The directors present their annual report and financial statements for the year ended 31 March 2024.
The financial statements have been prepared in accordance with the accounting policies set out in note 1 to the financial statements and comply with the charity's the Memorandum and Articles, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and "Accounting and Reporting by Charities: 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 2019).
The Social Enterprise Academy is the key learning and development organisation in Scotland supporting social entrepreneurs, social enterprises and enterprising third sector organisations. The company designs and delivers learning programmes tailored to the demands of the social enterprise sector, with a focus on individuals and their personal development as leaders and potential leaders of social entrepreneurship. The purpose of these activities is to:
• Strengthen leadership and the position of social entrepreneurs in Scotland.
• Underpin the sustainability of the wider third sector in Scotland.
• Encourage the innovation and creativity that will regenerate communities.
Last year, the Social Enterprise Academy (SEA) made a significant loss. Key accounting errors came to light towards the end of the year, including misclassification of grants paid out under funding contracts, incorrect recording of prior year audit adjustments and significant manual errors in reconciling management accounts to the ledgers. As the scale of the finance issues became clear, a full review of the business was carried out by an external finance director. The executive team and board now have confidence in our management accounts and took action to put in place a robust recovery programme to secure the future of SEA, with the support of our key funders and customers.
This was the fifteenth full year during which the Academy was performing its role as a strategic delivery partner of the Scottish Government. We have been acutely aware of the pressure on public finances during this period and the challenges this poses to the Social Economy.
We would like to thank the Scottish Government for their ongoing support during this period – for the Academy but more importantly for the people that the Academy serves. Outcome specific investment was received from the Scottish Government (SG) to cover the following areas reflected in an agreed work plan:
Bursary backed programme – this exists to ensure learning and development aimed at increasing sustainability is affordable for organisations in the wider third sector. The Academy delivered programmes related to Leadership, Entrepreneurship, and Social Impact Measurement to over 100 organisations with this support.
Schools Programme – Scottish Government have tasked the Academy with making the Social Enterprise Schools programme available to every school in Scotland. We continued to work across Scotland including the delivery of programmes in the Gaelic medium across the Islands of Scotland.
Rural Bursary - the Academy continues to target resources to support social enterprises in the rural south of Scotland as well as the Highlands. We continue to work with South of Scotland Enterprise and Highlands and Islands Enterprise in this endeavour.
Just Enterprise – the Academy continues to be an active member of the Just Enterprise consortium delivering Leadership development to the sector as part of this programme tendered by the Scottish Government. Demand continues to be high for these programmes.
We continue to sell programmes to organisations within the third and public sector who can afford to pay for learning and development. Over 60% of the Academy’s domestic income for adult programmes is generated through sales.
Private Sector – the Academy continues to develop sponsorship relationships, partnerships and client sales with parts of the private sector. We continue to explore this area as a potential growth area for the Academy. We enjoyed an ongoing relationship with SAP who continue to engage staff in support of our schools work in areas where their staff live. This relationship of staff development and retention of corporate employees with support of community work was also contracted by Aegon who ran a similar programme with the Academy in Edinburgh during this period.
OTHER ACTIVITIES
International Work
Mel Young, founder of the Homeless World Cup suggested that “If, as a social Enterprise, you are doing something pretty neat, you have a duty to share it”. Since 2012, the Academy has been sharing its model internationally through direct delivery and through a series of partnership arrangements with country level hubs. These have been most successful in Australia, South Africa, Canada, Egypt and Sweden.
Following on from re-structuring last year, the Academy continues to focus on domestic delivery in the UK and work in and through partners for our increased reach and impact internationally. We continued to work in terms of direct delivery with Movember and IKEA during this period and on some selected European projects.
During the year the charity generated incoming resources of £2,571,399 (2023:£2,553,085) and incurred expenditure of £3,322,253 (2023:£2,591,741). This resulted in a deficit of £750,854 for the year (2023: deficit of £38,656). The charity has net liabilities of £529,932 all of which are unrestricted (2023 : net assets £220,922).
