CHANNELING POSITIVITY (A COMPANY LIMITED BY GUARANTEE) TRUSTEES' REPORT AND AUDITED ACCOUNTS FOR THE YEAR ENDED 31 AUGUST 2016

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1 Company Registration No (England and Wales) CHANNELING POSITIVITY (A COMPANY LIMITED BY GUARANTEE) TRUSTEES' REPORT AND AUDITED ACCOUNTS

2 CONTENTS Page Reference and administrative details 1-2 Trustees' report 3-9 Governance statement Statement on regularity, propriety and compliance 14 Statement of trustees' responsibilities 15 Independent auditor's report on the accounts Independent reporting accountant's report on regularity Statement of financial activities including income and expenditure account Balance sheet 22 Statement of cash flows 23 Notes to the accounts including accounting policies 24-42

3 REFERENCE AND ADMINISTRATIVE DETAILS Trustees A Mortimer (Chair) * J E Drury (Accounting Officer) * S L Townes # J H McLaughlin (Chair of assurance committee) * J Dunn (Resigned 31 October 2016) # K E Tyler # A George (Appointed 1 September 2015 and resigned 31 October 2016) # A Graham (Appointed 1 September 2015 and resigned 31 July 2016) * S Brisco (Appointed 1 January 2016) * G Cockburn (Appointed 1 January 2016) # * members of the assurance committee # members of the enterprise committee Members A R Mortimer K M Vines P H Crick Senior management team - Principal J E Drury - Business Manager C Kay Company secretary Company registration number Registered office Independent auditor C Kay (England and Wales) Riverside Way Nottingham NG2 1DP UHY Hacker Young 14 Park Row Nottingham NG1 6GR - 1 -

4 REFERENCE AND ADMINISTRATIVE DETAILS Bankers Lloyds Bank Market Square House Old Market Square Nottingham NG1 6FD - 2 -

5 TRUSTEES' REPORT The trustees present their annual report together with the accounts and independent auditor's report of the charitable company for the period 1 September 2015 to 31 August The annual report serves the purposes of both a trustees' report, and a directors' report under company law. The financial statements have been prepared in accordance with the accounting polices set out in the notes to the financial statements and comply with the company s Memorandum and Articles of Association, applicable laws and Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland published on 16 July 2014 (FRS102). The academy trust has been set up to operate an academy for students aged who are struggling to progress in a mainstream school working in conjunction with secondary schools in Rushcliffe, Nottingham City and Nottinghamshire County. The academy opened its doors to students in September 2015 with 24 student places. The academy trust has a three year growth plan to achieve maximum pupil capacity of 56 by September Structure, governance and management Constitution The academy trust is a company limited by guarantee and an exempt charity. The charitable company's memorandum and articles of association are the primary governing documents of the academy trust. The academy trust is known as Channeling Positivity. The trustees of Channeling Positivity are also the directors of the charitable company for the purposes of company law. Details of the trustees who served during the period are included in the Reference and Administrative Details on page 1. Members' liability Each member of the charitable company undertakes to contribute to the assets of the charitable company in the event of it being wound up while they are a member, or within one year after they cease to be a member, such amount as may be required, not exceeding 10, for the debts and liabilities contracted before they ceased to be a member. Trustees' indemnities The academy trust maintains trustees and officers liability insurance which gives appropriate cover for any legal action brought against its trustees. The academy trust has also granted indemnities to each of its Trustees and other officers to the extent permitted by law. Qualifying third party indemnity provisions (as defined by section 234 of the Companies Act 2006) were in force during the period and remain in force, in relation to certain losses and liabilities which the Trustees or other officers may incur to third parties in the course of acting as Trustees or officers of the academy trust. Details of the insurance cover are provided in note 10 to the financial statements

