KING GEORGE V FURTHER EDUCATION CORPORATION
MINUTES OF THE MEETING OF THE GOVERNORS
FINANCE & GENERAL PURPOSES COMMITTEE
5.30pmMonday 5 December 2011
PRESENTArlene Allan (Governor)
Chris Baker (Governor)
Elinor Dodd (Governor)
Paul Lacey (Governor)
Morag Matthews (Staff Governor)
John Rostron (Governor)
Adele Wills (Principal)
Will Melia (Assistant Principal) In attendance
Wendy Moorcroft (Clerk)
A Quorum being present Arlene Allan in the Chair opened the meeting at 5.30pm.
11/41 Apologies
Vipin Trivedi (Governor)
11/42 Minutes of the Meeting of 12 September 2011
The minutes were approved by the members present and signed by the Chairman.
11/43 Matters Arising
11/27 Three Year Financial Forecast
It was noted that the final enrolment numbers were 119 less than target. It was also noted that the income from the Enrolment Admin Fee was around £8k compared with donations of around £5k the previous year.
11/38 Financial Report
It was noted that the Board had approved the additional expenditure for the window replacement work at the last meeting and the work was now well underway.
11/44 Financial Statement for the year ended 31 July 2011 and report of Financial Statements Auditors
Will Melia, Assistant Principal,presented the Financial Statements and Audit findings Report from Baker Tilly to the Committee. A summary of key issues had also accompanied the report for Governors’ information. The Committee was pleased to note that there were no unresolved disagreements with Management regarding items that could be material to the accounts and subject to carrying out a post balance sheet events review, Baker Tilly would be issuing an unqualified audit report for the year ended 31 July 2011.
Moving on to the financial performance and position, the Committee noted from the summary report that the College had achieved an operating deficit of £793k. There had been one significant one-off item and this was in respect of the exceptional restructuring costs of £844k. Without this significant one-off item of expenditure, the surplus for the year would have been £51k. There had been a positive cash flow of £407k and capital expenditure of £117k. Although the College had achieved an operating surplus position in 2009/10 of £163k, taking into account the exceptional gain last year of £229k in respect of the change in the calculation of pension costs and the exceptional restructuring costs of £844k in 20010/11, the position in 2010/11 was actually slightly better. Governors noted that the balance sheet remained strong with reserves of £6.2m and the cash balance healthy at £2.4m. Current liabilities had increased by around £1m but this was due to the accrual for redundancy costs and unspent capital BCIF at the year end. The bank loan in respect of the millennium building would be fully repaid in May 2012 and the colleges pension scheme deficit reduced by £88k. The fair value of pension scheme assets had risen.
Looking at the Baker Tilly Audit findings report, the Committee noted that Baker Tilly had identified some deficiencies in internal control with possible action to address these suggested. In particular the Committee noted the proposal for the inclusion of a standing item on all agendas for disclosure of potential conflicts of interest. As on appointment all Governors agreed to abide by the Governors’ code of conduct which required all interests to be declared and completed an annual declaration, this was not thought to be necessary but would be discussed further at Full Board. The Committee suggested however that a reminder of the requirement to declare any potential conflict of interest could be given at the Full Board meeting at which the annual declaration was completed. Governors also queried the reclassification of the staff restructuring costs as a liability rather than a provision. It was explained that this had been the treatment required by Baker Tilly as the payments had been agreed with staff prior to the year end. It was noted that whilst cash balances at the year end were very healthy, they were expected to fall considerably from February as the College made payments to contractors in respect of the recent capital works. Mr Melia reported that this would be carefully managed and monitored until cash balances began to rise again.
There being no other issue, the Committee approved the Report and Financial Statements for recommendation to the Full Board for approval and signature by the Chairman of Governors and the Principal. Governors extended their thanks to Mr Melia, and the Finance team for their hard work during the year.
11/45 Financial Report - 4th Quarter Accounts
Mr Melia reported that the 4th quarter accounts reflected the figures presented earlier in the financial statements. The figures showed a small operating surplus of £131k which was £161k better than budget Three key financial indicators were outside the target set by Governors. Income was £9k above budget. Pay costs were £202k below. This was due primarily to the decision taken not to recruit certain posts, lower than budgeted pay award and non utilisation of the contingency. Non pay costs were £51k over budget and most variances had been reported at earlier meetings. There had been capital expenditure on IT infrastructure of £69k and cash balances were very healthy at £2.4m. Looking at the key financial indicators which were outside target, it was noted that whilst the ‘pay as a percentage of income’ indicator was in line with budget, it should come into line with target as a result of the recent restructure and rationalisation. The ‘operating surplus as a percentage of income’ indicator was outside target due to the planned maintenance costs in the year. The current ratio was below target due to the accrual for rationalisation costs and the BCIF payment in advance. It was expected to return to target in 2011/12.
The cash flow forecast highlighted the anticipated drop in cash in February/March as discussed earlier and the cash position would be closely monitored throughout the year. All Bank covenants had been complied with.
Governors noted the monies on deposit and current interest rates.
Looking at the recent works undertaken with BCIF funding, the Committee was pleased to note that whilst the Full Board had approved a potential overspend of £122k, following release of the contingency, this overspend was now expected to be £51k.
In term of accuracy of forecasting, income showed a high level of accuracy. The forecasting process for both pay and non pay would be reviewed to improve accuracy in future years. Future issues centred as always around funding. Due to the under recruitment this year the College had again asked for volunteers for redundancy. There had only been limited interest so far. Governors asked if the there was any likelihood that there could be future compulsory redundancies. The Principal reported that whilstit was hoped that this could be avoided this yearit may have to be a consideration in future years. This was because lower numbers this year meant lower numbers in the second year next year. It was also not clear what the effect of future changes in the funding formula might be.
Governors also noted the detailed analysis of estates improvements and related costs during last year.
The Committee accepted the 4th Quarter Accounts and Financial Report.
11/46 Terms & Conditions MCA Procurement Forum
Mr Melia presented the Report to the Committee. The Merseyside Colleges Association had established a group to identify and achieve cost saving opportunities through collaboration procurement and the subsequent improved buying power. Funding of £99,210 had been secured totake this forward. Given that there were potentially nine colleges in the group each with differing internal financial regulations, going out to tender would be complicated and lengthy if each college were to go through its own approval process in advance. Terms of reference had therefore been proposed to allow the forum to go out to tender on a collaborative basis with the proviso that there was no negative cost impact on each college. The Committee was therefore being asked to recommend to the Board an amendment to the Financial Regulations to devolve authorisation for this work through the terms of reference presented. The first area the forum would be tendering for was cleaning but as KGV still had two years to run on the existing contract it would not be affected at this stage
The Committee agreed to recommend to the Board the proposed amendment to the Financial Regulations as set out in the Report.
11/47 Any Other Business
There was no other business.
There being no other business the meeting closed at 6.05p.m.
11/48 Date of Next Meeting
The date of the next meeting was 23 January 2012
SIGNED BY THE CHAIR AS A TRUE AND ACCURATE RECORD
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