2024-08-31-accounts

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Private and Confidential Presentation of audit findings to the Governors of Rendcomb College For the year ended 31 August 2024 NOVEMBER 2024 = ©h£ . = ~~T~~ d

Private and Confidential

Purpose .................................................................................................................................................................................................................................................................... 1 2. Executive summary .................................................................................................................................................................................................................................................. 2 3. Audit risks and qualitative aspects ........................................................................................................................................................................................................................... 4 4. Additional matters we are required to report ........................................................................................................................................................................................................... 7 5. Review of performance ............................................................................................................................................................................................................................................ 8 6. Accounting and audit matters ................................................................................................................................................................................................................................ 13 7. Going concern ........................................................................................................................................................................................................................................................ 14 8. Taxation – Rendcomb College and Rendcomb Services Limited ......................................................................................................................................................................... 16 9. Post balance sheet events ..................................................................................................................................................................................................................................... 17 10. Recommended control improvements ................................................................................................................................................................................................................. 18 11. Objectivity and independence .............................................................................................................................................................................................................................. 19 12. Outstanding audit matters .................................................................................................................................................................................................................................... 20 13. October Budget .................................................................................................................................................................................................................................................... 21 14. Charities Act 2022 ................................................................................................................................................................................................................................................ 23 15. Reserves Policy ................................................................................................................................................................................................................................................... 25 16. Changes to the Charities Statement of Recommended Practice (SORP) .......................................................................................................................................................... 26 17. Flagstone – an online deposit account marketplace ........................................................................................................................................................................................... 28

Contacts
Scott Lawrence	Ashleigh Child	Mike Ashworth
Partner	Senior Manager	Associate Manager
+44 (0) 1242 680000	+44 (0) 1242 680000	+44 (0) 1242 680000
scott.lawrence@hazlewoods.co.uk	ashleigh.child@hazlewoods.co.uk	mike.ashworth@hazlewoods.co.uk

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

1. Purpose

This document covers the audit of the statutory financial statements of Rendcomb College, for the year ended 31 August 2024 and has been prepared for the benefit of the Board of Governors. Its purpose is primarily to bring to your attention:

Significant audit risks and how they have been addressed;
Key accounting matters impacting on the financial statements;
Our views on accounting systems and deficiencies in internal control arising only from our audit of the financial statements.

This document discusses only the material points arising from our audit. Minor matters arising during the course of our work have been discussed with Richard Wilson, Finance Manager.

We explained our audit responsibilities and objectives, procedures and limitations of the audit in our letter of engagement. This letter also explained our approach to reporting audit findings to management, taking account of your requirements as well as our professional responsibilities. Our audit was not designed to identify all matters that may be relevant to the Board of Governors. There will be further information that you will need to discharge your governance responsibilities, such as matters reported on by management or by other specialist advisors. Our views on internal controls should not be taken as comprehensive. The purpose of the audit was to enable us to express an opinion on the financial statements. The audit included consideration of internal controls relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control.

This document has been presented to the Board of Governors for the purposes of the audit clearance for the year ended 31 August 2024 and should not be distributed to any party without our prior written consent. We accept no responsibility whatsoever for any reliance placed on this document by any third party.

1.1 Our responsibilities and reporting

We are responsible for performing our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) to form and express an opinion on the financial statements. We report our opinion on the financial statements to the members. ISAs UK set out specific standards and procedures that we are required to follow in carrying out our audit and we have referred to certain of these requirements in this report.

We are also required to report on the consistency of the Governors’ Report with the rest of the financial statements and whether it has been prepared in accordance with the requirements of the Charities SORP 2019 (FRS 102) and the Companies Act 2006.

1.2 What we do not report

Our audit is not designed to identify all matters that may be relevant to the Board of Governors and cannot be expected to identify all matters that may be of interest to you and, as a result, the matters reported may not be the only ones which exist.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

2. Executive summary

The audit has progressed well, with no significant issues or delays being noted from either the audit or finance team. The draft financial statements and our audit findings are being presented to the audit committee on time. Our findings are summarised as follows:

Key risks and additional matters we are required to report

When planning our audit, we identified four significant risks, being: management override of controls, revenue recognition, identification and classification of restricted revenue, and classification between funds. We have not identified any material issues from our consideration and testing of these risks and we have no additional matters to report on in connection with any difficulties encountered during our audit, related party transactions, fraud, errors, non-compliance with laws or regulations material to the financial statements or any limitations in the scope of our work.

Review of performance

Section 5 details the financial results of the charity and of the trading company. Included here is also a summary of the adjustments processed from the initial trial balance provided to us reconciling to the draft financial statements. There have been no uncorrected misstatements identified by our audit work to report on.

Accounting and audit matters

Section 5.1.1.3 brings attention to £56,808 of restricted funds brought forward that we understand have been spent on the intended purpose in previous years. We would like to confirm with the Governors that these funds should be transferred to general funds and what narrative should be included in the financial statements. Section 6 includes details of accounting and audit matters that are relevant to the charity.