6 TRUSTEES' REPORT (CONTINUED) Method of recruitment and appointment or election of trustees Under the terms of its Articles, the academy trust shall have the following Trustees: 7 independent Trustees appointed by the Members 2 independent Trustees appointed by the Trust Board 2 parents Trustees nominated and elected by the parent body 1 staff Trustee nominated and elected by the staff body 1 Principal; ex-officio member Policies and procedures adopted for the induction and training of trustees During the year under review the trust board met 6 times and there were 5 committee meetings. The training and induction provided for new trustees depends on their previous experience. All trustees are provided with the documentation that they will need to undertake their role as trustees. The trust has adopted a development strategy to cover the ongoing training of trustees. Organisational structure From September 2015 the trust operated within the articles of association, the EFA Academies Financial Handbook and the trust s Scheme of Delegation. The trust board is responsible for converting the vision and ethos into the strategic objectives of the school and ensuring the operational plans are in place to deliver those objectives. The trust board will set the key performance indicators and manage the risks in achieving these objectives. They will be responsible for the economy, efficiency and effectiveness of the use of resources and holding the management team to account. The management team comprised the Principal and Business Manager during 2015/2016. From autumn 2016 the management team was expanded to include the Head of School (Teaching and Learning), Assistant Principal Student Support and Special Educational Needs Co-ordinator. These managers control the academy at an executive level implementing the policies laid down by the trustees and reporting back to them. As a group they are responsible for the authorisation of spending up to a level delegated to them within agreed budgets and the appointment of staff, although appointment panels for senior posts always contain a trustee

7 TRUSTEES' REPORT (CONTINUED) Arrangements for setting pay and remuneration of key management personnel The t rust recognises the importance of developing a pay policy for all staff as a means of ensuring fairness, proper recognition for the work of staff and to ensure compliance with the principles of equal pay legislation and employment law. The trust set a Pay Policy in 2015 to carry the organisation thorough the first two years of operation. This policy applies to all staff including the key management personnel as disclosed on page 1. Key management personnel is a term used by FRS 102 for those persons having authority and responsibility for planning, directing and controlling the activities of a reporting entity, directly or indirectly, including any director (whether executive or otherwise). This definition includes academy trustees and those staff who are the senior management personnel to whom the trustees have delegated significant authority or responsibility in the day-to-day running of the academy trust. Remuneration of key management personnel is set at an individual level, within the pay ranges outlined in the Pay Policy. Pay ranges were set after taking account of benchmarking, market trends and affordability. Total remuneration packages include employer pension contribution rates at specific approved rates. The board always bear in mind the charitable status of the academy trust and recognise the fact the trust receives funding under a funding agreement with the Secretary of State for Education, and therefore ensure the remuneration paid to key management personnel provide value for money to the trust. The performance of key management personnel is reviewed on a regular basis to ensure continuing value for money. Total remuneration paid to key management personnel is set out in note 8. Related parties and other connected charities and organisations Channeling Positivity is a free school and has no connected organisations. Channeling Positivity s ethos is to work in partnership with secondary schools to meet the needs of students who, for whatever reason, are disengaged from mainstream school. Objectives and activities Objects and aims The primary aim of Channeling Positivity is to inspire young people to lead positive lives. The school is a small alternative provision free school working in partnership with Rushcliffe, Nottingham City and Nottinghamshire County secondary schools. We believe that it is really important to combine elements of the National Curriculum to support a meaningful post 16 destination with an alternative and enriched curriculum that clearly links learning to the world of employment. When a young person understands the validity of their learning and has a clear line of sight into a job or career then it is at that point that they choose to engage and focus to the best of their ability. Objectives, strategies and activities The key strategic objectives set by the trust in the first year of operation were primarily to embed the policies and processes into an efficient and effective school model. The key priorities were: Raising achievement and academic aspirations for all students Using positive adult role models throughout the school and curriculum Student empowerment to support the development of personal and social skills Personalised learning to support progress at the right level High standards of behaviour in all aspects of the school life To develop creativity and innovation thorough confidence To use student data effectively to support progress To ensure a meaningful and sustainable post 16 destination for all year 11 students

