Annual report and financial statements 2014
Annual report and financial statements for the year ended 31 December 2014
Board report
The Board is pleased to present the Annual Report and Financial Statements of the Architects Registration Board (ARB) for 2014. ARBs principal activities during the year are shown below, and reflect the requirements of the Architects Act 1997:
- To maintain and publish the Register of Architects.
- To prescribe (“recognise”) the qualifications needed to become an architect.
- To register those who meet ARB’s requirements for qualifications, experience and competence.
- To set standards for professional competence.
- To issue a code laying down standards of conduct and practice expected of architects.
- To regulate use of the title “architect”.
- To deal with complaints and enquiries from members of the public regarding the conduct and competence of architects.
ARB is the Competent Authority for architects in the UK. In this capacity, ARB liaises with its counterparts in other European countries to fulfil its obligations.
Board Membership 2014
| Peter Coe | Appointed | John Assael | Elected |
| Beatrice Fraenkel | Appointed | Ruth Brennan | Elected |
| Alan Jago | Appointed | Hans Eisner | Elected |
| Myra Kinghorn | Appointed | Andrew Mortimer | Elected |
| Ros Levenson | Appointed | Richard Parnaby | Elected |
| Arun Singh | Appointed | Susan Ware | Elected |
| Neil Watts | Appointed | Alex Wright | Elected |
| Nabila Zulfiqar | Appointed |
Leadership
Karen Holmes was appointed Interim Registrar and Chief Executive with effect from 17 February 2014.
Administration Office
8 Weymouth Street
London
W1W 5BU
Bankers
National Westminster Bank Plc
125 Great Portland Street
London, W1A 1GA
Auditors
Crowe Clark Whitehill LLP
St Bride’s House
10 Salisbury Square
London, EC4Y 8EH
Declaration of Interests
All Board members submit an annual declaration for inclusion within the Board’s Register of Interests. Details of the most recent declarations are published with individual Board members’ details on ARB’s website, www.arb.org.uk.
The Register of Interests is brought to each Board meeting, and Board members are required to declare any interest they may have in any of the Board’s business on the agenda, prior to the discussion of that item taking place.
Auditors
During 2014, ARB’s auditors, Crowe Clark Whitehill, undertook two pieces of non-audit work; which related to employment, tax and corporation tax compliance advice, at a cost of £1,833.18.
Staff Absence Information
The statistical information on staff sickness records for 2014 is shown below.
There were, on average, 14.4 days lost per employee in 2014. This is an increase on the figure for 2013 which was 14.2 days. This is due to two members of staff being on long-term sick during 2014. Excluding the long-term sickness, the average days lost reduces to 2.2 days per employee.
Staff turnover for 2014 was 22.7% (14.2% 2013); the figure for ARB is substantially higher than the national average across all sectors; however with such a low number of staff, any departures or recruitment will have a significant statistical impact.
Staff Pension Arrangements
The Architects Registration Board provides its employees with access to a contributory Group Personal Pension Scheme (otherwise known as a Defined Contribution – DC – arrangement). ARB’s liability for this arrangement ceases when employment comes to an end.
This arrangement meets all statutory requirements for employment law relating to employer sponsored pension arrangements.
Additionally, ARB has a closed (also known as Paid Up) Occupational Money Purchase scheme (also referred to as a DC arrangement), but there are no contributions being made to this arrangement and nor have there been for several years. There are no liabilities for future contributions to this scheme.
Board Remuneration Report
There were 5 Board meetings held during 2014. The average attendance at each meeting was 13.4 Board members. On average, Board members spent 14.9 remunerated days on Board and Committee business.
For further details, please visit the Board’s website at www.arb.org.uk/accountability.
A summary of Board and Committee attendance allowance and expenses paid in 2014:
| Amount | Number of Board Members |
| £1k less than £6k | 10 |
| £6k less than £10k | 3 |
| £10k less than 15k | 2 |
Health and Safety
There have been no health and safety incidents reported during the year. All the statutory requisite checks and tests have been undertaken.
Equality and Diversity
Following the implementation of a revised and updated Equality Scheme in 2011, the Board receives an annual progress report. The annual progress report was presented to the Board in December 2014. The Scheme had been updated to take account of the Public Sector Equality duty which ARB, as a public body, is subject to.
Many of the aims identified in the Scheme have become firmly embedded in the Board’s work and in the work of ARB more generally. As a public body, ARB abides by the Public Sector Equality Duty, which requires public bodies to:
- eliminate unlawful discrimination, harassment, victimisation and any other conduct prohibited by the Act;
- advance equality of opportunity between people who are a protected characteristic and those who don’t; and
- foster good relations between people who share a protected characteristic and those who don’t.
The Board considers all of these requirements in any decision-making process, and any equality implications are identified and taken into account before decisions are made.
We continue to deliver awareness training at regular intervals to ensure that we stay abreast of our responsibilities under the Equality Act.
Environmental/Recycling
ARB continues to successfully recycle its paper and other materials, with the recycling receptacles placed strategically throughout the premises. During 2014 we had saved the equivalent of 79 (95 in 2013) trees by recycling and 4,645 (5,618 in 2013) kilos of paper. Whilst our volume of printing increased during 2014 by 30 %, the amount we recycled decreased by 17 %. The drop in recycling is due to a purge on document storage during 2013 in line with our document retention and destruction policy.
Information Security and Data Handling
Due to our statutory functions, we hold a large amount of data, some of which constitutes personal data. We have in place relevant procedures to ensure data is handled appropriately at all times. In April 2014, we reported our Annual Security Report to the Department of Communities and Local Government. No areas of concern were identified.
Employee involvement
The “one ARB” ethos continues to be cultivated throughout the organisation. We have developed a set of commitments, which provide a focus each aspect of the work we do, and we continue to explore how we can embed these further into our work on a day-to-day basis.
Reserves
The Board’s reserves policy is to hold the higher of the following:
- a minimum of four months’ budgeted expenditure. When calculating this figure any unrealised profit on investments will be excluded from the calculation, or
- estimated wind-up costs, assessed annually. When calculating this figure, unrealised profit on investments will be included in the calculation.
