Financial resilience and reportable events

Our previous blog looked at various aspects of the Office for Students’ regulatory framework that relate to financial resilience.

The framework includes an obligation to notify the OfS of a range of “reportable events”.

These include events or matters that in the reasonable judgment of the OfS negatively affect, or could negatively affect, various matters including the provider’s ability to comply with its conditions of registration.

Careful thought needs to be given when deciding what events are reportable, when to make a report and the information required. 

In the case of future events planned or foreseen that concern compliance with conditions of registration, the OfS considers that reports should be made within five working days of the provider becoming aware of the event or matter.  The OfS gives examples of a campus closure or a likely breach of banking covenants as falling into this category.

The OfS’s illustrative list of reportable events includes a number related to questions of financial resilience.  Some events are always reportable; others are reportable if they meet the relevant materiality test.  Examples of matters that are always reportable include:

  • certain matters relating to liquidity;
  • “likely” breach of financial covenants;
  • withdrawal of financial support; 
  • some actions by external auditors;
  • when trustees or directors are considering making an assessment that a provider is not a going concern. 

A range of other events that might be linked to financial sustainability are also always reportable, such as the closure of a campus, department or course.

Matters which are reportable if they meet the materiality test include changes in actual or forecast financial performance, changes in financial commitments or borrowings, changes in student numbers, business models and redundancy programmes.

The materiality test in effect involves considering “whether a reasonable provider intent on complying with all of its conditions of registration and acting in the interests of students and taxpayers (rather than in its own commercial, reputational or other interests), would consider the event or matter to be material”.  Determining whether the test is met may involve careful judgment, and an appropriate record being made of how a decision was reached.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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