Embracing change through innovation

Annual report and financial statements for the year ending 31 December 2010

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Contents

Members of Council who held office during 2010 2

Members of Directorate and Company Secretary 2

President’s report 3

Chief Executive’s report 4

Directors’ report 5-19

Operational review 5-12

Financial review 12-14

Plans for the coming three years 15

Organisation and control 15-19

Independent Auditors’ report 20-21

Financial statements 22-38

Statement of financial activities 22

Balance sheet 23

Cash flow statement 24

Notes to the financial statements 25-38

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Members of Council who held office during 2010 as Directors and Trustees (all are members of AAT) Neil Price (President) Δ Hilary Lindsay (Vice President) Alixe Bainbridge-Spring Rachel Banfield (Chairman, Learning and Development Board) Mark Barnish Alison Black (until 05/07/10) Susan Boseley Catherine Chamberlain Henry Cooper (Chairman, Members’ Services Board) ‡ Nick Cudmore (until 21/05/10) Andrea Dunhill (from 21/05/10) Pam Dyson (Chairman, Governance Panel) Δ Mike Evans (Chairman, Resources Board) Δ ‡ Nicola Fisher Richard Harpum Una Illing Nigel Johnson Tim Light (until 21/05/10) Lee Maidment Daphne Marler Mark McBride Maxine McCulloch Neil Montgomery (until 21/05/10) Jeremy Nottingham (from 21/05/10) David Quigg Allan Ramsay (Chairman, Audit and Assurance Board) Mark Roberts Paul Rowlands (from 21/05/10) Julian Spencer Wendy Thorne Tracy Tipple (Chairman, Regulation and Compliance Board) Carole Turner (from 21/05/10) David Walker (from 21/05/10) Polly Wilson (until 21/05/10) Reg Wood Sarah Wood John Yeoman Chris Yerrell Members of Directorate and Company Secretary who held office during 2010 Chief Executive: Jane Scott Paul Δ Θ Director of Business Transformation: Tony Ashcroft (until 30.11.10) Director of Professional Development: Adam Harper Director of Finance and Corporate Resources: Tom Kelman Director of Education and Training: Clare Morley Θ Director of Marketing and Brand Strategy: Andrew Williamson Company Secretary: Karen Marshall Δ Indicates Director of Accounting Technicians (Services) Limited, a subsidiary company Θ Indicates Director of Association of Accounting Technicians (SA), a joint venture company ‡ Indicates Director of Association of Accounting Technicians Educational Trustees Limited, a subsidiary company

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President’s report Few people this year will have failed to notice the effects of the global economic crisis. Thankfully, due primarily to prudent financial planning on the part of AAT’s Council and Secretariat and the continuing support of our loyal membership, AAT has continued to maintain its financial security. But planning for the future is not only about remaining financially secure – it is also about embracing innovative new approaches to ensure sustainable growth and development. Professional accountants have a key role to play in helping organisations achieve this change by integrating key performance indicators into their standard systems and processes, and using their accounting skills to collate and analyse data to monitor, manage and maintain sustainable development. This is just one of many reasons why AAT is involved in The Prince’s Accounting for Sustainability Project. Set up in 2004 by HRH The Prince of Wales, the project aims to develop practical guidance and innovative tools to embed sustainability into an organisation’s decision-making and reporting processes. AAT is representing the voice of small business in developing this reporting process to ensure it’s practical for all organisations regardless of size or turnover. In addition, we see our role as educating our membership and providing guidance to the wider SME community. We believe this process is so crucial that the AAT is fully committed to embedding sustainable development and integrated reporting into the qualification and educational process. As an organisation, AAT is also playing its own part in the journey towards a sustainable business model. In 2010, the AAT’s Council set up a working group to research the best way to achieve this and sustainable development, alongside innovation, is now a key part of the business plan. Over the last few years, more and more of our services have been moved online meaning a reduction in printing and postage but also greater efficiencies for the membership. We also reduced our carbon footprint in late 2007 by moving from premises split over eight floors to one and a half floors decreasing our square footage by over 3,000 square feet. Sustainable development is really about making the best use of what resources we have available – rather than wasting them now at the expense of future growth. We fully believe innovation and sustainability should be at the heart of every organisation in order to secure its future. So, in pursuing that aim, I would also very much like to thank my fellow Council members for the support that they have shown me during the past year, and to all AAT’s staff for their continuing hard work and dedication. Neil Price MAAT President 10 March 2011