At the end of the 2014 financial year, the level of reserves represented approximately 7 months of operational costs for 2015 and sufficient to cover the estimated wind up costs. Therefore, the minimum requirement of the Board’s policy on reserves was met. The Board reviews its reserves policy regularly, with the next review planned for July 2015.
Approved and signed on behalf of the Board
Governance statement
As Accounting Officer of the Architects Registration Board (ARB), I, Karen Holmes am responsible for the management and control of the operations of ARB and the efficient use of our resources. The role is supported by the Board and my colleagues within ARB. This Governance Statement identifies how I discharge the responsibilities. The Statement outlines the governance of the organisation and the risk management framework, which are essential to managing and controlling ARB’s resources and risks. It reflects the challenges and activities of ARB during the year and provides assurance as to performance, responses to risk and the organisation’s success in managing risk. The statement also identifies where ARB will be taking steps to improve.
Corporate Governance
The strategic leadership and oversight of ARB is provided by the Board. Membership of the Board comprises of 15 members. Eight of these are appointed (lay) members, who are appointed by the Privy Council after advice from the Secretary of State of the Department of Communities and Local Government. Seven of these are elected architect members. ARB is invited to identify particular skills which may be sought in making the appointments, in order to assist the Board in securing a range of skills beneficial to the operation of the Board.
The Board members tenure, with effect from February 2014 was increased to 4 years by statutory instrument, an extension of 1 year, to ensure stability and consistency during the period of the Periodic Review being carried out by the Government.
Members of the Board who served during the year are shown under the heading Board Membership 2014.
The Board met five times during 2014 and meets in public for the majority of the sessions. Agendas, papers and minutes were published on ARB’s website in accordance with ARB’s policy on open and confidential sessions of the Meetings. Details of Board member attendance at Board and Committee meetings, together with expenses and attendance allowances claimed are published annually and are reported in the Appendix to the financial statements.
The Board works in accordance with a Board Members Handbook, which includes a Board Members Code, which follows the seven principles of public life – the Nolan Principles.
Declarations of interests are collected annually and published on the Boards website. At all meetings declarations are requested prior to commencement and where appropriate, members are excluded from the relevant discussions.
Consideration is given to the Code of Good Practice in relation to corporate governance and where applicable complied with.
Strategic aims
The Board approved its Business Plan for 2014 in September 2013 along with the budget for 2014. The Business plan and operational activity drove the fees for 2014, to ensure the organisation has the financial resources to execute its functions.
ARB’s two strategic aims which sit under ARB’s statutory responsibilities under the Act are:
- Protecting the consumer
- Supporting architects through regulation.
These aims are then reflected in ARB’s Business Plan. This plan outlines the work of ARB during the year to deliver both of ARB’s strategic aims and ARB’s statutory functions set out under the Architects Act 1997.
Oversight
The Board determines ARB’s annual budget and ensures that the necessary resources are available to fulfil the statutory responsibilities. The Board provides oversight of the activities of ARB and sets the fees payable by architects for registration and retention of their names in the Register. Regular reviews are undertaken of ARB’s management accounts throughout the year and any variances are highlighted and considered. The Board receives a report on ARB’s performance against key indicators, together with trend information twice a year, and considers mid-year progress of the Business Plan and the delivery of the Annual Business Plan after the year end.
Decisions of the Board
The Board is required to take a number of decisions under statute in addition to determining policy. Statutory decisions taken during 2014 included the prescription of new qualifications in architecture, determining Rules in relation to the investigation of complaints, setting the retention and other fees and the re-entry to the Register of an individual following erasure from the Register at the direction of the Professional Conduct Committee. In addition, the Board took non-statutory decisions such as the Scheme of Decision Making, the Risk Management Strategy, the Investment Strategy, and Committee Membership for 2014/15 and an agreement on Equality Monitoring of the Register and other areas of its functions.
An internal review of the decisions which are reserved to the Board under the Architects Act 1997 was undertaken to ensure that ARB met its statutory responsibilities.
The Board has a number of Committees which assist the Board and these are shown below. Each Committee has terms of reference which are determined by the Board and are published on ARB’s website. Each Committee reviews its own terms of reference and makes recommendations to the Board for change, with the exception of the Professional Conduct Committee, where the terms of reference are embedded within Rules. All Committees report to the Board. The Professional Conduct Committee holds its hearings in public and also provides an annual report to the Board. All other Committees prepare minutes which are passed to the Board and some also produce an annual report.
Audit Committee
The purpose of the Audit Committee is to assist the Board with its oversight functions. The Committee reviews the system of internal control, the management of risks, the financial reporting process and the audit process. It carries out its work with the assistance of the internal auditors. This Committee is particularly important in assisting the Board and the Accounting Officer in managing risk.
Remuneration Committee
The purpose of the Committee is to ensure that the remuneration and reward package offered to all staff, Board members and advisers is reviewed and amended appropriately. Regular external benchmarking work is undertaken to ensure Board member attendance allowance rates and staff salaries remain in line with comparable organisations.
Investigations Oversight Committee
An Investigations Oversight Committee is in place to oversee the investigations undertaken on behalf of the Board into allegations of unacceptable professional conduct, and serious professional incompetence, as defined by section 14 of the Act. It monitors the performance of the investigation function generally, and reports back to the Board through minutes of its meetings and an annual report.
Professional Conduct Committee
Although a Committee of ARB, the Professional Conduct Committee (PCC) is separate from the Board in its decision making. A number of Board members are nominally members of the Committee; however, they take no part in cases being considered, to ensure a separation of policy making and decision making. The Professional Conduct Committee considers and determines cases referred for unacceptable professional conduct, serious professional incompetence and some criminal convictions. The Chair of the PCC presents a report on an annual basis and attends the relevant Board meeting.
Prescription Committee
The Prescription Committee’s key role is to oversee the operation of the procedures for the prescription of qualifications. It also considers and develops policies relating to the prescription of qualifications under the prescribed examination process.