During the course of the year, the Academy encountered significant challenges stemming from the unexpected long-term absence of key finance personnel. The strain on our finance function was further compounded by a move to a new finance system and the merger of SEA International C.I.C. during the period. Towards the end of the year, a number of key accounting errors came to light, including misclassification of grants paid out under funding contracts, incorrect recording of prior year audit adjustments and significant manual errors in reconciling management accounts to the ledgers.
The resulting provision of inaccurate reporting of the company’s financial position significantly compromised the ability of the executive team and board to take action and regrettably flawed business decisions were made. As the scale of the finance issues became clear, a full review of the business was carried out by an external finance director and lessons have been learned. The finance team has been reconfigured and upskilled, a robust financial control framework has been implemented and improved forecasting procedures and mechanisms have been put in place. These changes and the consequential accurate and timely reporting this has enabled ensures that the mistakes of the past will not be repeated.
The executive team and board now have confidence in our management accounts and have taken action to put in place a robust recovery programme to secure the future of SEA.
Board and Senior Leadership Team (SLT) are actively working to develop a five-year business plan to drive recovery. During this period, recovery loans will play a critical role in supporting our efforts. The Scottish Government has reaffirmed its commitment to retaining the Social Enterprise Academy as a strategic delivery partner under the current 10-year strategy, which runs until 2026. Additionally, the Social Enterprise Ecosystem, of which the Academy is an active member, is collaborating with the Scottish Government to shape a new 10-year strategy.
To diversify income streams, the Academy is adopting a strategic approach to building partnerships within the private sector through the creation of a Learning Trust. This initiative aims to enhance the Learning and Development agenda within the social economy. Early progress has been encouraging, as demonstrated by partnerships with Experian, SAP, and Aegon. Alongside this, we remain committed to closely monitoring costs against income within the framework of the recovery plan, ensuring we adapt expenditures to align with available resources.
The Board have also given careful consideration to the question of the Academy’s status as a going concern. After seeking professional advice, we are in agreement that the Academy remains a going concern.
It is the policy of the charity that unrestricted funds which have not been designated for a specific use should be maintained at a level equivalent to between three and six month’s expenditure. The directors consider that reserves at this level will ensure that, in the event of a significant drop in funding, they will be able to continue the charity’s current activities while consideration is given to ways in which additional funds may be raised.
As at 31st March 2024, the Charity had net liabilities of £529,932, all are regarded as unrestricted, after allowing for funds tied up in non liquid assets. Actual three-months of charitable expenditure is £830,563.
The Directors have agreed a five year recovery plan to address this situation and restore the reserves.
Scottish Government provided outcome specific investment to cover the work plan referred to above.
Outcome specific grant income from a number of institutions including the Heritage Lottery Fund, Rank Foundation and PPL was also received
Fee income from participants and their organisations.
Fee income from organisations operating outside the Scottish geographical area including other regions of the United Kingdom, Europe, Africa and Asia.
Fundraising and Donations.
A financial analysis is shown in notes 2 to 5 to the financial statements.
The funding landscape remains challenging for the social economy, particularly within Learning and Development. As organizations contend with difficult economic conditions, discretionary spending is often reduced. To address this, the Senior Leadership Team (SLT) and Board have been actively exploring alternative income sources.
This year has been challenging in terms of financial performance at the Academy. However, the Directors, in collaboration with the Senior Leadership Team, have taken decisive action to address the situation and are confident that a robust recovery plan is now in place. This plan includes the improvements outlined earlier, such as enhancements to management accounting systems and processes, alongside a comprehensive review of products, markets, and profitability. In addition, cost reductions exceeding £300,000 have been achieved to create a solid foundation for recovery.
Under the Memorandum and Articles of Association, the charity has the power to invest any money that it does not immediately require in any investments, securities or properties. As there are few funds available for long-term investment the Trustees, having regard to the liquidity requirements of operating the charity and to the reserves policy, have operated a policy of keeping available funds in an interest-bearing bank account.
