SHETLAND ARTS DEVELOPMENT AGENCY TRUSTEES, REPORT & FINANCIAL STATEMENTS for th8 year ended 31 March 2026 Ch8rlty Regislr3llon No SC037082 SHETLAND ARTS DEVELOPMENT AGENCY CHAIRPERSON'S MESSAGE 31 MARCH 2026 As Chair of Shetland Arts Development Agency. l am pleas8d to present our Annual Flnanclal Stslemenl for the year ènding 31 March 2026. This year rngrks the fir81 undgr now multi-year funding 8gr8ements with both Shetland Charitable TnJ$l and Crealve Scotland, prowdlng a more stable foundats'on from which to plan an dellvei Qur work. Despite thi$ increas&d securlty, the org8ni$8tlon eontinues lo operate wilhln a challengiNJ environment. Rislng costs and ongoing staffing pressures have required carelLJI management and resilience from our team. I would like to recognise thè eemmilmenl and adaplabllity ol staff who have conllnued lo deliver a high- quallly programme In Ihese ¢ir¢umstances. Over the past year. Shèlond Arts has mainlalned 8 slrong level of a¢llvlty ar¥J Impact across Ihè islands. Within the 12 mDnlhs of this report, we pres•r)ted more than 3,700 perfomances. screenlngs and exhlbilion days with ovèr 220.000 audlence engagements. Our programrnes continue lo support ¢reallv• development, cornmunlty connection and wellbeSng, wlth consislenlly hl9h l&vels of audience $g1isfaction and posltlve feedback. W• hav8 also conllnu•d lo Invesl in the cr#8Jvè •conomy. supportlng praclllloners and micro-buslne$$es, wh518 enabling rnÉw wtrrk. collaboraliun5 and $kllls development. Thls contrlbulSgn remains viial to sustainiNJ vlbranl and re$lllenl cultural séctor In Shetland. Thls y•gr has also beon one ol transition and 8nllclpallon. Wlh Bonhoga closed fer mlurblshm•nl, there has been an inevitable impa¢t on dellvery. However, Ihls project repTesenls a $Sgnlficanl Inv8Blmenl In th6 future of Shetland's cullurBI infrastructu￿, and we look forward lo re¢penlng an improved, mwo accessible and more suslaln9ble laclllty In the ¢omSng year. Al Board lev81, I would like lo welcome Krislofer Wilson. Charlotte Jon•s and Jacky Willlamson lo the BoArd. l also extend my thanks lo my fèllow Tru8te&$ for Ih•lr conllnued cemmllment In suppcrtlng and guldlng the Organisalion. Flnally. I would Ilke lo thank our core lunders, Sheland Charltable Trust and Creatlve Scotland, for thglr conlSnuad Investment and Confidence in our work. My thanks also go lo our staff, partn$rs, audSence8, parucipants, performars and students your engagement and support are central lo everythlng w• do. Wl)Ile challenges remain, the orggnisatlon Is well placed to buSld on this y$arfs progress. With renewed lundlng. ongolng ¢apllal d8velopm8nls, and a Clear fo¢us on Impact, we look fomard with ca￿truS oplm15m lo the year ahead. Jarnle Manson Chair, Sheuand Arts Development Agèncy SHETLAND ARTS DEVELOPMENT AGENCY ANNUAL REPORT OF THE TRUSTEES 31 MARCH 2026 The Trustees are pleased to present their annual Trust88s' Rèport together with the financial stat8mants ol the chaflty for ihe year ellding 31 March 2026. The financi81 stslements eomply with the Charities and Trustee Investment {s￿￿8nd) Ael 2005, the Chari1105 Accounts (Scollandl Regulations 200818$ 8mendedl, the trust deed and Acccjunling Reporting by Charities.. Stsl¢ment of Re¢¢mmended Praclire applicabl¢ lo chaiilles preparing their a¢Gtsunls in acurdancè with th6 Financial Reporting Standard applicablè In th¥ UK and R$publio ol Ir&land la5 aM￿ded for accounllng