Board Effectiveness
To assist the Board in the effective discharge of its responsibilities, Board members receive a comprehensive induction programme. Development sessions are regularly held on issues which in May 2014 included an externally facilitated session on the principles of leading through change. Board and Committee papers are provided in advance of the meeting, wherever possible and contain sufficient information to allow the Board to discharge its responsibilities. A Board appraisal system is operated, together with an external appraisal process for the Chair of the Board. In 2014 all Committees conducted their own effectiveness review to which internal and external auditors contributed. The Board has considered the outcome of the review in February 2015 and will continue to take steps to improve Board and Committee effectiveness.
Risk Management
In fulfilling my responsibilities as both Accounting Officer and Interim Registrar of the Architects Registration Board (ARB), I work closely with the Board, as under the Architects Act 1997 (as amended) responsibilities for the delivery of the Act are designated to me or the Board. The Board determines the risk strategy of the organisation and sets the Scheme of Decision Making, which is in place to identify where authority for decision making lies.
The Purpose of the System of Internal Control
The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is an on-going process designed to identify and prioritise the risks to the achievement of ARB’s strategic aims, policies, objectives and statutory responsibilities. During 2014, specific consideration was given to the risk impact of the Period Review.
The Internal Control System is a tool to evaluate the likelihood of those risks being realised and the impact on the organisation should they be realised and assists with the ability to manage risks efficiently, effectively and economically. The system of internal control has been in place for the year ended 31 December 2014 and up to the date of approval of the annual report and financial statements. The system of internal control accords with Treasury guidance where it is considered to be appropriate, and adds value to ARB.
Capacity to Handle Risk
The Board has overall responsibility for risk management and is aided by the Audit Committee which provides the initial review process. A fundamental aspect of risk management is assurance that appropriate systems of controls and actions are in place, along with a robust and transparent reporting mechanism of those risks. The Board achieves this by having effective oversight procedures in place.
The Registrar and the management team are responsible for the day-to-day management of risk including the delivery and promotion of sound risk management practices. Staff are aware of ARB’s Risk Strategy and are encouraged to contribute. Staff are regularly briefed on the Risk Register as described under the risk and control framework below.
The Risk and Control Framework
The Board has in place a risk management strategy which is reviewed and updated once a year. The strategy specifies how ARB identifies, assesses and manages risk which may impact on ARB’s delivery of its strategic aims. The strategy has six principles underpinning ARB’s approach and it acknowledges that as a statutory body, ARB is generally risk-averse, as risk is often seen in financial terms as having an adverse impact on ARB’s ability to deliver. ARB generally works to minimise and control risk.
ARB has a Risk Register, which logs and tracks risks faced by ARB. The Risk Register is a key tool within the Risk Management Plan. The Risk Register is reviewed at least monthly at management meetings. New risks are added and consideration is given to the residual level of risk, identified after controls have been applied. The level of risk is adjusted where appropriate and some risks are removed. Actions and controls are also reviewed and amended as necessary according to the level of risk. Staff are invited to discuss and raise risks at monthly team meetings, in order to embed a culture of risk ownership.
ARB’s Risk Register has been divided into different risk categories: Governance Risk; Reputational Risk/Resource Risk; and Risk to Effective Delivery of Statutory Functions. Each risk level is then quantified using the likelihood and impact method. Controls are identified and actions put in place for each risk. A Risk Manager is assigned to the risk and a Risk Owner specified.
The Audit Committee has considered the key risks and developed, along with the Registrar and management team, a rolling programme of internal audit reviews conducted by ARB’s internal auditors. The Committee receives the outcome of each review and monitors the implementation of any recommendations. In 2014, the internal audit programme covered Risk Management an IT Health check, Financial Controls – Payroll & Expenses, Budget Setting and Monitoring. Further work was carried out on the Business Continuity Plan and an external Compliance Review was undertaken of the procedures in the area of Professional Standards. The Committee monitors the progress of actions following reviews at each meeting and reports to the Board through its minutes and verbal updates by the Chair.
Information and Data Security
ARB is committed to ensuring personal data held by the organisation is held securely and used appropriately. The organisation operates a range of measures to help safeguard personal and other data; including:
- A commitment to data quality and accuracy
- A formal process for recording errors and omissions throughout the organisation, including procedural and data breaches. There have been no significant data breaches during 2014 that required notification to the Information Commissioner.
- The provision of a confidential session at each Board meeting which is for Board members only
- A “security shredding” contract with a trusted market leader
- Industry-standard encryption of data for transfer and external storage
- Annual information security training for staff
- IT services policies and guidelines for staff
- Statements on privacy, data protection, copyright and publishing
- Compliance and monitoring tools for email, internet and telecommunication services and includes social media
- Physical security measures (including safe, access control systems and intruder alarm, CCTV recording equipment) both internally and at the perimeter
- Off-site vaults and storage facilities with military-grade security
- Web sites operated by the Board for the collection and processing of personal data incorporate Extended Validation security certificates for enhanced privacy and fraud prevention
- ISO-certified destruction of information assets
- Industry-standard firewall appliances to protect the Board’s private network from attack and intrusion
- Network penetration-testing for the protection of the Board’s private network is carried out annually and the testing includes the Remote Access system.
Risk Management Tools
Details of risk management tools are described in the sections above. In addition to those already mentioned, ARB also has in place:
- Appropriate insurance arrangements
- Regular review of ARB’s Staff Handbook and associated appendices
- External advisers used to ensure health and safety compliance
- Complaints log of complaints received with regard to ARB
- Errors log for procedures within ARB
- Board and Committee papers for new or revised policies include an assessment of risk resource and equality implications
- Staff and Board horizon scanning of the organisation risk landscape
- Regular reviews of investment and reserves policy
- Whistleblowing policy, Fraud and Bribery prevention policy
- Staff training, including fire safety and information security training
- Regular reviews of operating procedures and an ethos of continuous improvement
- Stringent budgeting process, linked with the Business Plan and three year forecasts
- A scheme of delegated authority, (Scheme of Decision Making) which is reviewed at least annually by the Audit Committee and agreed by the Board
- A financial procedures manual
- Internal compliance review of the Act and ARB/DCLG Framework Agreement
As Accounting Officer, I attend all Board meetings, Internal Management Team meetings and Audit Committee meetings. I also attend other Board Committee meetings and the Remuneration Committee where it is appropriate to do so.