Domestically: the status of the Academy as a strategic delivery partner of the Scottish Government will continue. This status was underpinned by a 3-year funding arrangement for the period 2021 to 2024, which in turn is supported by a 10-year Strategy which was co-produced with the sector and continues until 2026. The Academy is an active member of the Eco-System in Scotland and will be involved in the creation of the next 3-year Action Plan for Social Enterprise in Scotland, when the current one ends at the end of the next financial year.
We will continue to work across the UK to support social entrepreneurship and are committed to working with partners to support organisations they invest in. We see this strategic partnership role, working with key funders of the social economy to increase the chances of the organisations they invest in being successful.
Internationally: During this period, the Academy will continue to work in partnership with hubs around the world and focus on joint delivery in the international arena where appropriate. We continue to make our programmes available through our network of partners in Australia, Malaysia, Sweden, Egypt, South Africa and Canada.
In addition to this we will continue to play an active role within international networks such as Social Enterprise World Forum; the Inner Development Goals movement; the Global Association of Investment Networks and its members such as Impact Europe and Asian Venture Philanthropy Network.
Young People: We continue to develop strategic plans at a local authority level in Scotland to support the creation of a social enterprise in every school in Scotland. Having proven the concept of Social Enterprise Schools in London in the last year and a half, we are ready and motivated to scale this across other parts of the UK. The annual awards, where schools receive recognition for their work; Dragon’s dens, where the young people present their plans; and the ongoing partnership with the Big Issue magazine, where the young peoples’ work is showcased across the UK all remain integral parts of the programme.
We continue to work with other key partners from the social economy such as Kibble, FirstPort, Social Enterprise Scotland, the social enterprise networks to embed Learning and Development for Social Change effectively to support fairer communities in Scotland.
The charity is a company limited by guarantee governed by its Memorandum dated 26 August 2004 and Articles of Association adopted by special resolution on 23 November 2006 and subsequently amended and adopted by special resolution on 9 June 2016. It is a registered Scottish Charity.
The Social Enterprise Academy designs and delivers educational programmes and professional development in leadership and business skills for social entrepreneurs and those involved in social enterprise.
The directors who served during the year and up to the date of signature of the financial statements were:
The Articles provide for a maximum of twelve directors and a minimum of three. A person automatically becomes a director of the company upon his/her admission to membership. Membership is open to any individual wishing to support the aims and activities of the company who has been nominated for membership by three directors of the company and supported by 75% of the directors in office.
Charity name | Social Enterprise Academy (Scotland)
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Charity number | SC035936
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Company number | SC272855
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Registered office and principal address | Thorn House 5 Rose Street Edinburgh EH2 2PR
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Directors | Yvonne Strachan (Chairperson) Paul Chowdhry Roland Brinkman Julie Waites Hannah Dent Gregory Kinsman-Chauvet Johann Kennedy (Appointed 4th May 2023) Jahangir Wasim (Appointed 7th December 2023) Julie Drybrough ( Appointed 7th December 2023) Allan Watt ( Appointed 2nd May 2024)
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Chief Executive | Neil McLean
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Auditors | Thomson Cooper 3 Castle Court Carnegie Campus Dunfermline Fife KY11 8PB
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Bankers | Triodos Bank NV Brunel House 11 The Promenade Bristol BS8 3NN |
The full board of directors meets quarterly. The Board also spends a day each year undertaking a strategic review and forward planning for the organisation.
A finance subcommittee has delegated authority to consider matters of a financial nature including budget management. Management accounts are prepared monthly and this sub committee meets on a quarterly basis by arrangement to review them.
A Nominations Subcommittee has responsibility to oversee board member recruitment, induction and training.
Advisory groups are also in place to provide guidance to both the Global Learning Lab and the Education team. The Global Learning Lab has delegated responsibility to review all aspects of quality improvement within the context of the European Framework for Quality Management which was successfully introduced to the organisation on 5th August 2013 (date formally approved by European Framework for Quality Management).
