ACIE Scottish Conference SORP update and move to

ACIE Scottish Conference SORP update and move to FRS 102 Adrienne Airlie, CA Chief Executive, Martin Aitken & Co 26 August 2016 www. maco. uk www. mafsltd. co. uk

SORP update and move to FRS 102 Agenda FRS 102 SORP SOFA Investments Changes to headings Changes in format Cash Flow Statement Income recognition Different sources of income Deferral Legacies Donated goods & services Expenditure recognition Employee Benefits Pensions Notes to Accounts etc. Restatement issues www. maco. uk www. mafsltd. co. uk

SOFA www. maco. uk www. mafsltd. co. uk

Investment Valuation Basis • Market Value/ Fair Value • Since SORP 1995 • True & Fair Basis • Realised & Unrealised Gains & Losses on Investment assets (including Investment Property) can be shown as a single row on the SOFA • Can follow by way of note to split • One line disclosure is easier if “mark to market” approach is taken • (Since SORP 2000) www. maco. uk www. mafsltd. co. uk

Investment Valuation Basis cont’d • FRS 102 4 forms of investment • Listed / traded • • Shares, bonds etc. Investment Property • No – L & B if occupied by charity for its own use • Mixed Use – Split needed, if impractical show as L & B • No Dep’n on Inv Property • Unlisted Investments • Social Investments • Programme Related • Mixed Motive www. maco. uk www. mafsltd. co. uk

Investments – FRS 102 vs FRSSE SOFA • ONE Difference between FRS & FRSSE • Treatment of gains / losses on Investment assets (incl Investment Properties) SORP 2005 Shown in Other/ gains and losses – after “Net Incoming/outgoing resources” Below the Line (BTL) SORP 2015 FRS 102 requires that changes in the value of financial instruments (incl investments) are measured at fair value and taken through P/L. Now shown on So. FA before calculating “Net income/expenditure” Above the Line (ABL) FRSSE no change to the treatment in SORP 2005 for gains losses on Investment assets BTL. www. maco. uk www. mafsltd. co. uk

Balance Sheet – Investments & Intangible assets FRS 102 FRSSE Investment properties are measured initially at cost and subsequently at fair value. Valuation basis prescribed. Investment property valued at market value. Property let or occupied by another group undertaking Property, let or occupied by another group must now be shown as Investment property. Mixed use undertaking must be excluded from Investment – apportion between investment & operational. property and shown in tangible fixed assets. Capitalised Goodwill assumed to be w/o 5 years max except where value can be reasonably measured. No revaluation of intangible fixed assets (Historic cost). Goodwill assumed to have a life of 20 years. Unlisted equity investments initially at cost and then fair value. Unlisted equity investments best estimate of MV where practicable. If not then held at cost initially and then fair value. New class of investment – Social Investment. Additional investment disclosure. www. maco. uk www. mafsltd. co. uk

SOFA: SORP 2005 compared with FRS 102 SORP www. maco. uk www. mafsltd. co. uk

Unrestricted funds Restricted funds Endowment funds Total funds Prior period Total funds Charities SORP FRS 102 Statement of Financial Activities Further details £ £ £ Income and endowments from: Donations and legacies A 1 Charitable activities A 2 Other trading activities A 3 Investments A 4 Other A 5 Total Expenditure on: Raising funds B 1 Charitable activities B 2 Other B 3 Total www. maco. uk www. mafsltd. co. uk

Unrestricted funds Restricted funds Endowment funds Total funds Prior period Total funds Charities SORP FRS 102 Statement of Financial Activities (continued) Further details £ £ £ Net gains/(losses) on investments Net income/(expenditure) Transfers between funds Other recognised gains/ (losses): B 4 Gains/(losses) on revaluation of fixed assets D 1 Actuarial gains/(losses) on defined benefit pension schemes D 2 Other gains/(losses) Net movement in funds D 3 Reconciliation of funds: Total funds brought forward Total funds carried forward E www. maco. uk C www. mafsltd. co. uk