8 TRUSTEES' REPORT (CONTINUED) Public benefit In setting our objectives and planning our activities the trustees have given careful consideration to the Charity Commission's general guidance on public benefit. The trustees believe that the academy trust's aims, together with the activities outlined above, are demonstrably to the public benefit. Strategic report Achievements and performance The academy trust opened its doors to 24 young people aged between 13 and 16 on 7 September The school successfully delivered personalised learning for these students at a level appropriate to their abilities. The school offered 4 curriculum subjects in its first academic year with students working at level 2 to entry level students joined Channeling Positivity for their final year in Key Stage 4 education. All 11 students left with at least one qualification, 18% left with 4 GCSE or equivalent level 2 qualifications and 36% left with 4 level 1 or above qualifications. Our strategic priority to provide a positive post 16 destination for all year 11 students was achieved, with all students successfully moving onto apprenticeships or further education courses. The school worked in partnership with 14 commissioning schools from the City and County of Nottingham. This number increased during the year to 20 for 2016/17 academic year intake. Feedback from commissioning schools has been excellent with students improving their attendance in education over the year by, on average, 10% from their mainstream setting. The trust set 8 key priorities in its first year of operation and good progress was made in each of these priority areas, developing a strong foundation in all areas of the school to build on. Work continued throughout the year to embed the policies and processes developed during pre-opening into a strong and effective policy framework of operation. The management team consisting of the Principal and Business Manager expanded in autumn 2016 to include an Assistant Principal for Student Support; leading on the pastoral aspects of school life and a Head of School Teaching and Learning; leading on curriculum development and teaching and learning practice throughout the school. These posts together with the School SENCo form the team pushing forward the development and improvement of the School. Key performance indicators The trustees consider that the following are key performance indicators for the academy trust: - Student referral numbers to match EFA funding agreement growth plan; - General financial stability - aim for a minimum of 2% surplus to contribute to reserves; - Percentage of income spent on total staff costs to be no more than 70%; The trustees have been pleased that expectations for all key performance indicators listed have been successfully met during the period. 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 the board of trustees continues to adopt the going concern basis in preparing the accounts. Further details regarding the adoption of the going concern basis can be found in the statement of accounting policies

9 TRUSTEES' REPORT (CONTINUED) Financial review During the period the academy trust undertook the refurbishment of buildings purchased in the previous year. Capital grants totalling 1,085,741 are included within income in the Statement of Financial Activities, in accordance with the EFA Accounts Direction. Fixed assets purchased through EFA grant income are included in the Restricted Fixed Asset Fund; all other assets and liabilities are shown as a net donation into unrestricted funds. Most of the academy's recurrent income is obtained from the EFA in the form of grants, or is obtained from commissioning schools, the use of which is restricted to particular purposes. The grants received from the EFA and commissioners during the period ended 31 August 2016 and the associated expenditure are shown as restricted funds in the statement of financial activities. During the period ended 31 August 2016, total expenditure of 554,892 was more than covered by recurrent grant funding from the EFA together with other incoming resources. The excess of income over expenditure for the year (excluding restricted fixed asset funds) was 28,293. At 31 August 2016, the net book value of fixed assets was 2,542,397 and movements in tangible fixed assets are shown in note 11. to the financial statements. During the period the assets were used exclusively for providing education and the associated support services to the students of the academy. Reserves policy The trustees review the reserve levels of the academy trust annually having set a key performance indicator to maintain a minimum of 2% surplus to contribute to reserves. This review encompasses the nature of income and expenditure streams, the need to match income with commitments and the nature of reserves. The trustees will always try to match income with expenditure in the current year and will only carry forward reserves that it considers necessary and will have a clear plan for how it will be used to benefit students. The reserve policy required a minimum of 11k to be contributed to reserves in The actual value was 3,371 unrestricted funds and 24,922 general reserves totalling 28,293. This 5% contribution was considered appropriate for 2016 as this was the first year of operations and a suitable level of reserve is required to be maintained to ensure adequate future investments. Investment policy and powers It is the intention of the trust to invest any surplus funds going forward into low risk bank deposit accounts. The trust aims to manage its cash balances to provide for the day-to-day working capital requirements of its operations, whilst protecting the real long term value of any surplus cash balances against inflation. In addition, the trust aims to invest surplus cash funds to optimise returns while ensuring the investment instruments are such that there is no material risk to the loss of these cash funds

