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2022-03-31-accounts

AQA Education

A company limited by guarantee

ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022

Registered company number 3644723

Registered charity number 1073334

www.aqa.org.uk

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AQA Education Directors’ and Trustees’ Report including Strategic Report

INTRODUCTION

AQA Education (AQA) is a company limited by guarantee; it does not have share capital and is a registered charity. The directors, who are AQA Trustees and constitute the members of the Charity, present the Directors’ and Trustees’ Report which includes the Strategic Report and the audited Consolidated Financial Statements for the year ended 31 March 2022.

The Board of Trustees is, for company law purposes, also the Board of Directors and has ultimate responsibility for the Charity’s activities. It exercises its powers through the Chief Executive Officer (CEO) who is also a Trustee.

STRUCTURE

AQA’s directors during the reporting year and up to the date of this report were:

Mr M Bramwell (term concluded 1 August 2021) Mr J Dahl Dr A Hadawi (appointed 1 July 2021) Ms P Hird (Vice Chair) (term concluded 31 March 2022) Mr C Hughes Ms E Kitcatt Mr N Kiyani Professor J Knowles (appointed 21 April 2022) Ms L Martini (appointed 1 July 2021) Ms A Modan Mrs S Moore Mr M Nicholson Ms D O’Donoghue (appointed 1 July 2021) Professor M Rand-Weaver (term concluded 31 March 2022) Ms J Smith (term concluded 1 August 2021) Ms I Sutcliffe Mr M Turner Mr J van Wijngaarden (Chair)

Trustee vacancies are advertised when there is a particular skills gap and when a term of office comes to an end within the overall membership of the Board of Trustees. New appointments are formally approved by the Board of Trustees. Membership must naturally represent and be able to advise on the education sector, as well as the running of AQA and meeting its charitable objectives.

A number of the trustees also served as Chairs of governance and advisory committees during the reporting year, as follows:

Governance committees

Committee Chairs Group Mr J van Wijngaarden Finance Committee Mr N Kiyani Audit, Risk and Compliance Committee Mr M Turner Awarding Standards Committee Mr J van Wijngaarden Nominations Committee Mr J van Wijngaarden Remuneration Committee Ms P Hird

Advisory committees

Research Committee Student Advisory Group Irregularities and Appeals Committee Higher Education Advisory Group

Professor J Baird (non-trustee) Ms E Kitcatt Mr M Bramwell / Dame Joan McVittie (non-trustee) Mr M Nicholson

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All trustees are required to complete a Register of Interests declaration and to declare any potential conflict of interest annually and declare conflicts of interest at the start of each meeting. This also applies to governance and advisory committee members who are not trustees.

AQA’s Articles of Association provide for a range of governance and advisory committees as well as its Board of Trustees. All the committees, except the Research Committee and Irregularities and Appeals Committee, are chaired by trustees and, with the exception of the Committee Chairs Group, Awarding Standards Committee, Nominations Committee and Remuneration Committee include both trustees and independent members within their membership. This provides a breadth of experience in teaching and assessment, as well as commercial, operational and other professional and technical skills.

Governance committees

Due to the impact of the Coronavirus pandemic in 2021/2022, many governance meetings scheduled in the reporting period took place online.

Advisory committees

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AQA Education Directors’ and Trustees’ Report including Strategic Report

Advisory committees (continued)

AQA’s day-to-day business is carried out by the CEO, Mr Colin Hughes, and a team of senior directors who make up the Executive Team:

Group structure

AQA is an education charity and a leading provider of qualifications and support services for teachers and students. It also provides services through three wholly-owned subsidiary companies: Doublestruck Limited (Doublestruck), AQA Milton Keynes Limited (AQA MK) and AlphaPlus Consultancy Ltd (AlphaPlus), which along with AQA make up the Group and are detailed below.

The financial statements of these subsidiaries are consolidated into this set of financial statements.

Commercial partnership

In May 2015, AQA formed a 50/50 joint venture company with Oxford University Press, Oxford International AQA Examinations Limited. The company offers a suite of international GCSE, AS and A-level qualifications to schools outside the UK that teach a British curriculum. The qualifications are designed and delivered by AQA and externally validated to ensure they are comparable to UK qualifications. The equity method of accounting is used as the accounting treatment for the joint venture (Note 3).

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AQA Education Directors’ and Trustees’ Report including Strategic Report

EMPLOYMENT PRACTICES AND PAY

The Board of Trustees and the Executive Team comprise the key management of AQA in charge of directing, controlling, running and operating the organisation. Details of trustees’ expenses, related party transactions and remuneration paid to the Chair of the Board of Trustees are disclosed in Note 10 to the financial statements.

We have a Remuneration Committee, established as a governance committee of the Board of Trustees, to advise the latter on the appropriate remuneration and terms of service for the CEO and the Executive Team, and trustees when required. Specifically, this Committee determines annually what increase, if any, should be applied to the CEO’s remuneration and agrees the Executive Team’s remuneration, based on specific data provided to them.

The CEO is currently remunerated for his services in his role as CEO, and it is confirmed that no additional remuneration is payable or has been paid as a result of his appointment as a trustee.

Gender pay gap

In November 2021 we published our gender pay report, which shows that our median pay gap in 2021 has increased to 16.3% from 12.6%. Our mean gender pay gap has increased to 9.8% from 9.5% in 2020.

Since the data was prepared, we have seen a significant improvement in the representation of women across the organisation, but importantly at the more senior levels of the organisation, up to and including the Executive Team.

We are committed to addressing these gaps and positive steps are being taken to reduce our gender pay gap over time. This year we have updated our family friendly policies, published new guidance on women’s health and the menopause, and introduced hybrid working, all helping to contribute to a more supportive and inclusive environment for all our colleagues. Increased focus has been given to our internal employee support networks to ensure we consult with them on changes to policy and practice, and to ensure traditionally under-represented voices are heard. Our Empowering Women network is nurturing its third cohort, the largest group of women so far. We have introduced a new Early Careers programme that will focus on attracting less-well-represented groups to help build a more diverse, inclusive and skilled workforce at AQA.

Ethnicity pay gap

For the second time, in 21-22, we produced our ethnicity pay gap report, and for the first time we published this internally. We are pleased that disclosure rates have improved this year from within our internal employee base, with more than 97% of staff now providing their data in Workday on this point. While there is some improvement in our performance, the gap is still significant and presents a call to action around recruitment, development, and mobilisation of talented people from ethnic minorities. Our approach to pay means that there is parity between any two individuals working at the same pay-scale with the same length of service, but it is clear from our analysis that there is a lack of representation at our most senior levels, except at Board level where recent appointments have led to a 25% BAME representation.

Efforts this year have included strengthening the membership of, and the resources given to the support networks including the People of Colour employee network, simplifying our approach to recruitment advertising including making out job titles easier to understand and more transferrable to the open job market, and sharing information and celebrating key dates and festivals in the non-Christian calendars. In September 2021, we received the results of the external audit commissioned with the EW Group, and this gave us some additional insight and direction around developing inclusive approaches to attract and develop talent from ethnic minority background.

Improving diversity through recruitment

We have introduced an Early Careers programme, opening up opportunities to join AQA through new apprenticeship and graduate schemes: the first intake joined in January 2022.

We are improving our recruitment processes generally across all roles and levels, using voluntary disclosure data provided on application.

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EMPLOYMENT PRACTICES AND PAY (continued)

We are also promoting and encouraging diversity across our advisory groups and our Board of Trustees, to ensure that we have the necessary skills and diversity of thinking.

Culture

In early 2022 we launched our refreshed AQA values, as part of our strategic aim to build a forward- and outwardlooking culture.

Customers front and centre - Our customers are teachers: we want them always to choose us. Whatever our role, we all go the extra mile to meet their needs.

Step up - We think for ourselves. We use sound judgement and hold ourselves to account. We listen to understand, and speak our mind with courtesy and care.

Shape tomorrow - We look up, out and ahead. We use our independent voice to influence. We question what we do and take considered risks to improve and innovate.

Work and learn together - We build supportive, diverse teams. We enjoy working and learning together. We delight in our shared purpose, and celebrate success.

Results matter - We decide and deliver at pace. We make courageous decisions about what we will and won't do. We know when to aim for perfection, and when good is good enough.

PUBLIC BENEFIT

The Board of Trustees has due regard of the Charities Act 2011 and the Charity Commission guidance on public benefit, in particular the requirement that public benefit can no longer be presumed but must be demonstrated. We are confident in our role as a charity delivering services to the public and meeting the Charity Commission’s public benefit requirements now and into the future, with specific attention to ensuring that our services benefit society through advancing education, increasing social mobility and promoting learning. Further details are provided in the Strategic Report. We have complied with the duty in section 4 of the Charities Act 2011 to have due regard to public benefit guidance published by the Charity Commission.

Ensuring AQA’s work delivers its aims

Informed by the advice contained in the Charity Commission’s general guidance on public benefit, we keep our educational aims, objectives and activities under continuous review, consider our achievements and the outcomes of our work and evaluate the successes and benefits. In addition, we consider how future activities will contribute to the agreed aims and objectives and help to equip learners with the knowledge and skills they require for the future.

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STRATEGIC REPORT OBJECTIVES, ACHIEVEMENTS AND PERFORMANCE

Delivering against our purpose

AQA is an independent education charity and the UK’s largest provider of academic qualifications for schools and colleges.

Our purpose as an organisation is to advance education by enabling students and teachers to realise their potential. Any income we make through providing qualifications is invested back into education.

This means we are mindful of the impact that studying for exams and assessment has on the classroom and the need for our qualifications to support good teaching and learning that helps students progress to the next stage of their lives. Our purpose and our values guide our decision-making, for example:

In 2021 we faced many challenges delivering against our purpose in the face of the pandemic. We adapted to a new landscape, provided schools and colleges with additional support and guidance, and delivered the results that students needed to progress to the next stage of their lives.

As well as our core assessment activities, we also explore opportunities to support more teachers and young people to benefit the overall education system. These activities also help us to deliver on our public benefit.

Investing in students

The programme is supported by AQA volunteers and the Dame Kelly Holmes Trust’s team of inspirational mentors, which includes Olympic, Commonwealth and World Champion athletes who followed through on their goals, overcame adversity and had the will to succeed in both sport and life.

The participants work in one-to-one and group sessions over eight months to plan and deliver a social action project which benefits their local community. Despite the challenges of the pandemic, we continued to deliver the programme. In December 2021 we launched our 2021/22 cohort of AQA Unlocking Potential for another 80 students. It is also the 10th anniversary of the programme and, for the first time since the start of the pandemic, we were able to hold the events in person. The programme has now engaged over 582 students since it began in 2011.

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OBJECTIVES, ACHIEVEMENTS AND PERFORMANCE (continued)

Delivering against our purpose (continued)

Investing in students (continued)

Investing in teachers

Investing in research and sharing our assessment expertise

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OBJECTIVES, ACHIEVEMENTS AND PERFORMANCE (continued)

Investing in our communities and our people

Delivering against our strategic objectives

We started working to our new strategy in 2021. The objectives we set and what we did to achieve them are shown below.

1. To be AQA in all we do

A distinct and compelling brand that those inside and outside the organisation can recognise as reflecting accurately who we are and aspire to be, what we do, and how and why we do it.

As part of our move to create a more future focused and agile culture that supports AQA’s future journey to become the UK’s pre-eminent educational assessment organisation, we developed and launched our new values. These values underpin all that we do and support our vision by shaping our culture, and reflecting our identify.

To make sure that customers really understand who we are and what we stand for we have been reviewing our corporate brand with a third-party agency. It will mirror the work done on AQA’s values so our people truly understand who we are and what we stand for. In early 2022 we launched a reputation campaign that draws upon the brand work completed to date and aims to reconnect with customers after a turbulent two years without exams.

Part of this work includes our environmental sustainability mission - we are committed to being a socially responsible employer and reducing our carbon footprint. We recognise we have our part to play in tackling global climate change, and we have pledged to reduce our greenhouse gas emissions IMR (intensity measurement ratio - tonnes of CO2e per £m revenue) by at least 40% by 2025/26. We have already achieved significant reductions, which we have outlined in the Environmental Policy section of this report.

We have also looked at how we can improve our equality, diversity and inclusion both within AQA for recruitment and talent, but also for our qualifications. Over the past year, we have carried out a comprehensive review of equality, diversity and inclusion across all our qualifications to look at how they can best represent the diversity of knowledge and human experience we value – as well as reflecting all the different communities of students we serve. We are continuing to work with stakeholders and have established an equality, diversity and inclusion expert group to consider representation in the curriculum and assessment – and to ensure that decisions are informed by people who represent the full diversity of society.

2. To shape the future

We are at the centre of debate and policy making on matters of assessment and related topics. We must use our knowledge, expertise and research to influence policy direction. By doing this we ensure the best decisions are made in service of students and teachers.

Our assessment expertise provides the foundation for everything we do at AQA, and ensures that we are able to continuously improve the quality and reliability of our assessments for the benefit of students and teachers. We share our research with other assessment experts and policymakers to ensure that they have a sound evidence base for considering what would be in the best interests of students. We also publish and present papers and participate in national and international education conferences.

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OBJECTIVES, ACHIEVEMENTS AND PERFORMANCE (continued)

In 2021 we continued to play a big role in the rapidly changing policy environment. We did our best to make sure students and teachers could (even with exams being cancelled) still realise their potential. This was done through agile and fastpaced responses to government proposals and by bringing together senior stakeholders from schools, politics, think tanks, and elsewhere in education.

To help shape the future we have launched AQi: an exciting new online hub for insight, data and new thinking on the future of assessment and qualifications. AQi’s mission is to inform, stimulate and provide a neutral platform for debate, bringing together different points of view on policy and practice, through blogs, reports and debates.

The first report to be published on AQi ‘What Next for GCSEs?’ included the results of a new survey of 1,001 young people in England from a range of backgrounds, who were asked about their experiences of taking GCSEs. The findings of the report warned against any ‘radical or disruptive change’ to the qualifications that would ‘undermine the value and benefits of GCSEs to millions of students.’ It concluded that GCSEs fulfil their main purpose of measuring attainment and enabling progress - and there is no compelling argument for radical or disruptive change. However, it also acknowledged that there is evidence that taking GCSEs does not provide the same value to all students – and it is important for policymakers to gain a greater understanding of why.

In March 2022 we published another report ‘Evaluating the EBacc’ (English Baccalaureate) on AQi where we asked ‘Is the EBacc the best stepping stone for progression to post-16 education and future careers?’ The report concluded that the EBacc could be reconfigured in various ways to provide a different – potentially improved - stepping stone to post16 education and training that keeps young people’s options open. The full report and findings are published on the AQi website.

3. To be closer to our customers

We work intimately alongside teachers and schools (as well as government and other stakeholders) to ensure we provide what they want and need, today and in the future.

Our first step in achieving this was to set up ‘Customer and Sales’, to bring together all customer facing teams into one business area. We appointed the new director and spent time making sure that we have the right structure and right people in place to deliver against this strategic objective.

We have introduced the Customer Steering Group which brings together colleagues from across Customer and Sales, Operations, Product, Marketing, Digital and External Communications to drive customer centricity, deliver the customer strategy and deliver improved customer experience. We have also established the Customer and Sales Performance Delivery Group to make sure we are working effectively together and identify and improve functional performance and the customer experience.

We have three strategic aims that we started work on in the financial year, and began delivering against. These are, understanding the customer , who they are and what they need; interacting with the customer , so we can focus on their respective interactions with us and how these can be improved; and supporting the customer , so we improve our support offer and how we can more effectively package these to better suit customer needs.

To support this work, we have also established a Product Board which supports the work that the Product Management team do to ensure the continuing commercial success of our qualifications. This means ensuring the qualifications and supporting services meet customer needs and expectations, deliver the right outcomes for students, are attractive when compared to our main competitors and remain regulatory compliant. The Product Portfolio Strategy sets out our ambitions in terms of defending and growing our market share by ensuring we continuously improve and develop new products and services. The Product Board provides a gates process that ensures we take the right commercial decisions on where to prioritise and invest, when seeking to achieve our overarching ambitions.

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OBJECTIVES, ACHIEVEMENTS AND PERFORMANCE (continued)

4. To diversify close to our core

We develop a wider range of assessments, and explore alternative markets for our assessment platforms and expertise, while staying close to our core.

This activity is to make sure we continue to deliver on our charitable purpose as it allows us to serve the full range of students, it also offers additional financial sustainability and additional revenue streams that can be reinvested into charitable activities.

To help deliver against this we appointed an Executive Director for Strategy and Business Development who joined the Executive Team of AQA in February 2021. This new area of the business is responsible for driving AQA's strategy, overseeing implementation and developing new strategic commercial opportunities, which include acquisitions, joint ventures, new markets, technology alliances and leading AQA’s response to domestic and international government tenders and bids.

A major step towards this was in January 2022, with the acquisition of AlphaPlus, a trusted and respected team of assessment specialists who will bring a wealth of expertise and experience to AQA. AlphaPlus will greatly extend the range and scale of what AQA can offer, both in the UK and around the world.

While our UK qualifications are taught in 48 countries around the world, we have developed a range of qualifications that is specifically designed to meet the needs of the international market for our joint venture with Oxford University Press, Oxford International AQA Examinations. These new international GCSEs, AS and A-levels are now available to students in more than 15 countries across the Middle East, South East Asia, and East Asia. The shared aim of the joint venture is to improve education internationally through excellence in teaching, learning and assessment.

5. To lead digital change

We use digital tools to achieve higher quality assessment by being more efficient, reliable and deliverable. The shift to a digital future is inevitable, we will work with schools, the regulator and government to ensure the transition positively benefits learners.

Last year our research team led an initial, small study to evaluate student and teacher experiences of taking an onscreen GCSE English assessment pilot. We delivered this pilot through Doublestruck, an educational technology company that’s part of the AQA Group. The findings from this study helped us to launch our larger scale on screen assessment pilot in January 2022.

In the year we were busy with preparation for the pilot, creating the project team, selecting technology partners, and recruiting schools to take part. Up to 2,500 students from 100 schools and colleges will take part in the trials in 2022 including pilots in GCSE English, maths and science. The trial will also include adaptive – or ‘smart’ – assessments that adjust in difficulty as students progress through the test.

We are also carrying out a full programme of research on our trials to inform the regulator and the wider industry and help make digital assessment a reality.

6. To be effective at all times

Develop and adopt best practices, in quality, people, technology, ways of working, building on enabling actions under previous strategies. This puts the organisation and our people in the best possible position to deliver for our customers.

Our strategy is founded on our ability to deliver results to students, reliably and consistently, right first time, on time. We have an on-going programme of adopting the best working practices and technology with highly trained people to ensure we have a fully integrated end to end process for the delivery of high stakes summative assessments. Of particular importance is the need to improve the experience AQA provides to its associates who play a critical role at every stage of our assessment delivery process. Our ambition is that AQA is easy to do business with and that having AQA on a CV is widely recognised as a marque of assessment expertise and professionalism.

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OBJECTIVES, ACHIEVEMENTS AND PERFORMANCE (continued)

A key piece of work to help us deliver against this is the Future Workplace programme, which is to make sure that AQA is a resilient and productive organisation through the implementation of people, space and digital improvements which also promote health, wellbeing and work life balance.

PLANS FOR FUTURE PERIODS

With over a century of qualifications expertise, we will continue to promote education for the public benefit and support teachers to bring out the best in every student.

We will deliver a full summer exam series in 2022, for the first time since 2019 – supporting schools and colleges with the return to exams and the adaptations that have been made to address lost learning due to the Coronavirus pandemic.

We will continue to make progress in all aspects of our strategy, as set out above.

We will continue to work closely with Ofqual on existing and new government policy and regulatory requirements and understand the impact on the range of products and services we provide.

We will also continue supporting and developing our international joint venture with Oxford University Press, Oxford International AQA Examinations Limited.

We have committed to another year of sponsoring teachers through the Prince’s Teaching Institute courses. We have also committed to continue funding the Unlocking Potential programme until at least 2026, and we have increased the number of places on the programme from 80 to 120.

SECTION 172(1) REPORTING

Section 172 of the Companies Act 2006 requires a director of a charity company limited by guarantee to act in the way they consider, in good faith, would be most likely to promote the success of the charity. In doing this, section 172 requires a director to think ahead to the likely consequences of any decision in the long term including:

The directors give careful consideration to the factors set out above. The stakeholders we consider are our customers, the students we support, the people who work with us, those people and organisations that help us deliver our key service, and our regulators. The Board of Trustees recognises that building strong relationships with our stakeholders will help us to deliver our strategy in line with our purpose and our values.

Stakeholder engagement

The Board of Trustees is committed to effective engagement with all of its stakeholders. For the majority of instances they delegate this responsibility to the CEO and the Executive Team as part of the Charity’s day-to-day business. Depending on the nature of the issue in question, the relevance of each stakeholder group may differ and, as such, as part of its engagement with stakeholders the Executive Team seeks to understand the priorities of each group.

The Board of Trustees receives updates from the Executive Team on issues concerning staff, customers, associates, students, suppliers, Ofqual, Government and the wider community. Some of the ways in which the Executive Team has engaged with stakeholders over the year are shown below.

Customers

Customers (schools and colleges) are at the heart of everything that AQA does. This year we have maintained high customer satisfaction scores by listening to our customers’ feedback. We have also been working to better understand our customers’ journeys with us which has informed our customer initiatives to help us improve all areas of our organisation, including our products, our processes, our website and other communications. We also develop and

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SECTION 172(1) REPORTING (continued)

deliver targeted customer propositions and campaigns, based on detailed research into our customer needs and clear insights, driving changes in customer behaviour, brand perception and purchasing decisions.

During the pandemic there was so much uncertainty for our customers, decisions were being made very quickly to adapt to the situation, and our customer support was more important than ever. We kept customers updated at all key milestones, and carefully explained what the decisions would mean for them and their students. Our communications were key in making sure schools and colleges understood exactly what they needed to do, and when to do it, so that students could still receive the qualifications they needed to progress to the next stage of their lives.

As part of this we supported our customers from late summer right through the autumn term and delivered on our responsibility as an education charity to support teachers and learners in realising their potential, by helping students to catch up and to close the inequality gap that had been forming through the pandemic. It was also designed to meet our business objectives of maintaining our market leading position, increasing positive customer sentiment, and supporting retention and future growth activities.

In 2021, we explained again to our customers that we would never want to profit from the challenging circumstances that led to the cancellation of exams, and we returned £48.5m to schools and colleges. This reflected the full net cost savings.

Associates

Our associates are academics, teachers, lecturers and subject matter experts and are incredibly important to us. Despite the cancellation of exams and the changes in the awarding of qualifications, they remained a key resource in helping us write and deliver our assessments. Our annual associate survey provides us with an understanding of how associates feel about working with us, gives us an indication about their future intention of working with us, and helps us to identify priority areas for improvement. This is supported by the associate experience group, which is a forum consisting of representatives from associate facing teams. The group aims to recognise and validate the output of the associate survey, and work to improve our associate experience. They also produce a monthly newsletter in collaboration with a small group of associates, which is distributed to our associate community.

To continually improve our relationships with our associates by influencing and aligning associate activity across AQA and ensuring they feel valued and engaged, we continued to run our Associate Action Group. This group is a two way forum consisting of AQA senior managers and associates, to listen to the voice of associates and engage our associate community with AQA plans and initiatives.

Students

Students are not technically AQA’s customers as they do not purchase our products; however we do recognise that they are the end-users and therefore they have an important interest in the organisation. We have had a successful student engagement strategy in place for several years, which continues to grow and allows AQA to engage with this community.

The two main aims of the strategy are to: make sure we do our best to respond proactively and reactively to reduce unhelpful stress and anxiety where possible; and to ensure accurate and timely information is available to students on a variety of platforms including social media. It sits alongside the social media strategy, and it complements AQA's aims of acting in the best interests of students and helping teachers support their students.

We set up our Student Advisory Group in 2019 and despite meetings being impacted by the pandemic, this has grown into a successful and important part of our student engagement. The students have worked with and advised AQA and the Board of Trustees on several different projects and provide useful insight into the school experience. Members help trustees and staff understand the realities of the school experience and how the organisation can make meaningful change to products and services.

Suppliers

The Executive Team recognises the key role suppliers play in ensuring AQA delivers a reliable service. Suppliers also help AQA to continually improve the products and services we offer. We have met and worked with key suppliers throughout the year. This gives us an opportunity to share our plans, gives suppliers an opportunity to share ideas for improvement, and also enables us both to hear directly from each other to discuss current challenges and to nurture our ongoing relationship. Our aim is to ensure that our relationships are mutually beneficial. The goodwill this generates helps to ensure that AQA receives priority treatment, be it service, quality, innovation or other commercial benefit.

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SECTION 172(1) REPORTING (continued)

To ensure continued performance, we review supplier performance against KPIs and agree on priorities and action to be taken when performance falls below expectations. We have obligations to fulfil and we encourage feedback from our key suppliers by both formal and informal channels. Details on our payment practices and performance are found at GOV.UK (www.gov.uk).

Employees

The Executive Team engages with colleagues across the whole of AQA and within their own business areas. A variety of channels are used, including the hub intranet, newsletters and emails as well as colleague briefings and Q&A sessions. Monthly briefings feature our strategic objectives and the progress we are making; and regular Staying Connected briefings help colleagues keep up to date with key activity such as delivering our summer exam series. The Executive Team also meets regularly with the senior leadership group to ensure they are up to date and also able to share feedback with the Executive Team.

Joint Council for Qualifications (JCQ)

JCQ is the membership organisation for AQA and other large UK qualification providers. It is funded by its members and acts in support of their interests. It enables its members to reach a common position on national issues and speak to its stakeholders with a collective voice. We regularly engage through a formal committee structure and through various working groups. In relation to the summer 2022 series, exam boards worked collaboratively through JCQ to implement a range of measures intended to support centres and learners in line with government policy expectations.

Regulators

AQA recognises the importance of open and continuous dialogue with regulators. Our Responsible Officer and members of the Research and Regulation team proactively and regularly meet with Ofqual, Qualifications Wales and CCEA, which regulate qualifications. As a result of the pandemic, in relation to the extraordinary learner and centre support arrangements put in place for summer 2022, our engagement with regulators occurred primarily through a formalised governance framework, established by regulators and the Department for Education.

Government

As an education charity, AQA works with a range of government and other stakeholders to inform both their work and the development of wider education policy. We regularly organise roundtables, seminars, provide briefings and consultation responses to support stakeholder understanding of qualifications, the components of high-quality assessment, as well as to share insights from AQA’s research and analysis. In particular, we have worked extremely closely with officials and ministers at Ofqual and the Department for Education to advise and support the delivery of the summer 2022 series, including the arrangements put in place to mitigate the impacts of the Coronavirus pandemic on learning. We launched AQi this year, an insights platform providing research and thought pieces to key education policy stakeholders.

Wider community

As a registered charity, AQA is committed to managing the wider social impact of its operations. Details of our Modern Slavery Statement and Standards and Policies are included on our website www.aqa.org.uk. We take our environmental responsibilities very seriously. Further details on this are contained on page 18.

Decision making

AQA recognises the importance of engaging with stakeholders to help inform our strategy and Board of Trustees decision making. Relevant stakeholder interests, including those of employees, suppliers, customers, regulators and others are considered when it makes decisions.

We define principal decisions as those that are material or of strategic importance to AQA, and also those that are significant to any of its key stakeholder groups. In making its decisions, the Board of Trustees considers the outcomes of relevant stakeholder engagement as well as the need to maintain a reputation for high standards of business conduct, and to consider the long term consequences of its decisions. The following provide examples of how stakeholder interests were considered in a principal decision made by the Board of Trustees.

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SECTION 172(1) REPORTING (continued)

Integration and rebranding of AQA Milton Keynes (formerly DRS Data Services Ltd)

The Board of Trustees took the decision to integrate a number of departments within AQA MK into AQA to provide consistency, accessibility and synergies of skills and resources across the Group. The trustees considered the following:

Payroll project

During the year the Board of Trustees approved the implementation of a new payroll system for both employees and associates. In reaching the decision, the following key points were considered and discussed:

Hybrid working

During the year the Board of Trustees supported the move to hybrid working for employees. In reaching its decision, the following were a key focus for the Board of Trustees:

FINANCIAL REVIEW

AQA is in a strong and stable financial position coming out of this unprecedented period, during which the operations, income and costs of AQA changed significantly. We continue to focus on our long term financial strategy and are continuing to build our reserves. We have continued to rebuild the level of reserves due to good market performance and good financial management.

These financial statements cover the year to 31 March 2022. The key highlights from the year are as follows;

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FINANCIAL REVIEW (continued)


is detailed as follows:
Fair value of scheme assets
Present value of defined benefit obligation
Net pension asset
The net pension asset is made up as follows:		 31 March 2022
31 March 2021
£000
£000
304,431
292,215
(278,718)
(289,749)
25,713
2,466
The net pension asset is made up as follows:
GMPF pension liability
Unfunded pension liability
AQA Pension Scheme asset
Net pension asset		 31 March 2022
31 March 2021
£000
£000
(13,516)
(21,463)
(3,323)
(3,616)
42,552
27,545
25,713
2,466

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FUNDRAISING

Given the nature of the Charity, there is no external fundraising, and no use of professional fundraisers or commercial participators. As such, the requirements of the Charities Act 2011 in relation to statements on fundraising are not deemed to be applicable. The expenditure heading “Expenditure on raising funds” in the Consolidated Statement of Financial Activities relates solely to investment management costs.

ENVIRONMENTAL POLICY

The Companies Act 2006 requires large charities to include Greenhouse Gas (GHG) emissions and energy consumption disclosures in their directors’ report. Charities that consume more than 40,000kWh of energy annually must:

We take our environmental responsibilities very seriously. We recognise our part to play in contributing to the resolution of global and local environmental issues by reducing our impact on the environment and by taking a leading role in promoting environmental best practice. During the year, we have achieved a 74% reduction in our emissions per £m of sales revenue compared to our baseline year 2018/19.

We have continued to initiate improvements and to promote our environmental message throughout the organisation. Achievements have been accelerated due to the global Coronavirus pandemic and introduction of hybrid working resulting in reduced building occupancy and business travel. Although the levels of GHG reduction are not sustainable upon full return to operational norms, we have committed to significant changes to our operating model to enhance future GHG reductions. In the past 12 months our main achievements are:

*Reductions compared to GHG reporting baseline year 2018/19

As part of the Sustainability Strategy further improvements are underway, which will include:

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ENVIRONMENTAL POLICY (continued)

Emissions for Scope 1 (direct) and scope 2-3 (indirect) sources are continually monitored at source (i.e. energy consumption and waste production) as well estimated (i.e. fuel consumption through transport) applying the relevant conversion factors.

The annual quantity of emissions in tonnes of carbon dioxide for the Group for the year was 404.75 tonne CO2e, which is a reduction of 466.18 tonnes CO2e from the prior year. This equates to 2.74 tonnes per £m sales revenue, which is an 54% reduction compared to the prior year and 74% reduction compared to the 2018/19 baseline year. The emissions in 2018/19 baseline year were 1,884.27 tonnes CO2e which equates to 10.45 tonnes per £m sales.

The total Group energy consumption for the year was:

The total Group transport fuel use for the year was:

Our overall target to reduce our greenhouse gas emissions by 40% between 2018-2019 to 2025-2026 has been exceeded. A revised emissions target has been set at 60% or 4 tonnes CO2e for £m of revenue between 2018-2019 to 2025-2026, which factors in our return to full operational norms.