SOFA • • ACIE Example in handouts Headings reduced Plain English approach • Terminology Comparatives needed for all columns • Either on So. FA • Or Notes to the accounts Single column So. FA is permitted • One class of fund is material • If not U/R, R & Endowment Governance Costs Support Costs Income from – Expenditure on www. maco. uk www. mafsltd. co. uk

Cash Flow Statement www. maco. uk www. mafsltd. co. uk

Cash Flow Statement • ACIE example in handouts • Mandatory Scotland only • Income < £ 500 k • AP starting in 2015 ( unless signed by 31. 3. 16) • Optional AP starting in 2016 • Income > £ 500 k, mandatory, no exceptions • Layout • Operating activities • Investing activities • Financing activities • Option to prepare by fund type www. maco. uk www. mafsltd. co. uk

Income Recognition www. maco. uk www. mafsltd. co. uk

Income Recognition: SORP 2005 Income – FRS 5 detailed explanations Entitlement Certainty Measurement Conditions Certain & controllable Lack of related expenditure is not a reason for deferral www. maco. uk www. mafsltd. co. uk

Income Recognition: SORP 2015 • SORP 5. 3 (FRS 102) • Two broad categories of income • Exchange transactions (contract) • • Goods & services supplied under a contract Income received is approx. equal in value to the goods or services supplied (2) Non Exchange transactions (gifts) • Charity receives value from the donor without providing equal value in exchange • Grants could be “Income from Charitable Activities” if paid to secure particular goods or services • Restricted grants with no performance related conditions could be “Income from donations & legacies” • Transaction accounted for in accordance with substance no simply legal form www. maco. uk www. mafsltd. co. uk

Income Recognition: SORP 2015 Income is recognised in the accounts of a charity when all the following criteria are met: Entitlement Control over the rights to economic benefit has passed to the charity Probable It is more likely than not that economic benefit associated with the transaction or gift will flow to the charity Measurement The monetary value or amount of income and the costs incurred & or to complete the transaction can be measured reliably. All income reported GROSS www. maco. uk www. mafsltd. co. uk

Income Recognition - Grants General principles for recognising income from grants: • Recognised when there is evidence of entitlement to the grant and its amount can be measured reliably. • Evidence of entitlement usually exists when the formal offer of funding is received. • Must be accounted for and presented based on its substance i. e. restricted/unrestricted. • Grant conditions should be reviewed to identify any performance conditions or other terms and conditions that may prevent income recognition. Some grants can include terms and conditions which must be met before the charity is entitled to it. www. maco. uk www. mafsltd. co. uk

Income Recognition – Grant conditions Examples of conditions affecting income recognition include: • • receipt of grant being dependant on achieving a certain level of service the need to raise matched funding. Examples of conditions which do not prevent recognition: • • Submission of accounts Certification of expenditure A grant being restricted to a particular activity does not create a performance condition (FRS 102 paragraph PBE 34. 68). Grants without conditions should not be deferred even if it is received in advance of the related expenditure being incurred. The timing of the related expenditure is at the charity’s discretion and is not reason enough to defer. www. maco. uk www. mafsltd. co. uk

Income Recognition – When can you Defer? Where terms and conditions have not been met or charity is unsure it can meet the terms and conditions, income should be deferred until it is probable conditions can be met. Grants received in advance and have performance conditions attached which are out with the control of the charity, then the grant should be deferred and released in the period which the conditions have been met. Grant income not recognised due to conditions attached, which are out with the control of the charity, should be disclosed as a contingent asset if receipt is probable once the conditions have been met. www. maco. uk www. mafsltd. co. uk

