LOWESTOFT SIXTH FORM COLLEGE Report and …€¦ · · 2018-02-23Quality of Teaching and Learning...

LOWESTOFT SIXTH FORM COLLEGE

Report and Financial Statements

for the year ended 31 July 2017

LOWESTOFT SIXTH FORM COLLEGE Financial Statements for the Year Ended 31 July 2017

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 in 2016/17:

Yolanda Botham, Principal and CEO; Accounting Officer David Gartland, Deputy Principal Claire Eaton, Finance Manager

Board of Governors

A full list of Governors is given on pages 13 and 14 of these financial statements.

Mrs R Robson acted as Clerk to the Corporation throughout the period.

Professional advisers

Financial statements auditors and reporting accountants:

RSM UK Audit LLP Abbotsgate House Hollow Road Bury St. Edmunds Suffolk IP327FA

Banker:

Barclays Bank 1 Churchill Place London E145HP

Solicitors:

Mills & Reeve LLP 1 St James Court, Whitefriars Norwich NR31RU

Birketts LLP 24-26 Museum Street Ipswich Suffolk IP1 1HZ

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CONTENTS Page number

Report of the Governing Body

Statement of Corporate Governance and Internal Control

Governing Body's statement on the College's regularity, propriety and

compliance with Funding body terms and conditions of funding

Statement of Responsibilities of the Members of the Corporation

Independent Auditor's Report to the Corporation of Lowestoft Sixth

Form College

Statement of Comprehensive Income

Balance Sheet as at 31 July

Statement of Changes in Reserves

Statement of Cash Flows

Notes to the Accounts

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12

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REPORT OF THE GOVERNING BODY:

NATURE, OBJECTIVES AND STRATEGIES: The members of the governing body present their report and the audited financial statements for the year ended 31 July 2017.

legal status

The Corporation was established under the Further and Higher Education Act 1992 for the purpose of conducting Lowestoft Sixth Form College. The College is an exempt charity for the purposes of Part 3 of the Charities Act 2011.

The Corporation was incorporated as Lowestoft Sixth Form College on 23 March 2010.

Mission

In June 2011 the Corporation adopted a mission statement as follows:

"Our mission is to enable our students to excel and progress beyond expectation in an outstanding learning environment in the heart of Lowestoft."

Public Benefit

Lowestoft Sixth Form College is an exempt charity under the Part 3 of the Charities Act 2011 and following the machinery of government changes in 2016 its principal regulator is the Secretary of State for Education. The members of the Governing Body, who are trustees of the charity, are disclosed on pages 13and14.

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.

Implementation of strategic plan

In July 2017 the College approved the strategic plan for the period 1 August 2017 to 31 July 2019. The Corporation monitors the performance of the College against these plans. The plans are reviewed and updated each year. The College's strategic objectives are:

Quality of Teaching and Learning - Enhance Further to provide excellent teaching, foster an innovative, creative culture of learning to achieve or exceed our annual targets for student retention, achievement and success

2 Think Big. There is a world beyond Lowestoft. To prepare our students to face and relish the challenges ahead

3 Community Partnerships for transition & growth 4 Invest in, encourage and develop all colleagues 5 Robust finances 6 Successful Merger

These objectives are achieved through the implementation and monitoring of a detailed annual operating plan, which includes actions and targets assigned to individual managers. Progress against these targets is reported throughout the year to Corporation.

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REPORT OF THE GOVERNING BODY (continued) Financial objectives

During the year of these statements the College's financial objectives were to:

• Maintain a sound financial base in terms of liquidity and solvency • Maintain sound financial management • Maintain the confidence of Funding Bodies, Suppliers, Bankers & Auditors

Finance Key Performance Indicators (KPls)

The following financial KPls are used to report to the College leadership team, Finance and General Purposes Committee (F&GP) and the Corporation:

Key performance Indicator Measure/Target (Per Actual for 2016/17 2016/17 Budget)

Operating surplus/sector EBITDA as % of income (4.5%) 1.3%

Staff costs as % of income 74% 71%

Operating cash flow (£81k) £176k

Cash days in hand 28 66

Liquidity (adjusted current ratio) 0.9 1.5

Borrowing as % of income Nil Nil

Reliance on ESFA income 96% 93%

Financial Health Score Satisfactory Good

The College is committed to observing the importance of sector measures and indicators. 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 an acceptable outcome, demonstrating the improvement in financial performance 2016/17 compared to the budget for the year and the prior year's performance.

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REPORT OF THE GOVERNING BODY (continued)

FINANCIAL POSITION Financial results

The College generated a surplus before other gains and losses in the year of £41 ,000 (2015/16 - deficit of £368,000), with total income of £3,638,000, (2015/16 - £3,388,000)).

The College has an accumulated deficit of £75,000 and cash and short term investment balances of £593,000. The College wishes to continue to accumulate reserves and cash balances in order to maintain a reserve for reinvestment.

There were £5k of tangible fixed asset additions during the year.

The College has significant reliance on the education sector funding bodies for its principal funding source, largely from recurrent grants. In 2016/17 the FE funding bodies provided 93% of the College's total income.

Treasury policies and objectives

Treasury management is the management of the College's cash flows, its banking 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 College's Funding Agreement with the ESFA. All other borrowing requires the authorisation of the Corporation. The College has a short term overdraft facility in place of £250,000. This was not required in the year to 31 July 2017.