Significant Risks in 2014
The key risk considered during 2014 remained the same as for 2013 in respect of judicial review or legal action of decisions taken by the Board, the Registrar, or the Professional Conduct Committee. During 2014 the courts considered two cases of legal action against ARB, and specifically the Professional Conduct Committee, decisions. In one, permission was refused to an appellant to judicially review his erasure from the Register, and in the other the High Court upheld a decision of the PCC on appeal. Although legal challenges must be anticipated by all regulators, they can be costly and create reputational risk. ARB will continue to learn from any such challenges and will review insurance arrangements for 2015.
On 16 April 2014, the Department for Communities and Local Government (DCLG) announced its call for evidence for people’s views on the regulation of architects. The call for evidence asked for views on three distinct subject areas – the case for the regulation of architects; different models of regulating architects and evaluating the current model of regulation and the Architects. In November 2014 the DCLG announced there remained a case for continued light-touch statutory regulation of architects based on protection of title. Phase two of the review which has involved working with stakeholders to identify how best to deliver the regulation of architects continues.
Conclusions
As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review is informed by the work of the management team within ARB, who have responsibility for the development and maintenance of the internal control framework, and comments made by both the internal and external auditors in their management letter and other reports.
I have been advised on the result of my review of the effectiveness of the system of internal control by the Audit Committee, and a plan to address areas for continuous improvement identified from the work conducted throughout the year is in place.
The tools used in ARB’s risk management are outlined in the risk and control framework above. I have identified no significant on-going weaknesses, in the systems of internal controls and welcome the continuing programme of internal audit and ARB’s commitment to continuously assess its procedures for both quality, and efficiency, and value for money.
Signed by
Statement of the responsibilities of the Board and the Accounting Officer in respect of the financial statements
Under the Framework agreement drawn up jointly between the Architects Registration Board and the Department for Communities and Local Government, the Architects Registration Board will prepare financial statements for each financial year in the form and on the basis set out in the Accounts Direction issued by the CLG. The financial statements are prepared on an accruals basis and must give a true and fair view of the state of affairs of Architects Registration Board and of its income and expenditure, recognised gains and losses and cash flows for the financial year.
In preparing the financial statements, the Accounting Officer is required to comply with the Government Financial Reporting Manual and in particular to:
- observe the Accounts Direction issued by the Department for Communities and Local Government, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;
- make judgements and estimates on a reasonable basis;
- state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the financial statements; and
- prepare the financial statements on a going concern basis.
The Department for Communities and Local Government has designated the Registrar as Accounting Officer of the Architects Registration Board. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the Architects Registration Board’s assets, are set out in Chapter 3 of Managing Public Money published by the Treasury.
Signed by
Independent auditor’s report to the Board members of the Architects Registration Board
We have audited the financial statements of the Architects Registration Board for the year ended 31 December 2014 which comprise the Income and Expenditure Statement, Statement of Financial Position, Statement of Cash Flows, Statement of Changes to Reserves, and Notes to the accounts numbered 1 to 24
The financial reporting framework that has been applied in their preparation is applicable law and the 2013/14 Government Financial Reporting Manual (FReM) which applies International Financial Reporting Standards as adopted by the European Union (IFRSs).
This report is made solely to the Board Members of the Architects Registration Board, as a body, under the Architects Act 1997. Our audit work has been undertaken so that we might state to the Board Members 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 Architects Registration Board and the Board Members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Board, Accounting Officer and auditor
As explained more fully in the Statement of the Board’s and Accounting Officer’s responsibilities, the Board and Accounting Officer are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Architects Registration Board’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Architects Registration Board; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Board’s Report and any other surround information to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion, the financial statements:
- give a true and fair view of the state of the Architects Registration Board’s affairs as at 31 December 2014 and of its surplus for the year then ended;
- have been properly prepared in accordance with the Government Financial Reporting Manual (FReM).
Income and expenditure statement for the year ended 31 December 2014
|
Notes |
|
2014 |
2013 |
|
|
£ |
£ |
£ |
||
| OPERATING INCOME |
|
|
|
|
| Registration and retention fees |
3 |
3,832,892 |
|
3,494,386 |
| Prescribed examinations |
174,000 |
|
137,567 |
|
| Penalties and sundry receipts |
4 |
50,493 |
|
37,630 |
| Investment income |
5 |
54,132 |
|
28,182 |
|
|
|
|
||
| Total operating income |
4,111,517 |
|
3,697,765 |
|
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
| Employee salaries and benefits |
6 |
1,269,057 |
|
1,257,008 |
| Office costs |
7 |
441,645 |
|
438,492 |
|
|
|
|
||
|
1,710,702 |
|
1,695,500 |
||
|
|
|
|
||
| Printing and records |
8 |
52,686 |
|
55,202 |
| IT charges |
9 |
282,519 |
|
277,852 |
| Board allowances and expenses |
61,690 |
|
55,310 |
|
| Legal and other professional charges |
10 |
922,194 |
|
938,557 |
| Other administrative expenses |
11 |
261,998 |
|
257,562 |
|
|
|
|
||
| Total operating expenditure |
1,581,357 |
|
1,584,483 |
|
|
|
|
|
||
|
|
3,292,059 |
3,279,983 |
||
|
|
|
|
||
| OPERATIONAL SURPLUS FOR THE YEAR |
|
819,458 |
417,782 |
|
|
|
|
|
||
| Net gains / (losses) on investments |
|
194,350 |
(107,822) |
|
| SURPLUS FOR THE YEAR BEFORE TAXATION |
|
1,013,808 |
309,960 |
|
|
|
|
|
||
| Taxation |
19 |
|
(54,296) |
11,635 |
|
|
|
|
||
| RETAINED SURPLUS FOR THE YEAR |
|
959,512 |
321,595 |
|
|
|
|
|
||
| RESERVES AT THE START OF THE YEAR |
|
1,965,185 |
1,643,590 |
|
|
|
|
|
||
|
|
|
|
||
| RESERVES AT THE END OF THE YEAR |
|
2,924,697 |
1,965,185 |
There are no recognised gains and losses other than those included above. All activities are continuing.