The methodologies used to collect and assess emissions data varied throughout the inventory. The primary methodology used was multiplying GHG activity data by appropriate GHG emission factors. All methodologies used were selected based on their ability to provide accurate and consistent results. The use of activity data and emission factors was feasible due to the availability of both accurate activity data for the majority of sources and standard emission factors from Department for Environment 2021 (DEFRA) and the Greenhouse Gas Protocol Initiative (where DEFRA factors are not supplied).

RISK MANAGEMENT

Risk management at AQA is underpinned by an established risk policy and process including the setting of Risk Appetite which is reviewed annually by the Executive Team, the Audit, Risk and Compliance Committee (ARCC) and ultimately approved by the Board of Trustees.

Strategic and operational risks are identified in the context of our overall objectives and defined risk appetite. Our overall risk appetite is generally low, reflecting the nature of what we are delivering for students, and the highly regulated environment in which exam boards operate.

Operational risks are regularly reviewed by department managers, with any significant operational risks escalated to the Executive Team. On a monthly basis, the Executive Team reviews the strategic risk register and top operational risks. A risk report is presented to each meeting of the ARCC to ensure effective oversight of risk management activities and the overall AQA risk profile. Regular updates are provided to the Board of Trustees by the ARCC Chair.

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RISK MANAGEMENT (continued)

Our Group Risk Manager facilitates risk management activities across the business, ensuring that the process is communicated and managed effectively. Appropriate training mechanisms are in place, with risk awareness and guidance provided to managers and their teams to promote the effectiveness of our risk management framework.

Our outsourced internal auditors (KPMG during 2012/22) conduct a risk-based assurance programme of work throughout the year. The audit programme focuses on areas assessed as being at significant internal risk, as identified by the Executive Team and by Trustees. The ARCC approves the annual internal audit plan and reviews the individual reports and recommendations. The output provides assurance across the business areas within AQA and where weaknesses in controls are identified, actions are taken to address these. The ARCC monitors progress on any agreed actions from internal audit reviews to ensure these are addressed appropriately and in a timely manner.

Further, the ARCC reviews our internal controls and procedures (financial and non-financial) and considers the results of our audit reviews. It also approves the Regulatory Compliance team’s annual plan for review activity, receives and challenges reports on compliance, and oversees the process for producing the annual Statement of Compliance to the independent exam regulators. The Committee reports directly to the Board of Trustees.

The following is a summary of the main risks facing AQA, which are represented in our strategic risk register and are kept under review as part of the established process of risk management.

As well as ensuring our systems are robust and efficient, this will enable us to continuously improve our processes, respond to customer needs and provide a platform on which we can build the next generation of technology-enabled assessments.

FINANCIAL RISK MANAGEMENT

Financial risks are identified by the Executive Team and all managers as part of the annual business planning process including the setting of Risk Appetite, and are continually updated and monitored throughout the year. Financial performance is reported to the Finance Committee for further scrutiny as delegated by the Board of Trustees. Key areas of risk that impact the Group’s operations include managing working capital and long-term funding required to support its investment plans and pension commitments and liabilities.

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FINANCIAL RISK MANAGEMENT (continued)

The Group’s risk and financial management framework has the primary aim of protecting it from events that hinder achieving performance objectives and protects against reputational impact and regulatory scrutiny and potential fines. The objectives are to ensure sufficient working capital exists and risk is managed at a Group level and a business unit level.

Exposure to price, credit, liquidity and cash flow risk

Price risk - In normal circumstances, the risk is considered to be low based on the business model for the delivery of regulated assessments in the UK market. As well as the business price risk, price risk also arises on financial instruments because of changes in listed investment prices. Listed investments with a fair value of £49,685,000 are exposed to price risk but this exposure is within the Group's risk appetite.

Credit risk - Group policies are aimed at minimising such losses and that credit terms are only granted to customers who demonstrate an appropriate payment history and satisfy creditworthiness procedures. Details of the Group's debtors are shown in note 17 to the financial statements.

Liquidity risk - The Group mitigates liquidity risk by managing cash generated by its operations and applying cash collection targets throughout the Group.

Cash flow risk - The Group mitigates this risk by preparing and monitoring cash flow forecasts monthly to ensure that funds are available to meet our liabilities as they fall due.

SIGNIFICANT EVENTS

The Coronavirus pandemic has had a significant impact on the AQA Group. Our Business Continuity Planning mechanisms were used throughout 2020/21 and the first half of 2021/22, successfully ensuring continuity of operations throughout the pandemic as well as focus on employee wellbeing.

The cancellation of the summer 2021 exam series, announced by the Department for Education in January 2021, meant substantial change to how we awarded grades and meant we had to design, develop, and deliver a new system to award qualifications. This included additional development to our new platform Centre Services, to collect grades and to process any appeals we received.

We provided additional support to schools and colleges who had to produce grades for their students, including an optional support package of materials, with questions and mark schemes and example materials so they could benchmark their students. We gave guidance on how to collate and use evidence to support the grades as part of the quality assurance process. We also had to respond to further policy changes that required technology and operational updates. Despite all the challenges, we delivered accurately and on time.

To ensure consistency between boards and centres we worked closely with other exam boards to make sure the requirements for internal quality assurance and arrangements for external quality assurance were consistent and robust. Schools’ and colleges’ internal quality assurance arrangements needed to include consideration of results in previous years as a guide to help check that judgements are not unduly harsh or lenient. Schools and colleges were required to document the process they followed to ensure the judgements being made were fair, consistent, evidence-based and minimised the risk of bias and discrimination. As well as good practice, the documentation was required as part of the quality control assurance we were required to undertake.

In March 2021, we launched our new Centre Services system which is part of a broader programme to replace our current exam processing system. The new system is more secure, reliable and easier for exams officers and teachers to use. It is also more flexible and can adapt to future needs. The new system was used to provide support materials and to collect students’ grades for the summer 2021 series.

To support teaching and learning while schools were closed due to the pandemic, we offered some of our online teacher support material free of charge through our Exampro online learning platforms, and we also ran a series of free events to support teachers in the 2020/21 academic year. We continued to support teachers and students as they prepared to for the special autumn 2021 series, and introduced a support programme to help build core skills, identify gaps in learning and re-engage students when they returned to the classroom. With many students sitting national exams for

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AQA Education Directors’ and Trustees’ Report including Strategic Report

SIGNIFICANT EVENTS (continued)

the first time we knew that they would need more support than usual, so to help teachers better support their students we provided free training to support student exam preparation. This also included, for some subjects, a series of unseen papers through Exampro to help teachers prepare their students for exams.

Our operations have continued throughout the pandemic with almost all staff working from home up until autumn 2021. This required significant input from our IT team. Throughout this period, the wellbeing of our staff has been a key priority. Regular communication, guidance and support about working from home, and new initiatives that focus on mental and physical wellbeing have been introduced.

Where colleagues have not been able to do their jobs from home, or have really struggled with home working, we have supported them in returning safely to the office. Since autumn 2021, we have moved to a hybrid working arrangement for most staff, with a combination of office- and home-based working.

RESERVES POLICY

The target level of reserves enables us to achieve our primary charitable purpose of advancing education for the benefit of the public. To continue to provide high quality qualifications, assessment, and support to schools and colleges, we must invest in strategic areas including new products and systems. Some of these incur upfront expenditure that is not recovered for several years.

At the end of the year, we had funds of £156,169,000. They are held for a variety of purposes, to ensure that the Charity can operate as a going concern in the future and also fulfil its legal obligations. The funds are summarised below:

The remainder of our funds are our general funds:

When setting our free reserves target range we follow Charity Commission’s guidance and consider our cash flow requirements and perform an assessment of the risks and obligations facing the organisation. Based on our assessment, our policy has been to maintain free reserves in the range of £75 million to £90 million. We continue to review the free reserves target, to ensure that the free reserves policy continues to reflect changes in the organisation.

GOING CONCERN

The Board of Trustees has reviewed the financial position, considering the level of reserves and cash, and the system of financial control and risk management. They have undertaken sensitivity analysis and considered the potential impact of the Ukraine crisis and high inflation in the current economic client. Accordingly, they have a reasonable expectation that the Charity and the Group have adequate resources to continue in operational existence for the foreseeable future.

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AQA Education Directors’ and Trustees’ Report including Strategic Report

GOING CONCERN (continued)

As a consequence, these financial statements are prepared on the going concern basis. The trustees consider that there are no material uncertainties about the Group’s ability to continue as a going concern.

INVESTMENT POWERS AND POLICY

AQA’s investments are predominately held in UK and overseas equities, bonds and multi asset funds. The Investment Policy was reviewed during the year and is reviewed at least on a triennial basis.

We seek to adopt a well-diversified investment approach that balances potential return with appropriate risk. At the same time the Trustees are aware that some level of volatility is inevitable with a good investment strategy and endeavour to spread the risk across different asset classes. The assets of the Charity are to be invested with a mandate to achieve a return of 3.0% per annum above CPI. AQA’s Investment Advisor is Cazenove Capital Management. We agreed in the year to transition our long-term reserves to Cazenove’s Responsible Multi-Asset Fund. This is a fund designed to enhance our ESG (Environmental, Social and Governance) standards.

The Trustees encourage their Investment Advisor to exercise, where feasible, the voting rights attached to the Charity's investments.

The Investment Advisor has regard to each investee company's approach to corporate governance and ethical and environmental issues when assessing the long-term financial merits of investing in each company's shares, and encourages companies to adhere to the UK Corporate Governance Code or equivalent other governance code. The Trustees believe that this approach to socially responsible investment is in the best financial interests of the Charity and does not place additional constraints on the Investment Advisor’s freedom to choose investments. Some of the investments are held in pooled funds, some of which are index tracking funds and not actively managed and therefore the Investment Advisors have little scope to influence the investment direction of such funds. The Finance Committee may occasionally advise the Investment Advisor of entities or industries which they consider are not aligned with the objects of the Charity and therefore do not consider appropriate to invest in.

CHARITABLE ASSETS

The Trustees are of the opinion that the Charity’s assets are available and adequate to fulfil its obligations.

GOVERNANCE

Good governance is fundamental to our success as a charity. With this in place it helps us to achieve our objectives and enables our people to use their skills to their best effect. It also ensures we are compliant with relevant legislation. Having good governance allows us to review any risks we are facing in ways that support a productive culture.

The Charity Code of Governance – what it means to us

AQA takes its governance responsibilities seriously and, as a large charity, aims to have a governance framework that is fit for purpose, compliant and efficient. In 2017, the Charity Code of Governance (the Code) was launched, with a recommendation that charities review the extent to which they apply the Code and explain any aspects of the Code they are not applying. In our review we carried out a detailed examination of each element of the Code:

In this section you can find out how we are applying the Charity Code of Governance across our work.

Organisational purpose

AQA’s organisational purpose is our public benefit which is to help students and teachers to realise their potential.

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GOVERNANCE (continued)

Everyone has the potential to achieve, so we make sure that our qualifications give all students no matter their background or ability; the opportunity to show what they can do and progress to the next stage of their lives.

We have over a century of assessment expertise dating back to 1903, when our predecessor boards were founded by five leading universities. These public exam boards came into existence to provide an opportunity for young people from a range of backgrounds to access education. This commitment to social mobility remains at the heart of AQA’s charitable purpose. We are committed to continually improving the content and quality of our qualifications, to make sure they remain trusted by all who rely on them.

We provide high-quality assessments that are accessible, fair, reliable, and support students in their educational journey. Students come first in everything we do, and we know that they have unique and valuable insights, as well as recent, first-hand experience of exams - and we want to listen. Our Student Advisory Group, initially launched in October 2019, has gone from strength to strength and is now in its third year . Members’ views and perspectives have been particularly useful in helping the organisation to understand the impact of the Coronavirus pandemic on students, and how AQA can develop resources to help this cohort as best as possible. We are also seeking their views to inform current and new areas of work, such as piloting new forms of assessment.

Our Product Board has now been operational for two years and has had a considerable impact on developing products and services for our customers, teachers and students. Chaired by the Chief Operating Officer, the Board brings together expertise from across the organisation in order to ensure customers’ needs are considered in the round and new developments are identified and assessed in a timely fashion.

Leadership

AQA is governed by the Board of Trustees. Our Trustees are volunteers with distinguished careers in education and a wide variety of other fields, who want to give time to supporting AQA’s work for teachers, students and the field of education. Our Trustees include in their number our chief executive. They are aware of their legal responsibilities and take great care in their decision making and ensuring the organisation is operating to a high standard.

Our Trustees are responsible for our overall strategy, policy, educational initiatives and development, and for steering AQA to fulfil its educational and charitable objectives. They are regularly updated on this work throughout the year.

The Executive Team is made up of nine individuals and led by the chief executive. They are AQA’s senior managers and responsible for the day-to-day leadership and running of AQA, and the execution of its strategy and policies. In 2021 we welcomed a new Director of People, Isabelle Perrett.

Our Board of Trustees and Executive Team, with colleagues, have been instrumental in developing and demonstrating the AQA values and behaviours that enable the organisation and its people to achieve their potential.

Integrity

Maintaining our integrity is critical to how AQA operates; it is about doing what is right, and being open and honest. We aim always to uphold our the values and behaviours we have set. Our Board of Trustees scrutinise our decision making to ensure we adhere to this, as well as the requirements set by regulators such as the Charity Commission and Ofqual.

AQA operates a conflict of interest policy for all employees, Trustees and independent members, subcontractors and all third parties who work with us and act on our behalf. Conflicts of interest are collated at the start of each exam series. Declarations of interest are made and recorded at the start of every formal meeting.

We ensure that we report any issues or problems in a timely and transparent way as needed (whether to Ofqual or the Charity Commission) and work hard to put things right for our stakeholders.

We have a Modern Slavery Statement which is available on our website. We are committed to making ethical choices in our supply chain and we conduct full due diligence checks when onboarding new suppliers. Key strategic and critical suppliers are monitored on a continual basis for commercial, financial and supply chain risk, including compliance with regulatory, policy and legal requirements such as the Modern Slavery Act 2015.

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AQA Education Directors’ and Trustees’ Report including Strategic Report

GOVERNANCE (continued)

Decision making, risk and control

AQA strives to make decisions that are evidence based and informed by a good understanding of risk. Effective risk management is key to successfully delivering our strategy and developing AQA for a sustainable future. We have an organisation-wide risk management approach which identifies our key strategic and operational risks and ensures they are effectively managed through clear accountability and escalation when needed. We have a centrally held range of policies and procedures to help ensure consistent control measures are put in place to manage our work efficiently.

Board effectiveness

Our Board of Trustees meets five times a year, which continued remotely throughout the pandemic. Each meeting agenda includes progress reports on major programmes, critical activities and strategy. As mentioned above, the chief executive is also a Trustee and member of the Board. Other Executive Team members may be invited to attend and present at the meetings but do not have a vote in any decisions. In early 2022 we commissioned an external organisation to conduct a review of the Board’s effectiveness. The final report commented positively on the Board structure, engagement and working relationships, and made some recommendations for further enhancements.

Equality, diversity and inclusion

We are continuing to enact our commitment to build an inclusive place to work, that allows under-represented voices to be heard, and values each individual. We recognise that this helps ensure that our strategic thinking has rigour, borne out of challenge and divergence of thought.

Work is underway on a number of initiatives as part of our strategy to continue to make AQA a great place to work. We are looking at creative ways to attract and develop a more diverse workforce and build a culture that encourages inclusion and removes barriers to developing individuals’ talents. We have had successful launches of staff networks to embrace the diversity of our organisation:

Promoting wellbeing and good mental health has continued to be a focus for the organisation. Many colleagues have completed a Mental Health First Aid training course which aims to have mental health support on site at all times.