Cash flows

Cash inflow from operations was £176,000 (2016: cash outflow of £256,000) during the year.

Liquidity

The College had no borrowings at 31 July 2017. Throughout the year of these statements the College maintained a positive cash balance.

Reserves policy

The College has no formal Reserves Policy but 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 (£75,000) (2016: (£425,000)). It is the Corporation's intention to increase reserves over the life of the strategic plan through the generation of annual operating surpluses.

CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE

Financial health

The College's assessment of its financial health for the year ending 31 July 2017 is good, rated using the ESFA automated scoring system, an improvement on the budget assessment for the full year of satisfactory, due to the surplus on the Statement of Comprehensive Income, the current ratio and absence of debt.

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Student numbers and achievements

The College enrolled 685 students in September 2016. This increased to 745 students in September 2017.

Students continue to prosper at the College, with the Summer 2017 results showing improved achievement rates against last year for both A level and vocational (BTEC) cohorts.

For A level achievement rates improved to 97.3%, 1.4% above the national average, for AS level the achievement rate was 85.4%, 4.7% above the national average, for BTEC L3 the achievement rate was 94.4%, 6.2% above the national average, GCSE grades at A - C were significantly above the sector average at 49.8%, whilst the functional skills pass rate was significantly above the national average at 29.1%.

Student progression at Level 3 was 81 %, an increase from 80% in 2016, and value added was excellent:

• 85.5% of A Level students achieved at or above their ALPs target grade, recording a value added rating of ALPS 2, which is performance in the top 5% of the country.

• 76.6% of BTEC students achieved at or above their ALPs target grade, recording a value added rating of ALPS 3, which is performance in the top 25% of the country.

• 73.3% of AS students achieved at or above their ALPs target grade, recording a value added rating of ALPS 2, performance in the top 10%.

Curriculum developments

The College curriculum for 2016/2017 has been carefully planned to provide a wide range of courses at both levels Two and Three. It is designed to include the specialisms of local partner schools and facilitate smooth progression. It is also intended to dovetail rather than compete with the provision at East Coast College.

• STEM (Science, Technology, Engineering and Maths) Internships

The student STEM Internships project, a collaboration of The Ogden Trust, The Royal Academy of Engineering, Best Proactive and Lowestoft Sixth Form College, has been a huge success winning the East of England Energy Award for Innovation and providing very valuable industry experience for students. This project will be continued and expanded for 2017/18. The project is underpinned by excellent teaching across all STEM subjects as evidenced by 2017 outcomes - A level Maths and Physics results in the top 1 % nationally, A level Biology and Chemistry in the top 10%.

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 2016 to 31 July 2017, the College paid 87.6 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

Following the completion of the wave 5 Area Review of Colleges in Suffolk and Norfolk and the publication of the review findings and recommendations in August 2017, the College continues to pursue a merger with East Coast College, with a view to the completion of the merger by August 2018.

The College continues to meet regularly with the ESFA Intervention team to discuss performance against the 2017/18 budget and financial plan and progress towards merger.

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RESOURCES: The College has various resources that it can deploy in pursuit of its strategic objectives.

Tangible resources include the main college site, and access to outstanding sporting facilities at Barnards Centre Point and at Water Lane Leisure Centre.

Financial

The College has net liabilities of £75,000 (including £183,000 pension liability) (2016: £425,000 of net liabilities including £416,000 pension liabilities.)

People

The College employs 57 people (expressed as full time equivalents), of whom 30 are teaching staff.

Reputation

The College was opened in 2011 and its reputation is growing every year as evidenced by the significant increase in student enrolments from our three local partner schools (Benjamin Britten Academy, East Point Academy and Ormiston Denes Academy). In September 201743% of the Year 11 students from these schools enrolled, compared to 34% in September 2011, along with a significant increase in the number of enrolments from Norfolk schools.

The College's current OFSTED rating is Good across all categories and for all subject areas inspected, as set out in the inspection report issued in May 2015. The College is proud of what has been achieved and is ready for the next challenge. As Ofsted inspectors noted: 'leaders and managers have a clear vision for the college and are strongly committed to providing an outstanding experience for students.'

A copy of the full report is available on our website www.lowestoftsfc.ac.uk and via www.ofsted.co.uk.

The college has a clear marketing strategy in place to build awareness. This has been achieved through the creative use of new media (Facebook, Facebook advertising, Twitter) as well as the more traditional local press advertorials, leaflet campaigns, Open Days and attendance at school Option Evenings and Careers events.

Every student is a College ambassador and students are encouraged to contribute to their local community in a number of ways. The most obvious is to volunteer. Placements are arranged through the College, current students are working in local primary schools, day centres for the elderly, in animal welfare and more.

PRINCIPAL RISKS AND UNCERTAINTIES: The College has undertaken further work during the year 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.

Based on the strategic plan, the Risk Management Group 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 Risk Management Group 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 the 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.

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REPORT OF THE GOVERNING BODY (continued) 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. In 2016/17, 93% of the College's revenue was ultimately publicly 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.

This risk is mitigated in a number of ways:

• 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 ESFA

• By developing closer links and partnership working with other local providers

2. Student numbers

The College has planned its future financial position on the prudent assumption of no growth in student numbers, any growth achieved will determine the funding available from the ESFA.

