Queen Mary's College Report and Financial Statements for ... Financial Statements... · During 2013/14 the College adopted a strategic plan for the period 2013 to 2018. This plan

Queen Mary's College Financial Statements for the period ended 30 September 2017

Queen Mary's College

Report and Financial Statements

for the period ended 30 September 2017

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Key Management Personnel, Board of Governors and Professional advisers

Key management personnel

Key management personnel are defined as members of the College Leadership Team and were represented by the following:

Alison Foss Mark Henderson Helen Henderson Kate Need Beth Linklater Irfan Khan Caroline Watson Sally-Anne Spooner

Principal and Accounting officer Deputy Principal Assistant Principal Assistant Principal Assistant Principal Director of Finance Director of College Support Director of HR and Commercial Operations

Board of Governors

A full list of Governors is given on pages 14 and 15 of these financial statements.

Mrs Sue Eele acted as Clerk to the Corporation throughout the period.

Professional advisers

Financial statements auditors and reporting accountants: RSM UK Audit LLP Portland, 25 High Street Crawley, West Sussex RH101BG

Internal Auditors: Southern Internal Audit Partnership The Castle Winchester Hampshire. S023 8UB.

Bankers: Lloyds Bank 3 Town Quay Southampton Hampshire. S014 2AQ.

Solicitors: Lamb Brooks Victoria House 39 Winchester Street Basingstoke. Hampshire.RG21 7EQ.

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CONTENTS

Page number

Report of the Governing Body 4

Statement of Corporate Governance and Internal Control., 13

Statement of Regularity, Propriety and Compliance 21

Statement of Responsibilities of the Trustees of the Board 22

Independent Auditor's Report to the Board of Trustees of North Hampshire Education Alliance in respect of Queen Mary's College 24

Statement of Comprehensive Income and Expenditure 27

Statement of Changes in Reserves 28

Balance Sheets as at 30 September 29

Statement of Cash Flows 30

Notes to the Accounts 31

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Report of the Governing Body

NATURE, OBJECTIVES AND STRATEGIES:

The members present their report and the audited financial statements for the period ended 30 September 2017.

Legal status The Corporation was established under The Further and Higher Education Act 1992 for the purpose of conducting Queen Mary's College. The College is an exempt charity for the purposes of Part 3 of the Charities Act 2011.

On 1 October Queen Mary's College dissolved, transferring its activities, assets and liabilities to North Hampshire Education Alliance. This Members Report and the financial statements that follow are the final set of accounts over the two months period ending 30 September 2017 for Queen Mary's College.

Mission Governors reviewed the College's mission during 2012/13 and adopted a revised mission statement as follows: "to invest in individuals to build better futures."

Public Benefit Queen Mary's College is an exempt charity under the Part 3 of the Charities Act 2011 and from 1st September is regulated by the Secretary of State for Education. The members of the Governing Body, who are trustees of the charity, are disclosed on pages 14 and 15.

In setting and reviewing the College's strategic objectives, the Governing Body has had due regard for the Charity Commission's guidance on public benefit and particularly upon its supplementary guidance on the advancement of education. The guidance sets out the requirement that all organisations wishing to be recognised as charities must demonstrate, explicitly, that their aims are for the public benefit.

In delivering its mission, the College provides the following identifiable public benefits through the advancement of education:

• High-quality teaching; • Widening participation and tackling social exclusion; • Excellent employment record for students; • Strong student support systems; • Links with employers, industry and commerce; • The delivery of public benefit is covered in more detail throughout the Members Report and

Operating and Financial Review.

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Implementation of strategic plan

During 2013/14 the College adopted a strategic plan for the period 2013 to 2018. This plan includes an accommodation strategy and financial plans. The Corporation monitors the performance of the College against these plans. The College's strategic objectives were to:

• ensure every student aspires to and achieves the highest possible qualification grades; • provide a coherent and responsiveness curriculum meeting learners needs and interests; • ensure that the College is the college of choice for students, parents and other stakeholders; • continues to make an outstanding contribution to the wider community; • maintain the financial sustainability of the College by achieving the following: total income

of at least £12,000,000, operating surplus of 0- 2% of income taken year on year, ratio of staffing costs to recurrent funding to reduce below 80%, general reserve by July 2017 of £3,400,000 (excluding pension reserve), month end cash surplus to be maximised and at least £500,000 or greater, cash days in hand to be maximised and 15 or greater, maintain a positive current ratio to be greater than 1.0 and borrowing to reduce to less than 30% of total income by July 2017.

• These targets were included as part of 2016/17 audited financial statements.

The College has achieved or is on target to achieve these objectives.

The College's specific objectives for 2016/17 and achievement of those objectives is addressed below:

• The College achieved 2,130 16-18 year old learners funded by the funding bodies; • The College planned for a surplus on continuing operations of £190,000 and achieved an

operational surplus of £204,000; • The College planned for a ratio of staffing costs to total income 66% and achieved 68%; • The College aimed for in-year retention of full-time students of 95% and achieved 95%. • These results were included as part of 2016/17 audited financial statements.

A series of performance indicators and targets have been agreed to ensure that the Ofsted judgements of "Good" for "Overall Effectiveness" are sustained or improved.

The College's next academic year commenced in September 2017 and this report and financial statements are for a two month period only. Given the short period it is not possible to meaningfully assess and report on progress against objective. The monitoring and progress against objectives will continue in the new entity.

Financial objectives

The College's financial objectives were included as part of 2016/17 audited financial statements and are listed below:

• to achieve an EFA financial health rating of Good or better; • to achieve an annual operating surplus and positive cash flows year on year; • to pursue alternative sources offunding, on a selective basis, consistent with the College's core

competencies, and the need for a financial contribution to the College's overall finances; • to generate sufficient levels of income to support the asset base of the College; • to further improve the College's long term financial sustainability.

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As noted above on the basis that the report and financial statements are for a two month period only the actual vs. target as at 31 July 2017 as the latest available information. Performance indicators

Key performance Indicator Measure/Target Actual for 2016/17

Operating surplus/sector EBITDA as % of income >6.5% 8%

Staff costs as % of income 68.9% 69.6%

Operating cash flow £822,000 £1,012,000

Cash days in hand/liquidity (adjusted current ratio) 1.5 1.9

Borrowing as % of income <30.0% 27.7%

Reliance on ESFA income 90% 90%

Financial Health Score Good Good

The College is committed to observing the importance of sector measures and indicators and uses the FE Choices data available on the GOV.UK website which looks at measures such as success rates. The College is required to complete the annual Finance Record for the Education and Skills Funding Agency ("ESFA"). The Finance Record produces a financial health grading. The current rating of Good is considered to be a solid financial base for the sustainable future of the College.

FINANCIAL POSITION

Financial results

The College generated a deficit for the period ended 30 September 2017 of £35,000 (2016/17- operating surplus of £448,000).

The college has accumulated reserves of £3,135,000 (£6,872,000 excluding the pension provision), cash balances of £3,087,000. The College wishes to continue to accumulate reserves and cash balances in order to further develop the College site and build stronger financial resilience.

Tangible and intangible fixed asset additions during the year amounted to £60,000.

The College has significant reliance on the education sector funding bodies for its principal funding source, largely from recurrent grants. In 2016/17 the funding bodies provided 90% of the College's total income.

Treasury policies and objectives

Treasury management is the management of the College's cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.

The College has a separate treasury management policy in place.

Short term borrowing for temporary revenue purposes is authorised by the Accounting Officer. Such arrangements are restricted by limits in the Financial Memorandum agreed with the Education Funding Agency. All other borrowing requires the authorisation of the Corporation and shall comply with the requirements of the Financial Memorandum.

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Cash flows and liquidity

At £1,006,000 operating cash inflow (2016/17 £1,012,000 inflow), has been very positive and better than anticipated.

During the period the College has maintained it's overall liquidity position.

Reserves Policy

The College recognises the importance of reserves in the financial stability of any organisation, and ensures that there are adequate reserves to support the College's core activities. As at the balance sheet date the Income and Expenditure reserve stands at £1,095,000 (July 2017: £1,122,000).

CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE

Financial health The College's current financial health grade is classified as "Good". This is largely the consequence of robust financial management and regular budget monitoring.

Student numbers

The College continues to meet its targets for the recruitment of 16-18 students. Financial forecasting reflects the short-term demographic dip in year 11 numbers from 2017 - 2020. Numbers of 19+ students are stable. The academisation of the College is intended to give increased capacity to driving up performance, aspiration and confidence in secondary education in Basingstoke.

Student achievements

Students continue to prosper at the College. Overall success rates have improved from 85.1% in 2014/15 to 88.8% in 2015/16, and to 91% in 2016/17 which is 4.6% above the sixth form college benchmark.

Curriculum developments

Innovation in teaching, learning and assessment lies at the heart of our approach to the curriculum offer, staff development and quality improvement strategies.

QMC has a strong commitment to inclusiveness which is reflected in all College processes and procedures. The underlying principle that every child matters is understood by Queen Mary's to apply to all young people in Basingstoke and Deane. Our provision is designed to attract and engage students from a wide ability range and background.

Opportunities to challenge stereotypes and celebrate cultural diversity are embedded within courses, and are also provided through additional cross-College events and activities. This year Queen Mary's has successfully embraced the new linear A levels, maintaining the high achievement rates of previous years.

