THE ROYAL COUNTY OF BERKSHIRE SCHOOLS TRUST

Transcription

1 Registered number: THE ROYAL COUNTY OF BERKSHIRE SCHOOLS TRUST ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 AUGUST

2 CONTENTS Page Reference and Administrative Details 1-2 Trustees' Report 3-13 Governance Statement Statement on Regularity, Propriety and Compliance 17 Statement of Trustees' Responsibilities 18 Independent Auditors' Report on the Financial Statements Independent Auditors' Assurance Report on Regularity Statement of Financial Activities Incorporating Income and Expenditure Account 23 Balance Sheet 24 Statement of Cash Flows 25 Notes to the Financial Statements 26-46

3 REFERENCE AND ADMINISTRATIVE DETAILS OF THE ACADEMY TRUST, ITS TRUSTEES AND ADVISERS FOR THE PERIOD ENDED 31 AUGUST Members Oxford Diocesan Board of Education (appointed 9 March ) The Bishop of Reading (appointed 9 March ) A Davey (appointed 9 March ) G Joyner (appointed 9 March ) D M Langshaw (appointed 9 March ) Trustees A K Brackstone, Chief Executive Officer (appointed 9 March ) 1 A N Butt (appointed 9 March ) V L Gardner (appointed 9 March ) S D Hodgson, Chair of Finance Committee (appointed 9 March ) 1 A K Kay (appointed 9 March ) 1 D M Langshaw, Chair of Trustees (appointed 9 March ) D J Locke, Finance Director (appointed 9 March ) 1 1 Member of Finance Committee Company registered number Company name The Royal County of Berkshire Schools Trust Registered office St John's Church of England Primary School, Orts Road, Reading, RG1 3JN Principal operating office St John's Church of England Primary School, Orts Road, Reading, RG1 3JN Company secretary D Locke Senior management team A Brackstone, Chief Executive Officer D Locke FCA, Finance Director M Pett, Finance Manager Independent auditors Whitley Stimpson Limited, Penrose House, 67 Hightown Road, Banbury, OXON, OX16 9BE Page 1

4 REFERENCE AND ADMINISTRATIVE DETAILS OF THE ACADEMY, ITS TRUSTEES AND ADVISERS FOR THE PERIOD ENDED 31 AUGUST Advisers (continued) Bankers Lloyds Bank Plc, PO Box 1000, BX1 1LT Solicitors Winckworth Sherwood, 16 Beaumont Street, Oxford, OX1 2LZ Page 2

5 TRUSTEES' REPORT FOR THE PERIOD ENDED 31 AUGUST The Trustees (who are also the Directors of the Company under company law) present their Annual Report together with the audited financial statements of The Royal County of Berkshire Schools Trust (the Academy Trust ) for the period from 9 March to 31 August. The annual report serves the purposes of both a Trustees report and a Directors report, including a Strategic Report as required under company law. At 31 August, the Trust operates 2 primary Academies in Reading with a combined pupil capacity of 862 and 710 pupils currently enrolled based on the January school census. The schools serve children aged from 3 to 11. STRUCTURE, GOVERNANCE AND MANAGEMENT Constitution The Academy Trust is a company limited by guarantee, and an exempt charity, under the name The Royal County of Berkshire Schools Trust and was set up by, and constituted under, a Memorandum of Association dated 9 March. The Royal County of Berkshire Schools Trust is a private company limited by guarantee with no share capital and is an exempt charity. The Academy Trust s Memorandum and Articles of Association are the primary governing documents of the Academy Trust. Members of the Academy Trust are the Diocesan Board of Education (acting corporately), two persons appointed by the Diocesan Board of Education, the Bishop of Reading and the Chair of Trustees. In addition, the Members, with the consent of the Diocesan Board of Education, may agree unanimously to appoint additional Members. The Members of the Academy Trust for the period covered by this report are shown on page 1. Details of the Trustees who served during the period are included in the Reference and Administrative Details on Page 1. The Royal County of Berkshire Schools Trust was incorporated on 9 March. It is a Multi-Academy Trust and has in place a Master Funding Agreement with the Department for Education and separate Supplemental Funding Agreements in respect of each academy within the Academy Trust. There were two academies within the Academy Trust at the commencement of the Trust's activities on 1 June as follows: St John's CE Primary School, Reading New Town Primary School, Reading 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. Governors' Indemnities The Academy Trust has opted to take up the Department of Education's Risk Protection Arrangement ('RPA'), an alternative to insurance where UK government cover losses that arise. The Scheme protects Trustees and Officers from claims arising from negligent acts, errors or omissions occurring whilst on Academy Trust business, and provides cover up to 10,000,000. It is not possible to quantify the Trustees and Officers indemnity element from the overall cost of the RPA scheme. Page 3

