The regulator stresses that better information around financial risks must be included in annual accounts
Universities have been warned by the Office for Students to improve their risk reporting, or face the consequences for breaching registration requirements.
In an analysis of whether registered institutions met the OfS’s 2017-18 accounts direction—ensuring universities “disclose information in their financial statements that is important for transparency”—the regulator said several had fallen short when reporting their activities around risk assessment and internal control procedures, which set out how universities prevent bribery and fraud, among other problems.
The OfS found “several omissions” in universities’ statements, with multiple institutions failing to explain how internal control and risk information is reported to governing bodies, and at least one failing to state how it identifies risk at all. As a result, the regulator advised universities to “review their statement of internal control and consider whether it is sufficient to meet the accounts direction’s requirements”.
Universities must comply with the OfS’s accounts direction or risk being removed from the register. Students at institutions not on the register are unable to access tuition fee loans.
The body’s analysis this year was aimed at highlighting trends and giving advice to universities, explaining how they can improve their financial reporting to meet the account directives. However, from next year, failure to report the right information will be treated as a breach of registration requirements and the OfS could impose sanctions.
“Where we consider that a provider’s practice is non-compliant in future, we are likely to take enforcement action and this may include imposing a specific ongoing condition to require a provider to update the disclosures and re-publish its financial statements,” the OfS wrote.
Elsewhere in the analysis, which scrutinised financial reports from 34 universities receiving public funding—around 25 per cent of those on the register—the OfS said some universities had not complied with requirements for an external auditor to confirm that their statements complied with the OfS’s accounts direction, and were “true” and “fair”.
It also pointed out failures related accurately reporting vice-chancellors’ salaries and benefits. A full analysis of the issues relating to senior staff pay was covered in today’s 8am Playbook.