The College also provides discrete courses for a number of students with learning difficulties and disabilities. Equally there is a strong focus on the most able via specialist support (Oxbridge, MedicsjVets, university entrance exams). The progress of different groups of learners is monitored

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Queen Mary's College Finandal Statements for the period ended 30 September 2017

at class, course and whole-College level, with actions for improvement identified through the self assessment process.

The College recognises that examination success is not in itself a preparation for full and active participation in society, and actively supports the development ofthe skills and qualities necessary for progression to work, higher education and citizenship. Progression rates with the College and on to higher education and employment are high.

Payment performance

The Late Payment of Commercial Debts (Interest) Act 1998, which came into force on 1 November 1998, requires colleges, in the absence of agreement to the contrary, to make payments to suppliers within 30 days of either the provision of goods or services or the date on which the invoice was received. The target set by the Treasury for payment to suppliers within 30 days is 95 per cent. During the accounting period 1 August 2017 to 30 September 2017, the College aimed to pay at least 95 per cent of its invoices within 30 days. The College incurred no interest charges in respect of late payment for this period.

Events after the end of the reporting period As a result of the Area Review process conclusion in October 2016, the College has ceased as an entity on 30 September 2017. The assets, liabilities and activities of the college were transferred by way of a gift to a newly established Multi Academy Trust (MAT) - North Hampshire Education Alliance (NHEA) from 1 October 2017.

Future prospects The College has no major plans for future developments aside from those detailed above.

RESOURCES: The College has various resources that it can deploy in pursuit of its strategic objectives. Tangible assets include the College campus, which has benefitted from a capital planned maintenance programme and the addition and refurbishment of new buildings in the last 48 months. Financial The College has £3.1m of net assets (including £3.Sm pension liability and long term debt of £3.2m). People

The College employs an average of 186 people (expressed as full time equivalents), of whom 109 are teaching staff.

Reputation The College has a good reputation locally and nationally. Maintaining a quality brand is essential for the College's success at attracting students and external relationships.

PRINCIPAL RISKS AND UNCERTAINTIES: The College has undertaken further work during the year ended 31 July 2017 and the period ended 30 September 2017 to develop and embed the system of internal control, including financial, operational and risk management which is designed to protect the College's assets and reputation.

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Based on the strategic plan, the College Management Team undertakes a comprehensive review of the risks to which the College is exposed. They identify systems and procedures, including specific preventable actions which should mitigate any potential impact on the College. The internal controls are then implemented and the subsequent year's appraisal will review their effectiveness and progress against risk mitigation actions. In addition to the annual review, the College Management Team will also consider any risks which may arise as a result of a new area of work being undertaken by the College.

A risk register is maintained at the College level, which is reviewed at least annually by the Audit Committee and more frequently where necessary. The risk register identifies the key risks, the likelihood of those risks occurring, their potential impact on the College and the actions being taken to reduce and mitigate these risks. Risks are prioritised using a consistent scoring system. This is supported by a risk management training programme to raise awareness of risk throughout the College.

Outlined below is a description of the principal risk factors that may affect the College. Not all the factors are within the College's control. Other factors besides those listed below may also adversely affect the College.

1 Government funding

The College has considerable reliance on continued government funding through the further education sector funding bodies. In 2016/17, 90% of the College's revenue was ultimately public funded and this level of requirement is expected to continue. There can be no assurance that government policy or practice will remain the same or that public funding will continue at the same levels or on the same terms.

The College is aware of several issues which may impact on future funding,

• The demand led funding system which applies a series offactors such as guided learning hours and success rates to calculate an amount of funding to be received for each learner. Such funding cannot be guaranteed though.

• Freezing of funding levels per student for foreseeable future.

This risk is mitigated in a number of ways:

• Funding is derived through a number of direct and indirect contractual arrangements. • By ensuring the College is rigorous in delivering high quality education and training. • Considerable focus and investment is placed on maintaining and managing key relationships

with the various funding bodies. • Ensuring the College is focused on those priority sectors which will continue to benefit from

public funding. • Regular dialogue with funding bodies. • Through the development of the MAT, exploring shared back office functions.

2 Introduction of 19+ and 24+ loans on adult education

The College is concerned that the uptake of loans by students will be a hurdle to students investing in their education.

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This risk is mitigated in a number of ways: • By ensuring the College promotes the benefits of using the loans available. • Closely working with government and other providers to develop high quality education and

training, thus ensuring value for money for students. • Close monitoring of the demand for courses at a local and regional level.

3 Maintain adequate funding of pension liabilities

The financial statements report the movement on the share of the local government pension scheme (LGPS) deficit on the College's comprehensive statement of income line with the requirements of FRS 102 (28). Indications are that contributions towards the LGPS and the Teachers Pension scheme (TPA) are set to rise over the next few years.

The risks are mitigated as follows: • By re-assessing future pension contributions within the budgeting and planning process; • Keeping abreast of developments and options in LGPS and teachers pensions.

4 Failure to maintain the financial viability of the College

The College's current financial health grade is classified as "Good" as described above. This is largely the consequence of robust financial management. Notwithstanding that, the continuing challenge to the College's financial position remains the constraint on further education funding arising from the ongoing cuts in public sector spending whilst maintaining the student experience. This risk is mitigated in a number of ways:

• By rigorous budget setting procedures and sensitivity analysis;

• Regular in year budget monitoring;

• Robust financial controls;

• Exploring ongoing procurement efficiencies.

STAKEHOLDER RELATIONSHIPS

In line with other colleges and with universities, Queen Mary's College has many stakeholders. These include:

• Students; • Education sector funding bodies; • Staff; • Local employers (with specific links); • Local Authorities; • Government Offices/ Regional Development Agencies/LEPs; • The local community; • Other FE/HE institutions; • Trade unions; • Professional bodies; • Local schools; • Bank.

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The College recognises the importance of these relationships and engages in regular communication with them through the College Internet site and by meetings.

Equality

Queen Mary's College is committed to ensuring equality of opportunity for all who learn and work here. We respect and value positively differences in race, gender, sexual orientation, disability, religion or belief and age. We strive vigorously to remove conditions which place people at a disadvantage and we will actively combat bigotry. This policy will be resourced, implemented and monitored on a planned basis. The College's Equality Policy, including its Race Relations and Transgender Policies, are published on the College's Internet site.

The College publishes an Annual Equality Report and Equality Objectives to ensure compliance with all relevant equality legislation including the Equality Act 2010. The College undertakes equality impact assessments on all new policies and procedures and publishes the results. Equality impact assessments are also undertaken for existing policies and procedures on a prioritised basis.

The College considers all applications from disabled persons, bearing in mind the aptitudes of the individuals concerned. Where an existing employee becomes disabled, every effort is made to ensure employment with the College continues. The College's policy is to provide training, career development and opportunities for promotion, which are, as far as possible, identical to those for other employees. An equalities plan is published each year and monitored by managers and governors.

Disability statement

The College seeks to achieve the objectives set down in the Equality Act 2010.

i. As part of its accommodation strategy the College has installed lifts and ramps so that most of the facilities allow access to people with a disability;

ii. There is a list of specialist equipment, such as radio aids, which the College can make available for use by students and a range of assistive technology is available in the learning centre;

iii. The admissions policy for all students is described in the College charter. Appeals against a decision not to offer a place are dealt with under the complaints policy;

iv. The College has made a significant investment in the appointment of specialist lecturers to support students with learning difficulties and/or disabilities. There are a number of student support assistants who can provide a variety of support for learning. There is a continuing programme of staff development to ensure the provision of a high level of appropriate support for students who have learning difficulties and/or disabilities;

v. Specialist programmes are described in College programme information guides, and achievements and destinations are recorded and published in the standard College format;

vi. Counselling and welfare services are described in the College Charter, which is issued to students together with the Complaints and Disciplinary Procedure leaflets at induction.

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Disclosure of information to auditors

The members who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which the College's auditors are unaware; and each member has taken all the steps that he or she ought to have taken to be aware of any relevant audit information and to establish that the College's auditors are aware of that information.

Approved by order of the board of trustees as the company directors of North Hampshire Education Alliance, on 21 February 2018 and signed on its behalf by:

f2~.~ Mrs Rosemary Hood

Chair of North Hampshire Education Alliance

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Statement of Corporate Governance and Internal Control Following the conversion of College to an academy status from 1 October 2017, the Corporation has been dissolved and Board of Trustees of North Hampshire Education Alliance has authority to sign college financial statements. As the financial statements relate to pre conversion period, this statement has been written on that basis.

The following statement is provided to enable readers ofthe annual report and accounts ofthe College to obtain a better understanding of its governance and legal structure.

The College endeavours to conduct its business:

• in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership);

• in full accordance with the guidance to colleges from the Association of Colleges in The Code of Good Governance for English Colleges (lithe Cade"); and

• having due regard to the UK Corporate Governance Code 2016 insofar as it is applicable to the further education sector.

The College is committed to exhibiting best practice in all aspects of corporate governance and in particular the College has adopted and complied with the Code. We have not adopted and therefore do not apply the UK Corporate Governance Code. However, we have reported on our Corporate Governance arrangements by drawing upon best practice available, including those aspects of the UK Corporate Governance Code we consider to be relevant to the further education sector and best practice.

