powerpoint presentation - university of exeter · frs102 - income financial statements presentation...
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FRS102 Tanya Hitchen & Izzy Clayton Contact: [email protected]
FRS102 What is FRS102?
Impact on:
Income
Expenditure
Other Comprehensive Income
Balance Sheet
Timeline
What do I need to do?
What is FRS102?
Change in UK Accounting Standards
Driven by harmonisation with International Accounting Standards
FRS102 is a reduced version of full IFRS
1st year of FRS102 accounts is 2015/16 BUT
Need to restate 2014/15 financial statements
Restate opening balance sheet as at 1 August 2014
What is FRS102?
What have we done so far?
FE/HE SORP – applying FRS102 to the HE sector
Impact of FRS102 understood by Audit Committee and Council
Accounting policy choices approved by Audit Committee and Council
Opening balance sheet restated and approved by Auditors
Template accounts created
Some APTOS coding changes
Communication & Training
FRS102 - Income
3 Types of income under FRS102, impact on revenue recognition:
Exchange Transactions
Non-exchange Transactions
Government Grants
FRS102 - Income Exchange Transactions
Sale of goods and services in return for consideration
Tuition Fees
Commercial Research
Consultancy and some ‘Other Income’
Income for delivery of services recognised on % completion (can use e.g. time
or cost allocation)
No change to current accounting policies
FRS102 - Income Non-Exchange Transactions & Government Grants
Funder does not receive equal value exchange for cash
Includes both revenue and capital grants
DCG reserve no longer exists
New Accounting Policy: Income recognised in line with performance
conditions
Matching concept no longer exists
Timing differences between income and expenditure
FRS102 - Income
Performance Condition: A condition that requires the performance of a particular
level of service or units of output to be delivered, with payment of, or entitlement
to, the resources conditional on that performance.
Extract from FRS102
FRS102 - Income Research Grants
If funder receives benefit = exchange transaction = no change
If funder does not receive benefit = non-exchange transaction = new rules
Most research grant funding is conditional on:
Delivery of specified research
Incurring pre-determined expenditure
Therefore performance condition is delivery of a particular level of service,
measured by proportion of costs incurred.
No impact despite different accounting policy.
FRS102 - Income Research Grants
If terms and conditions do not include performance conditions (e.g.
donations), income must be recognised on entitlement.
Mis-match between income and expenditure.
Only a small proportion of research income affected – in 2013/14 impact
would have been £150k.
Use SUBJ1 D03 for Research Income without Performance Conditions –
usually D01.
FRS102 - Income
Other Grants
Revenue grants to be recognised as income upon completing any
performance conditions.
If no performance conditions, recognise upon entitlement.
Capital grants received included as income (previously in deferred capital
grant reserve).
Use performance conditions accounting rules.
FRS102 - Income
Endowments & Donations
Currently only unrestricted donations recognised as income.
Endowments received taken to endowment reserve via STRGL
FRS102 – all new endowments and donations will be recognised as income
upon entitlement.
FRS102 - Income
Service Concessions:
Impact on Income and Expenditure for value of student rents (UPP
arrangement 2013/14 £13m)
Increase in assets and liabilities as we recognise the one year liability for
any nominations made (UPP arrangement 2013/14 £13m)
Consideration to be made when setting up any major new contracts
FRS102 - Income Financial Statements Presentation
Original Restated
Income 2013/14 £000s
Funding Body Grants 47,497
Tuition Fees 150,623
Research Income 60,071
Other Income 62,279
Investment Income 3,350
Total incl JVs 323,820
Less share of JVs -19,360
Total Income 304,460
Income 2013/14 £000s
Tuition Fees 150,623
Funding Body Grants 44,677
Research Income 57,663
Other Income 54,703
Investment Income 3,350
Total before G&D 311,017
Donations/Endowments 1,294
Other grant income 7,278
Total Income 319,589
FRS102 - Expenditure
Main areas of change to expenditure under FRS102:
Service concessions – as previously noted
Pension changes
Annual leave accrual
Component accounting
FRS102 - Expenditure
Pension schemes:
Changes for both USS and ERBS
USS - Now we need to account for deficit recovery plan
• Large impact on Balance Sheet – pension liability
• Impacts staffing costs
• Awaiting the latest USS valuation in order to calculate the recovery
plan
• Volatile based on triennial valuations
FRS102 - Expenditure
Pension schemes:
ERBS
Difference in the calculation of the finance charges
Estimated £2m additional operating cost for 2013/14
Corresponding credit to the actuarial movement – below the line
FRS102 - Expenditure Annual leave accrual
Need to account for any unused annual leave at year-end as this is
essentially a liability of the University
Results in increased cost in first year and then variable year-on-year
Component accounting
Splitting out assets into smaller components
Impact on depreciation with buildings broken into smaller components
FRS102 - Expenditure
Financial statements presentation
Expenditure 2013/14 £000s
Staff costs 164,167
Fundamental restructuring costs -
Other operating expenses 110,725
Depreciation 37,215
Interest & other finance costs 8,621
Total Expenditure 320,728
Expenditure 2013/14 £000s
Staff costs 168,465
Other operating expenses 108,750
Depreciation 21,944
Interest & other finance costs 7,750
Total Expenditure 306,909
FRS102 – Other Comprehensive Income Inclusion of certain transactions that used to only be recognised in reserves.