6 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST Method of Recruitment and Appointment or Election of Trustees Up to sixteen Trustees can be appointed to the Board by the Members and a further two Parent Trustees can be elected to the Board. In addition, the Chief Executive Officer (CEO) is a Director. The Trustees, with the consent of the Diocesan Board of Education, may appoint up to two co-opted Trustees for such term up to a maximum of four years and upon such conditions as they shall think fit. Trustees (with the exception of co-opted and ex officio Trustees, including the CEO) are appointed for a period of four years but are eligible for reappointment provided the necessary criteria are met in each case. Each academy within the Academy Trust has an advisory body, as required by the Master Funding Agreement. These are called Local Governing Bodies ("LGBs") and their functions are set out in a scheme of delegation by the Academy Trust. Members of the LGBs are appointed primarily by the Trustees (with some exceptions allowing for the election of staff and parent representatives) and are accountable to the Trustees accordingly. The Trustees are also entitled to sit on the LGBs in an ex officio capacity. Trustees are appointed by Members of the Charitable Company. A minimum of five should be appointed. Policies and Procedures Adopted for the Induction and Training of Trustees All Trustees are provided with the Academy Trust's governing documents (i.e. the Memorandum and Articles of Association) as well as the Master Funding Agreement and Supplemental Funding Agreements for the Academies. The Trustees are further provided with minutes, accounts, budgets and other documents relating to the Trust. In addition, relevant documentation issued by the Department for Education, the Charity Commission and their professional advisers as necessary are provided to enable the Trustees to meet their legal obligations and follow best practice in respect of their role as Trustees (and Company Directors). Trustees are encouraged to make visits to the Academies within the Academy Trust. Organisational Structure The Board of Trustees governs the activities of the Academy Trust and oversees the work of each academy s LGB. The structure consists of the Board and the Finance Committee. The Trustees are also ultimately responsible for the strategic direction of the Academy Trust ensuring that its aims are met and its ethos maintained. Specifically, this includes setting general policy, adopting an annual plan and budget, monitoring the Academy Trust s financial performance and educational outcomes. The Trustees are also responsible for setting general policy and making major decisions about the direction of the Academy Trust. As briefly outlined above, the LGBs oversee the work and outcomes of individual academies within the Academy Trust. These are made up of a mix of local people including staff, parents and sponsor nominees acting as a critical support to the Headteacher and the academy. They will review the overall impact of each academy amongst the community it serves and ensure the Academy Trust s ethos remains as the core value. The Senior Leadership Team of the Academy Trust are the Chief Executive Officer, the Finance Director and the Finance Manager. They lead and manage the Trust, setting strategy and implementing policy in conjunction with the Board of Trustees generally. The Executive Headteacher, Heads of Schools and Deputy Headteachers, as employees of the Academy Trust, lead and manage the individual academies. Arrangements for Setting the Pay and Remuneration of Key Management Personnel The Senior Leadership Team comprise the key management personnel of the Academy Trust in charge of directing and controlling, running and operating the Academy Trust on a day to day basis. Page 4