In the opinion of the Governors, the College where relevant, complies with the vast majority of the provisions of The Code of Good Governance for English Colleges Code, and has complied throughout the year ended 31 July 2017. The College is committed to complying with any additional provisions in the next financial year. The Governing Body recognises that, as a body entrusted with both public and private funds, it has a particular duty to observe the highest standards of corporate governance at all times. In carrying out its responsibilities, it takes full account of The Code of Good Governance for English Colleges issued by the Association of Colleges in March 2015.

The College is an exempt charity within the meaning of Part 3 of the Charities Act 2011. The Governors, who are also the Trustees for the purposes of the Charities Act 2011, confirm that they have had due regard for the Charity Commission's guidance on public benefit and that the required statements appear elsewhere in these financial statements.

The Corporation

The members who served on the Corporation during the period 1 August 2017 to 30 September 2017 were as listed in the table below.

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Date of Term of End datel Date of Status of Attendance Full

Committees served Name appointment office appointment Governors

resignation

Mr Simon 20 May 2014 4 years Staff Member SSS* lout of 1 Barnard

Dr Audrey 14 July 2010 4 years Member SSS*, Appeals from 12 O out of 1 Boucher Oct 16

Re-appointed 14 July 2014

Mrs Karen 14 Dec 2016 4 years Member Audit lout of 1 Brimacombe

Mrs Jo Carver 22 May 2013 4 years Member F&P**, Appeals O out of 1

Re-appointed

22 May 2017

Mrs Suzanne 22 May 2013 4 years Member SSS*, Audit lout of 1 Cooper

Re-appointed

22 May 2017

Mr Will Dover 26 May 2016 1 year Student SSS* O out of O (b) Member

Mr Ian Ellison 1 Oct 1996 4 years Member F&P**, Appeals, Search lout of 1 & Governance

Re-appointed 12 Oct 2016

Ms Ali Foss 1 Sep 2013 Principal Member: F&P** and lout of 1 SSS*.

Serving Officer for all

committees except Audit and Appeals

Mr Simon Green 10 Dee 2014 4 years Staff member F&P** lout of 1

Mr luke 26 May 2016 1 year Student SSS* O out of O Hainsworth (b) Member

Mr Andy 29 Nov 1995 4 years Member Chair of the Board until lout of 1 Harding

Re-appointed 31 July 2017, SSS*, F&P**, Appeals,

10 Feb 2016 Remuneration until31 July 2017, Chair of Search

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Date of Term of End dateL Date of Status of Attendance Full

Committees served Name appointment office appointment Governors

resignation

Mrs Rosemary 25 May 2011 4 years Member Vice Chair of the Board O out ofO Hood (a)

Re-appointed wef 21 May 2015, Chair from 1 Aug 2017, Chair

1 April2015 of SSS* and member of Remuneration wef 21 May 15, Search & Governance

Mr Islam Jalaita 26 May 2016 4 years Member SSS*, Search & O out of 1 Governance wef 12 Oct 2016

Ms Julie 1 April2015 4 years Member Vice Chair of the Board lout of 1 McLatch wef 1 Aug 2017, SSS*,

Audit wef 14 Jul 2016

Mr Pat Murphy 14Jul2010 4 years Parent Chair F&P**, lout of 1 Member Remuneration, Appeals,

Re-appointed 1 Search & Governance April2015 wef 12 Oct 2016

Mr Mike 15 Feb 1999 4 years Member F&P**, Chair of O out ofO O'Dwyer (a) Remuneration

Re-appointed

10 Feb 2016

Dr Terri 21 May 2014 4 years Member SSS* lout of 1 Sandison

Mr Jon Soar (a) 21 May 2014 4 years Member Chair Audit, Search & O out ofO Governance, SSS*

Mr Chris 01 Sep 2016 4 years Member SSS*, F&P** wef 12 Oct lout of 1 Thomas 2016

Mr Andy Wilson 21 May 2014 4 years Member Audit lout of 1

SSS* = Students, Staffing and Standards, F&P** = Finance and Premises

(a) Trustees for the North Hampshire Education Alliance from 26th September 2017 - previously members of Queen Mary's College Corporation.

(b) Student members of Queen Mary's College Corporation - not invited to the single issue meeting of Queen Mary's College Corporation on 27th September 2017.

Other than the Principal and the two staff members, the members of the Board have no financial interest in the affairs of the College.

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It is the Corporation's responsibility to bring independent judgement to bear on issues of strategy, performance, resources and standards of conduct.

The Corporation is provided with regular and timely information on the overall financial performance of the College together with other information such as performance against funding targets, proposed capital expenditure, quality matters and personnel-related matters such as health and safety and environmental issues. The Corporation meets at least once a term.

The Corporation conducts its business through a number of committees. Each committee has terms of reference, which have been approved by the Corporation. These committees are Finance and Premises, Remuneration, Students, Staffing & Standards, Search& Governance, Appeals and Audit.

Full minutes of all meetings, except those deemed to be confidential by the Corporation, are available on the College's website or from the Clerk to the Corporation at:

Queen Mary's College Cliddesden Road Basingstoke Hampshire RG213HF

The Clerk to the Corporation maintains a register of financial and personal interests of the governors. The register is available for inspection at the above address.

All governors are able to take independent professional advice in furtherance oftheir duties at the College's expense and have access to the Clerk to the Corporation, who is responsible to the Board for ensuring that all applicable procedures and regulations are complied with. The appointment, evaluation and removal of the Clerk are matters for the Corporation as a whole.

Formal agendas, papers and reports are supplied to governors in a timely manner, prior to Board meetings. Briefings are provided on an ad hoc basis.

The Corporation has a strong and independent non-executive element and no individual or group dominates its decision-making process. The Corporation considers that each of its non-executive members is independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement.

There is a clear division of responsibility in that the roles of the Chairman and Accounting Officer are separate.

Appointments to the Corporation

Any new appointments to the Corporation are a matter for the consideration of the Corporation as a whole. The Corporation has a search and governance committee, consisting of at least three members of the Corporation, which is responsible for the selection and nomination of any new member for the Corporation's consideration. The Corporation is responsible for ensuring that appropriate training is provided as required.

Members of the Corporation are appointed for a term of office not exceeding four years.

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Corporation Performance

The Corporation carries out an annual self-assessment of its own performance. Last year performance was assessed against the Code of Good Governance for English Colleges and graded as "Good."

In January 2016 QMC had an Ofsted Inspection that confirmed the very good performance of the College, and which also praised the Governing Body for the role it played. The Report concluded "Your students continue to receive good-quality education and training. You work effectively with governors, managers and students to promote a learning culture strongly focused on continuous improvement of provision in all areas. With other senior leaders, you monitor students' performance closely and take decisive and effective actions to reduce the impact of the few courses or staff that perform below your expectations. Leaders have an accurate understanding of the college's strengths and areas for improvement and monitor the impact of their actions to improve it closely. Together with governors, you have communicated the college's vision well. Managers and staff have a good understanding of the drive towards being an outstanding college within which students can flourish" .

Remuneration Committee

The Committee's responsibilities are to make recommendations to the Board on the remuneration and benefits of the Accounting Officer and other key management personnel. Details of remuneration are set out in note 8 to the financial statements.

Audit Committee

The Audit Committee comprises at least three members of the Corporation (excluding the Accounting Officer and Chair of main Board). The Committee operates in accordance with written terms of reference approved by the Corporation.

The Audit Committee meets on a termly basis and provides a forum for reporting by the College's internal, reporting accountants and financial statements auditors, who have access to the Committee for independent discussion, without the presence of College management. The Committee also receives and considers reports from the main FE funding bodies as they affect the College's business.

The College's internal auditors review the systems of internal control, risk management controls and governance processes in accordance with an agreed plan of input and report their findings to management and the Audit Committee.

Management is responsible for the implementation of agreed audit recommendations and internal audit undertakes periodic follow-up reviews to ensure such recommendations have been implemented.

The Audit Committee also advises the Corporation on the appointment of internal, reporting accountants and financial statements auditors and their remuneration for audit and non-audit work as well as reporting annually to the Corporation.

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Internal Control

Scope of responsibility

The Corporation is ultimately responsible for the College's system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

The Corporation has delegated the day-to-day responsibiiity to the Principai, as Accounting Officer, for maintaining a sound system of internal control that supports the achievement of the College's policies, aims and objectives, whilst safeguarding the public funds and assets for which she is personally responsible, in accordance with the responsibilities assigned to her in the Financial Agreement between Queen Mary's College and the funding bodies. She is also responsible for reporting to the Corporation any material weaknesses or breakdowns in internal control.

The purpose of the system of internal control

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of College policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place in Queen Mary's College for the period ended 30 September 2017 and up to the date of approval of accounts.

Capacity to handle risk

The Corporation has reviewed the key risks to which the College is exposed together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The Corporation is of the view that there is a formal ongoing process for identifying, evaluating and managing the College's significant risks that has been in place for the period ended 30 September 2017 and up to the date of approval of accounts. This process is regularly reviewed by the Corporation.

The risk and control framework

The system of internal control is based on a framework of regular management information, administrative procedures including the segregation of duties, and a system of delegation and accountability. In particular, it includes:

• comprehensive budgeting systems with an annual budget, which is reviewed and agreed by the governing body;

• regular reviews by the governing body of periodic and annual financial reports which indicate financial performance against forecasts;

• setting targets to measure financial and other performance; • clearly defined capital investment control guidelines; • the adoption of formal project management disciplines, where appropriate.

