1. FRS102 – Donations & Endowments
Tanya Hitchen Contact:

2. FRS102  What is FRS102? Impact on: Restated Financial Statements
Donations
Endowments
Investment returns
Restated Financial Statements
What do I need to do?

3. 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

4. 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

5. FRS102 - Donations 3 Types of donation under FRS102:
Donation with no restrictions
Donation with restrictions
Donation with performance conditions
Note that under current GAAP, donations with restrictions and/or performance conditions are treated as expendable endowments.

6. FRS102 - Donations
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.
Restriction: A requirement that limits or directs the purposes for which a resource may be used that does not meet the definition of a performance condition.
Extract from FRS102

7. FRS102 - Donations Donation with no restrictions
Recognise donation as income upon entitlement.
Entitlement = receipt for donations, or grant of probate for legacies
Monies held in general reserves – no ring-fenced fund
Expenditure recognised as incurred
Mismatch between income & expenditure impacts surplus/deficit

8. FRS102 - Donations Donation with restriction
Use of the funds is specified. No specific level of service or units of output (e.g. teaching hours) – currently treated as expendable endowment
Recognise donation as income upon entitlement.
Monies held in restricted reserves
Expenditure recognised as incurred
Mismatch between income & expenditure impacts surplus/deficit

9. FRS102 - Donations Donation with Performance Conditions
Specified level of service or units of output (e.g. teaching hours), and no intention of donor to set up an endowment.
Expected to be rare.
Recognise donation as income upon meeting performance conditions.
Monies held in restricted reserves
Expenditure recognised as incurred
Less mismatch between income & expenditure impacts surplus/deficit

10. FRS102 - Endowments Types of Endowment Fund Expendable Endowment
Permanent Endowment - Restricted
Permanent Endowment – Unrestricted
Same definitions as current rules, but change in accounting.

11. FRS102 - Endowments Expendable Endowments
Funds donated with specific intention to create an endowment fund, or
Funds donated with a specific restriction so large in relation to the area of spend to which it relates that it will need to be retained over more than a short period of time.
The SORP considers that a timeframe of less that 2 years is unlikely to create an expendable endowment.

12. FRS102 - Endowments Expendable Endowments
New endowments received recognised as income upon entitlement
Note currently new endowments are taken to endowment reserves via the STRGL
Fund held in endowment reserves
Expenditure recognised as incurred
No accounting adjustment to net I&E/SoCI to nil
Mismatch between income and expenditure – budgeting & forecasting

13. FRS102 - Endowments Expendable Endowments
UoE receive a £100k donation. This is spent over a 4 year timescale:
Year 1
Year 2
Year 3
Year 4
Income
100,000
Expenditure
(26,000)
Investment Gain
3,000
(1,000)
2,000
Surplus/ (Deficit)
77,000
(27,000)
(24,000)

14. FRS102 - Endowments Permanent Endowment - Restricted
Donor stipulation that the capital element of the endowment must be held in perpetuity.
Specific restriction on use of endowment.
Accounting as per Expendable Endowment
Total Return rules still apply re how much can be withdrawn from funds each year.

15. FRS102 - Endowments Permanent Endowment - Unrestricted
Donor stipulation that the capital element of the endowment must be held in perpetuity.
No restriction on use of endowment.
Accounting as per Expendable Endowment
Total Return rules still apply re how much can be withdrawn from funds each year.

16. FRS102 - Investments Investment Portfolios
Investment income (interest and dividends) recognised as income
Market value gains/losses included within surplus (previously in STRGL)
Endowment assets category no longer on the Balance Sheet.
Now split between cash and investments
Endowment reserves details total endowment funds

17. FRS102 - Income Financial Statements Presentation Original Restated
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

18. FRS102 - Expenditure Financial statements presentation
Staff costs
168,465
Other operating expenses
108,750
Depreciation
21,944
Interest & other finance costs
7,750
Total Expenditure
306,909
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
No change re expenditure from endowment funds

19. 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

20. FRS102 – Balance Sheet Per the 2013/14 Financial Statements
Restated Under FRS102
2014
FIXED ASSETS
£000s
Non-Current Assets
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
ENDOWMENT ASSETS
30,265
Total Non-Current assets
715,978
CURRENT ASSETS
Current assets
Stocks
437
Stock
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
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

21. FRS102 – Balance Sheet Per the 2013/14 Financial Statements 2014
Restated Under FRS102
CREDITORS: AMOUNTS FALLING DUE
£000s
Creditors: amounts falling due after more than one year
AFTER MORE THAN ONE YEAR
-219,140
Reimbursable to the funding council
656
Bank loans and external borrowing
199,088
LESS: PROVISION FOR LIABILITIES
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
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
Income and expenditure reserve (excl Pension Reserve)
89,291
Income and expenditure reserve - restricted reserve
Pension Reserve
Unrestricted Reserves
Income and expenditure reserve (incl Pension Reserve)
62,740
Income and expenditure reserve - unrestricted
156,774
Revaluation reserve
302,936
365,675
Total Restricted and Unrestricted Reserves
TOTAL FUNDS
540,231
Total Reserves

22. FRS102 – What do I need to do? New coding required for
Types of donation / endowment
New donations/endowments within income
Gains/losses on investments in SoCI.
Process to identify types of donation/endowment within DARO.
Restate 2015/16 business plan – to go to October Council.
Be prepared to produce next business plan under FRS102.

23. Any questions?
Further Details: