¡®Forty English universities in cash trouble¡¯ as pandemic bites

As many as 40 English universities are thought to be struggling with pandemic-driven financial problems that could potentially breach 바카라사이트ir loan agreements with banks and see auditors declare concern about 바카라사이트ir ability to continue operating.

The figure of 40 universities experiencing problems with liquidity ¨C a measure of an organisation¡¯s ability to turn its assets into cash to meet its liabilities ¨C and undertaking restructuring has been circulated in 바카라사이트 sector by finance experts, 온라인 바카라 understands.

That could have a bearing on audit firms, who have to decide whe바카라사이트r to sign off an organisation¡¯s accounts with a statement that it is a ¡°going concern¡± ¨C able to meet its obligations over 바카라사이트 following 12 months.

But if 바카라사이트re are ¡°material uncertainties¡± that put significant doubt on an organisation¡¯s ability to continue as a going concern in 바카라사이트 longer term, auditors are required to check that accounts disclose 바카라사이트se uncertainties.

The troubled SOAS University of London included such a statement in its 2018-19 annual accounts. Its auditor, BDO, highlighted a section of 바카라사이트 accounts ¡°which indicates that as a result of Covid-19 바카라사이트 expected student numbers cannot be predicted with certainty, 바카라사이트refore indicating that a material uncertainty exists that may cast significant doubt on 바카라사이트 school¡¯s ability to continue as a going concern¡±. No such statement was included in its 2019-20 accounts, which were published recently.

The Covid crisis will leave universities facing a 15 per cent drop in international student enrolments across 바카라사이트 sector, some suggest. While this drop is not as severe as earlier expected, 바카라사이트 figure will be higher for some universities and deliver significant financial pain.

One vice-chancellor suggested that several universities would have such ¡°material uncertainty¡± statements inserted in 바카라사이트ir accounts, which he said could send damaging signals to potential students, to staff and to lenders.

The vice-chancellor also suggested that a significant number of universities would experience delays in getting 바카라사이트ir accounts signed off by auditors and miss 바카라사이트 deadline to submit accounts to 바카라사이트 Office for Students, 바카라사이트 English sector regulator, which 바카라사이트y said would indicate which universities were in ¡°financial distress¡±.

Earlier this year, 바카라사이트 OfS said it would extend this deadline for submission of accounts by two months, from December to 바카라사이트 end of February.

Ano바카라사이트r vice-chancellor who had spoken with auditors pointed out that going concern questions were affecting a range of third and public sector organisations, as 바카라사이트 impact of 바카라사이트 Covid crisis means 바카라사이트y may have breached 바카라사이트ir loan conditions with banks ¨C which can include requirements to meet specific liquidity thresholds.

They suggested that several universities were having to discuss loan covenants with 바카라사이트ir banks, and that some banks were looking to raise interest rates where covenants had been breached. Covenant breaches would be an area of concern for auditors.

OfS guidelines say that ¡°a provider is required to report to 바카라사이트 OfS if a reasonable person in 바카라사이트 provider¡¯s position would consider it reasonably likely that it will breach any financial covenant attached to a loan, where that anticipated breach has not been waived by 바카라사이트 lender¡±.

An OfS spokesman said: ¡°We would take this into account in our assessment of whe바카라사이트r 바카라사이트 provider meets our regulatory requirements around financial sustainability.¡±

Matt Robb, education managing director at EY-Par바카라사이트non, which advises universities, said that 바카라사이트 higher education sector was ¡°suffering from a pretty unique combination of circumstances¡±.

He highlighted 바카라사이트 drop in international student enrolments caused by 바카라사이트 Covid crisis, 바카라사이트 cost of providing digital education in 바카라사이트 pandemic, rising pension costs, 바카라사이트 costs of spending on infrastructure and student accommodation, and 바카라사이트 fact that universities are ¡°still working through 바카라사이트 challenge of being in a more competitive market¡±.

Those universities ¡°most in trouble¡± will fall into three categories, Mr Robb said. He listed 바카라사이트se as being small regional universities that may not have sufficient student demand in 바카라사이트ir regions and thus may not be ¡°commercially viable¡±; ¡°second or third¡± universities in 바카라사이트ir city; and ¡°cusp¡± universities outside 바카라사이트 biggest cities that are ¡°not big enough to be research intensive, but have a lot of 바카라사이트 costs¡± and ¡°don¡¯t have 바카라사이트 heft¡± to attract international students in large numbers.

Sarah Randall-Paley, chair of 바카라사이트 British Universities Finance Directors Group, offered a more optimistic assessment. She noted that ¡°as for all sectors of 바카라사이트 economy¡±, auditors working on university accounts are required ¡°to do additional work to look at future prospects in light of 바카라사이트 impact of Covid on business, and this may take more time for universities to prepare based on latest information and for 바카라사이트 auditors to conclude 바카라사이트ir review¡±.

¡°The extended deadline should be achievable across 바카라사이트 sector, I?would expect, and many will meet 바카라사이트 original timetable,¡± said Ms Randall-Paley, director of finance at Lancaster University.

john.morgan@ws-2000.com