haven high academy

The Boston Witham Academies Federation (A Company Limited by Guarantee)

The Boston Witham Academies Federation

Annual Report and Financial Statements Period ended 31 August 2013

Company Registration *mber:

8 58309

(England and ales)

The Boston Witham Academies Federation Annual Report and Financial Statements Period ended 31 August 2013

Contents Page

Reference and Administrative Details 1

Governance Statement 8 -11

Independent Auditor's Report and Regularity Report 14 -16

Notes to the Financial Statements: 20 - 35

Report of the Board of Directors 2-7

Statement of Directors' Responsibilities 12

Statement on Regularity, Propriety and Compliance 13

Statement of Financial Activities incorporating Income & Expenditure Account 17

Balance Sheet 18

Cash Flow Statement 19

The Boston Witham Academies Federation Annual Report and Financial Statements Reference and Administrative Details

Directors of the Trust who served during the year:

J Coddington Chair Rev S Dowson S Coleman C Shepheard Vice Chair J Curtis A. Reed Executive Head and Accounting Officer J Salmon Head of Academy, Haven High Academy H W Joyce Head of Academy, Carlton Road Academy R Creasey Head of Academy, Staniland Academy L Stanney R Marsland A Prigent T Elmer J McGarel G Kirtley E Hextall

Clerk to the Directors

Principal and Registered Office

Company Registration Number

Independent Auditor

Bankers

Legal Advisors

Appointed Resigned

26/07/2012 26/07/2012

26/07/2012 26/07/2012 26/07/2012 31/812013 26/07/2012 26/07/2012 31/8/2013 26/07/2012 26/07/2012 26/07/2012 26/07/2012 26/07/2012 26/07/2012 26/07/2012 26/07/2012 01/09/2013

Mrs P Champion

Marian Campus Marian Road Boston Lincolnshire PE219HB

8158309

Duncan & Toplis 15 Chequergate Louth Lincolnshire, LN11 OLJ

Barclays Bank PLC 52 Market Place Boston Lincolnshire PE21 6LU

Wilkin Chapman LLP The Maltings 11-15 Brayford Wharf East Lincoln LN5 7 AY

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The Boston Witham Academies Federation Report of the Board of Directors

The Directors present their annual report together with the financial statements and auditors report for the period ended 31 August 2013

This report follows the requirements of the Charity Commission's Statement of Recommended Practice (SORP) 2005 and the Charities Act 2011. It also meets the requirements of Companies House and the Education Funding Agency

Structure, Governance and Management

Constitution

The Academy Trust is a company limited by guarantee and an exempt charity. The Charitable Company's memorandum and articles of association are the primary governing documents of the Academy Trust.

The Directors act as the trustees for the charitable activities of The Boston Witham Academies Federation and are also the directors of the Charitable Company for the purposes of company law.

Details of the Directors who served throughout the year are included in the Reference and Administrative Details on page 1.

Members' Liability

Each member of the Charitable Company undertakes to contribute to the assets of the Charitable Company in the event of it being wound up while they are a member, or within one year after they cease to be a member. such amount as may be required. not exceeding £10 for the debts and liabilities contracted before they ceased to be a member.

Trustees' Indemnities

The Academy has granted an indemnity to one or more of its Directors against liability in respect of

proceedings brought by third parties. subject to the conditions set out in the Companies Act 2006.

Such qualifying third party indemnity provision has a limit of £5million and was at a cost of £3,969

Principal Activities, Objectives and Aims

The principal activity of the Trust, as set out in its artides of association and funding agreement with the Secretary of State is the operation of The Boston Witham Academies Federation to create a centre of excellence within and for the community which raises the aspirations and achievement of all stakeholders - an academy which provides support. care, guidance. challenge and empowerment for all.

The main objectives of the Academy during the period ended 31st August 2013 are summarised

below:

* to ensure that every child enjoys the same high quality education in terms of resourcing. tuition and care;

.. to raise the standard of educational achievement of all pupils;

.. to improve the effectiveness of the Academy by keeping the curriculum and organisational structure under continual review;

* to provide value for money for the funds expended; - 2

The Boston Witham Academies Federation Report of the Board of Directors (continued)

* to comply with all appropriate statutory and curriculum requirements; * to maintain links with industry and commerce and the international community; and * to conduct the Academy's business in accordance with the highest standards of integrity, probity and openness.

Public Benefit

The Directors have reviewed the objectives and activities of the Charity as detailed above and are satisfied that they are for the public benefit as detailed in the Charity Commission guidance note on this subject.

Board of Directors

The Board of Directors normally meets four times each year, with its Executive Director and appropriate advisers, to agree plans, programmes and budgets; agree and review policies; and to monitor progress and review performance. The Board met formally four times during the period

The Board sets the budgets within which the Trust operates. Policies are decided or ratified by the Board. The Board itself monitors the corporate income and expenditure against the agreed budgets to enable control of finance. They have ensured that systems are in place, including operational procedures in order to minimise risk.

There is no formally agreed induction programme for newly appointed Directors at present though the Executive Director and Chair spend time with new Directors in order to inform them fully of the workings of the Trust and their responsibilities. The induction provided will depend on the new Governor's existing experience, and where necessary will include training on charity and educational legal and financial matters. All new Directors are given a tour of the academy and the chance to meet with staff and students, and are also provided with copies of poliCies, procedures, minutes, accounts, budgets, plans and other documents that they will need to undertake their role as Directors. As there is normally expected to be only a small number of new Directors each year, induction tends to be done informally and is tailored specifically to the individual.

Organisational Structure

The main Board of Directors of the Trust has devolved the day-to-day running of each of the constituent academy schools to local governing bodies, and responsibility for financial governance to a Finance and Audit Committee. Details of the membership of each of the boards and committees are set out in the Governance Statement at page 7 .

Risk Management

The Directors have assessed the major risks to which the Trust is exposed, in particular those relating to teaching, proviSion of facilities and other operational areas of the Academy, and its finances. The Directors have implemented a number of systems to assess risks that the Trust faces, especially in the operational areas and in relation to the control of finances to minimise risk. This process has included the production of a full risk register which has been formally adopted by the Board, and will be subject to regular review and if necessary updating on at least an annual basis. Where significant financial risk still remains they have ensured they have adequate insurance cover. The Directors are confident that the Trust has an effective system of internal financial controls and this is explained in more detail in a separate section.

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Connected Parties

The Directors are not aware of any connected or related party that would require disclosure.

Responsible Officer

We confirm that the Responsible Officer (RO) function has been fully delivered by the Trust's auditors Messrs Duncan & Toplis. in line with the requirements of the Financial Handbook.. The issues identified have been addressed and formed part of the RO Report. which was forwarded to the Board of Directors, and any recommendations made therein have been acted upon.

Performance and Achievements

The Boston Witham Academies Federation is a Multi Academy Trust (MAT) which includes Haven High Academy, Carlton Road Academy. Staniland Academy, Haven High Academy Sixth Form on the site of the former St Bede's Catholic Science College. The Board of Directors are committed to ensuring that, through this partnership, all children and students receive the care guidance and support necessary to ensure the very best education for children from three to nineteen years of age.

Key performance indicators in respect of EYFS through to Key Stage 5 data are available on each academy website as well as calendars of events and all federation policies. The Directors have considered the ongoing Companies' Act requirement to publish financial KPl's and are of the opinion that being so recently established and converted there are no financial KPl's of value to report in respect of this period.

Major projects of the past twelve months have included substantial building work at Staniland Academy as we work in partnership with Lincolnshire County Council in expanding from two to three form entry.

