CORNERSTONE ACADEMY TRUST FORMERLY KNOWN AS BROADCLYST PRIMARY ACADEMY TRUST

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1 Registered number: FORMERLY KNOWN AS BROADCLYST PRIMARY ACADEMY TRUST ANNUAL REPORT AND FINANCIAL STATEMENTS

2 CONTENTS Page Reference and administrative details of the academy, its trustees and advisers 1-2 Trustees' report 3-9 Governance statement Statement on regularity, propriety and compliance 14 Trustees' responsibilities statement 15 Independent auditors' report Independent reporting accountant's assurance report on regularity Statement of financial activities Balance sheet 22 Cash flow statement 23 Notes to the financial statements 24-43

3 REFERENCE AND ADMINISTRATIVE DETAILS OF THE ACADEMY, ITS MEMBERS/ TRUSTEES AND ADVISERS Members J Bishop 1,2,3,4 M Whitelock Trustees J Bishop, Head Teacher 1,2,3,4 M Whitelock 1,2 H Massey, Chair 1,2,3,4 K Dyson 2,3,4 S Wright (resigned 9 December 2014) 1 R Billen 2 V Hampshire (resigned 22 July ) 3 C Pepper 1,3,4 C Bradley 2,4 R Brine (resigned 9 September 2014) 1 J Waddingham (appointed 24 March ) M Pitts (appointed 10 February ) 3 B Renfree (appointed 9 December 2014) 1,2 M Gordon (appointed 9 December 2014) 1,4 S Taylor (appointed 9 December 2014) 3,4 M Narramore (appointed 9 December 2014) 1 W Jordan (appointed 15 September ) N Bland (appointed 15 September ) Company registered number Principal and Registered office 1 Finance and Premises 2 Personnel 3 Curriculum 4 Admissions and Ethos School Lane Exeter Devon EX5 3JG Company secretary Chief executive officer Senior management team Independent auditors F Binns J Bishop J Bishop, Headteacher D James, Deputy Head N Rothery, Assistant Head G Newbery, Business Manager T Cavallo, SENCO A Pulfer, Senior Teacher Bishop Fleming LLP Chartered Accountants Statutory Auditors 2nd Floor Stratus House Emperor Way Exeter Business Park Exeter EX1 3QS Page 1

4 REFERENCE AND ADMINISTRATIVE DETAILS OF THE ACADEMY, ITS MEMBERS/ TRUSTEES AND ADVISERS Administrative details (continued) Bankers Solicitors Lloyds TSB 234 High Street Exeter Devon EX4 3NL Browne Jacobson 1 Manor Court Dix's Field Exeter Devon EX1 1UP Page 2

5 TRUSTEES' REPORT The Trustees present their annual report together with the financial statements and auditors report of the charitable company for the year ended 31 August. The annual report serves the purpose of both a Trustees report, and a Directors report under company law. The Trust operates an academy for pupils aged 2 to 11 in Broadclyst, Exeter. It has a pupil capacity of 450 (plus a 36 place Nursery) and had a roll of 434 (plus 54 Nursery children) in the school census on 31 January. STRUCTURE, GOVERNANCE AND MANAGEMENT Constitution The academy 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. The Trustees of Cornerstone Academy Trust are also the directors of the charitable company for the purposes of company law. Details of the Trustees who served throughout the year, except as noted, are included in the Reference and Administrative Details on pages 1 to 2. 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 they cease to be a member. Trustees' Indemnities The Academy has Professional Indemnity insurance for Trustees and Officers Liability via Zurich Insurance. The limit of indemnity is 2,000,000. TRUSTEES Method of recruitment and appointment or election of Trustees The Trustees are Directors of the charitable company for the purposes of the Companies Act 2006 and Trustees for the purposes of charity legislation. Trustees term of office is four years but they are eligible for re-election at the meeting at which they retire. At the first meeting of the year the Trustees will elect a Chair and a Vice Chair. When appointing new Trustees, the Board will give consideration to the skills and experience mix of existing Trustees in order to ensure that the Board has the necessary skills to contribute fully to the Academy s development. Policies and Procedures adopted for the Induction and Training of Trustees During the financial year under review the Trustees held six full Trustees meetings and twenty-two Trustees committee meetings. The training and induction provided for new Trustees will depend on their existing experience. The Academy buys the services of Browne Jacobson Solicitors who provide regular training events and also will provide bespoke training for Governing Bodies on request. Trustees are given access to an on line Trustee portal on the school s site where they can obtain copies of policies, improvement plans, minutes, and other documents that they will need to undertake their role as Trustees. All Trustees also have access to an online specialist information depository aimed solely at school Trustees. Organisational Structure The management structure ensures the effective and efficient running of the Academy. This consists of three levels: the Trustees; the Leadership Team and those with specific leadership responsibilities. The aim of the management structure is to devolve responsibility and encourage involvement in decision making at all levels. Page 3