Statement of financial position at 31 December 2014
|
Notes
|
2014
|
2013
|
|
|
£
|
£
|
||
| NON-CURRENT ASSETS |
|
|
|
| Property, plant and equipment |
12
|
232,783
|
277,946
|
| Intangible assets |
13
|
151,381
|
155,181
|
| Investments |
14
|
3,199,016
|
2,330,832
|
|
|
|
||
| Total non-current assets |
3,583,180
|
2,763,959
|
|
|
|
|
||
| CURRENT ASSETS |
|
|
|
| Trade and other receivables |
15
|
152,668
|
158,064
|
| Cash and cash equivalents |
2,921,222
|
2,580,438
|
|
|
|
|
||
| Total current assets |
3,073,890
|
2,738,502
|
|
|
|
|
||
|
|
|
||
| TOTAL ASSETS |
6,657,070
|
5,502,461
|
|
|
|
|
||
| CURRENT LIABILITIES |
|
|
|
| Trade and other payables |
16
|
328,277
|
335,585
|
| Deferred income |
3,404,096
|
3,201,691
|
|
|
|
|
||
| Total current liabilities |
|
3,732,373
|
3,537,276
|
|
|
|
||
| ASSETS LESS LIABILITIES |
2,924,697
|
1,965,185
|
|
|
|
|
||
| RESERVES |
|
|
|
| Designated reserve |
90,000
|
66,000
|
|
| Operational reserve |
2,605,641
|
1,861,964
|
|
| Revaluation reserve |
229,056
|
37,221
|
|
|
|
|
||
| TOTAL RESERVES |
2,924,697
|
1,965,185
|
These financial statements were approved by the Board and authorised for issue on 14/05/2015
Statement of cash flows for the year ended 31 December 2014
|
|
2014 |
2013 |
|
|
£ |
£ |
£ |
|
|
|
|
|
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
| Operational surplus for the year |
|
819,458 |
417,782 |
|
|
|
|
|
| Adjustments for non-cash income and expenses |
|
|
|
| Depreciation and amoritisation |
167,152 |
|
170,428 |
| Changes in operating assets and liabilities |
|
|
|
| Decrease / (increase) in trade and other receivables |
5,396 |
|
(46,631) |
| Increase in trade, other payables and deferred income |
195,097 |
|
1,169,664 |
|
|
|
|
|
| Net cash from operating activities |
367,645 |
|
1,293,461 |
|
|
|
|
|
| CASH FLOWS FROM INVESTMENT ACTIVITIES |
|
|
|
|
|
|
|
|
| Proceeds from the sale of investments |
1,301,615 |
|
1,566,230 |
| Purchase of investments |
(1,975,449) |
|
(2,094,596) |
| Purchases of property, plant and equipment and intangible assets |
(118,189) |
|
(117,692) |
|
|
|
|
|
| Net cash decreases from investing activities |
(792,023) |
|
(706,058) |
|
|
|
|
|
| Taxation |
|
(54,296) |
11,635 |
|
|
|
|
|
| Net increase in cash and cash equivalents |
|
340,784 |
1,016,820 |
|
|
|
|
|
| Cash and cash equivalents at the start of the year |
|
2,580,438 |
1,563,618 |
|
|
|
|
|
| Cash and cash equivalents at the end of the year |
|
2,921,222 |
2,580,438 |
All cash is represented by cash in hand
Statement of changes in reserves at 31 December 2014
|
Designated |
Operational |
Revaluation |
Total |
|
|
£ |
£ |
£ |
£ |
|
| Balance at 1 January 2014 |
66,000 |
1,861,964 |
37,221 |
1,965,185 |
|
|
||||
| Movement for the year |
– |
767,677 |
191,835 |
959,512 |
|
|
||||
| Transfer between reserves |
24,000 |
(24,000) |
– |
– |
|
|
||||
| Balance at 31 December 2014 |
90,000 |
2,605,641 |
229,056 |
2,924,697 |
At 31 December 2014, designated reserves represented the IT renewal fund (£28,000 – to cover the cost of ensuring that the organisation’s computer systems remain up to date and efficient), the Election Fund (£35,000 – set up to cover the cost of the election of ARB Board every 4 years (previously triennial)) and the Maintenance Reserve (£27,000 – set up to cover the regular cost of redecoration of the offices in accordance with the terms of the lease).
At the 31 December 2014, the revaluation reserve represented the closing market value less historic cost value of ARBs investments (accumulated unrealised gains).
Notes to the financial statements for the year ended 31 December 2014
1. GENERAL INFORMATION
The Architects Registration Board is incorporated under the Architects Act 1997. ARB’s principal address is 8 Weymouth Street, London, W1W 5BU. Its principal activity is acting as the statutory regulator for architects in the UK
2. ACCOUNTING POLICIES
a) Basis of accounting
The financial statements have been prepared in accordance with the 2013/14 Government Financial Reporting Manual (FReM). The accounting policies contained in the FReM apply International Financial Reporting Standards as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of ARB for the purpose of giving a true and fair view has been selected. The particular policies adopted by ARB are described below. They have been applied consistently in dealing with items that are considered material to the financial statements. They are presented in the units of currency of the United Kingdom.
Going concern
After making enquiries, ARB has a reasonable expectation that the organisation will be able to continue its activities for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the financial statements.
b) Income recognition
Income is recognised to the extent that it is probable that the economic benefits will flow to ARB and the revenue can be reliably measured. Income is measured at the fair value of the consideration received. Income arising from the provision of services is recognised when and to the extent that ARB obtains the right to consideration in exchange for the performance of its contractual obligations.