10 TRUSTEES' REPORT (CONTINUED) Principal risks and uncertainties The trustees have assessed the key risks to achieving the primary strategic objectives of the school in its first year of operation. The trustees have implemented a number of systems to assess risks that the school faces, especially in the operational areas (e.g. in relation to the quality of teaching and learning, outcomes for students, legal compliance and the completion of refurbishment work) and in relation to the control of finance. They have introduced systems, including operational procedures (e.g. behaviour management, personalised learning, vetting of new staff and visitors) and internal financial controls (see below) in order to manage risk. The trust has an effective system of internal financial controls and this is explained in more detail in the Governance Statement. The main risks that the academy is exposed to are summarised below. For each of these risks the probability, impact and seriousness have been considered together with appropriate action and management plans. The risks to which the academy trust is exposed arise both internally and externally. External risks include those in respect of future funding levels, competition, changes to rules and regulations, and the financial position of the staff pension schemes. Operational and reputational these risks include the running of the academy (including the capacity of staff and buildings to meet the needs of students) and its performance in delivering the curriculum. Financial - covering risks to the academy trust's financial position, including revenue streams, cost control and cash management. Statutory ensuring all aspects of statutory compliance are in place and operating effectively to allow trustees to place reliance on. The academy trust does not use complex financial instruments. It manages its activities using cash and various items such as trade debtors and trade creditors that arise directly from its operations. The existence of these financial instruments exposes the trust to a number of financial risks which are described below. The main risks arising from the trust's financial instruments are liquidity risk and credit risk. Liquidity risk - The trust manages its cash resources, including sufficient working capital, so that all its operating needs are met without the need for short-term borrowing. Credit risk this arises from the possibility that amounts owed to the trust will not be repaid. The trust does not undertake credit activities so it is only exposed to credit risk as it arises from normal business. Credit risk is managed through the use of approved banks and the prompt collection of amounts due. Plans for future periods The academy trust will continue to work to achieve the primary aim of the trust to inspire young people to lead positive lives. During the next 12 months the student numbers will grow to the maximum capacity of 56. The trust will ensure the systems and processes in place during the year are embedded to support high quality teaching and learning and for students to continue to achieve their potential at all levels. The challenge with all our students is to discover their potential, harness their opportunities and transform their aspirations

11 TRUSTEES' REPORT (CONTINUED) Auditor In so far as the trustees are aware: there is no relevant audit information of which the charitable company's auditor is unaware; and the trustees have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. A resolution proposing that UHY Hacker Young be reappointed as auditor of the charitable company will be put to the members. The trustees' report, incorporating a strategic report, was approved by order of the board of trustees, as the company directors, on 15 December 2016 and signed on its behalf by: A Mortimer Chair J E Drury Accounting Officer - 9 -

12 GOVERNANCE STATEMENT Scope of responsibility As trustees we acknowledge we have overall responsibility for ensuring that Channeling Positivity 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 principal, 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 Channeling Positivity and the Secretary of State for Education. She is 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 6 times during the year. Attendance during the year at meetings of the board of trustees was as follows: Trustees Meetings attended Out of possible A Mortimer (Chair) 6 6 J E Drury (Accounting Officer) 6 6 S L Townes 4 6 J H McLaughlin (Chair of assurance committee) 5 6 J Dunn (Resigned 31 October 2016) 4 6 K E Tyler 5 6 A George (Appointed 1 September 2015 and resigned 31 October 2016) 6 6 A Graham (Appointed 1 September 2015 and resigned 31 July 2016) 1 6 S Brisco (Appointed 1 January 2016) 2 3 G Cockburn (Appointed 1 January 2016) 3 3 The t rust board is made up of a maximum of 13 trustees appointed to ensure a balance of independence, skill and experience to undertake its responsibilities effectively. With this in mind the t rust has established two standing committees; the Assurance Committee and the Enterprise Committee. Through the publication of an Annual Report the t rust will communicate with all stakeholders and demonstrate public value and accountability for the public funds received by the t rust. During the autumn term nomination and election processes were run to identify parent trustees and a staff trustee. These processes were completed and the nominees ratified at the December t rust b oard. Only one parent trustee was identified during this process and the board held a vacancy for the remainder of the year for a second parent trustee