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Chief Executive’s report We knew that 2010 was going to be a challenge, but we had monitored the trends carefully and prepared for what might lie ahead. So while we have not grown at the levels of previous years, we have weathered a very difficult climate. We have remained steady and controlled. We have kept an eye on the external environment and remain well positioned to take advantage of opportunities and to manage the risks. The UK Government has ambitious reform plans for the vocational education and skills sector. These policies will have an impact on us and we are well prepared. We had anticipated many of these changes and put in place long-term strategies in preparation. Indeed, for the first time in the run up to an election, we launched a ‘Skills Manifesto’, and a number of the governmental initiatives are in line with this lobbying position. The Comprehensive Spending Review will affect many of our members and the organisations for which they work. However, good financial management is essential to every organisation, whether public or private, and our members are well-placed to make a significant contribution to improving organisational efficiency and effectiveness. We have invested in improving our own systems too. Our online services and e-learning tools continue to evolve to support our training providers and members. This process has not been without its challenges. We regret the inconvenience to our students and course providers caused by implementation problems with the computer based assessments that were launched in Autumn 2010. We have learnt from the problems and worked hard to avoid a recurrence. Take up of online services is high, with over 90% of transactions now completed online. We have also committed to an upgrade of our ICT infrastructure as part of our new Business Systems Strategy. This phased investment will allow us to capitalise on new developments, operate more effectively and spread our business risks. Most importantly, it will allow us to get closer to our customers and interact with them using the most appropriate media and technology. Like 2010, 2011 is going to be tough – but with the firm foundations laid this year, we are confident that AAT will be in a strong position when the upturn comes. Jane Scott Paul Chief Executive 10 March 2011

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Directors’ report Introduction The Directors present their consolidated annual report of the AAT group for the year ended 31 December 2010. The AAT group is comprised of the parent company AAT and its subsidiaries and joint venture company as listed in note 10(i) on page 33. As the parent company is a registered charity and company limited by guarantee, this statutory Directors’ report serves as the Trustees’ Annual Report. The Directors’ report is presented in the following sections:

• Operational review – sets out our objectives and how we have performed over the year against our targets.

• Financial review – provides an overview and commentary on how the AAT group’s financial position has changed over the year and sets out AAT’s reserves policy and investment policy.

• Plans for the coming three years – provides an overview of what we plan to do in the future to build on the progress made to date.

• Organisation and control – explains how we are organised and the framework that we have put in place to control and manage our operations, governance, and the risks that we face.

Operational review Summary of the objects of AAT AAT is a registered charity. Its charitable objects which benefit the public are:

• to advance public education and promote the study of the practice, theory, and techniques of accountancy

• to prevent crime • to promote the sound administration of the law for the public benefit by promoting and enforcing

standards of professional conduct amongst those engaged in accountancy, monitoring and supervising their compliance with money laundering legislation.

These objectives are achieved through the delivery of our three year business plan. The current business plan sets out the overall actions and strategies for a three year period from 2011-2013. Its overall aim is to make AAT essential for people, businesses and organisations, through the achievement of our vision; to put AAT at the heart of every business, with the business plan of AAT’s subsidiary company set up to support these aims. Our primary actions to achieve our overall aims are:

• Growth – expanding our core membership by increasing recognition, creating demand, and maintaining a strong and valued relationship with members.

• Diversification – attracting people beyond our core membership, with new AAT products and services.

• Innovation – differentiating our products and services and the way we deliver them. • Staying financially secure – managing our resources efficiently and effectively and investing wisely

to continue to develop and progress. We are committed to the highest standards of quality delivered within a framework of best practice in corporate governance. A positive customer centric culture across the organisation is pivotal to the successful delivery of our objectives. Appropriate resources are sustainably targeted to developing and delivering what people want and expect at each stage of their lifetime journey with AAT. Sustainability is an important and consistent theme in all that we do. AAT has made a commitment to operate in a sustainable way with respect for the environment and to exceed the legal minimum requirements for corporate social responsibility.