Retention fees are recognised in the period over which they entitle an individual to be listed on the Register of Architects. Registration and prescribed examination fees are recognised in the year in which the registration or prescribed examination takes place. Income from investments and cash is recognised in the period in which the income is earned.
c) Trade and other receivables
These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services but also incorporate other types of contractual monetary assets. They are initially recognised at fair value and are subsequently carried at invoiced value. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an impairment loss is recognised immediately in profit or loss.
d) Trade and other payables
Trade payables are obligations on the basis of normal credit terms and do not bear interest. They are categorised as financial liabilities at amortised cost.
e) Pension costs
ARB operates a defined contribution pension scheme on behalf of its employees. Contributions are charged to the income and expenditure account as they fall due.
f) Operating leases
Rentals payable are accounted for on a straight line basis over the term of the lease.
g) Plant and equipment and intangible assets
Plant and equipment and intangible assets are stated at historic cost less accumulated depreciation or amortisation and impairment losses. Individual assets costing £500 or more are capitalised and subsequently depreciated. Items costing less than £500 are written off to the income and expenditure account in the year of acquisition.
Depreciation and amortisation are charged so as to allocate the cost of assets over their estimated useful lives, using the straight-line method. The following annual rates are used:
| Leasehold improvements | over 10 years |
| Office furniture and equipment | over 5 years |
| IT equipment | over 3 years |
| IT development | over 3 years |
h) Taxation
The tax currently payable is based on investment income earned and gains on investments during the year as ARB is a mutual trading organisation.
i) Cash and cash equivalents
These financial assets include cash in hand and deposits held on call with banks.
j) Impairment of non-financial assets
ARB assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists ARB estimates the asset’s recoverable amount.
k) Investments
Investments comprise holdings of a number of UK gilts and Corporate Bonds. The fair value of the investments is based on the closing market value at the accounting date. Gains and losses arising from changes in market value are included within the Income and Expenditure Statement. Investments are categorised as ‘Financial Assets at fair value through the profit and loss.
l) Critical accounting estimates and judgements
ARB makes estimates and assumptions regarding the future. In the future, actual experience may differ from those estimates and assumptions. The Board considers there are none that are material to the preparation of the financial statements.
m) New standards and interpretations issued
The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period on 1 January 2014. ARB has concluded that there are no relevant standards or interpretations in issue not yet adopted.
3. REVENUE – REGISTRATION AND RETENTION FEES
|
2014 |
2013 |
|
|
£ |
£ |
|
|
|
|
|
| Registration fees |
134,940 |
94,412 |
| Retention fees |
3,697,952 |
3,399,974 |
|
|
|
|
|
3,832,892 |
3,494,386 |
| 4. REVENUE – PENALTIES AND SUNDRY RECEIPTS |
2014 |
2013 |
|
£ |
£ |
|
|
|
|
|
| Penalties paid on reinstatement to the Register |
45,739 |
34,027 |
| Sundry receipts |
4,754 |
3,603 |
|
|
|
|
|
50,493 |
37,630 |
| 5. OTHER INCOME – INVESTMENT INCOME | ||
| Income from investment portfolio |
51,470 |
26,717 |
| Interest on bank deposits |
2,662 |
1,465 |
|
|
|
|
|
54,132 |
28,182 |
|
|
|
|
|
|
|
|
|
| 6. STAFF COSTS |
|
|
|
|
|
|
| Salaries |
974,714 |
919,993 |
| Employer’s national insurance |
109,277 |
106,981 |
| Staff pension scheme |
99,798 |
107,308 |
| Medical and permanent health insurance |
37,130 |
43,230 |
| Recruitment costs |
10,966 |
13,724 |
| Staff training |
15,537 |
18,670 |
| Temporary staff |
21,635 |
47,102 |
|
|
|
|
|
1,269,057 |
1,257,008 |
|
|
|
|
|
|
No. |
No. |
|
| Staff numbers (average full time equivalent) |
21 |
21 |
Salaries in respect of those employees paid over £62k within the following ranges:
|
No. |
No. |
|
| £62,000 – £64,999 |
0 |
1 |
| £70,000 – £74,999 |
1 |
0 |
| £75,000 – £79,999 |
1 |
1 |
| £105,000 – £109,999 |
1 |
1 |
Payments were made into defined contribution pension schemes totalling £30,067 (2013: £30,869) in respect of these employees.
| 7. OFFICE COSTS |
2014 |
2013 |
|
£ |
£ |
|
|
|
|
|
| Rent |
130,102 |
130,240 |
| Rates |
103,345 |
100,964 |
| Building related costs |
55,456 |
37,220 |
| Insurance |
6,367 |
5,964 |
| Electricity |
15,077 |
14,238 |
| Office cleaning |
24,249 |
20,854 |
| Postage and telephone |
41,529 |
46,868 |
| Maintenance of office equipment |
11,368 |
10,847 |
| Depreciation: leasehold improvements |
51,733 |
51,732 |
| Depreciation: furniture and equipment |
2,419 |
19,565 |
|
|
|
|
|
441,645 |
438,492 |
|
|
|
|
|
| 8. PRINTING AND RECORDS |
|
|
|
|
|
|
| Printing |
42,524 |
46,244 |
| Stationery |
5,301 |
6,948 |
| Journals and newspapers |
4,861 |
2,010 |
|
|
|
|
|
52,686 |
55,202 |
|
|
|
|
|
|
|
|
|
| 9. IT CHARGES |
|
|
|
|
|
|
| Depreciation and amortisation: IT equipment and development |
113,000 |
99,131 |
| IT costs |
169,519 |
178,721 |
|
|
|
|
|
282,519 |
277,852 |
|
|
|
|
|
| 10. LEGAL AND OTHER PROFESSIONAL CHARGES |
|
|
|
|
|
|
| Remuneration to external auditors: |
|
|
| External audit services |
18,360 |
17,730 |
| Other services – corporation tax compliance advice |
1,200 |
1,200 |
| – employment tax advice |
633 |
5,987 |
|
|
|
|
| Legal expenses and professional charges – regulation |
687,192 |
689,871 |
| General legal, specialist advice and insurance |
214,809 |
223,769 |
|
|
|
|
|
922,194 |
938,557 |
Remuneration to external auditors shown above is inclusive of VAT. Excluding VAT external audit fees were £15,300, fees for corporation tax compliance were £1,000 and fees for employment tax compliance advice were £527.