7 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST The pay of the Senior Leadership Team, excluding the Finance Director, is reviewed annually by the Board in line with the AcademyTrust's pay and remuneration policy and by reference to published pay scales for teaching and support staff. The Finance Director is not an employee of the Academy Trust and did not receive any remuneration from the Academy Trust during the period. No Trustees, other than the Chief Executive Officer, receive any remuneration from the Academy Trust for their services as Trustees and the Chief Executive Officer's remuneration is only in relation to their role as an employee of the Academy Trust and not as a Trustee. Related Parties and Other Connected Charities and Organisations There are no related parties or connected organisations which either control or significantly influence the decisions and operations of the Academy Trust. The Academy Trust purchases certain services from the Oxford Diocesan Board of Education, one of the Members of the Academy Trust. The details of these transactions are disclosed in note 24 of the financial statements. There were no other related party relationships or connected organisations, including connected charities, during the year. There are no sponsors associated with the Academy Trust. OBJECTIVES AND ACTIVITIES Objects The Trust s object is specifically restricted to: Advance for the public benefit education in the United Kingdom, in particular but without prejudice to the generality of the foregoing by establishing, maintaining, carrying on, managing and developing academies which shall offer a broad and balanced curriculum and which shall include: (a) Church of England schools designated as such which shall be conducted in accordance with the principles, practices and tenets of the Church of England both generally and in particular in relation to arranging for religious education and daily acts of worship and having regard to any advice and following directives issued by the Diocesan Board of Education; and (b) other academies whether with or without a designated religious character; but in relation to each of the academies to recognise and support their individual ethos, whether or not designated Church of England. Aims The Royal County of Berkshire Schools Trust is a community-led Academy Trust bringing together Berkshire s schools to flourish and be fruitful. We want the children in our schools to achieve outstanding things, and to be relational, rooted and grounded, independent and empowered and flourishing young people. Our vision is to remain community-led, and focused on the East Reading area, expanding when we encounter other schools who share our philosophy. We acknowledge and build on the unique characteristics of our schools, letting each remain rooted and grounded in the community around them. The RCBST Philosophy Our starting point is that every child in the RCBST will have the best education we can give them. We aim for outstanding academic attainment, progress and behaviour, for every child regardless of their background or needs. Page 5

8 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST We believe that the best education means all of these things and more; developing the whole of the child as a person in their own unique local context. There are four things we want for our children. And if we want them for our children, we believe they should also be characteristics of how we run the Academy Trust: Which means... Relational Rooted and grounded Independent and empowered Flourishing For our children Children aren t islands - they grow through connection and relationships. We want them to work together, to love and support each other, including respecting differences. Children live and grow in a physical context - we want them to lead their communities, exemplify respect and tolerance, and make the people around them proud of their behaviour, conduct and principles. Children succeed best when they become independent learners - we want them to learn how to learn, to find things out for themselves, to be confident, motivated independent. and Children are playful, creative and fun - we want them to be able to bring all these things to school with them, to teachers who can take their natural enthusiasm and run with it, to an environment where play matters. For our Academy Trust We will work together relationally, preferring relationships to systems, meeting to , and trust over control. Each school will have its own unique flavour, rooted and growing up from the characteristics of its parents community. and We will devolve as much autonomy as we can to each school, as long as they wholeheartedly embrace philosophy. this We are a community Trust, and our meetings will be professional and effective, but also fun, respectful and stimulating, which is how we will attract and keep the best Trustees. Objectives, Strategies and Activities At the heart of the vision for academies in the Academy Trust is a belief in educational excellence. It is the strategic objective of the Academy Trust to create a family of outstanding academies. This covers a range of potential predecessor schools: good schools looking for a group option (including schools from particular geographical areas which may be converting together,) schools which are graded by Ofsted as Requires Improvement, schools who require more hands on sponsorship and brand new schools. In summary, the Academy Trust is: dedicated to achieving excellence in education; inclusive and diverse, open and welcoming; promoting a rich and creative curriculum; creating rewarding places to work; and supporting communities. Public Benefit As set out in the objects in the Articles of Association, the Academy Trust is dedicated to advancing education for the public benefit and in so doing it serves pupils, staff, parents and their local communities by providing academies with the highest levels of academic rigour and pastoral care, with opportunities provided for spiritual growth and intellectual enquiry. Page 6