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Activities undertaken to further our charitable purposes for the public benefit Our strategy supports our principal objects by promoting excellence in accountancy by providing the qualification known as ‘accounting technician’ which is accessible to all, in conjunction with a membership programme designed to maintain a high standard of professional conduct by accounting technicians in the public interest. The primary activities undertaken to achieve this strategy include offering a comprehensive syllabus to ensure that the assessments set by AAT adequately test the competence of student members. AAT helps its student members through the provision of learning materials and access to a support service and website with content that supports them while they are training. It also provides support to those assessment centres that have been approved to deliver training courses and conduct assessment for our student members. This support is continuously enhanced and in 2010 we developed two major projects that will result in a change to how the qualification is delivered. These projects relate to the successful launch of the revised AAT Accounting Qualification and the further scoping and implementation of an e-learning and e-assessment strategy, with the initial phase being delivered in 2011. These major projects are a direct response to the ever changing educational environment and will ensure we increase and improve access to our qualification. For those who become full members, AAT provides support and services which include continuing professional development courses, learning material and professional guidance in areas such as professional ethics and compliance with anti-money laundering legislation. It also provides support to members in practice on technical matters on behalf of their clients. Our conduct and compliance team ensures any complaints made about members are handled in a manner that aims to protect the public by upholding the standards of professional conduct to which our members are committed. As a professional membership body AAT also represents its members by being actively engaged with, and providing input into consultations relating to the work of its members and which support the evolution of the accountancy profession in the UK and overseas. The following table highlights how our activities have continued to benefit the public during 2010.

Main elements of the public benefit test Activities undertaken by AAT during 2010 to benefit the public

AAT’s identifiable benefit to the public

Through its open access policy continuing to advance the public education and promote the study of the practice, theory, and techniques of accountancy to over 122,000 student members and full members resident here in the UK and overseas. Providing access to a further 24,388 new students in 2010. Assisting 8,469 student members to qualify during the year. Electing 4,592, a record number of suitably qualified people to full membership. Providing access to more members of the public by developing more engaging and accessible e-learning and e-assessment tools. Through development of a level 1 qualification AAT Access (launched in January 2011) AAT will extend access to accountancy training and the overall AAT qualification and membership to a wider audience. Reduced subscriptions are available to members, subject to the fulfilment of certain conditions.

Is there any detriment or harm that might arise from carrying out our aims?

There is no detriment or harm, indeed quite the contrary, as by maintaining high standards of professionalism amongst our members and maintaining the quality of the qualification we feel there is great benefit to the public from having properly qualified accounting technicians.

Who we intend to benefit? Our members are qualified to provide professional support to commerce or directly to the public in their own right as members in practice offering accounting services to the public.

Private benefit Whilst AAT’s direct beneficiaries are its students and members, we are aware that not only the general public, but also employers benefit indirectly from AAT activities. In our view the benefits that employers receive from being able to rely on the AAT qualification must be seen as both an unavoidable consequence and an incidental result of our activities for the public benefit. These benefits are greatly outweighed by the extent to which the aims of AAT benefit society and the business community.

The Directors of AAT can confirm that they have complied with their duty in section 4 of the Charities Act 2006 to have due regard to the public benefit guidance published by the Charity Commission, with all Policy Boards and Council reviewing both proposed policy changes and all new activities before they are undertaken, to identify how they benefit the public.

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Review of activities During 2010 the following activities were developed in order to both enhance public benefit and to support AAT’s business plan objectives. Learning and development Launch of the revised Accounting Qualification (RAQ) In response to the decision taken by the UK Government to replace the National Qualifications Framework (NQF) with a revised Qualifications and Credit Framework (QCF) the AAT launched its revised Accounting Qualification on 1 July 2010. The revised qualification is based on the new National Occupational Standards (NOS) and will continue to be up-to-date in terms of delivering AAT members with the skills, knowledge and understanding that employers need and want. This replaces both the NVQ and Diploma pathways. At the end of 2010 there were 25,838 students registered on the revised qualification, which represents 37.7% of the total student population. As part of the introduction of the revised AAT Accounting Qualification the decision was taken to implement a more flexible system of assessment to tuition providers and students, rather than the paper-based exams which could only be offered twice a year. The introduction of computer based assessment (CBA) means that students can sit when they are ready and if unsuccessful only need to wait a matter of weeks, rather than months for a re-sit. AAT Access During 2010 we have been developing AAT Access; a new flexible, classroom based level 1 accounting qualification. Accredited under the Qualifications and Credit Framework (QCF), it is designed to help students gain the skills to build a career in business or accountancy. AAT Access will be offered as traditional classroom-based training through existing AAT approved training providers. Students will be tested on skills and knowledge using a computer based assessment. AAT Access was launched in January 2011 and includes for the first time the opportunity for students to buy AAT learning materials for this qualification. We have also produced detailed teaching guides to support the delivery of this learning material. Southern African Conference The first AAT Southern African Conference took place in May 2010 in Johannesburg. The main aim of the conference was to inform AAT training providers about the assessment, quality assurance and administration requirements for the revised AAT Accounting Qualification, the online support and e-learning resources available, and the marketing support available to both enhance support and promote membership growth in this region. Members’ services Growth in full and fellow membership Developments have been implemented to increase membership growth through encouraging increased elections to membership and high levels of membership retention. Communications to encourage and support progression to MAAT status were segmented and messages targeted to specific groups of AAT affiliates. This, along with developments such as provisional membership and the existing online application service resulted in another record year for elections to membership with 4,592 new members elected in 2010; the highest number of membership elections in any calendar year. Enhancing the levels of service and support to existing members similarly resulted in a strong performance, resulting in 93.5% of members retaining their MAAT or FMAAT status. Overall growth in full and fellow membership for 2010 was 3.6%.

