expenditure account), Table 2 (Statement of recognised gains and losses), the main heads of Table 3 (Consolidated balance sheet) and Table 4 (Consolidated cash
flow statement) must be identical to the audited/published financial statements.
Tables 5a (Research grants and contracts - breakdown of income by BIS Research Councils, Royal Society and British Academy) and 5b (Research grants and contracts - breakdown of income by cost
centre), and Table 6a (Tuition fees and education contracts analysed by domicile, mode, level and source) should be completed before Table 6b (Income analysed by source) as the totals from Tables
5a, 5b and 6a are automatically entered into Table 6b. Totals from Table 6b and Table 7 (Expenditure by activity) are automatically entered into Table 1.
The suggested order for completion of the tables is:
Table 5a, Table 5b, Table 6a, Table 6b, Table 7, Table 1, Table 2, Table 3, Table 4 and Table 8.
There are a number of validation checks embedded in the template. In addition to these there are a number of other checks that will be undertaken as part of the verification and validation
procedure. The details of these additional checks will be listed in the COMMIT-stage quality rules and the Check documentation guide for the Finance Statistics Return (FSR), which will be published in October 2015.
The data returned are subject to audit but do not require an Audit Statement.
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