9 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST The Academy Trust seeks to embody the Christian experience of community by establishing and running academies which themselves become communities where gifts can be shared, where the emphasis is on what can be contributed, rather than what can be received, and where each is given according to need. The Academy Trust s academies are places where children and young people can learn the value of service and of human endeavour, where they can be sure they are valued for who they are and where they can be supported to be the best they can be. The Trustees have complied with their duty to have due regard to the guidance on public benefit published by the Charity Commission in exercising their powers and duties as charity trustees. Strategic Report ACHIEVEMENTS AND PERFORMANCE The Academy Trust has two academies that were present at commencement. They are: St John s CE Primary School, Reading: As at 1 February 2017, this academy has 435 pupils on roll (including part-time Nursery children) and is situated in a disadvantaged area of Reading. In September 2017, the school will be a two form entry school in all year groups and there will be 420 pupils from Year R to Year 6 and an additional part-time Nursery catering for 52 children. Ofsted last visited the school during September 2008 and the overall Effectiveness of the School was judged Outstanding. In KS2 tests, the Year 6 results for were as below: Percentage of pupils meeting the expected standard in reading, writing and maths School Local Authority Average England Average 55% 56% 53% Percentage of pupils achieving at a higher standard in reading, writing and maths School Local authority average 5% 9% 5% England average Reading Writing Maths School progress score Confidence interval to to to +1.8 Well above national average(about 10% of schools in England) Above national average(about 10% of schools in England) Average(about 60% of schools in England) Average Average Below national average(about 10% of schools in England) Below Well below national average(about 10% of schools in England) Reading average (local authority) National average Page 7

10 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST The Academy Trust has ensured that significant support is provided at all levels to ensure staff sustain their focus on improving standards for pupils. New Town Primary School, Reading: This school is smaller than its host school of St John's and as at 1 February 2017 has 306 children on roll, including 41 children in its part-time 52 place Nursery. The school sits in the same locality as St John's Primary School as the schools are less than 0.25 miles apart. The Current Ofsted judgement of the school is as below: Inspection dates January Overall effectiveness Requires improvement Effectiveness of leadership and management Good Quality of teaching, learning and assessment Requires improvement Personal development, behaviour and welfare Good Outcomes for pupils Requires improvement Early years provision Requires improvement Overall effectiveness at previous inspection Inadequate Since the last inspection in January, rapid improvements have continued at New Town with the extra support from the Executive Headteacher and the Trust. The hands on approach and the clear strategic action plan resulted in strong KS2 results in and strong predictions for the end of KS2 results The school is securely self - evaluated as consistently good in all areas. In KS2 tests, Year 6 pupils in attained average levels in Reading, Writing and Mathematics. Percentage of pupils meeting the expected standard in reading, writing and maths Percentage of pupils achieving at a higher standard in reading, writing and maths School Local Authority Average England Average 64% 56% 53% School Local authority average 11% 9% 5% England average Reading Writing Maths School progress score Confidence interval to to to +4.2 Well above national average(about 10% of schools in England) Above national average(about 10% of schools in England) Average(about 60% of schools in England) Average Average Average Below national average(about 10% of schools in England) Well below national average(about 10% of schools in England) Reading average (local authority) National average Page 8

