FRS102 – Donations & Endowments
Tanya Hitchen
Contact: financialreporting@exeter.ac.uk
FRS102
 What is FRS102?
 Impact on:
 Donations
 Endowments
 Investment returns
 Restated Financial Statements
 What do I need to do?
What is FRS102?
 Change in UK Accounting Standards
 Driven by harmonisation with International Accounting Standards
 FRS102 is a reduced version of full IFRS
 1st year of FRS102 accounts is 2015/16 BUT
 Need to restate 2014/15 financial statements
 Restate opening balance sheet as at 1 August 2014
What is FRS102?
 What have we done so far?
 FE/HE SORP – applying FRS102 to the HE sector
 Impact of FRS102 understood by Audit Committee and Council
 Accounting policy choices approved by Audit Committee and Council
 Opening balance sheet restated and approved by Auditors
 Template accounts created
 Some APTOS coding changes
 Communication & Training
FRS102 - Donations
 3 Types of donation under FRS102:
 Donation with no restrictions
 Donation with restrictions
 Donation with performance conditions
 Note that under current GAAP, donations with restrictions and/or
performance conditions are treated as expendable endowments.
FRS102 - Donations
Performance Condition: A condition that requires the performance of a particular
level of service or units of output to be delivered, with payment of, or entitlement
to, the resources conditional on that performance.
Restriction: A requirement that limits or directs the purposes for which a
resource may be used that does not meet the definition of a performance
condition.
Extract from FRS102
FRS102 - Donations
Donation with no restrictions
 Recognise donation as income upon entitlement.
 Entitlement = receipt for donations, or grant of probate for legacies
 Monies held in general reserves – no ring-fenced fund
 Expenditure recognised as incurred
 Mismatch between income & expenditure impacts surplus/deficit
FRS102 - Donations
Donation with restriction
 Use of the funds is specified. No specific level of service or units of output
(e.g. teaching hours) – currently treated as expendable endowment
 Recognise donation as income upon entitlement.
 Monies held in restricted reserves
 Expenditure recognised as incurred
 Mismatch between income & expenditure impacts surplus/deficit
FRS102 - Donations
Donation with Performance Conditions
 Specified level of service or units of output (e.g. teaching hours), and no
intention of donor to set up an endowment.
 Expected to be rare.
 Recognise donation as income upon meeting performance conditions.
 Monies held in restricted reserves
 Expenditure recognised as incurred
 Less mismatch between income & expenditure impacts surplus/deficit
FRS102 - Endowments
Types of Endowment Fund
 Expendable Endowment
 Permanent Endowment - Restricted
 Permanent Endowment – Unrestricted
 Same definitions as current rules, but change in accounting.
FRS102 - Endowments
Expendable Endowments
 Funds donated with specific intention to create an endowment fund, or
 Funds donated with a specific restriction so large in relation to the area of
spend to which it relates that it will need to be retained over more than a
short period of time.
 The SORP considers that a timeframe of less that 2 years is unlikely to
create an expendable endowment.
FRS102 - Endowments
Expendable Endowments
 New endowments received recognised as income upon entitlement
 Note currently new endowments are taken to endowment reserves via
the STRGL
 Fund held in endowment reserves
 Expenditure recognised as incurred
 No accounting adjustment to net I&E/SoCI to nil
 Mismatch between income and expenditure – budgeting & forecasting
FRS102 - Endowments
Expendable Endowments
 UoE receive a £100k donation. This is spent over a 4 year timescale:
Year 1
Year 2
Year 3
Year 4
Income
100,000
Expenditure
(26,000)
(26,000)
(26,000)
(26,000)
Investment
Gain
3,000
(1,000)
2,000
0
Surplus/
(Deficit)
77,000
(27,000)
(24,000)
(26,000)
FRS102 - Endowments
Permanent Endowment - Restricted
 Donor stipulation that the capital element of the endowment must be held in
perpetuity.
 Specific restriction on use of endowment.
 Accounting as per Expendable Endowment
 Total Return rules still apply re how much can be withdrawn from funds each
year.
FRS102 - Endowments
Permanent Endowment - Unrestricted
 Donor stipulation that the capital element of the endowment must be held in
perpetuity.
 No restriction on use of endowment.
 Accounting as per Expendable Endowment
 Total Return rules still apply re how much can be withdrawn from funds each
year.
FRS102 - Investments
Investment Portfolios
 Investment income (interest and dividends) recognised as income
 Market value gains/losses included within surplus (previously in STRGL)
 Endowment assets category no longer on the Balance Sheet.