This risk is mitigated in a number of ways:

• Close partnership with local schools

• Annual review of the curriculum offer

• Y12- Y13 Expression of Intent Progression Data collected and analysed in March. Y12 Level 2 early enrolment process in June.

• Attendance & Retention data reported to the Leadership Team (LT) monthly

• Robust Pastoral Support

• Enrichment offer publicised

• Key data shared regularly with appropriated Corporation Committees

• Bursary Fund and other financial support promoted regularly

3. Maintain adequate funding of pension liabilities

The financial statements report the share of the Local Government Pension Scheme deficit on the College's balance sheet in line with the requirements of FRS 102.

The risk is mitigated by an agreed deficit recovery plan with Suffolk County Council.

4. Failure to maintain the financial viability of the College

The College's current financial health grade is classified as "good" as described above. 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

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STAKEHOLDER RELATIONSHIPS In line with other colleges, Lowestoft Sixth Form College has many stakeholders. These inelude:

• Students;

• Funding Councils;

• Sixth Form Commissioner;

• Staff;

• Local employers (with specific links);

• Local Authorities;

• The local community;

• Other FE institutions;

• Trade unions;

• Professional bodies.

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

Equal opportunities and employment of disabled persons

Lowestoft Sixth Form College is committed to the principle of equal opportunity in education and will not unlawfully discriminate on the basis of any protected characteristics, which inelude age, disability, gender reassignment, pregnancy or maternity, race, religion or belief, sex or sexual orientation.

The College's Equality and Diversity Policy is available on the College's intranet site. This policy will be resourced, implemented and monitored on a planned 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 that 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 members of the Corporation.

Equality statement

The College seeks to achieve the objectives set down in the Disability Discrimination Act 1995 as amended by the Special Education Needs and Disability Acts 2001 and 2005.

a) The College has appointed an Additional Learning Support Coordinator, who provides information, advice and arranges support where necessary for students with disabilities.

b) There is a list of specialist equipment which the College can make available for use by students and a range of assistive technology is available in the learning centre.

c) The College has a elear Admissions Policy.

d) 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.

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

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REPORT OF THE GOVERNING BODY (continued) 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 members of the Corporation on 7 December 2017 and signed on its behalf by:

David Bye

Chair of the Corporation

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Statement of Corporate Governance and Internal Control The following statement is provided to enable readers of the annual report and accounts of the College to obtain a better understanding of its governance and legal structure. This statement covers the period from 1 st August 2016 to 31 st July 2017 and up to the date of approval of the annual report and financial statements.

The College endeavours to conduct its business:

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

ii. having due regard to the UK Corporate Governance Code 2016 ("the Code") insofar as it is applicable to the further education sector.

We have reported on our Corporate Governance arrangements by drawing upon best practice available, including those aspects of the UK Corporate Governance Code 2016 we consider to be relevant to the further education sector and best practice.

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.

The College is an exempt charity within the meaning of Part 3 of the Charities Act 2011. The members of the Corporation, 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.

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Statement of Corporate Governance and Internal Control (continued)

The Corporation

The members who served on the Corporation during the year and up to the date of signature of this report were as listed in the table below:

Date of Term of Date of Status of Committees Attendance appointment office resignation appointment served at Corp

Meetings to 31/0712017

David Bye 23/10/2010 4 years Independent Search & 100% Member Governance,

Reappointed Finance & General

01/08/2014 4 years Purposes, Remuneration

Yolanda 07/09/2010 N/A Principal Search & 100% Botham Governance,

Finance & General Purposes, Curriculum, Quality & Standards

Sarah Adams 15/10/2013 2 years Term of Parent Member Curriculum, Quality 83% Office ended & Standards, Audit

15/07/2014 Reappointed 4 years Independent

Member 15/07/2014

David Carlin 15/07/2014 4 years Independent Finance & General 17% Member Purposes

Roger Cracknell 17/07/2012 4 years Independent Audit, Curriculum, 83% Member Quality &

Reappointed Standards,

12/07/2016 4 years Remuneration

Gary Flatt 07/12/2010 4 years Independent Audit, 67% Member

Reappointed Curriculum Quality & Standards

01/08/2014 4 years

Mark Flynn 17/07/2012 4 years Independent Audit, 67% Member Remuneration

Reappointed 12/07/2016

4 years

Keith Hunter 23/10/2010 4 years Independent Search & 83% Member Governance,


01/08/2014 4 years Purposes, Curriculum, Quality & Standards, Remuneration

Kirk Lower 23/10/2010 4 years Independent Search & 83% Member Governance,


01/08/2014 4 years Purposes, Remuneration

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Lauraine 14/10/2014 2 years Term of Parent Curriculum, 83% Osborne Office ended Member Quality &

Standards 31/07/2016

Reappointed 2 years Parent

20/10/2016 Member

Martyn 13/10/2015 4 years Independent Audit 67% Payne Member

Ron Stainsby 15/10/2013 4 years Independent Finance & 83% Member General

Purposes,

Reappointed 4 years Curriculum,

13/07/2017 Quality & Standards

Andrew Tink 13/12/2011 4 years 13/07/2017 Staff Member Curriculum, 67%

Reappointed Quality & Standards

01/08/2015 4 years

Shannon 20/10/2016 1 year Term of Student Curriculum, 17% Grimmer Office ended Member Quality &