A major refurbishment of the Tollfield Campus of Haven High Academy has been completed as the academy enters its second year of offering Post 16 provision.

Financial Review

Most of the Academy's income is obtained from the EFA (Education Funding Agency) in the form of

the General Annual Grant ("GAG" Funding), incorporating the use of which is restricted to particular

purposes. The grants received from the EFA during the period reported on and the associated expenditure are shown as restricted funds in the statement of financial activities, and totalled some

£10.7miJlion out of total income received for funding the educational activities of some £12million .

The balance of educational funding is received from central and local Government.

The schools have made an exciting start to life as part of an Academy Trust, and the financial performance for the period is seen as satisfactory and in line with its short and long-term plans.

Restricted funds in the SofA include the pension deficit on the Local Government Pension Scheme as this can be separately identified. This is discussed in greater detail at note 25. Recognising the deficit in the accounts is as required by the EFA and accounting best practice, but does not imply that this is an immediate liability, however there is an ongoing cash flow impact on the Academy in the form of increased employer contributions. The liability transferred on conversion amounted to £2.025million which has decreased during the period to £2.02million.

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The recognition of the pension fund liability has had a significant impact on the overall restricted funds "picture" in the SofA, but before accounting for this and for transfers between the funds to cover capital expenditure, the Academy had surplus restricted general income over its associated expenditure of some £1 million in the period

Unrestricted funds comprise the balance of local authority funds due to the individual schools on conversion and income from lettings and sales of school meals, plus contributions towards trips. The costs of the relevant activities has been charged against the income, and governance costs have also been charged against unrestricted funds.

Each academy has its own budget, separated into discrete sections within one overall Federation account. The Board of Directors of The Boston Witham Academies Federation hold overall responsibility for Finance, the board taking equal representation from each of the three academy Local Governing Bodies (LGB)

The Risk and Control Framework

The Academy's system of internal financial control is based on a framework of regular management information and administrative procedures including the segregation of duties and a system of delegation and accountability. In particular, it includes:

- setting targets to measure financial and other performance; - clearly defined purchasing (asset purchase or capital investment) - delegation of authority and segregation of duties; and - identification and management of risks.

Principal risks and uncertainties

The school has carried out an extensive risk assessment based on the YPLA (Now EFA) model. The risks are categorised into various heading to permit us to analyse in detail specific risks.

The predominant risks are given below.

Strategic and Reputation Risks:

1. Competition risk: We have identified that we need to remain focused on our reputation within the local community to ensure future children see the school as a great learning establishment. We strive and indeed maintain a healthy presence in the community and our whole school results, year in results and interaction with the local community remain a major focus.

2. Public profile risk: Failure to comply with statutory Health and Safety legislation. The "Human Factor" can never be eliminated, however the academy has an active H&S culture in place that extends from the children, staff, directors, members and public. The academy retains external advisors who can advise when necessary on H&S matters. The seeking of specialist advice should be used when major decisions to legislation are made

3. Board of Directors risk: Too little or too much delegation within committee. Effective management and delegation is conducted with whole committee monitoring. Workloads shared within various subcommittees.

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Operational Risks:

Management risk: Senior management capability /experience of charity sector risk. Currently SL T experience above sufficient for most tasks. The main areas of concern are the changes in EFA requirements that require the school to carry out tasks that are not expected. Otherwise, the objects of the school remain unchanged.

Going Concern

The DirectOis have reviewed the finances of the Trust and ACGldemies over the reporting period, taking account of their risk review as referred to earlier, and have concluded that there is a reasonable expectation that the Academy Trust has, or will have, adequate resources to continue in operational existence for the foreseeable future. Furthermore there are no material uncertainties that might adversely impact on the ongoing solvency of the Trust, so the going concern basis of accounting has been adopted in preparing the financial statements.

Reserves policy

The Directors review the reserve levels of the Academy on an annual basis, or more frequently if

deemed necessary. This review encompasses the nature of income and expenditure streams, the

need to match income with commitments and the nature of reserves. The Directors have determined

that the appropriate level of free cash reserves should be approximately £200,000 in future periods.

As stated in note 16, due to the impact of assuming the whole of the pension liability in the first

period following conversion, the academy could be said to have no free cash reserves, and carries

forward a deficit balance on restricted general funds. Whilst the liability is genuine, Parliament has

agreed, at the request of the Secretary of State for Education, to a guarantee that, in the event of

Academy closure, outstanding Local Government Pension Scheme liabilities would be met by the

Department for Education. The guarantee came into force on 18 July 2013.

Investment Policy

Should the level of free cash reserves held by the academy exceed that which is necessary to

service its ongoing working capital needs, the Directors, with reference to the short and longer-term

forecasts will consider investment of any excess funds over an appropriate period, to maximise the

return on any such surplus funds, while ensuring that risk is avoided insofar as is possible

Plans for Future Periods

The Board of Directors and separate Local Governing Bodies pride themselves on working in partnership with parents/carers and the community to offer a comprehensive, broad and flexible curriculum to pupils and students of all abilities. We place great emphasis on providing a caring environment for young people in our care, supporting them in their personal development, meeting all their needs, as well as ensuring that each and every child reaches and often exceeds their academic potential.

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Statement of Directors' Responsibilities

The Board of Directors (who act as trustees for the charitable activities of The Boston Wjtham Academies Federation and are also the directors of the Charitable Company for the purpo~.s of company law) are responsible for preparing the Directors' report and the financial stateme ts in accordance with the Annual Accounts Requirements issued by the Education Funding Agency, nited Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice)' and applicable law and regulations. I Company law requires the Directors to prepare financial statements for each financial year. WJnder company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Charitable Company and of its incoming reso~rces and application of resources, including its income and expenditure, for that period. In preparing ~hese financial statements, the Directors are required to: .

- select suitable accounting policies and then apply them consistently; - observe the methods and principles in the Charities SORP; - make judgments and estimates that are reasonable and prudent; - state whether applicable UK Accounting Standards have been followed, subject to any

material departures disclosed and explained in the financial statements; and - prepare the financial statements on the going concern basis unless it is inappropriate to

presume that the Charitable Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to ShO..! and explain the Charitable Company's transactions and disclose with reasonable accuracy at any ti~~ the financial position of the Charitable Company and enable them to ensure that the financial staterrlents comply with the Companies Act 2006.They are also responsible for safeguarding the assets Of the Charitable Company and hence for taking reasonable steps for the prevention and detection of ~raud and other irregularities. .

The Directors are responsible for ensuring that in its conduct and operation the Charitable combany applies financial and other controls. which conform with the requirements both of propriety and of ~oOd financial management. They are also responsible for ensuring grants received from the EFA have lDeen applied for the purposes intended.

Approved by order of the members of the Board of Directors on 13th Jan~ 2014

~'f~ D.......1WUe?J.....• ....

