Ensuring financial health is one of the most important tasks of any governing body. There are numerous indicators which may measure financial performance, so it is vital to focus on those few which give the greatest insight: the Key Performance Indicators (KPIs). It is important to note:
The funding councils typically use 5 indicators to judge the financial health of an institution:
Many finance committees also monitor:
It is also important to be aware of value for money.
The CUC has published a comprehensive guide to this area, Monitoring of Institutional Performance and the Use of Key Performance Indicators. The HEFCW also publishes analyses of financial data for its institutions; the 2009-10 position is given in circular W11/13HE.
More Information [PDF, 52Kb]. Governors may be interested in The Financial Health of the Higher Education Sector by Grant Thornton, using 2009-10 data, summarised in the Times Higher Education. The Financial Sustainability Strategy Group has published a report Assessing the Sustainability of Higher Education Institutions which is intended to help governing bodies of institutions to develop and monitor indicators of financial sustainability.
See also the HEFCE report on the Health of the HE Sector in 2009-10