Tax update

Subject to a gift aid donation from Rendcomb Services of £17,147 to the Rendcomb College, there is no corporation tax liability. The gift aid payment will need to be paid by 31 May 2025.

Going concern

The governors’ responsibilities in relation to going concern, and our conclusions after reviewing their assertion, are set out in section 7. Our work on their assertion for Rendcomb Services is outstanding subject to receiving the forecasts.

Internal control

Section 10 discusses the findings from our audit in relation to internal control. The only point noted here is in connection with stock control and valuation for the shop within Rendcomb Services which we understand has since been resolved.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

Independence and ethical matters

We are responsible for preparation of the Corporation Tax return, although the financial statements and Corporation Tax returns remain the Governors’ responsibility. The involvement of a separate tax team of specialists ensures that the self-review threat is mitigated and the final decision on judgement rests with the management and Governors. Hazlewoods and the audit engagement team have complied with relevant ethical requirements concerning independence and our quality review procedures.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

3. Audit risks and qualitative aspects

As identified in our audit planning letter dated 2 August 2024, we assessed the following matters as being the most significant risks of material misstatement in the financial statements. These include those risks which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit and the directing of the efforts of the engagement team.

	Significant management			Control findings to be reported in management	Control findings to be reported in management	Specific letter of	representation
Significant audit risk	judgement involved	Use of experts required	Error identified		letter		point
Management override						
Revenue recognition						
Allocation of income and						
expenditure to the
appropriate fund
Classification of costs						
between charitable activities
and fundraising

3.1 Management override

Risk: International Standard on Auditing (“ISA”) 240 (UK) (“ISA UK 240”) indicates that the risk of management override of controls is present in all entities and requires that auditors shall take that into account in designing audit procedures. We have considered this risk in our audit approach.

Approach:

We have reviewed significant accounting estimates, judgements and decisions made by management in relation to the financial statements. The results of these considerations are set out elsewhere in this document.

We have performed testing to consider the appropriateness of manual and automated journal entries recorded in the general ledger and other adjustments made in preparation of the financial statements, including journal entries made at the end of the reporting period and post-closing entries, corroborating unusual entries to supporting documentation. Our testing included the analysis of journals by account, postings by user, the use of control accounts and journals by category.

We have introduced an element of unpredictability through sampling throughout our audit work.

Conclusion: Our testing has not identified any indicators or incidents of management overriding the systems and controls in place.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

3.2 Revenue recognition

Risk: ISA (UK) 240 requires that we shall plan our audit procedures with a rebuttable presumption that there is a risk revenue may be misstated due to fraud. We are unable to rebut the presumption of the risk of fraud for any of the revenue streams due to their nature and therefore this has been considered a significant risk when planning our audit.

Approach:

We have reviewed the accounting treatment of each material income stream and agreed to documentation and bank receipt where appropriate.

A number of grants may include terms which result in a need to recognise deferred income. These may be varied and complex, so any grant income (e.g. capital grants) received in the year has been agreed to correspondence from the grant making body confirming the level of income and any restrictions that may apply.

We have also taken an analytical approach, by reviewing material streams of income and comparing these to amounts received in prior years. Any significant movements within this data are then investigated further in order to identify potential errors.

We have performed substantive testing at a transactional level, as well as cut-off testing for accrued and deferred income, to confirm that these amounts have been recognised in the correct period.

Conclusion: We have reviewed the revenue recognition policies in line with FRS 102 and the SORP and did not note any matters or inappropriate accounting allocations from our audit work.

3.3 Allocation of income and expenditure to the appropriate fund

Risk: The allocation between restricted and unrestricted income and expenditure may be misstated and is an inherent risk for all charities.

Approach:

We have considered whether donations received, and related expenditure, have been correctly recognised in accordance with the relevant funding agreement, grant offer letter, or similar. For an appropriate sample of donations, we have confirmed whether any restrictions are attached to the income. We have also reviewed the presentation of restricted funds in the financial statements, to check that the income and expenditure has been allocated correctly against the relevant fund

Conclusion: We have reviewed the allocation of income and expenditure and did not note any matters from our audit work.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

3.4 Classification of costs between charitable activities and fundraising

Risk: There is a risk that costs are classified incorrectly within the financial statements, resulting in incorrect presentation and disclosure.

Approach: We have reviewed the allocations of expenditure between charitable activities and raising funds.