AQA also engages with the ‘This is Me’ national campaign during Mental Health Awareness week, in which colleagues share their particular mental health experiences with the aim of ending the stigma of mental health conditions in any workplace. The organisation uses many strategies to promote better wellbeing across the spectrums of mental and physical health, social and environmental matters. Each office has at least one Wellbeing Warrior and events are frequently organised, including an annual Well Fayre to help all employees to learn more and improve their wellbeing.

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AQA Education Directors’ and Trustees’ Report including Strategic Report

GOVERNANCE (continued)

Openness and accountability

AQA strives to be open in its charitable work and is accountable for its actions. Each year we share our work and the progress we have made in the Annual Report.

We recognise the value and importance of having engaged and enquiring employees. We know high levels of engagement have a positive influence on the performance of our teams as they engage with the teachers, students and others in the field of education. This has been even more important during the ongoing effects of the Coronavirus pandemic.

During the year we have held a wide range of staff engagement sessions for colleagues to hear updates from the Executive Team and others on how organisational and strategic programmes are progressing.

We also encourage openness with all our colleagues, and AQA associates and examiners, through our ‘Speak Out’ facility. This is designed to encourage people (anonymously if they prefer) to give feedback or raise an issue, including anything that does not ‘feel right’. We have ‘Speak Out’ representatives that can be approached directly, a webpage for submitting anonymous comments, and a designated email mailbox. This scheme is operated alongside a formal Whistleblowing process.

Corporately, we engage fully with our regulators to report incidents when they occur, and to update the regulators on the progress of putting these right. We have a dedicated Incident Management process to examine any incidents that occur in day-to-day business, with decision making functions sitting independently from operational areas. All colleagues involved work together to ensure that our focus remains on our stakeholders and getting the best results for them.

AQA has a designated Safeguarding Lead who sits within our Exams Integrity Team and holds responsibility for all safeguarding activity across the organisation. A Safeguarding Strategy is regularly updated and presented to our trustees for approval; this strategy shapes the organisation’s response to safeguarding issues, including training for staff, associates and examiners who may undertake visits to schools, training on dealing with safeguarding issues presented in students’ exam responses, and being responsible for the organisation’s safeguarding policy and procedures.

POLICY FOR EQUALITY AND PEOPLE WITH DISABILITIES

We have an Equal Opportunities Policy in place and welcome applications for employment from appropriately qualified individuals regardless of race, gender, religion/belief, sexual orientation or disability. Where existing employees become disabled, our policy is to provide continued employment, training and occupational assistance where needed.

EVENTS AFTER THE REPORTING DATE

The directors have not identified any adjusting events. FRS 102 requires, for non-adjusting events, disclosure of the nature of the event, and either an estimate of its financial effect or a statement that such an estimate cannot be made. AQA has acquired companies and arranged loan facilities after the reporting date which are disclosed in Note 29.

ADDITIONAL INFORMATION

The AQA website contains up-to-date information on qualification specifications, exam timetables, events, teacher support, examiner recruitment, publications and other areas of the organisation’s activities. The website address is aqa.org.uk.

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AQA Education Directors’ and Trustees’ Report including Strategic Report

STATEMENT OF TRUSTEES’ RESPONSIBILITIES

The trustees, who are also directors of AQA Education (“Charitable Company”) for the purposes of company law, are responsible for preparing the Directors’ and Trustees’ Report (including the Strategic Report) and the financial statements in accordance with applicable law and regulation.

Company law requires the Trustees to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 Group and Charitable Company and of the incoming resources and application of resources, including the income and expenditure, of the Group and Charitable Company for that period.

In preparing these financial statements, the trustees are required to:

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 the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Charitable Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Financial statements are published on the Charitable Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Charitable Company’s website is the responsibility of the Trustees. The Trustees’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

Statement of disclosure of information to auditors

In so far as the Trustees are aware:

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AQA Education Directors’ and Trustees’ Report including Strategic Report

___________

APPOINTMENT OF AUDITORS

A resolution for the appointment of BDO LLP will be proposed at the Annual General Meeting for the ensuing year. This report was approved by the Board of Trustees on 14 December 2022 and signed on its behalf by

Mr J van Wijngaarden Director and Chair of the Board of Trustees

Mr N Kiyani Director and Trustee

Mr C Hughes Director and Trustee

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AQA Education Independent auditors’ report to the members of AQA Education

___________

Opinion on the financial statements

In our opinion, the financial statements:

We have audited the financial statements of AQA Education (“the Parent Charitable Company”) and its subsidiaries (“the Group”) for the year ended 31 March 2022 which comprise the consolidated statement of financial activities, the consolidated and charitable parent statement of financial position, the consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Charitable Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions related to going concern

In auditing the financial statements, we have concluded that the Trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Charitable Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Trustees with respect to going concern are described in the relevant sections of this report.

Other information

The Trustees are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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AQA Education

Independent auditors’ report to the members of AQA Education (continued)

Other Companies Act 2006 reporting

In our opinion, based on the work undertaken in the course of the audit:

In the light of the knowledge and understanding of the Group and the Parent Charitable Company and its environment obtained in the course of the audit, we have not identified material misstatement in the Strategic report or the Trustees’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of Trustees

As explained more fully in the Statement of Trustees’ Responsibilities, the Trustees (who are also the directors of the charitable company 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, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Trustees are responsible for assessing the Group’s and the Parent Charitable Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the Group or the Parent Charitable Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditor under the Companies Act 2006 and report in accordance with the Act and relevant regulations made or having effect thereunder.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding and accumulated knowledge of the Group and Parent Charitable Company, and the sector in which they operate, we considered the risk of acts by the Group or Parent Charitable Company which were contrary to applicable laws and regulations, including fraud and whether such actions or non-compliance might have a material effect on the financial statements. We considered the significant laws and regulations to be United Kingdom Generally Accepted Accounting Practice (including FRS102 and the Charities Statement of Recommended Practice) and the UK Companies Act 2006. All audit team members were briefed to ensure they were aware of any relevant regulations in relation to their work, areas of potential non-compliance and fraud risks.

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AQA Education Independent auditors’ report to the members of AQA Education (continued)

___________

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of an override of controls), and determined that the principal risks were related to posting inappropriate journal entries, management bias in accounting estimates and improper incoming resources recognition.

Our audit procedures in response to the above included, but were not limited to:

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities for the audit of the financial statements is located at the Financial Reporting Council’s (“FRC’s”) website at:

https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

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 2006. 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 the Charitable Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Gareth M Jones (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor Manchester, UK

21 December 2022

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

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AQA Education Consolidated Statement of Financial Activities year ended 31 March 2022

Note
Income:
Income from charitable activities:
Educational services
4
Income from other trading activities:
Digital services
4
Investment income
5
Total income
Expenditure:
Expenditure on charitable activities:
Educational services
6
Expenditure on other trading
activities:
Digital services
6
Expenditure on raising funds:
Investment management costs
5
Share of loss in joint venture
13
Total expenditure
Net income / (expenditure) before
investment gains / (losses)
Gains on investment assets
Net realised gains on investments
15
Net movement on unrealised gains
15
Net income / (expenditure) before
other recognised gains / (losses)
Other recognised gains / (losses)
Actuarial gains / (losses) on defined
benefit pension schemes
27
Net income / (expenditure) and net
movement in funds for the year
Reconciliation of funds
Total funds brought forward
Total funds carried forward
22		 Year ended 31 March 2022
Year ended 31 March 2021
Unrestricted funds
Unrestricted funds
£000
£000
£000
£000
£000
£000
Continuing
operations
Discontinued
operations
Total
Continuing
operations
Discontinued
operations
Total
(Restated)
(Restated)
143,603
-
143,603
133,119
-
133,119
3,278
-
3,278
697
821
1,518
1,142
-
1,142
1,208
-
1,208		 Year ended 31 March 2022
Year ended 31 March 2021
Unrestricted funds
Unrestricted funds
£000
£000
£000
£000
£000
£000
Continuing
operations
Discontinued
operations
Total
Continuing
operations
Discontinued
operations
Total
(Restated)
(Restated)
143,603
-
143,603
133,119
-
133,119
3,278
-
3,278
697
821
1,518
1,142
-
1,142
1,208
-
1,208		 Year ended 31 March 2022
Year ended 31 March 2021
Unrestricted funds
Unrestricted funds
£000
£000
£000
£000
£000
£000
Continuing
operations
Discontinued
operations
Total
Continuing
operations
Discontinued
operations
Total
(Restated)
(Restated)
143,603
-
143,603
133,119
-
133,119
3,278
-
3,278
697
821
1,518
1,142
-
1,142
1,208
-
1,208
148,023
-		 148,023
135,024
821		 135,845
126,080
-
3,336
-
150
-
350
-		 126,080
129,468
-
3,336
1,655
893
150
130
-
350
827
-		 129,468
2,548
130
827
129,916
-		 129,916
132,080
893		 132,973
18,107
-
1,586
-
758
-		 18,107
2,944
(72)
1,586
234
-
758
6,655
-		 2,872
234
6,655
20,451
-
23,376
-		 20,451
9,833
(72)

23,376
(17,288)
-		 9,761
(17,288)
43,827
-		 43,827
(7,455)
(72)
112,342
156,169		 (7,527)
119,869
112,342

31

AQA Education Consolidated Statement of Financial Activities (continued) year ended 31 March 2022

___________

The Consolidated Statement of Financial Activities incorporates the Summary Income and Expenditure Account. Income is derived from both continuing and discontinued operations. Net income/(expenditure) and net movement in funds represents the surplus/(deficit) for the year for Companies Act 2006 purposes and includes a surplus of £50,302,000 relating to the parent ( 2021: deficit £3,169,000).

The notes on pages 36 to 76 form part of these financial statements.

32

AQA Education Consolidated and Charitable Parent Statement of Financial Position as at 31 March 2022

Fixed Assets
Note
Intangible assets
11
Tangible assets
12
Investment in subsidiary undertakings
13
Other fixed asset investments
15
Total Fixed Assets
Current Assets
Stocks and work in progress
16
Debtors
17
Investments
18
Cash at bank and in hand
Total Current Assets
Liabilities
Creditors: Amounts falling due within one year
19
Net Current Assets
Total Assets less Current Liabilities
Provisions for Liabilities and Charges
21
Net Assets Excluding Pension
Asset and Liability
Defined benefit pension scheme asset
27
Defined benefit pension scheme liability
27
Total Net Assets
The Funds for the Group and Charity:
Unrestricted Funds
Designated funds
General funds
Total Funds
22		 Group
Charity
Group
Charity
2022
2022
2021
2021
£000
£000
£000
£000
40,491
30,638
39,594
34,557
17,534
8,951
16,170
9,080
-
24,432
-
13,134
49,685
49,685
42,758
42,758
107,710
113,706
98,522
99,529
2,232
817
2,065
925
155,796
165,654
65,686
77,596
821
821
2,821
2,821
69,098
65,722
109,697
106,833
227,947
233,014
180,269
188,175
(196,919)
(190,234)
(166,185)
(163,109)
31,028
42,780
14,084
25,066
138,738
156,486
112,606
124,595
(8,282)
(7,329)
(2,730)
(2,493)
130,456
149,157
109,876
122,102
42,552
42,552
27,545
27.545
(16,839)
(16,839)
(25,079)
(25,079)
156,169
174,870
112,342
124,568
4,501
4,501
2,500
2,500
151,668
170,369
109,842
122,068
156,169
174,870
112,342
124,568

33

AQA Education Consolidated Statement of Financial Position (continued) as at 31 March 2022

The notes on pages 36 to 76 form part of these financial statements. The company registration number is 3644723. The financial statements on pages 31 to 76 were approved and authorised for issue by the Board of Trustees on 14 December 2022 and signed on its behalf by:

Mr J van Wijngaarden Director and Chair of the Board of Trustees Mr N Kiyani Director and Trustee Mr C Hughes Director and Trustee

34

AQA Education Consolidated Statement of Cash Flows for the year ended 31 March 2022

___________

Note
Cash flows from operating activities:
Net cash (used in) / generated from operations
23
Taxation received
Net cash (used in) / generated from operating activities
Cash flows from investing activities:
Investment income
5
Purchase of tangible fixed assets
12
Purchase of intangible fixed assets
11
Purchase of subsidiaries, net of cash acquired
14
Purchase of fixed assets investments
15
Sale of current investments
Proceeds from sale of fixed asset investments
15
Investment in joint venture
13
(Increase) in cash held with fund managers
15
Net cash (used in) / provided from investing activities
(Decrease) / increase in cash and cash equivalents in the year
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year		 Group
Group
2022
2021
£000
£000
(21,000)
20,044
185
197
(20,815)
20,241
714
710
(2,304)
(4,649)
(9,746)
(15,086)
(5,316)
-
(16,050)
(19,133)
2,000
26,988
14,646
19,450
(549)
(600)
(3,179)
(767)
(19,784)
6,913
(40,599)
27,154
109,697
82,543
69,098
109,697

The notes on pages 36 to 76 form part of these financial statements.

35

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

1 General information

AQA Education (AQA) is a company limited by guarantee (registered company number 3644723 in England and Wales) and a registered charity (registered charity number 1073334 in England and Wales). It is incorporated under the Memorandum and Articles of Association and is incorporated and domiciled in England. The address of its registered office is Devas Street, Manchester, M15 6EX.

In the event of the Company being wound up, every Trustee undertakes to contribute to the assets of the company while such a person is a Trustee, or within one year afterwards, for payment of debts and liabilities of the company contracted before that Trustee ceases to be a trustee, and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding one pound.

2 Statement of compliance

These financial statements have been prepared in accordance with the Statement of Recommended Practice “Accounting and Reporting by Charities” (Charities SORP (FRS 102)) applicable to charities preparing their financial statements in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective January 2019), Companies Act 2006 and the Charities Act 2011.

AQA meets the definition of a public benefit entity under FRS 102.

3 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

These financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the recognition of certain financial assets and liabilities measured at fair value.

The Charity has adapted the Companies Act 2006 formats to reflect the Charities SORP (FRS 102) and the special nature of the Charity’s activities.

The Charity has taken advantage of the exemption in section 408 of the Companies Act 2006 from presenting its individual Statement of Financial Activities. They have also taken advantage of the exemption in paragraph 1.12b of FRS 102 from preparing an individual Statement of Cash Flows, on the basis that it is a qualifying entity and the Consolidated Statement of Cash Flows, included in these financial statements, includes the Charity’s cash flows.

(b) Going concern

The Charity’s business activities, its current financial position and factors likely to affect its future development are set out in the Strategic Report. The Charity has in place healthy liquidity which provides adequate resources to finance committed reinvestment and educational programmes, along with the Charity’s day to day operations. The Charity also has a long-term business plan which shows that it is able to service any of its debt facilities.

The Board of Trustees have assessed the future funding requirements of the Group and the Charity and compared it to the level of cash resources. The assessment included a review of the financial forecasts and the preparation of sensitivity analysis on the key factors which could affect future cash flow.

Having undertaken the review, the Board of Trustees has a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements. For this reason, it continues to adopt the going concern basis in the financial statements.

36

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(b) Going concern (continued)

The Trustees consider that there are no material uncertainties about the Group’s ability to continue as a going concern .

(c) Basis of consolidation

The Group consolidated financial statements include the financial statements of AQA and its subsidiary undertakings: AQA Milton Keynes Limited, Doublestruck Limited and AlphaPlus Consultancy Limited. AlphaPlus Consultancy Limited has a year end of 30 September, therefore consolidated figures only include the period from acquisition to 31 March.

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.

The net income and net movement in funds for the year for the Charity were £50,302,000 surplus (2021: £3,169,000 deficit) and total funds at the year-end were £174,870,000 (2021: £124,568,000).

The Group and the Charity have taken advantage of the transition exemption under paragraph 35.10(f) FRS 102 in respect of measurement of investments in subsidiaries and the joint venture on the date of transition to FRS 102 (1 October 2014) and continues to measure investment at their cost.