|
2013 |
2012 |
|
| 11. OTHER ADMINISTRATION EXPENSES |
£ |
£ |
|
|
|
|
| Bank charges |
39,989 |
53,756 |
| Sundry expenses |
2,780 |
3,614 |
| Staff travel expenses |
24,822 |
18,965 |
| Prescribed examination |
89,978 |
80,524 |
| Prescription & Qualifications |
38,366 |
35,818 |
| ACE |
35,385 |
36,829 |
| Public and professional awareness |
29,213 |
26,907 |
| Document storage |
1,465 |
1,149 |
|
|
|
|
|
261,998 |
257,562 |
| 12. PROPERTY, PLANT AND EQUIPMENT |
Leasehold |
Office furniture |
IT equipment |
|
|
improvements |
& equipment |
Total |
||
|
£ |
£ |
£ |
£ |
|
| Cost | ||||
| At 1 January 2014 |
517,325 |
107,807 |
192,663 |
817,795 |
| Additions |
– |
1,614 |
21,659 |
23,273 |
| At 31 December 2014 |
517,325 |
109,421 |
214,322 |
841,068 |
| Accumulated depreciation | ||||
| At 1 January 2014 |
258,662 |
101,337 |
179,850 |
539,849 |
| Charge for the year |
51,733 |
2,419 |
14,284 |
68,436 |
| At 31 December 2014 |
310,395 |
103,756 |
194,134 |
608,285 |
| Carrying amount |
|
|
|
|
| At 31 December 2014 |
206,930 |
5,665 |
20,188 |
232,783 |
| At 31 December 2013 |
258,663 |
6,470 |
12,813 |
277,946 |
| 13. INTANGIBLE ASSETS |
|
|
£ |
|
| Cost |
|
| At 1 January 2014 |
259,444 |
| Additions |
94,916 |
|
|
|
| At 31 December 2014 |
354,360 |
|
|
|
| Accumulated depreciation |
|
| At 1 January 2014 |
104,263 |
| Charge for the year |
98,716 |
|
|
|
| At 31 December 2014 |
202,979 |
|
|
|
| Carrying amount |
|
| At 31 December 2014 |
151,381 |
| At 31 December 2013 |
155,181 |
Intangible fixed assets are represented by development costs connected to information systems and associated software.
| 14. INVESTMENTS | ||
|
2014 |
2013 |
|
|
£ |
£ |
|
| At market value |
|
|
| At start of year |
2,330,832 |
1,910,288 |
| Additions |
1,975,449 |
2,094,596 |
| Disposal proceeds |
(1,301,615) |
(1,566,230) |
| Net gains on investments |
194,350 |
(107,822) |
|
|
|
|
| At end of year |
3,199,016 |
2,330,832 |
|
|
||
| Cost at end of year |
2,969,964 |
2,293,019 |
All investments are managed by Quilter Cheviot and are invested in a mixture of UK and overseas fixed interest holdings.
| 15. TRADE AND OTHER RECEIVABLES |
2014 |
2013 |
|
£ |
£ |
|
|
|
|
|
| Other receivables |
32,207 |
20,422 |
| Corporation tax |
– |
16,974 |
| Prepayments |
120,461 |
120,668 |
|
|
|
|
|
152,668 |
158,064 |
Other receivables relate to employee season-ticket loans. There are no impaired financial assets.
| 16. TRADE AND OTHER PAYABLES |
2014 |
2013 |
|
£ |
£ |
|
|
|
|
|
| Trade payables |
80,045 |
103,601 |
| Corporation tax |
28,293 |
– |
| Other taxation and social security |
51,735 |
57,132 |
| Accruals |
168,204 |
174,852 |
|
|
|
|
|
328,277 |
335,585 |
It is ARB’s policy to pay purchase invoices within 30 days of receipt.
17. PENSIONS
The Staff Pension Scheme is a defined contribution scheme. The cost of contributions during the period was £99,798 (2013: £107,308). There are no outstanding or prepaid contributions at the balance sheet date. The assets of the scheme are held separately from those of the Architects Registration Board in an independently administered fund.
18. LEASING COMMITMENTS
The Architects Registration Board is committed to making the following minimum annual payments under operating leases which expire:
|
Land and buildings |
||
|
2014 |
2013 |
|
|
£ |
£ |
|
| In more than five years |
480,271 |
592,570 |
The Architects Registration Board is committed to the lease on its Weymouth Street premises until April 2019. During 2009 the floor space was increased by approximately 121 square metres. No rent will be payable on this extra floor space until 24 December 2015 after which rent will be payable at opening market value.
19. TAXATION
ARB is a mutual trading organisation and is therefore taxed only on outside sources of income. Historically this has been investment income. Income tax was calculated at 20% of investment income and gains on investments during the period.
20. RELATED PARTY TRANSACTIONS – ARCHITECTS REGISTRATION BOARD STAFF BENEVOLENT FUND
The Architects Registration Board is able to appoint the trustees of the Architects Registration Board Staff Benevolent Fund. At 31 December 2014 all trustees of the Fund were members of the Board of the Architects Registration Board. The cost of the Fund’s audit together with other administration expenses is met by the Architects Registration Board.
21. BOARD REMUNERATION AND EXPENSES
Board members received an attendance allowance of £250 (held since July 2010) per day for attending Board meetings and participating in other Board business and committees.
The total attendance allowances paid during 2014 were £62,950 (2013: £78,339) which includes allowances paid to Board members for their roles as members of other Committees.
Board members are also able to claim travel and subsistence expenses. Expenses totalling £16,641 (2013:£15,458) were claimed during the year.