31/07/2017 Standards

Orlagh Maye 20/10/2016 1 year Left College Student Curriculum, 0% 26/01/2017 Member Quality &

Standards

Andrew 17/10/2017 4 years Staff Member Curriculum, N/A Timberlake Quality &

Standards

Chloe 17/10/2017 1 year Student Curriculum, N/A O'Dwyer Member Quality &

Standards

Georgina 17/10/2017 1 year Student Curriculum, N/A Pell Member Quality &

Standards

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 each 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 general purposes, remuneration, search, curriculum, quality and standards and audit. Full minutes of all meetings, except those deemed to be confidential by the Corporation, are available on the College's website at www.lowestoftsfc.ac.uk or from the Clerk to the Corporation at:

Lowestoft Sixth Form College Rotterdam Road Lowestoft Suffolk NR322PJ

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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 of their 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 Committee, consisting of four 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.

Corporation Performance

The Corporation carried out a self-assessment of its own performance for the year ended 31 st July 2017 and graded itself as "Outstanding" on the Ofsted scale.

Remuneration Committee

Throughout the year ending 31 July 2017 the College's Remuneration Committee comprised five members of the Corporation. 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 for the year ended 31 July 2017 are set out in note 5 to the financial statements.

Audit Committee

The Audit Committee comprises five members of the Corporation (excluding the Accounting Officer and Chair). 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 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.

Management is responsible for the implementation of agreed audit recommendations and is required to report to Audit Committee on the extent that this has been achieved.

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 responsibility to the Principal, 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 Lowestoft Sixth Form College 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 Lowestoft Sixth Form College for the year ended 31 July 2017 and up to the date of approval of the annual report and 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 ending 31 July 2017 and up to the date of approval of the annual report and 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 ineluding the segregation of duties, and a system of delegation and accountability. In particular, it ineludes:

• 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

• elearly defined capital investment control guidelines

• the adoption of formal project management disciplines, where appropriate.

Lowestoft Sixth Form College has not appointed an internal audit service for the year ended 31 st July 2017. For that year, the College management and Governors have assessed the internal controls and developed a Board Assurance Framework, clearly showing the mapping of assurance sources against the risks identified.

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Statement of Corporate Governance and Internal Control (continued) The College analysed the risks to which it was exposed and a programme of assurance was agreed with the Audit Committee. The Committee was provided with regular reports on this assurance activity in the College which included:

• a review of HR Safeguarding arrangements and sickness procedures undertaken by BAJ Consultancy

• a review of all Health and Safety systems and procedures by System2 Consulting

• Area Review Wave 5 reports and recommendations, along with supporting papers

• regular meetings with East Coast College to consider strategic direction

• regular meetings with ESFAIJoint Intervention Team to review the Early Intervention regime requirements which include review of monthly management accounts

• The College Self-Assessment Report and action plan is reviewed by a 'critical friend' a colleague in an outstanding provider.

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 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 and the reporting accountant for regularity assurance 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 other sources of assurance, and a plan to address weaknesses and ensure continuous improvement of the system is in place.

The leadership 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 leadership team and the Audit Committee also receive regular reports from external 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. At its December 2017 meeting, the Corporation carried out the annual assessment for the year ended 31 July 2017 by considering documentation from the leadership team, and taking account of events since 31 July 2017.

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

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Statement of Corporate Governance and Internal Control (continued) Going concern

After making appropriate enquiries, the Corporation considers that the College has adequate resources to continue in operational existence for the foreseeable future.

The Corporation has decided to pursue a merger with East Coast College with an expectation that this will take place during 2018.

For this reason, the financial statements are prepared on a basis other than going concern on the assumption that the merger is effective during 2018. The assets and liabilities will be transferred as part of the merger at their carrying value. No material adjustment arose of ceasing to apply the going concern basis.


J~ landa Botham

Accounting Officer David Bye Chair of the Corporation

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Statement of regularity, propriety and compliance The Corporation has considered its responsibility to notify the Education and Skills Funding Agency 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 Corporation, 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 terms and conditions of funding 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 Education and Skills Funding Agency.

~"-b~ Yolanda Botham

Accounting Officer

David Bye

Chair of Governors

Date 7 - l;)_ .(1 Date 7. ()_ . (e

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Statement of Responsibilities of the Members of the Corporation The members of the Corporation are required to present audited financial statements for each financial year.

The law applicable to charities in England and the terms and conditions of the Funding Agreement between the Education and Skills Funding Agency and the Corporation of the College, requires the corporation of the college to prepare financial statements and the Report of the Governing Body for each financial year in accordance with the Statement of Recommended Practice - Accounting for Further and Higher Education Institutions the annual Accounts Direction issued jointly by the Skills Funding Agency and the Education Funding Agency, and applicable United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and which give a true and fair view of the state of affairs of the College and of the College's surplus/deficit of income over expenditure for that period.

In preparing the financial statements, the corporation 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 Corporation is responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the College, and which enable it to ensure that the financial statements are prepared in accordance with the Charities Act 2011 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 Corporation of the College; 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.

Members of the Corporation are responsible for ensuring that funds from the Education and Skills Funding Agency are used only in accordance with the authorities that govern them as defined by and in accordance with Further & Higher Education Act 1992, subsequent legislation and related regulations and the Funding Agreement with the Education and Skills Funding Agency and any other conditions that may be prescribed from time to time.