(i) Subsidiaries

A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Investments in subsidiary undertakings are stated at cost, including those costs associated with the acquisitions, less provision for any impairment in value. Where events or changes in circumstances indicate that the carrying amount of an investment may not be recoverable, an impairment review is performed. An impairment write down is recognised to the extent that the carrying amount of the asset exceeds the higher of the fair value less costs to sell and value in use.

Where a subsidiary has different accounting policies to the Group, adjustments are made to those subsidiary financial statements to apply the Group’s accounting policies when preparing the consolidated financial statements.

Any subsidiary undertakings sold or acquired during the year are included up to, or from, the dates of change of control. Where control of a subsidiary is lost, the gain or loss is recognised in the consolidated statement of financial activities.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation. All of the subsidiaries have a year end of 31 March with the exception of AlphaPlus Consultancy Limited with a year end of 30 September.

(ii) Joint ventures

Investments in joint arrangements can take the form of jointly controlled operations, jointly controlled assets, or jointly controlled entities. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. AQA has a joint venture classified as a jointly controlled entity.

37

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(ii) Joint ventures (continued)

AQA has invested in a jointly controlled entity (Oxford International AQA Examinations Limited). AQA owns 50% of the issued share capital. A joint venture agreement has been signed by both parties.

Interests in jointly controlled entities are accounted for using the equity method (mentioned below) after initially being recognised at cost in the consolidated statement of financial position.

Under the equity method of accounting, the investments are initially recognised at cost (including transaction costs) and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in the statement of financial activities. Dividends received or receivable from joint ventures are recognised as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy “Impairment of non-financial assets” mentioned later in this note.

AQA’s share of the loss of the joint venture is recognised in the consolidated statement of financial activities.

(d) Income recognition

Revenue is measured at the fair value of the consideration received or receivable and represents the amount for goods supplied or services rendered, net of value added tax.

The Charity recognises revenue when (a) the significant risks and rewards of ownership have been transferred to the buyer; (b) the Charity retains no continuing involvement or control over the goods or services; c) the amount of revenue can be measured reliably; d) it is probable that future economic benefits will flow to the entity and; e) when the specific criteria relating to each of the sales channels have been met, as described below.

Subscription income is received in advance of the period to which it relates and is deferred on a straight line basis over the subscription period.

(i) Provision of examination services

Income for the provision of examination services is recognised when all services associated with the qualification are substantially completed. Income received in advance of the examination series is deferred and recognised when the examination series takes place.

For post results services income is recognised when the amount of the revenue and the stage of completion can be measured reliably.

(ii) Events

Income for the provision of events is recognised when the event takes place.

38

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(d) Income recognition (continued)

(iii) Centre inspection services

Income is recognised for centre inspection services on a straight line basis over the period of the contract. Invoices are raised quarterly in arrears.

(iv) Provision of teacher support materials

Revenue from the sale of digital courseware products is recognised on straight line basis over the period of the subscription. For individual sales, the revenue is recognised when control is passed to the customer when the digital product is made available.

(v) Digital services

Revenue from services such as scanning are recognised in the accounting period in which the work on the services is performed and the obligations have been satisfied in accordance with the customers’ agreed requirements.

Sales of scanning machines and associated equipment are recognised when the products have been delivered to the customer and it is probable that economic benefits associated with the transaction will flow to the Company. Maintenance service contracts are recognised on a straight-line basis over the period of the contract.

(vi) Educational consultancy services

Revenue for educational consultancy services is recognised when the services are complete, with services ongoing over the year end treated as work in progress. Profit on long term work in progress contracts is recognised when the outcome of the contracts can be assessed with reasonable certainty, and is that amount which is estimated to reflect fairly the profit arising up to the accounting date. Profit on long term work in progress contracts is recognised as the difference between the reported revenue and related costs.

(e) Fund accounting

Unrestricted funds are available to spend on activities that further any of the purposes of Charity. Designated funds are unrestricted funds of the Charity which the trustees have decided at their discretion to set aside to use for a specific purpose.

(f) Expenditure recognition and irrecoverable value added tax

Expenditure is recognised once there is a legal or constructive obligation to make a payment to a third party, it is probable that settlement will be required and the amount of the obligation can be measured reliably. Expenditure is classified under the following activity headings:

(i) Charitable activities

These costs relate to services provided centrally and identified as wholly or mainly in support of direct charitable expenditure, together with an appropriate proportion of management and office overheads undertaken to further the purposes of the Charity and their associated support costs.

(ii) Governance and support costs

These costs relate to the corporate management of the organisation itself. They include expenses of Trustees’ meetings, audit fees, office relocation costs and other corporate management costs .

39

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(i) Governance and support costs (continued)

Allocation of support and governance costs

Support costs have been allocated between governance costs and other support costs. Support costs are those functions that assist the work of the Charity but do not directly undertake charitable activities. Support costs include back office costs, finance, IT, personnel and payroll. Governance costs comprise all costs involving the public accountability of the Charity and its compliance with regulation and good practice. These costs include costs related to statutory audit and legal fees together with an apportionment of overhead and support costs. These costs all relate to expenditure on charitable activities. The bases on which support costs have been allocated are set out in note 9.

The majority of AQA’s supplies are exempt for value added tax purposes. As a result, AQA is only able to recover a small percentage of its input tax. The amount not recoverable is charged in the consolidated statement of financial activities under the appropriate cost category or added to the cost of fixed assets.

(ii) Other trading activities

These costs relate to non-charitable services provided by subsidiary undertakings, AQA Milton Keynes Limited and AlphPlus Consultancy Limited. It includes direct costs as well as overhead costs.

(g) Deferred income and expenditure

Examination fees and training course fees received in advance are deferred and recognised in the year the examinations and meetings take place. All deferred income is fully recognised in the following year. Expenditure on question papers and on fees and expenses of examiners relating to examinations taking place after the year end are carried forward as payments in advance to be charged against the year in which the examinations take place.

(h) Employee benefits

The Group provides a range of benefits to employees, including holiday pay, defined benefit and defined contribution pension plans.

(i) Short-term benefits

Short-term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the year in which the service is received.

(ii) Defined contribution pension plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations. The contributions are recognised as an expense when they are due. Amounts due but not paid are shown in accruals in the statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.

40

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(iii) Defined benefit pension plans

The Charity operates defined benefit plans for employees. The two principal defined benefit schemes for AQA’s staff are the AQA Pension Scheme and the Greater Manchester Pension Fund (GMPF). AQA also has unfunded pension liabilities which represent augmented pensions for members of staff who are no longer employees of AQA. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan.

The defined benefit section of the AQA Pension Scheme, GMPF and the unfunded augmented pension liabilities are accounted for as defined benefit schemes under section 28 of FRS 102. The defined benefit section of the AQA Pension Scheme was closed to new entrants from July 2006 and to future accruals from January 2011. AQA participates in the Greater Manchester Pension Fund (GMPF), which is an externally funded defined benefit pension scheme, where AQA’s share of the total scheme’s underlying assets and liabilities can be separately identified. Unfunded pension liabilities represent the liability of unfunded pensions for former employees of AQA. AQA has also contributed to two further defined benefit schemes, namely the Teachers’ Pension Scheme and the University Superannuation Scheme. These are multi-employer defined benefit schemes where it is not possible to separately identify the assets and liabilities for each participating employer. Accordingly, contributions are treated as defined contribution schemes for accounting purposes.

The liability recognised in the statement of financial position in respect of the defined benefit plan is the present value of the defined benefit obligation at the reporting date less the fair value of the plan assets at the reporting date. A defined benefit asset is recognised where there is a plan surplus which can be recovered in future through a refund to AQA.

(iii) Defined benefit pension plans (continued)

The defined benefit obligation is calculated using the projected unit credit method. Annually the Group engages independent actuaries to calculate the obligation. The present value is determined by applying an appropriate discount rate to the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating to the estimated period of the future payments.

The fair value of plan assets is measured in accordance with the FRS 102 fair value hierarchy and in accordance with the Group’s policy for similarly held assets. This includes the use of appropriate valuation techniques.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the consolidated statement of financial activities. Actuarial valuations of pensions are performed every three years.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is recognised within ‘Net investment income’.

(i) Business combination and goodwill

Business combinations are accounted for by applying the purchase method

The cost of a business combination is the fair value of the consideration given, liabilities incurred or assumed and of equity instruments issued plus the costs directly attributable to the business combination. Where control is achieved in stages the cost is the consideration at the date of each transaction.

41

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(i) Business combination and goodwill (continued)

Contingent consideration is recognised where the consideration is probable and can be measured reliably. Where (i) the contingent consideration is not considered probable or cannot be reliably measured but subsequently becomes probable and measurable or (ii) contingent consideration previously measured is adjusted, the amounts are recognised as an adjustment to the cost of the business combination.

On acquisition of a business, fair values are attributed to the identifiable assets, liabilities and contingent liabilities unless the fair value cannot be measured reliably in which case the value is incorporated in goodwill. Where the fair value of contingent liabilities cannot be reliably measured they are disclosed on the same basis as other contingent liabilities.

Goodwill recognised represents the excess of the fair value and directly attributable costs of the purchase consideration over the fair values to the Group’s interest in the identifiable net assets, liabilities and contingent liabilities acquired.

Goodwill is amortised over its expected useful life which is estimated as 8 years. At the time of acquisition management performed an assessment of expected useful life and deemed 8 years to be appropriate. Goodwill is assessed for impairment when there are indicators of impairment and any impairment is charged to the consolidated statement of financial activities.

In accordance with Section 35.10(a) of FRS 102, Section 19 of FRS 102 has not been applied in these financial statements in respect of business combinations affected prior to the date of transition.

(j) Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation commences when the software or development project is ready for use. Amortisation is calculated, using the straight-line method, to allocate the depreciable amount of the assets to their residual values over their estimated useful lives, as follows:

Software – 3 years

Development costs – up to 5 years

For Nexus, our bespoke exams processing system, amortisation is charged over the length of the project which is due to finish in the 2023/24 financial year.

Amortisation is charged to expenditure on charitable activities in the consolidated statement of financial activities.

The assets are reviewed for indicators of impairment and if these are present, the asset will be impaired to the recoverable amount.

Intangible assets acquired as part of a business combination are measured at fair value at the acquisition date.

42

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(j)

Intangible assets (continued)

Costs associated with maintaining computer software are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

(i) Specification development

Expenditure on the development of specifications and related teacher support materials is charged to the consolidated statement of financial activities in the year in which the expenditure is incurred.

(ii) Systems development

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets .

(iii) Research and development expenditure

Research expenditure is charged to the consolidated statement of financial activities in the year in which the expenditure is incurred.

Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility, costs can be measured reliably and resources are available to complete the project. Other development expenditure that does not meet these criteria is recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent year.

(k) Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.

The useful economic lives and residual value of fixed assets have been reviewed at the end of the accounting year. The effect of any change is accounted for prospectively.

43

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(k) Tangible fixed assets and depreciation (continued)

The Trustees have not deemed it practical given the cost involved to quantify the difference between the carrying value and market value of interests in land and buildings. The charge for depreciation is calculated so as to write off the cost, less estimated realisable value, of each asset on a straight line basis over its expected useful life, as follows:

Freehold land and buildings

25 - 40 years

Leasehold land and buildings

Term of the lease

Furniture, equipment and vehicles:

Office fixtures & fittings and equipment

Office fixtures & fittings and equipment 3 - 10 years Motor vehicles 4 years IT equipment 3 years

For the purposes of the Charities SORP (FRS102), all tangible fixed assets are considered to be functional assets of the Charity. Tangible assets costing more than £10,000 per individual item or group of related items are capitalised in the year of acquisition. Items costing less than £10,000 are charged to the profit and loss when incurred.

Tangible fixed assets are derecognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in the consolidated statement of financial activities and included in ‘Expenditure on charitable activities’.

(l) Leased assets

At inception the Group assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement.

(i) Operating lease

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the consolidated statement of financial activities on a straight-line basis over the period of the lease.

(ii) Lease incentive

Incentives received to enter into an operating lease are credited to the consolidated statement of financial activities, to reduce the lease expense, on a straight-line basis over the period of the lease.

The Group and Charity have taken advantage of the exemption in respect of lease incentives on leases in existence on the date of transition to FRS 102 (1 October 2014) and continue to credit such lease incentives to the consolidated statement of financial activities over the period to the first review date on which the rent is adjusted to market rates.

44

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(m) Impairment of non-financial assets

At each reporting date non-financial assets not carried at fair value are assessed to determine whether there is an indication that the asset may be impaired. If there is such an indication the recoverable amount of the asset is compared to the carrying amount of the asset.

The recoverable amount of the asset is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax, obtainable as a result of the asset’s continued use. These cash flows are discounted using a pre-tax discount rate that represents the current market risk-free rate and the risks inherent in the asset.

If the recoverable amount of the asset is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount and an impairment loss is recognised in the consolidated statement of financial activities.

If an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the consolidated statement of financial activities.

(n) Stocks

The purchase of materials, goods and examination materials are written off in the year of examination. Printing stocks and consumables are valued at the lower of cost and estimated selling price less cost to complete and sell.

Cost is determined on the first-in, first-out (FIFO) method. Cost includes the purchase price, including taxes and duties and transport and handling directly attributable to bringing the stock to its present location and condition.

At the end of each reporting year stocks are assessed for impairment. If an item of stock is impaired, the identified stock is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the consolidated statement of financial activities. Where a reversal of the impairment is required the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the consolidated statement of financial activities.

(o) Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less and bank overdrafts.

There is no debt and therefore a net debt note has not been produced.

45

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(p) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event and it is probable that a transfer of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations might be small.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost.

The Group and Charity has taken advantage of the transition exemption under paragraph 35.10(l) of FRS 102 to remeasure dismantling obligations using information available at the transition date (1 October 2014) rather than the date that obligation arose.

(q) Financial instruments

The Group has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

(i) Financial assets

Basic financial assets, including trade and other debtors, amounts owed by fellow undertakings and cash and bank balances are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting year financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the consolidated statement of financial activities.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in the consolidated statement of financial activities.

46

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(q) Financial instruments (continued)

(i) Financial assets (continued)

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value as at the statement of financial position date using the closing quoted market price. The statement of financial activities includes the changes in fair value, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment. These long term investments, whilst highly liquid, are included in fixed assets, as there is no intention to draw down on them in the next year or indeed in the near future.

All gains and losses are taken to the consolidated statement of financial activities as they arise. Realised gains and losses on investments are calculated as the difference between sales proceeds and their opening carrying value or their purchase value if acquired subsequent to the first day of the financial year. Unrealised gains and losses are calculated as the difference between the fair value at the year end and their carrying value. Realised and unrealised investment gains and losses are combined in the consolidated statement of financial activities.

The main form of financial risk faced by the Charity is that of volatility in equity markets and investment markets due to wider economic conditions, the attitude of investors to investment risk, and changes in sentiment concerning equities and within particular sectors or sub sectors.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

(ii) Financial liabilities

Basic financial liabilities, including trade and other creditors and amounts owed to fellow Group companies that are classified as debt, are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

The Group does not currently use derivatives to manage its financial risks.

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expire.

47

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

3 Summary of significant accounting policies (continued)

(r) Critical accounting judgements and key source of estimation uncertainty

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Critical judgements in applying the entity’s accounting policies:

(i) Share of loss in joint venture

The Charity has invested in a jointly controlled entity (Oxford International AQA Examinations Limited) in which it owns 50% of the issued share capital. The Charity’s share of losses is in excess of its interest in the entity which management have elected to recognise within provisions for liabilities and charges as they consider they have a continuing commitment to those students studying for their exams if the jointly controlled entity were to cease trading.

(ii) Intangible assets - software

The capitalisation of software development costs on the balance sheet depends on the assessment of future economic benefit arising from future use and is accordingly a matter of judgement.