11 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST Summary: School Improvement is tracked through carefully coordinated activity including (i) regular data reports of pupil progress which are collated using a pupil progress data tracking MIS system and (ii) regular on-site inspections by our School Improvement team. Progress is then reported and accountability for progress is then overseen directly by the Board. Key Financial Performance Indicators As well as monitoring educational improvement the Board also monitor other key performance indicators. In terms of key financial indicators, the Board have monitored carefully the operational financial position (actual surplus of 9.6% vs > 1.0% budgeted surplus) and cash balances (actual balance of 1.54 months operational expenditure compared to > 1.50 months target). The Board are pleased that actual performance is in line with the targets set. The Trustees medium term aim is to balance the Academy Trust's budget in year and to build sufficient reserves to protect its schools against the financial impact of unplanned costs such as urgent and unforeseen capital repairs. However, they are also mindful that this must be balanced by the responsibility to use the public delegated to them for the benefit of the pupils currently on roll in the Academy Trust's schools, and to ensure that all balances held, whether by the Academy Trust itself or by its schools, have a clearly identifiable, transparent and documented purpose. The Academy Trust's Funding Agreement is not subject to a specific carry forward limit on the amount of GAG funding and as such, the main financial performance indicator is the level of reserves held at the balance sheet date and, in particular, the amount of restricted and unrestricted funding carried forward. At 31 August, the balance of the restricted general was 113,971 and the balance of the unrestricted was 334,424. After adjusting for the transfer of the Local Government Pension Scheme (LGPS) deficits inherited on conversion, further FRS102 pension and interest cost adjustments to the LGPS deficit in the period and the fixed and other assets transferred from the Local Authority on conversion, the Trust made a surplus for the year of 128,737. This surplus was made up of operating income totalling 1,002,408 (excluding assets and liabilities inherited on conversion) and operating expenditure totalling 873,671 (excluding depreciation and FRS102 LGPS adjustments). This surplus consists substantially of educational grants received in the three months ended 31 August. The expenditure that will be funded by these grants will fall largely in the /17 financial year although some may be held over until the following year if the Academy Trust's budget plans require it. Going Concern After making appropriate enquiries, the Board of Trustees has a reasonable expectation that the Academy Trust 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. Further details regarding the adoption of the going concern basis can be found in the Accounting Policies within the financial statements. FINANCIAL REVIEW Review of Activities The Academy Trust received 4,579,522 (excluding the impact of the pension liability on conversion accounted for as negative income) in income for the three months ending 31 August. This income is split between Restricted General Funds, Fixed Asset Funds and Unrestricted Funds as follows: Page 9

12 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST Restricted General Fund: The majority of the Academy Trust's income into the restricted general fund was received through the Education Funding Agency (EFA) recurrent revenue grants of 915,059 for use on the Academy Trust's educational operations. Restricted Fixed Asset Fund: The 3,240,960 carried forward balance covers the value of land, buildings and other fixed assets transferred to the Academy Trust upon conversion in. Unrestricted Fund: The Academy Trust received income of 391,694 into the unrestricted fund during the period, the majority of which was represented by the surplus transferred from the Local Authority on conversion of 332,229. The net book value of the Academy Trust s tangible fixed assets was 3,240,960 at 31 August and the movement in this account is detailed in note 14 to the financial statements. The majority of this is represented by the value of the assets transferred to the Academy Trust from the Academies joining the Trust since its incorporation. The Academy Trust occupies land and buildings of St John's CE Primary School which are provided to it and owned by various land trustees ('the Site Trustees'). The Academy Trust occupies this land and buildings under the terms of Church Land Supplemental Agreements between the Oxford Diocesan Board of Education, the Site Trustees and the Academy Trust, which provide the Trust with the right to use the land and buildings of the Academies for an indefinite period, subject to a 2-year termination notice period, which amounts to a mere licence. The EFA guidance suggests that Academy Trusts recognise the future economic benefits that they expect to flow from the continued use of the property rather than recognizing legal title and so, normally, Academy Trusts should recognise these assets on their balance sheet. The National Society of the Church of England and others have challenged this guidance and the EFA have responded by saying Trustees should review the EFA guidance in reaching their own conclusions and must then provide enhanced disclosure. The Trustees continue to consider that prudence requires the exclusion from the balance sheet of land and buildings that are not beneficially owned. An enhanced disclosure has been given in the note 14 of the financial statements. On conversion the land and buildings occupied by New Town Primary school were assigned to the Academy Trust under a 125 year lease from Reading Borough Council. In the absence of available valuations from the EFA, the fair value of this land and buildings, as recognised in the financial statements, has been based on Trustees' valuation. The Academy Trust also has a 125 year lease from Reading Borough Council for the playing fields of St John's CE Primary School, which was transferred to the Academy Trust on conversion. Again, in absence of available valuations from the EFA, the fair value of this land, as recognised in the financial statements, has been based on Trustees' valuation. Cash in hand at 31 August was 436,288. Financial Risk Management Policies and Objectives Our financial objectives include ensuring that every academy within the Academy Trust and the Academy Trust s central administration set and maintain viable budgets to ensure long term financial stability of the Trust. Budget plans for the Academy Trust s central activities are planned on a five year rolling basis, and are monitored and amended to ensure continuing viability under changing circumstances. Page 10

