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2020-12-31-accounts

Annual report and accounts 2020

A review of the year

cipfa.org

Contents

1

2

President’s introduction 6 About CIPFA 12 and CEO overview

3

4

Our purpose and strategy 14

Performance and achievements 18

5

6

Staff and environment 28

Independent Review: 30 London Counter Fraud Hub

2 CIPFA Annual Report and Accounts 2020

7

8

How we are governed 34 Opportunities and risks 42 9 10 Financial summary 46 Our future plans 56 11 12 Administrative information 60 Financial report 62

Opportunities and risks 42

01 reside4t's introdtrtion and CEO overview

This time last year, my predecessor wrote in these pages “little did we realise then the scale of the seismic shock that was to come with the arrival of COVID-19”. She could not have been more right. The challenges that have faced the public sector over the course of 2020 have been unlike any we have ever known. The word ‘unprecedented’ has been used so many times it has almost lost all meaning, but it is also true: it was an unprecedented year in every sense of the word, and thus my term as CIPFA President has been unique. However, despite the obstacles of 2020, it has been an excellent year, both for CIPFA’s students and members, and the organisation corporately.

The public sector has of course been on the frontline of the pandemic, not least my own sector of the NHS. Across the public services we saw inspiring examples of public servants going above and beyond to support citizens and communities. Services and functions were also digitised at a pace previously unheard of.

CIPFA joined this effort, with all face-to-face events and teaching moved online by 18 March 2020. Understanding what we can achieve remotely has been a revelation.

Many organisations do not see themselves ever returning to a full time, 9 to 5, ‘in the office’ model, and at CIPFA, while we look forward to the day we can get together with our members and stakeholders in face-to-face environments, the last year has certainly accelerated our ‘digital first’ approach in the UK and around the world.

In the UK, we were able to provide a bedrock of support to our members. Throughout the pandemic, we have worked closely with the Ministry of Housing, Communities and Local Government (MHCLG) to shape their planned funding package to the sector. We amended our guidance on Section 114 notices to reflect higher demand for services and increased costs. And in addition to the stellar support provide by CIPFA’s Networks and other commercial subscription services, we were also quick to offer a broad range of free-to-air services, including webinars, podcasts and a new weekly bulletin to CFOs that sorted the wheat from the chaff of government announcements.

These successes have also been realised around the world. With strong restrictions on travel, delivering projects internationally was a challenge, but CIPFA was still able to complete all planned projects for the year as well as continue to expand our reach and influence. We continued our capacity-building work in Somalia, Somaliland and Bangladesh and kicked off new World Bank-funded projects in Bangladesh and Albania. We also established our new International Advisory Panel, featuring experts from around the world, to enhance our expertise and influence the development of public financial management globally.

Even though this has, in many ways, been one of the most challenging years of my career, I’m coming away from it with a sense of optimism. Over the course of the last year, I’ve shared in your challenges, but I’ve also shared in your successes. In 2020, I have been a witness to resilience, determination and compassion in the public sector like at no other time in my professional life. It has been an honour to share this time with you.

Professor Andy Hardy President

CIPFA Annual Report and Accounts 2020 5

During 2020, services and functions were also digitised at a pace previously unheard of. CIPFA joined this effort, with all faceto-face events and teaching moved online. Understanding what we can achieve remotely has been a revelation.

Professor Andy Hardy President

6 CIPFA Annual Report and Accounts 2020

Rob Whiteman, CBE CEO

The scale of the disruption that came in the wake of the COVID-19 was both unpredicted and unprecedented. At CIPFA, while we were not expecting the crisis as we went into 2020, from the outset we moved quickly to stay ahead of the curve, controlling costs, deferring planned investment and adapting our operations to support members, students and customers remotely. I am pleased to report that in spite of these challenges we accelerated the trend of increased better trading over recent years to the degree that we achieved the most financially successful performance for many decades, delivering a £3m trading surplus and £2.8m improvement on budget. We also took the opportunity to review our business model, refresh our senior leadership team and middle management capabilities, and craft a fiveyear business plan that we are confident will spur us on to future success.

In last year’s foreword, I addressed our difficult decision to improve our balance sheet and write down the problematic London Counter Fraud Centre costs borne before July 2019 so that we had no baggage going forward in the challenging context of COVID-19. In retrospect we are all the more confident that we made the right decision, albeit an uncomfortable one. Elsewhere in this annual report you will see that we have very much continued to learn lessons and made good progress with implementing Martin Sinclair’s recommendations following his independent review.

Like the organisations we are proud to support, 2020 challenged us to think differently about our business as usual and we rose to the occasion. It’s a source of great pride that we moved quickly to adopt online invigilation for our professional exams, meaning we did not cancel a single exam for our students, the only UK professional accountancy body to do so. In parallel to online exam delivery, we shifted rapidly from face-toface to online delivery of our education programme, with no pause in learning.

CIPFA is, uniquely among UK-based professional accountancy bodies, a standard-setter as well as an educator, and we take a specific role in the statutory framework underpinning local government financial reporting. We worked collaboratively and at pace to reframe our guidance to local government CFOs to reflect the added pressures of the COVID-19 pandemic on local authorities.

We also continued close and productive dialogue with MHCLG to help shape and inform central government’s support for the local government sector. As chief executive, I was pleased to be asked to give evidence to both the Commons’ Public Accounts Committee and the Housing, Communities and Local Government Select Committee into various inquiries focused on local government.

In the fast-moving, uncertain context of 2020, CIPFA aimed to be a trusted anchor, providing reassurance and stability. We signposted members to the resources they needed to make sense of the new operating context. We introduced a weekly CFO bulletin complemented by monthly CEO bulletins, directing senior leaders in local government to the resources that really mattered. We also introduced more regular podcasts and a programme of free-to-air webinars, attracting high-profile and influential contributors to discuss and explore the professional and personal challenges of the pandemic. Our annual conference went digital and was postponed from July to October, but still offered a rich programme of content with speakers including former chancellor Lord Hammond, Welsh finance minister Rebecca Evans and BBC Newsnight’s Nick Watt. We devised a creative delegate offer, extending the reach of the conference in a way that offered good value to our members and employer organisations. Alongside this, our regular programme of smaller events continued successfully, albeit online.

There was particularly strong performance from our Networks, the Achieving Finance Excellence in Policing programme, our training services and our international advisory offer, aided in large part by our shift to online delivery. Agility is vital for organisations such as CIPFA and where we performed less strongly, for example our professional education and training service, in research and analytics and property, we offset the impact by reducing the cost base and in some cases restructuring to address longer-term challenges.

The COVID-19 pandemic has also had a profound impact on us as an employer, and our staff have been largely working remotely since before the first lockdown. Our in-house IT team moved quickly to support the shift to remote working for our staff, HR policies were flexed and updated and our internal communications increased in frequency to ensure staff were kept informed. While retaining a focus on business and customer needs, we took care to ensure staff were supported, offering them access to wellbeing resources throughout what was an uncertain and at times stressful period, which saw some staff placed on furlough. As we move out of the pandemic, we have started consultation on our new operating model in a world where remote working is the norm rather than the exception, with consequent impacts on our estate and people strategies.

In the latter part of the year, much of my attention as CEO was focused on the development of our five-year business plan, accompanied by a digital transformation programme to overhaul and update our business processes and systems. We plan to invest £10.5m, with £1.5m earmarked for year 1 (2021) and student and membership pathways are the first milestone on our transformation roadmap.

In summary, we have emerged from the crucible of 2020 a fitter organisation and imbued with the knowledge that we can do things we would never have thought possible, reaching our members and markets in new and exciting ways. We face the future with optimism and confidence. I would like to commend to our members the commitment and energy of managers and staff to achieve this.

Rob Whiteman, CBE CEO

These changes strengthen our ability to be an attractive and competitive employer to recruit and retain the very best talent and all the more thrive in our competitive markets.

“ In the fast-moving, uncertain context of 2020, CIPFA aimed to be a trusted anchor, providing reassurance and stability.

CIPFA Annual Report and Accounts 2020 9

“

Our digital transformation programme will invest £10.5m, with £1.5m earmarked for year 1 (2021), and student and membership pathways are the first milestone on our roadmap.

Rob Whiteman, CBE CEO

10 CIPFA Annual Report and Accounts 2020

CIPFA Annual Report and Accounts 2020 10

02

CIPFA, the Chartered Institute of Public Finance and Accountancy , is the professional body for finance experts in the public sector.

Our members work across all public services. They manage the largest budgets under the greatest scrutiny – that’s why the CPFA designation is widely recognised as the benchmark qualification for public service finance.

Founded in Manchester in 1885 as the Corporate Treasurers and Accountants Institute, CIPFA has helped shape public financial management in the UK, and increasingly globally.

CIPFA is the world’s only professional accountancy body to specialise in public services. Our suite of training and qualifications is sought after and highly respected around the world.

We champion high performance with information and guidance, courses and conferences, property and asset management solutions, advisory and recruitment services for a range of public sector clients.

CIPFA Annual Report and Accounts 2020 13

03 Our pur , and str4t se **

CIPFA’s Purpose

Building trust and delivering excellence in public financial management.

CIPFA believes that improving public services is the key to changing lives for the better. We aim to be the global leader in public financial management and to make a real difference to the world we live in.

CIPFA is a charity that sets the standards that UK local government and organisations worldwide adopt. Good public financial management is central to achieving and building trust across communities. Through resilient finances we can ensure public money is raised and spent with the highest degree of openness and efficiency and that critically important services are provided efficiently and effectively.

CIPFA is a membership body that supports its members and students, ensuring we equip them with the tools to deliver best-in-class public financial management across the whole of their career. We deliver qualifications that are relevant to the public sector and we offer lifelong learning materials to support career development in line with our public finance professional competency framework.

CIPFA’s aim is to lead the domestic and global debate on good public financial management and governance.

Our business works with the organisations that employ our students and members, and other key public finance stakeholders, to ensure – at the organisational level – public finance is at its strongest, contributing to effective and efficient public services.

To be a strong advocate for sound public financial management, having a positive influence and impact on practice.

To support and advise organisations, strengthening their public financial management.

To be the membership, education and lifelong learning provider of choice for public finance professionals.

To deliver exceptional business support, with the customer as our focus.

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CIPFA’s strategic
objectives
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CIPFA Annual Report and Accounts 2020 15

CIPFAS values

CIPFA is res onsive p and customer oriented

CIPFA is committed to innovation and digital delivery

CIPFA provides unique specialist ex ertise p

CIPFA is people-focused, supportive and collaborative

CIPFA is trusted as independent and ethically driven

CIPFA Annual Report and Accounts 2020 17

Performa cean ts .Ip

CIPFA is a charity. Our charitable objectives are to promote public benefit and create public value by:

1

Advancing public finance and promoting best practice

2 Regulating and supporting members

3

Educating and training student members

1 Advancing public finance and promoting best practice

Supporting the public sector’s COVID-19 response

The world public bodies operate in changed in March 2020 with the outbreak of the COVID-19 pandemic. Public bodies had to find a way to deliver their core services and ensuring good financial management continued, while adapting and responding to the impacts of lockdown, processing additional government grants and reliefs.

CIPFA’s work in 2020 was integral to these efforts. Expert CIPFA staff worked closely with MHCLG to provide advice on business rates collection fund and accounting, all of which enabled the department to shape its planned funding package to local government.

Recognising that regular and trusted communication was essential in the fast-moving environment created by the pandemic, early on CIPFA introduced a weekly email bulletin for chief financial officers (CFOs) in local government. The first edition was produced in March 2020 and continued throughout the year, receiving very positive feedback.

Supporting finance professionals in local government

The financial challenges that could be faced by local authorities in England and Wales are recognised in a statutory mechanism. The requirement to issue a Section 114 notice (a term referencing Section 114 of the Local Government Act 1988) emerges when a chief financial officer has to make public a local authority’s inability to balance its budget.

During 2020 higher demand for services resulted in increased costs for local authorities, while lockdown restrictions resulted in lower income from fees and charges. Given this content, the immediate issue of Section 114 notices was considered not to be the most appropriate response. CIPFA acted quickly to modify guidance to enable CFOs to more readily navigate the financial issues emerging from the pandemic.

Although these modifications were small, they created space for CFOs to explore other avenues for financial support. They also enabled more finance directors to meet their statutory responsibilities, while avoiding a Section 114 notice and the resulting freeze on local spending that inevitably follows – an essential outcome in the pandemic.

CIPFA Annual Report and Accounts 2020 19

The pandemic required CIPFA, as well as the organisations we support, to work differently. In what was a major success story, CIPFA’s team of Network advisors transferred nearly 300 planned face-to-face events into webinar delivery. The shift to a virtual environment ensured a seamless service was provided to customers in finance, governance, procurement, revenues, police and fire, social care, insurance and treasury management, and facilitated international outreach via some training for Unicef staff in New York.

Policy focus beyond COVID-19

Working with HM Treasury and the Public Works Loan Board (PWLB)

The Prudential Code for Capital Finance in Local Authorities was developed by CIPFA and is a professional code of practice that supports decision making on capital investment. It sits at the heart of the wider prudential framework for local authorities, which includes the legislative frameworks within the UK.

During 2020 HM Treasury and the Public Works Loan Board (PWLB) made modifications to the way local authorities access borrowing for capital investment. CIPFA was consulted by the Treasury in advance of what was a significant change to PWLB lending terms.

CIPFA also submitted a response to the consultation and gave notice that a fundamental review of the Prudential Code was being planned.

The Redmond Review

CIPFA has created a small team to address the consequences of the Redmond Review. It is working on training materials for auditors as well as taking forward the proposals for summary statements to make them a reality and add to local authority accountability.

Advising organisations on the front line

The CIPFA Advisory team built on its 2019 success and 2020 saw a growth in revenue of 9.2% to £1.74m. This is a significant achievement given the impact of COVID-19 on the consulting market. The Advisory team also responded to the challenges of delivery through a digital medium, which has been welcomed by clients.

In 2020 Advisory worked with 56 different clients to deliver almost 90 wide-ranging projects. A significant number of client engagements (18%) realised revenue between £50,000 and £320,000, which signals that our advice and guidance are valued and continually sought.

The range of support provided to local government and the police sector continues to develop. 2020 saw an increased focus on supporting organisations’ understanding and their response to commercial activities, financial stability and resilience as well as understanding their balance sheet structure and messages around performance. Advisory also continued to deliver financial management and financial governance reviews, finance function and finance environment transformation as a contribution to organisational improvement and progression.