6 TRUSTEES' REPORT (continued) The Trustees are responsible for setting general policy, adopting a development plan and budget; monitoring the Academy through close liaison with and reporting from the Headteacher and through personal observations by visits to the school; making major decisions about the strategic direction of the Academy including capital expenditure and involvement in staff appointments in consultation with the Headteacher. The Trustees are appointed in line with Articles 50 to 58 within the Memorandum of Association. When appointing new Trustees the Governing Body recognises the need to have a wide range of skills amongst the Trustees. The Leadership Team is led by the Headteacher and he is supported by the Deputy Head, an Assistant Head, the Business Manager, SENCO and Senior Teacher. These senior leaders manage the Academy implementing the policies agreed by the Trustees and reporting back to them on progress. The Headteacher, assisted by other key senior staff, is responsible for the authorisation of spending within agreed budgets and the appointment of staff. The Headteacher is the Accounting Officer. Connected Organisations, including Related Party Relationships Heatree Activity Centre is a related party as Mr Bishop, a Trustee of the Academy is also a Trustee of the centre. The transactions with Heatree Activity Centre are undertaken at arm's length and are disclosed in these financial statements. There are no other related parties which either control or significantly influence the decisions and operations of Cornerstone Academy Trust. There are no sponsors or formal Parent Teacher Associations associated with the Academy. OBJECTIVES AND ACTIVITIES Objects and Aims The principal objects and activities of the charitable company are the operation of the Academy known as Broadclyst Community Primary School is to provide a differentiated free education for students between the ages of 2 and 11. In setting the objectives and planning the activities the Trustees have given careful consideration to the Charity Commission s general guidance on public benefit and in particular to its supplementary public benefit guidance on advancing education. Objectives, Strategies and Activities The main objectives of the Academy during the year ended 31st August are summarised below: to deliver high quality education and care to all students within the Academy. to maintain and enhance the standards and achievement of all pupils. to include and meet the needs of all pupils whatever their educational need. to work successfully in partnership with a range of different stakeholders that support the Academy s high achievements. to further develop the business management of the school to ensure value for money and good financial health. to review and enrich the curriculum to provide a broad and balanced curriculum. to conduct the Academy s business in accordance with the highest standards of integrity, probity and openness. to restructure leadership team to facilitate strategic projects such as becoming a teaching school. to develop the Academy site so that it enables pupils to achieve their full potential. to foster partnerships with Universities, teacher training institutions and business to add value to opportunities offered by the Academy. The Academy s main strategy is to: Create and promote a challenging learning environment that inspires children to achieve high standards and Page 4