13 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST Budget plans for academies within the Academy Trust are monitored and amended in consultation with the Finance Director to ensure viability over a three year rolling timescale, taking into account changes in funding levels arising from pupil number changes or other funding factors. Cash flow is monitored monthly at a Trust and individual academy level. An internal Financial Procedures Manual has been published and issued to the Trust s academies which requires compliance with procedures designed to manage and protect the Trust s, and ensure that they are authorised at appropriate levels and used appropriately. The Trustees have implemented a system to assess risks that the Academy Trust faces, especially in the operational areas (such as in relation to teaching, health and safety and school trips) and in relation to the control of finances. They have introduced systems, including operational procedures and internal financial controls in order to minimise risk. Where significant financial risk still remains they have ensured they have adequate insurance cover. The Academy Trust has an effective system of internal financial controls and this is explained in more detail in the Governance Statement in this Annual Report. The Academy Trust has developed and agreed a Risk Register. This has been discussed by the Trustees and includes the financial risks to the Academy Trust. The Risk Register is constantly reviewed in light of any new information and formally reviewed annually. The Trustees have implemented a number of systems to assess and minimise those risks, including internal controls. Where significant financial risk still remains, the Trustees have ensured the Academy Trust and the Academies has adequate insurance cover. Whilst the Academies are currently well subscribed, risks to revenue funding from a falling roll are small. However, the current freeze on the Government's overall education budget, changes in funding arrangements for special educational needs and the increasing employment and premises costs mean that budgets will be increasingly tight in coming years. The Trustees examine the financial health of the Academy Trust formally every term, reviewing performance against budgets and overall expenditure by means of regular update reports at all full Trust and Finance Committee meetings. At the balance sheet date, the Academy Trust had no significant liabilities arising from trade creditors or debtors where there would be a significant effect on the Academy Trust's liquidity. The Trustees recognise that the Local Government Pension Scheme deficit represents a significant potential liability to the Academy Trust. However, as the Trustees consider the Academy Trust is able to meet its known annual contribution commitments for the foreseeable future, the risk from this liability is minimised. Principal Risks and Uncertainties The principal risks and uncertainties facing the Trust are as follows: Financial The Academy Trust has considerable reliance on continued Government funding through the EFA. In the year, approximately 94% of the Academy's incoming resources was 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 of management The risk in this area arises from the potential failure to effectively manage the Academy Trust s finances, internal controls, compliance with regulations and legislation, statutory returns etc. The Trustees continue to review and ensure appropriate measures are in place to mitigate these risks. Page 11

14 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST Reputational The continuing success of the Academy Trust is dependent on continuing to attract applicants in sufficient numbers by maintaining the highest educational standards. To mitigate this risk, the 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 in safeguarding are maintained in the areas of selection and monitoring of staff, the operation of child protection policies and procedures, health and safety, and discipline. Staffing The success of the Academy Trust is reliant on the quality of its staff so the Academy Trust monitors and reviews 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 Trust has engaged Whitley Stimpson Limited, the external auditor, to perform a programme of work aimed at checking and reviewing the financial systems and records as required by the Academies Financial Handbook. All finance staff and relevant Trustees receive training to keep them up to date with financial practice requirements and to develop their skills in this area. The Academy Trust has continued to strengthen its risk management process throughout the year by improving the process and ensuring Governor awareness. A Risk Register is maintained and reviewed and updated on a regular basis. Reserves Policy The Academy Trust s budget plan has been developed to ensure that reserves are maintained within the reserve policy guidelines agreed with the Finance Committee and Board. Reserves are maintained to provide an appropriate level of working capital, to invest appropriately in infrastructure for the future and to provide a contingency against unforeseen cost and liabilities that might arise. The level of reserves held will be reviewed annually by the Board of Trustees to ensure that it is adequate but not excessive. It is assessed that in the medium term liquid reserves should be maintained to equate to at least 1.5 months of budgeted operating expenditure. At the year-end liquid reserves were equal to 1.58 months of budgeted operating expenditure. The Academy Trust also proposes to look at setting aside reserves to enable it to support schools which have unexpected and exceptional needs. This will be considered as part an on-going budget review process. Investment Policy The Academy Trust has no investments other than balances held in current accounts at Lloyds bank for the Trust itself and its schools. We do not anticipate having sufficient surplus for investment in the next two years, and so a formal investment policy will be considered for /17 year onwards. At that time full consideration will be given to the extent to which social and ethical considerations will influence investment decisions. Page 12