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Queen Mary's College has not appointed a full assurance Internal Audit service for the period ended 30 September 2017. For that period, the appointed Internal Audit service provided specific assurance on areas directed by the Audit Committee. The College Management and Governors are developing a Board Assurance Framework, with the intention of further directing Internal Audit and other forms of assurance against key risks identified.

The Audit Committee is provided with regular updates on assurance, policies, internal controls and mitigating actions in relation to the major risk areas identified during the year, which forms part of the existing Assurance Framework.

Review of effectiveness

As Accounting Officer, the Principal has responsibility for reviewing the effectiveness of the system of internal control. Her review of the effectiveness of the system of internal control is informed by:

• the work of the internal auditors; • the work of the executive managers within the College who have responsibility for the

development and maintenance of the internal control framework; • comments made by the College's financial statements auditors, the reporting accountant for

regularity assurance, the appointed funding auditors (for colleges subject to funding audit) in their management letters and other reports.

The Accounting Officer has been advised on the implications of the result of her review of the effectiveness of the system of internal control by the Audit Committee, which oversees the work of the internal auditor and other sources of assurance, and a plan to address weaknesses and ensure continuous improvement of the system is in place.

The senior management team receives reports setting out key performance and risk indicators and considers possible control issues brought to their attention by early warning mechanisms, which are embedded within the departments and reinforced by risk awareness training. The senior management team and the Audit Committee also receive regular reports from internal audit and other sources of assurance, which include recommendations for improvement. The Audit Committee's role in this area is confined to a high-level review of the arrangements for internal control. The Corporation's agenda includes a regular item for consideration of risk and control and receives reports thereon from the senior management team and the Audit Committee. The emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception.

Based on the advice ofthe Audit Committee and the Accounting Officer, the Board is ofthe opinion that it has an adequate and effective framework for governance, risk management and control, and has fulfilled its statutory responsibility for lithe effective and efficient use of resources, the solvency of the institution and the body and the safeguarding of their assets".

Going Concern

The College dissolved on 30 September 2017 and its activities, assets and liabilities transferred by way of a gift to North Hampshire Education Alliance on 1 October 2017. The financial statements are prepared on the basis that the College is not a going concern. However, no material adjustments arise as a result of ceasing to apply the going concern basis and the College's assets and liabilities have been transferred to the Academy Trust at their book value.

Page 19


Approved by order of the board of trustees as the company directors of North Hampshire Education Alliance, on 21 February 2018 and signed by:

,}r •

Mrs Rosemary Hood Ms Alison Foss

Chair of North Hampshire Education Alliance Chief Executive Officer and Accounting Officer of North Hampshire Education Alliance

Page 20


Statement of Regularity, Propriety and Compliance The Board has considered its responsibility to notify the Education and Skills Funding Agency (ESFA) of material irregularity, impropriety and non-compliance with terms and conditions of funding, under the college's funding agreement. As part of our consideration we have had due regard to the requirements of the funding agreement.

We confirm on behalf of the Board, that after due enquiry, and to the best of our knowledge, we are able to identify any material irregular or improper use of funds by the College, or material non compliance with the terms and conditions offunding under the College's funding agreement.

We confirm that no instances of material irregularity, impropriety or funding non-compliance have been discovered to date. If any instances are identified after the date of this statement, these will be notified to the ESFA.

Mrs Alison Foss Mrs Rosemary Hood

Chief Executive Officer and Chair of North Hampshire

Education Alliance Accounting Officer of North Hampshire

Education Alliance

21 February 2018 21 February 2018

Page 21


Statement of Responsibilities of the Trustees of the Board of North Hampshire Education Alliance The trustees ofthe Board are required to present audited financial statements for each financial year.

Within the terms and conditions of the College's Funding Agreement with the ESFA, the Board, through its Accounting Officer, is required to prepare financial statements for each financial year in accordance with the 2015 Statement of Recommended Practice - Accounting for Further and Higher Education and with the College Accounts Direction 2016 to 2017 issued by the ESFA, and which give a true and fair view of the state of affairs of the College and the result for that year.

In preparing the financial statements, the Board is required to:

• select suitable accounting policies and apply them consistently • make judgements and estimates that are reasonable and prudent • state whether applicable Accounting Standards have been followed, subject to any material

departures disclosed and explained in the financial statements • prepare financial statements on the going concern basis, unless it is inappropriate to assume

that the College will continue in operation.

The Board is also required to prepare a Members Report, which describes what it is trying to do and how it is going about it, including information about the legal and administrative status of the College.

The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the College, and which enable itto ensure that the financial statements are prepared in accordance with the relevant legislation of incorporation and other relevant accounting standards. It is responsible for taking steps that are reasonably open to it in order to safeguard the assets of the College and to prevent and detect fraud and other irregularities.

The maintenance and integrity of the College website is the responsibility of the Board of the North Hampshire Education Alliance; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Trustees of the Board are responsible for ensuring that expenditure and income are applied for the purposes intended by Parliament and that the financial transactions conform to the authorities that govern them. In addition they are responsible for ensuring that funds from the ESFA are used only in accordance with the Financial Agreement with the ESFA and any other conditions that may be prescribed from time to time. Trustees of the Board must ensure that there are appropriate financial and management controls in place in order to safeguard public and other funds and to ensure they are used properly. In addition, trustees of the Board are responsible for securing economical, efficient and effective management of the College's resources and expenditure, so that the benefits that should be derived from the application of public funds from the ESFA are not put at risk.

Page 22


Approved by order of the board of trustees as the company directors of North Hampshire Education Alliance, on 21 February 2018 and signed on its behalf by:

Mrs Rosemary Hood

Chair of North Hampshire Education Alliance

21 February 2018

Page 23


INDEPENDENT AUDITOR'S REPORT TO THE BOARD OF TRUSTEES OF NORTH HAMPSHIRE EDUCATION ALLIANCE IN RESPECT OF QUEEN MARY'S COLLEGE

Opinion

We have audited the financial statements of Queen Mary's College (the 'Dissolved College') for the period ended 30 September 2017 which comprise the college statement of comprehensive income, the college balance sheet, college statement of changes in reserves, the college statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is United Kingdom accounting standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' as set out in our engagement letter dated 3 November 2017.

In our opinion the financial statements:

• give a true and fair view ofthe state ofthe Dissolved College's affairs as at 30 September 2017 and of the Dissolved College's deficit of income over expenditure for the period then ended; and

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (lSAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Dissolved College and North Hampshire Education Alliance in accordance with the ethical requirements that are relevant to our audit ofthe financial statements in the UK, including the FRC's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter - non-going concern basis

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made under Accounting policies - going concern on page 31 concerning the use of a basis of accounting other than that of a going concern. As described the College dissolved on 30 September 2017 and its activities, assets and liabilities transferred to North Hampshire Education Alliance. The financial statements for the period ending 30 September 2017 have been drawn up on a basis other than that of a going concern.

No material adjustments arose as a result of ceasing to apply the going concern basis.

Other information

The trustees are responsible for the other information. The other information comprises the information included in the Report and Financial Statements other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other

Page 24


information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Post-16 Audit Code of Practice 2016 to 2017 issued by the Department for Education requires us to report to you if, in our opinion:

• adequate accounting records have not been kept; • the financial statements are not in agreement with the accounting records; or • we have not received all the information and explanations required for our audit.

Responsibilities of the Board of Trustees of North Hampshire Education Alliance in respect of Queen Mary's College

As explained more fully in the Statement of the Board's Responsibilities set out on pages 22 to 23, the Board is responsible for the preparation of financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Board determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Trustees are responsible for assessing the Dissolved College's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the Dissolved College or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities.This description forms part of our auditor's report.

Page 25


This report is made solely to the Board of Trustees, as a body, in accordance with the Funding Agreement published by the Education and Skills Funding Agency and our engagement letter dated 3 November 2017. Our audit work has been undertaken so that we might state to the Board, as a body, those matters we are required under our engagement letter dated 3 November 2017 to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trustees, as a body, for our audit work, for this report, or for the opinions we have formed.

