Material Adverse Events
A material adverse event is one which has resulted in, or could result in, a significant loss of funds or a significant risk to a charity’s property, work, beneficiaries or reputation. This can include cases of fraud, theft, loss of charity assets or other impropriety or irregularity. At its most basic level, an event is material if the University considers it to be material. Indicators of this could include the involvement of the police or a regulatory agency, the seniority (level of responsibility) of the person involved, disciplinary proceedings against staff, or reports to the senior management team, Audit Committee or Governors.
It is a requirement of the Office for Students Terms and conditions of funding for higher education institutions that the accountable officer for the University (the Vice-Chancellor), in agreement with the governing body, or in urgent cases the chair, must report material adverse events to the OfS at the time when they are identified. In view of the public interest, for incidents of suspected or actual fraud where the sums involved are greater than £25,000, the University will consider whether police involvement will be required.
What is a Material Adverse Event?
The Office for Students Terms and conditions of funding for higher education institutions gives the following examples:
- "significant fraud", theft or other cause where the value of the loss is in excess of £25,000
- a significant and immediate threat to the HEIs financial position
- impropriety or major accounting breakdown
- any merger with another institution or organisation
- any material change in its financial performance and position to its submitted forecasts
- the removal or resignation of external or internal auditors before the end of terms of their appointment
What Happens after a Material Adverse event is Reported?
On receipt of notification of a potential material adverse event the Chief Financial Officer will review the submission and liaise with the Vice-Chancellor as 'accountable officer' to determine whether wider notification is required. If it is determined that the report is of a material adverse event, the HEI's accountable office must report, without delay, to all of the following:
- the chair of the HEI’s audit committee
- the chair of the HEI’s governing body
- the HEI’s head of internal audit
- the external auditor
- the OfS at firstname.lastname@example.org
Need Help or More Information?
Further information about Material adverse events is available in paragraphs 39-41 of the OfS
Terms and conditions of funding for higher education institutions.
If you have any questions please contact Helen Dingle (Chief Financial Officer)