periods comrnenGing 1 January 20191 Ith8 SORPI. OBJECTIVES AND ACTIVITIES Shetland Arts, prlncip81 objèctivès are laid out in the 8upplemenlary Deed of Trust regi8terad on 30 October 2020. Tho objects ol the agency are to.. advance the education of the publlG resldenl In Shetland In the Arts, In particular the Arts ol Dance. Drarna, fhealre, Fllm, Llleralure, Music, Crafts, Vlsual Arts and any new fom ol Mèdla; advance Arts and Culture lor the benefit ol the publlc In Shelland., advance Cldzenshlp and Cornmunlty Development forthe benefit of the public In Shetland. In furtherance of the objects the Truste¢$ $hg11 seek lo.. encourage and a88181 Sn promollng and advanclng the creatlon, practice, preBentalion and ¥ludy ol all lom8 of art- vl¥u?I, p?rformlng and creallve- 8UPPOrt and encourage the ￿ntInUal development ol 911 art lorms., 8UPPOrt exl6tJNJ, arKI encourage new. work., Improve g¢¢e88 to tho 8rts and create ¢pportunlll•s for Indlvldual$, geographl¢81 communltlas and communllies ol Int•r•sl, at all l•v•ls of •xp•rlanc• and abillty, to participate in and enjoy a div•TS• rang• of arts Actlvlty through p•rformanc•s, •xhlbillons and educalionBI activitles. Iv) creale opportunllles lor person81 development through a communlty development approach wlthSn the arts: promote a culluffj of Illelong leamlng through a Gommunlty devdopment approach wllhln the art$-, support profgsslonal artlgts through regldencies, workshops and pgrfomi8n¢g$,' promote exc811enc8 in artistic quallty,. develop the skllls and experlence of artlst pradtioners and particlpants aThJ encourage learnlng; and Ixl provide fa¢blilie$ lo Support artisllc activili¢g. SHETLAND ARTS DEVELOPMENT AGENCY ANNUAL REPORT OF THE TRUSTEES (CONTINUED) 31 MARCH 2026 Introduction We employ a robust process of evaluation for each element of every project we d85iver. Every octlvity 18 submltted to the Leadershlp Team on a Project Proposal Form IPPFI thal contsins a narrative statement and describes how the proje¢l ￿lateS lo our Trust Deed, whlth programrne arèa it is part of, which art ftsms li lates to and wh8ther the work Is contemporary, populisl or Ir8ditional. This fonr also sets the Kay P8rlormance Indlcalors IKPlsl and the budgeL l elements of the activlty are considerèd, particularly how the projects will dèllver our soci81 outcomes. Tho Leadershlp Team sets key mlleslones and receivos regular updates, with monitoring requlrements being dlctBted by the 5¢ale ol the pmject. Once an actlvlty is complel•d the PPF 18 revlewed against actual$ and leB$ons are leame and Unr•$lrt¢te(l Funds of £166,50412025- £116,205}. A deSigna￿en 01 £25.149 was made to the A88el Repl8cemenl ond Repalr reserv8 In the year to 31 March 2026. Th• tnjstees acknowledg¢ the current posillon 1$ ¢hallenglng and they expect11 lo be 8 medlum.lo.long term objecllve lo reach the poslllon slated in the res•rves policy. Th• staff tearn has beèn charged lo increase surplus from in¢om• lor us to xhleve Ihl8 P051tion w￿h1￿ thè Mxt three year8. PLANS FOR THE FUTURE Fundlng We have spent th¢ last 12 month dÈveloplng a fundraising 8tralegy that will be Implemented over thè n•xt three years. The plan$ are to increa8¢ Investment from sp¢ns¢rshlp and Trusts and Foundallons lo 10% of our lolal funded income. R•glonal Role We continue to develop Shetland Arts, reglon81 role in partnership wlh The Pier Arts C8nter in Orkney, An Lanntalr in Harri$ and Taigh Chear5?bhagh