David Bye


20


Independent auditor's report to the Corporation of Lowestoft Sixth Form College Opinion We have audited the financial statements of Lowestoft Sixth Form College (the "College") for the year ended 31 July 2017 which comprise the college statement of comprehensive income, the college balance sheet, the 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 14 July 2017.

In our opinion the financial statements: • give a true and fair view of the state of the College's affairs as at 31 July 2017 and of the College's

surplus of income over expenditure for the year 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) (ISAs (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 college in accordance with the ethical requirements that are relevant to our audit of the 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 We draw attention to the accounting policies in the financial statements, which indicates that the Governors are pressing forward with plans to merge the operation of Lowestoft Sixth Form College with another college, which may result in the transfer of Lowestoft Sixth Form College's trade, assets and liabilities to another entity and the cessation of trade. The transfer could take place during 2018. For this reason, the financial statements have been prepared on a basis other than going concern. No material adjustments arose as a result of ceasing to apply the going concern basis of accounting. Our opinion is not modified in respect of this matter.

Other information The governors are responsible for the other information. The other information comprises the information included in the Report of the Governing Body other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other 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.

21


Independent auditor's report to the Corporation of Lowestoft Sixth Form College (continued)

Responsibilities of the Corporation of Lowestoft Sixth Form College As explained more fully in the Statement of the Members Responsibilities set out on page 19, the Corporation 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 Corporation 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 Corporation is responsible for assessing the 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 Corporation either intend to liquidate the 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.ukJauditorsresponsibilities this description forms part of our auditor's report.

This report is made solely to the Corporation, as a body, in accordance with the Funding Agreement published by the Education Funding Agency and our engagement letter dated 14 July 2017. Our audit work has been undertaken so that we might state to the Corporation, as a body, those matters we are required under our engagement letter dated 14 July 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 Corporation, as a body, for our audit work, for this report, or for the opinions we have formed.

RSM UK AUDIT LLP Chartered Accountants Abbatsgate Hause Hollow Road Bury St Edmunds Suffolk IP327FA

19 December 2017

22


Statement of Comprehensive Income Notes Year ended 31 July

2017

£'000 £'000 INCOME

Funding body grants 2 3,547

Other income 3 90 Investment income 4

Total income 3,638

EXPENDITURE Staff costs 5 2,343

Other operating expenses 6 848

Depreciation 8 391 Interest and other finance costs 7 15

Total expenditure 3,597

Surplus/(deficit) before other gains and 41 losses

Taxation

Surplus/(deficit) for the year 41

Actuarial gain in respect of defined benefit 15 309 pensions schemes Total Comprehensive Income for the year 350

Year ended 31 July 2016

£'000 £'000

3,254

132

2

3,388

2,331

925 485

15

3,756

(368)

(368)

(89)

(457)

23


Balance sheet as at 31 July Notes

2017 2016

£'000 £'000

Fixed assets

Tangible Fixed assets 8 16,864 17,250

16,864 17,250

Current assets

Debtors 9 66 66

Cash at bank and in hand 593 424

659 490 Current liabilities - amounts falling due 10 (950) (904) within one year Net current liabilities (291) (414)

Total assets less current liabilities 16,573 16,836

Creditors - amounts falling due after more 11 (16,465) (16,845) than one year

Provisions

Defined benefit pension schemes 15 (183) (416)

Total net liabilities (75) (425)

Unrestricted Reserves

Income and expenditure account (75) (425)

Total unrestricted reserves (75) (425)

The financial statements on pages 23 to 41 were approved and authorised for issue by the Corporation on 7 December 2017 and were signed on its behalf on that date by:

David Bye


Yolanda Botham

Accounting Officer

24


Statement of Changes in Reserves Total

£'000

Balance at 31st July 2015 32

Deficit from the income and expenditure account Other comprehensive income

(368)

(89)

Balance at 31 July 2016 (425)

Total

£'000

Balance at 31st July 2016 (425)

Surplus from the income and expenditure account

Other comprehensive income

41

309

Total comprehensive income for the year 350

Balance at 31 July 2017 (75)

25


Statement of Cash Flows

Cash flow from operating activities Surplus/Deficit for the year Adjustment for non-cash items Depreciation

(Increase)/decrease in debtors Increase/(decrease) in creditors due within one year

Decrease in creditors due after one year

Pensions costs less contributions payable Adjustment for investing or financing activities Investment income

Interest payable

Net cash flow from operating activities

Notes 2017 2016 £'000 £'000

41 (368)

391 485 3

46 (29) (380) (400)

76 51

(1 ) (2) 3 4

176 (256)

Investing activities Investment income

Payments made to acquire fixed assets

1

(5)

2

(4) 2

Financing activities Interest paid (3) (4)

(3) (4)

Increase / (decrease) in cash and cash equivalents in the year 169 (258)

Cash and cash equivalents at beginning of the year 424 682

Cash and cash equivalents at end of the year 593 424

26


Notes to the Accounts 1. Accounting Policies

General Information

Lowestoft Sixth Form College is a corporation established under the Further and Higher Education Act 1992 as an English sixth form college of further education. The address of the College's principal place of business is given on page 14. The nature of the College's operations are set out in the Report of the Governing Body.

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.

Basis of Accounting

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 SORP), 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 principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently applied to all the years presented, unless otherwise stated.