13 GOVERNANCE STATEMENT (CONTINUED) As this was the first year of the trust operation the trust board have undertaken a comprehensive review of governance decision making and effectiveness. Trustees considered the decision making structure was robust and the impact of decisions made by the board had a direct impact on the improvement of the quality of teaching and learning during the year. Due to the newness of the board and the operations of the school it is considered appropriate by the trust to undertake a similar review for each of the first 3 years of operation to ensure the governance structure is fit for purpose and effective in its oversight of the school. The assurance committee is a sub-committee of the main board of trustees. Its purpose is to advise the trust on the adequacy and effectiveness of the school s financial management and assurance framework. In undertaking this role the committee advises and supports the trust in explaining in its annual report that it has fulfilled its statutory and regulatory responsibilities. The committee ensures the financial procedures in operation are followed and oversees the regularity and probity of the funds received through the funding agreement. Included in this committee s remit is oversight of value for money. The committee will have a formal role in the trust s policies for fraud, irregularities, anti-bribery and whistleblowing as well as HR policies including recruitment, grievance and disciplinary matters. The assurance committee will provide the trust with the assurance that the policies, procedures and internal control environment are effective and delivering continuous improvement. J McLaughlin was appointed Chair of the committee during the year. Attendance at meetings in the year was as follows: Trustees Meetings attended Out of possible A Mortimer (Chair) 3 3 J E Drury (Accounting Officer) 2 3 J H McLaughlin (Chair of assurance committee) 3 3 A Graham (Appointed 1 September 2015 and resigned 31 July 2016) 1 3 S Brisco (Appointed 1 January 2016)

14 GOVERNANCE STATEMENT (CONTINUED) The enterprise committee is a sub-committee of the main board of trustees. Its purpose is to advise the trust on the effectiveness of the school s progress towards its strategic priorities of raising achievement, personalised learning, student empowerment and achieving a meaningful post 16 destination. The committee supports the leadership team to advance excellence within the organisation, improving teaching, learning and assessment, the student experience and student outcomes. J Dunn was appointed Chair of the committee during the year. He resigned 31 October 2016 and a new Chair will be appointed shortly. Attendance at meetings in the year was as follows: Trustees Meetings attended Out of possible S L Townes 2 2 J Dunn (Resigned 31 October 2016) 2 2 K E Tyler 1 2 A George (Appointed 1 September 2015 and resigned 31 October 2016) 0 2 G Cockburn (Appointed 1 January 2016) 1 2 Review of value for money As accounting officer the principal 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 available. The accounting officer for the academy trust has delivered improved value for money during the year by: Financial oversight and challenge has been developed to ensure resources are allocated for the benefit of teaching and learning and the delivery of outcomes; Procurement protocols have been developed to ensure robust challenge of all spending decisions. All staff are aware of their obligations to seek value for money from public funds. 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 on-going process designed to identify and prioritise the risks to the achievement of academy trust policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place in Channeling Positivity for the period 1 September 2015 to 31 August 2016 and up to the date of approval of the annual report and accounts

15 GOVERNANCE STATEMENT (CONTINUED) 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 1 September 2015 to 31 August 2016 and up to the date of approval of the annual report and accounts. This process is regularly reviewed by the board of trustees. The 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 assurance 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. 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 decided to identify a key control area each year and to undertake an independent assessment of the area using a suitably qualified individual reporting directly to the board. This process will begin with a review of key financial controls in 2016/17. Review of effectiveness As accounting officer the principal 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 external auditor; the financial management and governance self assessment process; the work of the executive managers within the academy trust 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 assurance committee and ensure continuous improvement of the system is in place. Approved by order of the board of trustees on 15 December 2016 and signed on its behalf by: A Mortimer Chair J E Drury Accounting Officer