Conclusion: We have reviewed the classification of costs and did not note any matters from our audit work.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

4. Additional matters we are required to report

	Issue	Comments
1	Significant difficulties encountered during the	No significant difficulties encountered during the audit.
	audit.
2	Written representations required.	We will provide a letter setting out the representations required from the Governors in relation to significant matters relating to our
		audit.
3	Any fraud or suspected fraud issues.	Whilst the Governors have ultimate responsibility for prevention and detection of fraud, we are required to obtain reasonable
		assurance that the financial statements are free from material misstatement, including those arising as a result of fraud. Our audit procedures did not identify any fraud. The written representations made by you to us as referred to above includes confirmation from
		you thatyou are not aware of anyknown, suspected or alleged fraud.
4	Any suspected non-compliance with laws or	The most significant considerations for your business are tax regulations including PAYE, VAT and Corporation Tax. We made
	regulations.	enquiries of management and reviewed correspondence with the relevant authorities.
		We did not identifyanynon-compliance with laws and regulations that could have a material impact on the financial statements.
5	Significant matters in connection with related	Whilst you are responsible for the completeness of the disclosure of related party transactions in the financial statements, we are
	parties.	also required to consider related party transactions in the context of fraud as they may present greater risk for management override or concealment or fraud.
		We did not identify any significant matters in connection with related parties not disclosed in the financial statements.
		We however require confirmation from you as part of your written representations made to us that you are not aware of any related
		partytransactions or other relationships requiringdisclosure in the financial statements bystatute or accountingstandards .
6	Limitations in the scope of our audit where	There were no limitations noted.
	information was not available

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

5. Review of performance

5.1 Summary of results for the year ended 31 August 2024

			Total funds			Total funds
	Restricted funds	Unrestricted funds	2024	Restricted funds	Unrestricted funds	2023
	£	£	£	£	£	£
Income from:
Donations	-	242,544	242,544	-	738,372	738,372
Charitable activities	-	8,071,462	8,071,462	-	7,820,521	7,820,521
Investments	-	64,326	64,326	-	48,359	48,359
Other	-	276,348	276,348	-	212,026	212,026
Total income	-	9,456,257	9,456,257	-	8,819,278	8,819,278
Expenditure on:
Raising funds	-	67,168	67,168	-	65,741	65,741
Charitable activities – Staff costs	-	5,736,157	5,736,157	-	5,035,973	5,035,973
Charitable activities – Other	-	3,892,163	3,892,163	-	3,756,944	3,756,944
Total expenditure	-	9,695,488	9,695,488	-	8,792,917	8,792,917
Net (expenditure)/income	-	(239,231)	(239,231)	-	26,361	26,361
Transfers between funds	(56,808)	56,808	-	-	-	-
Gains (losses) on investment assets	-	68,000	68,000	-	(65,510)	(65,510)
Net movement in funds	(56,808)	(114,423)	(171,231)	-	(39,149)	(36,149)
Total funds brought forward	56,808	272,770	329,578	56,808	311,919	368,727
Total funds carried forward	-	158,347	158,347	56,808	272,770	329,578

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

Narrative on the results for the year

Donations have reduced compared to 2023 due to the income from Rendcomb College Foundation, which was £221k in 2024 compared to £729k in 2023.

Income from charitable activities is largely made up of school fees less bursaries and discounts given. Although the amount of bursaries, scholarships and allowances given has increased compared to 2023, the gross level of schools fees have also increased, resulting in an overall increase in school fees received. Income from school transport, additional courses and accommodation have all also increased compared to 2023.

Income from investments includes both income from investments and bank interest. The increase compared to prior year is mainly due to an increase in bank interest received during the year.

Other income is made up of rental income and function income. Both of these income streams have increased compared to 2023.

Expenditure on raising funds in 2024 (bar £357 second hand uniform expenses) relates to the expenditure incurred on the functions, and the increase compared to 2023 is comparable to the increase seen in the function income. In 2023 there was also £31k of interest charges included within expenditure on raising funds, which has reduced to £nil in 2024.

Over half of the expenditure on charitable activities relates to staff salaries, which have increased by £700k compared to 2023. The average number of employees has increased by 7 compared to last year which has contributed to this increase, along with pay rises.

Other notable movements in charitable expenditure include:

Catering costs which have increased by £75k as a result of increased hospitality as well as general cost increasing due to inflation.
Cleaning costs which have decreased by £99k following the majority of cleaning costs being brought in-house from January 2024.
Electricity costs which have increased by £126k due to the general increases in prices seen recently.
Costs relating to minibus contracts which have increased by £62k as a result of more transport services being provided to pupils.
External contractor costs which have increased due to a variety of repair work required in 2024 including on the bridge, in the sports hall and following water leaks.
A reduction in rental improvements of £67k following the full refurbishment of Orchard House in 2023.
A reduction in school agency fees due to lower numbers of international pupils being recruited.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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5.1.1 Movement in funds reconciliation

The adjustments made to the net movements in funds per management accounts for the year ended 31 August 2024 to the draft financial statements presented at this meeting are shown below.

	£
	Net movement in funds as shown in the management accounts (155,458)
	Processed adjustments
	■Investment Valuation (5.1.1.1) 68,000
	■Reversal of donation income (5.1.1.2) (56,808)
	■Depreciation (5.1.1.3) (8,202)
	■Agency fees accrual (5.1.1.4) (16,708)
	■Reversal of bursary (5.1.1.5) (2,055)
	Total value of processed adjustments (15,773)
	Net movement in funds as shown in the draft statutory financial statements (171,231)

5.1.1.1 Investment Valuation

Based on the investment portfolio provided by Cazenove Capital, we have processed an adjustment to recognise the change in value of £68,000 compared to last year. This amount represents the gains accrued during the year, reflecting the positive performance of the investments within the portfolio.