RSM UK AUDIT LLP Chartered Accountants Portland, 25 High Street Crawley, West Sussex. RH101BG

Page 26


Statement of Comprehensive Income and Expenditure Notes 30 Year ended

September 31 July 2017 2017 £'000 £'000

INCOME Funding body grants 2 1,735 10,495 Tuition fees and education contracts 3 24 Other grants and contracts 4 15 64 Other income 5 157 1,096 Endowment and investment income 6 8 Donations and Endowments 7 1 13

Total income 1,908 11,700

EXPENDITURE Staff costs 8 1,310 7,933 Other operating expenses 9 401 2,464 Depreciation and amortisation 12,13 191 1,131 Interest and other finance costs 10 54 290

Total expenditure 1,956 11,818

(Oeficit) before other gains and losses (48) (118)

Profit on disposal of assets 12 1 2

(Deficit) before tax (47) (116)

Taxation 11

(Deficit) for the year Actuarial gain in respect of pensions schemes

(47) 12

(116) 564

Total Comprehensive Income for the period (35) 448

Page 27


Statement of Changes in Reserves

Income and Revaluation Total Expenditure reserve account

£'000 £'000 £'000

Balance at 1st August 2016 620 2,102 2,722

Deficit from the income and expenditure account (116) (116) Other comprehensive income 564 564 Transfers between revaluation and income and expenditure reserves 54 (54)

502 (54) 448

Balance at 31 July 2017 1,122 2,048 3,170

Deficit from the income and expenditure account (47) (47) Other comprehensive income 12 12 Transfers between revaluation and income and expenditure reserves 8 (8)

Total comprehensive income for the year (27) (8) (35)

Balance at 30 September 2017 1,095 2,040 3,135

Page 28


Balance sheets as at 30 September 30 September 31 July

2017 2017 Notes £'000 £'000

Fixed assets Tangible fixed assets 12 22,562 22,691 Intangible fixed assets 13 63 65

22,625 22,756 Current assets Trade and other receivables 14 307 278 Investments 15 1,200 Cash and cash equivalents 20 3,087 977

3,394 2,455

Less: Creditors - amounts falling due within one year 16 (3,141) (2,189)

Net current assets 253 266

Total assets less current liabilities 22,878 23,022

Less: Creditors - amounts falling due after more than one year 17 (16,006) (16,153) Provisions Defined benefit obligations 19 (3,534) (3,494) Other provisions 19 (203) (206)

Total net assets 3,135 3,170

Unrestricted reserves

Income and expenditure account 1,095 1,122 Revaluation reserve 2,040 2,048

Total unrestricted reserves 3,135 3,170

Total reserves 3,135 3,170

The financial statements on pages 27 to 55 were approved and authorised for issue by the Board of Trustees on 21 FeÏj ~ were signed on its behr:at date by:

Mrs Rosemary H~a Ms Alison Foss

Chair of North Hampshire Education Alliance Chief Executive Officer and Accounting Officer of North Hampshire Education Alliance

Page 29

Queen Mary's College Fïnancïal Statements for the period ended 30 September 2017

Statement of Cash Flows 30 31 July

September 2017 Notes 2017

£'000 £'000 Cash inflow from operating activities (Deficit) for the period (47) (116) Adjustment for' non-cash items Depreciation 191 1,131 (Increase) in debtors (29) (69) Increase in creditors due within one year 956 218 Decrease in creditors due after one year (147) (609) increase in provisions 29 177 Adjustment for investing or financing activities Investment income (8) Interest payable 54 290 Loss on sale of fixed assets (1) (2)

Net cash flow from operating activities 1,006 1,012

Cash flows from investing activities Proceeds from sale of fixed assets 1 2 Investment income 8 Withdrawal of deposits 1,200 300 Payments made to acquire fixed assets (60) (325)

1,141 (15) Cash flows from financing activities Interest paid (32) (202) Interest element of finance lease rental payments (1) (1) Repayments of amounts borrowed (4) (127) Capital element of finance lease rental payments (61)

(37) (391)

Increase in cash and cash equivalents in the year 2,110 606

Cash and cash equivalents at beginning of the year 20 977 371

Cash and cash equivalents at end of the year 20 3,087 977

Page 30


Notes to the Accounts 1. Statement of accounting policies and estimation techniques

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements. The financial statements have been prepared for the two month period ending 30 September 2017. The comparative period was for the year to 31 July 2017.

Basis of preparation

These financial statements have been prepared in accordance with the Statement of Recommended Practice: Accounting for Further and Higher Education 2015 (the 2015 FE HE SaRP), the College Accounts Direction for 2016 to 2017 and in accordance with Financial Reporting Standard 102 - "The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland" (FRS 102). The College is a public benefit entity and has therefore applied the relevant public benefit requirements of FRS 102.

The financial statements are presented in sterling which is also the functional currency of the College. Monetary amount in these financial statements are rounded to the nearest whole 1,000 except where otherwise indicated.

Basis of accounting

The financial statements are prepared in accordance with the historical cost convention modified by the revaluation of certain fixed assets.

Going concern

The activities of the College, together with the factors likely to affect its future development and performance are set out in the Members Report. The financial position ofthe College, its cashflow, liquidity and borrowings are presented in the Financial Statements and accompanying Notes.

The College currently has £3.2m of loans outstanding with bankers on terms negotiated in prior years. The terms of the existing facility extend for 16 years until 2033. The College's forecasts and financial projections indicate that it will be able to operate within this existing facility and covenants for the foreseeable future.

On the basis that the activities, assets and liabilities of the College transferred by way of a gift to the North Hampshire Education Alliance, an Academy Trust on 1 October 2017, the financial statements have, as required by FRS102, been prepared on that the basis that the College is not a going concern.

However no material adjustments arose as a result of ceasing to apply the going concern basis, as the College activities will continue and assets and liabilities have been transferred to the Academy Trust at book value.

Recognition of income

Revenue grant funding

Government revenue grants include funding body recurrent grants and other grants and are accounted for under the accrual model as permitted by FRS 102. Funding body recurrent grants are

Page 31


measured in line with best estimates for the period of what is receivable and depend on the particular income stream involved. Any under achievement for the Adult Education Budget is adjusted for and reflected in the level of recurrent grant recognised in the income and expenditure account. The final grant income is normally determined with the conclusion of the year end reconciliation process with the funding body following the year end, and the results of any funding audits. 16-18 learner-responsive funding is not normally subject to reconciliation and is therefore not subject to contract adjustments.

The recurrent grant from HEFCE represents the funding allocations attributable to the current financial year and is credited direct to the Statement of Comprehensive Income.

Where part of a government grant is deferred, the deferred element is recognised as deferred income within creditors and allocated between creditors due within one year and creditors due after more than one year as appropriate.

Grants (including research grants) from non-government sources are recognised in income when the College is entitled to the income and performance related conditions have been met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the balance sheet and released to income as the conditions are met.

Capital grant funding

Government capital grants are capitalised, held as deferred income and recognised in income over the expected useful life of the asset, under the accrual model as permitted by FRS 102. Other, non governmental, capital grants are recognised in income when the College is entitled to the funds subject to any performance related conditions being met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the Balance Sheet and released to income as conditions are met.

Fee income

Income from tuition fees is stated gross of any expenditure which is not a discount and is recognised in the period for which it is received.

Agency arrangements

The College acts as an agent in distributing Bursary Support Funds. Payments received from the funding bodies and subsequent disbursements to students are excluded from the income and expenditure of the College where the College does not lose control of the economic benefit of the transfer.

Accounting for retirement benefits

Post-employment benefits to employees ofthe College are principally provided by the Teachers' Pension Scheme (TPS) and the Local Government Pension Scheme (LGPS). These are defined benefit plans, which are externally funded and contracted out of the State Second Pension.

Teachers' Pension Scheme (TPS)

The TPS is an unfunded scheme. Contributions to the TPS are calculated so as to spread the cost of pensions over employees' working lives with the College in such a way that the pension cost is a substantially level percentage of current and future pensionable payroll. The contributions are determined by qualified actuaries on the basis of valuations using a prospective benefit method.

Page 32


The TPS is a multi-employer scheme and there is insufficient information available to use defined benefit accounting. The TPS is therefore treated as a defined contribution plan and the contributions recognised as an expense in the income statement in the periods during which services are rendered by employees.

Local Government Pension Scheme (LGPS)

The LGPS is a funded scheme. The assets of the LGPS are measured using closing fair values. LGPS liabilities are measured using the projected unit credit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The amounts charged to operating surplus are the current service costs and the costs of scheme introductions, benefit changes, settlements and curtailments. They are included as part of staff costs as incurred.

Net interest on the net defined benefit liability/asset is also recognised in the Statement of Comprehensive Income and comprises the interest cost on the defined benefit obligation and interest income on the scheme assets, calculated by multiplying the fair value of the scheme assets at the beginning of the period by the rate used to discount the benefit obligations. The difference between the interest income on the scheme assets and the actual return on the scheme assets is recognised in interest and other finance costs.

Actuarial gains and losses are recognised immediately in actuarial gains and losses.

Short term Employment benefits Short term employment benefits such as salaries and compensated absences (holiday pay) are recognised as an expense in the year in which the employees render service to the College. Any unused benefits are accrued and measured as the additional amount the College expects to pay as a result of the unused entitlement.

Enhanced Pensions

The actual cost of any enhanced ongoing pension to a former member of staff is paid by a college annually. An estimate of the expected future cost of any enhancement to the ongoing pension of a former member of staff is charged in full to the College's income in the year that the member of staff retires. In subsequent years a charge is made to provisions in the balance sheet using the enhanced pension spreadsheet provided by the funding bodies.

Non-current Assets - Tangible fixed assets Tangible fixed assets are stated at cost (or deemed cost) less accumulated depreciation and accumulated impairment losses. Certain items of fixed assets that had been revalued to fair value on or prior to the date of transition to the 2015 FE HE SORP, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.

Land and buildings Land and buildings inherited from the local education authority are stated in the balance sheet at valuation on the basis of depreciated replacement cost as the open market value for existing use is not readily obtainable. The associated credit is included in the revaluation reserve. The difference between depreciation charged on the historic cost of assets and the actual charge for the year

Page 33


calculated on the revalued amount is released to the income and expenditure account reserve on an annual basis.

• Building improvements made since incorporation are included in the balance sheet at cost. e Freehold land is not depreciated. • Freehold buildings are depreciated over their expected useful economic life to the College of

between 7 and SO years. • The College has a policy of depreciating major adaptations to buildings over the period of their

useful economic life of between 7 and SO years.

Where land and buildings are acquired with the aid of specific grants, they are capitalised and depreciated as above. The related grants are credited to a deferred capital grant account, and are released to the income and expenditure account over the expected useful economic life of the related asset on a basis consistent with the depreciation policy.