(i) Carrying value of goodwill

The Group reviews the indicators of impairment annually to identify whether goodwill has suffered any impairment, in accordance with the accounting policy stated. The recoverable amounts of cash generating units have been determined based on value-in-use calculations.

(ii) Retirement benefit obligations

The Group has obligations to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depends on a number of factors, including: life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends.

Note 27 details the actuarial assumptions used in determining the carrying amount at 31 March 2022.

(iii) Provisions

Provision is made for reorganisation costs and dilapidations. These provisions require management’s best estimate of the costs that will be incurred based on legislative and contractual requirements. In addition, the timing of the cash flows and the discount rates used to establish net present value of the obligations require management’s judgement.

There are no amendments to FRS 102 or Financial Reporting Council abstracts that have a significant effect on the current year, prior year or future periods.

48

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

4 Income from charitable and other trading activities

Educational Services - United Kingdom fee income
Educational Services – Overseas fee income
Total income from charitable activities
Digital Services – United Kingdom income
Digital Services – Overseas income
Total income from other trading activities		 Unrestricted funds
2022
2021
£000
£000
(Restated)
142,837
132,417
766
702
143,603
133,119
2,323
454
955
1,064
3,278
1,518

Included within Educational Services income are two grants from the Department for Education for £4,351,000. These grants were to support with the cost of appeals of summer examination series in 2021 and additional running costs incurred for the autumn examination series in 2021. This grant was to maximise the rebate to schools.

The restated figures are due to a prior period adjustment which has resulted in income of £752,000 being reallocated from digital services to educational services in 2021. Please refer to Note 28 for further details.

5 Investment income and management costs

nvestment income and management costs
Interest – UK deposits
Dividends
Net credit to other finance income on defined pension
scheme assets and liabilities (note 27)
Total investment income
Brokers’ fees
Total investment management costs
Net investment income		 Unrestricted funds
2022
2021
£000
£000
86
142
628
568
714
710
428
498
1,142
1,208
(150)
(130)
(150)
(130)
992
1,078

49

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

6 Total of expenditure

Total of expenditure
Operational costs:
Examiner costs
Printing postage and other
examination costs
Premises costs
Direct staff costs
Operating lease rentals
Non capital IT costs
Depreciation
Amortisation of intangibles
(Profit)/loss on disposal
Overheads
Research and development
costs
Restructuring costs
Consultancy
Defined benefit scheme costs
excluding net interest and
employer contributions
Governance costs (see note 9)
Support costs (see note 9)
Total expenditure		 2022
2022
2022
2021
2021
2021
Educational
services
Digital
services
Total
Educational
services
Digital
services
Total
£000
£000
£000
£000
£000
£000
(Restated) (Restated)
9,810
-
9,810
11,658
-
11,658
2,341
-
2,341
4,580
-
4,580
3,321
95
3,416
3,559
143
3,702
43,842
1,234
45,076
41,661
1,106
42,767
1,854
61
1,915
2,038
63
2,101
16,904
5
16,909
17,733
56
17,789
1,335
88
1,423
1,367
74
1,441
17,232
272
17,504
17,949
406
18,355
-
-
-
(501)
(48)
(549)
3,353
1,579
4,932
3,120
601
3,721
-
-
-
1
-
1
412
-
412
187
-
187
3,534
-
3,534
3,222
-
3,222
558
-
558
956
-
956
427
2
429
399
1
400
21,157
-
21,157
21,539
146
21,685
126,080
3,336
129,416
129,468
2,548
132,016

Discontinued operations shown in the prior year on the Consolidated Statement of Activities relate to the closure of AQA Milton Keynes’ print division. The restated figures are due to a due to a prior period adjustment which has resulted in £15,729,000 of expenditure being reallocated from digital services to educational services. Please refer to Note 28 for further details.

7 Summary analysis of expenditure and related income for charitable activities

Income from charitable activities:
Fees and charges
Total income
Expenditure on charitable activities:
Staff costs
Operational costs
Total expenditure
Total surplus from charitable activities		 2022
2021
Total
Total
£000
£000
(Restated)
143,603
133,119
143,603
133,119
(65,014)
(61,812)
(61,066)
(67,656)
(126,080)
(129,468)
17,523
3,651

50

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________ 8 Taxation

AQA is a charity and therefore claims exemption from corporation tax. The subsidiary undertakings are non-charitable companies incorporated in England and Wales and are subject to corporation tax. Subsidiary trading companies pay any taxable profits to the Charity each year as Gift Aid and thus do not incur corporation tax.

9 Analysis of governance and support costs

The Group initially identifies the costs of its support functions. It then identifies those costs which relate to the governance function. Having identified its governance costs, the remaining support costs together with the governance costs are apportioned between the charitable activities undertaken (see note 6) in the year. Refer to the table below for the basis for apportionment and the analysis of support and governance costs.

Employment costs
Trustee expenses
Internal audit services
External auditor – audit services:
Audit of consolidated and Charity
financial statements
Audit of the subsidiary financial
statements
Assurance in relation to grant
claims
Audit of teacher’s pension
scheme
Total
Employment costs
Trustee expenses
Internal audit services
External auditor – audit services:
Audit of consolidated and Charity
financial statements
Audit of the subsidiary financial
statements
Total		 Support
costs
Governance
function
2022
Total
Basis of
allocation
£000
£000
£000
21,157
15
21,172
Staff time
-
2
2
Invoiced events
-
221
221
Governance
-
118
118
Governance
-
33
33
Governance
-
36
36
Governance
-
4
4
Governance
21,157
429
21,586
Support
costs
Governance
function
2021
Total
Basis of allocation
£000
£000
£000
21,685
15
21,700
Staff time
-
3
3
Invoiced events
-
275
275
Governance
-
83
83
Governance
-
24
24
Governance
21,685
400
22,085
Governance

As the Charity is unable to recover input VAT, the fee for the audit of consolidated and Charity financial statements includes VAT.

51

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

10 Analysis of staff costs, trustee remuneration and expenses, and the cost of key management personnel

Wages and salaries
Social security costs
Pension costs
-
Defined benefit employer contributions
-
Defined contribution pension costs
Other staff related costs		 2022
2021
£000
£000
51,398
48,829
5,085
4,954
1,685
2,523
5,959
4,962
64,127
61,268
2,121
1,187
66,248
62,455

During the year £164,000 (2021: £657,000) was received from the Government in respect of the Coronavirus Job Retention Scheme.

Termination payments of £831,000 ( 2021: £39,000 ) were made in the year, due to a change in the staffing structure.

Average monthly number of employees and temporary staff (all of
whom are directly or indirectly employed in the administration of
examinations).
By activity:
Educational services
Support and administration
Digital services		 2022
2021
Number
Number
830
726
476
443
76
112
1,382
1,281

Having received Charity Commission permission £15,000 (2021: £15,000) was paid to Mr van Wijngaarden in his role as Chair of the Trustees. The Trustees have been reimbursed for all expenses incurred by them in connection with their attendance at meetings of the Board, other committees or general meeting of the Charity or otherwise in connection with their discharge of their duties as Trustees. Travelling and subsistence expenses amounting to £2,129 (2021: £3,388) , were reimbursed to 9 (2021: 13) trustees.

The key management personnel of the parent Charity comprise the Executive Team alongside the Trustees of the Charity. The total remuneration of the key management personnel of the Charity over the full year was £1,870,000 (2021: £1,265,000) . The remuneration of the Chief Executive Officer, who is also a trustee, was £299,000 (2021: £249,000). This increase reflects the appointment of the CEO part-way through the prior year.

52

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

10 Analysis of staff costs, trustee remuneration and expenses, and the cost of key management personnel (continued)

The key management personnel of the Group comprise those of the Charity and the key management personnel of its wholly owned subsidiaries. The remuneration of the key management personnel of the subsidiaries totalled £611,000 (2021: £442,000) . The total remuneration of the key management personnel for the Group was £2,481,000 (2021: £1,707,000 ).

98 employees (2021: 113 employees) within the Group earned over £60,000 in the year excluding pension contributions within the following bands:

Group

Group
Year ended Year ended
31 March 31 March
2022 2021
Number Number
Higher paid employees fell within the following bands:
£60,001 to £70,000 51 54
£70,001 to £80,000 18 24
£80,001 to £90,000 8 7
£90,001 to £100,000 6 9
£100,001 to £110,000 4 6
£110,001 to £120,000 3 2
£120,001 to £130,000 3 3
£130,001 to £140,000 1 2
£140,001 to £150,000 - 2
£150,001 to £160,000 3 2
£160,001 to £170,000 - 1
£240,001 to £250,000 - 1
£290,001 to £300,000 1 -
The above bandings are based on annual salaries.

Contributions by the employer were made to defined benefit pension schemes for 15 ( 2021: 21 ) higher paid employees. Contributions amounting to £600,000 ( 2021: £782,000 ) were made to defined contribution schemes for 73 ( 2021: 84 ) higher paid employees.

53

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

11
Intangible assets
Group
COST
At 1 April 2021
Additions
Disposals
At 31 March 2022
ACCUMULATED AMORTISATION
At 1 April 2021
Amortisation charge for the year
On disposal
At 31 March 2022
NET BOOK VALUE
At 31 March 2022
At 31 March 2021
Charity
COST
At 1 April 2021
Additions
At 31 March 2022
ACCUMULATED AMORTISATION
At 1 April 2021
Amortisation charge for the year
At 31 March 2022
NET BOOK VALUE
At 31 March 2022
At 31 March 2021		 Goodwill
Software
£000
£000
7,676
59,389
8,654
9,746
-
-		 Development
expenditure
Total
£000
£000
15,374
82,439
-
18,400
(276)
(276)
16,330
69,135		 15,098
100,563
6,035
24,441
635
13,863
-
-		 12,369
42,845
3,005
17,503
(276)
(276)
6,670
38,304		 15,098
60,072
9,660
30,831		 -
40,491
1,641
34,948		 3,005
39,594
Software
Total
£000
£000
57,937
57,937
9,746
9,746
67,683
67,683
23,380
23,380
13,665
13,665
37,045
37,045
30,638
30,638
34,557
34,557

54

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

12
Tangible fixed assets
Group
Freehold
Land &
Buildings
£000
COST
At 1 April 2021
2,084
On acquisition of subsidiary
450
Additions
-
Disposals
-
At 31 March 2022
2,534
ACCUMULATED DEPRECIATION
At 1 April 2021
807
Charge for the year
47
On disposals
-
At 31 March 2022
854
NET BOOK VALUE
At 31 March 2022
1,680
At 31 March 2021
1,277
Charity
COST
At 1 April 2021
Additions
At 31 March 2022
ACCUMULATED DEPRECIATION
At 1 April 2021
Charge for the year
At 31 March 2022
NET BOOK VALUE
At 31 March 2022
At 31 March 2021		 Freehold
Land &
Buildings
£000
2,084
450
-
-		 Leasehold
Land &
Buildings
IT
Equipment
Furniture,
Equipment
and Vehicles
Total
£000
£000
£000
£000
17,223
2,866
13,329
35,502
-
69
34
553
411
12
1,881
2,304
-
-
(472)
(472)
2,534 17,634
2,947
14,772
37,887
8,539
2,880
7,176
19,402
423
34
919
1,423
-
-
(472)
(472)
854 8,962
2,914
7,623
20,353
1,680 8,672
33
7,149
17,534
1,277 8,684
38
6,171
16,170
Leasehold
Land &
Buildings
IT
Equipment
Furniture,
Equipment
and Vehicles
Total
£000
£000
£000
£000
17,223
2,348
3,489
23,060
411
-
-
411
17,634
2,348
3,489
23,471
8,539
2,318
3,123
13,980
423
22
95
540
8,962
2,340
3,128
14,520
8,672
8
271
8,951
8,684
30
366
9,080

55

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

12 Tangible fixed assets (continued)

Analysis of land and buildings as at 31 March 2022

Group
Cost
Depreciation
Net book value
Charity
Cost
Depreciation
Net book value		 Freehold
Land &
Buildings
Long Leasehold
Land &
Buildings
Total
Freehold
Land &
Buildings
Long Leasehold
Land &
Buildings
Total
2022
2022
2022
2021
2021
2021
£000
£000
£000
£000
£000
£000
2,534
17,634
20,168
2,084
17,223
19,307
(854)
(8,962)
(9,816)
(807)
(8,539)
(9,346)		 Freehold
Land &
Buildings
Long Leasehold
Land &
Buildings
Total
Freehold
Land &
Buildings
Long Leasehold
Land &
Buildings
Total
2022
2022
2022
2021
2021
2021
£000
£000
£000
£000
£000
£000
2,534
17,634
20,168
2,084
17,223
19,307
(854)
(8,962)
(9,816)
(807)
(8,539)
(9,346)
1,680
8,672
10,352
1,277		 8,684
9,961
Long Leasehold
Land & Buildings
2022
2021
£000
£000
17,634
17,223
(8,962)
(8,539)
8,672
8,684
13
Investment in subsidiary undertakings
(a) Investment in subsidiary undertakings
At 1 April 2021
Doublestruck
AQA MK
Additions
AlphaPlus
At 31 March 2022		 2022
2021
£000
£000
5,826
5,826
7,308
7,308
11,298
-
24,432
13,134

AQA holds 100% of the share capital of Doublestruck Limited (Doublestruck), AQA Milton Keynes Limited (AQA MK), formerly DRS Data Services Limited, and AlphaPlus Consultancy Limited. The registered address of Doublestruck (Company number: 02373295) is Devas Street, Manchester, M15 6EX, for AQA MK (Company number: 05568337) is Devas Street, Manchester, M15 6EX and for AlphaPlus (Company number: 04801609) is Unit 109 Albert Mill, Hulme Hall Road, Manchester, England, M1 4LY.

56

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

13 Investment in subsidiary undertakings (continued)

The summarised financial information of the subsidiary undertakings is provided below:

Total income
Total expenditure
Profit/(loss) on ordinary activities
before taxation
Taxation
Retained profit/(loss) for the year
Assets
Liabilities
Net assets/(liabilities) and reserves		 Doublestruck Limited
AQA Milton Keynes
Limited
AlphaPlus
Consultancy
Limited
2022
2021
2022
2021
2022
£000
£000
£000
£000
£000
4,665
4,206
11,236
15,537
2,219
(2,733)
(2,601)
(17,998)
(18,824)
(1,617)*
1,932
1,605
(6,762)
(3,287)
602
-
-
-
-
-
1,932
1,605
(6,762)
(3,287)
602
3,642
3,184
11,267
15,002
4,370
(3,109)
(2,971)
(18,876)
(15,849)
(1,124)
533
213
(7,609)
(847)
3,246

AlphaPlus figures include the period since acquisition to the 31 March 2022.

(b) Investment in joint venture

At 1 April 2021
Funding payments
Share of loss
At 31 March 2022		 2022
2021
£000
£000
(678)
(451)
549
600
(350)
(827)
(479)
(678)

AQA’s share of the accumulated losses of the joint venture which exceeds the amount invested is included within provisions for liabilities and charges on the balance sheet and is stated at cost less impairment. During the year, an addition of £549,000 was made to the cost of the investment.

The joint venture listed below has share capital consisting solely of ordinary shares, which is held directly by the Group.


he Group.
Place of % of Nature of the Measurement
business/country ownership **relationship ** method
Name of the entity **of incorporation ** interest
Oxford International AQA
Examinations Limited United Kingdom 50 See below Equity

Oxford International AQA Examinations Limited offers a suite of international GCSE, AS and A-level qualifications to schools outside the UK that teach a British curriculum. The qualifications are designed and delivered by AQA and externally validated to ensure they are comparable to UK qualifications.

57

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

13 Investment in subsidiary undertakings (continued)

The business made a loss in the year, in line with expectations at this stage of its growth and the AQA Trustees remain positive about future trading. AQA remains committed to funding its share of the jointly controlled entity.