5.1.1.2 Reversal of donation income

£56,808 of donations were included in the trial balance provided for audit. On investigation, these arose from a transfer out of restricted funds, rather than income being received in the year. Since these donations have been recognised as income in a prior year, they should not be recognised as income again this year. We understand that the funds have also been spent in a previous year and so have been released form restricted funds as a transfer.

5.1.1.3 Depreciation

Although this adjustment is immaterial, we have posted it to the financial statements to ensure that the statutory accounts agree with the revised fixed asset register at the year end. During our fieldwork we calculated a difference of £8,202 in the depreciation charge for the year. When queried, Richard explained that it was simply a human error in the excel formula and an updated register was provided which correctly depreciates the multi-use games area for the full year.

5.1.1.4 Agency fee accrual

An accrual for Agency fees to Rendcomb Services Limited of £16,708 has been recognised to ensure the fees for the year match up with those recognised in the trading company. This also ensures that on consolidation with the Foundation, the intercompany balances net off exactly with each other.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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5.1.1.5 Reversal of bursary

Similar to the reversal of donation income above, £2,055 of the Francis Dutton fund was utilised in the year by way of a bursary to a pupil. This had initially been posted directly to the funds nominal, but has been reclassed to present as a bursary in the year. Although trivial, this adjustment had to be processed in order for the opening reserves to tie in with the closing position per the 2023 signed financial statements.

5.1.2 Uncorrected misstatements

No uncorrected misstatements have been identified during the audit.

During the audit, we may also have identified adjustments that we regard as clearly trivial and under International Standards on Auditing (UK) we are not required to bring these to your attention. Clearly trivial adjustments are those individually below 5% of our financial statement materiality level.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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5.2 Rendcomb Services Limited

5.2.1 Summary of Performance

A summary of performance for the year ended 31 August 2024 has been set out below:

	Year Ended	Year Ended
	31 Aug 2024	31 Aug 2023
	(£)	(£)
Turnover	274,580	220,391
Cost of Sales	(230,631)	(212,051)
Gross Profit	43,949	8,340
Administrative expenses	(25,463)	(7,361)
Operating profit	18,486	979
Interest receivable and similar income	-	-
Interestpayable and similar charges	-	-
Profit before tax	18,486	979
Taxation	-	-
Profit after tax	18,486	979

5.2.2 Commentary on results for the year

The company's turnover rose from £220,391 in the previous year to £274,580 in the current year. This growth can be attributed to £73,998 of new revenue stream from operating the village shop offset by a reduction in agency fees from international students. There was a corresponding increase in cost of sales from £212,051 to £230,631 including £50,911 of shop costs offset by a reduction in agency fees payable for international students. Administrative expenses also increased from £7,361 to £25,463, largely due to refurbishments undertaken for the Airbnb properties during the current year.

5.2.3 Profit reconciliation

One adjustment has been processed to recognise the year end stock value of £7,623. This has reduced the cost of sales and improved the profit for the year.

5.2.4 Uncorrected misstatements

No uncorrected misstatements have been identified during the audit.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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6. Accounting and audit matters

6.1 Reclassification of PAYE

PAYE owed at year end was included in the trade creditors listing. As PAYE relates to taxes and employee contributions, the sum of £108,244 has been reclassified in the financial statements from Trade Creditors to the Other Taxation and Social Security. This adjustment ensures that the PAYE liability is correctly presented, aligning with best accounting practices and improving the accuracy of the financial statement presentation. This reclassification is in line with the previous years presentation.

6.2 Trip Funds held (liability account) debit balance

The Trip Funds Held account, which is typically a creditor account, currently shows an unusual debit balance of £20,081. Upon further investigation, it was discovered that this balance includes a debit entry of £44,343 made during the year. This entry relates to an advance payment for a sports tour scheduled for beginning on 28 October 2025. Since this payment represents an advance rather than a liability, the amount has been reclassed to prepayment. There is no impact on the net movement in funds from this reclass.

6.3 Presentation of due from related parties

Within trade debtors is an amount of £200,000 owed from Rendcomb College Foundation. Since this is a balance owed from a related party, we have presented it separately in the balance sheet. This is consistent with previous years presentation and aims to provide clearer information regarding the nature of the transaction, thereby enhancing the overall accuracy of the financial statements.

6.4 Trading activities

During the year the College had income from functions of £182k and rental income of £94k, together totalling £276k of trading income. If any of this trade is subject to VAT, there is a chance the College has, or will, breach the VAT threshold, which is currently £90k. We would like to discuss this further with you to understand the actions that are in place to monitor the trading income levels.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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7. Going concern

The financial statements of the Charity and the Company have been prepared on the assumption that they are both individually a going concern and will continue their operations for the foreseeable future. General purpose financial statements are prepared on a going concern basis, unless management either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. When the use of the going concern basis of accounting is appropriate, assets and liabilities are recorded on the basis that the Charity will be able to realise its assets and discharge its liabilities in the normal course of business. In preparing the financial statements the Governors are required to assess the Charity and Company’s ability to continue as a going concern. This assessment should take into account;

The degree of uncertainty associated with the outcome of an event of condition increases significantly the further into the future an event or condition or the outcome occurs.
Any judgement about the future is based on information available at the time at which the judgement is made.