Movements in market value of investments
Actuarial gains / losses on pension schemes
Changes in the fair value of financial instruments
Volatility of other comprehensive income
Considering appropriate performance measures for the sector
FRS102 – Other Comprehensive Income Statement of Comprehensive Income £’000s
Total income 319,589 Total expenditure 320,728 Surplus/deficit before other gains/losses and share of surplus/deficit in joint ventures associates (1,140)
Gain/(loss) on investments 2,970 Share of operating surplus/ (deficit) in joint venture(s) 499
Surplus / (deficit) for the year 2,329
Unrealised surplus on revaluation of land and buildings 45,104 Actuarial (loss)/gain in respect of pension schemes (7,367) Change in fair value of hedged financial instrument(s) 100 Total comprehensive income for the year 40,166
Total comprehensive income for the year comprises: Endowment comprehensive income for the year 1,118 Restricted comprehensive income for the year (1,562) Unrestricted comprehensive income for the year 40,610
40,166
FRS102 – Balance Sheet Per the 2013/14 Financial Statements Restated Under FRS102
2014 2014
FIXED ASSETS £000s Non-Current Assets £000s
Tangible assets 663,079 Intangible assets and goodwill 3,391
Investment assets 7,330 Tangible fixed assets 673,207
Investment assets - Joint ventures 3,048 Heritage assets 7,171
673,457 Investments 29,161
Investment in joint venture 3,048
ENDOWMENT ASSETS 30,265 Total Non-Current assets 715,978
CURRENT ASSETS Current assets
Stocks 437 Stock 437
Debtors - Amounts falling due within one year 31,155 Trade and other receivables 47,614
Debtors - Amounts falling due after more than one year 16,459 Investments 30,276
Investments 30,276 Cash and cash equivalents 77,955
Cash at bank and in hand 76,693 Total current assets 156,283
155,020
Creditors - amounts falling due within one year
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR -72,819 Reimbursable to funding council 571
Bank loans and external borrowing 3,823
Obligations under finance leases 13,652
Other creditors 69,760
Total creditors (amounts falling due within one year) 87,805
NET CURRENT ASSETS 82,201 Net current (liabilities) / assets 68,477
TOTAL ASSETS LESS CURRENT LIABILITIES 785,923 Total assets less current liabilities 784,455
FRS102 – Balance Sheet Per the 2013/14 Financial Statements 2014 Restated Under FRS102 2014
CREDITORS: AMOUNTS FALLING DUE £000s Creditors: amounts falling due after more than one year £000s
AFTER MORE THAN ONE YEAR -219,140 Reimbursable to the funding council 656
Bank loans and external borrowing 199,088
LESS: PROVISION FOR LIABILITIES 0 Obligations under Finance leases 19,396
Other 26,700
TOTAL NET ASSETS EXCL. PENSION LIABILITY 566,783 Total creditors (amounts falling due after more than one year) 245,840
NET PENSION LIABILITY -26,551 Provisions
Pension provisions 48,640
Other provisions -
Total provisions 48,640
TOTAL NET ASSETS INCL. PENSION LIABILITY 540,232 Total net assets 489,975
DEFERRED CAPITAL GRANTS 144,291
ENDOWMENTS
Expendable 9,039
Permanent 21,226
30,265
Restricted Reserves
RESERVES Income and expenditure reserve - endowment fund 30,265
Income and expenditure reserve (excl Pension Reserve) 89,291 Income and expenditure reserve - restricted reserve -
Pension Reserve -26,551 Unrestricted Reserves -
Income and expenditure reserve (incl Pension Reserve) 62,740 Income and expenditure reserve - unrestricted 156,774
Revaluation reserve 302,936 Revaluation reserve 302,936
365,675 Total Restricted and Unrestricted Reserves 489,975
TOTAL FUNDS 540,231 Total Reserves 489,975
FRS102 – Conversion timeline
March 2014
31 July 2014
31 July 2015
31 July 2016
Statement of Recommended Practice approved by the FRC
Transition date First reporting date
Comparative Balance Sheet
March 2013
FRS 102 issued (revised Aug
2014
FRS102 - Timeline
Date Task Status
20 May Council – FRS102 Impact Paper & KPMG assurance report Sent
12 June Deadline to produce accounting policy papers etc for Audit Committee
Restatement of opening balance sheet – Uni & Group
Reserves reconciliation / explanation – Uni & Group
Sent
2 July Workshop to HoFs and Finance Teams
7 July Workshop to HoFs and Finance Teams
31 July
Document of changes to coding for colleges and services & timetable for future
requirements
July Council to approve 2015/16 Accounting Policies
1 Aug Implement new coding for FRS102
11 Sept Draft Financial Statements under current UK GAAP
Oct-Dec Restate 2014/15 Financial Statements under FRS102
Jan 16 KPMG audit of restated 2014/15
Feb 16 Restatement of 2015/16 Budgets in time for 2016/17 budget setting
Sept 16 Produce 2015/16 Financial Statements under FRS102
Timetable for budgeting changes still to be agreed
FRS102 – What do I need to do?
Corporate Accounting to circulate details of code changes.
Colleges / services need to consider whether there is any income
with/without performance conditions that will need to be restated for
2014/15.
Process to identify non-exchange transactions with / without performance
conditions on an ongoing basis.
Consider whether there will be an impact on business plans at college /
service level.
Be prepared to produce next business plan under FRS102.