Income Recognition – Disclosure Grants & Deferrals Disclosure and notes to the accounts • Disclosure of government grants and deferred income is required by FRS 102. . • There must be explanations in the accounts regarding the accounting policies adopted in relation to the recognition of each material item of income stating whether the performance model or accruals model approach has been taken (FRS 102 paragraph 24. 6). • There must be explanations in the notes to the accounts for any income that has been deferred, explaining why it has been. • There should be an analysis of the movement in the deferred income account with prior year comparatives. www. maco. uk www. mafsltd. co. uk

Income Recognition Income recognition under FRS 102: • Transactions which have no future performance related conditions are recognised in income when proceeds are received/receivable. • Transactions which have specified future performance related conditions are recognised when conditions are met. • A liability should be recognised where proceeds have been received before the revenue recognition criteria has been met. (FRS 102 paragraph 24. 5 B) www. maco. uk www. mafsltd. co. uk

Income Recognition – 2 Year Grant - Charity A receives £ 400, 000 in FY 15/16, to help support people living with Hepatitis. The related expenditure is due to be incurred over two years: £ 200, 000 in 2014/15 and £ 200, 000 in 2016/17. The payment of the grant is based on the provision of an annual progress and expenditure reports by March each year and mid year reports to be submitted by September each year. Under FRS 102 In 2015/16 Incorporation of grant income: Bank Grant income Recognise expenditure incurred: Expenses Bank In 2016/17 Recognise expenditure incurred: Expenses Bank www. maco. uk Balance Sheet SOFA + £ 400, 000 + £ 200, 000 www. mafsltd. co. uk

Income Recognition – 2 Year Grant - Charity A (cont. ) Under FRS 102 In 2015/16 Incorporation of grant income: Bank Grant income Recognise expenditure incurred: Expenses Bank In 2016/17 Recognise expenditure incurred: Expenses Bank Balance Sheet SOFA + £ 400, 000 + £ 200, 000 As the conditions attached to the grant are wholly within the control of the charity, the full £ 400, 000 should be recognised in 2015/16. Although the related expenditure will not be fully incurred until 2016/17, this is not reason enough to defer the grant income. www. maco. uk www. mafsltd. co. uk

Income Recognition – Future Project - Charity B has a year end of 31 March 2016 and receives confirmation in writing that it will receive a grant of £ 1, 000 on 31 March 2016 however it will not be paid till the following financial year. There are no conditions attached to the grant. Under FRS 102 In 2015/16 Incorporation of grant income: Accrued income Grant income Balance sheet SOFA + £ 1, 000, 000 As the charity has received acceptance in writing there will be a present legal obligation at 31 March 2016 meaning it will pass the entitlement test. It will have to be recognised in 2016 financial statements and not in the following financial year on receipt of the grant. www. maco. uk www. mafsltd. co. uk

Income Recognition – Entitlement & Conditions Charity C receives a grant of £ 100, 000 to build a new community centre with no further conditions attached. The charity incurs costs of £ 300, 000 to build the community centre and depreciates over a useful life of 20 years. Under FRS 102 Balance sheet Recognition of factory: Fixed assets Cash Recognition of grant: Cash Grant income Recognition of depreciation charge: Depreciation Fixed assets SOFA + £ 300, 000 - £ 300, 000 + £ 100, 000 + £ 15, 000 The whole grant is recognised in the SOFA immediately as there are no provisions requiring deferral of the grant received other than the community centre being built, which has occurred. www. maco. uk www. mafsltd. co. uk

Income Recognition – T & Cs (1) Charity D has a year end of 31 December 2015 and will receive core funding of £ 40, 000 from the Big Lottery fund to fulfil its charitable purposes. The grant payments have been planned as follows: Year one 01/10/2015 01/01/2016 01/04/2016 01/07/2016 £ 5, 000 Year two 01/10/2016 01/01/2017 01/04/2017 01/07/2017 £ 5, 000 The grant may be withheld should the charity not meet the following requirements: • Submission of quarterly expenditure reports • Submission of annual charity accounts Under FRS 102 The full funding of £ 40, 000 should be recognised in the SOFA in 31 December 2015 year end accounts. The underlying conditions are completely under the control of the charity and are not reason enough to prevent recognition. www. maco. uk www. mafsltd. co. uk