The Governors are required to consider the ability of the Charity and the Company to continue as a going concern for the foreseeable future and for a period of at least 12 months after the date the financial statements are approved.

Approach:

Our audit procedures included:

Remaining alert for economic, sector specific and Charity specific factors that might impact the Governors’ assessment of going concern.
Evaluating the Governors’ assessment of going concern, including a review of forecasts for the period to 31 August 2025 prepared by management, including assessment of the reasonableness and consistency of the assumptions with each other and the relevance and reliability of underlying data used in preparing these and the susceptibility of those assumptions to material variations.
Considering the reasonableness of management’s future actions in relation to its going concern assessment including (if relevant) whether those actions/plans will improve the situation, whether management actions are feasible and whether any additional facts have become available since management’s assessment.
Prior to finalisation of the audit, we will review the following to confirm the going concern status of the Charity:
Latest management information available; and
Review of any post balance sheet events prior to signing that may impact going concern status of the Charity.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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We shall require written representations from the Board that their assessment of going concern takes into account all relevant factors and the Board has satisfied itself that there are no material uncertainties in relation to the ability of the Charity to continue as a going concern. Furthermore, confirmation is required that the disclosures made in the financial statements in relation to going concern are appropriate.

Conclusion

Based on our audit procedures we are satisfied that the disclosures in the financial statements in relation to going concern matters are fair and made on a reasonable basis and unless circumstances change prior to issuing our audit report we do not anticipate us having to modify our audit report relating to the Charity’s ability to continue as a going concern.

We note that the College budget is forecasting a loss before depreciation of £339,809 with the following assumptions:

Number of pupils on role reduced from 423 in the previous year to 405.
No income from Rendcomb Foundation.
Circa £100k cost reductions as a result of catering coming in house.
Circa 4.5% increase in wages and salaries.

Whilst the cash outflow can be financed by cash reserves (ignoring increasing in working capital from fees paid in advance to avoid VAT) those reserves will run out in circa 24 months and therefore we recommend that the College balances its budget soon or sources alternative income streams to support its educational activities.

We note that these budgets do not include output VAT which will be applied in full (20%) to fees. They also exclude VAT recovery, increases in minimum wage and NIC from the October budget which are thought to contra each other.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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8. Taxation – Rendcomb College and Rendcomb Services Limited

For the year ended 31 August 2024, we understand that only Rendcomb Services Limited is required to prepare a corporation tax return, on request of HMRC.

8.1 Status of the tax computations on which the tax disclosures are based

The Company’s tax disclosures have been prepared based on tax computations which we understand are complete. We note that the computation is subject to tax Partner review in due course.

8.2 Corporation tax

Based on the draft financial statements, there is no corporation tax liability that applies to Rendcomb Services Limited in respect of the year ended 31 August 2024. This is on the assumption that a gift aid donation from Rendcomb Services of £17,147 will be paid up to Rendcomb College by 31 May 2025.

8.3 Enquiries

As far as we are aware, there are no current enquiries or compliance checks into the Company’s tax affairs.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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9. Post balance sheet events

Events after the end of the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. There are two types of events:

Those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the end of the reporting period); and
Those that are indicative of conditions that arose after the end of the reporting period (non-adjusting events after the end of the reporting period).

We will require written representations from the Board to confirm that there are no post balance sheet events of which need to be aware other than as disclosed in the draft financial statements.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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10. Recommended control improvements

As explained in our engagement letter, the purpose of our audit procedures is to enable us to express an opinion on the financial statements. Our audit included consideration of the internal controls relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. The matters reported are limited to those deficiencies identified during the audit and that we have concluded are of sufficient importance to merit being reported to you.

We have identified the following recommended control improvements which we consider are of significant importance to bring these to your attention. We would ask that management’s responses to the points identified are entered where indicated.

Entity	Deficiency	Potential effects	Management response
Rendcomb Services Limited	There were several items on the	This may indicate potential issues in the pricing or cost	Richard explained that this is due to a timing issue in
	stock listing that reflected negative costs and margins.	allocation processes, which may warrant further investigation to ensure the accuracy of inventory valuation and profitability calculations.	that shop stock hadn't been input into the system prior to selling the items.
		Such discrepancies could affect the overall financial performance metrics and may require corrective actions to align the stock records with the underlying economic realities	Richard explained that this process has now been tightened up but was mainly due to shop assistant posts being vacant. Richard explained that this process has now been tightened up but was mainly due to shop
			assistant posts being vacant.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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11. Objectivity and independence

In our planning letter dated 2 August 2024, we set out what we considered to be the potential or perceived threats to our objectivity and independence in carrying out the audit, along with the safeguards that we planned to implement to mitigate any such threats and the reasons as to why we considered those safeguards to be effective.