»> Finance costs, which are directly attributable to the construction of land and buildings, are not capitalised as part of the cost of those assets.

A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying amount of any fixed asset may not be recoverable.

On adoption of FRS 102, the College followed the transitional provision to retain the book value of land and buildings, which were revalued in 1996 at deemed cost

Equipment Equipment costing less than £750 per individual item is written off to the income and expenditure account in the period of acquisition. All other equipment is capitalised at cost. Equipment inherited from the local education authority is included in the balance sheet at valuation.

Inherited equipment has been depreciated on a straight-line basis over its remaining useful economic life to the College of between one and three years from incorporation and is now fully depreciated. All other equipment is depreciated over its useful economic life as follows:

• Motor vehicles and general equipment • Computer equipment • General equipment

3 to 7 years; 3 years; S, 7 or 15 years;

Where equipment is acquired with the aid of specific grants, it is capitalised and depreciated in accordance with the above policy, with the related grant being credited to a deferred capital grant account and released to the income and expenditure account over the expected useful economic life of the related equipment.

Leased assets

Costs in respect of operating leases are charged on a straight-line basis over the lease term to the Statement of Comprehensive Income and Expenditure. Any lease premiums or incentives relating to leases signed after 1st August 2014 are spread over the minimum lease term. The College has taken advantage of the transitional exemptions in FRS 102 and has retained the policy of spreading lease

Page 34


premiums and incentives to the date of the first market rent review for leases signed before 1st August 2014.

Leasing agreements which transfer to the College substantially all the benefits and risks of ownership of an asset are treated as finance leases.

Assets held under finance leases are recognised initially at the fair value of the leased asset (or, if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as an obligation under finance leases. Assets held under finance leases are included in tangible fixed assets and depreciated and assessed for impairment losses in the same way as owned assets.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charges are allocated over the period of the lease in proportion to the capital element outstanding.

Investments

Listed investments held as non-current assets and current asset investments, which may include listed investments, are stated at fair value, with movements recognised in Comprehensive Income. Investments comprising unquoted equity instruments are measured at fair value, estimated using a valuation technique.

Cash and cash equivalents

Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable on demand if they are in practice available within 24 hours without penalty.

Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of change in value. An investment qualifies as a cash equivalent when it has maturity of 3 months or less from the date of acquisition.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance ofthe financial instrument's contractual obligations, rather than the financial instrument's legal form.

All loans, investments and short term deposits held by the Group are classified as basic financial instruments in accordance with FRS 102. These instruments are initially recorded at the transaction price less any transaction costs (historical cost). FRS 102 requires that basic financial instruments are subsequently measured at amortised cost, however the College has calculated that the difference between the historical cost and amortised cost basis is not material and so these financial instruments are stated on the balance sheet at historical cost. Loans and investments that are payable or receivable within one year are not discounted.

Foreign currency translation

Transactions denominated in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the end of the financial period with all resulting exchange differences being taken to income in the period in which they arise.

Taxation The College is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable company for UK corporation tax purposes.

Page 35


Accordingly, the College is potentially exempt from taxation in respect of income or capital gains received within categories covered by sections 478-488 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

The College is partially exempt in respect of Value Added Tax, so that it can only recover a minor element ofthe VAT charged on its inputs. Irrecoverable VAT on inputs is included in the costs of such inputs and added to the cost of tangible fixed assets as appropriate, where the inputs themseives are tangibie fixed assets by nature.

Provisions and contingent liabilities

Provisions are recognised when

• the College has a present legal or constructive obligation as a result of a past event; • it is probable that a transfer of economic benefit will be required to settle the obligation; and • a reliable estimate can be made of the amount of the obligation.

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as a finance cost in the statement of comprehensive income in the period it arises.

A contingent liability arises from a past event that gives the College a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the College. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably.

Contingent liabilities are not recognised in the balance sheet but are disclosed in the notes to the financial statements.

Judgements in applying accounting policies and key sources of estimation uncertainty

In preparing these financial statements, management have made the following judgements:

• Determine whether leases entered into by the College either as a lessor or a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.

• Determine whether there are indicators of impairment of the group's tangible assets, including goodwill. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

Other key sources of estimation uncertainty

• Tangible fixed assets Tangible fixed assets, other than investment properties, are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re assessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life ofthe asset and projected disposal values.

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• Local Government Pension Scheme

The present value of the Local Government Pension Scheme defined benefit liability depends on a number of factors that are determined on an actuarial basis using a variety of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions, which are disclosed in note 25, will impact the carrying amount ofthe pension liability. Furthermore a roll forward approach which projects results from the latest full actuarial valuation performed at 31 March 2016 has been used by the actuary in valuing the pensions liability at 30 September 2017. Any differences between the figures derived from the roll forward approach and a full actuarial valuation would impact on the carrying amount of the pension liability.

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2 Funding council grants 30

September 2017 £'000

31 July

2017 £'000

Recurrent grants Education and Skills Funding Agency - adult Education and Skills Funding Agency - 16 -18 High Level ALS Grant Specific Grants Releases of government capital grants Non-Recurrent Grants Funding Bodies

28 176 1,483 8,974 100 626

100 614 24 105

1,735 10,495 Total

3 Tuition fees and education contracts

Adult education fees International students fees Total tuition fees

30 31 July September

2017 2017 £'000 £'000

17 7

24

24 Total

4 Other grants and contracts 30 31 July

September 2017 2017 £'000 £'000

Other Funds 6 26 Other grants and contracts 9 38

Total 15 64

Page 38


5 Other income 30 31 July

September 2017 2017

£'000 £'000

Catering and residences 24 262 Other income generating activities 80 533 Miscellaneous income 53 301

Total 157 1,096

6 Investment income 30 31 July

September 2017 2017

£'000 £'000

8

8

Other interest receivable

7 Donations and Endowment 30 31 July

September 2017 2017 £'000 £'000

Unrestricted donations 1 13

Total 1 13

Page 39


8 Staff costs

The average number of persons (including key management personnel) employed by the College during the year, described as full-time equivalents, was:

Teaching staff Non-teaching staff

30 September 31 July 2017 2017 No. No.

109 112 77 78

186 190

30 September 31 July 2017 2017 £'000 £'000

1,020 6,180 91 560

199 1,193

1,310 7,933

Staff costs for the above persons

Wages and salaries Social security costs Other pension costs

Payroll sub total Contracted out staffing services

Total Staff Costs 1,310 7,933

Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the College and are represented by the College Management Team which comprises the Principal, Deputy Principal, Assistant Principals, Vice Principal and Directors. Staff costs include compensation paid to key management personnel for loss of office.

Emoluments of Key management personnel, Accounting Officer and other higher paid staff

30 September 2017 No.

31 July 2017

No.

The number of key management personnel including the Accounting Officer was:

8 9

Page 40


The number of key management personnel and other staff who received annual emoluments, excluding pension contributions and employers national insurance but including benefits in kind, in the following ranges was:

Senior post-holders 30 September 31 July

2017 2017 No. No.

£1,000 to £30,000 1

£30,001 to £50,000 2 £50,001 to £60,000 3 1 £60,001 to £70,000 3 3 £70,001 to £80,000 1 1 £100,001 to £110,000 1 1

8 9

Other staff 30 September

2017 No.

31 July 2017

No.

7 7

7 7

The figures in table for 30 September 2017 relate to the period of 1 August 2017 to 30 September 2017 and have been annualised for comparative purposes.

Key management personnel compensation is made up as follows: 30 31 July

September 2017 2017 £'000 £'000

Salaries - gross of salary sacrifice and waived 89 507 emoluments Employers National Insurance contributions 11 61 Pension contributions 14 85

Total emoluments 114 653

There were no amounts due to key management personnel that were waived in the year, nor any salary sacrifice arrangements in place. The above compensation includes amounts payable to the Accounting Officer (who is also the highest paid officer) of:

30 31 July September 2017

2017 £'000 £'000

Salaries 18 109 NI contributions 2 14 Pension contributions 3 18

23 141

Page 41


Compensation for loss of office paid to former key management personnel

Estimated value of other benefits, including provisions for pension benefits


2017 £'000 £'000

19

The members of the Corporation other than the Accounting Officer and the staff member did not receive any payment from the institution other than the reimbursement of travel and subsistence expenses incurred in the course of their duties.

9 Other operating expenses

Teaching costs

Non-teaching costs

Premises costs

30 September

2017

£'000

154

139

108

31 July

2017

£'000

963

970

531

Total 401 2,464

Surplus is stated after charging 30 September 2017

31 July 2017

£'000 £'000

Auditors' remuneration:

Financial statements audit

Internal audit

Other services provided by the financial statements auditors

Hire of assets under operating leases

4 19

7

1

25 4

10 Interest payable

On bank loans, overdrafts and other loans:

30 September 31 July 2017 2017 £'000 £'000

32 202 32 202

1 1 21 87

54 290

On finance leases Net interest on defined pension liability

Total

Page 42


11 Taxation The College is not liable for corporation tax arising out of its activities during this period and previous year.