Museum & Arts Centr• in North Ulst. 2026 127 should s$e the initial projects from the Islands Growth Deal begin lo come lo fruition. The inclusion of Even Here Evèn Now in the Seottlsh Govemmenl l$18nds Plan 15 signiflcanl recognlllon ol the work of Shelland Arts and we look forward to expanding into new territories. Facilities We wll Continuo lo Invest in our f8cilifj8S Wlth investment frum a varfety of souiees. The support from Shetland Charitablè Trusts Capital Giants scheme has enabled us to improve and or replace some key area5. Funding from Cycle UK h8s enabled investment in a electric cargo bike and blke sheil wlth recharge facilltiÈs. SHETLAND ARTS DEVELOPMENT AGENCY ANNUAL REPORT OF THE TRUSTEES (CONTINUED) 31 MARCH 2026 REFERENCE AND ADMINISTRATIVE DETAILS Trustees Chrfs Gadsby Hannah Hough Malcolm Innes James Johnston Charlolle Jones Michele Kery Kerry Larbaleslier Calriona MacDonald Susan Mail Jamie Manson Shona Mi51er Jacky William50n Krislofer Wllson Reslgned 23 August 2025 Resigned 25 June 2026 Appolnted 25 August 2025 Vlce Chalr Resigned 2Q July 2025 Resi9n8d 23 August 2025 Chair Apptynled 25 Jun6 2026, Rssign8d 25 August 2026 Appoinled 25 Augusl 2025 Appthnled 25 Jun8 2026 Chlef Executlv& Gra9me Howell L8adership Team Kerry Llewellyn Kerry Llewellyn Calrlona Macdonald Bryan Peterson Wendy Tulloch Support Lead Ttr 37 May 2025 Director of Operalions From l Jun& 2025 Director of CrealSvSty and ImpaclAppolnlod 1 D•cember 2025 Education and Outreach Lead RosèneG13t May 2025 Cuslorner Experfence Lead Rssh)n•dJl Mèy 2025 Address Shetland Arts Development Agency Mareel L8rwl¢k Shetland ZE1 OWQ Audltor8 AJB Scholes Ltd Sl Olaf's Hall , ChurGh Road Lerwick Shetland ZE1 OFD Bankers Vlrgln Mon8y 106 Commerclal Slr8el LerwSck Shetland ZE1 OJJ Sollcltorg H8rper m￿le0d Sl Olaf's Hall Church Road Lerwck Shetland ZE1 OFD Foundlng Trust Dged R89islered on 13 January 2006 Charltable Status Scottish Charity No. SC037082 STRUCTURE, GOVERNANCE ANO MANAGEMENT Governing Oo¢umènt and Organisation Shetland Arts DevelopmentAgency 55 an unlncworaled Registered ScottSsh Charity, consllluled uThJer Intrst deed. The organisalion isgovemed by a board of trusteeswho are responsible for long-temi planning and strategic deciqk)n making. delegalty)g the day-Io-d8yoper8I'on81 deaslon maklng to Ihe Chief Executive. Appointment ol Trustees, thelr Inductlon and Tralnlng Tha truste85 meet birymonlhly to administer the activities of th8 Agency. During the year th8 Trust Daed uired the board to be compris￿1 of a minifftum of seven trustees, and a maximum of thirteen. Each Ir shall hold Offi￿ for a period ol three ywdrs with power lo be re.appointed for a further period of three years. io SHETLAND ARTS DEVELOPMENT AGENCY ANNUAL REPORTOF THE TRUSTEES (CONTINUED) 31 MARCH 2026 Trustees will retire on the third anniversary of their appointment. In the event of appointment for that furthèr period, such trustees TM51 not be eligible for appointment for a period of three years thereafter. The appointnEnt of newlrusleeswll be thejob of a Nominallons Committee constiluied by three of the serving Iruslees. Tmslees are nomally recrLJited lollowng public advertlsement. The positions of Chair and Vlce Chair are voted on bylhe existirrfJ trustees, these offlce hokJer8 serve In 8ccord8nce ￿th the Agency'8 Standing Orders. The Iruslees make decisions by malorftyvote al theirmeetNYJs. The board holds meellngsevery