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Enhancement of services Membership services were further enhanced during 2010 to deliver improved opportunities for membership engagement.

• In February Engage the monthly e-bulletin promoting all membership services was launched. • Engage has improved online bookings for AAT events, leaping up from 1,963 in 2009 to

9,384 in 2010. • The first AAT membership webinars were delivered, laying solid foundations for this service to be

developed for future service provision. • FMAAT Plus, a new approach offering a bundle of services to AAT fellow members to subscribe to,

was fully launched in June. • Following on from the 2009 pilot event, over 120 members attended the Members’ Weekender

conference event which was delivered in conjunction with the AAT’s AGM. • Branch Committee support was further enhanced during 2010 and three new branches were

launched in the UK. • Over 15% of members elected to MAAT status in 2010 attended their first CPD event

during the year. Regulation and compliance Disciplinary Regulations and policy framework The Disciplinary Regulations and associated policy framework have been updated to support fair and timely resolution of misconduct cases against members. This is evidenced by the use of independent members in the make up of a Disciplinary Tribunal and a shift away from private proceedings in favour of transparency and independence, in keeping with the provisions of the Human Rights Act. With this in mind, the composition of the Disciplinary Committee has also been revised to include delegates from the wider membership, and more streamlined internal procedures. Indicative Sanctions Guidance has also been published to promote consistency. Members in Practice Scheme and Money Laundering Regulations The Members in Practice Scheme and the support AAT provides in relation to the Money Laundering Regulations 2007 have both evolved during 2010.

• CCH online has been launched, providing a comprehensive, free, unlimited support service available 24 hours a day, seven days a week to help members in practice to answer technical queries they have.

• Letters of engagement have been mandated, subject to a required update to the Guidelines and Regulations for members in practice.

• Nationwide road shows have been undertaken, promoting the role of members in the international fight against money laundering and terrorist financing.

• An anti money laundering toolkit has been launched, detailing practical advice and guidance on compliance.

• AAT has responded to consultations and actively participated in a number of forums in order to promote and make representations on behalf of members in practice.

• An action plan for those members in practice found to be non compliant with the Money Laundering Regulations 2007 has been introduced, and where appropriate, supports them in achieving compliance.

Disciplinary caseloads The disciplinary caseload has been managed effectively, demonstrating that AAT strives for the highest standards of conduct and professionalism amongst its membership. With 382 disciplinary cases received in 2010, and including work in progress brought forward from 2009, 394 cases were closed. Six cases were considered by a Disciplinary Tribunal.

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Resources The following developments have been implemented to support the delivery of our financial security objectives, and to further enhance the value for money we deliver for our members. Final salary pension scheme With effect from 1 May 2010, Council, the Trustees of the Association of Accounting Technicians Retirement Benefits Scheme (the scheme) and the active members of the scheme agreed to close the scheme to the future accrual of benefits and break the link with final salary. Council is now exploring ways to further manage and mitigate the risks that remain from operating the scheme as a closed scheme. Development of AAT’s procurement strategy 2010 saw the development of AAT’s sustainable procurement strategy. This strategy was developed to support our commitment to the use of high quality procurement as an instrument in our search for value, and to ensure alignment with our sustainability and risk policies. Budget setting In 2010 AAT adopted a more flexible and dynamic approach to budget setting. Throughout the year a range of factors, including the impact of the UK Government’s Comprehensive Spending Review and the continuing economic uncertainty, contributed to the need to build in more agile and dynamic forecasting and financial modelling techniques to continuously monitor financial performance. Business systems strategy A strategic review of our business systems commenced in July 2010. The aim is to develop a strategy that ensures that our key systems support our objectives to introduce new membership offerings; diversify into new markets; enable a broader range of technologies to be integrated into AAT’s main platform; and to provide new opportunities for improved stakeholder engagement. Implementation of the strategy resulting from this review will commence in 2011. Cross organisational activities The following additional key cross organisational activities were undertaken in 2010. Website enhancements We continue to enhance the AAT website in order to further develop the relevance of the relationship that we have with both AAT students and members. More accessible member communications/services During 2010 AAT continued to increase the channels through which news and information is made available to both student and full members by further integrating paper and electronic/ digital delivery. Diversification objectives achieved through ATSL AAT reactivated its trading subsidiary, Accounting Technicians (Services) Ltd (ATSL) in July 2010. It commenced trading again with initial activities including advertising and sponsorship coming from the Accounting Technician magazine and the launch in January 2010 of the recruitment website. Sustainability AAT is further developing its sustainability initiatives, which focus on the areas in which we have the most impact, namely through supporting and building knowledge within our membership of the role that accountants can play in helping organisations achieve their sustainability objectives. The Prince’s Accounting for Sustainability Project, in which AAT is involved through its membership of the Accountancy Body Network, aims to develop practical guidance and innovative tools to embed sustainability into an organisation’s decision making and reporting processes. AAT’s sustainability group has reviewed our own Corporate Social Responsibility (CSR) Policy to put these initiatives into practice. AAT(SA) In 2010 AAT(SA) continued its focus of both securing funding through the delivery of projects in the local government arena, and on the building of its membership base and brand throughout business and government. These two elements remain the critical success factors for a sustainable professional body. Overall membership of AAT(SA) increased by 118% during the year from 1,468 to 3,193 members.