J Coddington A. Reed Chair Executive Head and Accounting Officer

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The Boston Witham Academies Federation Governance Statement

In addition to the local governing bodies outlined above, rather than have a single management team, the decision was taken to allocate to each academy its own Senior Leadership Team, taking responsibility for the day-to-day management of the individual academies. These are constituted as below:

Haven High Academy Carlton Road Academy Staniland Academy

Senior leadership Team Senior leadership Team Senior leadership Team

KAlbelda LCarr L Carr

J Amaral F Hobart R Creasey (Head of Academy)

SCoupland V Heppell M Corfield

E Hextall lJames AO'Connell

C Ponulak H W Joyce (Head of Academy) SPell

A Reed (Executive Head) A Reed (Executive Head) A Reed (Executive Head) J Salmon (Head of Academy) l Reed RSykes

C Singleton o Rushby L Wheatley

CSumner J Quincey A Thompson

J Wallis

S Wharff

FWilliams

P Champion

The Board of Directors has considered the need for a specific internal audit function and has decided not to appoint an internal auditor nor to consitute an internal audit committee. However, the Directors have appOinted Messrs Duncan & Toplis as Responsible Officer ('RO'). The RO's role includes giving advice on financial matters and performing a range of checks on the Academy Trust's financial systems. On a quarterly basis, the RO reports to the Board of Directors on the operation of the systems of control and on the discharge of the

J Coddington Chair

A.Reed Executive Head and Accounting Officer

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Thtl collslilwnl schools tlach have their own local governing body, which concerns itself mainly with the individual Academies' curriculum standards and premises. The membership of each of Ihese includes at least one member of the main Board. Their respective memberships. together with their attendance at meetings during Ihe period are set out below:

Haven High Academy, Local Governing Body Member Meetings Attended

J Coddington 2 S Dowson 3 J Salmon 3 L Stannay 2 RTinkler 3 J McGarel 2 DrT Joachim 3 T Elmer 3 A Thompson 2 CThompson 3 PChampion 3

Carlton Road Academy, Local Governing Body Member Meetings Attended

S Coleman 3 G Kirtley 2 HW Joyce 3 BShaw 3 B Toplis 2 R Marsland 2 J Esprit 2 L Reed 3 E Nurse 3

Staniland Academy, Local Governing Body Member Meetings Attended

C Shepheard 2 J Curtis 2 R Creasey 3 SWelboum 2 RNewall 1 E Hextall 3 A Prigent 3 L Cuesta 1 E Thome 3 J Chester 3 L Wheatley 3

Out of a Possible

3 3 3 3 3 3 3 3 3 3 3

Out of a Possible

3 3 3 3 3 3 3 3 3

Out of a Possible

3 3 3 3 3 3 3 3 3 3 3

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Review of Effectiveness

As Accounting Officer, the Executive Headteacher has responsibility for reviewing the effectiveness of the system of internal control. During the year in question the review has been informed by:

- the work of the Responsible - the work of the external auditor; - the financial management and governance self-assessment process;

The Accounting Officer has been advised of the implications of the result of their review of the system of intemal control by the Finance Comrnittee and a plan to address weaknesses and ensure continuous improvement of the system is in place.

Governance

The information on governance included here supplements that described in the Directors' Report and in the Statement of Directors' Responsibilities. The governing body has formally met 4 times during the year. Attendance during the year at meetings of the governing body was as follows:

Meetings Attended Out of a Possible J Coddington 2 3 RevS Dowson 3 3 S Coleman 3 3 C Shepheard 2 3 J Curtis 3 3 A Reed 3 3 J Salmon 3 3 HW Joyce 3 3 R Creasey 3 3 L Stanney 2 3 R Marsland 1 3 A Prigent 2 3 T Elmer 3 3 G Kirtley 3 3 G McGarel 3 3 PChampion 3 3

The Finance Committee is a sub-committee of the main governing body. Its purpose is to support the Accounting Officer in his day-to-day running of the financial affairs of the Academy and to oversee its systems of internal control. Attendance at meetings in the year was as follows:

Member of Committee Meetings Attended Out of a Possible

T Elmer S Coleman C Shepheard A Reed E Nurse (By Invitation) P.Champion

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Scope of Responsibility

As Directors, we acknowledge we have overall responsibility for ensuring that the Trust has effective and appropriate systems of control, financial and otherwise. We are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Trust and enable us to ensure the financial statements comply with the Companies Acts and the Charities Commission Statements of Recommended Practice. We also acknowledge responsibility for safeguarding the assets of the Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities and to provide reasonable assurance that:

- The Trust is operating efficiently and effectively; - Its assets are safeguarded against unauthorised use or disposition; - the proper records are maintained and financial information used within the Trust or for

publication is reliable; and - the Trust complies with relevant laws and regulations.

The Purpose of the System of Internal Control

The system of intemal 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 on-going process deSigned to 'identify and prioritise the risks to the achievement of academy trust 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 within the Trust for the period 26 July 2012 to 31 August 2013 and up to the date of approval of the annual report and financial statements.

Capacity to Handle Risk

The board of trustees has reviewed the key risks to which the academy trust is exposed together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The board of trustees is of the view that there is a formal on-going process for identifying, evaluating and managing the academy trust's significant risks that has been in place for the period 26 .Iuly 2012 to 31 August 2013 and up to the date 'Of approval of the annual report and financial statements. This process is regularly reviewed by the board of trustees.

The Risk and Control Framework

The Trust's system of internal financial control is based on a framework of regular management information and administrative procedures including the segregation of duties and a system of delegation and accountability. In particular, it includes:

- comprehensive budgeting and monitOring systems with an annual budget and periodic financial reports which are reviewed and agreed by the Directors; - regular reviews by the Finance Committee of reports which indicate financial performance against the forecasts and of major purchase plans, capital works and expenditure programmes; - setting targets to measure financial and other performance; - clearly defined purchasing (asset purchase or capital investment) guidelines; - delegation of authority and segregation of duties; and - identification and management of risks.

The Board of Directors has delegated the day-ta-day responsibility to the Executive Headteacher, as

Accounting Officer, for ensuring financial controls conform with the requirements of both propriety and good

financial management and in accordance with the requirements and responsibilities assigned to it in the

funding agreement between the Academy Trust and the Secretary of State for Education. He is also

responsible for reporting to the Board of Directors any material weaknesses or breakdowns in intemal control.

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Phase 1 of the expansion of Staniland Academy is nearing completion, providing an additional class for reception aged children. During the 2013-14 academic year Phase 2 will provide a further six classrooms and an additional studio hall. Directors will also be considering how to meet the Coalition Government's objective of providing a free, hot school meal to all Key Stage One children across its two Primary Academies.

In December 2013 the DfE informed The Boston Witham Academies Federation that they had been successful in their application; in conjunction with Lincolnshire County Council, to open Wygate Park Academy. This is a new Primary site currently under construction in Wygate Park, Spalding. The building worth f3million is fully funded by Lincolnshire County Council to meet the demand for school places.

The academy which is currently under construction will open in September 2014. The academy will open to accommodate a one form entry Reception class of 30, reaching its full intake of 210 pupils by 2020.

Auditors

Insofar as the trustees are aware:

• There is no relevant audit information of which the charitable company's auditor is unaware; and

• The trustees have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

The auditors Duncan & Toplis will be proposed for re-appointment at the forthcoming Annual General Meeting.

. 13.01,1014Approved by order of the members of the Board of Directors on ................................ .

~nd signed on Its behalf b7-.IN.j~~eJ .. A. Reed Executive Head and Accounting Officer

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Statement on Regularity, Propriety and Compliance

As Accounting Officer of The Boston Witham Academies Federation I have considered my reSi'onSibility

to notify the Academy Trust Governing Body and the Education Funding Agency of material irr gularity.

impropriety and non-compliance with EF A terms and conditions of funding, under the funding a reement

in place between the academy trust and the Secretary of State. As part of my consideration I have had

due regard to the requirements of the Academies Financial Handbook. i

I confirm that I and the academy trust governing body are able to identify any material irrtgUlar or

improper use of funds by the academy trust. or material non-compliance with the terms and contitions of

funding under the academy trust's funding agreement and the Academies Financial Handbook. .