16 STATEMENT OF REGULARITY, PROPRIETY AND COMPLIANCE As accounting officer of Channeling Positivity I have considered my responsibility to notify the academy trust board of trustees and the Education Funding Agency of material irregularity, impropriety and noncompliance 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's board of trustees are able to identify any material irregular or improper use of funds 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 the following instances of material irregularity, impropriety or funding non-compliance discovered to date have been notified to the board of trustees and EFA. If any instances are identified after the date of this statement, these will be notified to the board of trustees and EFA: Transactions with a connected party have taken place above the value of 2,500. A statement of assurance was not completed confirming that the goods or services provided were not in excess of cost, although this was discussed with trustees at the point of engagement. During the year ended 31 August 2016 there were no procedures in place to carry out independent checking of financial controls. This was not considered a high risk by the Trust. A system of regular checks will be instigated in the current year. J E Drury Accounting Officer 15 December

17 STATEMENT OF TRUSTEES' RESPONSIBILITIES The trustees (who also act as governors for Channeling Positivity and are also the directors of Channeling Positivity for the purposes of company law) are responsible for preparing the Trustees' Report and the accounts 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 accounts for each financial year. Under company law the trustees must not approve the accounts 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 accounts, the trustees are required to: select suitable accounting policies and then apply them consistently; observe the methods and principles in the Charities SORP 2015 and the Academies Accounts Direction 2015 to 2016; make judgements 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 accounts; and prepare the accounts 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 accounts 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 that 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 accounts may differ from legislation in other jurisdictions. Approved by order of the board of trustees on 15 December 2016 and signed on its behalf by: J E Drury Accounting Officer

18 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CHANNELING POSITIVITY We have audited the accounts of Channeling Positivity for the year ended 31 August 2016 set out on pages 20 to 42. The financial reporting framework that has been applied in their preparation is applicable law and 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, the Charities SORP 2015 and the Academies Accounts Direction 2015 to 2016 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 auditor's 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 opinions we have formed. Respective responsibilities of trustees and auditors As explained more fully in the Trustees' Responsibilities Statement set out on page 15, the trustees, who are also the directors of Channeling Positivity for the purposes of company law, are responsible for the preparation of the accounts and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the accounts 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 accounts A description of the scope of an audit of financial statements is provided on the APB's website at Opinion on accounts In our opinion the accounts: give a true and fair view of the state of the charitable company's affairs as at 31 August 2016 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; have been prepared in accordance with the requirements of the Companies Act 2006; and have been prepared in accordance with the Charities SORP 2015 and the Academies Accounts Direction 2015 to Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Trustees' Report including the incorporated strategic report for the financial year for which the accounts are prepared is consistent with the accounts

19 INDEPENDENT AUDITOR'S REPORT (CONTINUED) TO THE MEMBERS OF CHANNELING POSITIVITY 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 accounts 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. Elizabeth Searby BSc FCA (Senior Statutory Auditor) UHY Hacker Young 14 Park Row Nottingham NG1 6GR Dated: 15 December

20 INDEPENDENT REPORTING ACCOUNTANT'S ASSURANCE REPORT ON REGULARITY TO CHANNELING POSITIVITY AND THE EDUCATION FUNDING AGENCY In accordance with the terms of our engagement letter dated 28 August 2015 and further to the requirements of the Education Funding Agency (EFA) as included in the Academies Accounts Direction 2015 to 2016, we have carried out an engagement to obtain limited assurance about whether the expenditure disbursed and income received by Channeling Positivity during the period 1 September 2015 to 31 August 2016 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 Channeling Positivity and EFA in accordance with the terms of our engagement letter. Our work has been undertaken so that we might state to the Channeling Positivity 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 Channeling Positivity and EFA, for our work, for this report, or for the conclusion we have formed. Respective responsibilities of Channeling Positivity's accounting officer and the reporting accountant The accounting officer is responsible, under the requirements of Channeling Positivity s funding agreement with the Secretary of State for Education dated 23 March 2015 and the Academies Financial Handbook, extant from 1 September 2015, 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 2015 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 period 1 September 2015 to 31 August 2016 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 2015 to 2016 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 trust's income and expenditure