22. CURRENCY RISK
ARB does not hold balances in foreign currencies. All fees payable are required to be settled in UK sterling and so ARB is not exposed to current risk.
23. LIQUIDITY AND CREDIT RISK
ARB aims to maintain a minimum of 4 months operating costs as a reserve and reserves during the year to 31 December 2014 were in excess of this level. As stated above the majority of ARB’s income is received at the start or before the start of the financial year. ARB has no borrowings (or legal right to do so) and monies required for short term working capital requirements are held in accounts with no significant restrictions on access. ARB does not consider that there is a significant exposure to liquidity or credit risk.
24. INTEREST RATE RISK
Registrants pay annual fees at the start or prior to the start of each financial year. In addition ARB has reserves equating to around five months annual expenditure. Surplus funds are held as follows to maximise returns:
UK gilts and Corporate Bonds the element of ARB’s reserves not required for short term working capital are held in UK gilts and Corporate Bonds. During the year to 31 December 2014 these gilts generated an income return of approximately 1.7% (2013: 1%)
Business reserve there is a sweeping system in operation from ARB’s current account to the business reserve in order to maximise interest earned on monies needed for short term working capital requirements.
Treasury reserve Monies not required for short term working capital is invested in higher interest accounts with ARB bankers.
Interest rate risk is not considered significant in terms of ARB requiring returns to finance its operations.
Board allowances and expenses
Board Members Expenses
|
Board Member
|
Attendance
Allowance |
Reading
|
Train/Tube
|
Air
|
Car
|
Taxi
|
Other
|
Hotel
|
Subsistance
|
Total
|
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
|
|
John Assael
|
1,875.00 | 1,050.00 | – | – | – | – | – | – | – | 2,925.00 |
|
Ruth Brennan
|
2,750.00 | – | 1,011.30 | – | 52.22 | 47.57 | – | 348.00 | 15.82 | 4,224.91 |
|
Peter Coe
|
4,375.00 | 500.00 | – | – | – | – | – | – | – | 4,875.00 |
|
Hans Eisner
|
2,500.00 | – | 684.55 | – | 50.46 | 91.20 | – | 1,044.00 | 175.00 | 4,295.21 |
|
Beatrice Fraenkel
|
7,750.00 | – | 2,717.25 | – | 163.10 | 327.60 | – | 1080.00 | 222.12 | 12,260.07 |
|
Alan Jago
|
5,000.00 | 1,000.00 | 308.60 | – | – | – | – | 348.00 | 20.00 | 6,676.60 |
|
Myra Kinghorn
|
1,875.00 | – | 15.10 | – | – | – | – | – | – | 1,890.10 |
|
Ros Levenson
|
2,625.00 | – | 20.10 | – | 67.25 | 15.00 | – | – | – | 2,727.35 |
|
Andrew Mortimer
|
1,775.00 | – | 86.40 | – | – | – | – | – | – | 1,861.40 |
|
Richard Parnaby
|
5,000.00 | 1,250.00 | 1,584.75 | – | – | – | 2.00 | 348.00 | 27.45 | 8,212.20 |
|
Arun Singh
|
2,750.00 | – | 50.30 | – | – | – | – | – | – | 2,800.30 |
|
Susan Ware
|
3,000.00 | – | – | – | – | – | – | – | – | 3,000.00 |
|
Neil Watts
|
4,000.00 | 6,700.00 | 873.75 | – | 139.25 | – | – | 407.00 | – | 12,120.00 |
|
Alex Wright
|
5,000.00 | – | 1,773.60 | – | – | 7.30 | – | 771.00 | 211.32 | 7,763.22 |
|
Nabila Zulfiqar
|
2,425.00 | – | 1,011.00 | – | 80.00 | 6.00 | – | 432.00 | 5.90 | 3,959.90 |
|
Total
|
52,450.000 | 10,500.00 | 10,136.70 | – | 522.28 | 494.67 | 2.00 | 4,778.00 | 677.61 | 79,591.26 |
Meeting Attendance
| Board Member | Board Meetings | Additional Board Days | Prescription Committee | Remuneration Committee | Audit Committee | Investigations Oversight Committee | Other Meetings/ Attendance | Total Meetings Attended |
| John Assael | (5) 3 | (2) 2 | (9) 6 | 0 | 11 | |||
| Ruth Brennan | (5) 5 | (2) 2 | (3) 2 | 3 | 12 | |||
| Peter Coe (Board delegate on European issues) | (5) 5 | (3) 2 | (9) 7 | 2 | 16 | |||
| Hans Eisner | (5) 5 | (2) 2 | 1 | 8 | ||||
| Beatrice Fraenkel (Chair) | (5) 5 | (2) 2 | (6) 4 | 24 | 35 | |||
| Alan Jago | (5) 4 | (2) 1 | (9) 9 | (6) 6 | 8 | 28 | ||
| Myra Kinghorn | (5) 5 | (2) 2 | (3) 3 | 1 | 11 | |||
| Ros Levenson | (5) 5 | (2) 2 | (3) 3 | 5 | 15 | |||
| Andrew Mortimer | (5) 4 | (2) 1 | (3) 3 | 2 | 10 | |||
| Richard Parnaby | (5) 5 | (2) 2 | (9) 7 | 10 | 24 | |||
| Arun Singh | (5) 3 | (2) 2 | (3) 3 | 2 | 10 | |||
| Susan Ware | (5) 4 | (2) 1 | (9) 9 | (6) 6 | 1 | 21 | ||
| Neil Watts | (5) 5 | (2) 2 | (9) 9 | 1 | 17 | |||
| Alex Wright (Board delegate on European issues) | (5) 5 | (2) 2 | (2) 3 | 11 | 21 | |||
| Nabila Zulfiqar | (5) 5 | (2) 2 | (3) 3 | 2 | 12 |
Please note that more than one meeting may occur during a day, in which case, the amount charged will not necessarily reflect the number of meetings or input of individual members. Please also note that some members do not charge the full daily rate for some of the meetings attended.