The CEO produces a report of the organisation’s progress to the directors on a quarterly basis. The CEO has delegated powers to make day-to-day decisions regarding operations. A work plan and budget is agreed between the CEO and the directors and if there is significant variation required, this is referred to the directors for approval.
Our subsidiary company SEA International CIC has its own Board of Directors who meet quarterly.
After appointment/co-option an induction programme is offered to all new directors. In addition, all directors receive an information pack that contains the Memorandum and Articles of Association, roles and responsibilities of being a director, and background information on the organisation.
Key management personnel of the charity are the Directors and the Chief Executive Officer, Neil McLean, who is charged with the day to day running of the charity. All directors give of their time freely and no directors’ remuneration was paid in the year. Details of directors’ expenses and related party transactions are disclosed in the notes to the financial statements.
Directors are required to disclose all relevant interests and register them with the Chief Executive and in accordance with the Company’s policy withdraw from discussions where a conflict of interest arises. No conflicts of interest arose during the financial year.
The pay of the company’s Chief Executive is reviewed annually and is currently on a ratio of 3 to 1 with the company’s administrative staff which the directors consider to be a fair and reasonable multiple. The remuneration is also bench-marked with charitable companies of a similar size and activity to ensure that the remuneration set is fair and not out of line with that generally paid for similar roles.
The Social Enterprise Academy (Scotland) co-operates with other social enterprises throughout Scotland, the rest of the UK and Europe. The Academy currently has a reliance on Government funding for a significant amount of delivery of learning programmes, as is demonstrated in notes 3 and 4 to the financial statements.
The directors, who also act as trustees for the charitable activities of Social Enterprise Academy (Scotland), are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Company Law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that year.
In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Charities SORP;
- make judgements and estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in operation.
The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and the Companies Act 2006. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In accordance with the company's articles, a resolution proposing that Thomson Cooper be reappointed as auditor of the company will be put at a General Meeting.
The Board’s annual strategic review and forward planning event considers the risks to which the charity is exposed and identifies what needs to be in place to manage these risks throughout the year. In addition, a risk register is maintained by the CEO and staff which is presented to the board on a quarterly basis. The risks faced by the company fall into two categories, internal and external.
Internal risks are minimised by the implementation of procedures for authorisation of transactions and activities and to ensure consistent quality of delivery for all operational aspects of the company. A scheme of delegation is in place for payment authorisation and this has been agreed with the finance subcommittee.
Financial risks are monitored within the executive team on a monthly basis with the scrutiny of cash flow, balance sheets and profitability statements.
External risks relate largely to the sustainability of the company and the blended nature of income streams with much of the charitable work of the organisation dependent on the provision of grants by external bodies including the Scottish Government. This is augmented by the delivery of learning programmes to organisations who can afford to purchase these on behalf of their staff, or beneficiaries. There continues to be growing demand for the delivery of learning programmes both in Scotland and beyond which is indicative of the Academy’s strategy to reduce reliance on grant funding by public bodies. Independent grant funding including an increased level of interest in the social economy by corporate foundations also looks likely to mitigate this risk.
Any variation from the business plan has an associated risk assessment that is presented to the board of directors for consideration and approval.
The Board are aware of the growing risk of cyber-attack and have taken appropriate steps to protect the company including additional security and back up facility with our IT provider and a comprehensive training programme for all staff.
The directors' report was approved by the Board of Directors.
Opinion
We have audited the financial statements of Social Enterprise Academy (Scotland) (the ‘charity’) for the year ended 31 March 2024 which comprise the statement of financial activities, the balance sheet, the statement of cash flows 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 charity 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.
In auditing the financial statements, we have concluded that the directors' 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 ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and 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 course of 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.
We have nothing to report in respect of the following matters in relation to which the Charities Accounts (Scotland) Regulations 2006 (as amended) require us to report to you if, in our opinion:
the information given in the financial statements is inconsistent in any material respect with the directors' report; or
proper accounting records have not been kept; or
the financial statements are not in agreement with the accounting records; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the statement of directors' responsibilities, the directors 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 directors 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 directors are responsible for assessing the 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 directors either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.