7 TRUSTEES' REPORT (continued) become lifelong learners. The school has high expectations, builds children s confidence, and ensures success for all. We seek to foster creative thinkers, inquisitive questioners, and avid problem solvers with flexible skills, who are successful communicators. Children learn to collaborate effectively at all levels, including working with our international partners and are able to adapt to the needs of a diverse and fast changing society. The Academy has reviewed its development plan and is in year three of its five-year plan, which details how it intends to achieve the aims and objectives. The activities provided include: teaching and learning opportunities to ensure each child achieves to their full potential. training opportunities for all staff. a programme of enrichment and extension activities for all students including: o Swimming teaching o A wide PE offering across the school, with a rich alternative programme for Years 5 and 6 o Expanding music provision across the school o Extra-Curricular enrichment for Year 6 students o Outdoor Education Forest school, Allotment, Residential Activities o A rich variety of after school clubs o Provision of wrap around via the Breakfast Club & extended after school care o Extending existing strong collaborative partnerships with other schools and organisations. Public Benefit The Trustees confirm that they have complied with the duty in Section 17(5) of the Charities Act 2011 to have due regard to the Charity Commission's general guidance on public benefit in exercising their powers or duties. They have referred to this guidance when reviewing the academy's aims and objectives and in planning its future activities. STRATEGIC REPORT Achievements and Performance The Academy Trust converted to a Multi-Academy Trust during the year, becoming Cornerstone Academy Trust. This is in preparation for the opening of the recently awarded free school, the Digital Primary Academy, in September The Academy has again sustained high achievement and progress as measured by foundation stage profile key stage one results and the key stage two results. The Academy worked alongside the appointed building contractor to finalise the construction of the new hall, kitchen, multi-use area, changing rooms and café. The attention to detail invested throughout the design and build phases has meant we have an outstanding, high specification, thoroughly state of the art building. To ensure that standards are maintained year on year the Academy operates a programme of target setting, and curriculum monitoring and review that feed into the Academy development plan. The Academy also ensures that there are opportunities to share good practice and receive good CPD matched to the needs of staff and the objectives of the Academy. In October the Academy was part of a successful pilot for the new Ofsted inspection framework. The school-led Nursery continues to go from strength to strength. Numbers in each session have increased to 36 children and there are only a few sessions with vacant places. Future numbers look to promise a full take-up. Following the conversion of the previous pre school to a school led Nursery in September 2013 we have spent the last period developing a high quality educational offer for children aged 2 and above. We have invested a significant amount of money to provide a fully refurbished nursery building and external areas. We continued as part of a national DfE pilot looking at the education of two year olds. During the last 12 months, the Academy has continued to make considerable investment in ICT including the purchase of new PCs, ipads and MS Surfaces for use by pupils and staff. The inaugural Global Enterprise Page 5

8 TRUSTEES' REPORT (continued) Challenge saw over 30 schools from 20 different countries across the world taking part, with the eventual winners being a school in Mumbai, India. The children and their teacher were flown to the Microsoft HQ in Seattle as part of their prize. The first full year of the Cornerstone Teaching School was a successful one. The alliance with other partner school has gone from strength to strength and the first learning opportunities have been rolled out. The completion of the new hall means we are able to offer quality facilities for our events. The school has maintained two minibuses and a people carrier to ensure that classes can be taken off site to enrich their learning experience. The Academy has operated a bus service collecting pupils from the local area reducing the number of cars on the road each day. Overall a big investment has been made into the learning environment that many children will benefit from. The Academy has maintained its strong links with Exeter and Plymouth Universities, with Microsoft, the National Trust and Exeter College. The Academy has continued to develop its intentional reputation for innovation in ICT and has advised LA s and governments from across the UK in their IT strategies. The Academy has continued to include a diverse range of children with very specific educational needs working successfully with Devon County Council to place these children within the Academy and support their individual needs within a mainstream setting. Key Performance Indicators As funding is based on pupil numbers this is also a key performance indicator. Pupil numbers for were 434 (at January). An identified dip in reception numbers for September would have seen this number decrease, so a dedicated effort to ensure all other year groups have the maximum number of children has been actioned. The following KPIs were set at the start of the year: Whole School Leadership Target Achievement Performance KS1 Phonics KS1 SATS results Leadership Team Governance Sustain high attainment and progress by the end of KS2. Sustain the percentage of children achieving the expected level. Sustain high attainment and progress by the end of KS1. Build leadership capacity in readiness to open a new free school. Establish the trust governance model as a multi-academy trust in readiness for a new free school and any potential sponsor school joining the trust. Percentage of pupils attaining or surpassing Level 4: Reading 95% Writing 93% Maths 90% 92% of Year 1 children achieved the expected level, up 2% on the previous year. 97% of Year 2 children achieved the expected level, up 19% on the previous year. 100% of children achieved the expected level for reading. 95% of children achieved the expected level for writing. 100% of children achieved the expected level for maths. Free school awarded. In preopening phase building towards opening in New trustees with relevant skill sets recruited to support the conversion to a MAT. MAT conversion took place in August. Page 6