21 INDEPENDENT REPORTING ACCOUNTANT'S ASSURANCE REPORT ON REGULARITY TO CHANNELING POSITIVITY AND THE EDUCATION FUNDING AGENCY (CONTINUED) The work undertaken to draw to our conclusion includes: An assessment of the risk of material irregularity and impropriety within the trust. Testing of those areas identified through risk assessment, including reviewing internal controls, analytical review and enquiries of management. Consideration of the evidence and concluding on the work carried out. Conclusion In the course of our work, except for the matters listed below, nothing has come to our attention which suggests that in all material respects the expenditure disbursed and income received during the period 1 September 2015 to 31 August 2016 has not been applied to purposes intended by Parliament and the financial transactions do not conform to the authorities which govern them. Transactions with a connected party have taken place above the value of 2,500. A statement of assurance was not completed confirming that the goods or services provided were not in excess of cost. During the year ended 31 August 2016 there were no procedures in place to carry out independent checking of financial controls. A system of regular checks will be instigated in the current year. Elizabeth Searby BSc FCA Reporting Accountant UHY Hacker Young Dated: 15 December

22 STATEMENT OF FINANCIAL ACTIVITIES INCLUDING INCOME AND EXPENDITURE ACCOUNT Unrestricted Restricted funds: Total Total Funds General Fixed asset Notes Income and endowments from: Donations and capital grants ,085,741 1,086,054 1,500,000 Charitable activities: - Funding for educational operations 3-549, , ,000 Other trading activities 4 2, ,913 - Investments Total income and endowments 3, ,137 1,085,741 1,638,249 1,720,128 Expenditure on: Charitable activities: - Educational operations 7-503,376 51, , ,576 Total expenditure 6-503,376 51, , ,576 Net income/(expenditure) 3,371 45,761 1,034,225 1,083,357 1,574,552 Transfers between funds - (3,839) 3, Other recognised gains and losses Actuarial gains/(losses) on defined benefit pension schemes 17 - (17,000) - (17,000) - Net movement in funds 3,371 24,922 1,038,064 1,066,357 1,574,552 Reconciliation of funds Total funds brought forward ,091 1,504,333 1,574,552 - Total funds carried forward 3,499 95,013 2,542,397 2,640,909 1,574,

23 STATEMENT OF FINANCIAL ACTIVITIES (CONTINUED) INCLUDING INCOME AND EXPENDITURE ACCOUNT Comparative information Unrestricted Restricted funds: Total ended 31 August 2015 Funds General Fixed asset 2015 Notes Income and endowments from: Donations and capital grants ,500,000 1,500,000 Charitable activities: - Funding for educational operations 3-220, ,000 Investments Total income and endowments ,000 1,500,000 1,720,128 Expenditure on: Charitable activities: - Educational operations 7-145, ,576 Total expenditure 6-145, ,576 Net income/(expenditure) ,656 1,499,768 1,574,552 Transfers between funds - (4,565) 4,565 - Reconciliation of funds Total funds brought forward Total funds carried forward ,091 1,504,333 1,574,

24 BALANCE SHEET AS AT 31 AUGUST Notes Fixed assets Tangible assets 11 2,542,397 1,504,333 Current assets Debtors ,057 13,125 Cash at bank and in hand 156,363 82, ,420 95,353 Creditors: amounts falling due within one year 13 (412,908) (25,134) Net current assets 122,512 70,219 Total assets less current liabilities 2,664,909 1,574,552 Defined benefit pension liability 17 (24,000) - Net assets 2,640,909 1,574,552 Funds of the academy trust: Restricted income funds 15 - Fixed asset funds 2,542,397 1,504,333 - General funds 119,013 70,091 - Pension reserve (24,000) - Total restricted funds 2,637,410 1,574,424 Unrestricted funds 15 3, Total funds 2,640,909 1,574,552 The accounts were approved by order of the board of trustees and authorised for issue on 15 December J E Drury Accounting Officer A Mortimer Chair Company Number