I confirm that no instances of material irregularity, impropriety or funding non-compliance have been discovered to date. '

Signed

A. Reed Executive Head and Accounting Officer

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Independent Auditor's Report on the Financial Statements to the members of The Boston Witham Academies Federation

We have audited the financial statements of The The Boston Witham Academies Federation ("The Academy") for the

period ended 31 August 2013 which comprise the Statement of financial activities, the Balance sheet, the Cash flow

statement and the related notes. The financial reporting framework that has been applied in their preparation is

applicable law, United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and

the Academies Accounts Direction 2013 issued by the Education Funding Agency.

This report is made solely to the academy's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the academy's governors those matters we are required to state to them in an Auditors' report and for no other purpose. To the fuliest extent permitted by law, we UU flot accept or assume responsibility to anyone other than the academy and its governors, as a body, for our audit worl<., for this report, or for the opinion we have formed.

RESPECTIVE RESPONSIBILITIES OF GOVERNORS AND AUDITORS

As explained more fully in the Directors' responsibilities statement, the Directors (who are also the Trustees of the

academy for the purposes of company law) are responsible for the preparation of the financial statements and for being

satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and

Intemational Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices

Board's Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the academy's circumstances and have been conSistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the governors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Governors' report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

OPINION ON FINANCIAL STATEMENTS In our opinion the financial statements:

· give a true and fair view of the state of the academy's affairs as at 31 August 2013 and of its incoming resources and application of resources, including its income and expenditure, for the period then ended;

· have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

· have been prepared in accordance with the requirements of the Companies Act 2006 and the Academies Accounts Direction 2013 issued by the Education Funding Agency.

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Independent Auditor's Report on the Financial Statements to the members of Boston

Witham Academies Federation

OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion the information given in the Directors' report for the financial period for which the financial stati! ments are prepared is consistent with the financial statements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to rep~rt to you if, in our opinion:

• adequate accounting records have not been kept. or returns adequate for our audit have not been received froi· branches not visited by us; or • the financial statements are not in agreement with the accounting records and returns; or • certain disclosures of Directors' remuneration speCified by law are not made; or .

.• we have not received all the information and explanations we require for our audit.

Duncan & Toplis 15 Chequergate Louth Lincolnshire, LN11 OLJ

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"::...IO__

Independent Reporting Auditor's Assurance Report on Regularity to The Boston Witham Academies Federation and the Education Funding Agency

In accordance with the terms of our engagement letter and further to the requirements of the Education Funding Agency

(EFA) as included in the Academies Accounts Direction 2013, we have carried out an engagement to obtain limited

assurance about whether the expenditure disbursed and income received by The Boston Witham Academies Federation

("The Academy") during the period ended 31 August 2013 have been applied to the purposes identified by Parliament and

the financial transactions conform to the authorities which govern them.

This report is made solely to The Boston Witham Academies Federation and the EFA in accordance with the terms of our

engagement letter. Our work has been undertaken so that we might state to The Boston Witham Academies Federation

and the EFA 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 Boston Witham Academies Federationt and the

EFA. for our work. for this report. or for the conclusion we have formed.

RESPECTIVE RESPONSIBILITIES OF THE BOSTON WITHAM ACADEMIES FEDERATION'S ACCOUNTING OFFICER AND THE REPORTING AUDITORS

The accounting officer is responsible. under the requirements of The Boston Witham Academies Federation's funding agreement with the Secretary of State for Education and the Academies Financial Handbook extant from 1 September 2012, 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.

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 Academies Accounts Direction 2013. 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 ended 31 August 2013 have not been applied to purposes intended by Parliament or that the financial transactions do not conform to the authorities which govern them.

APPROACH

We conducted our engagement in accordance with the Academies Accounts Direction 2013 issued by the EFA. We performed a limited assurance engagement as defined in our engagement letter.

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 consequently 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.

Our engagement includes examination, on a test basis, of evidence relevant to the regularity and propriety of the academy's income and expenditure.

CONCLUSION e course of our work. nothing has come to our attention which suggests that in all material respects the expenditure

",received during the period ended 31 August 2013 have not been applied to purposes intended by

cial transactions do not conform to the authorities which govem them.

Lincolnshire. LN11 OLJ

- 16 \Tip. \=...>0 ~ 'lO\ ""

The Boston Witham Academies Federation Com!;!an)l Number 8158309 Statement of Financial Activities for the Period ended 31 August 2013 (including Income and Ex!;!enditure Account)

Restricted Restricted Fixed

Unrestricted General Asset TO~AL Funds Funds Funds 20~3

Notes £000 £000 £000 £0 0

I

Incoming resources Incoming resources from generated funds: · Voluntary income · Activities for generating funds 3 256 256 · transfer from Local Authority on conversion 28 140 (2.025) 15.379 1~,494 Incoming resources from !

charitable activities: · Funding for the Academy's educational operations 4

Total incoming resources 57 11,844 122 1 ,023

453 9,819 15,501 2 ,773

Resources expended Cost of generating funds: · Costs of generating voluntary income · Fundraising trading Charitable activities: · Academy's educational operations Governance costs Other resources expended

5 7

160

63 10,616 149

160

10~765

i 63

Total resources expended

Net incoming / (outgoing) resources before transfers

Gross transfers between funds

223

230

10,616

(797)

149

15,352

1,869

1°1 988

14 1 785

Net income/(expenditure) for the year 0 (2,436) 17,221 14 785 Other recognised gains and losses Actuarial gains on defined benefit pension schemes 25 30 30 Net movement in funds 0 (2,406) 17,221 14j815

Reconciliation of funds Funds brought forward at 26 July 2012

I

Funds carried forward at 31 August 2013 0 (2,406) 17,221 14,!815 i

All of the Academy Trust's activities derive from acquisitions in the current financial period. . A Statement of Total Recognised Gains and Losses is not required as all gains and losses are includ$d in the Statement of Financial Activities

- 17

The financial statements on pages 1 to 32 were approved by the Directornd authorised

for issue on 13th Janua~ 20:~: arc on theirb~h~~b~n~eJ..

J Coddington A. Reed

Chair Executive Head and Accounting Officer

The Boston Witham Academies Federation Com[!an~ Number 8158309 Balance Sheet as at 31 August 2013

Fixed assets Tangible assets

Current assets

Debtors Cash at bank and in hand

Creditors: Amounts falling due within one year

Net current liabilities

Net assets excluding pension liability

Pension scheme liability

Net assets including pension liability

Funds of the academy: Restricted funds · Fixed asset fund(s) · General fund(s) Pensions Reserve

Total restricted funds

Unrestricted funds · General fund(s) Total unrestricted funds Total funds

Notes

11

12

13

25

17

16 16 25

£OOO's

299 397 696

£OOO's

17,221

(386)

16,835

2,020

5

17,221 (386)

(2,020)

16

14,815

- 18

The Boston Witham Academies Federation Company Number 8158309 Cash Flow Statement for the Period Ended 31 August 2013

Notes £OOO's

Net Cash Inflow From Operating Activities 19 17,627

Cash transferred on conversion to an Academy Trust 140

Capital Expenditure (including transfer on conversion) 20 (17,370)

Increase in cash in the year 21

Reconciliation of net cash flow to movement in net funds

Net funds at 26 July 2012

Net funds at 31 August 2013

All of the cash flows are derived from acquisitions in the current financial period.

- 19

397

The Boston Witham Academies Federation Notes to the Financial Statements for the Period Ended 31 August 2013

Statement of Accounting Policies

Basis of Preparation

The financial statements have been prepared under the historical cost convention in accordance with applicable

United Kingdom Accounting Standards, the Charity Commission 'Statement of Recommended Practice: Accounting

and Reporting by Charities' (,SORP 2005'). the Academies Accounts Direction issued by the YPLA (now the EFA)

and the Companies Act 2006. A summary of the principal accounting policies, which have been applied consistently,

except where noted, is set out below.