Income Recognition – T & Cs (2) Charity E is offered an employability grant of £ 1, 250, 000 p. a. from the Big Lottery Fund on 31 March 2015. The grant will be paid in 4 equal instalments, the first being on 31 March 2016 and annually thereafter. There a number of outcomes and project indicators that must be met in order to receive each payment, which are as follows: YOUTH UNEMPLOYMENT • referred to training schemes • improving CVs and completing job applications • experiencing improved self confidence • engaging with transitional support worker • who have sustained employment • move into employment, training or education Yr 1 30 35 40 Yr 2 30 70 80 50 50 Yr 3 50 70 80 50 50 Yr 4 50 35 40 50 50 120 Under FRS 102 As the conditions attached to the grant are not within the control of the charity, only the first instalment of £ 1, 250, 000 received in the year should be recognised in 2015/16. The remaining amounts should be recognised as and when the charity meets the conditions. www. maco. uk www. mafsltd. co. uk

Legacy Income Recognition: FRS 102 Probability, Entitlement & Measurement • Under SORP 2005 income was recognised when receipt was “virtually certain” • Under FRS 102 it becomes "probable” • Evidence of entitlement and reliable monetary measurement remain the same • For accounting purposes, entitlement exists when the charity has • • evidence the gift is left to them • executor is satisfied it will not be required to settle claims on estate. Receipt is probable when • there has been a grant of probate • executors have established there are sufficient assets in the estate, after settling any liabilities, to pay the legacy • www. maco. uk any conditions attached to the legacy are met or within charity’s control. www. mafsltd. co. uk

Measurement - Legacies • Re Measurement knowing probate is granted is insufficient – maybe assets need to be sold to meet debts: • Legacy subject to interest of a life tenant only recognised as income on the death of the life tenant • Should only be recognised when it can be measured or estimated with sufficient reliability • Fair value receivable will generally be the expected cash amount to be distributed to the charity from the estate • If it cannot be measured accurately then it should be disclosed as a contingent asset until criteria for income recognition is met. • Can use an estimation technique to value legacies as income. www. maco. uk www. mafsltd. co. uk

Donated Goods & Services Income Recognition: FRS 102 • DONATED GOODS FOR RESALE • Receiving a gift in kind on trust for conversion into cash • Where practicable measure at fair value on initial recognition • Expected proceed from sale less expected costs of sale. • Adjustment via stock & “Income from other trading activities” on So. FA • UK Retail Gift Aid Scheme – Estimation allowed • DONATIONS OF FACILITIES & SERVICES • • • Value of gift to the charity No valuation given re volunteers on accounts TAR or notes to disclose their impact www. maco. uk www. mafsltd. co. uk

Expenditure Recognition www. maco. uk www. mafsltd. co. uk

Recognition of Expenditure Definition of a liability has been expanded to reflect change in recognition criteria for income. A liability and related expenditure should be recognised when the following criteria are met: • • • Obligation Present legal or constructive obligation existing at the reporting date as a result of a past event Probable More likely than not that the transfer of economic benefits will be required in settlement Measurement There is an ability to measure or estimate the amount reliably www. maco. uk www. mafsltd. co. uk

Expenditure Recognition – example Charity C pledges to award a grant of £ 500, 000 to Charity D in two instalments of £ 250, 000 in 2015/16 and £ 250, 000 in 2016/17. There are no conditions attached to the grant. Under FRS 102 In 2015/16 Incorporation of grant paid: Grants paid Bank Recognising future commitment: Grants paid Future commitments due Balance sheet + £ 250, 000 SOFA + £ 250, 000 As the Charity C has awarded the grant with no conditions it is probable that the full amount of £ 500, 000 will be paid to Charity D and therefore will have to recognise the grant when it is awarded rather than when it is paid. www. maco. uk www. mafsltd. co. uk