months wllh a more detailed infomialion session on speciflc topics of intere81 In the months between. New trJ$lee8 recelva individual1ndLKdon fTom the Leodership Tean on appc4nlnEnt and are encouraged lo undertake Irdining as approprfate lo thelr rol8. Pay Poll¢y for Sgnior Staff The trustees conslder that the charily'y trustees Bnd Leadershlp Team comprise the key management personnel of the Gharfty in charge of direction and conlrolllng, Nnnlng and operdling the charity on a day-to- day basis. The Leadershlp Team ¢omprf8es thè Chief Executive, Director of Crealivily and Impact and the Dlreclor of Operallons. All tru8tees give their lime freely and no Iwslee receivèd remun8rallon in the year. Details gf Iwslee'8 expens85 are dlsc108ed In note 19 of the accounts. The pay of thè senlor slaff 1$ reviewed annually. The pay rale3 are benchmatl(ed against Ihlrd sector pay In Shetland. Thg pay of the ChSef ExeGullve l& sel by the trustegs. Ro18ted Partle8 Shetland Arts DevelopmenlAoency Is funded bylhe Shelkgnd Charllable Trust lo deliver arts sertes lo the community in Ilne ￿th Ihelr 2025- 2030 Strategy. Their priorities include Community wellbelng., Indivldual wellbelng., Everyong mallers., Generatlonal falm¢$$ ond Enabllng strong and re8111enl organlsalions. Shetland Arts DevelopmenlAg8ncy also recelves revenue lunding from Cmllve ScolSand, d8pendenl upon Its subm15sp)n lo them of an annu81 progran￿O 01 o¢llvities. This progr8MTr￿ musl meet Cre811ve Scotland's own crllorla gf Quality and AmbSllon'. EngagerHenl', Equolltl8s. Dlverslty and Incluslon. Environm8nlal Suslalnablllly and Foir Work. Shetland Arts IP C.l.C., o Cornmunlly Inlgre$l Cotrpany, wa9 incorporated on 25 July 2011. The Company18 wholly owned byShelkn(J Artg Developn*nl Agenry 8nd was sel up 88 a means to secure the IntelleGlual property rights over films, books, musSc, atc. and ensure that any profits generated Sn Ihls way can b9 retalned forlhe goDd of Sh¢lknd. During the flnanoal year. th¢ company's t1ans8ct￿rt$ were not mglerial to the group, so Gonsolidalion of tha flgures was not ￿quIred. Rlsk Mgnggement The Trustees have 8ssessed the major rfsl¢s towhl¢h the charity is exws8d and are satisfied that systems are in p18cg lo miligale our exposure lo the major risks. The new rfsk of climalo change has been added during the year. The table below highlights tho risks the board have identlfSed ￿ being the most signSflcanl. Rlsk Tille Risk Delall 'MSllgglion Approprf81e Pay and T&C8 Tralnlng and Wellbeing provision Ctsod nallonal profile lo enable recrultmenl (Tru81ees & Staff) Critical P￿cesS Planning Le&Jershlp Loss of key leader8 or key indlviduals that the organis81ion dopends upon and cannot be replg¢ed eaBiIy Lack of Govemance Govemance arrangements have Illlle or no systems In place lo Identify and monitor compllance Regular fomal and infomal meetings Mrilh key reports Complete the SCVO Govemanc& Check Up Annual Audit SHETLAND ARTS DEVELOPMENT AGENCY ANNUAL REPORT OF THE TRUSTEES (CONTINUED) 31 MARCH 2026 Rlsk Tille Risk Detail Mitigation Loss of Reputalioft nd l or stakeholder confidence l trijst Rlsk that an incldent or situation creates an environment that confidence 15 eroded or lost. So¢ial Outcomes Access to specialist comms freelancers Good informed relationship with stakeholders Active man8gemenl of Social Med6a and publlc èrtgagèmènt Exl$mal Impacts Being unable to manage and adapt lo societal