25 STATEMENT OF CASH FLOWS Notes Cash flows from operating activities Net cash provided by operating activities 18 77,829 86,665 Cash flows from investing activities Dividends, interest and rents from investments Capital grants from DfE and EFA 1,085,741 - Payments to acquire tangible fixed assets (1,089,580) (4,565) (3,694) (4,437) Change in cash and cash equivalents in the reporting period 74,135 82,228 Cash and cash equivalents at 1 September ,228 - Cash and cash equivalents at 31 August ,363 82,

26 NOTES TO THE FINANCIAL STATEMENTS 1 Accounting policies A summary of the principal accounting policies adopted (which have been applied consistently, except where noted), judgements and key sources of estimation uncertainty, is set out below. 1.1 Basis of preparation The accounts of the academy trust, which is a public benefit entity under FRS 102, have been prepared under the historical cost convention in accordance with the Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102), the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (Charities SORP (FRS 102)), the Academies Accounts Direction 2015 to 2016 issued by EFA, the Charities Act 2011 and the Companies Act Channeling Positivity meets the definition of a public benefit entity under FRS 102. These accounts for the year ended 31 August 2016 are the first accounts of Channeling Positivity prepared in accordance with FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. The date of transition to FRS 102 was 30 April The reported financial position and financial performance for the previous period are not affected by the transition to FRS Going concern The trustees assess whether the use of going concern is appropriate, ie whether there are any material uncertainties related to events or conditions that may cast significant doubt on the ability of the charitable company to continue as a going concern. The trustees make this assessment in respect of a period of at least one year from the date of authorisation for issue of the accounts and have concluded that the academy trust has adequate resources to continue in operational existence for the foreseeable future and there are no material uncertainties about the academy trust s ability to continue as a going concern. Thus they continue to adopt the going concern basis of accounting in preparing the accounts. 1.3 Income All incoming resources are recognised when the academy trust has entitlement to the funds, the receipt is probable and the amount can be measured reliably. Grants receivable Grants are included in the statement of financial activities on a receivable basis. The balance of income received for specific purposes but not expended during the period is shown in the relevant funds on the balance sheet. Where income is received in advance of meeting any performance-related conditions there is not unconditional entitlement to the income and its recognition is deferred and included in creditors as deferred income until the performance-related conditions are met. Where entitlement occurs before income is received, the income is accrued

27 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 1 Accounting policies (Continued) General Annual Grant is recognised in full in the statement of financial activities in the period for which it is receivable, and any abatement in respect of the period is deducted from income and recognised as a liability. Capital grants are recognised when there is entitlement and are not deferred over the life of the asset on which they are expended. Unspent amounts of capital grant are reflected in the balance in the restricted fixed asset fund. Sponsorship income Sponsorship income provided to the academy trust which amounts to a donation is recognised in the statement of financial activities in the period in which it is receivable (where there are no performance-related conditions), where the receipt is probable and it can be measured reliably. Donations Donations are recognised on a receivable basis (where there are no performance-related conditions) where the receipt is probable and the amount can be reliably measured. Other income Other income, including the hire of facilities, is recognised in the period it is receivable and to the extent the academy trust has provided the goods or services. Donated goods, facilities and services The value of donated services and gifts in kind provided to the academy trust are recognised at their open market value in the period in which they are receivable as incoming resources, where the benefit to the academy trust can be reliably measured. An equivalent amount is included as expenditure under the relevant heading in the statement of financial activities, except where the gift in kind was a fixed asset in which case the amount is included in the appropriate fixed asset category and depreciated over the useful economic life in accordance with the academy trust's policies. Where the donated good is a fixed asset it is measured at fair value, unless it is impractical to measure this reliably, in which case the cost of the item to the donor should be used. The gain is recognised as income from donations and a corresponding amount is included in the appropriate fixed asset category and depreciated over the useful economic life in accordance with the academy trust s accounting policies