Financial Statements 2017/18


35. Prior year adjustment


A. Unite Olympic Way hall of residence In the financial year ending 31 July 2017 the University entered into a partnership arrangement with Unite Students to provide student accommodation at a new hall of residence “Unite Olympic Way” at the London Campus.


The University has now reviewed the basis on which the accommodation rental income and costs under the arrangement were accounted for and concluded that there was an error in the original decision to report the transaction on a ‘net’ basis in income (at note 6, Residences, catering and conferences). The correct treatment would have shown the values ‘gross’ with income and costs categorised separately within the financial statements.


This revised treatment correctly reflects the University’s status as principal in providing the accommodation to the student. The original treatment classed the University as agent. Under the corrected classification, the University is considered to be the principal when measured against the indicators that are used in a principal/agent assessment under FRS 102 where control is the basis for determining whether an entity is a principal or agent.


The control indicators in FRS 102 that the University made its judgement to account for the transaction as principal were based on which entity in the arrangement:


— has the primary responsibility for fulfilling the promise to provide the accommodation to the student, — bears the greater risk, — has discretion in establishing the rent for the rooms.


The change has the effect of increasing both the prior year income (at note 6, Residences, catering and conferences) and expenditure (at note 10, Other premises costs) by £5,531k. The change has had no impact on the balance sheet figures.


The comparative consolidated statement of comprehensive income and expenditure, and notes 6 and 10 which support those statements to take account of this change have all been restated.


B. Halls of residence rental income


Student accommodation is provided by the University to new and existing students at a number of halls of residence at the London Campus.


The University has now reviewed the basis on which hall rental debt and deferred rental incomes relating to students who applied to commence study in the academic year commencing after 1 August 2017 were accounted for at the year ended 31 July 2017. It has been concluded that there was an error in the original decision to report these transactions as a debtor


for hall rents due to the University and as deferred rental amounts for accommodation services to be delivered at a date after 1 August.


The correct treatment is to not show these values within the financial statements for the year ended 31 July 2017 on the basis, that at the year end date, there is no certainty the accommodation services will be provided given the student applied for a place in the hall when they accepted only a conditional (not firm) offer of a place to study at the University and so until that offer is made firm and accepted by the student the hall room booking may be withdrawn and cancelled.


The change has the effect of decreasing both the prior year Trade and other receivables (Note 17, Other Receivables) and Creditors: amounts falling due within one year (Note 19, Accruals and deferred income) by £6,231k. The change has had no impact on the Consolidated and University Statement of Comprehensive Income and Expenditure figures.


The comparative Balance Sheets as at 31 July 2017, the Consolidated Cash Flow and any notes which support those statements to take account of this change have all been restated.


96


Middlesex University


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