Expenditure Recognition • Criteria to apply • Obligation • Probable • Measurement • Reference to Exchange & Non- Exchange transactions • Constructive obligations • Specific commitments • Communicated to beneficiary / recipient • Established pattern of practice. • Funding commitments. • The award of a grant is a Non – exchange transaction • Done to further charitable purpose, no contractual relationship with recipient. • Some grants may contain specific conditions re output or service – performance related grants • A grant restricted for a particular purpose is not a Performance related condition. • Maybe met out of U/r funds – scope to designate • Not all funding commitments need to be recognised. • Onerous contracts www. maco. uk www. mafsltd. co. uk

Expenditure- Employee benefits FRS 102 • • Wages & salaries Paid Annual leave Paid Sick leave Termination benefits Review Holiday year now – avoid adjustment later or restatement Change Holiday year. Materiality Post employment benefits (DB scheme) as at reporting date www. maco. uk www. mafsltd. co. uk

Pensions – DC & DB Schemes Defined contribution scheme • Pension payments on retirement dependent on contributions made and the value of investments at the date of retirement • No legal or constructive obligation on the employer to pay further contributions for employees if the fund does not have sufficient assets to pay all employee benefits relating to current or prior period service Defined benefit scheme • Pension payments determined by salary (final salary, career average salary) and the number of years of pensionable service • Employer has given a guarantee for an amount / level of pension and requires to pay contributions to ensure that is achieved • Deficits on the scheme based on actuarial valuations require to be funded by the employer www. maco. uk www. mafsltd. co. uk

Pensions – DC & DB Schemes Pensions www. maco. uk www. mafsltd. co. uk

Pensions – Interaction with SORPs Defined contribution scheme (DC) • No change in the method of accounting from SORP 2005 to SORP 2015 (FRSSE & FRS 102) • Contributions payable to the pension scheme are charged to the Statement of Financial Activities in the period to which they relate • Disclosures required are: - Nature of the scheme Cost for the period Contributions due / prepaid at balance sheet date www. maco. uk www. mafsltd. co. uk

Pensions – DB disclosure Pensions – DB Disclosure Defined benefit scheme (DB) • As part of the transition to FRS 102 SORP 2015 : • Comparative figures re-stated • Effects on prior year reported surplus & reserves to be shown in the reconciliations. • Any movements in the asset / liability from the prior year will be accounted for through the SOFA • Above net income – service costs and net interest income / expense • Below net income – any actuarial gains and losses • Significant level of disclosures required in the accounts • Important to review the assumptions used by the actuary in arriving at the scheme asset / liability • Cost implications for obtaining the actuarial report www. maco. uk www. mafsltd. co. uk

Pensions – MEDB Pensions - MEDB Defined benefit multi employer schemes • Treatment depends on whether the charity’s share of the assets and liabilities of the scheme can be identified • If they can, then accounted for as a DB scheme as detailed on the previous slides • Consider obtaining individualised FRS 102 report from the/ an actuary which applies assumptions specific to the charity’s own circumstances • • Cost implication but gives a more accurate view of the charity’s pension asset / liability Better information for planning purposes www. maco. uk www. mafsltd. co. uk

Pensions – MEDB Cont’d Pensions – MEDB (cont. ) Under old rules (FRS 17) • If unable to determine the share of assets and liabilities for the charity’s share of the scheme: • treated as a DC scheme with only contributions being recognised in the period they relate to • If able to determine the share of assets and liabilities for the charity’s share of the scheme: • Assets & liabilities should have been recognised • However lots organisations incorrectly took advantage of the above exemption to treat as DC www. maco. uk www. mafsltd. co. uk