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

Going Concern

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

The College's forecasts and financial projections demonstrate that it will be able to operate within the funding allocation confirmed by the ESFA for 2017/18.

Accordingly, the members of the Corporation have a reasonable expectation that the College has adequate resources to meet its liabilities as they fall due for a period of at least twelve months from the date of signing of these statements, as the overdraft facility in place is not forecast to be required in the period to December 2018, despite the net liabilities position at 31 July 2017.

The College's latest financial forecast results in an assessment of satisfactory financial health by the end of the 2017/18 and 2018/19.

The College continues to monitor performance against budget and to share the results of this monitoring work with the ESFAlJoint Intervention Team.

Following the completion of the Norfolk and Suffolk Area Review in March 2017 the College decided that it intended to pursue a merger with East Coast College on the grounds that this course would allow the continuation of the outstanding learning environment in Lowestoft whilst protecting the Sixth Form College ethos and ensure the very best possible education for our current and future students. The collective expertise of both colleges could lead to exciting collaborative opportunities for future sixth form provision in the area.

The College has been working with the ESFA and East Coast College with an expectation that merger will take place during 2018. Accordingly, the College is pressing forward with the planned merger, with College governors attending East Coast College board meetings and working groups of senior post holders from both Colleges to take this work forward and intends to share the merger proposal and consult all stakeholders in Spring 2018.

27


Notes to the Accounts (continued) Therefore, the financial statements are prepared on a basis other than going concern on the basis that the merger is effective during 2018. The assets and liabilities will be transferred as part of the merger at their carrying value. No material adjustment arose as a result of ceasing to apply the going concern basis.

Recognition of income

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 measured in line with best estimates for the period of what is receivable and depend on the particular income stream involved. 16-18 learner-responsive funding is not normally subject to reconciliation and is therefore not subject to contract adjustments, and is recognised when receivable.

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.

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 capital grants are recognised in income when the College is entitled to the funds subject to any performance related conditions being met.

All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned on a receivable basis.

Retirement benefits

Post-employment benefits to employees of the 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.

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 the Government Actuary on the basis of valuations using a projected unit method. The TPS is a multi employer scheme but sufficient information is not available to use defined benefit accounting and therefore it is accounted for as a defined contribution scheme, with the amount charged to the statement of comprehensive income being the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments.

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 and liabilities 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 other comprehensive income.

Actuarial gains and losses are recognised immediately in other recognised 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.

28


Notes to the Accounts (continued)

Tangible fixed assets

Tangible fixed assets are stated at deemed cost less accumulated depreciation.

Bui/dings

Leasehold buildings are depreciated on a straight line basis over their expected useful lives of 50 years. The College has a policy of depreciating major adaptations to buildings over the period of their useful economic life of between 20 and 50 years.

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, but not to adopt a policy of revaluations of these properties in the future.

Subsequent expenditure on existing fixed assets

Where significant expenditure is incurred on tangible fixed assets after initial purchase it is charged to income in the period it is incurred, unless it increases the future benefits to the College, in which case it is capitalised and depreciated on the relevant basis.

Equipment

Equipment costing less than £1,000 per individual item is recognised as expenditure in the period of acquisition. All other equipment is capitalised at cost.

Capitalised equipment is depreciated on a straight-line basis over its remaining useful economic life as follows:

• motor vehicles • computer equipment • furniture • fixtures and fittings

Leased assets

Costs in respect of operating leases are charged on a straight-line basis over the lease term.

3 years 3 years 5 years 3 years

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.

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. 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.

Financial Instruments

The College has chosen to adopt Section 11 of FRS 102 in full in respect of financial instruments.

29



Financial assets and liabilities

Financial assets and financial liabilities are recognised when the College becomes a party to the contractual provisions of the instrument,

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

All financial assets and liabilities are initially measured at transaction price (including transaction costs). A financial asset or financial liability that is payable or receivable in one year is measured at the undiscounted amount expected to be received or paid net of impairment.

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.

Agency arrangements

The College acts as an agent in the collection and payment of discretionary support funds. Related payments received from the funding bodies and subsequent disbursements to students are excluded from the income and expenditure of the College where the College is exposed to minimal risk or enjoys minimal economic benefit related to the transaction.

Judgements in applying accounting policies and key sources of estimation uncertainty

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

• Determine whether there are indicators of impairment of the College's tangible assets. 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.

30



Other key sources of estimation uncertainty

• Tangible fixed assets

Tangible fixed assets 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 of the asset and projected disposal values.

• 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 15, will impact the carrying amount of the 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 31 July 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.

31



2 Funding body grants Year ended 31 July

2017 2016 £'000 £'000

3,005 2,704

151 67 391 483

3,547 3,254

Year ended 31 July

2017 2016 £'000 £'000

5 90 117

10

90 132

Recurrent grants Education Funding Agency Specific grants Local authorities & other government bodies

Releases of government capital grants

Total

3 Other income

Other income generating activities

Miscellaneous income

Other grant income

Total

Other interest receivable

Year ended 31 July 2017 2016 £'000 £'000

2

4 Investment income

Total 1 2

5 Staff costs - and key management personnel remuneration 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

2017 No. 30 27

2016 No. 30 30

57 60

32



Staff costs for the above persons

Wages and salaries

Social security costs

Other pension costs

2017

£'000

1,806

164

347

2016

£'000

1,863

149 313

Payroll sub total

Contracted out staffing services

2,317

15

2,325

6

Restructuring costs - contractual

2,332

11

2,331

Total staff costs 2,343 2,331

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 Leadership Team which comprises the Principal, Vice Principal and Finance Manager.