There have been no changes to these threats and safeguards and we consider therefore that Hazlewoods and the audit engagement team have complied with relevant ethical requirements concerning independence.

We remain independent and objective in forming our audit opinion.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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12. Outstanding audit matters

In addition to the points noted in the main part of the report, the following items are outstanding before we can finalise our auditor’s report:

Any final amendments to the financial statements, if any, to be processed once these have been discussed and agreed.
Latest forecasts for the College and Rendcomb Services Limited.
Signed letter of representation (to be provided by ourselves with the financial statements for signing).
Final review of going concern and post balance sheet events (performed immediately before the signing of the financial statements).

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

13. October Budget

13.1 VAT on school fees

The government has recently confirmed that the introduction of 20% VAT on private school fees and boarding services will apply from 1 January 2025.

In addition to this, it has also confirmed that any pre-payment of fees relating to a term starting on or after 1 January 2025 will be subject to 20% VAT from 29 July 2024. Therefore, from 1 January 2025, all education services and vocational training supplied by a private school, or a “connected person”, for a charge will be subject to VAT at the standard rate of 20%.

The draft legislation specifically exempts other things closely associated with education. HM Treasury’s Technical Note says “other “closely related” goods and services other than boarding (i.e. goods and services that are provided by a private school for the direct use of their pupils and that are necessary for delivering the education to their pupils) will remain exempt from VAT.”

Currently, costs that could potentially be defined as ‘closely related’, and therefore not be subject to VAT include the below:

School meals
Transport
Examination fees
Books and stationery

This has yet to be confirmed in legislation or formal HMRC guidance – it is assumed that this will be the case when such services are genuinely supplied separately to the educational fees.

Removal of the current VAT exemption will mean that schools will be required to register for VAT, once taxable income has exceeded the current VAT registration of £90,000. Once registered, schools must charge VAT on school fees. If a school already has some taxable income but has not yet exceeded the VAT threshold, it can decide to register on a voluntary basis from an earlier date. Schools will be entitled to recover input VAT on costs incurred in relation to the provision of education. Schools that do not currently make any taxable supplies (such as the hiring out of their facilities) will be able to register with HMRC from 30 October 2024.

From the date VAT registration commences, schools will also be entitled to recover retrospective VAT costs in respect of goods and services consumed directly linked to its taxable supplies. Providing the goods are still on hand at the time of registration, VAT can be recovered up to four years before the registration date. For services, VAT costs can be backdated up to six months from the date of registration.

The introduction of VAT to school fees will mean that schools will need to assess the potential impact of this change, to determine how far its school fees need to be raised, and how much of the VAT charged to the Local Authorities (or other public body funders) / parents can be absorbed by the school. It should be noted that Treasury guidance issued with the legislation expects schools to use the savings from recovering input VAT, to minimise the overall impact on VAT inclusive fees charged.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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13.2 Employer NIC

The Chancellor announced significant changes to employers’ National Insurance contributions (NICs) and the Employment Allowance, set to take effect from 6 April 2025. These adjustments attempt to balance the need for significant revenue generation with some further support for smaller businesses.

Starting in April 2025, the rate of employer NICs will rise from 13.8% to 15%. Despite this hike, the UK’s total revenue from employer Social Security Contributions and payroll taxes will remain below the OECD average and the third lowest in the G7, trailing behind France, Italy, Germany, and Japan.

The threshold at which employers become liable to pay NICs, known as the Secondary Threshold, will be reduced from £9,100 to £5,000 per employee. This change means that employers will start paying NICs at a lower level of employee earnings.

To mitigate the impact on smaller businesses, the Government is increasing the Employment Allowance. Currently, this allowance provides a £5,000 discount on NICs bills for employers with NICs liabilities of £100,000 or less. From next year, the allowance will be raised to £10,500 and additionally, the £100,000 eligibility threshold for the Employment Allowance will be removed.

The increase in headline NIC rates will be significant for many organisations but the Government estimate that more than half of employers with NICs liabilities will either see no change or will benefit overall next year.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

14. Charities Act 2022

In February 2022 the Charities Act 2022 was passed into law. This revised Act has been implemented in phases over the last couple of years.

Phase 1 (Effective 31 October 2022)

Paying trustees for providing services or goods to the charity - Charities now have a statutory power to pay trustees for providing:
services only, for example estate agency or computer consultancy
services and associated goods, for example plumbing or painting service and any associated materials such as plumbing parts or paint
goods only, for example supplying stationery to the charity
Fundraising appeals that do not raise enough or raise too much - There are now simplified requirements where funding appeals raise too much or not enough
Power to amend Royal Charters – New statutory powers for Charities to amend a Royal Charter with approval from Privy Council.

