a) GMC, GCNS and CC seek approval in principle from SFC for the funding for the
costs of merger. The costs of merger would have to be quantified and would have to
be fully funded by SFC;
b) GMC, GCNS and CC prepares fully integrated financial projections incorporating
the merger cost and savings to ensure financial security can be achieved.
2.3 History & Historic Financial Performance
2.3.1 From our brief review in this area the following are the key areas to note:
a) GMC was formed in August 2004 by the merger of GCBP & GCFT;
b) GMC is a recognised leader in the provision of building and printing, food
technology and creative industries in Scotland;
c) GMC had a positive HMIe inspection in June 2007.
2.4 Accounting Policies
2.4.1 The key points to note are:
� CC is currently accounting for the SPF pension fund liability as a defined contribution
scheme whereas GMC and GCNS are accounting for the SPF pension fund as a
defined benefit scheme.
� CC has adopted the transitional provisions of FRS 15 in respect of fixed assets which
means it has not applied a revaluation to land and buildings on an ongoing basis. Both
GMC and GCNS revalue assets on a 3 year and 5 year basis in line with FRS 15.
� The fixed assets policies vary between the various Colleges and should be reviewed
and harmonised post merger.
� There are differences in the accounting policies of each college in other areas which
should be harmonised post merger.
2.5 Audit Issues
2.5.1 The conclusion from our review of recent reports from internal and external audit visits is
that GMC appears to have reasonable controls in all areas reviewed.
2.5.2 Based on our review, GMC appears to report appropriate, timely and accurate financial
information to the Board of Management and the Finance Committee.
2.5.3 GMC appears to have appropriate structures and committees meet on a regular basis.
2.5.4 The key points to note are:
� The College has implemented FRS 17 in relation to the Strathclyde Pension Fund;
Appendix 5: Due Diligence Executive Summaries
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