Incoming resources

Grants receivable

Grants are included in the Statement of Financial Activities on a receivable basis. The balance of income received for specific purposes but not expended during the period is shown in the relevant funds on the balance sheet Where income is received in advance of entitlement of receipt its recognition is deferred and included in creditors as deferred income. Where entitlement occurs before income is received, the income is accrued.

General Annual Grant is recognised in full in the year for which it is receivable and any unspent amount is reflected as a balance in the restricted general fund. Capital grants are recognised when receivable and are not deferred over the life of the a~set on which they are expended. Unspent amounts of capital grant are reflected in the balance in the restricted fixed asset fund.

Interest receivable

Interest receivable is included within the statement of financial activities on a receivable basis.

Other Income

Other income, including the hire of facilities, is recognised in the period it is receivable and to the extent the goods have been provided or on completion of the service.

Resources expended

Resources expended are recognised in the period in which they are incurred and include irrecoverable VAT if appropriate. They have been classified under headings that aggregate all costs relating to that activity.

Allocation of costs

In accordance with the Charities SORP, expenditure has been analysed between the cost of generating funds, the Academy's charitable activities and governance. Items of expendibJre which involve more than one cost category have been apportioned on a reasonable. justifiable and consistent basis for the cost category concerned.

Governance costs

Governance costs include the costs attributable to the Trust's compliance with constitutional and statutory requirements, including audit, strategic management and trustees' meetings and reimbursed expenses. Such costs inClude both direct and allocated support costs.

20 •


Fund accounting

General funds represent those resources which may be used towards meeting any of the objects of the Trust at the discretion of the Directors.

Restricted funds comprise grants from the EFA and other donors which are to be used for specific purposes.

Tangible fixed assets

The Academy's treatment of expenditure on fixed assets varies according to the category of the assets and their expected useful economic lives

Tangible fixed assets acquired since the Trust was established are included in the accounts at cost.

Assets costing less than £1,000 are written off in the year of acquisition. All other assets are capitalised.

A review for impairment is carried out if events or changes in circumstsnces indicate that the carrying amount of any fixed asset may not be recoverable

Land and buildings occupied by the Academies are included in these accounts using valuations carried out by the EFA as at 31 March 2013.

Where tangible fixed assets have been acquired with the aid of specific grants, either from the government or from the private sector, they are included in the balance sheet at cost and depreciated over their expected useful economic lives. The related grants are credited to the restricted fixed asset fund (in the Statement of Financial Activities and carried forward in the balance sheet) and the depreciation on the appropriate assets is charged to this fund such that the remaining carrying value of the grants at each year-end is represented by the net book value of the funded assets.

Assets under construction are accounted for at cost based on architects' certificates and other direct costs. They are not depreciated until they are brought into use.

DepreCiation

Depreciation is provided on a straight line basis on the cost of tangible fixed assets. to write them down to their estimated residual values over their expected useful lives. The principal annual rates used are:

Freehold Land and Buildings No Depreciation Long Leasehold Property • Over the remaining lease term Buildings Refurbishments 10% Furniture and Equipment 25% Motor Vehicles 25% Computer Equipment and Software 33%

• in the case of the land and buildings transferred to the academy on a 125 year lease by Lincolnshire County Council on conversion, these have been incorporated into these accounts based on valuations carried out by the ErA as at 31 March 2013. and depreciated at a rate of 8% to write off the value over the period of the lease.

Stocks

Stocks are valued at the lower of cosl and net realisable value. after making due allowance for obsolete and slow moving items. In respect of the period reported on. a review of stocks of textbooks and cleaning materials was undertaken on the last day of the period. and the board reached the conclusion that the value of these was not material.

- 21


Taxation

The Boston Witham Academies Federation is a registered charity and as such is exempt from income tax and corporation tax under the provisions of the Income and Corporation Taxes Act 1988. The cost of irrecoverable VAT incurred by the Academy has been induded in the statement of financial activities.

Pensions Benefits

Retirement benefits to employees of the academy trust are provided by the Teachers' Pension Scheme ('IPS') and the Local Government Pension Scheme ('LGPS'). These are defined benefit schemes, are contracted out of the State Earnings-Related Pension Scheme (,SERPS'), and the assets are held separately from those of the academy trust.

I he TP::; IS an uniunded scheme and contributions are calculated so as to spread the cost of pensions over

employees' working lives with the academy trust 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 quinquennial valuations using a prospective benefit method. As stated in Note 25, the TPS is a multi

employer scheme and the academy trust is unable to identify its share of the underlying assets and liabilities of the

scheme on a consistent and reasonable basis. The TPS is therefore treated as a defined contribution scheme and

the contributions recognised as they are paid each year.The LGPS is a funded scheme and the assets are held

separately from those of the academy trust in separate trustee administered funds.

Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the

projected unit method and discounted at a rate equivalent to 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 gains and losses on settlements and curtailments. They are induded as part of staff costs. Past service costs

are recognised immediately in the Statement of Financial Activities if the benefits have vested. If the benefits have

not vested immediately, the costs are recognised over the period until vesting occurs. The expected return on assets

and the interest cost are shown as a net finance amount of other finance costs or credits adjacent to interest.

Actuarial gains and losses are recognised immediately in other gains and losses

Further details of the schemes are given in note 25.

Leasing commitments

Rentals payable under operating leases are charged against income on a straight line basis over the lease term.

Conversion to Academy Trust

The conversion from a state maintained school to an academy trust involved the transfer of identifiable assets and liabilities and the operation of the school for £nil consideration and has been accounted for under the acquisition

The assets and liabilities transferred on conversion from the constituent schools to an academy trust have been

valued at their fair value being a reasonable estimate of the current market value that the Directors would expect to

pay in an open market for an equivalent item, subject to the assumption that fixtures and equipment are deemed to

have been fully depreciated. Their fair value is in accordance with the accounting policies set out above. The amounts have been recognised under the appropriate balance sheet categories, with a corresponding amount

recognised in voluntary income as [net income I net expenditure] in the Statement of Financial Activities and

analysed under unrestricted funds, restricted general funds and restricted fixed asset funds. Further details of the

transaction are set out in note 28.

- 22

The Boston Witham Academies Federation Notes to the Financial Statements for the Year Ended 31 August 2013

2 General Annual Grant (GAG)

There was no brought forward GAG as this is the first period since the school converted to being an Academy. Under the funding agreement with the Secretary of State, the academy was not subject to a limit on the amount of GAG that it could carry forward at 31 August 2013.