15 TRUSTEES' REPORT (continued) FOR THE PERIOD ENDED 31 AUGUST PLANS FOR FUTURE PERIODS Future Developments The Academy Trust, in conjunction with teachers, parents and pupils, will endeavour to maintain existing high standards of performance and will seek to improve where possible within the ethos set out in objectives and activities. The Board is developing a comprehensive strategic development plan for the Trust and an action plan for the /17 year which covers key areas including School Improvement, Human Resources, Finances and Operations. Opportunities for further schools to join are being explored to allow the Academy Trust to grow to benefit from further economies of scale and for the mutual benefit of all. The Academy Trust has set a sustainable budget for the /17 financial year. FUNDS HELD AS CUSTODIAN TRUSTEE ON BEHALF OF OTHERS The Academy Trust and its Trustees do not act as Custodian Trustees of any other charity. DISCLOSURE OF INFORMATION TO AUDITORS Each of the persons who are Trustees at the time when this Trustees' report is approved has confirmed that: so far as that Trustee is aware, there is no relevant audit information of which the charitable company s auditors are unaware, and that Trustee has taken all the steps that ought to have been taken as a Trustee in order to be aware of any relevant audit information and to establish that the charitable company's auditors are aware of that information. This report, incorporating a strategic report, was approved by order of the Board of Trustees as the company directors, on 20 February 2017 and signed on its behalf by: D M Langshaw Chair of Trustees Page 13

16 GOVERNANCE STATEMENT SCOPE OF RESPONSIBILITY As trustees, we acknowledge we have overall responsibility for ensuring that The Royal County of Berkshire Schools 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 Chief Executive Officer, 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 Royal County of Berkshire Schools 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 Statement of Trustees' Responsibilities. The board of trustees has formally met 2 times during the period. Attendance during the period at meetings of the board of trustees was as follows: Trustee Meetings attended Out of a possible A K Brackstone, Chief Executive Officer 2 2 A N Butt 2 2 V L Gardner 2 2 S D Hodgson, Chair of Finance Committee 2 2 A K Kay 2 2 D M Langshaw, Chair of Trustees 2 2 D J Locke, Finance Director 2 2 The Trust intends to review the impact and effectiveness of the Board of Trustees during the /2017 financial year. The Local Governing Bodies will be reviewed through an annual cycle of visits and, where governance is causing concerns, the Trust will consider the need to support governance through the appointment of additional governors and alternative governance arrangements. The Finance Committee is a subcommittee of the main Board of Trustees. Its purpose is to review the Academy Trust s financial position closely and to provide delegated strategic financial direction. The Finance Committee also incorporates the duties of the Audit Committee. At present the Academy Trust has, as allowed by EFA, not appointed a separate Audit Committee. The role of the Finance Committee includes preparing and approving annual budgets, monitoring financial performance against the budget, reviewing delegated authorities, ensuring all transactions are conducted in accordance with good practice as directed by the Charity Commission and the EFA, to ensure best value is achieved in all financial transactions and to receive and (where relevant) respond to annual audit reports on the Academy Trust and its use of public. Attendance at meetings in the period was as follows: Trustee Meetings attended Out of a possible A K Brackstone, Chief Executive Officer 2 2 S D Hodgson 2 2 A K Kay 2 2 D J Locke 2 2 Page 14