9 TRUSTEES' REPORT (continued) Teaching School Assessment Staff satisfaction Parent satisfaction Student satisfaction Collaboration Expand the School Direct teacher training programme to train more teachers across more alliance schools. Establish the range of services offered by the teaching school to include CPD opportunities, school to school support and research projects. Prepare for national assessment changes with the removal of levels. Reaccreditation of Investors in People. Provide regular parent consultation meetings and opportunities for feedback. Continue Student Voice processes to seek views and issue feedback forms for pupils to complete. Continue to build strong partnerships with regional, national and international education partners. Recruited seven School Direct students, both primary and secondary to be trained across five alliance schools in /16. Large range of CPS opportunities developed alongside three research projects. Embedded new standardised testing from GL Assessments. Achieved. Half termly meetings took place and feedback at the results of formal feedback questionnaires at the end of the year was outstanding. Successfully implemented a number of school improvement projects as an outcome of Student Voice. Pupil surveys rated the school as outstanding. Awarded Microsoft Showcase School with two teachers being MS Innovative Expert Educators. Two teachers visited link school in Ethiopia. Established Global Enterprise Challenge with 1500 students from across 25 schools in 20 countries. Going Concern After making appropriate enquiries, the Board of Trustees has a reasonable expectation that the academy has adequate resources to continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going concern basis in preparing the financial statements. FINANCIAL REVIEW Financial Review Most of the Academy's income is obtained from the Department for Education (DfE) in the form of recurrent grants, the use of which is restricted to particular purposes. The grants received from the DfE during the 12 months ended 31 August and the associated expenditure is shown as restricted in the statement of financial activities. The Academy also receives grants from Devon County Council for Individually Assigned Resources, to support students who have a Statement of Educational Need with associated funding allocation. In accordance with the Charities Statement of Recommended Practice, 'Accounting and Reporting by Charities' (SORP 2005), such grants are shown in the Statement of Financial Activities as restricted income. During the year ended 31 August (excluding restricted fixed asset and pension reserves), total expenditure of 2,209,087 was funded by recurrent grant funding from the DfE together with other incoming resources of 2,337,870. The excess of income over expenditure for the year was 128,783. Reserves Policy The Trustees review the reserve levels of the Academy annually. This review encompasses the nature of income and expenditure streams; the need to match income with commitments; and the nature of the reserves. The Page 7

10 TRUSTEES' REPORT (continued) Trustees aim is to set aside reserves of at least 30k to cover unexpected costs with possibly higher carry forward reserves for specific capital projects. The carry forward into /16 has been planned and monitored and will offset the Academy s rising employment costs, notably incremental drift and the full year effect of increased pension and national insurance costs. The defined benefit pension scheme reserve has a negative balance. The effect of the deficit position of the pension scheme is that the Academy Trust is paying higher employers pension contributions over a period of years. The higher employers pension contributions will be met from the Academy Trust s budgeted annual income. Whilst the deficit will not be immediately eliminated, there should be no actual cash flow deficit on the fund, nor any direct impact on the free reserves of the academy Trust. Investment Policy The Academy will be further discussing with the Academy Bank Manager cash flow and investment opportunities and will make recommendations to Trustees on investment proposals. PRINCIPAL RISKS AND UNCERTAINTIES The Board of Trustees has reviewed the major 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 principal risks and uncertainties facing the Academy are as follows: Financial the Academy has considerable reliance on continued Government funding through the EFA. In the last year over 80% of the Academy's incoming resources were ultimately Government funded and whilst this level is expected to continue, there is no assurance that Government policy or practice will remain the same or that public funding will continue at the same levels or on the same terms. Failures in governance and/or management the risk in this area arises from potential failure to effectively manage the Academy's finances, internal controls, compliance with regulations and legislation, statutory returns, etc. The Trustees continue to review and ensure that appropriate measures are in place to mitigate these risks. Reputational the continuing success of the Academy is dependent on continuing to attract applicants in sufficient numbers by maintaining the highest educational standards. To mitigate this risk Trustees ensure that pupil success and achievement are closely monitored and reviewed. Safeguarding and child protection the Trustees continue to ensure that the highest standards are maintained in the areas of selection and monitoring of staff, the operation of child protection policies and procedures, health & safety and discipline. Staffing the success of the Academy is reliant upon the quality of its staff and so the Trustees monitor and review policies and procedures to ensure continued development and training of staff as well as ensuring there is clear succession planning. Fraud and mismanagement of The Academy has appointed a Responsible Officer/internal audit to carry out checks on financial systems and records as required by the Academy Financial Handbook. All finance staff receive training to keep them up to date with financial practice requirements and develop their skills in this area. The Academy has continued to strengthen its risk management process throughout the year by improving the process and ensuring staff awareness. A risk register is maintained and reviewed and updated on a regular basis. The Trustees examine the financial health formally every half term, reviewing performance against budgets and overall expenditure. Regular update reports are also given at all Full Trustees' meeting and Finance Committee Meetings. PLANS FOR FUTURE PERIODS The Academy will continue to strive to provide outstanding education and improve the levels of performance of its pupils at all levels. The Academy will continue to aim to attract high quality teachers and support staff in order to deliver its objectives. Page 8

