GOLDSMITHS FINANCIAL AUDIT 2006-07 docx

GOLDSMITHS FINANCIAL AUDIT 2006-07 The Audit Committee Goldsmiths, University of London, New Cross, London SE14 6NW GS/RBB/PB/53201 Dear Sirs, AUDIT OF THE FINANCIAL STATEMENTS OF GOLDSM

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GOLDSMITHS FINANCIAL AUDIT 2006-07

The Audit Committee

Goldsmiths, University of London,

New Cross,

London

SE14 6NW

GS/RBB/PB/53201

Dear Sirs,

AUDIT OF THE FINANCIAL STATEMENTS OF GOLDSMITHS, UNIVERSITY OF LONDON FOR THE YEAR ENDED 31 st JULY 2007

I am pleased to report that our audit for the above year is now complete and, in accordance with best

professional practice, I am taking this opportunity of informing you of certain matters that we are obliged, as external auditors, to communicate to those charged with the organisation’s governance

The matters raised all arise from the application of normal audit procedures As you will appreciate, our audit procedures are designed primarily to enable us to form an opinion on the accounts as a whole Our

procedures include such tests of the accounting records and internal control systems as are, in our opinion, necessary for audit purposes Consequently, our procedures cannot be relied upon to reveal all systems weaknesses which may exist Any systems weaknesses which do exist may, nevertheless, come to light as a result of our work and those which were noted during the current year’s audit are detailed in the appendix Furthermore, as you are no doubt aware, an audit involves taking samples of populations and drawing

conclusions about the whole population from the results of samples tested, sample sizes being determined

by materiality and our assessment of risk An audit can therefore only provide reasonable but not absolute assurance that the accounts are not materially misstated

This report is not exhaustive and only deals with the more significant matters which came to our attention during the audit Other matters of lesser significance have been discussed with the relevant staff during the course of our audit work

In conclusion I would like to take this opportunity of expressing our appreciation to you and your staff,

particularly Barry Douglas and Roy Vickery, for their assistance and co-operation during the course of our audit

If you have any queries on any of the points in this letter, please do not hesitate to contact me

Yours faithfully,

Knox Cropper

This is trial version www.adultpdf.com

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APPENDIX TO MANAGEMENT LETTER FROM KNOX CROPPER

MATTERS ARISING FROM THE AUDIT FOR THE YEAR ENDED 31 ST JULY 2007

1 INTRODUCTION

This letter is produced in accordance with International Standards on Auditing (UK and Ireland) The purpose of this document is to communicate to those charged with governance the findings of the audit

The document consists of:

details of any modifications to the auditors report;

details of any unadjusted misstatements;

details of any significant weaknesses in accounting systems and internal

controls;

comments on qualitative aspects of accounting practices and financial

reporting;

details of any other matters arising from the audit; and

details of emerging issues

We are required as external auditors to report whether the financial statements show a true and fair view Our work has been carried out in accordance with relevant legislation, auditing standards and guidelines and as agreed in our letter of engagement

We confirm that our audit has been completed to our satisfaction

2 MODIFICATIONS TO THE AUDIT REPORT

We confirm that our audit report is unqualified This means that, we as auditors, have no material reservations over the figures or information disclosed in the financial statements The text of the audit report is consistent with the standard text for unqualified audit reports prescribed by HEFCE

3 DETAILS OF UNADJUSTED MISSTATEMENTS IN THE ACCOUNTS

We can confirm that no material errors were noted during our audit which remained uncorrected other than matters which are clearly trifling both individually and in aggregate

4 SIGNIFICANT WEAKNESSES IN ACCOUNTING SYSTEMS AND INTERNAL CONTROLS

Whilst our audit did not detect any significant weaknesses in accounting systems and internal

controls, a number of areas were noted where improvements could be made and these are outlined under Other Matters in section 6 below

5 QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES AND FINANCIAL REPORTING

We are pleased to report that the accounting policies adopted by the College are, in our opinion, appropriate to its circumstances and adequately disclosed These policies have been consistently applied year on year Furthermore, in our view, the judgements exercised by management in the preparation of the accounts were prudent and even handed

6 OTHER MATTERS ARISING FROM THE AUDIT

(a) Internal Audit

During the course of our audit we reviewed the reports and files of internal audit As a result of our review we were able to place reliance on the work of internal audit in a number of areas notably :

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Review of Student Systems - Enrolment

Review of Financial Systems - Purchasing Controls

Review of Payroll and Associated Personnel Procedures

(b) Tuition Fees

We are pleased to note that this year the reconciliation of the UNIT E database to Agresso was prepared by Roy Vickery We were then able to review the reconciliation and note that the records on Agresso and, consequently, the disclosures in the financial statements is consistent with the UNIT E database, which is an accurate record of students attending Goldsmiths during the period

(c) Bank Reconciliations

We identified differences between Agresso and the bank statements on two bank accounts during the course of our audit

(i) RBS account number 46055363 – Interest credited to the account of £98.03 was not

recognised on Agresso This was a dormant account due for closure and was no longer being reconciled on a regular basis

(ii) Lloyds TSB bank account number 0543203 – Interest debited to the account of £989.21 was

not recognised on Agresso The loan account related to the £6,850,000 borrowed to settle the finance leases for Surrey House and Chesterman House The solicitor requested the payment for the account a day early so that the account was overdrawn for that day until the

£6,850,000 was drawn down to the account the following day The debit charge arose on the