Former CIPFA president Sir Tony Redmond completed his much-awaited review into the Oversight of Local Audit and Transparency of Local Authority Financial Reporting (the Redmond Review) in September 2020. This called on CIPFA’s expertise to assist in the design of a summary financial statement (later to be referred to as a standardised statement). We developed a series of pilot statements consistent with Redmond’s vision that summary accounts would be a vehicle to increase transparency.

20 CIPFA Annual Report and Accounts 2020

Achieving Finance Excellence in Policing

The Achieving Finance Excellence in Policing (AFEP) programme continued successfully following its April 2019 launch, despite the disruptions presented by COVID-19.

Achievements in 2020 included the production of a comprehensive and unique assessment on the statement of financial management in policing – the National Report. This report shone a light on areas of best practice to shape a national roadmap and inform local improvement plans, enabling forces to stay in control of their financial strategy.

AFEP also delivered 12 specific police data dashboards, which collectively created a unique police database, the first of its kind.

Supporting the profession internationally

2020 saw a strong start for CIPFA’s international work, with a broad portfolio of advisory and capacity building assignments drawing on our experience to strengthen public financial management (PFM) across Africa, South and Central Asia and the Caribbean.

The imposition of travel restrictions that aimed to curb the spread of COVID-19 across the globe immediately impacted many of our projects, where our staff and consultants were delivering face-to-face support in country. After ensuring the safety of our people, our immediate priority was to work with our clients to develop new ways of collaborating to ensure that our projects could continue to be delivered on time and to the quality required. Our responsiveness and flexibility meant we were able to successfully complete all of our planned activities in 2020 as well as expanding our technical breadth and geographical reach through the commencement of new projects.

Additionally, leadership support academies were convened, attended by 75 delegates and totalling 3,790 CPD hours across the stream. A successful virtual conference was also held in September, attracting 57 delegates and a range of well-placed speakers from across the police sector and other public services.

Work began on two publications focused on the role of the CFO in policing and a guide to police force collaborations.

Preparation also got underway for the second iteration of the programme – AFEP II. This places learning and development as well as talent progression at its heart. The programme will deliver a highly flexible approach to people development, supporting the next generation of police finance leaders. This comprehensive programme includes areas of training that are also available to non-finance team members.

We continued our ongoing World Bank-funded capacity building work in Somalia, Somaliland and Bangladesh, supporting the professionalisation of civil servants working in the field of PFM through delivery of CIPFA’s IPFM qualification. We continued to support the Government of Tajikistan in the organisational and capacity development of the Chamber of Accounts, the country’s state audit institution, including practical support for the implementation of performance audits. We also completed a scoping study considering the migration to accrual accounting in the Botswana Unified Revenue Service and provided recommendations on next steps for implementation.

More broadly, 2020 saw the development of important new relationships with key international stakeholders, including central and local governments and state audit institutions, donors, academic institutions and regional bodies. Through these relationships, we seek to influence the development of PFM globally, as well as building capacity to implement such developments.

CIPFA Annual Report and Accounts 2020 21

Keeping the profession connected through conferences and events

Due to the restrictions imposed by the pandemic, CIPFA’s annual conference took place later than usual and was an entirely digital event. Held over four days in October, speakers included former chancellor Lord Hammond, Welsh finance minister Rebecca Evans, Sir Tony Redmond and organisational psychologist John Amaechi. The event attracted 1,064 paying delegates, with 850 attending across the four days. The vast majority of content was available on demand for nine months after the event.

A new look and feel for CIPFA

Working with design agency PS London, CIPFA conducted a project to refresh our brand and visual identity and began rollout in Q4. The updated look and feel introduced new fonts, a broader colour palette with more tones and depth and a shift to photographic imagery. The website homepage, and some associated landing pages, were also restructured and adopted this refreshed brand identity.

Winners of the annual Public Finance Awards were also announced as part of the conference programme. Awards were given across 17 categories including a Grand Prix, which went to Manchester City Council for its social value through procurement programme.

The annual Northern Ireland conference – Public Finance Live Northern Ireland – was held in December, two months later than its normal scheduled date, but enjoyed its highest turnout ever. Members in Northern Ireland supported the event in numbers with more than 100 attending what was the last policy and technical event of the year.

Alongside these paid-for events, we launched a programme of free-to-air webinars to provide helpful information and support to public finance professionals as they grappled with the personal and professional challenges of COVID-19. Speakers appearing as part of this webinar programme included Sir Michael Barber, Lord Deben (Chair of the Committee on Climate Change), Dame Margaret Hodge MP and the Institute for Fiscal Studies. The webinars broadcast to a total 1,075 delegates live from launch in May. All content is archived on CIPFA’s YouTube channel and the channel had received a total of 18,395 views by the end of 2020.

We also increased frequency of the production of the CIPFA podcast, CIPFA Speaks!, covering topics from climate change to inclusion in the accountancy profession and featuring insights from a range of members, policy experts and commentators. Across the year, the podcast received 2,224 listens.

22 CIPFA Annual Report and Accounts 2020

Public Finance International Advisory Panel (IAP)

In 2020, CIPFA established the Public Finance International Advisory Panel, convening a global panel of more than 35 experts to generate fresh insights into public sector finance issues worldwide.

IAP members include professionals from academia, international bodies and professional accounting organisations. The IAP aims to facilitate professional and academic discussion and thought leadership on pan-public sector finance issues, including anti-corruption, internal control, budgetary management, accounting, auditing and performance reporting.

International Financial Reporting for Non-Profit Organisations (IFR4NPO)

The International Financial Reporting for NonProfit Organisations initiative is a five-year project led jointly by Humentum and CIPFA to develop the first ever international financial reporting guidance for non-profit organisations (NPOs).

Project efforts in 2020 were largely focused on increasing awareness of both the project and future guidance, ahead of the IFR4NPO consultation paper launch in January 2021. CIPFA dedicated a significant amount of time in 2020 to developing content for the consultation phase and engaged national standard setters from around the world to better inform efforts. The project team recruited country champions globally to showcase and promote the project, regional awareness sessions were organised and both the Technical Advisory Group (TAG) and Practitioner Advisory Group (PAG) held meetings to better understand and analyse the specific needs of potential users of the guidance.

CIPFA Annual Report and Accounts 2020 23

2 Regulating and supporting members

Supporting members through COVID-19

Professional ethics – supporting our members and students

From day one of the COVID-19 challenge, CIPFA’s priority was the health and wellbeing of our 17,000 members and student members and we mobilised quickly and efficiently to support them.

CIPFA consistently remained ahead of the curve of COVID-19 in the support we provided to members. Working across teams, we identified five major stakeholder groups to target in the first instance: students, member volunteers, employers, subscribers and event delegates. Each of these groups received targeted communications outlining the priority of our stakeholders’ health and wellbeing and plans for how services would be proceeding.

From 17 March, our full customer services operation was up and running remotely, and all subsequent events were reworked for online delivery. By ensuring all events were recorded, we were able to create additional value for members, as they would be able to participate even if unavailable on the day and view the content on demand.

With a largely public sector membership base for whom the mass shift to remote and online working was going to be unfamiliar, on 20 March we circulated comprehensive ‘how to’ documents for our major digital platforms, including MS Teams and GoToWebinar.

From early to mid-April, with immediate crisis communications and activities well embedded, efforts were turned to providing resources to members and students to support them in their day-to-day roles. On 8 April we launched a new COVID hub on the website, with sections dedicated to students, events and updates from government segmented by sector. This also included a free guide on leadership in times of crisis. The hub has received over 15,000 hits since launch.

A major project to assist members and students with professional ethics began in 2020. The majority of public finance professionals will likely face an ethical dilemma at some point in their career and this prompted CIPFA’s Public Finance Management Board to commission the development of an e-learning tool.

The development was largely completed in 2020 and final testing revealed a modernised means whereby members and students can benchmark their professional knowledge against the requirements of CIPFA’s Statement of Professional Practice on Ethics.

The e-learning addresses the five ethical principles of objectivity, integrity, professional behaviour, professional competence and due care and confidentiality. Users can self-test against a bank of short practical case studies and will be provided with a certificate of completion that will count towards their continuing professional development. The e-learning module will be made available to members and students on a complimentary basis and at a low cost to non-CIPFA members.

Disciplinary

Protecting the public interest and maintaining public confidence in the integrity and reputation of our membership is paramount. We investigate allegations of malpractice and apply disciplinary sanctions where necessary.

In 2020, six cases were drawn to a conclusion with two resulting in expulsion, one in an entry on record, two in no further action being taken and one case being closed for other reasons. The appeal period for two cases heard in late 2020 will elapse in 2021.

24 CIPFA Annual Report and Accounts 2020

3 Educating and training student members

CIPFA provides world-class education and training for student members. We teach the next generation of public sector finance professionals best practice in key areas, including commercial skills, governance and audit, leadership and management, technical accounting and financial reporting.

March saw a successful and very rapid move from face-to-face classes to online delivery. This required significant operational changes but was implemented with no pause in learning.

In such an uncertain and unusual time, we felt it was important to offer students support beyond the core requirements of the syllabus and so hosted a series of webinars focused on strategies to maintain wellbeing and good mental health. The student response was particularly positive, with students thanking CIPFA for supporting mental wellbeing, citing the facilitator of the sessions as a calming influence with helpful tips, and welcoming the sense of community gained from the programme.

CIPFA was the only UK professional accountancy body to offer exams throughout the first lockdown thanks to early adoption of online invigilation.

Total students

5,280

182

Students to members

CIPFA Annual Report and Accounts 2020 25

The views of regulators and assessors

Apprenticeships

The Office for Students report on Level 7 apprenticeship provision, presented in March 2020, describes CIPFA’s ‘high quality provision’ of Level 7 apprenticeship qualifications.

Its full summary paragraph was as follows:

The review team finds that as the training provider, CIPFA has sound governance and management arrangements for its higher apprenticeships; has strong relations with employers that help to enhance the on-the-job and off-the-job training experience that apprentices receive; shows sound institutional judgement in its assessment of the strengths of its programme design as confirmed by employers and the review team; demonstrates competence in how it is identifying and managing risks associated with the way in which Work-Based Learning Coaches (WBLCs) manage and support apprenticeships; in how it is managing the work of the WBLCs overall; and in how it has openly acknowledged to apprentices and to the review team weaknesses in its current online portfolio recording tool and is taking steps to improve matters for apprentices and employers; and operates admissions arrangements that ensure that applicants for its higher apprenticeships are evaluated systematically and fairly, with due regard to their personal circumstances.

In 2020 changes to regulatory arrangements were announced, bringing all apprenticeship provision under the scope of Ofsted and its Education Inspection Framework in 2021. Work begun to ensure evidence of operational and process compliance and continuous improvement in in relation to the Ofsted framework.

AAT training

CETC had its regular external assessment as a registered Association of Accounting Technicians’ Training Provider in November 2020 and received positive feedback from the external verifier (EV) who was particularly impressed with the flexibility shown by CETC to adapt training plans to meet the needs of our learners who were facing challenges at work and home due to COVID-19.

After meeting students and trainers, the EV concluded that moving to online delivery ensured that there was no break in learning for the students and they completed all training successfully. The EV highlighted the continuity provided to learners during a difficult year and confirmed students were happy with the service and standard of teaching.

Development of the new Counter Fraud Investigator Apprenticeship started in 2020 ready for its launch in 2021.

Student responses to our wellbeing webinars were particularly positive, with students thanking the organisation for supporting mental wellbeing, citing the facilitator of the sessions as a calming influence with fabulous tips, and welcoming the sense of community gained from the programme.

Non-PQ training

Trainers adapted quickly to enable a shift to training delivery via virtual classroom at the start of the pandemic and this mode has been well-received by employers and delegates. We continue to review materials and delivery methods to ensure continuous improvement in relation to content and learning outcomes.

The pandemic did impact the delivery of some programmes, particularly those being delivered outside the UK, with some clients choosing to delay programme delivery.

A range of new public-sector focused e-learning modules were developed covering Governance and Accountability, Fraud Awareness, Budget Management and Control, and Introduction to Finance Business Partnering.

26 CIPFA Annual Report and Accounts 2020

Supporting students internationally

We continued to develop our expertise in PFM professionalisation starting new World Bankfunded assignments in Bangladesh and Albania. In Bangladesh, we are supporting the development of a Competency Framework, a training needs analysis and a Code of Conduct for PFM professionals, with the aim of working towards a future-ready PFM workforce. In Albania, we are assisting the Ministry of Finance and Economy in developing and delivering a comprehensive capacity development programme to ensure technical accounting capability and capacity is increased across all tiers of government, starting with central government entities ahead of roll out to local government units.

Training at the International Fund for Agricultural Development

In 2020 CIPFA was awarded a contract to develop and deliver a global financial management training programme over three years. The client is the International Fund for Agricultural Development (IFAD), a UN Agency. IFAD provides low-interest loans and grants to finance agricultural and rural development projects that support the eradication of poverty and hunger in rural areas of developing countries. The fund commissioned the programme to strengthen the financial management practice of the projects they fund and in turn, improve the project outcomes.

The original plan was for classroom training to be held in four languages in hub locations across Africa, Asia and South America. However, following the start of the pandemic a new delivery format was agreed to incorporate e-learning and web-delivered training. CIPFA quickly geared up to increase e-learning development capacity and by the end of 2020 had completed most of the development work. 2021 sees the roll-out of the programme to delegates.

250+ delegates coming from three continents will complete the training.

24 e-learning courses

have been created.

The training will be delivered in 4 different languages.

CIPFA Annual Report and Accounts 2020 27

05 Staff an

Staff

We recognise the importance of our staff in helping make CIPFA a stand-out organisation in the way we behave and the quality of the work we deliver for the public, members, customers, each other and everyone with a stake in our work.

We want our people to share our commitment to CIPFA’s values and have fulfilling and challenging careers where they contribute to our success. Our shared behaviours form part of a new online staff performance process and are designed to foster and grow how we work.

We have enabled staff to play a key role in the development of CIPFA’s vision, strategy and direction and provided opportunities for communication and feedback at open forum engagement sessions that all staff attend and through our leadership development programme, which is creating a cohesive senior management team for the organisation.