 Now split between cash and investments
 Endowment reserves details total endowment funds
FRS102 - Income
Financial Statements Presentation
Original
Income 2013/14
Funding Body Grants
Tuition Fees
Restated
£000s
47,497
150,623
Income 2013/14
Tuition Fees
£000s
150,623
Funding Body Grants
44,677
Research Income
60,071
Research Income
57,663
Other Income
62,279
Other Income
54,703
Investment Income
3,350
Investment Income
3,350
Total incl JVs
323,820
Total before G&D
Less share of JVs
-19,360
Donations/Endowments
1,294
Total Income
304,460
Other grant income
7,278
Total Income
311,017
319,589
FRS102 - Expenditure
Financial statements presentation
Expenditure 2013/14
£000s
Expenditure 2013/14
Staff costs
168,465
Staff costs
Other operating expenses
108,750
Fundamental restructuring costs
Depreciation
Interest & other finance costs
Total Expenditure
21,944
7,750
306,909
Other operating expenses
Depreciation
Interest & other finance costs
Total Expenditure
No change re expenditure from endowment funds
£000s
164,167
110,725
37,215
8,621
320,728
FRS102 – Other Comprehensive Income
Statement of Comprehensive Income
Total income
Total expenditure
Surplus/deficit before other gains/losses and share of
surplus/deficit in joint ventures associates
£’000s
319,589
320,728
(1,140)
Gain/(loss) on investments
Share of operating surplus/ (deficit) in joint venture(s)
2,970
499
Surplus / (deficit) for the year
2,329
Unrealised surplus on revaluation of land and buildings
Actuarial (loss)/gain in respect of pension schemes
Change in fair value of hedged financial instrument(s)
Total comprehensive income for the year
Total comprehensive income for the year comprises:
Endowment comprehensive income for the year
Restricted comprehensive income for the year
Unrestricted comprehensive income for the year
45,104
(7,367)
100
40,166
1,118
(1,562)
40,610
40,166
FRS102 – Balance Sheet
Per the 2013/14 Financial Statements
FIXED ASSETS
Tangible assets
Investment assets
Investment assets - Joint ventures
ENDOWMENT ASSETS
CURRENT ASSETS
Stocks
Debtors - Amounts falling due within one year
Debtors - Amounts falling due after more than one year
Investments
Cash at bank and in hand
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
Restated Under FRS102
2014
£000s
663,079
7,330
3,048
673,457
30,265
437
31,155
16,459
30,276
76,693
155,020
-72,819
82,201
785,923
Non-Current Assets
Intangible assets and goodwill
Tangible fixed assets
Heritage assets
Investments
Investment in joint venture
Total Non-Current assets
2014
£000s
3,391
673,207
7,171
29,161
3,048
715,978
Current assets
Stock
Trade and other receivables
Investments
Cash and cash equivalents
Total current assets
437
47,614
30,276
77,955
156,283
Creditors - amounts falling due within one year
Reimbursable to funding council
Bank loans and external borrowing
Obligations under finance leases
Other creditors
Total creditors (amounts falling due within one year)
571
3,823
13,652
69,760
87,805
Net current (liabilities) / assets
68,477
Total assets less current liabilities
784,455
FRS102 – Balance Sheet
Per the 2013/14 Financial Statements
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
LESS: PROVISION FOR LIABILITIES
2014
£000s
-219,140
0
TOTAL NET ASSETS EXCL. PENSION LIABILITY
566,783
NET PENSION LIABILITY
-26,551
TOTAL NET ASSETS INCL. PENSION LIABILITY
540,232
DEFERRED CAPITAL GRANTS
144,291
ENDOWMENTS
Expendable
Permanent
RESERVES
Income and expenditure reserve (excl Pension Reserve)
Pension Reserve
Income and expenditure reserve (incl Pension Reserve)
Revaluation reserve
TOTAL FUNDS
Restated Under FRS102
Creditors: amounts falling due after more than one year
Reimbursable to the funding council
Bank loans and external borrowing
Obligations under Finance leases
Other
Total creditors (amounts falling due after more than one year)
Provisions
Pension provisions
Other provisions
Total provisions
2014
£000s
656
199,088
19,396
26,700
245,840
48,640
48,640
Total net assets
489,975
89,291
-26,551
62,740
302,936
365,675
Restricted Reserves
Income and expenditure reserve - endowment fund
Income and expenditure reserve - restricted reserve
Unrestricted Reserves
Income and expenditure reserve - unrestricted
Revaluation reserve
Total Restricted and Unrestricted Reserves
30,265
156,774
302,936
489,975
540,231
Total Reserves
489,975
9,039
21,226
30,265
FRS102 – What do I need to do?
 New coding required for
 Types of donation / endowment
 New donations/endowments within income
 Gains/losses on investments in SoCI.
 Process to identify types of donation/endowment within DARO.
 Restate 2015/16 business plan – to go to October Council.
 Be prepared to produce next business plan under FRS102.
Any questions?
Further Details:
 Email financialreporting@exeter.ac.uk