b) GMC has written to SFC with regard to the letter of 9 June 2009 which principally
related to collaborative provision. GMC has confirmed directly to the SFC that it has
complied with all areas in the letter;
c) GMC has confirmed that all material contracts are in writing. We recommend that a
contracts register detailing major contracts is maintained post merger.
2.9 Assets and Liabilities
2.9.1 The principal points to note are as follows: -
a) A formal valuation of land and buildings was carried out at 31 July 2008 resulting in a
valuation of £28,395k against a carrying value at 31 July 2009 of £27,891k;
b) The impact of any upward valuation would be to increase the depreciation charge for
GMC and potentially reduce the surplus in future years;
c) GMC appears to have been upgrading its estates in recent years with capital
expenditure and estates maintenance expenditure of approximately £ 10 million
between 2007 and 2009;
d) At present GMC has no major estates projects planned, other than the City Centre
Estates Strategy;
e) If any of the current estate is sold off as part of the City Centre Estates Project there
may be a permanent diminution in value which would have to be reflected in the
financial statements of GMC. The accounting treatment would depend upon the
circumstances of disposal;
f) The approximate average rate of depreciation was calculated for land and buildings
across the three Colleges: GMC (3.4%), CC (1.7%), and GCNS (3.6%). The rate
applied at Central College is lower than that applied at both Glasgow Metropolitan
College and Glasgow College of Nautical Studies. This stems from the fact that
Central depreciates all land and buildings over 50 years whereas the other two
Colleges both apply different rates across different buildings. Convergence of
accounting policies will therefore be required to be considered should the Colleges
merge.
g) We recommend that land and buildings are reviewed for evidence of any
encumbrances as part of the legal due diligence process;
h) The Marine Skills Project is being capitalised one third each across the Colleges. The
project is currently expected to come in on budget at a level of approximately £5.5
million;
2.9.2 GMC should bear in mind that its net worth could be adversely affected by any FRS 17
pension deficit arising in the Scottish Teachers Superannuation Scheme.
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Appendix 5: Due Diligence Executive Summaries