Linked to our strategic ambitions, business plan and our aim to transform CIPFA we have implemented a new organisation structure. This will provide greater clarity on accountabilities and responsibilities and facilitate more effective collaboration across the organisation. Our senior structure is based around our four directorates, all led by a director and reporting to the Chief Executive. CIPFA Council and Board delegate to the Chief Executive day-to-day operational control of CIPFA’s business and operations.

Quality, Health, Safety and the Environment

The COVID-19 pandemic has led to the mothballing of the Birmingham and Edinburgh sites since March 2020 and the partial mothballing of the London office. Areas within the London office and the Chester site have been supported by a very small group of volunteer staff.

The COVID-19 situation has skewed all health, safety and environmental data and targets and detailed figures are therefore unfortunately not available. Wherever possible across all CIPFA sites we recycle paper and all other materials such as food waste and batteries in order to reduce our use of resources and lessen our impact on the environment.

November 2020 saw the successful three yearly recertification of the ISO 14001-2015 (Environment) and ISO 9001-2015 (Quality) systems held by CIPFA as well as the transition from OHSAS 18001 to ISO 45001:2018 (Health & Safety) covering all four CIPFA office locations. These are run as two management systems, one covering Quality and the other covering Health, Safety & the Environment, with all staff having full access to each.

Our staff forum, a representative group of employees from across the organisation, provides a mechanism for staff to meet with senior management, discuss important business issues and provide feedback on matters that concern or interest our people.

In 2020 we established a staff representative group to provide input and feedback on our plans to implement our diversity and strategy, which along with employee development and wellbeing forms an important part of our people plans for 2021.

Our staff remain committed and engaged with our mission and have performed admirably during what has been exceptional year. As we emerge from the pandemic we will push on with plans for our refocused people agenda and aim to ensure CIPFA remains a great place to work.

CIPFA Annual Report and Accounts 2020 29

Title

06 Independent Review: London Counter Fraud Hub

In October 2020, Martin Sinclair, former CIPFA Council Member and prior to retirement Deputy Auditor General at NAO, presented the findings of his independent review looking at the lessons learned from the London Counter Fraud Hub project. The review assessed CIPFA’s governance, including risk management and procedures in relation to the project.

Martin Sinclair concurred with the lessons learned and actions put in place by CIPFA and commented on the progress already made to improve capabilities and governance.

1 2

Improve the clarity of delegated authority and where decisions are made.

Improve the corporate and board culture to encourage constructive challenge and balance the perspectives of trustees, non-executive directors and executive directors.

5 6

Improve internal Guard against optimism governance processes to bias with robust bed in the new structure business planning. and ensure good information flow.

As requested by Council, the Sinclair Review also set out a range of recommendations to further improve the processes, culture and maturity of governance and delivery. The advice and action plan in response was welcomed and approved by Council at its meeting in December 2020.

The recommendations and approved action plan fall under eight themes:

3 4

Develop an overarching mandate setting out the commercial parameters and risk appetite for Commercial Board to supplement financial and decision making delegations.

Improve the opportunities for Council to oversee the work of CIPFA Board.

7 8

Ensure the revenue and capital implications of programmes and projects are well understood within the governance system.

Strengthen risk management.

CIPFA Annual Report and Accounts 2020 31

Governance responsibilities have been brought together into the new role of Company Secretary & Head of Governance with a remit to bring clarity to the system and ensure compliance with the charitable objectives, the Charter and bye-laws, and the scheme of delegation.

The initial stages of implementation have focused on bringing clarity to the governance system with improved information flow. The next phase will be to review risk management and develop the ‘mandate’ from Council to CIPFA Board and the Commercial Board. This will set out the Council’s risk appetite and the parameters for commercial activity.

Culture change was another key area of the recommendations. From the executive side, a leadership training programme for senior executives is designed to support this culture change. The two away-days arranged for the Commercial Board and CIPFA Board will also incorporate facilitated sessions to help develop the right culture.

CIPFA is committed to achieving excellence in its governance and continues to review its practice against the Charity Governance Code annually. To provide an independent check, Martin Sinclair will be invited to assess the progress made after a full year.

A new advisory board, the Portfolio Board, is supporting management through introducing rigour to business case development and review for projects and programmes. The Board’s membership is designed to provide sufficient breadth of expertise for programme review and monitoring and includes a CIPFA Business Ltd non-executive director.

32 CIPFA Annual Report and Accounts 2020

CIPFA’s year in numbers

186 scheduled faceto-face classes

moved online

11 conferences attracting 1 468 , delegates

17 consultation responses including submissions to 5 parliamentary inquiries

CIPFA Annual Report and Accounts 2020 33

07

F

Name and nature of the charity

The full name of the charity is The Chartered Institute of Public Finance and Accountancy (CIPFA). It is governed by Royal Charter granted in 1959 and is registered with the Charity Commission for England and Wales, number 231060.

CIPFA is also registered with the Office of the Scottish Charity Regulator. The registration number is SC037963.

CIPFA is managed and regulated in accordance with its Charter and Bye-laws.

Charitable objectives

To promote and To advance and to publish the promote co- results of studies operation between and research work accountancy therein and in bodies in any way. related subjects.

To advance the science of public finance and of accountancy and cognate subjects as applied to all or any of the duties imposed upon and functions undertaken by public service bodies, and to promote public education therein.

To advance and promote any scheme or schemes (howsoever constituted), having as one or more of their objects the review or regulation in the public interest of the establishment of standards by, and the training, regulatory and disciplinary activities and procedures of, any one or more accountancy bodies.

Public benefit

CIPFA’s work building trust and delivering excellence in public financial management aims to ensure public money and services are managed effectively, efficiently and securely for the benefit of all.

The Council confirms that it has complied with the duty under the Charities Act 2011 to have due regard to the Charity Commission’s guidance on public benefit. The work of CIPFA in pursuit of its objectives is detailed in Performance and Achievements.

Within the charity is a network of branches and regions. They work alongside CIPFA helping to deliver the charitable objects, principally through the provision of support and information to members and students locally.

CIPFA has one active wholly-owned subsidiary company: CIPFA Business Ltd, Companies House registration number 2376684, and a majority holding in CIPFA C.Co Ltd, registration number 10212053.

CIPFA Business Ltd is the management support services company of CIPFA and has a separately constituted board of directors. It specialises in providing financial advice and governance, property and asset management solutions, and the supply of information and expertise.

The charity (including regional groups) and the subsidiary company are reported on a consolidated basis. Membership of CIPFA is open to all who can demonstrate the required academic achievement. Fees are kept to a minimum through subsidy supplied by profits generated through the subsidiary company.

CIPFA Annual Report and Accounts 2020 35

The Institute Council

The President chairs the Institute Council. In addition to four honorary officers, the Council is constituted of no less than 21 elected members of CIPFA and up to 16 co-opted individuals.

The Council approves the co-options, taking into consideration the skills, experience and knowledge required. It evaluates these against an agreed set of criteria and aims to ensure a balanced council reflecting the sectors, geographical coverage and general make-up of the Institute membership.

All Council members play a non-executive role.

A programme of induction is provided for new Council members and mentors arranged from the cohort of more experienced council members.

Council appoints the members of the CIPFA Board, which deals with the oversight of operational matters, and includes the six trustees, who are Council members, to deal with reserved matters.

The role of the Institute Council

Council is responsible for the strategic direction of CIPFA and approving major developments. It also approves the terms of reference and delegated powers of its committees and boards. Through delegation to the CIPFA Board, it is responsible for the effective oversight of the operations of CIPFA and its subsidiary company. The Council normally meets four times a year.

Statement of Council responsibilities

The trustees must ensure that the annual report and financial statements are made in accordance with applicable law and regulations. They are also responsible for the integrity of the corporate and financial information included on the charity’s website.

Charity law requires the trustees to prepare financial statements for each financial year. Statements must give a true and fair view of the charity and the group and their financial activities in accordance with UK Generally Accepted Accounting Practice (UK Accounting Standards).

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

The trustees must disclose with reasonable accuracy at any time the financial position of the charity and the group, and ensure that the financial statements comply with the Charities Act 2011.

Trustees are also responsible for safeguarding the assets of the charity and the group and ensuring their proper application in accordance with charity law. This includes taking reasonable steps for the prevention and detection of fraud and other irregularities.

The trustees have adopted the Charity Governance Code. While CIPFA complies with the seven principles of the code, the trustees acknowledge the need to maintain compliance with the code and to strive for excellence. Therefore, we continuously review compliance and take actions where necessary. The trustees are aware that the code was updated in December 2020 and will continue to monitor its application of principles against the revised code in the year ahead.

36 CIPFA Annual Report and Accounts 2020

The governance structure

Having set the strategy for the organisation, Council delegates oversight of CIPFA’s business to the CIPFA Board, which implements the approach through other boards and committees.

The CIPFA Board comprises six trustees of CIPFA (which include the four honorary officers of the Institute), two non-executive directors, the Chief Executive and the Director of Finance.

The CIPFA Business Ltd Board, which also acts as the Commercial Board, comprises the President, Vice President, three non-executive directors, the Chief Executive, the Director of Finance and the Chief Operating Officer.

All boards and committees are formally constituted with terms of reference. The Council acts on advice and information provided by the executive. Members of Council are able, where appropriate, to take independent professional advice at no personal expense so that they are able to fulfil their role.

----- Start of picture text -----
CIPFA Council
Holds Royal Charter
Sets governance structures
Sets direction
CIPFA Board CMB
Nominations
Day to day oversight Day to day management
Committee
of CIPFA of CIPFA
Trustees Non-executive directors
Provides
Accountable for Accountable for
governance support
registered charity companies
SMB PFMB Portfolio Board
Education QA and Sets accounting Programme
membership standards management of CIPFA
Commercial Board
Audit Committee
Provides busin ess
Provides assurance
expertise
Remuneration
Committee
Key: Governance roles Regional and advisory boards and panels
----- End of picture text -----

CIPFA Annual Report and Accounts 2020 37

Key individuals

A summary of the key individuals with responsibility for the boards and committees at the core of the Institute is given below.

Audit CIPFA Students Public Financial Remuneration Commercial Nominations
Committee Board and Members Management Committee Board Committee
Board Board
Chair Lyn Andy Caroline Mohammed Joe Joe Carolyn
Davies Hardy Rassell Sajid Sealy Sealy Williamson
Vice Suresh Joe Leslie Rosanne Jane Roger Jane
Chair Patel Sealy Milne Nulty Cuthbertson Alderson Cuthbertson

CIPFA Business Ltd: CIPFA Business Ltd is the professional services business of the Chartered Institute of Public Finance and Accountancy (CIPFA). During 2020, we continued to provide cutting-edge advice and services to help public bodies improve financial management and efficiency in the face of contracting budgets.

The directors of CIPFA Business Ltd are all experienced in business or the markets that it serves. Brief details of their background and experience are included below.

Roger Alderson: Roger has spent a significant portion of his career working internationally, as a consultant (with the McKenna Group), a strategist (with Perot Systems) and a marketing director (with EDS, HP and Logica). Roger has proven experience working with a range of organisations from startups to multi-nationals and has operated from both headquarters and the field.

Mike Driver CB (Vice President): Mike moved into government finance in 1999 and held a number of senior roles from 2012 including Chief Financial Officer at the Department for Work and Pensions and Ministry of Justice. In 2017 Mike was appointed to Head of the Government Finance Function, HM Treasury, a position he held for over three years to drive the agenda to substantially strengthen the finance function’s critical role at the heart of government, ensuring better political and business outcomes. Mike has a plethora of additional roles including as a non-executive board member of Shared Services Connect Limited.

38 CIPFA Annual Report and Accounts 2020

Joe Sealy: Founding Partner at Greater Pacific Capital, Joe was previously a managing director in the Investment Banking division at Goldman Sachs. Joe has been a specialist in providing strategic advice to clients covering communications, media, entertainment, advertising and security. He is an experienced strategic advisor to corporations, investors and government institutions across multiple regions and industries.

He was a partner at KPMG in strategy consulting and implementation and has also held positions as an advisor in the public sector, specialising in privatisation and outsourcing.

Gareth Moss: A CIPFA qualified accountant, Gareth is a former Director of Resources of two local authorities and before becoming Finance Director he worked in CIPFA’s Consultancy arm, advising public sector bodies on issues as wide as financial management, governance and senior staff recruitment. Gareth’s past employment includes roles at Serco, where he was responsible for their local government contracts, Price Waterhouse and several local authorities.

Gareth is a non-executive director at Worcestershire Children First and Chairs the John Taylor Multi Academy Trust (based in Staffordshire and Derbyshire).

Mark Thomson: Mark Thomson is an experienced business leader, having held high-profile senior positions in both the private and public sector. As Director General for UK Visas and Immigration and Her Majesty's Passport Office, Mark led teams responsible for managing around 10 million visa and passport applications a year and advised the Home Secretary on immigration strategy and policy.

Rob Whiteman, CBE: Rob is CIPFA’s Chief

Executive. He formerly held a senior civil servant role as the Chief Executive of the UK Border Agency and led the Improvement & Development Agency. Rob has also worked in local government as Chief Executive of the London Borough of Barking and Dagenham and Director of Resources at the London Borough of Lewisham.

Key:

Non-executive director Member of the CIPFA Group Remuneration Committee

CIPFA Trustee

CIPFA Annual Report and Accounts 2020 39

Key management personnel remuneration

The trustees consider the CIPFA management board, which includes the chief executive, as comprising the key management personnel of the charity.

The CIPFA management board is made up of the executive directors of CIPFA and CIPFA Business Ltd. It is responsible for directing and controlling, and running and operating, the charity on a day-to-day basis.

All trustees give of their time freely and no trustee remuneration was paid in the year.

The remuneration committee has full delegated responsibility for decision making in relation to the pay and conditions of senior management including the chief executive in relation to remuneration, including:

In the case of the CIPFA management board, the chief executive recommends any bonus awards to the remuneration committee. In the case of the chief executive, any bonus award is considered on advice from the honorary officers, and on receipt of recommendations from the chair of the remuneration committee.

The committee obtains independent professional advice as required including to compare and benchmark CIPFA’s practices against those of other organisations. Executive remuneration is also benchmarked periodically with organisations of a similar size within the sector and activity to ensure that the remuneration set is fair and not out of line with that generally paid for similar roles. Such advisers may attend meetings as necessary.

Equal opportunities

The pay of the CIPFA management board is reviewed annually and is informed by any general pay award within the Institute. In the case of the chief executive, any changes to current salary, terms and conditions, bonus awards, etc are considered on advice from the honorary officers, and on receipt of recommendations from the chair of the remuneration committee.

The Institute provides a single discretionary group bonus scheme applicable to all eligible staff including the CIPFA management board, which has clear trigger points and also allows for investment in the organisation’s future growth.

CIPFA is committed to the principle and practice of equal opportunities and aims to be an equal opportunities employer.

Our employment policy seeks to ensure that no job applicant or employee receives less favourable treatment on the grounds of sex, marital status, pregnancy and maternity, sexual orientation, race, religion or belief, age, disability, gender reassignment or any other grounds that are unjustifiable in terms of equality of opportunities for all.

The nominations committee embraces CIPFA’s commitment to equal opportunities. Its role includes identifying candidates to stand for CIPFA Council from a wide variety of backgrounds. It also recommends to council candidates for co-option as well as chair and vice chair roles on major boards and committees. Again, diversity is a major factor in its considerations.

The trigger point and target surplus is reviewed and agreed as part of the annual business planning process by the trustees. The trigger and the split between bonus scheme pot and investment may vary. The bonus scheme is triggered when CIPFA generates a trading surplus above the approved business plan. All bonus awards are subject to the overall value of the bonus pot and based on assessment of individual in-year performance.

40 CIPFA Annual Report and Accounts 2020

Council members and attendance chart

Council 19/20 Council 20/21 Council Audit
Committee		 Co-opted
member
David Aldous 3/3
DannyBatten 2/3
John Bloomer 2/3
Michael Brodie 3/3
James Charlton 1/3
Carol Culley 3/3
Mike Driver 1/3
TonyEra 2/3
Kathryn Goodall 2/3
Claire Gravil 0/3
Shaer Halewood 0/3
Richard Harbord 3/3
Andrew Hardy 3/3
Elizabeth Honer 3/3
Sarah Howard 0/3
Vanessa Howlison 3/3
Milt Isaacs 3/3
Toshihiko Ishihara 3/3
Hari Iyer 2/3
Dr Peter Kane 3/3
Catherine Little 1/3
Muhammad Maqbool 3/3
Mark McBride 3/3
Lynda McMullan 1/3
Leslie Milne 3/3
Rosanne Nulty 3/3
Lee Outhwaite 3/2
Jayne Owen 3/3
Suresh Patel 3/3
Caroline Rassell 3/3
Mohammed Sajid 3/3
Renaud Seligmann 2/3
Kelly Watson 3/3
Mark White 2/3
Jon Williams 3/3
Carolyn Williamson 3/3
Derek Yule 3/3

CIPFA Annual Report and Accounts 2020 41

ities )J

Opportunities

Reduced spending across the public sector in the UK and internationally brings many challenges, but it also presents opportunities for CIPFA, through training, consultancy activity, leadership and support.

The Institute’s reputation has been established over years of promoting best practice in public finance and guiding public bodies through the toughest challenges. 2020 was no exception to that and saw CIPFA (internally) respond well to the global pandemic but it also provided opportunities for our services to support customers and members during difficult times. CIPFA continues to see these as its central roles, which makes it the first choice for public sector finance professionals looking for advice and help when the pressure is on. We are dedicated to public service, we understand how public sector organisations work and we provide bespoke support. Our UK and International Advisory work continues to support organisations deal with funding and COVID-19 related challenges.

As the world’s only public sector accountancy body there is strong demand for our expertise around the globe. Internationally, demand for public services is growing. By investing in our overseas capability, CIPFA is able to help governments across the world establish sound financial management and train the professionals needed to deliver high-quality services. Our strategy reflects these opportunities.

CIPFA invests significant time and resources into ensuring new finance professionals are fully prepared for their future careers and will operate to the highest standards. During 2020, the CIPFA Education and Training Centre has continued to focus efforts on ensuring its professional qualification and its apprenticeship offers are cutting edge, engaging and fit for purpose, to encourage new and talented individuals choose a career in public finance.

Fraud is a recognised and growing problem for the public sector, which is why CIPFA’s Counter Fraud Centre (CCFC) works to ensure public bodies have the training and support to stamp out the crime wherever it appears.

Risk management and internal control

Risks are monitored and reported on a quarterly basis at all levels of the Institute including the CIPFA Management Board, CIPFA Board and the audit committee. Risks are addressed as part of the business planning process and placed under the management of a senior member of staff and the appropriate board or committee. The Council and its audit committee are satisfied that all reasonable steps are being taken to manage exposure to major risks.

The advice received following the London Counter Fraud Hub was that the CIPFA Council mandate levels of risk that the Institute should take on different aspects of activity. This has been incorporated into our already established risk management process.

We operate a comprehensive business planning process, with an annual business plan and budget set by the CIPFA Board and approved by the Council. The CIPFA management board review key performance indicators monthly and revise forecasts as a minimum on a quarterly basis, and performance is reported to every CIPFA Board meeting.

CIPFA maintains a comprehensive set of delegations of authority and financial regulations. The financial controls and procedures are reviewed regularly and compliance with them verified by the work of the internal and external auditors.

We maintain a comprehensive set of policies and procedures, including: whistle-blowing, data protection, health and safety, complaints handling, code of conduct and register of interests for council members, non-executive directors and senior staff.

The audit committee reviews, on behalf of the Council, CIPFA’s accounting and financial reporting practices. Internal audit reviews are prioritised using a risk-based approach. Recommendations are followed up.

Following the external review by Martin Sinclair into events surrounding the London Counter Fraud Hub, CIPFA management board has developed a Risk Mandate and Appetite for Council to consider. We will further develop our approach to evaluating, mitigating and managing risks at strategic and operational levels.

CIPFA Annual Report and Accounts 2020 43

Risks

CIPFA remains alert to both the immediate and longer term risks that our core market faces. CIPFA recognises the risk caused by COVID-19 and takes seriously the health and safety of staff and customers, as well as the potential impact on income streams. The Institute has moved to digital delivery of services wherever practical to ensure the high level of service expected from us continues to be provided and to safeguard our stakeholders’ health and safety. This mode of delivery has been popular with customers, members and students and as we emerge from the pandemic we will look to retain the best and most appropriate facets of digital as well as face to face activity (although we anticipate we will continue to deliver the majority of our activity digitally). 2021 has seen the retention of a sizeable contingency to enable us to manage unforeseen situations.

Following the experience of the London Counter Fraud Hub CIPFA has revised its approach to programme and project management. A non-executive director now sits on the Programme Management Board where a rigorous approach is taken to reviewing the risks and opportunities as well as the delivery of our programmes and projects.

We continue to diversify our products and services as well as review the markets within which we operate, both within the UK and Internationally.

We continue to look to market our Professional Qualification as a relevant and attractive career path and demonstrate the opportunities to build successful and rewarding careers in public sector financial management.

44 CIPFA Annual Report and Accounts 2020

----- Start of picture text -----
Principal risks for CIPFA What the risks mean How we manage the risks
----- End of picture text -----

Sustained reductions in public Impact on the delivery of our Diversifcation of products, services,
spending by the government
lead to a signifcant reduction in		 objectives, including our charitable
aims		 markets and sectors to maintain our
income base.
our commercial income
Employers seeing less value in Reduced student numbers lead to a CIPFA Futures, key account
CPFA leads to reduction in PQ reduction in members and a smaller management to ensure we retain
student numbers Institute, which in turn impacts our our focus, attention on new
ability to support existing members apprenticeship scheme, focus
and customers on quality submissions to ESFA
and OFQUAL. Joint working with
customers and stakeholders to
ensure the relevance of
the qualifcation.
COVID-19 leads to a signifcant Inability to invest in CIPFA activities Immediate reaction to home
reduction in our income and a and consequential impact on our working and digital delivery as
failure to achieve the 2020 and attractiveness as a training and well as management action on
2021 business plan and budget membership organisation recruitment and expenditure. Focus
on emerging from the pandemic and
on developing a balanced approach
to our operations that continues to
deliver services at optimum cost
without compromising the health
and safety of our employees.
Loss of a major training provider Loss of an employer would result in a Continued attention given to
loss of income, impact on reputation ensuring our offer remains relevant
and reduction in student (and hence and appropriate for all of those
future member) numbers customers.
The level and volatility of the
Wiltshire pension fund defcit
damages the confdence of
members, staff, customers,		 Although the going concern is not an
issue (because of the Mansell St asset
on the balance sheet) the volatility of
the valuation compromises our long-		 Monitor performance of scheme.
Close scheme to new employees.
Review potential options to address
the defcit in line with Council
partners and stakeholders in the term planning instruction (June 2015). Ensure
long-term future of CIPFA revenue contributions to the scheme
are appropriate to cover the risk.
Failure to comply with the
regulatory requirements relating		 Adverse FRC monitoring would
impact signifcantly on our reputation		 Launch of CPD policy in January
2020 and sampling of member
to CPD and the subsequent compliance will identify non-
reputational and brand damage compliance and mitigate the risk.
Loss of right to deliver Signifcant fnancial and reputational OFQUAL application process has
apprenticeship training or
end point assessments		 impact on CIPFA enabled us to mitigate many of the
risks identifed.

CIPFA Annual Report and Accounts 2020 45

Financ ,Jsum

CIPFA ended the year with a negative balance sheet of £15.9m and the statement of financial activities shows a negative net movement of £8.4m for the year.

The deterioration in the CIPFA balance sheet is due to movements in the FRS 102 Pension valuation. CIPFA operates two pension schemes: a funded defined benefit pension scheme and a defined contribution group personal pension plan that has been offered to new members of staff since 1 January 2007.

The assets and liabilities of the Wiltshire Pension Fund of the Local Government Pension Scheme are subject to a full actuarial valuation every three years in accordance with the requirements of the Local Government Pension Scheme (Administration) Regulations 2008. The latest valuation of the scheme was carried out as at 31 March 2019.

With effect from 1 April 2017 the employer’s contributions are made up of two elements – a fixed sum annual payment for past service and an employer’s contribution rate of 26.0% of pensionable earnings for future service until the next triennial valuation. At the March 2019 valuation CIPFA had a pension deficit of £4,567,000.

The assumptions used in the actuarial valuation as at 31 March 2019, together with the market value of assets and funding level were:

Rate of return on investments

3.3%

Rate of increase in salaries

2.7%

Retail price inflation

2.3%

CIPFA Annual Report and Accounts 2020 47

However, FRS 102 rules require inclusion of the year-end valuation calculated on the basis defined in that standard. The scheme actuary has valued the pension scheme in accordance with FRS 102 for the purpose of the statutory financial statements. FRS 102 methodology differs from that used in the triennial funding valuation, particularly in the determination of the discount rate.

The valuation uses the projected unit credit method of valuation, projecting the valuation results of the latest formal valuation date (31.03.2019). This allows for changes in financial assumption among other factors. Similarly liabilities are rolled forward, any changes in pensionable payroll and asset values are also taken into account but it is important to stress that FRS 102 is not a formal valuation and that the pensions reserve valuation under FRS 102 is only a snapshot in time and will fluctuate.

The costs of a pension arrangement require estimates regarding future experience. These assumptions are largely prescribed at any point and reflect market conditions at the reporting date. Changes in market conditions that result in changes in the net discount rate (essentially the difference between the discount rate and the assumed rates of increase of salaries, deferred pension revaluation or pensions in payment), can have a significant effect on the value of the liabilities reported. The assumptions used have been discussed with the scheme actuary.

The variability inherent in FRS 102 valuations can be demonstrated by CIPFA’s recent history:

Year Year-end pension Year-end balance Actuarial gain/(loss)
valuation (£000) sheet position (£000) (£000)
TRIENNIAL FRS 102
(@ 31.03.XX) (@ 31.12.XX)
2016 (13,000) (34,471) (11,389) (16,500)
2017 (28,825) (4,492) 8,603
2018 (21,477) 981 3,868
2019 (4,600) (27,152) (7,498) (6,190)
2020 (38,567) (15,905) (11,266)

48 CIPFA Annual Report and Accounts 2020

Although the pension fund deficit poses a long-term issue for CIPFA, CIPFA’s governing Council recognises that FRS 102 does not, of itself, affect cash flows because CIPFA makes employer contributions to the pension fund on the basis of advice from the scheme actuary as part of their report on the triennial valuation. Following the 2019 triennial revaluation the primary employer contribution rate (costs of new benefits accruing) will increase over the three-year valuation period from April 2020 by 3.2%, and the secondary employer rate (deficit repayment) decreased by 30.0% over the same period. The objective is to fund the deficit over a total of 14 years. We acknowledge our pension fund obligations and have a clear strategy to manage the deficit, which includes a deficit reduction plan that is designed to get the scheme to selfsufficiency by 2033 subject to continued discussion and agreement with the pension scheme trustee board. The scheme is not open to new members of staff and the cost implications have been built into our business plans. The Council will continue to closely monitor any further upward pressure on the contribution rate and it is included in the CIPFA risk register. The resulting defined benefit pension scheme liability is presented separately after other net assets on the face of the balance sheet.

Reductions in public spending and a concentration of activity in responding to the pandemic and its consequences saw a reduction in our trading activity of 5.8%. However, with a very tight control on expenditure, a freeze on recruitment and deferral of investment we made an operating surplus on our trading activity of £3.026m in 2020. This retained profit will enable CIPFA to invest in our strategic priorities:

To be a strong advocate for sound public financial management, having a positive influence and impact on practice.

To be the membership, education and lifelong learning provider of choice for public finance professionals.

To support and advise organisations, strengthening their public financial management.

To deliver exceptional business support, with the customer as our focus.

CIPFA Annual Report and Accounts 2020 49

CIPFA returned an operating profit, for the third successive year, of £3.065m for the year (before noncash FRS 102 pension and property adjustments), as a consequence of the improvement in areas of our business.

2020 2019
CIPFA group operating statement £000 £000
Income 26,417 26,889
Costs (excluding restructuring costs) (22,948) (26,240)
3,469 649
Restructuring costs (404) (174)
Operating proft/(loss) 3,065 475
Intangible impairment (74) (3,736)
FRS 102 pension credit (149) 515
Net income/(expenditure) 2,842 (2,746)
Gain on property valuations 17 457
Actuarial gain on pension scheme (11,266) (6,190)
Net movement in funds (8,407) (8,479)

50 CIPFA Annual Report and Accounts 2020

Financial review and related policies

The total income for the CIPFA Group was £26.4m (2019: £26.9m) a small decrease of £0.5m (1.9%).

The net movement in funds shows a deterioration of £8.4m (2019: £8.5m deterioration), the actuarial loss on the defined benefit pension scheme offset by a modest gain in property assets and a substantial operating profit.

Detailed analysis of group operating income and expenditure shows some variations between 2019 and 2020. We had a strong performance from our Advisory, Networks and Education & Training teams who adapted immediately and successfully to the challenges of the year; our customers responded positively to these adaptations. CIPFA’s education and training student members’ incomes were impacted by the pandemic as employers deferred decisions given the uncertainties, although expenditure also dropped given the reduced costs of delivering this reduction in programmes. A restructuring of the Analytics and Research portfolio also led to a below budget outturn although this will turn around in 2021.

In 2020 the turnover reduced by 5.8% but tight control of our cost base resulted in an operating surplus of £3.026m. The prior year loss was impacted by the impairment of the London Counter Fraud Hub of £3.7m.

The business continues to respond to the needs of the changing market; as the impact of the government’s policies, most notably the reduction in public services spend, continue. Despite the continued challenging and highly competitive trading conditions, this is primarily the result of continued strong demand for our advisory, statistical, benchmarking, publishing, networks and property services.

The very strong underlying performance in 2020, allied with the continued development of our portfolio and keeping the cost base under review, will enable us to continue to respond effectively to the demand for performance improvement and transformation support in public services.

CIPFA C.Co Ltd commenced trading in July 2016 when former directors and senior managers from local government who had successfully supported the transformation of public services formed a partnership with the Chartered Institute of Public Finance and Accountancy (CIPFA). CIPFA C.Co Ltd has been established to support public sector organisations deliver the levels of transformation required to deliver public services against the backdrop of budget reductions. The aim of the company is to work with organisations that deliver public services to help them improve the advancement and wellbeing of society.

Total income for the CIPFA GroupTotal income for the CIPFA Group

----- Start of picture text -----
20202020
20192018
----- End of picture text -----

£26.4m £26.9m

CIPFA Annual Report and Accounts 2020 51

----- Start of picture text -----
Income by source
----- End of picture text -----

----- Start of picture text -----
0.9%
(1.0%)
11.3%
(11.0%)
15.0%
(12.9%)
53.3% Analysis of group
(56.9%) operating income
2020 (2019)
19.4%
(18.2%)
Membership Other trading Other income
subscriptions activities
Advancing public finance Educating and training
and promoting best practice student members
----- End of picture text -----

Expediture by source

----- Start of picture text -----
0.3%
(12.6%)
22.5%
(17.3%)
47.0% Analysis of group
(45.0%) operating expediture operating income
2020 (2019)
23.9%
(20.2%)
6.2%
(4.9%)
Advancing public finance Regulation and Impairment
and promoting best practice supporting members
Educating and training Other trading
student members expenses
----- End of picture text -----

52 CIPFA Annual Report and Accounts 2020

Reserves policy

At 31 December 2020 CIPFA had total funds excluding the pension liability of £22.5m (2019: £19.75m). Overall CIPFA had negative total funds, including the pension liability, of £15.9m with total negative unrestricted funds of £16m.

At 31 December 2020 there were total designated funds of £15.4m (2019: £15.3m) and a revaluation reserve of £4.7m (2019: £4.9m). The designated funds are represented by the property fund that represents the element of reserves that represents the cost of the freehold buildings and investment properties as at 31 December 2015, the designated fund for other fixed assets. In 2020 we released a provision of £0.5m previously designated for future legal costs given that legal action will not now be pursued against the London Borough of Ealing in relation to the legality of London Counter Fraud Hub contract. The revaluation reserve relates to the revaluation of freehold and investment property.

At 31 December 2020 there were restricted funds of £97,000 (2019: £102,000) comprising trust funds and regional funds that have been established either by way of donations in memory of eminent accountants within public finance or from various organisations.

The CIPFA Board, on behalf of Council, reviews its reserves annually. The CIPFA Board view of CIPFA’s overall position remains cautious despite the improved performance in recent years. It recognises that CIPFA remains vulnerable to economic downturns given its heavy dependence on commercial income and the public sector market.

In recognition of this focus the Board defined two key financial targets.

1. The group should have available cash or cash equivalent resources of in excess of £2m, being broadly one month’s cash requirement.

2. The group should hold a level of other charitable funds equivalent to two months of CIPFA Group expenditure. Other charitable funds exclude CIPFA’s property assets which are treated as designated funds, revaluation and pension reserves.

During 2020, the CIPFA group operated for 21 working days (74 working days in 2019 and 73 working days in 2018) with less than its target cash availability. In relation to its reserves target, while CIPFA’s total funds excluding the pension reserves at the year-end stood at £22.7m, this includes property assets of £20.5m (2019: £20.7m) that could only be realised on the sale of the property. The other charitable funds at the yearend were £2.5m representing a £1.4m (36%) shortfall against the reserves target of £3.9m. Cash balances have held up particularly well relative to previous years as a result of the underlying business performing well and returning an operating profit of £3.1m for the year, and tighter cash management. Despite that the balance sheet shows a net current liability position at the end of 2021.

The continued emphasis on cash management and improving the current asset position will therefore be a feature for 2020 and beyond.

It considers that CIPFA needs to hold reserves to protect core activities (which means being able to fund obligations, including employer pension contributions, but ideally not at the cost of charitable activities) in the event of income shortfall and to enable balanced longterm strategic planning. The approved reserves policy recognises that measuring total unrestricted funds is only one indicator and includes fixed assets that could not easily be converted to cash. Hence CIPFA Council focuses much of its effort on monitoring the group cash and current asset/liability position, including management of the pension deficit described above.

CIPFA Annual Report and Accounts 2020 53

Going concern

The CIPFA Board, on behalf of Council, has assessed the ability of CIPFA to continue as a going concern and has considered several factors when forming its conclusion as to whether the use of the going concern basis is appropriate when preparing these financial statements. This has included the revised budget for 2021 and forecast for 2021–25 contained in the business plan, cash flow forecasts to 31 December 2023 and a consideration of the key risks, including the ongoing impact of COVID-19 on the continued operation of CIPFA’s activities as well as the impact on our customers. In addition during the preparation of the budgets we incorporated some sensitivity analysis per service area around income and expenditure assumptions included in the final submission to the Board.

Since the changes forced on our operations by the pandemic in 2020 our activities have settled into ‘digital by default’ and that is now considered our preferred mode of activity. Ahead of a full move out of lockdown we are planning how we will operate our services with a greater use of remote activity than before the pandemic and we have reflected that in our plans. We do not anticipate an adverse impact on our finances; in fact, greater take up of those services and delivery at a reduced cost have been built into the business plan. We continue to anticipate access to broader markets given this mode of delivery and our operational resilience and lower risk will continue.

We maintain our focus on high quality products and services for our members and customers and seeking innovations in the delivery of those services and products.

In addition we have maintained our tight controls over expenditure and investment, only releasing the investment that is included in the business plan when we are comfortable that the underlying business performance warrants that.

The CIPFA reserves position is a deficit of £15.905m (2019: £7.948m deficit) complicated by the inclusion of the FRS 102 Pensions reserve, which stands at a deficit of £38.567m (2019: £27.152m deficit). Within that our designated funds (principally the Mansell St property) have remained stable (£15.350m (2019: £15.265m). However our charitable funds (free reserves available for investment) have seen a large increase and now stand at £2.484m (2019: £0.619m deficit) as a result of the operating surplus in 2020. This figure is still short of our target of having reserves of two months’ average expenditure (2020: £3.9m) but the planned surpluses for 2021 (£256k) and our contingency (£1.5m) if not utilised will see us hit that target. Our cash flow forecasting across the period of review indicates that sufficient working capital is available for CIPFA to satisfy all of our commitments as they fall due.

Having regard to the above, the trustees believe there are no material uncertainties surrounding the decision to adopt the going concern basis of accounting in preparing the financial statements.

Investment policy

Byelaw 59 details the extensive investment powers that are bestowed upon the Council. Given the annual cycle of fluctuation in cash balances held, the current investment policy is limited to depositing surplus funds with a range of approved institutions in tranches with a range of maturity dates. The policy focuses on low risk and readily realisable investment forms. Within these confines, we seek to obtain the best interest rates possible.

Fundraising

CIPFA had no fundraising activities requiring disclosure under section 162A of the Charities Act 2011.

CIPFA continues to face a pension fund deficit that remains subject to the future volatility of the pension scheme’s liabilities as a result of changing actuarial variables. Pension scheme considerations and contributions are incorporated into our business plan. The business plan also considers the terms and conditions of the existing bank facilities. During 2020 CIPFA took steps to make use of the various support mechanisms instigated by the UK government and that has continued into 2021 at a much reduced level.

54 CIPFA Annual Report and Accounts 2020

CIPFA’s year in numbers

56 18,395 views of CIPFA’s clients YouTube channel and advised across 2,224 listens to CIPFA’s 90 projects podcast

22,000 customer email enquiries were responded to alongside over 9,000 web chats across the UK and internationally

53

press releases and comments issued

CIPFA Annual Report and Accounts 2020 55

10 Our future plans

CIPFA is unique. Unique in our reputation and brand strength, unique in the commitment and passion of our team and unique in our focus. No other Institute does what we do, focusing purely on public finance. Now is the time to capitalise on the opportunity presented by governments and their public sectors, which are facing very real challenges and risks, ensuring CIPFA is a responsive organisation that is vibrant, energetic and focused. This ambition is reflected in our growth plans contained in the 2021–2025 business plan.

As an organisation we will be responding to some major global challenges: emerging from the disruption caused by the COVID-19 pandemic, climate change, the advent of globalisation and the need for sustainability reporting. We will need to ride the waves of data and disruptive technology and accommodate their impact on the accountancy, audit and public finance profession. We will be leading on prevention and fighting the rising tide of corruption and fraud. We will complement governments as they seek to professionalise the public sector with tailored training and development.

CIPFA is a membership body that supports our members and students, ensuring we equip them with the tools to deliver best-in-class public financial management across the whole of their career. CIPFA is a charity, promoting best practice in public finance. CIPFA sets the standards that UK local government and organisations worldwide adopt. CIPFA is a trainer, delivering accountancy and other qualifications that are relevant to the public sector, and preparing students for the future and lifelong learning materials available to support career development in line with a clearly defined competency framework for public finance professionals. In 2021 we will launch our benchmark chartered professional accountancy qualification, grow our capacity to meet rapidly rising demand for accountancy apprenticeships in the UK and extend our accredited training programmes in finance, governance and counter fraud globally.

To support CIPFA’s aims, our business teams work with the organisations that employ our students and members, and other key public finance stakeholders, to ensure – at the organisational level – public finance is working at its strongest, contributing to effective and efficient public services. In 2021 CIPFA will continue to build on its recent strong performance in the advisory field, supporting public sector financial resilience improving organisational capacity and good governance. 2020 saw the delivery of the next generation of CIPFA data analytics solutions as we aim to meet the growing demand for accessible, portable, flexible and customised products and services, and in 2021 we will grow our use and availability of that.

In 2020 we were forced by the pandemic to delay the launch of ‘CIPFA and me’, our new people strategy, which sets out what we offer staff and what we expect from them. This will roll out in 2021. We will create an environment where people want to work and can perform at their best. We will create a culture where our people are supported, engaged and empowered to fulfil their potential and deliver results. We will also initiate the plans set out in our new diversity and inclusion strategy supporting staff, members and the wider profession to improve access and opportunity for progression in their careers regardless of background as well as developing our approach to sustainability and sustainability reporting.

Through our new business plan and strategy CIPFA will focus on the key account sectors – local government, central government, health and social care, international, police and property – while also remaining responsive to the wider market. We will continue to collaborate with other professional accounting organisations, ministries of finance and supreme audit institutions across the globe, growing our student and member base.

CIPFA Annual Report and Accounts 2020 57

2020 was a particularly strong year for CIPFA in terms of our business performance and financial position; we will look to consolidate this success and invest in services, digital delivery and key new capabilities evolving CIPFA’s policy, research and evidence base, investing in product development and digitising our services.

Notwithstanding recent growth, there remains significant uncertainty arising from COVID-19 and a sluggish global economic outlook and these are still challenging times, so we will continue to balance investment with a cautious approach, building a stronger balance sheet and reducing our long-term liabilities.

The trustees’ annual report was approved on 29 April and signed on their behalf by Professor Andy Hardy, CIPFA President.

Professor Andy Hardy President

58 CIPFA Annual Report and Accounts 2020

CIPFA’s year in numbers

24 e-learning courses

207 new apprentices enrolled

developed for IFAD students

200

1,128 media mentions

open training events (4,826 delegates), of which were provided at 28 no charge to participants (1,565 delegates)

CIPFA Annual Report and Accounts 2020 59

ill 11 rative r¥n-a

The full name of the charity is The Chartered Institute of Public Finance and Accountancy (CIPFA). It is a charity by Royal Charter granted in 1959 and is registered with the Charity Commission for England and Wales, number is 231060.

CIPFA is also registered with the Office of the Scottish Charity Regulator. The registration number is SC037963.