3 Activities for Generating Funds Unrestricted Restricted

Funds Funds TOTAL £OOO's £OOO's moo's

Academy Trips and other School Fund Income 43 43 Hire of Facilities 34 34 Sale of Meals

4 Funding for Academy's educational operations Restricted Restricted

Unrestricted General Fixed Asset Funds Funds Funds TOTAL £OOO's £000'5 £OOO's £OOO's

DfE Revenue Grants - General Annual Grant (GAG) 0 10.745 10,745

Academy Converter Grant 0 75 75 Insurance Reimbursement 119 119 Other DfE Grants 0 407 407 EFA Capital Fonmula Grant 41 41

0 11,346 41 11,387

Other Government Grants - Special Educational Needs Funding 0 478 478

School Milk Funding 0 5 5 - Local Authority Capital Funding

Non-Governmental income Total Funding for Educational Operations

5 Resources Expended Staff Costs

Non-Pay Expenditure Premises Other

TOTAL

£OOO's £000'5 £OOO's £OOO's

Costs of activities for generating funds

Academy's educational operations . Direct costs 7,020 131 1,374 8,525 . Allocated support costs

Govemance costs including allocated support costs

23


Incoming/outgoing resources for the year include:

Fees payable to Auditor Audit

- Other Services Operating leases

6 Charitable Activities· Academy's Educational Operations

Direct costs

Teaching and Educational Support Staff Costs Educational Supplifl!> Staff Development Educational Consultancy Other Direct Costs Depreciation

Support Costs

Support Staff Costs Maintenance of Premises and Equipment Rent and Rates Insurance Heat and Ught Other Support Costs

7 Governance Costs

Audit & Accountancy Legal and licences

8 Staff Costs

Staff costs during the period were:·

Wages & Salaries Social Security Costs Pension Costs

Compensation Costs

Unrestricted Restricted £OOO's £OOO's

7,020 293

64 '344

655 149

12 2

16

TOTAL £Ooo's

7,020 293

64 344 655 149

1.274 570

·5 125 169 106

1,274 570

·5 125 169 106

0 2,240 2.240

0 10,765 10.765

Unrestricted Restricted TOTAL £OOO's £OOO's £OOO's

14 0 14

£OOO's

6.800 437

1,050 8.287

The average number of persons (induding senior management team) employed by the academy during the year. expressed as fuJi time equivalents was as follows:

Teachers Administration and Support Management

No. 130.1 126.3

• 24 •


The number of employees whose emoluments fell within the following bands was:

£60,001 to £70,000 £180,001 to £190,000

Pension contribu~ons made by the Trust in respect of the above two employees were £11,178 and £26,215 respectively.

9 Directors' Remuneration

The head teacher receives remuneration in respect of sevices he provides undertaking his role of headteacher, and not in respect of his services as govemor. Other Directors did not receive any payments, other than duly approved reimbursement of expenses totalling £5,281, from the Academy in respect of their role as Directors. The value of the headteacher's remuneration was £185,917.

The following Governors were also members of the teaching or support staff and received remuneration during the period within the following bands, solely in respect of services that they provide undertaking their respective teaching and other roles, not in respect of their services as governors. Other related party transactions are set out in note 26.

Range Name Position

£50,001 to £55,001 R.Creasey Staff Govemor £55,001 to £60,000 HW Joyce Staff Governor £60,001 to £65,000 J.Salmon Staff Governor

10 Directors' and Officers' Insurance

The Academy has purchased insurance to protect Directors and officers from daims arising from negligent acts.

errors or omissions occurring while on Academy business. The cost of this insurance was £3,969 and it provides

cover of up to £5million. This cost is induded in total insurance costs in the Statement of Financial Activities.

11 Fixed Assets

Leasehold Land &

Buildings'

Assets Under Construction

Computer Equipment

Fumiture & Equipment

Motor Vehides

TOTAL

£OOO's £OOO's £OOO's £OOO's £OOO's Cost Brought forward 0

Additions 1,165 244 364 218 1,991

Transfer on conversion 15,318 61 15.379

Disposals 0

At 31st August 2013

Depreciation Brought forward o

Charge for Year 115 8 11 15 149

On Disposals o

At 31st August 2013

Net Book Value 31 st August 2013

- 25


• land &buildings held on a 125-year lease from lincolnshire County Council as transferred to the AC<ldemy on

conversion have been included in accordance with valuations carried out as at 31st March 2013 on behalf of the

Education Funding Agency, in conjunction with the Whole of Government Accounts return. The Directors

consider these to be fair values. Of the total valuations, the amount in respect of land is £1.521million

12 Debtors £OOO's

VAT Reclaimable 193 Prepayments and Accrued Income 104 Trade Debtors 2

299

13 Creditors: amounts falling due within one year £OOO's

Trade Creditors 409 Taxation and Social Security 143 Sundry Creditors and Accruals

14 Stock

The Academy holds no trading stocks, and while small amounts of cleaning and educational materials were held at the year-end, these are not considered to be material

15 Funds Balance atBalance at Gains.

Incoming Resources 31st26th July losses &

Resources Expended August2012 Transfers

2013 £OOO's £OOO's £OOO's £OOO's £OOO's

Restricted general funds

General Annual Grant (GAG) 10,745 (9,991) (1,639) (885) Start Up Grant 75 (75) Other DfE grants 123 (27) 96 Special Educational Needs Funding 478 (478) School Milk Funding 5 (5) Other 15 (15) Pupil Premium 403 403 lGCS Pension

Restricted fixed asset funds

DfE and local Authority capital grants 122 (122) Transfer of Fixed Assets from LA 15,379 (115) 15,264 Expenditure from GAG and LA Grants (34) 1,761 1,727 Expenditure from unrestricted funds

Total restricted funds

Unrestricted funds

Unrestricted funds 453 (223) (230)

Total unrestricted funds

Total funds

- 26


Notes to the Financial Statements for the Year Ended 31 August 2013

Analysis of Academies by fund balance

Fund balances at 31 August 2013 were allocated as follows: £OOO's


4,617 1,465 1.525

Shared services (7.993)

Total before fixed assets and pension reserve

Pension reserve Fixed Assets

(2,020)

Analysis of academies by cost

Expenditure incurred by each academy during the period was as follows:

Teaching and Edocational

Support Siaft Costs

£OOO'S

Other Support Staff Costs

£OOO's

Educational Supplies

£OOO's

OlherCosts

£OOO's

Total

£OOO's


170 36 48

37 9

15

152 47 29

1,518 611 323

1,877 703 415

Shared services 6,766 1.213 3 11 7.993

Shared services comprise direct and indirect salary costs and support supplies and costs. which are shared between two or more of the schools. These are all considered to fall within the definition of the normal costs of running the schools as funded by the General Annual Grant. The basis on which the shared central costs are to be apportioned between the schools Within the Trust is yet to be agreed, and is to be considered and reviewed by the Govemors based on experience of demand for internal resourting. but at this stage it is felt that this may be best achieved using comparative pupil numbers.

Under the funding agreement with the Secretary of State. the academy was not subject to a limit on the amount of GAG that it could carry forward at 31 August 2013.

The specific purposes for which the funds are to be applied are as follows:

General Annual Grant (GAG) must be used for the normal running costs of the Academy.

Other DFE I EFA Grants comprise of various grants awarded for specific projects, in particular to boost standards of attainment. Grants include Pupil Premium funding which is intended to support education from pupils from a disadvantaged background.

local Government Grants includes funding provided for pupils with Statements of Special Educational Needs and is used by the academy to assist with the pupils education.

Devolved capital funding is that provided to academies to use as it sees fit in areas such as improvements to buildings or facilities, or the repair or refurbishment of such.

Other capital grants are provided to the academy based on specific bids for individual projects .

. 27


Other income comprises various other receipts induding school meals. The income is dassed as restrided or unrestricted based on the nature of the income.

The pension reserve arises from the actuarial measurement of the Academy's share of the Local Government Pension Scheme deficit. This deficit is recorded as a provision. The actuarial cost of employing staff during the year is initially reflected in the normal running costs of the school in the restricted pension fund. The amount induded in resources expended represents the pension cost for the year charged to income and expenditure that arises from actuarial calculations of service cost net of employer contributions paid. and amounts to £25.000. Actuarial gains and losses that arise from changes in assumptions by the actuary or wider influences are shown in the restricted pension fund. the movement this year being a net £30,000 actuarial reduction in the net pension fund deficit.

Re&t/icleo rix"d Clssd funds represent monies received In respect of and spent on fixed assets. 1 illS indudes assets inherited on converSion. The total of resources expended within this fund indude the depreciation charge for the year. The transfers figure is the amount of other funds used to acquire fixed assets.