shocks. e.g. P8ndtrmi¢s, Di5rupllon ol Inl¢rnallonal Trade, Significant change of Natlonol Polit1￿1 Direction En$uro staff stru¢lure Is flexlble En8ure staff are current in training Bu51ne5s Conllnu1ty Planning Relalionshlp wllh stakeholdws Finance Un8xp8et8d shortfall in lunding to Income affectSng the abll+ty lo deliver agalnsl medlum-lerm plans Dlv•rslty Ol Core Funding Able to ro18e pr¢￿e¢l lundlng from alternative source$ Focus on traded I commercial incomè Ensure funding is claimed in a Umely fa5hkn E$l81&8 Largo, unexpected e81a1￿ Issues Proactive A88el Mana9•m&nl Regular & Reactive Malnl&nanco Sulficienl Insuranco Legal l Regul81Sons B￿a¢h ol leg81 or Ilc•nclng condltlons Tr81ned Staff Us• of professiongl advisors Use of aud5tors Proactlve relationghlp with Ilcenclng body Cllm818 Change Rlsk lo organlsalion 8ug181nablllly In Ihg fa￿ of ongolng ¢llmole change Impacts Use of Hybrid w￿kIng U$0 of onllne Meollng$ wllh partners Invèst In laclllti•s to Mdu¢e carbon usage Use of carbon budgetlng Cyber Securfty Loss of organlsallonal dats, ransomware att8¢k8, or IT failu￿ disrupting QPgrallon$ and domoging reputs11￿. Use ol robust InfraslNcture and 3afeguards U5¢ ol wEb-ba$ed tools whorg appropriate e.g. Monad, Web Hostlng Reminders about cyber security, phishing emails etc in SADA news Cyber Insurance In place S8fegu8rdSng Failure Ic* adequately safe9uard Children or vulnerable adult$ involvgd in Shetland Arts, activities results in hgm lo indlviduals and signlflcant r8PUtailonal, legal. and financlal dBmagts to the organisalion. Clear PVG policies in place PVG check8 and safer recruilmenl practices Staff trxinlng and elèar reportlng processes Deslgnaled Safeguardlng Lead STATEMENT OF TRUSTEES, RESPONSIBILITIES The Trustees are responslble for preparing the annuol Trustees, Report and the financlal statements in ac£ordance wrth appllcable law and United Kingdom Accountlng Slondards Iunlled Kln9dom Generally Accepted Accounting Practice). 12 SHETLAND ARTS DEVELOPMENT AGENCY ANNUAL REPORT OF THE TRUSTEES (CONTINUED) 31 MARCH 2026 Th• law applicable lo charities In Scotland requires the tnjstees to Prepa￿ finan¢ial statements for each financial year which glve a true and fair view ol the state of affalrs of the charity and of th¢ in￿ming resources and appllcation of resources ol the charity for that period. In preparing thesè finanaal slalements. the Iruslees are requlred to.. Sèlèct suitable acCoUn￿ng poll¢les and then appty Ihern consistently., Obsèrve the methods and prfn¢iples In the Charities SORP IFRS 1021.. Make jud9ements and eslkngtes that are reasonable and prudent,. Slate whether appli¢abie accountlng standards have been fellowed, Sublect lo any fflaleii85 d8partures disclosed and explalned in the flnanclal stalemenls; Pr8pare ihe financlal 3lalemenl$ on the goiThJ concern bagis unless 11 Is Inapproprlole to presum that the charity will ¢ontlnye in operatlon. The trustees are responsible for keeping proper accounting records that dlsclose with reastsnable ac¢uracy at any ￿rne the fin3nclal position of the charity and enable Ihem lo ensure that the finan¢lal s181èm•nts comply with Ime Charllles and Trusletr Investmènl (Scotlandl Act 2Q05, thé Charilles A¢counts Iscoilandl Rogulgtlon$ 211J8 las amgNledl and th• provlslons of the charity's conslllullon, They are also regponslble for safeguarding Ihe assats of lh& Charlty 8nd hence lor laklng re8son8ble 51gp$ for the pr•v¥ntlon