11 TRUSTEES' REPORT (continued) We will be working towards the opening of the Digital Primary Academy in September The next period will once again be filled with a significant level of design work and project management tasks as we head towards opening within temporary accommodation on the Broadclyst site for 12 months. The Academy aims to augment our links with other schools locally and nationally in order to continue to improve. We will continue to foster our partnerships with Universities, including Exeter University, Plymouth University and Nottingham University and also with commercial companies including Microsoft. We will continue to use our status as a Microsoft Showcase School to further enrich the provision here at the Academy but equally as important to help develop the ICT provision in other like minded schools. We will use the winnings from the Microsoft competition to launch the Global Enterprise Challenge around the world. The Academy will further develop its teaching school and we anticipate a growth in our School Direct training programme. The possibility of becoming an Academy Sponsor may become a reality. FUNDS HELD AS CUSTODIAN TRUSTEE ON BEHALF OF OTHERS The Academy and its Trustees do not act as the Custodian Trustees of any other Charity. TRUSTEES INDEMNITIES There were no third party indemnity provisions during the year or at the date of approval of the Trustees report. AUDITORS In so far as the Trustees are aware: there is no relevant audit information of which the charitable company's auditors are 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 auditors are aware of that information. The auditors, Bishop Fleming LLP, are willing to continue in office and a resolution to appoint them will be proposed at the annual general meeting. Trustees' report, incorporating a strategic report, approved by order of the Board of Trustees, as company directors, on 23 December and signed on the board's behalf by: H Massey Chair of Trustees Page 9

12 GOVERNANCE STATEMENT SCOPE OF RESPONSIBILITY As Trustees, we acknowledge we have overall responsibility for ensuring that Cornerstone Academy Trust has an effective and appropriate system of control, financial and otherwise. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss. The Board of Trustees has delegated the day-to-day responsibility to the 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 Cornerstone Academy Trust and the Secretary of State for Education. They are also responsible for reporting to the Board of Trustees any material weaknesses or breakdowns in internal control. GOVERNANCE The information on governance included here supplements that described in the Trustees' report and in the Trustees' responsibilities statement. The Board of Trustees has formally met 6 times during the year. Attendance during the year at meetings of the Board of Trustees was as follows: Trustee Meetings attended Out of a possible J Bishop, Headteacher 6 6 H Massey, Chair 6 6 C Pepper 6 6 K Dyson 5 6 C Bradley 5 6 M Whitelock 3 6 B Renfree 5 5 M Gordon 5 5 M Narramore 5 5 S Taylor 5 5 M Pitts 2 3 J Waddingham 2 3 S Wright 2 2 R Billen 2 2 R Brine 1 1 Governance reviews: During the year, governors have paid particular attention to matters including: The conversion to a multi-academy trust The application process to open a new free school Discussions with potential sponsorship schools The final stages of construction and the opening of the new hall and kitchen The introduction of an appraisal and performance management process for support staff During the year, the conversion to a MAT has given the trustees a number of opportunities to assess the adequacy of the governing arrangements in place. This has been supported by external organisations as well as a number of upskilling and strategic days for trustees to attend. New trustees have come on board, all bringing a range of skills to complement the existing qualities found across the Board. Discussions have taken place regarding the ongoing suitability of the committee structure, and changes will be put in place in the new year. The Finance and Premises Committee is a sub-committee of the main Board of Trustees. Its purpose is: To assist the decision making of the governing body, by enabling more detailed consideration to be given to the best means of fulfilling the governing body's responsibility to ensure sound management of the academy s finances and resources, including proper planning, monitoring and probity. To make appropriate comments and recommendations on such matters to the governing body on a regular basis. Major issues will be referred to the full governing body for ratification. Page 10