As will be noted from the SOFA, the overall balance on restricted general funds is in deficit. due largely \0 the recognition of the pension deficit in the first period after conversion.

The balance of unrestricted funds as at the period end has been transferred against the deficit on restricted general funds to minimise the deficit carried forward on those funds.

The only surplus balance of carried forward is on restricted fixed assel funds. This comprises the balance of undepreciated fixed assets.

16 Analysis of net assets between funds

Fund balances at 31 August 2013 are represented by: Unrestricted

Funds

Restricted General Funds

Restricted Fixed Asset Funds

TOTAL

£OOO's £OOO's £OOO's £Ooo's

Tangible fixed assets 17.221 17.221 Current assets 696 696 Current liabilities (1.082) (1.082) Pension scheme liability (2.020} {2.020~ Total net assets ~2.4062 17,221 14.815

17 Capital Commitments

At 31st August 2013. the Academy had total capital commitments not provided in the financial statements of £47.600.

18 Financial Commitments

Operating leases

At 31 August 2013 tile Academy had annual commitments under non-cancellable operating leases as follol.'lS:

£OOO's

Expiring within one year 2 Expiring within two and five years indusive 22 Expiring in over five years

24

- 28


19 Reconciliation of net income to net cash inflow from operating activities

Nelincome 14,785 Depreciation 149 Pension deficit 2,020 Actuarial gain on pension fund 30 Cash transferred on conversion (140) (Increase )/decrease in debtors (299) Increase/(decrease) in creditors 1,082

Net cash inflow from operating activities

20 Capital expenditure and financial investment

Purchase of tangible fixed assets 1,991 Transfer of Land & Buildings on conversion at EfA valuation 15.318 Transfer of Motor Vehides on conversion at valuation 61 Net cash outflow from capital expenditure and financial investment 17.370

21 Analysis of changes in net funds At 31stAt 26th July Cash

August2012 Flows

2013 £OOO's £OOO's

Cash in hand and at bank

22 Contingent Liabilities

During the period of the Funding Agreement in the event of the sale or disposal by other means of any asset for

which a Government capital grant was received. The Boston Witham Academies Federation is required either to

re-invest the proceeds or to repay to the Secretary of State for Education and Skills the same proportion of the

proceeds of the sale or disposal as equates with the proportion of the original cost met by the Secretary of State.

Upon termination of the Funding Agreement. whether as a result of the Secretary of State or The 80ston Witham Academies Federation serving notice. the Academy Trust shall repay to the Secretary of State sums determined by reference to:

a) the value at that time of The Boston Witham Academies Federation site and premises and other assets held for the purpose of the Federation: and

b) the extent to which expenditure incurred in providing those assets was met by payments by the Secretary of State under the Funding Agreement.

23 Members' Liability

Each member of the charitable company undertakes to contribute to the assets of the company in the event of it being wound up while he/she is a member. or within one year after he/she ceases to be a member. such amount as may be required, not exceeding £10 for the debts and liabilities contracted before he/she ceases to be a

24 Ultimate Controlling Interest

The Trustees have ultimate control of the Academy Trust.

- 29


25 Pension and Similar Obligations

The Academy's employees belong to two principal pension schemes: the Teachers' Pension Scheme England and Wales (TPS) for academic and related staff; and the Local Government Pension Scheme (LGPS) for nonteaching staff. Both are defined-benefit schemes. The pension costs are assessed in accordance with the advice of independent qualified actuaries. The latest actuarial valuation of the TPS was 31 March 2010 and of the LGPS 31 August 2012. As at 31 August 2013, amounts due to TPS and LGPS were £74.253 and £47.956 respectively.

Teachers' Pension Scheme

Introduction

The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme. governed by the Teachers' Pensions Regulations (2010). These regulations apply to teachers in schools that are maintained by local authorities and other educational establishments, including academies, in England and Wales. In addition teachers in many independent and voluntary-aided schools and teachers and lecturers in some establishments of further and higher education may be eligible for membership. Membership is automatic for full-time teachers and lecturers and from 1 January 2007 automatic too for teachers and lecturers in part-time employment following appointment or a change of contract. Teachers and lecturers are able to opt out of the TPS.

The Teachers' Pension Budgeting and Valuation Account

Although members may be employed by various bodies. their retirement and other pension benefits are set out in regulations made under the Superannuation Act (1972) and are paid by public funds provided by Parliament. 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 under arrangements governed by the above Act.

The Teachers' Pensions Regulations require an annual acoount, the Teachers' Pension Budgeting and Valuation Acoount, to be kept of receipts and expenditure (including the cost of pensions' increases). From 1 April 2001, the Acoount has been credited with a real rate of return. which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return.

Valuation of the Teachers' Pension Scheme

At the last valuation, the contribution rate to be paid into the TPS was assessed in two parts. First. a standard

contribution rate (SCR) was determined. This is the contribution, expressed as a percentage of the salaries of

teachers and lecturers in service or entering service during the period over which the contribution rate applies,

which if it were paid over the entire active service of these teachers and lecturers would broadly defray the cost of benefits payable in respect of that service. Secondly, a supplementary contribution is payable if. as a result of the

actuarial review, it is found that accumulated liabilities of the Account for benefJts to past and present teachers,

are not fully covered by standard contributions to be paid in future and by the notional fund built up from past

contributions. The total contribution rate payable is the sum of the SCR and the supplementary contribution rate.

Th~ last valuation of the TPS related to the period 1 April 2001 to 31 March 2004. The Government Actuary's

report of October 2006 revealed that the total liabilities of the Scheme (pensions in payment and the estimated

cost of future benefits) amounted to £166,500 million. The value of the assets (estimated future contributions

together with the proceeds from the notional investments held at that valuation date) was £163.240 million. The

assumed real rate of return was 3.5% in excess of prices and 2% in excess of earnings. The rate of real earnings

growth was assumed to be 1.5%. The assumed gross rate of return was 6.5%. From 1 January 2007, the SCR

was assessed at 19.75%, and the supplementary contribution rate was assessed to be 0.75% (to balance assets

and liabilities as required by the regulations within 15 years). This resulted in a total contribution rate of 20.5%.

which translated into an employee contribution rate of 6.4% and employer contribution rate of 14.1 % payable.

- 30


Actuarial scheme valuations are dependent on assumptions about the value of future costs. the design of benefits and many other factors. Many of these assumptions are being considered as part of the work on the reformed TPS, as set out below. Scheme valuations therefore remain suspended. The Public Service Pensions Bill. which is being debated in the House of Commons. provides for future scheme valuations to be cOnducted in accordance with Treasury directions. The timing for the next valuation has still to be determined. but it is likely to be before the reformed schemes are introduced in 2015.

Teachers' Pension Scheme Changes

Lord Hutton published his final report in March 2011 and made recommendations about how pensions can be made sustainable and affordable, whilst remaining fair to the workforce and the taxpayer. The Government accepted Lord Hutton's recommendations as the basis for consultation and Ministers engaged in extensive discussions with trade unions and other representative bodies on reform of the TPS. Those discussions concluded on 9 March 2012 and the Department published a Proposed Final Agreement. setting out the design for a reformed TPS to be implemented from 1 April 2015.

The key provisions of the reformed scheme include: a pension based on career average earnings; an accrual rate of 1/57th ; and a Normal Pension Age equal to State Pension Age, but with options to enable members to retire earlier or later than their Normal Pension Age. Importantly, pension benefits built up before 1 April 2015 will be fully protected

In addition, the Proposed Final Agreement includes a Government commitment that those within 10 years of Normal Pension Age on 1 April 2012 will see no change to the age at which they can retire, and no decrease in the amount of pension they receive when they retire. There will also be further transitional protection, tapered over a three and a half year period, for people who would fall just outside of the 10 year protecfion.