Principal Office

77 Mansell Street London E1 8AN

Principal Advisers

Bankers

CIPFA Management Board

Chief Executive: Rob Whiteman, CBE

Director of Finance and Performance: Peter Woodman (retired December 2020)

Director of Finance: Gareth Moss (joined January 2021)

Chief Operating Officer: Dan Worsley

Director of Policy and Membership: Drew Cullen

Director of Public Financial Management: Karen Sanderson

Director of International: Khalid Hamid

Interim Director of Transformation: Ravi Dhindsa (joined November 2020)

Lloyds Bank Plc Villiers House 48-49 Villiers Street London WC2N 5LL

Insurers

Bartlett and Company Ltd Broadway Hall Horsforth Leeds LS18 4RS

Solicitors (disciplinary)

DAC Beachcroft 100 Fetter Lane London EC4A 1BN

Head of HR: Darren Parris

Solicitors (corporate)

Interim Head of Governance: Nicola Hannam (joined November 2020)

Steeles Law Solicitors Limited 154 Bishopsgate London EC2M 4LN

Auditor

Crowe U.K. LLP 55 Ludgate Hill London EC4M 7JW

CIPFA Annual Report and Accounts 2020 61

Financia repor

Consolidated statement of financial activities for the group

Year ended 31 December 2020

2020 2019
Note £000 £000
Income
Income from charitable activities:
Membership subscriptions 2,995 2,956
Advancing public fnance and promoting best practice 3,967 3,472
Educating and training student members 5,138 4,884
Regulation and supporting members 0 5
12,100 11,317
Other trading activities:
Income from information, advisory and property services 2 14,081 15,296
Investments: Interest received 9 16
Other income:
Property sales and rentals 3 227 260
Total income 26,417 26,889
Expenditure
Expenditure on charitable activities:
Advancing public fnance and promoting best practice 5,314 5,138
Educating and training student members 5,644 5,985
Regulation and supporting member 1,466 1,445
12,423 12,568
Other expenditure:
Expenditure from information, advisory and property services 2 11,078 13,331
Impairment of intangible asset 8 74 3,736
Total expenditure 4 23,575 29,635
Net income (expenditure) 2,842 (2,746)
Other recognised gains/losses:
Gain on revaluation of fxed assets 18 17 457
Actuarial gain on defned beneft pension scheme 7 (11,266) (6,190)
Net movement in funds (8,407) (8,479)
Reconciliation of funds
Fund balances brought forward at 1 January (7,498) 981
Fund balances carried forward at 31 December (15,905) (7,498)

The results set out in the above statement of financial activities all relate to continuing operations and include the net restricted expenditure attributable to the non-controlling interest in CIPFA C.Co Ltd of £5k net expenditure (2019: £25k net income).

There are no other gains or losses other than those recognised above and therefore no separate statement of total recognised gains and losses has been presented. Further analysis can be found in note 19.

The notes on pages 66 to 84 form part of these financial statements.

CIPFA Annual Report and Accounts 2020 63

Consolidated balance sheets

As at 31 December 2020

Group CIPFA
2020 2019 2020 2019
Note £000 £000 £000 £000
Fixed assets
Intangible assets 8 552 346 263 141
Tangible assets 9 13,710 13,865 13,638 13,770
Investment property 10 6,975 7,100 6,975 7,100
Investments 11,12 9 9 409 409
21,246 21,320 21,285 21,420
Current assets
Stocks and work in progress 14 299 110 157 2
Debtors 15 2,862 3,740 1,962 2,439
Cash at bank and in hand 6,011 2,574 1,244 1,346
9,172 6,424 3,363 3,787
Creditors:amounts falling due within one year 16 (7,105) (6,934) (2,090) (3,914)
Net current (liabilities)/asset 2,067 (510) 1,273 (127)
Total assets less current liabilities 23,313 20,810 22,558 21,293
Long-term liabilities
Creditors:amounts falling due after more than one year:
Loan 17 (651) (1,156) – –
Net assets excluding pension liability 22,662 19,654 22,558 21,293
Defned beneft pension scheme liability 7 (38,567) (27,152) (38,567) (27,152)
Net assets/(liabilities) including pension liability (15,905) (7,498) (16,009) (5,859)
Funds
Restricted funds 19 42 42 42 42
Minority interest 55 60 – –
Unrestricted funds
Designated funds 15,350 15,265 15,350 15,265
Revaluation reserve 4,731 4,906 4,731 4,906
Other charitable funds 2,484 (619) 2,435 1,080
Total funds excluding pension liability 22,662 19,654 22,558 21,293
Pension reserve 7 (38,567) (27,152) (38,567) (27,152)
Total funds including pension liability (15,905) (7,498) (16,009) (5,859)

The financial statements of CIPFA’s branches, regions, and students’ societies are incorporated within the Charity’s financial statements. Before consolidation into the group financial statements, the charity made a surplus of £1,083,000 in 2020 (2019: a deficit of £754,000) The surplus for this year is before other recognised losses of £11,249,000 (2019 £5,733,000).

Approved and authorised for issue by the Council on 29 April 2021 and signed on its behalf by:

President

Chief Executive

The notes on pages 66 to 84 form part of these financial statements.

64 CIPFA Annual Report and Accounts 2020

Consolidated statement of cash flows

For the year ended 31 December 2020

Note
2020
£000
2020
£000
2019
£000
2019
£000		 Note
2020
£000
2020
£000
2019
£000
2019
£000		 Note
2020
£000
2020
£000
2019
£000
2019
£000
Net cash provided by operating activities
4,577
1,800
Cash fows from investing activities
Interest received
8
16
Purchase of intangible fxed assets
(381)
(281)
Purchase of tangible fxed assets
(215)
(160)
Net cash (used in) investing activities
(588)
(425)
Cash fows from fnancing activities
Commercial loan
17
(484)
(360)
Interest paid
2
(69)
(91)
Net cash provided by fnancing activities
(553)
(451)
Net increase in cash and cash equivalents
3,437
924
b/fwd Cash at bank
2,574
1,650
c/fwd Cash at bank
6,011
2,574
Notes to the cash fow statement
A. Net cash (used in) operating activities
2020
£000
2019
£000
Net income/(expenditure)
Current year pension (credit)
7
Interest receivable
Interest payable
2
Commercial loan
17
Depreciation and amortisation charges
8 & 9
Impairment of intangible asset
8
Loss on disposal of fxed assets
Decrease/(increase) in stocks and work in progress
Decrease/(increase) in debtors
(Decrease)/increase in creditors		 2,842
(2,746)
149
(515)
(8)
(16)
69
91
484
360
420
600
74
3,736
–
56
(189)
251
879
(73)
(142)
56
4,577
1,800
At 1 Jan Cashfows At 31 Dec
2020 2020
B. Analysis of changes in net debt £000 £000 £000
Cash in hand 2,574 3,437 6,011
Commercial Loan (1,640) 484 (1,156)
Total 934 3,921 4,855

CIPFA Annual Report and Accounts 2020 65

Notes to the financial statements

1. Accounting policies

Company information

The full name of the charity is the Chartered Institute of Public Finance and Accountancy (CIPFA). It is a public benefit entity set up by Royal Charter granted in 1959 and is registered with the Charity Commission for England and Wales. The charity registration number is 231060. CIPFA is also registered with the Office of the Scottish Charity Regulator. The registration number is SC037963. CIPFA is a Public Benefit Entity and its registered office is 77 Mansell Street, London, E1 8AN.

Accounting conventions

The consolidated financial statements comprise the financial statements of CIPFA and its subsidiary undertakings, CIPFA Business Ltd, registration number 2376684 and CIPFA C.Co Ltd, registration number 10212053, on a line by line basis and adjusted for the elimination of inter-group transactions and balances.

Going concern

The CIPFA Board, on behalf of Council, has assessed the ability of CIPFA to continue as a going concern and has considered several factors when forming its conclusion as to whether the use of the going concern basis is appropriate when preparing these financial statements. This has included the revised budget for 2021 and forecast for 2021–25 contained in the business plan, cash flow forecasts to 31 December 2023 and a consideration of the key risks, including the ongoing impact of COVID-19 on the continued operation of CIPFA’s activities as well as the impact on our customers. In addition during the preparation of the budgets we incorporated some sensitivity analysis per service area around income and expenditure assumptions included in the final submission to the Board.

Since the changes forced on our operations by the pandemic in 2020 our activities have settled into ‘digital by default’ and that is now considered our preferred mode of activity. Ahead of a full move out of lockdown we are planning how we will operate our services with a greater use of remote activity than before the pandemic and we have reflected that in our plans. We do not anticipate an adverse impact on our finances; in fact, greater take up of those services and delivery at a reduced cost have been built into the business plan. We continue to anticipate access to broader markets given this mode of delivery and our operational resilience and lower risk will continue.

We maintain our focus on high quality products and services for our members and customers and seeking innovations in the delivery of those services and products.

In addition we have maintained our tight controls over expenditure and investment, only releasing the investment that is included in the business plan when we are comfortable that the underlying business performance warrants that.

CIPFA continues to face a pension fund deficit that remains subject to the future volatility of the pension scheme’s liabilities as a result of changing actuarial variables. Pension scheme considerations and contributions are incorporated into our business plan. The business plan also considers the terms and conditions of the existing bank facilities. During 2020 CIPFA took steps to make use of the various support mechanisms instigated by the UK government and that has continued into 2021 at a much reduced level.

The CIPFA reserves position is a deficit of £15.905m (2019: £7.948m deficit) complicated by the inclusion of the FRS 102 Pensions reserve, which stands at a deficit of £38.567m (2019: £27.152m deficit). Within that our designated funds (principally the Mansell St property) have remained stable (£15.350m (2019: £15.265m). However our charitable funds (free reserves available for investment) have seen a large increase and now stand at £2.484m (2019: £0.619m deficit) as a result of the operating surplus in 2020. This figure is still short of our target of having reserves of two months’ average expenditure (2020: £3.9m) but the planned surpluses for 2021 (£256k) and our contingency (£1.5m) if not utilised will see us hit that target. Our cash flow forecasting across the period of review indicates that sufficient working capital is available for CIPFA to satisfy all of our commitments as they fall due.

Having regard to the above, the trustees believe there are no material uncertainties surrounding the decision to adopt the going concern basis of accounting in preparing the financial statements.

66 CIPFA Annual Report and Accounts 2020

Basis of preparation

The financial statements have been prepared under the historical cost convention as modified by the revaluation of freehold land and buildings and investment property and in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) – effective 1 January 2015.

The financial statements have been prepared to give a ‘true and fair’ view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a ‘true and fair view’. The departure has arisen because charities are now required to prepare their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) issued on 16 July 2014 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005, which has since been withdrawn.

The functional currency of CIPFA and its subsidiary entity is considered to be GBP because that is the currency of the primary economic environment in which the group operates. The consolidated financial statements are also presented in GBP.

Further details of the CIPFA’s active subsidiary undertakings are provided in note 2.

The financial statements of CIPFA’s branches, regions, and students’ societies are incorporated within the Charity’s financial statements.

Income recognition

Income is credited to the statement of financial activities in the year to which it relates. Income is deferred only when conditions have to be fulfilled before CIPFA becomes entitled to it or where the donor has specified that the income is to be expended in the future period. In the case of membership subscriptions and subscriptions for journals and electronic services any receipt in respect of future years is shown as deferred income.

Government grants

Government grants are recognised on the performance model, when the charity has complied with any conditions attaching to the grant and the grant will be received. The grant in connection to the job retention scheme has been recognised in the period to which the underlying furloughed staff costs relate to. Included in income is an amount of £292,702 in respect of the Coronavirus Job Retention Scheme.

Investments

Listed investments are stated at mid-market value at the year-end, with realised and unrealised gains and losses being shown in the statement of financial activities. Other investments where there is no identifiable market price are valued having regard to the cost of the investment, the underlying net assets of the entities invested in and a potential market valuation.

Investment properties are measured at fair value annually with any change recognised in the statement of financial activities. The trustees deem market value to be a fair approximation of fair value for the purpose of obtaining annual valuations. A full valuation is undertaken every three years and interim valuations are performed in intermediate years.

Expenditure recognition

Expenditure, including irrecoverable value added tax, is debited to the statement of financial activities on an accruals basis:

CIPFA Annual Report and Accounts 2020 67

Pensions

CIPFA operates two pension schemes for its staff. The first is a funded defined benefit pension scheme under the Superannuation Act 1972, which is subject to the Local Government Pension Scheme (Administration) Regulations 2008 and which, from 1 January 2007, staff are only eligible to join under specific circumstances. The second pension scheme introduced from 1 January 2007 is a defined contribution group personal pension plan via Aegon.

Defined benefit pension scheme

Pension contributions are paid to a local government defined benefit pension scheme in accordance with the recommendations of actuaries. The scheme is funded, with the assets of the scheme held separately from those of CIPFA, in separate trustee-administered funds.

CIPFA has fully adopted Financial Reporting Standard FRS 102 for the accounting treatment of retirement benefits.

Current service costs, past service costs, gains and losses on settlements and curtailments, interest on pension scheme liabilities and the expected return on pension scheme assets are charged to resources expended.

Actuarial gains and losses are recognised immediately as other recognised gains and losses, after net incoming/(outgoing) resources for the year.

As detailed in note 7, pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis and discounted at a rate equivalent to the current rate of return on a highquality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained triennially and are updated at each balance sheet date. The resulting defined benefit pension scheme liability is presented separately after other net assets on the face of the balance sheet.

Defined contribution scheme

Defined contributions are paid to the group personal pension plan via Aegon in accordance with the group policy. The policy allows for minimum employee contributions of 3%, with the employer contributing double the employee contribution up to a maximum of 10%.

Stocks and work in progress

Stocks and work in progress are stated at the lower of cost and net realisable value. Work in progress comprises the cost of ongoing projects and work performed on contracts not yet billed to clients. Costs include direct labour, contractual costs and attributable overheads.

Leased assets – lessee

Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term.

Leased assets – lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

Research and development

Research and development is normally written off as incurred, except for specific projects that are deemed to generate future benefit.

Intangible fixed assets – development expenditure

Intangible fixed assets represent development costs capitalised in accordance with FRS 102. These are stated at historical cost and amortised on a straightline basis over the period which revenue is expected to be generated (three to five years).

Amortisation is recognised in the statement of financial activities under expenditure on charitable activities.

CIPFA C.Co Ltd operates a defined contributions personal pension plan via Royal London, with defined contributions paid in accordance with the company policy.

68 CIPFA Annual Report and Accounts 2020

Tangible fixed assets and depreciation

Freehold property is held at valuation and depreciated over 50 years. Revaluations are undertaken by an independent valuation expert annually. A full valuation is undertaken of freehold property every three years and interim valuations in intermediate years. Included in the fixed asset note is the carrying amount that would have been recognised had the assets been carried under the historical cost model.

Other fixed assets are capitalised and depreciated if the value is greater than £1,000 for an individual asset or greater than £5,000 for a capital project.

Tangible fixed assets are depreciated from the month the assets are first used on a straight-line basis over their estimated economic lives as follows:

Years
Computer equipment 3
Furniture, fttings and other equipment 5

Assets under construction relate to refurbishment and information technology development and are not depreciated until brought into use.