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

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

2017 No.

3

2016

No.

4

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

Key management Other staff personnel

2017 2016 2017 2016

No. No. No. No.

£20,001 to £30,000 p.a. NIA NIA £50,001 to £60,000 p.a. NIA NIA £60,001 to £70,000 p.a.

£70,001 to £80,000 p.a.

£80,001 to £90,000 p.a. £90,001 to £100,000 p.a.

3 4

33


Notes to the Accounts (continued) Key management personnel emoluments are made up as follows:

2017 2016 £'000 £'000

Salaries 196 237 196 237

Pension costs 31 38 Employers national insurance contributions 24 27 Total emoluments 251 302

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

2017 2016 £'000 £'000

Salaries 97 93 National Insurance 12 11

109 104 Pension contributions 15 14 Total 124 118

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.

6 Other operating expenses 2017 2016 £'000 £'000

Teaching costs 232 231 Non-teaching costs 277 340 Premises costs 339 354

Total 848 925

Other operating expenses include: 2017 2016 £'000 £'000

Auditors' remuneration: Financial statements audit 14 10 Other services provided by the financial statements auditor Hire of assets under operating leases 54 58

7 Interest and other finance costs 2017 2016 £'000 £'000

Bank interest and charges 3 4 Net interest on defined pension liability (note 15) 12 11

Total 15 15

34



8

Cost At 1 August 2016

Additions

At 31 July 2017

Leasehold Equipment Total Building

£'000 £'000 £'000

19,152 2,752 21,904

5 5

19,152 2,757 21,909

Depreciation At 1 August 2016

Charge for the year

At 31 July 2017

1,915

383

2,739

8 4,654 391

2,298 2,747 5,045

Net book value at 31 July 2017 16,854 10 16,864

Net book value at 31 July 2016 17,237 13 17,250

9 Debtors 2017 2016 £'000 £'000

Amounts falling due within one year:

Trade debtors 17 14

Prepayments and accrued income 49 52

Total 66 66

10 Creditors: amounts falling due within one year 2017 2016 £'000 £'000

Trade creditors 60 89

Other taxation and social security 41 46

Accruals and deferred income 245 178

Deferred income - government capital grants 393 398

Holiday pay accrual 110 110

Other creditors 101 83

Total 950 904

11 Creditors: amounts falling due after one year 2017 2016 £'000 £'000

Deferred income - government capital grants 16,465 16,845

Total 16,465 16,845

35



12 Financial instruments

The College has the following financial instruments: 2017 2016 £'000 £'000

Financial assets Debt instruments measured at amortised cost

Total 37 32 37 32

Financial liabilities Financial liabilities measured at amortised cost

Total 396 322 396 322

13 Lease obligations At 31 July the College had minimum lease payments under non-cancellable operating leases as follows:

2017 2016 £'000 £'000

Payments due

Not later than one year Later than one year and not later than five years

31 46

31

47 77 78

14 Events after the reporting period

Work is continuing to pursue a merger with East Coast College, in line with the recommendations set out in the in the wave 5 Area Review of further education and sixth form Colleges in Norfolk and Suffolk Report, as published in August 2017.

36



15 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 Local Government Pension Scheme (LGPS) for non-teaching staff, which is managed by Suffolk County Council. Both are multi-employer defined-benefit plans.

2017 £000

175

110 102 64 40

174

349

2016 £000

Total pension cost for the year

Teachers' Pension Scheme: contributions paid Local Government Pension Scheme:

Contributions paid FRS 102 (28) charge

Charge to the Statement of Comprehensive Income

172

142

Total Pension Cost for Year within staff costs 314

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 of the LGPS 31 March 2016.

Contributions amounting to £24,303 (2016 £24,630) were payable to the scheme at 31 st July and are included within creditors.

Teachers' Pension Scheme

The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers' Pension Scheme Regulations 2014. The TPS is an unfunded scheme and members contribute on a "pay as you go" basis - these contributions, along with those made by employers, are credited to the Exchequer.

Valuation of the Teachers' Pension Scheme

Not less than every four years the Government Actuary ("GA"), using normal actuarial principles, conducts a formal actuarial review of the TPS. The aim of the review is to specify the level of future contributions. Actuarial valuations are dependent on assumptions about the value of future costs, design of benefits and many other factors.

The latest actuarial valuations 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:

total scheme liabilities for service to the effective date (pensions currently payable and the estimated cost of future benefits) of £191.5 billion value of notional assets (estimated future contributions together with the proceeds from the notional investments held at the valuation dated) of £ 176.6 billion notional past service deficit of £14.9 billion assumed real rate of return is 3.0% in excess of prices and 2% in excess of earnings rate of real earnings growth is assumed to be 2.75% assumed nominal rate of return of 5.06%

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.uklnews/employers/2014/06/publication-of-the-valuation report.aspx

37


Notes to the Accounts (continued) The TPS valuation for 2012 determined an employer rate of 16.48% (including a 0.08% administration fees), which was payable from September 2015. The next valuation of the TPS is currently underway based on March 2016 data, whereupon the employer contribution rate is expected to be reassessed and will be payable from 1 April 2019.