14 Acquisition of Subsidiary

On 24 January 2022 the group acquired 100% of AlphaPlus Consultancy Limited, a company registered in England and Wales, which provides digital educational services.

In calculating the goodwill arising on acquisition, the fair value of net assets of AlphaPlus Consultancy Limited were assessed and no adjustments to book value were necessary.

Fixed assets
Tangible
Current assets
Debtors
Investments
Cash at bank and in hand
Total assets
Creditors
Due within one year
Net assets
Goodwill (note 11)
Total purchase consideration (including expenses
Purchase consideration settled in cash
Contingent consideration (note 21)
Total consideration
Purchase consideration settled in cash
Cash and cash equivalents in subsidiary acquired
Cash outflow on acquisition		 Book value
Revaluation of
fixed assets
£’000
£’000
484
-
2,492
-
1
-
959
-		 Fair value
£’000
484
2,492
1
959
3,936
-
(1,291)
-		 3,936
(1,291)
2,645
**- **		 2,645
of £307,000) 8,654
11,299
6,275
5,024
11,299
6,275
(959)
5,316

The useful economic life of goodwill has been estimated to be 8 years.

Since acquisition date, AlphaPlus Consultancy Limited has contributed £2,219,000 to group turnover and £602,000 to group net income.

58

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

15 Other fixed asset investments

Investments

nvestments
Market value at 1 April 2021
Additions at cost
Disposals at market value (i.e. sales proceeds)
Net movements in cash held with fund managers
Net investment gains
Market value at 31 March 2022
Cost at 31 March 2022
Balance on net unrealised gain reserve
Analysis of net investment gains
Movement on unrealised gains
Realised gains based on historic cost of investments disposed of during
the year
Net investment gains		 Group
& Charity
Group
& Charity
2022
2021
£000
£000
42,758
35,418
16,050
19,133
(14,646)
(19,450)
3,179
768
2,344
6,889
49,685
42,758
45,642
39,474
4,043
3,284
758
6,655
1,586
234
2,344
6,889

59

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

15 Other fixed asset investments (continued)

Analysis of market value of investments held

nalysis of market value of investments held
Equities
United Kingdom
Overseas
Bonds
United Kingdom
Overseas
Multi asset funds
Alternatives
Hedge funds
Property
Commodities
Other
Cash held with fund managers		 Group &
Charity
% of
total
Group &
Charity
% of
total
2022
2021
£000
£000
2,958
5.9
2,974
7.0
19,042
38.3
20,786
48.6
637
1.3
2,415
5.6
4,331
8.7
2,596
6.1
9,522
19.2
3,456
8.1
638
1.3
-
-
1,777
3.6
3,129
7.3
1,972
4.0
1,809
4.2
4,001
8.0
3,965
9.3
4,807
9.7
1,628
3.8
49,685
100.0
42,758
100.0

All investments are carried at their fair value. Investment in equities and fixed interest units are all traded in quoted public markets, such as the London Stock Exchange. Holdings in common investment funds, unit trusts and open-ended investment companies are as advised by the fund managers. The basis of fair value for quoted investments is equivalent to the market value, using the bid price. Asset sales and purchases are recognised at the date of trade at cost (that is their transaction value) .

16 Stocks and work in progress

Raw materials
Work in progress
Finished goods		 Group
Charity
Group
Charity
2022
2022
2021
2021
£000
£000
£000
£000
1,230
-
693
-
-
-
365
-
1,002
817
1,007
925
2,232
817
2,065
925

The balances above are shown net of a provision amounting to £169,000 (2021: £391,000) .

60

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

17 Debtors

ebtors
Trade debtors
Amount recoverable on contracts
Amounts owed by Group undertakings
Amount due from related party
Other debtors
Prepayments and accrued income		 Group
Charity
Group
Charity
2022
2022
2021
2021
£000
£000
£000
£000
149,834
148,658
58,364
57,348
-
-
115
-

-
14,383
-
13,624
143
142
300
300
417
310
495
310
5,402
2,161
6,412
6,014
155,796
165,654
65,686
77,596

Prepayments and accrued income includes £501,000 (2021: £900,000) falling due after more than one year.

Other debtors includes £185,000 (2021: £185,000) falling due after more than one year.

Amounts due from Group undertakings are unsecured. Loans are repayable on demand with twelve months’ notice and interest is charged at an annual commercial rate of 4.75% over the Royal Bank of Scotland base rate.

18 Current investments

Investments totalling £821,000 (2021: £2,821,000) shown under current assets for the Group and Charity are represented by shares in the BlackRock Institutional Sterling Liquidity Fund and Goldman Sachs Sterling Liquid Reserves Fund.

61

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

19 Creditors: amounts falling due within one year

Trade creditors
Payments on account
Amounts owed to Group undertakings
Taxation and social security costs
Other creditors
Accruals and deferred income		 Group
Charity
Group
Charity
2022
2022
2021
2021
£000
£000
£000
£000
4,812
3,200
5,488
4,752
150
-
-
-
-
1,018
-
1,929
3,476
2,638
1,892
1,343
681
657
430
121
187,800
182,721
158,375
154,964
196,919
190,234
166,185
163,109

Amounts due to Group undertakings are unsecured. Loans are repayable on demand with twelve months’ notice and interest is charged at an annual commercial rate of 4.75% over the Royal Bank of Scotland base rate.

Accruals and deferred income include net refund liability of £3,536,000 (2021: £25,000,000) .

The movement on deferred income during the year was:

Balance at 1 April 2021
Amount deferred in the year
Amount released in the year
Refunded to schools and colleges
Balance at 31 March 2022		 Group
Charity
Group
Charity
2022
2022
2021
2021
£000
£000
£000
£000
129,020
126,563
164,446
162,132
184,968
182,498
131,550
131,407
(129,761)
(127,346)
(124,798)
(124,798)
(3,500)
(3,500)
(42,178)
(42,178)
180,727
178,215
129,020
126,563

The amount refunded to schools and colleges of £48,500,000 (2021: £42,178,000) was in respect of the summer 2021 exam series (2021: summer 2020 exam series) and relates to savings made in delivery of the special exam series. £45,000,000 of the refund to schools in relation to summer 2021 exam series was already recognised in 2021 financial statements and is part of the brought forward figure for the current year. There was an additional £3,500,000 of refunds recognised in the current year bringing the total amount refunded to schools of £48,500,000 in respect of the summer 2021 exam series.

62

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

20 Financial instruments

The Group and Charity have the following financial instruments:

Note
Financial assets measured at fair value
through statement of financial activities:
Investment in securities
Equities
15
Bonds
15
Multi asset funds
15
Alternatives
15
Cash held with fund managers
15
Short-term deposits
18
Note
Financial liabilities measured at
amortised cost:
Trade creditors
19
Amounts owed to Group undertakings
19
Other creditors
19
Accruals		 Group
Charity
Group
Charity

2022
2022
2021
2021
£000
£000
£000
£000
22,000
22,000
23,760
23,760
4,968
4,968
5,011
5,011
9,522
9,522
3,456
3,456
8,388
8,388
8,903
8,903
4,807
4,807
1,628
1,628
821
821
2,821
2,821
50,506
50,506
45,579
45,579
Group
Charity
Group
Charity

2022
2022
2021
2021
£000
£000
£000
£000
4,812
3,200
5,488
4,752
-
1,018
-
1,929
681
657
430
121
7,073
4,507
30,349
29,395
12,566
9,382
36,267
36,197

The Group’s activities expose it to a variety of financial risks: market risk (including price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Details on the Group’s exposure to each type of risk and how it manages those risks are detailed in ‘Financial risk management’ section of the Strategic Report.

63

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

21 Provisions for liabilities and charges

Group
Balance at 1 April 2021
Provided in the year
Utilised in the year
Balance at 31 March 2022
Charity
Balance at 1 April 2021
Provided in the year
Utilised in the year
Balance at 31 March 2022		 Contingent
consideration
Reorganisation
Leasehold
dilapidations
Share of
loss in joint
venture
Total
£000
£000
£000
£000
£000
-
47
2,005
678
2,730
5,024
-
727
-
5,751
-
-
-
(199)
(199)
5,024
47
2,732
479
8,282
Contingent
consideration
Reorganisation
Leasehold
dilapidations
Share of
loss in joint
venture
Total
£000
£000
£000
£000
£000
-
47
1,767
678
2,492
5,024
-
12
-
5,036
-
-
-
(199)
(199)
5,024
47
1,779
479
7,329

Contingent consideration

This provision relates to future consideration due for the acquisition of AlphaPlus Consultancy Limited. Actual consideration will be calculated based on financial performance in the post acquisition period to September 2024. The provision represents management’s financial forecasts for the company.

Reorganisation provision

The provision relates to estimated costs of changes to staffing structures. The provision is a non-contingent liability.

Leasehold dilapidations

As part of the property leasing arrangements there is an obligation to repair damages and make good leasehold properties when they are vacated. The provision is expected to be utilised between 2022 and 2108 as the leases terminate.

Share of loss in joint venture

The share of loss in the joint venture relates to AQA's share of the loss in the Oxford International AQA Examinations Limited entity which is jointly held with Oxford University Press. The provision will be offset against future profits of the joint venture.

64

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

22 Total Charity Funds

Analysis of movements in unrestricted funds

Group
Designated funds
Pension charged account fund
Total designated funds
Unrestricted general funds
General unrestricted funds
Fixed asset fund
Investment revaluation reserve
Total unrestricted general
funds
Unrestricted funds before
pension asset
Pension reserve
Total general funds
Total Group Funds		 1 April
2021
Net Income /
(expenditure)
Investment
and actuarial
gains
Transfers
31 March
2022
£000
£000
£000
£000
£000
2,500
-
-
2,001
4,501
2,500
-
-
2,001
4,501
49,968
37,985
-
(14,405)
73,548
54,124
(18,292)
-
12,533
48,365
3,284
-
758
-
4,042
107,376
19,693
758
(1,872)
125,955
109,876
19,693
758
129
130,456
2,466
-
23,376
(129)
25,713
109,842
19,693
24,134
(2,001)
151,668
112,342
19,693
24,134
-
156,169

A description of the funds can be found on page 21.

Analysis of net assets between funds 2022

Group
Intangible assets
Tangible assets
Investments
Current assets
Liabilities
Provisions
Pension reserve
Total net assets		 Designated
fund
Total
unrestricted
Pension
asset
Total funds
-
40,491
-
40,491
-
17,534
-
17,534
-
49,685
-
49,685
4,501
223,446
-
227,947
-
(196,919)
-
(196,919)
-
(8,282)
-
(8,282)
-
-
25,713
25,713
4,501
125,955
25,713
156,169

65

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

22 Total Charity Funds (continued)

Analysis of movements in unrestricted funds

Charity
Designated funds
Pension charged account fund
Total designated funds
Unrestricted general funds
General unrestricted funds
Fixed asset fund
Investment revaluation reserve
Total unrestricted general
funds
Unrestricted funds before
pension asset
Pension reserve
Total general funds
Total Charity Funds		 1 April
2021
Net income /
(expenditure)
Investment
and actuarial
gains
Transfers
31
March
2022
£000
£000
£000
£000
£000
2,500
-
-
2,001
4,501
2,500
-
-
2,001
4,501
72,682
43,379
-
(15,035)
101,026
43,636
(17,211)
-
13,163
39,588
3,284
-
758
-
4,042
119,602
26,168
758
(1,872)
144,656
122,102
26,168
758
129
149,157
2,466
-
23,376
(129)
25,713
122,068
26,168
24,134
(2,001)
170,369
124,568
26,168
24,134
-
174,870

A description of the funds can be found on page 21.

Analysis of net assets between funds 2022

Charity
Intangible assets
Tangible assets
Investment in subsidiary undertakings
Investments
Current assets
Liabilities
Provisions
Pension reserve
Total net assets		 Designated
fund
Total
Unrestricted
Pension
asset
Total funds
-
30,638
-
30,638
-
8,951
-
8,951
-
24,432
-
24,432
-
49,685
-
49,685
4,501
228,513
-
233,014
-
(190,234)
-
(190,234)
-
(7,329)
-
(7,329)
-
-
25,713
25,713
4,501
144,656
25,713
174,870

.

66

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

22 Total Charity Funds (continued)

Analysis of movements in unrestricted funds

Group
Designated funds
Pension charged account
fund
Total designated funds
Unrestricted general funds
General unrestricted funds
Fixed asset fund
Capital commitments
Investment revaluation
reserve
Total unrestricted general
funds
Unrestricted funds before
pension asset
Pension reserve
Total general funds
Total Group Funds		 1 April
2020
Net income /
(expenditure)
Investment
and actuarial
gains / (losses)
Transfers
31 March
2021
£000
£000
£000
£000
£000
500
-
-
2,000
2,500
500
-
-
2,000
2,500
41,176
22,271
-
(13,479)
49,968
59,241
(19,166)
-
14,049
54,124
2,826
-
-
(2,826)
-
(3,372)
-
6,656
-
3,284
99,871
3,105
6,656
(2,256)
107,376
100,371
3,105
6,656
(256)
109,876
19,498
-
(17,288)
256
2,466
119,369
3,105
(10,632)
(2,000)
109,842
119,869
3,105
(10,632)
-
112,342

A description of the funds can be found on page 21.

Analysis of net assets between funds 2021

Group
Intangible assets
Tangible assets
Investments
Current assets
Liabilities
Provisions
Pension reserve
Total net assets		 Designated
fund
Total
unrestricted
Pension asset
Total funds
-
39,594
-
39,594
-
16,170
-
16,170
-
42,758
-
42,758
2,500
177,769
-
180,269
-
(166,185)
-
(166,185)
-
(2,730)
-
(2,730)
-
-
2,466
2,466
2,500
107,376
2,466
112,342

67

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

_________

22 Total Charity Funds (continued)

Analysis of movements in unrestricted funds

Charity
Designated funds
Pension charged account
fund
Total designated funds
Unrestricted general funds
General unrestricted funds
Fixed asset fund
Capital commitments
Investment revaluation
reserve
Total unrestricted general
funds
Unrestricted funds before
pension asset
Pension reserve
Total general funds
Total Charity Funds		 1 April 2020
Net Income /
(expenditure)
Investment and
actuarial gains /
(losses)
Transfers
31 March
2021
£000
£000
£000
£000
£000
500
-
-
2,000
2,500
500
-
-
2,000
2,500
62,995
21,490
-
(11,803)
72,682
45,290
(14,027)
-
12,373
43,636
2,826
-
-
(2,826)
-
(3,372)
-
6,656
-
3,284
107,739
7,463
6,656
(2,256)
119,602
108,239
7,463
6,656
(256)
122,102
19,498
-
(17,288)
256
2,466
127,237
7,463
(10,632)
(2,000)
122,068
127,737
7,463
(10,632)
-
124,568

A description of the funds can be found on page 21.

Analysis of net assets between funds 2021

Charity
Intangible assets
Tangible assets
Investment in subsidiary undertakings
Investments
Current assets
Liabilities
Provisions
Pension reserve
Total net assets		 Designated
fund
Total
Unrestricted
Pension asset
Total funds
-
34,557
-
34,557
-
9,080
-
9,080
-
13,134
-
13,134
-
42,758
-
42,758
2,500
185,675
-
188,175
-
(163,109)
-
(163,109)
-
(2,493)
-
(2,493)
-
-
2,466
2,466
2,500
119,602
2,466
124,568

68

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

23 Net cash (used in) / generated from operations

Reconciliation of net income to net cash (used in) / generated from operations

Net incoming resources before other recognised gains
Net investment income excluding net finance income on defined benefit
pension schemes
Depreciation
Profit on disposal of tangible fixed assets
Amortisation of intangibles
Write-off of intangible assets
Increase in stocks
(Increase) / decrease in debtors
Increase / (decrease) in creditors
Increase in provisions
Post-employment benefits cost less payments
Net cash (used in) / generated from operations		 Group
2022
2021
£000
£000
18,107
2,872
(714)
(710)
1,423
1,441
-
95
17,503
18,355
-
3,322
(167)
(355)
(87,801)
6,800
29,444
(12,213)
1,076
693
129
(256)
(21,000)
20,044

Analysis of changes in net debt

Cash at bank and in
hand
Total cash and cash
equivalents		 At 1 April
2021
Cash flows
Acquisition
of subsidiary
Non cash
changes
At 31 March
2022
£000
£000
£000
£000
£000
109,697
(35,283)
(5,316)
-
69,098
109,697
(35,283)
(5,316)
-
69,098

Included in the balance at 31 March 2022 is £4,501,000 (2021: £2,500,000) relating to a pension charged account to help fund a buy-out of the AQA Pension Scheme with an insurance company at some time in the future.