Pensions – MEDB Cont’d Pensions – MEDB (Cont. ) Under SORP 2015 (FRS 102) Stricter requirements than under SORP 2005, for schemes applying the exemption Under SORP 2015 (FRS 102) - can only be treated as if a DC scheme if no funding agreement in place However, if a funding agreement is in place to a eliminate a deficit, the charity must: - • • • Account for contributions as if a DC scheme Recognise a liability on the balance sheet equal to the net present value of the future deficit reduction payments Payments are discounted to PV using the market yield on high quality corporate bonds Each year, a finance cost is charged to the SOFA to reduce the discount to £nil over the period of the funding agreement. www. maco. uk www. mafsltd. co. uk

Notes to Accounts www. maco. uk www. mafsltd. co. uk

Notes / Basis of Preparation • First time adoption FRS 102 • Effective date – start of period • Restatement issues and notes • Changes to Accounting policies e. g. grants/ legacies • Basis of Preparation • Prepared in accordance with FRS 102 and SORP (FRS 102) • Public Benefit Entity • Going Concern – no material uncertainties if yes then disclose • Reasons for/ impact of changes in accounting policies + financial effect. • Notes & Policies • Government grants • Accounting policies re current asset investment, stock, debtors • Accounting policies re measurement of creditors & provisions • Discount on LT Debtors or Creditors if material ? • ACIE Examples in handouts. www. maco. uk www. mafsltd. co. uk

Restatement www. maco. uk www. mafsltd. co. uk

Transition – Key restatement dates example FINANCIAL YEAR ENDED 31 DECEMBER 2015 FINANCIAL YEAR ENDED 31 MARCH 2015 RESTATE FUND BALANCE RECONCILE TO OLD SORP 1 APR 14 31 DEC 14 RESTATE COMPARATIVES RESTATE FUND BALANCE RECONCILE TO OLD SORP 31 MAR 15 31 DEC 15 FIRST YEAR ADOPTION OF FRS 102 31 MAR 16 1 JAN 14 www. maco. uk www. mafsltd. co. uk

Mixed Use Property – Restatement required On transition the changes to the SORP have different effects on the financial statements Mixed use property • The charity holds a property at £ 1 m • Half is used as the charity head office – this portion will be treated as property, plant and equipment • Half is rented to another company – this portion will be treated as investment property • The property was revalued to £ 1. 2 m during the year ended 31 /12/14 FRS 102 SORP – section 4. 59 – gains and losses on investment assets FRS 102 SORP – section 4. 62 – gains/losses on revaluation of fixed assets FRS 102 SORP – section 10. 47 – mixed use property FRS 102 – section 16. 4 – mixed use property www. maco. uk www. mafsltd. co. uk

Mixed Use Property – Restatement of Balance Sheet FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 Investment property £ 0. 6 M - Property plant etc. £ 0. 6 M £ 1. 2 M www. maco. uk OLD SORP 31/12/13 £ 1 M www. mafsltd. co. uk

Mixed Use Property – Restatement of SOFA FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 Nil £ 0. 1 m - Net incoming/ outgoing resources Nil £ 0. 1 m Nil Unrealised gain on property, plant and equipment Nil £ 0. 1 m £ 0. 2 m Funds brought forward £ 3 m £ 2. 8 m Total funds carried forward £ 3 m Unrealised gain on investment property www. maco. uk www. mafsltd. co. uk

Mixed Use Property – Reconciliation of funds Fund balance under old SORP Total Funds 31/12/14 Total Funds 1/1/14 £ 3 m Nil £ 3 m Adjustments: Mixed use property Restated fund balance under FRS 102 SORP www. maco. uk www. mafsltd. co. uk

Investment Property – Restatement required Investment property • • The charity holds an investment property at £ 2 m The property was revalued during the year ended 31/12/15 to £ 2. 1 m FRS 102 SORP – section 10. 45 – investment properties FRS 102 SORP – section 4. 59 – gains and losses on investment assets FRS 102 – section 16 – investment properties www. maco. uk www. mafsltd. co. uk