Phase 2 (Effective 14 June 2023)

Selling, leasing or otherwise disposing of charity land – The Act simplified some of the legal requirements relating to the disposal of land as follows:
widening the category of designated advisers who can provide charities with advice on certain disposals
confirming that a trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements
giving trustees discretion to decide how to advertise a proposed disposal of charity land
removing the requirement for charities to get Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy
Using permanent endowment :
charities can spend, in certain circumstances, smaller permanent endowment funds (£25,000 or less) without Commission authority
certain charities are able to borrow up to 25% of the value of their permanent endowment fund without Commission authority
charities that have opted into a total return approach to investment are able to use permanent endowment to make social investments
Charity names – The Charity Commission now have more authority over charity names.

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Phase 3 (Effective 7 March 2024)

Making changes to governing documents - Statutory powers are now in place for unincorporated charities to amend their governing document. If using this power, these charities will need to get the Commission’s authority to make certain ‘regulated alterations’ in the same way as charitable companies and Charitable Incorporated Organisations (CIO).
Selling, leasing or otherwise disposing of charity land – In addition to the above, charities can now take out a mortgage or charge on its land without asking for authority from the Charity Commission.
Charity mergers - New rules are now in force that will allow most gifts to charities to transfer to the new charity following a merger
Trustee Remuneration – The Charity Commission are now able to authorise payment to a trustee for work competed for the charity where the Commission decides it would be inequitable for the trustee to not be paid.
There is detailed guidance on each of the above points on the Gov.uk website: Charities Act 2022 changes GOV.UK (www.gov.uk)

Changes brought in by the 2022 Act will update, rather than replace, the 2011 Act and therefore mentions of the Act in financial statements will still reference 2011.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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15. Reserves Policy

The Charity Commission monitors the content of the Trustees Annual Reports that are submitted each year and has highlighted the reserves policy as an area in need of closer attention.

The disclosure should:

Explain the policy for holding reserves;
State the amount of reserves and why they are held; and
State the reasons for holding reserves that may be considered unnecessary.

Larger charities (those with income over £500k) are also required to disclose the following:

Total funds at year end
The likely timing of designated expenditure
A reconciliation to ‘free reserves’
A comparison of free reserves to the policy, outlining steps being taken to address any difference.

15.1 Free reserves

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----- Start of picture text -----
Less fixed
Less
asset fund
Total restricted and Equals free
and
reserves endowment reserves
designated
funds
funds
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Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

16. Changes to the Charities Statement of Recommended Practice (SORP)

At the end of March 2024, the Financial Reporting Council (“FRC”) published the final amendments to the periodic review of Financial Reporting Standard 102 (“FRS 102”). The Charities SORP provides guidance on how to apply FRS 102, including additional charity specific requirements, and therefore the amendments seen in FRS 102 must be adopted by Charities. Later in the year, and prior to implementation of the changes, a revised SORP is expected to be published.

In most cases this amendment becomes effective for accounting periods beginning on or after 1 January 2026, typically for 31 December 2026 year ends.

The major changes to FRS 102 are outlined below.

Lease accounting

Over the years, there has been much debate whether to bring operating leases onto the balance sheet. The revision to FRS 102 follows the broad principles set out in the relevant International Financial Reporting Standard (IFRS 16 Leases ) meaning, in essence, there is no distinction between operating and finance leases.

Lease obligations of lessees are to be capitalised and recognised as assets on the balance sheet as “right-of-use fixed assets” together with a liability for the present value of lease payments still to be made.

Depreciation will be charged as an expense on the “right-of-use fixed assets”, typically over the lease term, with a finance cost recognised for servicing the lease liability. If all things are equal, reported movement in funds are unlikely to change much compared to current recognition.

There is an exception to the transition for short-term (less than 1 year) and low-value leases and there will be no requirement to restate comparatives in the first year of application.

Revenue recognition

Revenue recognition has also been an area of focus for some time and the revised FRS 102 adopts the five-step model for revenue recognition from IFRS 15 Revenue from Contracts with Customers with some simplifications.

Charities often have many sources of funding, including income from charitable grants, donations and legacies, where funds are given freely. However, charities also receive income from contracts which could be impacted by the changes to FRS 102.

Some income characteristics to look out for are:

Contracted services
Vouchers

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

Private and Confidential

■ ‘Promises’ over time

The five step model applicable to these types of income involves:

Identifying the contract (or contracts) with a customer;
Identifying the promises in the contract;
Determining the transaction price;
Allocating the transaction price to the promises in the contract; and
Recognising revenue when (or as) promises are satisfied.

The form of the contracts with partners/donors will determine whether there is a change to revenue recognition.

In applying the changes for leasing and revenue recognition, the cumulative retrospective effect can be dealt with as an adjustment to opening reserves at the date of the initial application, rather than a full restatement for prior years.

Effective date

The above, together with other incremental improvements to FRS 102, are effective for accounting periods commencing on or after 1 January 2026. Early application is permitted as long as all those amendments are adopted at the same time.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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17. Flagstone – an online deposit account marketplace

The service

Flagstone is an online deposit account marketplace providing you with a secure online platform with the ability to compare 200+ deposit accounts from over 50+ banks, opening as many accounts as you require with just a few clicks.