and d•t8clSon of fraud and other Irregularille$, The trust••s are tsgpen8ible lor the malnlenBnce end integrlty ol the ¢harily and flnancial Inf¢rmalion Included on the ¢harlty's wgbsile. Leglslalion in th& Unllgd Klngdom goveming th• preparatlon ond dissernlnallon ol th• ffinancial $tst8ments mlghl dlffer from l¢gl$latlon in other lurlsdlcllon8. Approved by Ihe board of Irusl&g8 on 25 June 2028 Und slgned on Ih8lr behalf by: Jomi• MAnson Chalrperson 13- SHETLAND ARTS DEVELOPMENT AGENCY INDEPENDENT AUDITORS, REPORT TO THE TRUSTEES 31 MARCH 2026 Opinion We have audited the ffnan¢ial $18lemenls of Sheuand Arts Development Ayency Ilhe '¢harity'l for the year ended 31 Mar¢h 2026 whlch compflsÉ Slalement of Finan¢i81 A¢tivitle5. the Balanc8 Sheet. Statement of Cash Fl¢)ws and notes to the ffinanclal stslements. in¢luding significant accDunting policies. The financigl reporting framework that has been applied In their preparatlon 1$ appllcable 18w and Unltod Kingdom Accounting Standards, including FRS 102 'The Financia1 R8POrting Stsndard applicabl• In th• UK Ènd Republic ol Ireland" Iuniled Kingdom Generally Accepted Accounting Practlcel. In our opinion the flnan¢lal slalemenl$'. givo a truè and falr vlew of thè st81è ol the charity's 8ff8ir$ 8$ at 31 March 2026 and of its in¢oming re8ource$ and app11catlon of re$ource$, for the year then ended.. have been property prepared In ac¢ordan¢e with Unlled Klngdom Genorally A¢c&pled Accountlng Practicè., gnd have been prepafftd in accordance with the requirements of the Charities and Trustee Investment (Scollandl Act 2005 and regulation 8 01 the Charitr'e5 Accounts (Scotlandl Regulatlons 2006 las amended). Ba¥1¥ lor oplnlon We have been appolntsd as audltor under $?ctlon 441111¢) of the Ch8rlllo$ and Twsleg Inveslmenl IS¢otlandl A¢1 2005 and report In &c¢¢idance wllh regulallons mada under that Act. We conducted our audll In o¢cordance with Intemallonal Standards on Audlting IUKI IISAs IUKII and appllcablo law, Our r¢spon$ibilltles undei those s¢an¢Yards are lurther described In th& Auditorfs re8ponslbllitl•s for the audll of the financlal st@temonl$ ￿etIon ol our Mport. We 8r• Ind•p•ndonl of the charfty In accordance with the ethical requirements that are relevant to our audil of the financlal stat&m•nts In th& UK, Includlng th8 FRC'8 Ethical Standard and we have lulfilled our elhical r86ponsibililies in accordance wllh these requlremenl$. Wo belleve that the audit evidence we have c4Jlained is sufficlenl and approprfale lo prevldo a basls for our oplnlon. Concluslons rolatlng to golng concern In audlling the flnancial slalements, we have ctsncluded th81 Ihts Iruslee$' use of the golng ¢oncèrn ba81$ 01 accounlbng Sn the p￿paral¢n ol tho flnancial 8lal•menls 18 approprialo. Based ¢n th• Work we hava performed, wo have not IdentSflod any mgtgrlal un¢artain119s r81aling to evan18 or conditions that. indlvldually or collects'vely. may casl slgnlficanl doubl on the ¢h9rf1y'$ abllity lo Continue a8 8 golng Concern lor a period of at lea81 fv4elve months from when the financial slatemenls are authorfsed lor issue. Our re8pon8lbilllles and the rnsponslbllllle8 of the trustee8 wllh respect lo golng ￿nceM are de8Crtbed in tho relevanl $ectlon$ of IhSs report. other Informatlon The other inforrnalion compriges the infomi8lion included in the annu81 report other th8n the financlal statements 8nd our audltor's report Ihereon. The Iwslees are