76
Integrated Annual Report 2020-21
Statement of principal accounting policies BASIS OF PREPARATION The University’s financial statements have been prepared in accordance with United Kingdom Accounting Standards, including Financial Reporting Standard 102 (FRS 102) and the Statement of Recommended Practice: Accounting for Further and Higher Education (HE SORP 2019). They have also been prepared in accordance with the ‘carried forward’ powers and duties of previous legislation (Further and Higher Education Act 1992 and the Higher Education Act 2004) and the new powers of the Higher Education and Research Act 2017 during the transition period to 31 July 2019, the Accounts Direction issued by the Office for Students, the Terms and conditions of funding for higher education institutions issued by the Office for Students and the Terms and conditions of Research England Grant. The financial statements are prepared in sterling which is the functional currency of the group and rounded to the nearest £’000. The University is a public benefit entity and therefore has applied the relevant public benefit requirement of the applicable UK laws and accounting standards. The University is registered with the Office for Students (OfS).
GOING CONCERN The University’s activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Review Incorporating the Operational Review which forms part of the Board of Governors’ Integrated Report. The Board of Governors’ Financial Review also describes the University’s financial position, its cash flows, liquidity position and borrowing facilities. The financial statements have been prepared on a going concern basis which the Board of Governors consider to be appropriate for the following reasons. The Board of Governors have prepared income and expenditure, balance sheets and cash flow statement forecasts for the four years ending 31 July 2025. After reviewing these forecasts, the Board of Governors is of the opinion that, taking account of severe but plausible downsides, including the impact of interest rate rises, tuition fee reductions and student recruitment reductions, the University will have sufficient funds to meet their liabilities
as they fall due over the period of 12 months from the date of approval of the financial statements (the going concern assessment period). In January 2021, the Board of Governors approved the University’s financial forecast. This forecast has recently been updated to incorporate the University’s latest business plan following a special board meeting held in October 2021. When approving the plan, the Board of Governors considered several different strategies and the consequences each would have on the financial sustainability of the University. At the meeting scenario modelling that had been undertaken was presented and reviewed. This modelling was based upon the February 2021 OfS Financial Forecast and provided a long-term vision of academic improvement and estates development with financial projections to 2028/29. The Board of Governors considered:
• the University’s strategic vision to 2030 • the academic strategy • demographic and market led data analysis • a funding options appraisal • an estates vision master plan • financial modelling of various scenarios The University has no undrawn lending facilities and the budgeted cash flow does not require any additional facilities within the next 12 months. The approved business plan does not breach any covenant thresholds on our existing facilities with the Triodos Bank and Allied Irish Bank for the periods to 31 July 2029. Having reviewed the scenario modelling, the Board of Governors is confident that the University will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements. This is based upon the strategic growth and associated estates development plan approved by the Board of Governors on 12 October 2021. The Board of Governors have therefore prepared the financial statements on a going concern basis.