The pension costs paid to TPS in the year amounted to £175,000 (2015: £172,000)

The TPS is a multi-employer pension plan and there is insufficient information to account for the scheme as a defined benefit plan so it is accounted for as a defined contribution plan.

Local Government Pension Scheme

The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by Suffolk County Council. The total contributions made for the year ended 31 July 2017 were £140,000, of which employer's contributions totalled £110,000 and employees' contributions totalled £30,000. The agreed contribution rates for future years are 19.7% for employers and range from 5.5% to 12.5% for employees, depending on salary.

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

Rate of increase in salaries Future pensions increases Discount rate for scheme liabilities Inflation assumption (CPI) Commutation of pensions to lump sums (pre April 2008 service) Commutation of pensions to lump sums (post April 2008 service)

At 31 July At 31 July 2017 2016

2.7% 3.9% 2.4% 1.9% 2.7% 2.5% 2.4% 1.9% 25% 25%

63% 63%

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

At 31 July At 31 July 2017 2016

years years Retiring today

Males 21.9 22.4 Females 24.4 24.4 Retiring in 20 years Males 23.9 24.3 Females 26.4 26.9

38


Notes to the Accounts (continued) The College's share of the assets in the plan at the balance sheet date were:

Fair Fair Value at Value at 31 July 31 July

2017 2016

£'000 £'000

Equity instruments 1,021 658 Debt instruments 315 191 Property 150 95 Cash 15 10 Total fair value of plan assets 1,501 954

Actual return on plan assets 418 86

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

2017 2016

£'000 £'000 Fair value of plan assets 1,501 954 Present value of plan liabilities (1,684) (1,370) Net pensions liability (183) (416)

Amounts recognised in the Statement of Comprehensive Income in respect of the plan are as follows:

2017 £'000

2016 £'000

Amounts included in staff costs Current service cost Past service cost Total

152 22

142

174 114

Amounts included in interest and other finance costs

Pension finance cost (12) (11 ) (11 ) (12)

Amount recognised in Other Comprehensive Income

Return on pension plan assets Experience losses arising on defined benefit obligations Changes in assumptions underlying the present value of plan liabilities Amount recognised in Other Comprehensive Income

393 (73)

(11 )

56 2

(147)

309 (89)

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Notes to the Accounts (continued) Movement in net defined benefit (Iiability)/asset during year

2017 2016 £'000 £'000

Net defined benefit liability in scheme at 1 August (416) (276)

Movement in year:

Current service cost (152) (142)

Employer contributions 110 102

Past service cost (22)

Net interest on the defined (Iiability)/asset (12) (11 )

Actuarial gain or loss 309 (89)

Net defined benefit liability at 31 July (183) (416)

Asset and Liability Reconciliation 2017 £'000

2016 £'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 demographic assumptions

Changes in financial assumptions Estimated benefits paid

Past service cost

Defined benefit obligations at end of period

1,370 1,011

152 142

37 41

30 33 73 (2)

(12)

23 147

(11 ) (2)

22

1,684 1,370

Changes in fair value of plan 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

954 735

25 30

393 56 110 102

30 33

(11 ) (2)

1,501 954

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Notes to the Accounts (continued) 16 Related party transactions

Owing 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 year was £623; 4 governors (2016: £581; 4 governors). 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 year (2016: None).

17 Amounts disbursed as agent

Learner support funds 2017 2016

£'000 £'000

7 7

67 86

74 93 (65) (83)

(3) (3)

6 7

Balance at 1 August, included in creditors

Funding body grants - discretionary & vulnerable learner support

Disbursed to students Administration costs

Balance unspent as at 31 July, included in creditors

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.

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INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON REGULARITY TO THE CORPORATION OF LOWESTOFT SIXTH FORM COLLEGE AND THE SECRETARY OF 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 14 July 2017 and further to the requirements of the funding agreement with the Education Funding Agency, to obtain limited assurance about whether the expenditure disbursed and income received by Lowestoft Sixth Form College during the period 1 August 2016 to 31 July 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 2016 to 31 July 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 Lowestoft Sixth Form College 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 Corporation of Lowestoft Sixth Form College for regularity The Corporation of Lowestoft Sixth Form College is 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 corporation of Lowestoft Sixth Form College is also responsible for preparing the Governing body's Statement of Regularity, Propriety and Compliance.

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 2016 to 31 July 2017 have not been applied to purposes intended by Parliament or that the financial transactions do not conform to the authorities which govern them.

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INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON REGULARITY TO THE CORPORATION OF LOWESTOFT SIXTH FORM COLLEGE AND THE SECRETARY OF SECRETARY OF STATE FOR EDUCATION ACTING THROUGH THE DEPARTMENT FOR EDUCATION (Continued)

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 and Skills 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 corporation of Lowestoft Sixth Form 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 corporation of Lowestoft Sixth Form 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 corporation of Lowestoft Sixth Form College 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.

RSM UK AUDIT LLP Chartered Accountants Abbatsgate Hause Hollow Road Bury St Edmunds Suffolk IP327FA

19 December 2017

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LOWESTOFT SIXTH FORM COLLEGE Report and …€¦ · · 2018-02-23Quality of Teaching and Learning...

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