13 GOVERNANCE STATEMENT (continued) The committee is authorised: To consider the academy's indicative funding, notified annually by the EFA, and to assess its implications for the academy, in consultation with the headteacher, in advance of the financial year, drawing any matters of significance or concern to the attention of the governing body. To consider and recommend acceptance/non acceptance of the academy's budget, at the start of each financial year. To contribute to the formulation of the academy s development plan, through the consideration of financial priorities and proposals, in consultation with the headteacher, with the stated and agreed aims and objectives of the academy. To receive and make recommendations on the broad budget headings and areas of expenditure to be adopted each year, including the level and use of any contingency fund or balances, ensuring the compatibility of all such proposals with the development priorities set out in the development plan. To liaise with and receive reports from the staffing/remuneration and curriculum committees, as appropriate, and to make recommendations to those committees about the financial aspects of matters being considered by them. To monitor and review expenditure on a regular basis and ensure compliance with the overall financial plan for the academy, and with the financial regulations of the DfE, drawing any matters of concern to the attention of the governing body. To monitor and review procedures for ensuring the effective implementation and operation of financial procedures, on a regular basis, including the implementation of bank account arrangements and, where appropriate to make recommendations for improvement. To prepare the financial statement to form part of the annual report of the governing body to parents and for filing in accordance with Companies Act and Charity Commission requirements. To receive auditors reports and to recommend to the full governing body action as appropriate in response to audit findings. To recommend to the full governing body the appointment or reappointment of the auditors of the academy. During the year the committee played a major role in the introduction of performance related pay for support staff, as well as the financial and premises related impact of taking on the school-led Nursery. Attendance at meetings in the year was as follows: Trustee Meetings attended Out of a possible J Bishop, Head Teacher 5 5 C Pepper 4 5 M Whitelock 3 5 H Massey 2 5 B Renfree 4 4 M Narramore 3 4 M Gordon 2 4 S Wright 1 1 Page 11

14 GOVERNANCE STATEMENT (continued) REVIEW OF VALUE FOR MONEY As accounting officer, the Headteacher has responsibility for ensuring that the academy trust delivers good value in the use of public resources. The accounting officer understands that value for money refers to the educational and wider societal outcomes achieved in return for the taxpayer resources received. The accounting officer considers how the trust s use of its resources has provided good value for money during each academic year, and reports to the board of trustees where value for money can be improved, including the use of benchmarking data where available. The accounting officer for the academy trust has continued to deliver improved value for money during the year: There is a continuing emphasis placed upon obtaining an optimum mix of economy, efficiency and effectiveness to ensure that the goods and services purchased deliver the best possible educational outcomes for the resources invested. Our financial procedures require purchases to be considered in the light of best value. Wherever possible, and certainly above threshold limits, competitive quotations are sought to check what the market can offer. Purchases with an aggregate value of 50,000 or more, although few, are subject to a strict tender regime. Recent examples include the procurement of reprographic equipment and AV equipment. We have a system of regular risk review for each governor sub-committee. This process has enabled governors to assess any risks present within decisions made or about to be made, meaning that decisions are more informed and less likely to need revisiting. Decisions around staffing levels are made against the backdrop of a rolling financial plan which clearly demonstrates the impact of any proposed change. Although as a school things can change significantly in a short timescale, having a snapshot picture at the time of an important decision gives governors and the leadership team more confidence whether the change can be sustained (or not) and that it will not adversely impact other areas of school business. In particular, this year, there has been a strong emphasis on maintaining vigilance with regard to the VFM of the 2m building project. THE PURPOSE OF THE SYSTEM OF INTERNAL CONTROL The system of internal 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 ongoing process designed to identify and prioritise the risks to the achievement of Academy 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 in Cornerstone Academy Trust for the year 1 September 2014 to 31 August 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 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's significant risks, that has been in place for the year 1 September 2014 to 31 August 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 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: comprehensive budgeting and monitoring systems with an annual budget and periodic financial reports which are reviewed and agreed by the Board of Trustees; regular reviews by the Finance and Premises 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; Page 12