17 GOVERNANCE STATEMENT (continued) REVIEW OF VALUE FOR MONEY As Accounting Officer, the Chief Executive Officer 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 Academy 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 appropriate. The Accounting Officer for the Academy Trust has delivered improved value for money during the year by: Continuing to ensure that resources are directed where they are most needed and most effective, for example ensuring support staff are deployed to where they are most needed by tracking pupils' attainment and progress. Engaging with other educational providers and experts to share delivery or good practice, and to drive up standards for the least cost, for example joint activities with other schools to share in service staff training. Appraising or renegotiating services and contracts to get the best mix of quality and effectiveness for the least cost, for example negotiating a contract for payroll services with the local authority. THE PURPOSE OF THE SYSTEM OF INTERNAL CONTROL The system of internal financial 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 financial control is based on an ongoing 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 in The Royal County of Berkshire Schools Trust for the period 9 March 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 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 ongoing process for identifying, evaluating and managing the Academy Trust's significant risks, that has been in place for the period 9 March 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 FINANCIAL RISK AND CONTROL FRAMEWORK The Academy 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 board of trustees; 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; identification and management of risks. Page 15

18 GOVERNANCE STATEMENT (continued) The Board of Trustees has considered the need for a specific internal audit function and has decided not to appoint an internal auditor. However, the Trustees have appointed Whitley Stimpson Limited, the external auditors, to perform additional checks. The auditors' role includes giving advice on financial matters and performing a range of checks on the Academy Trust's financial systems. On an annual basis, the auditors will report to the Board of Trustees on the operation of the systems of control and on the discharge of the Board of Trustees' financial responsibilities. Whitley Stimpson Limited undertook a range of tests on the Academy Trust's financial controls and systems as requested by the Board of Trustees which did not result in any material control issues being identified. However, the work carried out did lead to some minor recommendations to improve the control environment, none considered significant, which the Board of Trustees are implementing. REVIEW OF EFFECTIVENESS As Accounting Officer, the Chief Executive Officer has responsibility for reviewing the effectiveness of the system of internal control. During the period in question the review has been informed by: the work of the external auditors; the financial management and governance self-assessment process; the work of the Finance Director and Finance Manager, with the assistance of the work undertaken by the external auditors, in the development and maintenance of the internal financial 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 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 20 February 2017 and signed on their behalf, by: D M Langshaw Chair of Trustees A K Brackstone Accounting Officer Page 16

19 STATEMENT ON REGULARITY, PROPRIETY AND COMPLIANCE As Accounting Officer of The Royal County of Berkshire Schools Trust I have considered my responsibility to notify the Academy Trust 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 trust and the Secretary of State for Education. As part of my consideration I have had due regard to the requirements of the Academies Financial Handbook I confirm that I and the Academy Trust board of trustees are able to identify any material irregular or improper use of by the academy trust, or material non-compliance with the terms and conditions 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. If any instances are identified after the date of this statement, these will be notified to the board of trustees and EFA. A K Brackstone Accounting Officer Date: 20 February 2017 Page 17

20 STATEMENT OF TRUSTEES' RESPONSIBILITIES FOR THE PERIOD ENDED 31 AUGUST The Trustees (who act as governors of The Royal County of Berkshire Schools Trust and are also the directors of the charitable company for the purposes of company law) are responsible for preparing the Strategic Report, the Trustees' 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 2015 and the Academies' Accounts Direction 2015 to ; make judgments and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards (FRS 102) 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 the 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 on 20 February 2017 and signed on its behalf by: D M Langshaw Chair of Trustees Page 18

21 INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS TO THE MEMBERS OF THE ROYAL COUNTY OF BERKSHIRE SCHOOLS TRUST We have audited the financial statements of The Royal County of Berkshire Schools Trust for the period ended 31 August which comprise the Statement of Financial Activities Incorporating Income and Expenditure Account, the Balance Sheet, the Statement of Cash Flows 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) including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Academies Accounts Direction 2015 to issued by the Education Funding Agency. This report is made solely to the charitable company'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 charitable company'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 charitable company 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 Statement of Trustees' Responsibilities, 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 Trust'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 charitable company's affairs as at 31 August 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, the Charities SORP 2015 and the Academies Accounts Direction 2015 to issued by the Education Funding Agency. Page 19