12 Tangible Fixed assets

Land and Equipment buildings Freehold

£'000 £'000

32,111 5,610

60 (22)

32,111 5,648

Total

£'000 Cost or valuation At 1 August 2017 37,721

Additions Disposals

60 (22)

At 30 September 2017 37,759

Depreciation At 1 August 2017 10,440

Charge for the year Elimination in respect of disposals

130

4,590 15,030

59 189 (22) (22)

4,627 15,197

1,021 22,562

1,020 22,691

At 30 September 2017 10,570

Net book value at 30 September 2017 21,541

Net book value at 31 July 2017 21,671

Tangible fixed assets inherited from the LEA at incorporation have been valued by the Corporation on a depreciated replacement costs basis with the assistance of professional advice.

The net book value of equipment includes an amount of £141,000 (2016/17 - £149,000) in respect of assets held under finance leases. The depreciation charge on these assets for the period was £8,000 (2016/17 - £41,000). If fixed assets had not been revalued before being deemed as cost on transition they would have been included at the following historical cost amounts:

£'000

Cost Aggregate depreciation based on cost

Nil Nil

Net book value based on cost Nil

Page 43


13 Intangible Fixed assets

Software Total

£'000 £'000 Cost or valuation At 1 August 2017 and 30 September 2017 66 66

Amortisation At 1 August 2017 1 1 Charge for the year 2 2

At 30 September 2017 3 3

Net book value at 30 September 2017 63 63

Net book value at 31 July 2017 65 65

14 Trade and other receivables


2017 £'000 £'000

Amounts falling due within one year:

Trade receivables 62 18 Prepayments and accrued income 241 222 Other 4 38

Total 307 278

Page 44


15 Current investments

30 September 2017 £'000

31 July 2017

£'000

Short term deposits 1,200

Total 1,200

16 Creditors: amounts falling due within one year

30 September 31 July 2017 2017 £'000 £'000

Bank loans and overdrafts 136 136 Obligations under finance leases 27 27 Trade payables 283 165 Other taxation and social security 272 275 Accruals and deferred income 1,147 652 Deferred income - government capital 648 614 grants Payments received in advance 248 123 Other creditors 380 197

Total 3,141 2,189

Accruals and deferred income include holiday pay accruals of £221,000 in September 2017 (£218,000 in July 2017).

17 Creditors: amounts falling due after one year

30 September 31 July 2017 2017 £'000 £'000

Bank loans 3,096 3,100 Obligations under finance leases 91 91 Deferred income - government capital 12,819 12,962 grants Total 16,006 16,153

Page 45


18 Maturity of debt

(a) Bank loans and overdrafts

Bank loans and overdrafts are repayable as follows:

30 September

2017

31 July 2017

£'000 £'000

In one year or less 136 136

Between one and two years 145 144

Between two and five years 643 649

In five years or more 2,308 2,307

Total 3,232 3,236

Bank loans part fixed at 6.66% and 6.86% repayable by instalments between 1st October 2017 and 29th July 2033 totalling £3,232,000.

(b) Finance leases

The net finance lease obligations to which the institution is committed are:


2017

£'000 £'000

In one year or less 27 27

Between two and five years 91 91

In five years or more

Total 118 118

Finance lease obligations are secured on the assets to which they relate.

Page 46


19 Provisions

Defined Enhanced Total benefit pensions

Obligations

£'000 £'000 £'000

At 1 August 2017 3,494 206 3,700

Expenditure in the period (58) (2) (60)

Transferred from income and expenditure account 98 (1) 97

At 30 September 2017 3,534 203 3,737

Defined benefit obligations relate to the liabilities under the College's membership of the Local Government pension Scheme. Further details are given in Note 25.

The enhanced pension provision relates to the cost of staff who have already left the College's employ and has been recalculated in accordance with guidance issued by the funding bodies.

The principal assumptions for this calculation are:

2017

Price inflation 2.3%

Discount rate 1.3%

20 Cash and cash equivalents

At 1 August Cash Other At30 2017 flows changes September

2017

£'000 £'000 £'000 £'000

Cash and cash equivalents 977 2,110 3,087

Page 47


21 Capital commitments

Commitments contracted for at 30 September


2017

£'000 £'000

59

22 Lease Obligations

At 30 September the College had minimum lease payments under non-cancellable operating leases as follows:

30 September

2017

31 July 2017

£'000 £'000

Future minimum lease payments due

Equipment

Not later than one year 11 14

Later than one year and not later than five years 11 21

later than five years

Total lease payments due 22 35

23 Contingent liabilities

There were no contingent liabilities identified.

24 Events after the reporting period

As a result of the Area Review process conclusion in October 2016, the College has ceased as an entity on 30 September 2017. The assets, liabilities and activities of the college were transferred by way of a gift to a newly established Multi Academy Trust (MAT) - North Hampshire Education Alliance (NHEA) from 1 October 2017.

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25 Defined benefit obligations

The College's employees belong to two principal post-employment benefit plans: the Teachers' Pension Scheme England and Wales (TPS) for academic and related staff; and the Hampshire Local Government Pension Scheme (LGPS) for non-teaching staff, which is managed by Hampshire County Council. Both are multi-employer defined-benefit plans.

The pension costs are assessed in accordance with the advice of independent qualified actuaries. The latest formal actuarial valuation of the TPS was 31 March 2012 and ofthe LGPS 30 September 2017.

Total pension cost for the year 30 September

2017 £'000

88

31 July 2017

£'000

670

333 190

523

Teachers Pension Scheme: contributions paid Local Government Pension Scheme: Contributions paid FRS 102 (28) charge Charge to the Statement of Comprehensive Income

111

58 30

Enhanced pension charge to Statement of Comprehensive Income

Total Pension Cost for Year 199 1,193

Contributions amounting to £169,139 (July 2017:£122,859) were payable to the scheme at 30 September and are included in creditors.

Teachers' Pension Scheme

The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers' Pensions Regulations 2010, and, from 1 April 2014, by the Teachers' Pension Scheme Regulations 2014. These regulations apply to teachers in schools and other educational establishments, including academies, in England and Wales that are maintained by local authorities. In addition, teachers in many independent and voluntary-aided schools and teachers and lecturers in some establishments of further and higher education may be eligible for membership. Membership is automatic for full-time teachers and lecturers and, from 1 January 2007, automatic too for teachers and lecturers in part-time employment following appointment or a change of contract. Teachers and lecturers are able to opt out of the TPS.

Page 49

Queen Mary's College Financiai Statements for the period ended 30 September 2017

25 Defined benefit obligations (continued)

The Teachers' Pension Budgeting and Valuation Account

Although teachers and lecturers are employed by various bodies, their retirement and other pension benefits, including annual increases payable under the Pensions (Increase) Acts are, as provided for in the Superannuation Act 1972, paid out of monies provided by Parliament. Under the unfunded TPS, teachers' contributions on a 'pay-as-you-go' basis, and employers' contributions, are credited to the Exchequeï under arrangements governed by the above Act. Retirement and other pension benefits are paid by public funds provided by Parliament.

The Teachers' Pensions Regulations require an annual account, the Teachers' Pension Budgeting and Valuation Account, to be kept of receipts and expenditure (including the cost of pensions' increases). From 1 April 2001, the Account has been credited with a real rate of return which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return.

Valuation of the Teachers' Pension Scheme

The latest actuarial review of the TPS was carried out as at 31 March 2012 and in accordance with The Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014. The valuation report was published by the Department for Education (the Department) on 9 June 2014. The key results of the valuation are:

• employer contribution rates were set at 16.48% of pensionable pay (including administration fees ofO.08%);

• total scheme liabilities for service to theeffective date of £191,500 million, and notional assets (estimated future contributions together with the notional investments held at the valuation date) of £176,600 million giving a notional past service deficit of £14,900 million;

• an employer cost cap of 10.9% of pensionable pay; • the assumed real rate of return is 3.0% in excess of prices and 2% in excess of earnings. The rate of

real earnings growth is assumed to be 2.75%. The assumed nominal rate of return is 5.06%. The new employer contribution rate for the TPS will be implemented in September 2015. The next valuation of the TPS is currently underway based on April 2016 data, whereupon the employer contribution rate is expected to be reassessed and will be payable from 1 Apri12019.

A full copy of the valuation report and supporting documentation can be found on the Teachers' Pension Scheme website at the following location: https://www.teacherspensions.co.u k/ news/em ployers/2014/06/ pu bi ication-of-the-va I uation report.aspx

Page 50



Scheme Changes

Following the Hutton report in March 2011 and the subsequent consultations with trade unions and other representative bodies on reform of the TPS, the Department published a Proposed Final Agreement, setting out the design for a reformed TPS to be implemented from 1 April 2015.

The key provisions of the reformed scheme include: a pension based on career average earnings; an accrual rate of l/57th; and a Normal Pension Age equal to State Pension Age, but with options to enable members to retire earlier or later than their Normal Pension Age. Importantly, pension benefits built up before 1 April 2015 will be fully protected.

In addition, the Proposed Final Agreement includes a Government commitment that those within 10 years of Normal Pension Age on 1 April 2012 will see no change to the age at which they can retire, and no decrease in the amount of pension they receive when they retire. There will also be further transitional protection, tapered over a three and a half year period, for people who would fall up to three and a half years outside of the 10 year protection.

Regulations giving effect to a reformed Teachers' Pension Scheme came into force on 1 April 2014 and the reformed scheme commenced on 1 April 2015.

The pension costs paid to TPS for the period ended September amounted to £174,104 (July 2017: £1,053,233).

FRS 102 (28)

Under the definitions set out in FRS 102 (28.11), the TPS is a multi-employer pension scheme. The College is unable to identify its share of the underlying assets and liabilities of the scheme.

Accordingly, the College has taken advantage of the exemption in FRS 102 and has accounted for its contributions to the scheme as if it were a defined-contribution plan. The College has set out above the information available on the plan and the implications for the College in terms of the anticipated contribution rates.

Local Government Pension Scheme

The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by Hampshire Local Authority. The total contribution made for the period ended 30 September 2017 was £75,935, of which employer's contributions totalled £58,230 and employees' contributions totalled £17,705. The agreed contribution rates for future years are 17.3 % for employers and range from 5.5% to 8.5% cent for employees, depending on salary.

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Principal Actuarial Assumptions

The following information is based upon a full actuarial valuation of the fund at 31 March 2016 updated to 30 September 2017 by a qualified independent actuary.

At30 At 31 July September

2017 2017

Rate of increase in salaries 2.1% 2.0%

Future pensions increases 2.1% 2.0%

Discount rate for scheme liabilities 2.7% 2.6%

Inflation assumption (CPI) 2.1% 2.0%

Commutation of pensions to lump sums 70% 70%

The current mortality assumptions include sufficient allowance for future improvements in mortality rates. The assumed life expectations on retirement age 65 are:

Males

At30 At 31 July September

2017 2017

Years years

24.0 24.0

27.0 27.0

Rètiring today

Females

Retiring in 20 years

Males 26.0 26.0

Females 29.3 29.3

Page 52



Local Government Pension Scheme (Continued) The College's share of the assets in the plan and the expected rates of return were:

Long-term rate of Fair Value at Long-term rate Fair Value at return expected 30 September of return 31 July 2017 at 30 September 2017 expected at 31 2017 July 2017

£'000 £'000

Equities 4,798 4,749 Debt Instruments 2,297 2,274 Property 510 504 Cash 235 233

Total market value of assets 7,840 7,760

Weighted average expected 2.7% 2.6% long term rate of return

Actual return on plan assets 10 510

The amount included in the balance sheet in respect of the defined benefit pension plan is as follows:

Fair value of plan assets Present value of plan liabilities Present value of unfunded liabilities Net pensions liability (Note 19)

30 September 31 July 2017 2017 £'000 £'000

7,840 7,760 (11,330) (11,210)

(44) (44) (3,534) (3,494)

30 September 31 July 2017 2017 £'000 £'000

90 520 90 520

Amounts included in staff costs Current service cost Total

Amounts included in investment income Net interest income 20 80

20 80

Page 53



Amounts recognised in Other Comprehensive Income

30 September 2017 £'000

31 July 2017 £'000

Return on pension plan assets Experience gainsj(losses) arising on defined benefit obligations Changes in assumptions underlying the present value of plan iiabiiities

10 510 50

Amount recognised in Other Comprehensive Income 10 5GO

Movement in net defined benefit liability during the year

Deficit in scheme at 1 August (3,494) (3,784) Movement in year:

Current service cost (90) (520) Employer contributions 60 330 Net interest on the defined (liability)jasset (20) (80) Actuarial gain or loss 10 560

Net defined benefit liability at 31 July (3,534) (3,494)

Asset and Liability Reconciliation 30 31July 2017

September 2017 £'000 £'000

Changes in the present value of defined benefit obligations

Defined benefit obligations at start of period Current Service cost Interest cost Contributions by Scheme participants Experience gains and losses on defined benefit obligations Changes in financial assumptions Estimated benefits paid Defined benefit obligations at end of period

11,210 90 50 20

10,600 520 250 100 (50)

(40) 11,330

(210) 11,210

Reconciliation of Assets

Fair value of plan assets at start of period Interest on plan assets Return on plan assets Employer contributions Contributions by Scheme participants Estimated benefits paid Fair value of plan assets at end of period

7,760 6,860 30 170 10 510 60 330 20 100

(40) (210) 7,840 7,7GO

Page 54


26 Related party transactions

Due to the nature of the College's operations and the composition of the board of governors being drawn from local public and private sector organisations, it is inevitable that transactions will take place with organisations in which a member of the board of governors may have an interest. All transactions involving such organisations are conducted at arm's length and in accordance with the College's financial regulations and normal procurement procedures.

The total expenses paid to or on behalf of the Governors during the period of August and September were nil (July 2017: £233). This represents travel and subsistence expenses and other out of pocket expenses incurred in attending Governor meetings and charity events in their official capacity. No Governor has received any remuneration or waived payments from the College or its subsidiaries during the period (July 2017: None).

27 Amounts disbursed as agent

Learner support funds 30 September

2017 £'000

31 July 2017 £'000

Funding body grants Bursary support Discretionary learner support

79 134

79 134

Disbursed to students (128) Administration costs (6)

Balance unspent as at 30 September, included in creditors 79

Funding body grants are available solely for students. In the majority of instances, the College only acts as a paying agent. In these circumstances, the grants and related disbursements are therefore excluded from the Statement of Comprehensive Income.

Page SS


Reporting accountant's assurance report on regularity INDEPENDENT REPORTING ACCOUNTANT'S ASSURANCE REPORT ON REGULARITY TO THE BOARD OF TRUSTEES OF NORTH HAMPSHIRE EDUCATION ALLIANCE IN RESPECT OF QUEEN MARY'S COLLEGE, AND THE SECRETARY OF STATE FOR EDUCATION ACTING THROUGH THE DEPARTMENT FOR EDUCATION

Conclusion

We have carried out an engagement, in accordance with the terms of our engagement letter dated 3 November 2017 and further to the requirements of the Funding Agreement published by the Education Funding Agency to obtain limited assurance about whether the expenditure disbursed and income received by Queen Mary's College (the 'Dissolved College') during the period 1 August 2017 to 30 September 2017 have been applied to the purposes identified by Parliament and the financial transactions conform to the authorities which govern them.

In the course of our work nothing has come to our attention which suggests that in all material respects the expenditure disbursed and income received during the period 1 August 2017 to 30 September 2017 has not been applied to purposes intended by Parliament and the financial transactions do not conform to the authorities which govern them.

Basis for conclusion

The framework that has been applied is set out in the Post-16 Audit Code of Practice 2016 to 2017 issued by the Department for Education. In line with this framework, our work has specifically not considered income received from the main funding grants generated through the Individualised Learner Record (ILR) returns, 'for which Education and Skills Funding Agency has other assurance arrangements in place.

We are independent of the Dissolved College and North Hampshire Education Alliance in accordance with the ethical requirements that are applicable to this engagement and we have fulfilled our ethical requirements in accordance with these requirements. We believe the assurance evidence we have obtained is sufficient to provide a basis for our conclusion

Responsibilities of the board of trustees of North Hampshire Education Alliance in respect of Queen Mary's College for regularity

The governing body of the Dissolved College was responsible, under the funding agreement and the requirements of the Further & Higher Education Act 1992, subsequent legislation and related regulations and guidance, for ensuring that expenditure disbursed and income received is applied for the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. The board of trustees of North Hampshire Education Alliance is responsible for preparing the Trustees Statement of Regularity, Propriety and Compliance.

Page 56


Reporting accountant's responsibilities for reporting on regularity

Our responsibilities for this engagement are established in the United Kingdom by our profession's ethical guidance and are to obtain limited assurance and report in accordance with our engagement letter and the requirements of the Post-16 Audit Code of Practice 2016 to 2017.

The objective of a limited assurance engagement is to perform such procedures as to obtain information and explanations in order to provide us with sufficient appropriate evidence to express a negative conclusion on regularity. A limited assurance engagement is more limited in scope than a reasonable assurance engagement and the procedures performed vary in nature and timing from, and are less in extent than for a reasonable assurance engagement; consequently a limited assurance engagement does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express a positive opinion.

We report to you whether anything has come to our attention in carrying out our work which suggests that in all material respects, expenditure disbursed and income received during the period 1 August 2017 to 30 September 2017 have not been applied to purposes intended by Parliament or that the financial transactions do not conform to the authorities which govern them.

Our work included identification and assessment of the design and operational effectiveness of the controls, policies and procedures that have been implemented to ensure compliance with the framework of authorities including the specific requirements of the funding agreement with the Education Funding Agency and high level financial control areas where we identified a material irregularity is likely to arise. We undertook detailed testing, on a sample basis, on the identified areas where a material irregularity is likely to arise where such areas are in respect of controls,

. policies and procedures that apply to 'classes of transactions.

This work was integrated with our audit of the financial statements and evidence was also derived from the conduct of that audit to the extent it supports the regularity conclusion.

This report is made solely to the board of North Hampshire Education Alliance in respect of Queen Mary's College, and the Secretary of State for Education acting through the Department for Education in accordance with the terms of our engagement letter. Our work has been undertaken so that we might state to the board of North Hampshire Education Alliance, in respect of Queen Mary's College, and the Secretary of State for Education acting through the Department for Education those matters we are required to state in a report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the board of North Hampshire Education Alliance and the Secretary of State for Education acting through the Department for Education for our work, for this report, or for the conclusion we have formed.

(~MLLL ~uP RSM UK AUDIT LLP Chartered Accountants Portland, 25 High Street Crawley, West Sussex. RH10 1BG

.1.b k..~ A..ol ~ . Page 57

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Queen Mary's College Report and Financial Statements for ... Financial Statements... · During 2013/14 the College adopted a strategic plan for the period 2013 to 2018. This plan