Not a qualified accountant or expert in the area of HEI reporting But, HEFCE is adopting practices and procedures that have been use in the private sector for many years, and which have been tried and tested in the FE sector.
Look at the issue from HEFCE’s point of view
Responsibilities – Chief Officer of HEFCE “… may suspend the payment of grant, either in whole or in part and either permanently or temporarily, if, in his opinion, it is appropriate and reasonable to do so in order to safeguard public funds” Institutions’ Responsibility Stewardship – governing body responsible for ensuring funds used as intended Compliance – governing body responsible for compliance Financial management – systems must be in place
Problems – two-dimensionality!
This model works reasonably well in a free-market environment Increasingly, long-term strategies in the private sector are being used as direction-finders, and not as milestones How can institutions plan forward when levels of activity are not guaranteed to be funded, and the unit of funding is unknown?
Expenditure does not always equate with improved performance Difficulties with quantifying softer issues (motivation) Importance of the interrelationship of these measures to other strategic drivers (quality of student experience)
Objectives derived from strategy (must be SMART)
Cost effectiveness analysis (alternative cost streams to produce similar sets of public service outputs) Cost benefit analysis (valuation of non-marketed impacts such as staff time, environmental impacts) Compliance cost assessment (cost of implementing regulation) Environmental appraisal (to complement compliance costing) Cost utility analysis (used in health programmes where outputs can be measured but not valued – health) Matrix (impact statement) approach (used where many kinds of impact affecting several different groups of people – land use planning decisions) Financial appraisal (public expenditure costs and savings of each option aka… Exchequer cost analysis Commercial appraisal (for trading operations)
Nothing new in Universities reviewing ways of keeping costs down. Lots of the approaches proposed by HEFCE have been going on for many years. This case study shows an approach that pre-dates the HEFCE guidelines