We have been appointed as auditor under section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance with the Act 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We considered the opportunities and incentives that may exist within the group for fraud and identified the greatest potential for fraud in the following areas: existence and timing of recognition of income, posting of unusual journals along with complex transactions and manipulating the Charity’s key performance indicators to meet targets. We discussed these risks with management, designed audit procedures to test the timing and existence of revenue, tested a sample of journals to confirm they were appropriate and inspected minutes from meetings held by management and trustees for any reference to breaches of laws and regulations. In addition, we reviewed areas of judgement for indicators of management bias to address these risks.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience through discussion with the officers and other management (as required by the auditing standards).
We reviewed the laws and regulations in areas that directly affect the financial statements including applicable charity and company law and considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statement items.
With the exception of any known or possible non-compliance with relevant and significant laws and regulations, and as required by the auditing standards, our work in respect of these was limited to enquiry of the officers and management of the charity.
We communicated identified laws and regulations and potential fraud risks throughout our team and remained alert to any indications of non-compliance or fraud throughout the audit. However the primary responsibility for the prevention and detection of fraud rests with the trustees.
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. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and to the charity’s directors, as a body, in accordance with Section 44(1) (c) of the Charities and Trustees Investment (Scotland) Act regulation 10 of the Charities Accounts (Scotland) Regulations 2006. Our audit work has been undertaken so that we might state to the charity's trustees 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 trustees as a body, for our audit work, for this report, or for the opinions we have formed.
Thomson Cooper 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.
The statement of financial activities includes all gains and losses recognised in the year. All income and expenditure derive from continuing activities.
Social Enterprise Academy (Scotland) is a private company limited by guarantee incorporated in Scotland. The registered office is Social Enterprise Scotland, Thorn House, 5 Rose Street, Edinburgh, EH2 2PR.
The financial statements have been prepared in accordance with the charity's governing document, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended), the Companies Act 2006, FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the Charities SORP "Accounting and Reporting by Charities: 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 2019). The charity is a Public Benefit Entity as defined by FRS 102.
The financial statements are prepared in sterling, which is the functional currency of the charity. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The charity recorded a loss of £750,854 (2023: loss £38,656) during the year. At 31st March 2024 the charity had net current liabilities of £501,634 (2023: assets £347,882) and a balance sheet deficit of £529,932 (2023: surplus £220,922).
The current and future cash position of the charity has been reviewed by the Board. This included a comprehensive review of the financial projections and cash-flow requirements, covering a period beyond one year from the date of approval of the financial statements. These forecasts were prepared using assumptions which the directors consider appropriate to the financial position of the charity and its future anticipated revenues and costs.
Specific consideration has been given to:
The financial stability of the charity
Cash flow management
Development of the Learning Trust
Levels of Scottish Government funding
No repayment of Directors loans for a period of at least 12 months from the date of approval of the financial statements and until the charity’s financial position has improved
The directors acknowledge that the charities’ liquidity position relies on the directors continuing to review the budgets and ensure that costs are controlled but project that the liquidity position will further strengthen over the next 12 months due to improved financial performance.
The directors acknowledge that the charity’s liquidity position is reliant on the above key assumptions and without this a material uncertainly would exist which may cast doubt over the charity’s ability to continue as a going concern.
After due consideration of the above, the directors are satisfied that the charity has access to adequate resources to continue in operational existence for period of at least twelve months from the date of approval of the financial statements. The directors therefore continue to adopt the going concern basis of accounting in preparing the financial statements.
Unrestricted funds are available for use at the discretion of the directors in furtherance of their charitable objectives.
Restricted funds are subject to specific conditions by donors or grantors as to how they may be used. The purposes and uses of the restricted funds are set out in the notes to the financial statements.
Cash donations are recognised on receipt. Other donations are recognised once the charity has been notified of the donation, unless performance conditions require deferral of the amount. Income tax recoverable in relation to donations received under Gift Aid or deeds of covenant is recognised at the time of the donation.