24 Operating lease commitments

At 31 March AQA had the following future minimum lease payments under non-cancellable operating leases, for each of the following years:

Not later than one year
Later than one year and not later than
five years
Later than five years		 Group
2022
Charity
2022
Group
2021
Charity
2021
£000
£000
£000
£000
2,128
1,376
1,791
1,116
5,950
3,335
4,683
2,985
15,002
12,350
16,133
13,083
23,080
17,061
22,607
17,184

25 Capital commitments

There were £4,654,000 capital commitments contracted for at 31 March 2022 but not provided for (2021: £6,170,000) in relation to contracts for software systems.

69

27 Retirement benefits

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

26 Related party transactions

In the year, AQA received £375,000 ( 2021: £348,000 ) from Doublestruck for royalty fees, and AQA paid £36,000 ( 2021: £55,000 ) to Doublestruck for loan interest. Doublestruck also paid Gift Aid of £1,612,000 ( 2021: £1,970,000 ) to AQA during the year. The amount owed by AQA to Doublestruck in respect of a loan and accrued interest was £1,018,000 (2021: £1,031,000) at 31 March 2022.

In the year, AQA MK charged AQA £8,809,000 (2021: £13,266,000) for digital and IT services and exceptional items (2021: digital services) and AQA MK paid AQA £613,000 (2021: £547,000) for loan interest. AQA charged AQA MK £419,000 (2021: £nil) for management charges. During the year, AQA MK paid £nil ( 2021: £nil ) to AQA for Gift Aid. The amount owed by AQA MK to AQA in respect of a loan, accrued interest and amounts to be recharged was £14,383,000 (2021: £12,726,000) at 31 March 2022.Total loan facility available from AQA Education to AQA MK is £20,000,000.

The amounts recharged to the joint venture, Oxford International AQA Examinations Limited, in the year were £1,271,000 ( 2021: £1,100,000 ). The amount due to AQA at the year-end was £150,000 ( 2021: £289,000 ).

Trustee and key management remuneration are disclosed in Note 10.

There have been no related party transactions with AlphaPlus in the reporting year .

The two principal defined benefit pension schemes for AQA’s staff are the AQA Pension Scheme and the Greater Manchester Pension Fund (GMPF). In accordance with section 28 of FRS 102, unfunded pension liabilities are included in the defined benefit pension schemes liability.

AQA has opted to aggregate the section 28 of FRS 102 disclosure notes for the AQA Pension Scheme, GMPF and unfunded pension liabilities. The total employer contributions in the year for these defined benefit schemes are:

Total AQA employer contributions
The defined benefit pension scheme asset is made up as follows:
The AQA Pension Scheme
The defined benefit pension schemes’ liability is made up as follows:
GMPF
Unfunded pension liabilities		 2022
2021
£000
£000
1,685
2,008
2022
2021
£000
£000
42,552
27,545

2022
2021
£000
£000
13,516
21,463
3,323
3,616
16,839
25,079

70

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

27 Retirement benefits (continued)

During the year, AQA operated the AQA Pension Scheme which incorporates a defined benefit section providing benefits based on pensionable salary. The assets of the scheme were held separately from those of AQA being invested in trustee administered funds. The defined benefit section of the scheme was closed to new entrants from July 2006 and to future accruals from January 2011.

The plan is administered by independent trustees, who are responsible for ensuring that the plan is sufficiently funded to meet current and future obligations. The last completed full actuarial valuation of the Pension Scheme was at 30 September 2018.

AQA participates in the Greater Manchester Pension Fund (GMPF), which is an externally funded defined benefit pension scheme, where AQA’s share of the total scheme’s underlying assets and liabilities can be separately identified. Unfunded pension liabilities represent the liability of unfunded pensions for former employees of AQA.

AQA continues to review its pension scheme offering and is commitment to providing a high-quality, fair and consistent employee offer to all colleagues.

Principal actuarial assumptions

The principal actuarial assumptions at the reporting date (expressed as a range where applicable) are:

2022 2021
% per annum % per annum
Price increases 3.15 – 3.55 2.75 – 3.35
Pension increases - in payment 2.65 – 3.45 2.55 – 3.25
Pension increases - deferred 3.15 2.75
Salary increases 3.40 3.00
Discount rate 2.60 2.10

The figures presented in these disclosures are based on the mortality assumptions adopted for the latest funding valuation with additional margins for prudence removed. For the AQA scheme the tables used are 95.1% (2021: 97.0%) of S2PxA (96.6% (2021: 92.0%) of S2PxA) tables for males (females); future improvements are in line with the CMI 2020 projections subject to a long term trend rate of 1.25% (2021: 1.25%) .

For the GMPF liabilities the tables used are Club Vita curves, CMI 2018 subject to a long term trend rate of 1.5% and a smoothing parameter of 7.0 and an initial addition parameter of 0.5% (0.25%).

For the unfunded arrangements the same tables as the AQA liabilities are used but these are adjusted to reflect the assumed higher life expectancy of these members, specifically 95.1% (2021: 67.0%) of S3PxA (96.6% (2021: 62.0%) S2PxA) tables for males (females); future improvements are in line with the CMI 2021 projections subject to a long term trend rate of 1.25% (2021: 1.25%) . Example life expectancies are 24.5 (2021: 24.5) years (26.9 (2021: 27.2) years) from age 65 for a male (female) currently aged 65 and 25.8 (2021: 25.8) years (28.2 (2021: 28.2) years) from age 65 for a male (female) currently aged 45.

71

AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

27 Retirement benefits (continued)

Statement of financial position disclosures

The amounts recognised in the statement of financial position are as follows:

Fair value of scheme
assets
Present value of
liabilities
Net pension
asset/(liability)		 Net Pension Asset
Net Pension Liabilities
Total
2022
2021
2022
2021
2022
2021
£000
£000
£000
£000
£000
£000
202,576
197,677
101,855
94,538
304,431
292,215
(160,024)
(170,132)
(118,694)
(119,617)
(278,718)
(289,749)
42,552
27,545
(16,839)
(25,079)
25,713
2,466

The major categories of scheme assets as a percentage of total scheme assets are as follows:

Equities
Property
Bonds
Hedge Funds
Cash and other
Total		 2022
2021
%
%
10.0
39.4
17.8
11.6
53.2
35.8
18.8
8.6
0.2
4.6
100.0
100.0

Statement of financial activities disclosures

Amounts recognised in the statement of financial activities before net outgoing resources

Current service cost
Past service cost
Scheme administration expenses
Net interest on asset
Total
Actual return on scheme assets		 2022
2021
£000
£000
1,311
1,166
-
172
931
912
(428)
(498)
1,814
1,752
23,376
(17,288)

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AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

27 Retirement benefits (continued)

Changes in the present value of the defined benefit obligations

Changes in the present value of the defined benefit obligations
Opening defined benefit obligations
Current service cost
Past service costs
Interest cost
Contributions by members
Actuarial (gains)/losses
Benefits paid
Closing defined benefit obligations
Changes in the fair value of the scheme assets
Opening fair value of scheme assets
Expected return on assets
Interest income
Contributions by members
Contributions by employer
Scheme administration expenses
Benefits paid
Closing fair value of scheme assets		 2022
2021
£000
£000
289,749
247,195
1,311
1,166
-
172
5,640
5,304
287
308
(10,690)
42,983
(7,579)
(7,379)
278,718
289,749
2022
2021
£000
£000
292,215
266,693
12,686
25,695
6,068
5,802
287
308
1,685
2,008
(931)
(912)
(7,579)
(7,379)
304,431
292,215

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AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

27 Retirement Benefits (continued)

Amounts for the current and previous four years

Fair value of scheme assets
Present value of defined benefit
obligations
Net pension asset /(liability)		 31
March
2022
31
March
2021
31
March
2020
31
March
2019
31
March
2018
£000
£000
£000
£000
£000
304,431
292,215
266,693
270,431
255,025
(278,718)
(289,749)
(247,195)
(260,341)
(260,515)
25,713
2,466
19,498
10,090
(5,490)

Other defined benefit pension schemes

Multi-employer defined benefit schemes

AQA participated in two (2021: two) multi-employer defined benefit schemes where it is not possible to separately identify the assets and liabilities for each participating employer. Accordingly, under section 28 of FRS 102, the schemes below are treated as defined contribution schemes for accounting purposes.

Teachers’ Pension Scheme

The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers’ Pension Scheme Regulations 2014. Membership is automatic for teachers employed by AQA. TPS is an unfunded multi-employer pension scheme where it is not possible to identify AQA’s share of the scheme’s assets and liabilities. Accordingly, under Section 28 of FRS 102, AQA has accounted for its contributions to the scheme as if it were a defined contribution scheme. Below is set out the information available on the scheme.

TPS is an unfunded scheme to which both the member and employer makes contributions, as a percentage of salary - these contributions are credited to the Exchequer. Retirement and other pension benefits are paid by public funds provided by Parliament. The Government Actuary, using normal actuarial principles, conducts a formal actuarial review of the TPS in accordance with the Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014 published by HM Treasury every 4 years. The aim of the review is to specify the level of future contributions. Actuarial scheme valuations are dependent on assumptions about the value of future costs, design of benefits and many other factors. The latest actuarial valuation of the TPS was carried out as at 31 March 2016. The valuation report was published by the Department for Education on 5 March 2019. The key elements of the valuation and subsequent consultation are:

A copy of the valuation report and supporting documentation is on the Teachers’ Pensions website. The next valuation result is due to be implemented from 1 April 2024.

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AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________

27 Retirement Benefits (continued)

University Superannuation Scheme

The Universities Superannuation Scheme is a hybrid pension scheme, providing defined benefits (for all members), as well as defined contribution benefits. The assets of the scheme are held in a separate trusteeadministered fund. Because of the mutual nature of the scheme, the assets are not attributed to individual employers and a scheme-wide contribution rate is set. AQA is therefore exposed to actuarial risks associated with other participating employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis. Accordingly, under Section 28 of FRS 102, AQA has accounted for the scheme as if it were a wholly defined contribution scheme. The latest available completed actuarial valuation is at 31 March 2020. At the valuation date, the value of the assets of the scheme was £66.5 billion and the value of the scheme’s technical provisions was £80.6 billion indicating a shortfall of £14.1 billion and a funding ratio of 83%. A copy of the valuation report and supporting documentation is on the Universities Superannuation Scheme website. Following the 2020 valuation, a new deficit recovery plan was implemented from October 2021, which increased deficit payments from 2% of salaries to 6.3% of salaries.

Defined contribution schemes

During the year, the total amount charged to the consolidated statement of financial activities in relation to defined contribution schemes (including the defined benefit schemes accounted for as defined contribution schemes under section 28 of FRS 102) amounted to £5,959,000 (2021: £4,962,000) . The amount charged includes contributions to the AQA defined contribution scheme. Contributions payable to the schemes at the year-end was £602,000 (2021: £nil) .

28 Prior Period Adjustment - restatement of consolidated statement of financial activities

The AQA Education financial statements separate income and expenditure into charitable educational services and other trading digital services. In the 2021 consolidated financial statements, the entire results of AQA Milton Keynes were treated as digital services in error.

The majority of AQA Milton Keynes financial activities are directly related to services required by AQA Education to meet its charitable purpose of providing examination services. As such this element should be treated as educational services on consolidation as this better reflects the nature of the activities. The 2021 figures have been restated to reflect this reclassification.

Educational services:
Income from continuing operations
Expenditure from continuing operations
Total surplus from charitable activities
Digital services:
Income from continuing operations
Expenditure from continuing operations
Total deficit from digital services		 Unadjusted
Adjustment
Restated
£000
£000
£000
132,367
752
133,119
(113,739)
(15,729)
(129,468)
18,628
(14,977)
3,651
1,449
(752)
697
(17,384)
15,729
(1,655)
(15,935)
14,977
(958)

The change in allocation results in income of £752,000 and expenditure of £15,729,000 being reallocated from digital services to educational services in 2021. There is no impact on consolidated net income/expenditure, the consolidated statement of financial position and the consolidated statement of cash flows.

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AQA Education Notes to the Financial Statements for the year ended 31 March 2022

___________ 29 Events after the reporting date

Management has not identified any adjusting events.

FRS 102 requires, for non-adjusting events, disclosure of the nature of the event, and either an estimate of its financial effect or a statement that such an estimate cannot be made.

Creation of AQA Commercial Services Limited

On 16 August 2022 AQA Commercial Services Limited a private limited company was incorporated under company number 14299239 and is wholly-owned by AQA. AQA Commercial Services Limited will act as a holding company with trading subsidiaries underneath.

Acquisition of Blutick

In November 2022 AQA acquired 100% share capital of Blutick Ltd, registered company number 11318113 (England and Wales). Blutick is a AI-driven platform, which supports the teaching, learning and assessment of Key Stage 3, GCSE and A-level Mathematics. This acquisition helps to enhance AQA’s mathematics offering.

Acquisition of A3C Solutions

In December 2022 AQA acquired 100% share capital of A3C Solutions Ltd, registered company number 08453864 (England and Wales). A3C Solutions provides a project management and reporting tool designed for the Extended Project Qualification (EPQ) submissions. This acquisition helps to enhance AQA’s EPQ offering.

Acquisition of Training Qualifications UK Ltd

In December 2022 AQA acquired 100% share capital of Training Qualifications UK Ltd, registered company number 07827508 (England and Wales). Training Qualifications UK Ltd is an End-Point Assessment Organisation built on innovation and technology that is disrupting the UK qualification and assessment sector. This acquisition helps to enhance AQA’s qualification offering.

Cazenove Loan

In December 2022 AQA has arranged a short term £10,000,000 loan facility for a 12 month period with Cazenove, secured against AQA’s investments managed by Cazenove. The facility has been put in place as a buffer due to AQA’s cyclical nature of cashflow and will ensure that AQA is able to continue to deliver on AQA’s strategy.

AQA Education to AQA Commercial Services Loan Facility

On 8 November 2022 AQA has arranged a £40,000,000 loan facility with AQA Commercial Services Limited at a commercial rate of interest. AQA Commercial Services Limited is aiming to make acquisitions of educational private limited companies whose activities will directly further AQA’s charitable purposes and which may in addition raise money through their trading operations to be applied towards those charitable purposes. The loan has been approved to provide funds to AQA Commercial Services Limited to make such acquisitions and is on the basis that the investment is in AQA’s best interests given the combination of the financial return and the degree to which its objects are advanced and the social investment duties under the Charities Act 2011 are observed.

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Legal and administrative details

Registered office

AQA Education Devas Street Manchester M15 6EX Tel: 0800 197 7162 www.aqa.org.uk Registered company number: 3644723 (England and Wales) Registered charity number: 1073334 (England and Wales)

Bankers, investment advisers and auditors

Bankers

NatWest Bank 250 Bishopsgate London EC2M 4AA

Independent Investment Advisors

Cazenove Capital Management 1 London Wall Place London EC2Y 5AU

Independent External Auditors

BDO LLP 3 Hardman Street Manchester M3 3AT

Independent Internal Auditors

KPMG LLP 1 St Peter’s Square Manchester M2 3AE

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