Medr/2026/21: Accounts direction to higher education institutions in Wales for 2025/26

Introduction

1. The purpose of this accounts direction is to inform institutions of Medr’s requirements for the format of their audited financial statements for the year 2025/26.

2. Higher education institutions in Wales remain subject to the framework of the HEFCW financial management code (FMC) (HEFCW circular W17/16HE) until Medr’s new regulatory framework comes into effect on 1 August 2026.

Changes from 2024/25 accounts direction

3. The following amendments have been made to this document since the final version for 2024/25:
a) Minor narrative / typographical changes and updated internet links

4. Higher education institutions are required to follow the Statement of Recommended Practice: Accounting for Further and Higher Education 2019 (FEHE SORP), or any successors to this SORP, when preparing their financial statements. Links to the FEHE SORP and guidance on implementation of some areas can be found in the SORP area of the British Universities’ Finance Directors’ Group (BUFDG) website. If there are any inconsistencies between the requirements of the FEHE SORP and this accounts direction then this accounts direction will prevail.

5. As noted in the SORP, institutions must apply all requirements under FRS 102: the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).

6. In the case of an institution which is also a company limited by guarantee, this direction is subject to the requirements of the Companies Act 2006.

7. The financial statements shall be signed by the Accountable Officer and by the Chair, or one other member of the governing body appointed by that body.

8. Institutions should note that the formats of the primary accounting statements (consolidated statement of comprehensive income and expenditure, consolidated statement of changes in reserves, balance sheet, and consolidated cash flow statement) should be followed. The financial statements should follow BUFDG’s latest model financial statements where possible to promote consistency of treatment within the sector, whilst having due regard to the diversity of institutions, and clarity of presentation to users. The model can be found in the SORP area of the BUFDG website.

9. With the move by the Higher Education Statistics Agency (HESA) to the provision of open data, third party users are increasingly extracting institutional and sector data for comparison and comment from this source as opposed to the published financial statements. We would therefore expect Institutions to have due regard to HESA definitions and guidelines for categorisation within the financial statements in order to ensure that the financial statements as approved by the governing body are in line with the HESA finance record submitted subsequently.

10. Consistency between the HESA finance record and published financial statements promotes improved comparability between institutions and consistency of data used for UK sector analysis.

11. The notes to the accounts should contain analyses of income and expenditure and balance sheet items consistent with recognised good accounting practice and should be sufficiently detailed to enable users to obtain a clear understanding of how the institution is performing financially.

12. Where the accounts include material items of income or expenditure that are unlikely to recur and/or do not reflect the underlying financial performance this should be explained.

13. The financial statements should further comply with any relevant requirements of the Charities Act 2011 in so far as it relates to an institution.

14. Institutions should also:

a) Ensure that contracts for external audit provide that the external auditor must include a report to the governing body in the financial statements on whether in all material respects:

i.) the financial statements give a true and fair view of the state of the higher education institution’s affairs, and of its income and expenditure, gains and losses, changes in reserves and cash flows for the year. They should take into account relevant statutory and other mandatory disclosure and accounting requirements, and Medr requirements;
ii.) the financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice, being the financial reporting standard (FRS102), the statement of recommended practice: accounting for further and higher education (FEHE SORP), and relevant legislation;
iii.) funds from whatever source administered by the higher education institution for specific purposes have been properly applied to those purposes and managed in accordance with relevant legislation;
iv.) the institution has applied income, where appropriate, in accordance with the Financial Management Code (FMC) (HEFCW W17/16HE) paragraph 145, and whether Funding Council grants (including grants from Medr) have been applied in accordance with terms and conditions attached to them and used for the purposes for which they were received, including the Terms and Conditions of Funding; and
v.) the requirements of Medr’s accounts direction have been met.

b) Provide detailed analysis and disclosure within the financial statements of audit and other fees paid to external auditors, in accordance with Statutory Instrument SI 2008 No 489– The Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 and the Amendments to these Regulations encompassed within Statutory Instrument SI 2011 No 2198. This is required for those institutions to which company law applies. The Statutory Instrument can be viewed at the Office of Public Sector Information website (www.legislation.gov.uk).

c) In their management letters or reports, auditors should have regard to the specific requirement of Medr, such as compliance with increases in financial commitments thresholds, or other issues of non-compliance.

Date of submission of audited financial statements to Medr

	Deadline
Audited financial statements	30 November 2026
Publication on website	31 January 2027
Audited subsidiary financial statements	31 December 2026