21st December 2006 but remained undetected up to the date of our audit

Although neither amount is significant it is important that the college controls all its bank accounts by regular reconciliation Dormant accounts are particularly susceptible to fraud and we recommend that all accounts are reconciled on a monthly basis from the date they are opened to the date of

confirmation of closure

7 EMERGING ISSUES

(a) SORP – Accounting for Further and Higher Education

The new Statement of Recommended Practice which will become mandatory for the year ended 31st July 2008 may affect the treatment of certain matters in Goldsmith’s Financial Statements, although a number of these issues have already been addressed

Operating and Financial Review

Income recognition, and the treatment of restricted and unrestricted funds

Bursaries

Heritage Assets

Exchequer Interest

FRS 17 - Pension Scheme Disclosures

Student Union Consolidation

(b) Corporation Tax Treatment

Ernst and Young LLP in co-operation with BUFDG have prepared a paper in respect of the changes introduced by the Finance Act 2006 in respect of the Corporation Tax Treatment of UK Universities The paper sets out the requirement to identify non primary purpose and non charitable expenditure, and their proposed treatment This may include setting up subsidiary companies where Gift Aid relief

to the University may be available

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Mr Greg Stevenson Your ref: GS/RBB/PB/53201

Knox Cropper, Chartered Accountants

16 New Bridge Street

London

EC4V 6AX

25 October 2007

Dear Greg

Matters arising from the External Audit for the year ended 31 July 2007

Thank you for your letter of 23 October 2007 setting out your opinion of the College's annual financial statements for the year ended 31 July 2007 and appending matters arising from your audit

I am pleased that the audit was completed to your satisfaction and that no material errors were found With regard to your comments on bank reconciliation:

(i) RBS account number 46055363 - interest had been recognised for each of the first three quarters of the year but, through an oversight, was missed in the final quarter

(ii) Lloyds TSB account number 05432303 – we did not receive a statement from the bank indicating that this additional interest had been charged The bank has accepted that this was an error and has agreed to waive any additional charges arising because of late payment

Bank reconciliations are carried out on a monthly basis and so the omission of the amounts listed above is exceptional However, a more careful review of the bank balances will be carried out in future

The emerging issues you mention are on our agenda and will be considered in detail in the year ahead

May I thank you once again for your co-operative and professional approach to the audit

Yours sincerely

Barry Douglas

Director of Finance

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LETTER OF REPRESENTATION

From the Chair of Finance and Resources Committee

Goldsmiths, University of London New Cross

London SE14 6NW Messrs Knox Cropper

Chartered Accountants

8/9 Well Court

London EC4M 9DN

Dear Sirs

We confirm, to the best of our knowledge and belief, and having made appropriate enquiries of other directors and officials of the College, the following representations given to you in connection with your audit

of the College's financial statements for the year ended 31st July 2007

1 GENERAL

We acknowledge as the Council our responsibility, under the Charter and related Statutes, for the financial statements which give a true and fair view and for making accurate representations to you All the accounting records have been made available to you for the purpose of your audit and all the transactions undertaken by the College have been properly reflected and recorded in the accounting records All other records and related information, including minutes have been made available to you

We also acknowledge our responsibility for maintaining sound systems of internal control and for the prevention and detection of fraud and other irregularities

We confirm that such accounting records properly reflect the true nature of all material transactions and properly distinguish between capital and revenue items as defined in the Accounting Policies

We believe that the College's financial statement should be prepared on a going concern basis on the grounds that current and future sources of funding or support will be more than adequate for the College's needs We believe that no further disclosures relating to the College's ability to continue as a going concern need to be made in the financial statements

3 FIXED ASSETS

All fixed assets disclosed on the Balance Sheet were in existence at the balance sheet date, and that the College held good title to these assets at that date We further confirm that the assets reported in the Balance Sheet are not subject to charges except to the extent disclosed by way of note Depreciation rates are regularly reviewed and we consider the rates adopted in the current year to be appropriate

4 LAWS AND REGULATIONS

We are not aware of any irregularities, including fraud, involving management or employees of the College; nor are we aware of any breaches or possible breaches of statute, regulations, contracts, agreements or the College's Charter which might prejudice the College's going concern status or which result in the College suffering significant penalties or other loss No allegations of such irregularities, including fraud, or such breaches have come to our notice

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5 LOANS AND ARRANGEMENTS

The College has not had nor entered into, at any time during the year, any arrangement, transaction

or agreement to provide credit facilities (including loans, quasi-loans or credit facilities) for Council members nor to guarantee or provide security for such matters

6 POST-BALANCE SHEET EVENTS

There have been no events since the balance sheet date which necessitate revision of the figures included in the financial statements or inclusion of a note thereto Should further material events occur, which may necessitate revision of the figures included in the financial statements or inclusion of

a note thereto, we will advise you accordingly

7 CREDITORS

All known liabilities which existed at the balance sheet date have been reflected in the accounts

8 DEBTORS

Debtors, as disclosed in the accounts, were all due to the College at the balance sheet date and in particular adequate provision has been made to write down disputed items or items which are unlikely

to be recoverable, for any other reason, to their recoverable amounts Therefore debtors reflected in the accounts are anticipated to realise in due course their book amounts

9 CONTINGENT LIABILITIES

We are not aware of any litigation pending at 31st July 2007 or other matters giving rise to potential liabilities or contingencies except as disclosed in the financial statements

10 TRANSACTIONS WITH RELATED PARTIES

We are not aware of any transactions with related parties requiring further disclosures in the financial statements

11 GRANTS AND DONATIONS

All grants, donations and other income, the receipt of which is subject to specific terms of conditions have been notified to you There have been no breaches of terms and conditions during the period in the application of such income

Yours faithfully

Mark Baillache

Member of Council and Chair of Finance and Resources Committee

Signed following the Council meeting on

29 November 2007

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