Financial Statements | Annual Report and Accounts 2019–20
Statement of principal accounting policies
1. Basis of preparation These financial statements have been prepared in accordance with the United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law), the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education (2019) and the OfS Accounts Direction (OfS 2019.41). The College is a public benefit entity and therefore has applied the relevant public benefit requirements of the United Kingdom Generally Accepted Accounting Practice. The financial statements are prepared under the historical cost convention (modified by the revaluation of endowment and listed non-current asset investments and investment properties). The accounting policies have been applied consistently year on year. The College’s consolidated forecasts and projections, taking account of reasonably possible changes in performance, show that the College should be able to operate within the level of its current facilities. In arriving at its assessment, Council have considered a period of 18 months from the balance sheet date in assessing the use of the going concern assumption. In developing this assessment, Council have noted that College successfully reacted to the impact of COVID-19 during the year by controlling costs and considered it reasonable to assume that further cost constraint could be exercised, if necessary. Council have also noted that the College has significant investment balances that could be liquidated if required to address any liquidity shortfall. The forecasts and projections, including a plausible worst-case scenario in which the College’s multi-mode teaching is disrupted by further COVID-19 restrictions leading to less revenue from hall and tuition fees as students interrupt studies or withdraw, show that the downside risk to cashflow is manageable and so the risk of breaching covenants imposed by lenders is considered low. Whilst under this plausible worstcase scenario the College has limited headroom against one cash flow related loan covenant, any potential breach would be identified well in advance of the point subject to covenant testing and appropriate action could be taken. Additionally, the College has sufficient resources available to prepay the relevant loan and avoid a breach of this covenant or to take other actions. Therefore, Council have a reasonable expectation that the College has adequate resources to continue in operational
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existence for the foreseeable future. The College therefore continues to adopt the going concern basis in preparing its financial statements.
2. Basis of consolidation The consolidated financial statements include the College and all its subsidiaries for the financial year to 31 July. The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of income and expenditure from the date of acquisition, or up to the date of disposal. Intragroup transactions are eliminated on consolidation. In preparing its own financial statements, the College has applied the exemptions available under FRS 102 to disclose neither a cash flow statement, nor related party transactions with wholly owned subsidiaries. Similarly, an exemption has been taken from disclosing details of the College’s financial instruments as the consolidated position is presented in these financial statements. Associated companies and joint ventures are accounted for using the equity method in the consolidated financial statements. Associated companies are those in which the College has a significant, but not dominant, influence over their commercial and financial policy decisions. Joint ventures represent entities over which the College has joint control with a third party.
3. Income recognition Income from the sale of goods or services is credited to the consolidated statement of comprehensive income and expenditure when the goods or services are supplied to the external customers or the terms of the contract have been satisfied. Tuition fee income is stated gross of any expenditure which is not a discount and credited to the consolidated statement of comprehensive income and expenditure over the period in which students are studying. Where the amount of the tuition fee is reduced, income receivable is shown net of the discount. Bursaries and scholarships are accounted for gross as expenditure and not deducted from income. Government grants are credited to the consolidated statement of comprehensive income and expenditure when the College is entitled to the income and any performance related conditions have been met. Where multiple performance conditions exist, the amount of income recognised reflects the income due for performance conditions met. Income from research grants and contracts is credited to the consolidated statement of