Deferred taxation

Deferred tax is provided in full in respect of material timing differences between the treatment of certain items for taxation and accounting purposes. A deferred tax asset is only recognised where the conditions for recognition in FRS 102 are satisfied and such balances may fall due after more than one year.

Fund accounting

Unrestricted funds held by the charity are:

Designated funds – these are unrestricted funds set aside by the trustees for specific future purposes or projects.

Other charitable funds – these are unrestricted general funds that can be used in accordance with the charitable objects at the discretion of trustees.

Restricted funds – those funds that can only be used for particular restricted purposes within the objects of the charity. Restrictions arise when specified by the donor or when funds are raised for particular restricted purposes.

Further explanation of the nature and purpose of each fund is included in the notes to the accounts.

Critical accounting judgements and key sources of estimation uncertainty

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements are described in the accounting policies and are summarised below:

Pension liabilities – The charity recognises its liability to its defined benefit pension scheme, which involves a number of estimations as disclosed in note 7. These estimates were made having taken advice from the scheme actuary.

Valuation of land and buildings and investment property – The charity’s land, buildings and investment property are stated at their estimated fair value based on professional valuations as disclosed in note 9 and 10.

Financial instruments

Financial assets and financial liabilities are recognised when CIPFA becomes a party to the contractual provisions of the instrument. Additionally, all financial assets and liabilities are classified according to the substance of the contractual arrangements entered into. Financial assets and liabilities are initially measured at transaction price (including transaction costs) and are subsequently re-measured where applicable at amortised cost. Assets and liabilities held in foreign currency are translated to GBP at the balance sheet date at an appropriate year-end exchange rate.

CIPFA Annual Report and Accounts 2020 69

2. Profits from trading activities of subsidiary

CIPFA has one active wholly-owned trading subsidiary: CIPFA Business Ltd, registration number 2376684. The principal activities of CIPFA Business Ltd are networks, advisory and research. CIPFA Business Ltd remits a proportion of its profits to CIPFA by means of gift aid. Audited accounts are filed with the Registrar of Companies.

CIPFA additionally owns a 75% interest in the trading subsidiary CIPFA C.Co Ltd, registration number 10212053, which commenced trading in July 2016. The principal activities of CIPFA C.Co Ltd are strategy, transformation and improvement advisory services. A summary of the trading results of both subsidiaries are shown below.

2020 2019
Proft and loss account – CIPFA Business Ltd £000 £000
Turnover 13,187 14,002
External charges (1,581) (2,706)
Staff costs (5,884) (6,248)
Depreciation (89) (134)
Impairment of intangible asset – (3,736)
Other operating charges (2,545) (2,970)
Operating proft 3,088 (1,792)
Interest receivable 8 5
Interest payable (71) (91)
Proft on ordinary activities before taxation 3,025 (1,878)
Tax on proft on ordinary activities – –
Proft after taxation 3,025 (1,878)
Funds brought forward (1,478) 230
Gift aid to CIPFA (1,262) (230)
Retained in subsidiary (2,740) (1,878)
Net assets 285 (1,478)
2020 2019
Proft and loss account – CIPFA C.Co Ltd £000 £000
Turnover 904 1,318
External charges – –
Staff costs (604) (801)
Other operating charges (320) (393)
Operating proft (20) 124
Interest receivable – –
Proft on ordinary activities before taxation (20) 124
Tax on proft on ordinary activities – (24)
Retained in subsidiary (20) 100
Net assets 218 239

70 CIPFA Annual Report and Accounts 2020

3. Property income

2020 2019
£000 £000
Rent and dilapidations from tenants 227 260
227 260

Property income is the income from tenants occupying parts of the Mansell Street property during the year.

4. Total resources expended

Group Support costs
Activities
direct
costs
£000
Human
resources
£000
ICT
£000
Finance
& admin
support
£000
Marketing
& public
relations
£000
Govern
£000
Defned
beneft
pension
costs
£000
2020
Total
£000
Charitable expenditure:
Advancing public fnance
and promoting best practice
Educating and training
students
Regulation and supporting
members		 3,390
122
349
213
1,008
149
83
5,314
3,713
181
539
298
774
160
52
5,717
853
30
85
120
323
41
14
1,466
Total charitable costs
Other expenditure:
Expenditure from
information, advisory and
property services		 7,956
333
973
631
2,105
350
149 12,497
8,026
178
516
635
1,641
82
– 11,078
15,982
511
1,489
1,266
3,746
432
149 23,575
Total 2019 22,963
372
1,329
1,150
3,840
496
(515) 29,635
Basis of allocation:
– Charitable costs
Headcount
Work
Income
Estimated
Income Headcount
– Information, advisory and
property services
Actual
cost
Actual
cost
Actual
cost
Actual
cost
Actual
cost
Net income for the year is stated after charging
2020
£000
2019
£000
FRS 102 pension
149
(515)
Depreciation and amortisation
419
600
Impairment
74
3,736
Operating lease rentals
163
163
One-off costs of restructuring
–
91
Auditor fees – group
2020
£000
2019
£000
Statutory audit – Crowe
49
46
Statutory audit – Other
6
6
Tax advisory services
12
7
67
59

CIPFA Annual Report and Accounts 2020 71

5. Governance costs

2020 2019
Group £000 £000
Audit fees 55 52
Internal audit fees 18 27
Annual report and accounts – 1
Council, committees and boards 62 107
Management and governance support 220 237
Apportionment of costs supporting governance activities 77 77
432 501

6. Employees

6. Employees
2020 2019
Group £000 £000
Salaries and wages (including temporary staff) 10,065 9,951
National insurance 1,120 1,072
Pension costs 1,650 2,427
Other staff costs 574 439
Redundancy and termination costs 404 174
13,813 14,063

Redundancy and termination payments of £404,000 (2019: £174,000) were paid during the period and are recognised in the statement of financial activities. These costs include £0 one-off pension costs (2019: £91,000).

Ex-gratia payments of £31,000 (2019: £40,000) were paid during the period and are recognised in the statement of financial activities.

The average number of employees in the Group in 2020 was 219 (2019: 221).

2020 2019
Group No No
Advancing public fnance and promoting best practice 22 19
Educating and training student members 34 35
Regulation and supporting members 5 5
Governance 3 3
Support services 90 85
CIPFA Business Ltd 59 64
CIPFA C.Co Ltd 6 10
219 221

72 CIPFA Annual Report and Accounts 2020

Senior employees received remuneration falling within the following ranges:

CIPFA CIPFA CIPFA CIPFA CIPFA CIPFA
Business C. Co Ltd Business C. Co Ltd
2020 2020 2020 2019 2019 2019
£230,000 – £239,999 1 –
£210,000 – £219,999 1 – – – – –
£200,000 – £209,999 – – – 1 – –
£150,000 – £159,999 – 1 – – 1 –
£130,000 – £139,999 1 – – 2 – –
£120,000 – £129,999 1 – – – – –
£110,000 – £119,999 2 – – 1 – –
£100,000 – £109,999 1 – – 1 – –
£90,000 – £99,999 2 – 1 – – 1
£80,000 – £89,999 3 3 – 2 2 –
£70,000 – £79,999 7 2 1 8 5 1
£60,000 – £69,999 11 8 4 9 4 4

Of the senior employees 30 CIPFA (2019: 22), 14 CIPFA Business Ltd (2019: 10) and six CIPFA C.Co Ltd (2018: six) are members of the pension schemes. Employer pension contributions made on behalf of senior employees in 2020 was £827,000 (2019: £1,065,000).

Remuneration of key management personnel

Key management is made up of the Chief Executive and the executive directors. CIPFA’s total cost, including pension and national insurance, for key management personnel for 2020 was £1,215,331 (2019: £956,000). The total cost for the Chief Executive, including pension and national insurance, was £241,444 (2019: £236,710).

Volunteers

CIPFA is supported by a strong network of volunteers who play a vital role advancing our objectives of advancing public finance, promoting best practice, educating and training student members and regulating and supporting members.

Volunteers sit on our Council, boards, committees and policy panels; they also undertake regional engagement and are involved in organising regional events.

7. Pensions

CIPFA operates two pension schemes for its staff:

The Local Government Pension Scheme – this is a statutory, defined benefit pension scheme. Pension benefits in the scheme are determined by reference to an individual’s pensionable pay at retirement and their length of scheme membership. The Local Government Pension Scheme is administered through 100 funds across the UK. CIPFA is an admitted body in the Wiltshire Pension Fund, which is administered by Wiltshire County Council. On 1 January 2007, CIPFA took the decision to largely close the scheme to new members, with membership only offered where business need dictates and it is approved by the Remuneration Committee.

The scheme is contributory for both employer and employees. Total contributions recognised in the statement of financial activities during 2020 were £1,072,000 (2019: £1,880,000).

CIPFA Annual Report and Accounts 2020 73

The CIPFA Personal Pension Plan – this is a defined contribution, money purchase scheme, operated on behalf of CIPFA by Aegon. Pension benefits payable under the scheme are dependent upon contributions made and fund growth over the life of the scheme.

This scheme replaced the Local Government Pension Scheme as the default scheme for CIPFA employees joining on or after 1 January 2007.

The scheme is contributory for both employer and employees. CIPFA matches employee contributions up to 10% of salary.

The total pension cost to the group for the financial year, in respect of the pension schemes, for 2020 were £1,654,000 (2019: £2,427,000).

The Local Government Pension Scheme

The assets and liabilities of the Wiltshire Pension Fund of the Local Government Pension Scheme are subject to a full actuarial valuation every three years in accordance with the requirements of the Local Government Pension Scheme (Administration) Regulations 2008. The latest valuation of the scheme was carried out as at 31 March 2019.

With effect from 1 April 2017 the employer’s contributions are made up of two elements – a fixed sum annual payment for past service and an employer’s contribution rate of 26.0% of pensionable earnings for future service until the next triennial valuation. At the March 2019 valuation CIPFA had a pension deficit of £4,567,000.

The assumptions used in the actuarial valuation as at 31 March 2019, together with the market value of assets and funding level were:

Rate of return on investments 3.3%
Rate of increase in salaries 2.7%
Retail price infation 2.3%
Funding level for CIPFA staff 95.0%
Defcit for CIPFA staff £4.567m

The actuary has valued the pension scheme in accordance with FRS 102 for the purpose of the statutory financial statements. FRS 102 methodology differs from that used in the triennial funding valuation, particularly in the determination of the discount rate.

The FRS 102 disclosures are shown below.

The amounts recognised in the balance sheet are as follows:

2020 2019
£000 £000
Fair value of employer assets 107,410 100,072
Present value of funded obligations (145,940) (127,176)
Present value of unfunded liabilities (37) (48)
Net (underfunding) in funded plans (38,567) (27,152)
Net (liability) (38,567) (27,152)
Amount in balance sheet:
Liabilities 38,567 (27,152)
Assets – –
Net (liability) 38,567 (27,152)

74 CIPFA Annual Report and Accounts 2020

2020 2019
Reconciliation of defned beneft obligation £000 £000
Opening defned beneft obligation 127,224 110,654
Current service cost 787 723
Past service cost – 43
Interest cost 2,524 3,175
Contribution by members 150 164
Actuarial (gains)/losses 18,252 15,744
Past service losses – –
Losses on curtailments – –
Benefts paid (2,960) (3,279)
Closing defned beneft obligation 145,977 127,224
2020 2019
Reconciliation of fair value of employer assets £000 £000
Opening fair value of employer assets 100,072 89,177
Expected return on assets 1,985 2,568
Contributions by members 150 164
Contributions by the employer 1,177 1,888
Actuarial (loss)/gain 6,986 9,554
Estimated benefts paid (2,960) (3,279)
Closing fair value of employer assets 107,410 100,072
2020 2019
Recognition within the statement of fnancial activities £000 £000
Current service cost (787) (766)
Past service cost – –
Interest cost (2,524) (3,175)
Expected return on employer assets 1,985 2,568
Past service loss – –
Contributions by employer 1,177 1,888
Losses on curtailments and settlements – –
Total amount (charged)/credited within net incoming resources (149) 515
Actuarial (loss) (11,266) (6,190)
Total amount (debited)/credited to statement of fnancial activities (11,415) (5,675)

CIPFA’s estimated employer’s contribution for the year to 31 December 2020 will be approximately £1,072,000.

2020 2019
The major categories of plan assets as a percentage of total plan assets £000 £000
Equities 52% 56%
Bonds 37% 29%
Property 11% 12%
Cash 0% 3%

CIPFA Annual Report and Accounts 2020 75

2020 2019
Principal assumptions at the balance sheet date £000 £000
Pension increase rate 2.4% 2.2%
Salary increase rate 2.0% 2.2%
Discount rate 1.4% 2.0%
Assumes life expectations on retirement age 65:
Current pensioners – males 21.7 21.7
Current pensioners – females 24.0 24.0
Future pensioners – males 22.5 22.5
Future pensioners – females 25.5 25.5

The amounts for the current and previous periods are as follows:

2020 2019 2018 2017 2016
£000 £000 £000 £000 £000
Defned beneft obligation (145,977) (127,224) (110,654) (117,881) (113,347)
Scheme assets 107,410 100,072 89,177 92,056 78,876
(Defcit) (38,567) (27,152) (21,477) (25,825) (34,471)

8. Intangible assets

Other
Assets under		 Total
construction
A Group £000
£000		 £000
Development at cost
At 1 January 2020 719
251		 970
Additions 124
202		 326
Transfers 202
(202)		 –
Impairment –
(74)		 (74)
Disposals (229) – (229)
At 31 December 2020 816
177		 993
Amortisation
At 1 January 2020 624
–		 624
Charge for year 46
–		 46
Eliminated on disposal (229) – (229)
At 31 December 2020 441
–		 441
Net book value 31 December 2020 375
177		 552
Net book value 31 December 2019 95
251		 346

76 CIPFA Annual Report and Accounts 2020

Other Assets under Total
construction
B CIPFA £000
£000		 £000
Development at cost
At 1 January 2020 561
55		 616
Additions 17
202		 219
Transfers 6
(6)		 –
Impairment –
(74)		 (74)
Disposals (229) – (229)
At 31 December 2020 355
177		 532
Amortisation
At 1 January 2020 475
–		 475
Charge for year 23
–		 23
Disposals (229) – (229)
At 31 December 2020 269
–		 269
Net book value 31 December 2020 86
177		 263
Net book value 31 December 2019 86
55		 141

Intangible assets relate to product software, delivery and supports software, and the costs of learning materials to support students training for the professional qualification. The assets under construction relate to the periodic refresh of the learning materials, migration of our servers to Amazon Web Service and an interface to assist recognition of our apprenticeship income streams.