How it works

Once your account is open, you will be able to transfer money to your Flagstone account, either in one go or in instalments.

When you transfer money to your Flagstone account, it is deposited into a ‘holding account’ provided by HSBC Bank plc. The holding account is a segregated trust account set up to receive and hold funds before they are sent on to the selected deposit account(s).

For deposits in excess of £250,000, there is a one off-charge of £500 to set up the account.

The benefits

The key benefit of this service is the simplicity. You do not need to complete countless new applications for each bank every time you wish to place deposits. Once you have competed the single application form, there is no further documentation needed from you to deposit into the various banks available through Flagstone. This will save you considerable time and effort, as competitive rates are right at your fingertips.

The minimum deposits are £250,000 for a corporate business and trusts and £50,000 for individual and joint accounts.

The offering also lets individuals and joint accounts benefit from FSCS protection (£85,000) per institution. Therefore, should you wish to deposit more than that covered by the FSCS, you will be able to spread your risk amongst different institutions, benefitting from additional protection.

Additionally, Flagstone’s security is attractive. Flagstone operates as a ‘closed loop’, meaning that once your funds are held in the holding account, it can then only either get deposited as you wish, or paid back to you.

In a time of rising interest rates and high inflation, it is important to ensure that your hard-earned money works for you. Take control of your money and see what it can do for you.

For individual and joint accounts, there are some special rates only available through the Flagstone platform, plus if you create an account via Hazlewoods Financial Planning LLP, you will benefit from lower charges (0.25% - 0.15% compared to 0.40% - 0.25%) than if you proceed direct.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

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This is a non-advised service, neither Hazlewoods Financial Planning LLP nor Flagstone will advise you on the suitability of depositing funds with Flagstone. Hazlewoods Financial Planning LLP are acting as an Introducer only, for introducing you to Flagstone, Hazlewoods Financial Planning LLP will receive a fee/commission of 15% per annum (for example, if you invested £250,000 we would receive £75 per year).

Require more information?

If you require more information and a brochure, please do let us know and we can put you in touch with a member of Hazlewoods Financial Planning LLP.

Presentation of audit findings to the Governors of Rendcomb College - For the year ended 31 August 2024 / November 2024

HAZLEWOODS	HAZLEWOODS
IN CHELTENHAM	IN STAVERTON
Windsor House	Staverton Court
Bayshill Road	Staverton
Cheltenham GL50 3AT	Cheltenham GL51 0UX
Tel: 01242 237661	Tel: 01242 680000

Hazlewoods LLP is a Limited Liability Partnership registered in England and Wales with number OC311817. Registered office: Staverton Court, Staverton, Cheltenham, Glos, GL51 0UX. A list of LLP partners is available for inspection at each office. Hazlewoods LLP is registered to carry on audit work in the UK and regulated for a range of investment business activities by the Institute of Chartered Accountants in England & Wales.

Contents

1. Purpose

1.1 Our responsibilities and reporting

1.2 What we do not report

2. Executive summary

Key risks and additional matters we are required to report

Review of performance

Accounting and audit matters

Tax update

Going concern

Internal control

Independence and ethical matters

3. Audit risks and qualitative aspects

3.1 Management override

Approach:

3.2 Revenue recognition

Approach:

3.3 Allocation of income and expenditure to the appropriate fund

Approach:

3.4 Classification of costs between charitable activities and fundraising

4. Additional matters we are required to report

5. Review of performance

5.1 Summary of results for the year ended 31 August 2024

Narrative on the results for the year

5.1.1 Movement in funds reconciliation

5.1.1.1 Investment Valuation

5.1.1.2 Reversal of donation income

5.1.1.3 Depreciation

5.1.1.4 Agency fee accrual

5.1.1.5 Reversal of bursary

5.1.2 Uncorrected misstatements

5.2 Rendcomb Services Limited

5.2.1 Summary of Performance

5.2.2 Commentary on results for the year

5.2.3 Profit reconciliation

5.2.4 Uncorrected misstatements

6. Accounting and audit matters

6.1 Reclassification of PAYE

6.2 Trip Funds held (liability account) debit balance

6.3 Presentation of due from related parties

6.4 Trading activities

7. Going concern

Approach:

Conclusion

8. Taxation – Rendcomb College and Rendcomb Services Limited

8.1 Status of the tax computations on which the tax disclosures are based

8.2 Corporation tax

8.3 Enquiries

9. Post balance sheet events

10. Recommended control improvements

11. Objectivity and independence

12. Outstanding audit matters

13. October Budget

13.1 VAT on school fees

13.2 Employer NIC

14. Charities Act 2022

Phase 1 (Effective 31 October 2022)

Phase 2 (Effective 14 June 2023)

Phase 3 (Effective 7 March 2024)

15. Reserves Policy

The disclosure should:

15.1 Free reserves

16. Changes to the Charities Statement of Recommended Practice (SORP)

Lease accounting

Revenue recognition

■ ‘Promises’ over time

Effective date

17. Flagstone – an online deposit account marketplace

The service

How it works

The benefits

Require more information?