In his interim report of October 2010, Lord Hutton recommended that short-term savings were also required, and that the only realistic way of achieving these was to increase member contributions_ At the Spending Review 2010 the Government announced an average increase of 3.2 percentage points on the contribution rates by 2014-15. The increases were to be phased in from April 2012 on a 40:80:100% basis.

Under the definitions set out in Financial Reporfing Standard (FRS 17) Retirement Benefits, the TPS is a multiemployer pension scheme. The academy is unable to identify its share of the underlying assets and liabilities of the scheme. Accordingly, the academy has taken advantage of the exemption in FRS 17 and has accounted for its contributions to the scheme as if it were a defined contribution scheme. The academy has set out above the information available on the scheme.

Local Government Pension Scheme

As described in note 1 the LGPS obligation relates to the employees of the academy trust. who were the employees transferred as part of the conversion from the maintained school and new employees who were eligible to, and did, join the Scheme in the year/period. The obligation in respect of employees who transferred on conversion represents their cumulative service at both the predecessor school and the academy trust at the balance sheet date.

- 31

The Boston Witham Academies Federation Noles 10 the Financial Statements for the Year Ended 31 Aug 2013

Principal Actuarial Assumptions

The actuarial assumptions uUlised by Messrs Hymans Roberts in their valua~on of the funded status of the scheme at 31st Augusl2013 are set out below (with comparatives for 1s1 September 2012

Period 31st August sep~!ber Ended 2013 2012

Pension Increase Rate 2.8% 2.2% Salary Increase Rate 5.1% 4.5% Expected Return on Asse 6.1% 5.1% Discount Rate 4.6% 4.1%

In accordance with the ASB Reporting Statement 'Retirement Benefits', sensitivity analysis showing the effect that

marginal movement on each of these rates would have on the Trust's liability to the scheme are set out below:

Approximate . a Change in Assumptions at 31 st August % Increase to A:~~;~;ryte

2013 Employerliability

A t (£000) moun

0.5% decrease in Real Discount Rate 14% 567 year increase in member lifo oxpoctanc 3% 118 .5% Increase in the Salary Increase Rat 8% 305 5% Increase in the Pension Increase Ra 6% 243

Breakdown of the Estimated Return on Assets by Category

Period 31 st August sep~!ber Ended 2013 2012

Equities 6.6% 5.5% Bonds 4.3% 3.7% Property 4.7% 3.7% Cash 3.6% 2.8%

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

Current Pensioners Future Pensioners' • figures assume members aged 45 at the last formal valuation date

The Academy's share of the assels and liabilities in the scheme and the expected rates of return were:

Fair Value of Academy Assets in the Scheme

Period Ended

31st August 2013 (£000)*

1st September

2012 (£000)

Equities 1480 862 Bonds 231 163 Property 211 140 Cash 0 TOTAL 1922 1165

• the assel values al31 sl Augusl2013 are at bid value as required by FRS17

- 32


Balance Sheet Values of Assets and Liabilities

31st August 1s1 SeptemberPeriod Ended

2013 (£000)* 2012 (£000)

Fair value of assets as above 1,922 1.165 Present value of funded liabilities' (3,942) (3.190) Net underfunding in funded plans (2,020) (2.025) Present value of unfunded liabilities --Unrecognised past service cost --Net Asset/(Liability) (2,020) (2,025) Corresponding amount in the Balance Sheet:liabilities 2,025 Assets TOTAL

-

- (2.025)

• In their valuation of the scheme as at 31st August 2013. Anne Cranston AFA of Messrs Hymans Robertson comments: "/ estimate that this liability comprises of £3.942.000. £0 and £0 in respect of employee members, deferred pensioners and pensioners respectively as at 31st August 2013. The approximation involved in the rollforward model means that the split of the scheme liabilities between the three classes of member may not be re/iab/e for certain types of employer. However. / am satisfied that the approach used leads to reasonable estimates for the aggregate liability figure.·

Amounts recognised in the statement of financial activities

Period Ended

31st August 2013 £000 % of pay

Current service cost· Interest Cost Expected Return on Employer Assets Past Service Cost/(Gain) Lossesl(Gains) on Curtailments and Settlements Total Actual Return on Employer Assets

400 141 (72)

22.4% 7.9%

(4.0%)

469 26.3% 208

Reconciliation of defined benefit obligation

Period Ended 31st August 2013 (£000)

Opening Defined Benefit Obligation 3.190 Current Service Cost 400

141 106 105

Interest Cost Contributions by Members Actuarial losses/(Gains) Closing Defined Benefit Obligation 3.942

Reconciliation of fair value of employer assets


Opening Fair Value of Employer Assets 1.165 Expected Reurn on Assets 72

106 444 135

Contributions by Members Contributions by the Employer Actuariallosses/(Gains)

Value of Employer Assets 1,922

- 33

Ii


Amounts for the current accounting perion


Fair Value of Employer Assets 1,922 (3,942) (2,020)

135 0

Present Value of Defined Benefit Obligation Surplus/(Oeficit) Experience Gains/(Losses) on Assets Experience GainS/(Losses) on Liabilities

The actuarial gains and losses for the current year are recognised in the statement of financial activities.

26 Related Party Transactions

Declarations of business interests have been received from all trustees, members of school committees. members of all senior management teams and finance staff.

Owing to the nature of the Academy's operations and the composition of the board of Directors 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 Directors may have an interest. All transactions involving such organisations are

conducted at arm's length and in accordance with the Academy's financial regulations and normal procurement

procedures. It should also be noted that a number of personnel who are related to members of the board or to the

senior management team are employed at the school. The board are fully aware of these relationships; the

decision to employ and the terms of each relevant person's employment have been dealt with totally transparenHy

and on a commercial basis.

27 Post Balance Sheet Events

In December 2013 the DfE informed The Boston Witham Academies Federation that they had been successful in their application; in conjunction with Lincolnshire County Council, to open Wygate Park Academy in Spalding. The academy which is currenHy under construction will open in September 2014.

28 Transfer on Conversion

On 1st September 2012 Haven High School, Carlton Road Primary School and Staniland Primary and Nursery School joinUy converted to academy trust status under the Academies Act 2010, and all the operations and assets and liabilities were transferred to The Boston Witham Academies Federation for £Nil consideration.

The transfer has been accounted for using the acquisition method. The assets and liabilities transferred were valued at their fair value and recognised in the balance sheet under the appropriate headings with a corresponding net amount recognised as net income/(resources expended) in the Statement of Financial Activities as voluntary income/(other resources expended).

The following table sets out the fair values of the identifiable assets and liabilities transferred and an analysis of their recognition in the SOFA.

Unrestricted Restricted Restricted TOTAL Funds General Fixed

Funds Asset Funds

£000 £000 £000 £000 Tangible Fixed Assets

- Freeholdlleasehold land and buildings 15,318 15.318 • Other tangible fixed assets 61 61

Budget surplus on Local Authority funds 140 140

LGPS pension deficit (2,025) (2.025)

The above net assets indude £99,996 that was transferred as cash.

34

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29 Taxation

The academy trust is considered to pass the tests set out in Paragraph 1 Schedule 6 of the Finance Act 2010 and

therefore it meets the definition of a charitable company for UK corporation tax purposes. Accordingly. the

academy trust is potentially exempt from taxation in respect of income or capital gains received within categories

covered by Chapter 3 Part 11 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 .

• 35

haven high academy

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