How is financial sustainability evaluated?

What reviewers assess

Reviewers judge whether an institution has the financial resources, planning and controls to sustain its educational mission and meet student commitments. Assessments typically consider:

• Recent and audited financial statements, cash flow and balance-sheet trends.
• Budget forecasts and scenario planning (including downside scenarios).
• Liquidity and working capital, reserves or access to credit.
• Income diversity (tuition, donations, grants, commercial activities).
• Governance and financial oversight (board competence, financial officer qualifications).
• Risk management, internal controls and audit arrangements.
• Link between financial plans and academic strategy, staffing and student support.

Evidence institutions should provide

Common documentary evidence that supports an assessment includes:

• Three to five years of audited or independently reviewed financial statements and management accounts.
• Current-year cashflow forecast and a multi-year financial plan aligned to the strategic plan.
• Board minutes showing financial oversight and approvals.
• Risk register, internal audit reports and external auditor management letters.
• Policies on reserves, fee-setting, refunds and student protection.
• Letters of intent for major funding or guarantees where relevant.

How judgements are reached

Accrediting reviewers use a mixture of documentary review, interviews with leaders and finance staff, and on-site verification (or remote equivalent). Key judgement factors are:

• Evidence of ongoing viability under reasonable stress tests.
• Demonstrable governance capacity to detect and correct financial deterioration.
• Policies and contingencies that protect students (teach-out, refunds, transfer arrangements).
• Openness and accuracy of public statements about financial status.

Where risks are identified, accrediting bodies may require corrective action plans, monitoring reports or interim conditions on accreditation.

Student protection and legal responsibilities

Institutions remain legally responsible for complying with local laws and for protecting students if financial difficulty occurs. Accreditation does not replace registration, licensing or statutory approvals required by national or local authorities. Institutions must provide accurate public information about their status and arrangements for students.