9. Tangible fixed assets

9. Tangible fxed assets
Freehold land Furniture & Computers Total
& buildings Fittings
A Group £000 £000 £000 £000
Cost or valuation
At 1 January 2020 13,600 1,396 2,548 17,544
Revaluations (50) – – (50)
Additions – – 76 76
Disposals – – (9) (9)
At 31 December 2020 13,550 1,396 2,615 17,561
Depreciation
At 1 January 2020 – 1,233 2,446 3,679
Charge for year 192 99 82 373
Revaluations (192) – – (192)
Eliminated on disposal – – (9) (9)
At 31 December 2020 – 1,332 2,519 3,851
Net book value 31 December 2020 13,550 64 96 13,710
Net book value 31 December 2019 13,600 163 102 13,865

CIPFA Annual Report and Accounts 2020 77

Freehold land Furniture & Computers Total
& buildings Fittings
B CIPFA £000 £000 £000 £000
Cost or valuation
Revaluations 13,600 1,172 2,156 16,928
Additions (50) – – (50)
Transfer/reclassifcations – – 57 57
Disposals – – (35) (35)
At 31 December 2020 13,550 1,172 2,178 16,900
Depreciation
At 1 January 2020 – 1,095 2,063 3,158
Charge for year 192 59 54 305
Revaluations (192) – – (192)
Eliminated on disposal – – (9) (9)
At 31 December 2020 – 1,154 2,108 3,262
Net book value 31 December 2020 13,550 18 70 13,638
Net book value 31 December 2019 13,600 77 93 13,770

The tangible fixed assets are held for charitable use.

Cushman & Wakefield, Property Consultants, completed a desktop valuation of the Mansell Street property as at 31 December 2020. The basis used for the valuations was open market value. The historical cost of the freehold land and buildings is £13,572,000.

10. Investment property

2020 2019
Group and CIPFA £000 £000
Cost
At 1 January 7,100 3,300
Additions - 3,800
Revaluation (125) –
At 31 December 6,975 7,100

The investment property relates to the third and fifth floors of the Mansell Street property.

11. Investments in subsidiary company

2020 2019
£000 £000
400,000 £1 ordinary shares in CIPFA Business Ltd 400 400
75 £1 ordinary shares in CIPFA C.Co Ltd – –
400 400

78 CIPFA Annual Report and Accounts 2020

12. Other investments

2020 2019
Group and CIPFA £000 £000
Balance at 1 January 9 9
Movement in year – –
Balance at 31 December 9 9

As one of five major accountancy bodies the Institute holds 70 £1 shares in CCAB Ltd at a cost of £70 (7% of the issued equity capital). Other investments comprise a number of funds that have been established either by way of donations in memory of eminent accountants within public finance or from various organisations.

13. Deferred tax

A deferred asset of £12,000 (2019: £363,000) exists at 31 December 2019 in respect of timing differences. However, the asset has not been recognised in the balance sheet as it is not deemed likely to crystallise given CIPFA Business Ltd’s policy and practice of remitting all taxable profits to CIPFA under gift aid.

14. Stocks and work in progress

Group 2020 2019 CIPFA 2020 2019
£000 £000 £000 £000
Finished goods 4 6 1 2
Work in prograss 295 104 156 –
299 110 157 2

15. Debtors

Group 2020 2019 CIPFA 2020 2019
£000 £000 £000 £000
Trade debtors 1,688 2,085 813 1,019
Amounts due from subsidiary undertakings – – 254 538
Other tax and social security – 13 – 13
Other debtors 851 1,275 680 618
Prepayments 323 367 215 251
2,862 3,740 1,962 2,439

CIPFA Annual Report and Accounts 2020 79

16. Creditors: amounts falling due within one year

Group 2020 2019 CIPFA 2020 2019
£000 £000 £000 £000
Trade creditors 565 1,120 55 334
Amounts due to subsidiary undertakings – – 6 1,076
Other tax and social security 2,107 920 356 431
Other creditors 618 876 565 731
Receipts in advance 3,305 3,527 1,103 1,335
Property provision 4 7 4 7
Commercial loan 505 484 – –
7,105 6,934 2,090 3,914

Receipts in advance of £3,305,000 (2019: £3,527,000) relate to professional membership and commercial services that will be delivered in the next financial year.

17. Commercial loan

2020 2019
£000 £000
Balance at 1 January 1,640 2,000
Repayments (484) (360)
Balance at 31 December 1,156 1,640
2020 2019
Analysis of commercial loan £000 £000
Within one year 505 484
Within two to fve years 651 1,156
1,156 1,640

CIPFA Business Limited has a commercial loan of £2,000,000 which is secured on the Mansell Street, London property. The loan has an interest rate of 4.82% with principal repayment over years two to five of the loan, which matures in February 2023.

80 CIPFA Annual Report and Accounts 2020

18. Group funds

Balance at Transfers Income Expenditure Other
Balance
1 Jan recognised
at 31 Dec
2020 gains/losses 2020
£000 £000 £000 £000 £000 £000
Unrestricted funds
Designated (property) 14,154 484 – – –
14,638
Designated (other fxed assets) 611 402 – (301) –
712
Designated (contractual dispute) 500 (500) – – –
–
Revaluation reserve 4,906 – – (192) 17
4,731
Other charitable (619) (386) 26,191 (22,702) –
2,484
Pension reserve (27,152) – – (149) (11,266) (38,567)
(7,600) – 26,191 (23,344) (11,249) (16,002)
Restricted funds
Trust funds 9 – – – –
9
Regional funds 33 – – – –
33
Minority interest 60 – 226 (231) –
55
Total funds (7,498) – 26,417 (23,575) (11,249) (15,905)
Balance at Transfers Income Expenditure Other Balance
1 Jan recognised at 31 Dec
2019 gains/losses 2019
£000 £000 £000 £000 £000 £000
Unrestricted funds
Designated (property) 15,667 (1,513) – – – 14,154
Designated (other fxed assets) – 4,763 (4,152) 611
Designated (contractual dispute) – 500 – – – 500
Revaluation reserve 4,633 – – (184) 457 4,906
Other charitable 2,101 (3,770) 26,560 (25,510) – (619)
Pension reserve (21,477) – – 515 (6,190) (27,152)
924 (20) 26,560 (29,331) (5,733) (7,600)
Restricted funds
Trust funds 9 – – – – 9
Regional funds 13 20 – – – 33
Minority interest 35 – 329 (304) – 60
Total funds 981 – 26,889 (29,635) (5,733) (7,498)

Designated fund (property) – The Council has classified as designated funds the element of its reserves that represents the cost of the freehold buildings and investment properties as at 31 December 2015.

Designated fund (other fixed assets) – The Council has classified as designated funds the intangible assets and other non-property fixed assets.

Designated fund (contractual dispute) – The Council has removed the previously designated £500,000 for future legal costs in relation to the contract dispute relating to the London Counter Fraud Hub contract.

– Revaluation reserves (property) This relates to the revaluation of the freehold and investment properties.

Trust funds – A number of funds have been established either by way of donations in memory of eminent accountants within public finance or from various organisations. The income from the investments is used for prizes in each year’s examinations, either for the best subject or the best student in a particular field. A proportion of the funds (£9,000) are administered through a separate charity, Charity Commission Registration 313981.

CIPFA Annual Report and Accounts 2020 81

Regional funds – A number of funds have been established by way of donations in memory of eminent accountants within public finance. The funds are used to support students or further the work of the region.

Minority interest – This represents CIPFA’s non-controlling interest in CIPFA C.Co Ltd, of which it owns 75% of issued shares in the company.

19. Analysis of group net assets between funds

Designated Other Pension Revaluation Restricted Total
charitable reserve reserve
£000 £000 £000 £000 £000 £000
Fund balances at 31 December 2020
are represented:
Intangible assets 552 – – – – 552
Tangible fxed assets 8,979 – – 4,731 – 13,710
Investment property 6,975 – – – – 6,975
Investments – – – – 9 9
Current assets – 9,139 – – 33 9,172
Current liabilities (505) (6,655) – – 55 (7,105)
Long-term liabilities (651) – – – – (651)
15,350 2,484 – 4,731 97 22,662
Pension liability – – (38,567) – – (38,567)
Group net assets/(liabilities) 15,350 2,484 (38,567) 4,731 97 (15,905)
Designated Other Pension Revaluation Restricted Total
charitable reserve reserve
£000 £000 £000 £000 £000 £000
Fund balances at 31 December 2019
are represented:
Intangible assets 346 – – – – 346
Tangible fxed assets 8,959 – – 4,906 – 13,865
Investment property 7,100 – – – – 7,100
Investments – – – – 9 9
Current assets 500 5,891 – – 33 6,424
Current liabilities (484) (6,510) – – 60 (6,934)
Long-term liabilities (1,156) – – – – (1,156)
15,265 (619) – 4,906 102 19,654
Pension liability – – (27,152) – – (27,152)
Group net assets/(liabilities) 15,265 (619) (27,152) 4,906 102 (7,498)

82 CIPFA Annual Report and Accounts 2020

20. Leasing commitments

At 31 December 2020 the future minimum lease payments under non-cancellable operating leases were as follows:

Land & Other Land & Other
buildings buildings
2020 2020 2019 2019
A Group £000 £000 £000 £000
Leases that expire:
within one year 153 19 153 23
within 2 to 5 years 377 18 480 42
in over 5 years 36 – 89 –
566 37 722 65
Land & Other Land & Other
buildings buildings
2020 2020 2019 2019
B CIPFA £000 £000 £000 £000
Leases that expire:
within one year 104 15 104 19
within 2 to 5 years 183 16 286 35
in over 5 years – – – –
287 31 390 54

21. Leased assets

At 31 December 2020 the future minimum lease receipts due to CIPFA under non-cancellable operating leases were as follows:

Land & Land &
buildings buildings
2020 2019
Group and CIPFA £000 £000
Leases that expire:
within one year 175 190
within 2 to 5 years 303 15
in over 5 years - –
478 205

CIPFA Annual Report and Accounts 2020 83

22. Transactions with trustees

The trustees received no remuneration in relation to fulfilling their role as trustees (2019: Nil).

Four trustees were reimbursed £2,239 for actual travel and subsistence costs necessarily incurred on institute business (2019: four trustees were reimbursed £21,902). No additional payments were made to trustees.

23. Transactions with related parties

In 2020, the following transactions were incurred between CIPFA and its subsidiaries, CIPFA Business Ltd and CIPFA C.Co Ltd. There are no other related transactions or balances for disclosure in this report.

2020 2019
£000 £000
Management fees/recharges charged by CIPFA to CIPFA Business Ltd 2,311 2,142
Sales to CIPFA from CIPFA Business Ltd (1) 17
Sales to CIPFA Business Ltd from CIPFA 10 17
Sales to CIPFA C.Co Ltd from CIPFA Business Ltd 1 3
Amounts due to CIPFA from CIPFA Business Ltd 254 226
Amounts due to CIPFA Business Ltd from CIPFA 6 1,076
Amounts due to CIPFA from CIPFA C.Co Ltd 211 312
Loan interest charged by CIPFA to CIPFA C.Co Ltd 6 9
Gift aid paid to CIPFA by CIPFA Business Ltd 1,000 230

84 CIPFA Annual Report and Accounts 2020

Independent auditor’s report to the trustees of the Chartered Institute of Public Finance and Accountancy

We have audited the financial statements of the Chartered Institute of Public Finance and Accountancy (‘the charity’) and its subsidiaries (‘the group’) for the year ended 31 December 2020, which comprise the statements of financial activities, the group and charity balance sheets, the consolidated cash flow statement and notes to the financial statements, including 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).

In our opinion the financial statements:

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 are independent of the group 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating 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 charity’s or the group’s ability to continue as a going concern for a period of at least 12 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 contained within the annual report. 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 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.

CIPFA Annual Report and Accounts 2020 85

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 and the Charities Accounts (Scotland) Regulations 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement, the trustees 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 and the parent charity’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 charity 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 Section 151 of the Charities Act 2011, and Section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance with the Acts 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.

Details of the extent to which the audit was considered capable of detecting irregularities, including fraud and non-compliance with laws and regulations are set out below.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/ auditorsresponsibilities . This description forms part of our auditor’s report.

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

Irregularities, including fraud, are instances of noncompliance with laws and regulations. We identified and assessed the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these between our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining audit evidence sufficient and appropriate to provide a basis for our opinion.

We obtained an understanding of the legal and regulatory frameworks within which the charity and group operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Charities Act 2011 and the Charities and Trustee Investment (Scotland) Act 2005 together with the Charities SORP (FRS 102) 2019. We assessed the required compliance with these laws and regulations as part of our audit procedures on the related financial statement items.

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In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which might be fundamental to the charity’s and group’s ability to operate or to avoid a material penalty. We also considered the opportunities and incentives that may exist within the charity and the group for fraud. The laws and regulations we considered in this context for the UK operations were taxation legislation, employment legislation and General Data Protection Regulation (GDPR).

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the trustees and other management and inspection of regulatory and legal correspondence, if any.

We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the timing surrounding recognition of income and the override of controls by management. Our audit procedures to respond to these risks included enquiries of management, internal audit and the audit committee about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals, reviewing accounting estimates for biases, reviewing regulatory correspondence with the Charity Commission and reading minutes of meetings of those charged with governance.

Use of our report

This report is made solely to the charity’s members, as a body, in accordance with Part 4 of the Charities (Accounts and Reports) Regulations 2008 and Regulation 10 of the Charities Accounts (Scotland) Regulations 2006. Our audit work has been undertaken so that we might state to the charity’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 charity and the charity’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Crowe U.K. LLP Statutory Auditor London

Date: 9th June 2021

Crowe U.K. LLP is eligible for appointment as auditor of the charity by virtue of its eligibility for appointment as auditor of a company under Section 1212 of the Companies Act 2006.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

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The Chartered Institute of Public Finance and Accountancy. Registered with the Charity Commissioners of England and Wales No 231060 Registered with the Office of the Scottish Charity Regulator No SC037963.

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