Investment Property – Restatement of Balance Sheet Investment property Property plant etc. www. maco. uk FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 £ 2. 1 m £ 2 m Nil Nil www. mafsltd. co. uk

Investment Property – Restatement of SOFA FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 £ 0. 1 m Nil Nil Unrealised gain on property plant and equipment N/a Nil Funds brought forward £ 3 m £ 3. 1 m £ 3 m Unrealised gain on investment property Net incoming/ outgoing resources Total funds carried forward www. maco. uk www. mafsltd. co. uk

Investment Property – Reconciliation of Funds Fund balance under old SORP Total Funds 31/12/14 Total Funds 1/1/14 £ 3 m Nil £ 3 m Adjustments: Investment property Restated fund balance under FRS 102 SORP www. maco. uk www. mafsltd. co. uk

Holiday Pay – Restatement required Holiday Pay accrual • • • The Charity’s year end is 31/12/15 The Holiday period runs to March each year The charity calculates that it has an accrual of £ 50 k as at 31/12/15 For the year ended 31/12/13 or 31/12/14 the charity had not provided for a holiday pay accrual The 31/12/14 accrual would have been £ 20 k The 31/12/13 accrual would have been £ 10 k FRS 102 SORP – section 7. 40 and 7. 41 FRS 102 – section 28. 4 short term employee benefits www. maco. uk www. mafsltd. co. uk

Holiday Pay – Restatement of Balance Sheet Accruals www. maco. uk FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 £ 50 K £ 20 K NIL www. mafsltd. co. uk

Holiday Pay - Restatement of SOFA FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 £ 30 K £ 10 K NIL Net incoming/ outgoing resources £(30 K) £(10 K) NIL Funds brought forward £ 2. 98 M £ 2. 99 M £ 3 M Total funds carried forward £ 2. 95 M £ 2. 98 M £ 3 M Salaries www. maco. uk www. mafsltd. co. uk

Holiday Pay – Reconciliation of funds Fund balance under old SORP Total Funds 31/12/14 Total Funds 1/1/14 £ 3 m £(20 k) (£ 10 k+£ 10 k) £(10 k) £ 2. 98 m £ 2. 99 m Adjustments: Holiday pay accrual (2014/2013) Restated fund balance under FRS 102 SORP www. maco. uk www. mafsltd. co. uk

MEDB – Restatement required MEDB pension scheme • • • The charity operates a defined benefit pension scheme Not previously accounted for under FRS 17 MEDB 31/12/13 deficit £ 9 M 31/12/14 £ 10 m 31/12/15 £ 12 m FRS 102 SORP – section 17. 6 – accounting for defined benefit plans FRS 102 – section 28. 14 – post-employment benefits: defined benefit plans www. maco. uk www. mafsltd. co. uk

MEDB - Restatement of Balance Sheet Net pension liabilities www. maco. uk FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 £ 12 M £ 10 M NIL www. mafsltd. co. uk

MEDB - Restatement of SOFA FRS 102 SORP 31/12/15 FRS 102 SORP 31/12/14 OLD SORP 31/12/14 £ 4 m £ 2 m Nil £(4 m) £(2 m) Nil £ 2 m £ 1 m Nil Funds brought forward £ 2. 5 m £ 3. 5 m £ 12. 5 m Total funds carried forward £ 0. 5 m £ 2. 5 m £ 12. 5 m Net contributions/interest/service cost Net incoming/ outgoing resources Actuarial gain/(loss) www. maco. uk www. mafsltd. co. uk

MEDB - Reconciliation of Funds Fund balance under old SORP Total Funds 31/12/14 Total Funds 1/1/14 £ 12. 5 m £(10 m) £(1 m)+£(9 m) £ 2. 5 m £ 3. 5 m Adjustments: Effect of MEDB Restated fund balance under FRS 102 SORP www. maco. uk www. mafsltd. co. uk

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