15 GOVERNANCE STATEMENT (continued) clearly defined purchasing (asset purchase or capital investment) guidelines. delegation of authority and segregation of duties; identification and management of risks. The Board of Trustees has considered the need for a specific internal audit function and has decided to appoint Devon Audit Partnership as internal auditor. The internal auditor's role includes giving advice on financial matters and performing a range of checks on the Academy's financial systems. In particular the checks carried out in the current period included: Testing of payroll systems Testing of purchasing and payment systems Testing of control account-bank reconciliations Testing of contracts and tendering Review of the finance policy On a termly basis, the internal auditor reports to the Board of Trustees on the operation of the systems of control and on the discharge of the Board of Trustees' financial responsibilities. The schedule of work was delivered as planned. No material control issues were identified. REVIEW OF EFFECTIVENESS As Accounting Officer, the 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 internal auditor; the work of the external auditors; the work of the executive managers within the Academy who have responsibility for the development and maintenance of the internal control framework. The Accounting Officer has been advised of the implications of the result of their review of the system of internal control by the Finance and Premises Committee and a plan to ensure continuous improvement of the system is in place Approved by order of the members of the Board of Trustees on 23 December and signed on its behalf, by: H Massey Chair of Trustees J Bishop Accounting Officer Page 13

16 STATEMENT ON REGULARITY, PROPRIETY AND COMPLIANCE As Accounting Officer of Cornerstone Academy Trust I have considered my responsibility to notify the Academy Board of Trustees and the Education Funding Agency of material irregularity, impropriety and non-compliance with EFA terms and conditions of funding, under the funding agreement in place between the Academy and the Secretary of State. As part of my consideration I have had due regard to the requirements of the Academies Financial Handbook (2014). I confirm that I and the Academy Board of Trustees are able to identify any material, irregular or improper use of by the Academy, or material non-compliance with the terms and conditions of funding under the Academy's funding agreement and the Academies Financial Handbook (2014). I confirm that no instances of material irregularity, impropriety or funding non-compliance have been discovered to date. If any instances are identified after the date of this statement, these will be notified to the Board of Trustees and EFA. J Bishop Accounting Officer Date: 23/12/ Page 14

17 TRUSTEES' RESPONSIBILITIES STATEMENT The Trustees (who act as governors of Broadclyst Primary Academy Trust and are also the directors of the charitable company for the purposes of company law) are responsible for preparing the Trustees' report (including the Strategic report) and the financial statements in accordance with the Annual Accounts Direction issued by the Education Funding Agency, United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and applicable law and regulations. Company law requires the Trustees to prepare financial statements for each financial year. Under company law the Trustees 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 resources and application of resources, including its income and expenditure, for that period. In preparing these financial statements, the Trustees are required to: select suitable accounting policies and then apply them consistently; observe the methods and principles of the Charities SORP; make judgments and accounting 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; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business. The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company's transactions and disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Trustees are responsible for ensuring that in its conduct and operation the charitable company applies financial and other controls, which conform with the requirements both of propriety and of good financial management. They are also responsible for ensuring grants received from EFA/DfE have been applied for the purposes intended. The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Approved by order of the members of the Board of Trustees and signed on its behalf by: J Bishop Accounting Officer Date: 23 December Page 15