rgspon$ible for Ihe other infomallon con18ined wlthln th• annual report. Our opSnion on the financial stat&mants does not cO￿r thè ethar inlormation and, we do not express any fomi of assurance conclusion thereon. Our Tesponsibility is lo read the other Inforrnalion and, In doing $0, conslder whether the other Information Is materially incon5islenl with the financial statements or our knowledge obtained in the course of the aud51 or olheTWi5g 8ppearg to ba mBl¢ri811y misslaled. If ￿ identify such malBrial incon513tencie8 or apparent malerlal mlsslalements. we a￿ requlred lo delemine whether Ihls 9ivo$ rlse lo a materi81 mlsslalemenl In th8 flnancial statements themselves. If, based on th6 work w• hav• perfomi•d, w• concludè that thèrÉ 1$ mmterial misstatement of this other infomiaiion. we are required to report that fact. We have nothiwYJ to rtport In this regard. 14- SHETLAND ARTS DEVELOPMENT AGENCY INDEPENDENT AUDITORS. REPORT TO THE TRUSTEES 31 MARCH 2026 Matter8 on whlch we are r•qulred to report by èxc•ption We have nothing to report in respert of the following matt&r$ where the Chadtias Accounts (Scollandl Regulations 2006 las amended) requir• us to report to you if, In our opinitsn: the inform*'on given in the financial 51alemenls Is Inconsislernt In any materi81 wp8cI with the Iruslees, annual report,. or proper accounting reeords have not been kept.. or th• financlal slalements are not In agre$rnent with the aceountlng reoords,. or we havè not re¢elved all the information and explan8tlons we require for our audll. R8sponsibllltle¥ of trusteès As explained more fully in thè slatemenl of trustees, responsibilities ￿t out on page 13 the Irust•es are responsible for the preparallcn of the financial statements and lor being satisfied that they give a true and fair view, and lor such internal control as the Iruslees determine 1$ necessary lo en8bl8 Ihe preparallon of fin8ncial slalemenls that are free from material misstattsmant, whether due to fraud or error. In preparing th• finanGlÈl Stslemenls. th8 trusle•s ore responsible fur assassing th• charfty'8 ability lo continue as a 905ng concern, disclosing. as applicable, matters rel8led lo going conc&m and using the golng concem basis ol accounbng unless thè trustees ellher intend Ir) Ilquidale Ihe charlty or lo cease operation5. or havg no r6alistic allarnatlve bul lo do 80. Audltor's rosponslbllltl•s for th• oudlt of thfr flnanclal $tatam•nts Our objectives are to obtsin reasonable assurance oboul whèther the financlal slalements as a whc*le are free from material mi88lalemenl, whethtrr du& lo Iraud or error, and to1ssue an au(lilorfs report th81 includè8 cur opinlon. Re88¢n8ble assurance is a high level of assurance. but IB not a guarante? that Bn audll conducted in accordance wlth ISA8 IUKI will always deteol a malerlal mlsstatemenl when il exists. Mi$stal•m&nts con arise from fraud or error and ar• considerad matsrlal 51. Indlwdually or in the aggregale, they could rea$onably be •xp8cted to Influence the economlc doclslon$ of usèrs taken on the b5818 cf these financial statements. Thg •xtent to whlch th• audlt Wa8 ¢onsldered c•pAbh of d•tectlng Irr•gul8rltl•B, In¢ludlng fraud Irregularilles gre Snstances of non.compllance with laws and regulallons. The objectiv89 of our audit arg to obl8ln sufficient 8ppropriat• audit evidence regordlng compllanc8 With laws and regulallon8 Ih81 have a dlrect eff¥cl on the dètermlnatlon of