The FEHE SORP 2026 (Statement of Recommended Practice for Further and Higher Education) introduces significant changes for further and higher education institutions.
Changes include new requirements around lease accounting, revenue recognition, student support and disclosures. With implementation approaching, institutions should assess the impact early, plan for system and reporting changes, and engage with auditors to support a smooth transition.
The updated FEHE SORP applies to periods beginning on or after 1 January 2026, with most institutions first applying it in their 2026/27 financial statements. Many are now moving into the implementation phase, and given the extent of data requirements, increased judgement and potential system changes, it is important to start assessing and planning for the impact early.
Summary of the key changes
| Area | What is changing? | Practical implications |
| Lease accounting | Most operating leases will now be recognised on balance sheet as right-of-use assets and lease liabilities. | Significant increase in reported assets and liabilities, impacting key financial metrics including gearing and net debt, and potentially affecting loan covenants and financial sustainability measures. Also affects performance metrics (e.g. EBITDA) through the reclassification of lease costs and may alter cash flow presentation. |
| Revenue recognition |
Introduction of five-step model for exchange transactions contract(s) with a customer:
|
Requires a comprehensive review of all income streams on a sufficiently disaggregated basis. |
| Student support | Bursaries, scholarships and fee waivers treated as reduction of income (as consideration payable to customer i.e. students). | Changes presentation of revenue, with costs no longer shown in the Statement of Comprehensive Income but netted against fee income. Increases the need for clear disclosures to explain the interaction with reserves, where funded from restricted or endowment funds. |
| Judgement and complexity | Increased use of estimates and judgement across revenue recognition and lease accounting. | Requires enhanced documentation and clear communication of key judgements and assumptions, both internally to support financial reporting processes and externally through financial statement disclosures. |
| Other disclosures | Expanded disclosure requirements across a number of areas (including going concern, financial instruments, investments in associates, onerous contracts, intangible assets and service concession arrangements). | Greater emphasis on transparency, narrative and supporting detail, with increased expectation to clearly articulate key judgements, assumptions and areas of estimation uncertainty. |
Impact and preparation
HE institutions should now be moving into implementation planning; this stage should include the following actions.
- Taking the time to assess the overall impact across finance, systems and reporting.
- Putting together a clear plan and timetable to manage the transition.
- Identifying and involving the right people early, including teams outside finance where needed.
- Factoring FEHE SORP 2026 implementation into year-end planning for 2026/27, rather than treating it as a separate exercise.
- Engaging early with your auditors to agree the approach and key judgements.
- Preparing a detailed impact assessment paper for consideration by relevant committees, setting out key judgements, implications and proposed approach.
- Building up clear, well-documented support for key assumptions and decisions, and agreeing expectations with your auditors to ensure a smooth audit process.
Our multi-disciplinary team can support HE institutions across a range of service offerings.
If you would like support and advice tailored to the needs of your organisation, please reach out to your usual Crowe UK contact.
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