18 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF We have audited the financial statements of Cornerstone Academy Trust for the year ended 31 August 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 2014 to 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 Our audit work has been undertaken so that we might state to the academy's members those matters we are required to state to them in an Auditors' 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 academy and its members, as a body, for our audit work, for this report, or for the opinion we have formed. RESPECTIVE RESPONSIBILITIES OF TRUSTEES AND AUDITORS As explained more fully in the Trustees' responsibilities statement, the Trustees (who are also the directors 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 International 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 Trustees; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Trustees' report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. 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 and of its incoming resources and application of resources, including its income and expenditure, for the year 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 2014 to issued by the Education Funding Agency. OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion the information given in the Trustees' report, incorporating the Strategic report, for the financial year for which the financial statements are prepared is consistent with the financial statements. Page 16

19 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF 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 report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of Trustees' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Tim Borton FCA DChA (Senior Statutory Auditor) for and on behalf of Bishop Fleming LLP Chartered Accountants Statutory Auditors 2nd Floor Stratus House Emperor Way Exeter Business Park Exeter EX1 3QS 23 December Page 17

20 INDEPENDENT REPORTING ACCOUNTANTS' ASSURANCE REPORT ON REGULARITY TO AND THE EDUCATION FUNDING AGENCY In accordance with the terms of our engagement letter dated 02 September 2013 and further to the requirements of the Education Funding Agency (EFA) as included in the Academies Accounts Direction 2014 to, we have carried out an engagement to obtain limited assurance about whether the expenditure disbursed and income received by Cornerstone Academy Trust during the year 1 September 2014 to 31 August 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 Cornerstone Academy Trust and EFA in accordance with the terms of our engagement letter. Our work has been undertaken so that we might state to Cornerstone Academy Trust and 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 Cornerstone Academy Trust and EFA, for our work, for this report, or for the conclusion we have formed. RESPECTIVE RESPONSIBILITIES OF 'S ACCOUNTING OFFICER AND THE REPORTING ACCOUNTANT The accounting officer is responsible, under the requirements of Cornerstone Academy Trust's funding agreement with the Secretary of State for Education dated 26 August 2010, and the Academies Financial Handbook extant from 1 September 2014, 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 2014 to. 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 year 1 September 2014 to 31 August 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 2014 to issued by 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. Our work on regularity included a review of the internal controls policies and procedures that have been implemented and an assessment of their design and effectiveness to understand how the academy complied with the framework of authorities. We also reviewed the reports commissioned by the trustees to assess the internal controls throughout the year. We performed detailed testing based on our assessment of the risk of material irregularity, impropriety and noncompliance. This work was integrated with our audit on the financial statements where appropriate and included analytical review and detailed substantive testing of transactions. Page 18

21 INDEPENDENT REPORTING ACCOUNTANTS' ASSURANCE REPORT ON REGULARITY TO AND THE EDUCATION FUNDING AGENCY (continued) CONCLUSION In the course of our work, nothing has come to our attention which suggests that in all material respects the expenditure disbursed and income received during the year 1 September 2014 to 31 August have not been applied to purposes intended by Parliament and the financial transactions do not conform to the authorities which govern them. Tim Borton FCA DChA (Reporting Accountant) Bishop Fleming LLP Chartered Accountants Statutory Auditors 2nd Floor Stratus House Emperor Way Exeter Business Park Exeter EX1 3QS 23 December Page 19

22 STATEMENT OF FINANCIAL ACTIVITIES (incorporating income and expenditure account and statement of total recognised gains and losses) INCOMING RESOURCES Unrestricted Note Restricted Restricted fixed asset Total Total 2014 Incoming resources from generated : Transfer of Nursery building ,217 Other voluntary income 2 1,191 3,120-4,311 12,792 Activities for generating 3 43, ,455 25,360 Investment income Incoming resources from charitable activities 278,466 2,010,999 9,126 2,298,591 4,026,518 TOTAL INCOMING RESOURCES 323,751 2,014,119 9,126 2,346,996 4,128,605 RESOURCES EXPENDED Costs of generating : Fundraising expenses and other costs 5, ,145 9,673 Charitable activities 236,579 1,977, ,473 2,375,937 2,105,289 Governance costs 9-26,478-26,478 22,388 TOTAL RESOURCES EXPENDED 6 241,724 2,004, ,473 2,407,560 2,137,350 NET INCOMING / (OUTGOING) RESOURCES BEFORE TRANSFERS 82,027 9,756 (152,347) (60,564) 1,991,255 Page 20