Tnaleri81 amount5 and dls¢losur¢$ In the financi81 statements, lo perform aud51 pro¢ed¢Jres to hèlp Identty in$lan¢es of non-ctsmpll8n¢e wSth other laws and rngulalions that moy havo malerlal 8ffe¢l on th8 finan¢lal stslemenls, and to r•spond approprial¥ly lo Identified or $u$pecled non- compliance wSlh laws and regulallons It1enlified durlng the audll. In relgllon to fraud. the oblècllve8 ol our gudll a￿ to Identify and osses3 th$ r19k of msleriel mlsstalemenl ol the flnanci81 $latements due lo fraud, to obtain sufficlonl approprbale audit evidence ￿gardIng the assegs•d risks ef maledal mlsslalèment due to Iraud Ihrou9h designing and Implernenfjng 8pproprlat& re$p¢n$e$ ond to respond approprlalely lo IrAud or suspected fraud Sdenlified during th• gudll. However. 11 is the prlmary ￿SponSIbIlIty ol managemènt, wlth the ov¢r8ight of those charged with gov&rnance, to ensure that the @ntlty's operalior18 ar¢ conducted In accordance with the provlsions of laws and regul8llons and for the prgventlon and detecll¢n of fraud. In idenllfylng and asse$$lng rlsk5 of malgri?I mlsstaternenl In r•spect of Irregularitiès, Includlng fraud, the audit engagement team.. obtsined an undÈtslandirrfJ of the nature of thè sector, Including th¥ lagal and regulatory framework, that the charity opèratas In and how tho charity is complylng with the legal and règulatory framework,. Inqulred of management. and those ¢harged with govern8nc•. about their own Identification and assessment of the rfsks of irregularillès. induding any known aciual, suspected or alleged instances of fraud., di5CU85ed matters about non-compllance with laws And regulatlons and how Iraud might occur including assessment of how and Whe￿ the financlal statements may be susceptible to fraud. 15- SHETLAND ARTS DEVELOPMENT AGENCY INDEPENDENT AUDITORS, REPORT TO THE TRUSTEES 31 MARCH 2026 A$ a result of these procedur88 we consider the mosl slgnificanl laws and regulations that have a direct imp#cl on the financlal stslgm&nts aT¢ FRS 102, Charities SORP IFRS 1021, Charities and Trustee Investment Iswllandl Act 2005 and regulation 8 tyf the Charilitss A¢coullls (Scollandl Regulations 2006 las amended), the charity's governing document and lax legislali()n. We performed audit procedures lo delecl non-compllances whlch may have a material Impact On th$ financlal slal&ments which Included revlewing the financial statements including the Trustees, Report, remaining alèrt to naw or unusual transadons which may not be In accordance with the goveming documents, Inspecting correspondence with l¢¢al tax aulhorllles and evaluating advice received from external advlsors. The most 8ignifieant laws and Mgulations that have Èn indirèct impact on the financial statsmenlB are those In rel81ion lo the Employment Act 2008 and Health and Safety al Work Act 1974. We performed audll procedures to1nquire ol management whether the chartty is In cofflpllance with thes& law and regul81ion$ and Inspèct8d th& diant's risk re91Ster for controls in plac•, as well AS ched(ing payroll documenlalion and Teconciliations. The audit engagement team (den￿ried the rlsk of management override of ¢¢ntrolg and revenue recognition loccurrence and cul-ofl of grÈnt Incomè and complaleness of other income) 83 the area8 where the financial slalemenls were most susceptible to materlal misst¥t¢rllent due lo fraud. Aydll procedures performed in Connec￿On wllh management override Indude