Expenditure is recognised once there is a legal or constructive obligation to transfer economic benefit to a third party, it is probable that a transfer of economic benefits will be required in settlement, and the amount of the obligation can be measured reliably.
Expenditure is classified by activity. The costs of each activity are made up of the total of direct costs and shared costs, including support costs involved in undertaking each activity. Direct costs attributable to a single activity are allocated directly to that activity. Shared costs which contribute to more than one activity and support costs which are not attributable to a single activity are apportioned between those activities on a basis consistent with the use of resources. Central staff costs are allocated on the basis of time spent, and depreciation charges are allocated on the portion of the asset’s use.
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of financial activities.
Fixed asset investments are initially measured at transaction price excluding transaction costs, and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised in net income/(expenditure) for the year. Transaction costs are expensed as incurred.
A subsidiary is an entity controlled by the charity. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the charity holds a long-term interest and where the charity has significant influence. The charity considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Other investments are measured at cost less impairment on the basis that they represent a bond holding in an entity that is not publicly traded and the fair value cannot otherwise be measured reliably.
The charity is considered the parent undertaking of its 100% owned subsidiary company Social Enterprise Academy International C.I.C. which is incorporated in Scotland (SC544394). Its registered office address is Thorn House, 5 Rose Street Edinburgh, EH2 2PR.
At each reporting end date, the charity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The charity has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the charity's balance sheet when the charity becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of operations from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the charity’s contractual obligations expire or are discharged or cancelled.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the charity is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Programme Fee Income
Grants Receivable
Management fees charged to trading subsidiary
Fundraising Income
Sponsorship Income
Investments
Education & Training Programmes
Education & Training Programmes
Staff recruitment
Staff travel, subsistence and other costs
Consultancy
Marketing and Publicity
Programme Delivery
Courses and Conferences
The charitable group initially identifies the costs of its support functions. It then identifies those costs which relate to the governance function. Having identified its governance costs, the remaining support costs, together with the governance costs are apportioned between its key charitable activities undertaken. Refer to the note below for the basis of the apportionment and the analysis of support and governance costs.
Premises Costs
Telephone
Postage and Stationery
Bank charges
Loan interest
IT Equipment and Maintenance
Consultancy Fees
Subscriptions
Board Travel and Subsistence
Governance costs includes payments to the auditors of £16,654 (2023- £5,432) for audit fees.
All costs are allocated to activities on a direct basis, with the exception of staff costs which are allocated on the basis of time spent.
The average monthly number of employees during the year was:
The total amount of employee benefits received by key management personnel of the charity is £76,861 (2023: £64,790). The charity considers its key management personnel to be the directors and Chief Executive Officer, Neil McLean.
Travel and Accommodation costs amounting to £324 (2023: £71) were paid in respect of all members of the board of directors. No directors received any remuneration during the year.
Included within wages and salary costs are payments totalling £nil (2023: £nil) made to staff in connection with cessation of employment.
The charity is exempt from taxation on its activities because all its income is applied for charitable purposes.
The bank overdraft is secured on the assets of the company by way of a floating charge.
Deferred income is included in the financial statements as follows:
The charity operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the charity in an independently administered fund.
The restricted funds of the charity comprise the unexpended balances of donations and grants held on trust subject to specific conditions by donors as to how they may be used.
This grant funding was received from National Heritage Lottery Fund for delivery of our Steps to Sustainability programme.
The unrestricted funds of the charity comprise the unexpended balances of donations and grants which are not subject to specific conditions by donors and grantors as to how they may be used. These include designated funds which have been set aside out of unrestricted funds by the trustees for specific purposes.
At the reporting end date the charity had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At the year end, there was an intercompany balance between the charity and its subsidiary company relating to expenses paid by the company on behalf of the subsidiary company. A balance of £13,986 (2023: £247,443) remains outstanding to the company as at the year end and is included within debtors. A management charge of £nil (2023: £51,027) was received from Social Enterprise Academy International C.I.C. to the parent charity Social Enterprise Academy Scotland during the year.
Details of the charity's subsidiaries at 31 March 2024 are as follows: