Other than the general law, and for those institutions which are established as companies - company law, there are two key sets of financial rules:
The key point is that money provided by the funding councils must only be spent on education or research or the provision of facilities in support of those activities. Charity law requires institutions to spend money exclusively on their charitable activities. Many institutions have formed subsidiary companies to carry out work which cannot be regarded as for the ‘public benefit’.
In addition to the financial memorandum, the funding councils also issue each year an Accounts Direction (see for example that of HEFCE) specifying certain requirements in relation to the annual financial statements. The funding councils place restrictions on both long-term and short-term borrowing.
There are also rules about audit and an increasing emphasis on the importance of proper costing and pricing.
More information [PDF, 52Kb]