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Public affairs It is essential that AAT members continue to be represented at the highest level with policy makers and within the accounting profession, and this year AAT has continued to successfully engage with the UK Government and its agencies through meetings and by responding to a variety of consultations. Education and skills In the area of education and skills, this has included significant interaction with the Wolf Review into vocational education for 14 to 19 year olds, and contributions to Skills for Sustainable Growth on the future direction of skills policy and a Simplified Further Education and Skills Funding System and Methodology on the future of skills funding. Our own Skills Manifesto (launched March 2010) also allowed us to engage with the education representatives of the main political parties, and we have subsequently seen the direction of debate in this sector become consistent with many of AAT’s main policy aims. We produced a direct briefing note for the Rt Hon David Willetts MP, the Minister of State for Universities and Science, on the AAT’s progression pathways and also met John Hayes MP, the Minister of State for Further Education, Skills and Lifelong Learning. As a result, we gained clarification from Government on the Young People’s Learning Agency (YPLA) funding guidance to ensure that standalone qualifications could be funded by the YPLA and not just through the routes that the previous Government supported. Accountancy and taxation We are also involved in a wide range of consultation and lobbying activities in the areas of accountancy and taxation, including work with: HM Revenue and Customs (HMRC), HM Treasury, Department for Business, Innovation and Skills, Accounting Standards Board, International Accounting Standards Board, International Federation of Accountants, Financial Reporting Council, Companies House, the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator, the Prince’s Trust Accounting for Sustainability Forum and the Charity Finance Directors Technical Accounting Forum. One of the most significant areas of potential change is the proposal by HMRC to introduce a crime of “deliberate wrongdoing by tax agents”. AAT together with other leading professional accountancy and taxation bodies, recognises the need for legislation but believes that the draft is too broad in its scope. We will continue to work with HMRC in the development of this important legislation. In addition to our written consultation responses, we have participated in consultation meetings with the European Commission, International Accounting Standards Board, David Gauke MP, Exchequer Secretary to the Treasury, and Mike Clasper, Chairman of HMRC to discuss the UK Government’s recent Comprehensive Spending Review. We participate in a number of HMRC’s consultative forums and groups, including: the Working Together Steering Group, Carter Agent Steering Group, Joint VAT Consultative Committee, Employers Consultation Forum, Compliance Reform Forum, Managing Deliberate Defaulters Working Group, Joint VAT subgroup, Security Working Group and Working with Tax Agents Group.

We believe that participation is important as it allows us to inform and influence at an early stage of development, thereby avoiding or mitigating adverse impacts on our membership and ultimately the clients or employers that they serve.

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Key performance indicators AAT has identified the key performance indicators that help it to determine whether we are on course to achieve our business plan objectives and our charitable objectives. These indicators, together with a commentary on the results for the year are summarised in the table below:

Objectives Definition of key performance indicator

Actual 2009

Actual 2010 Commentary

Growth

Number of members 122,730 122,697

Our overall membership numbers, excluding AAT(SA), have remained static this year due, in the main, to the current economic climate this was not unexpected. However, we continue to invest in attracting new students and activities to retain existing students, and believe this will stand AAT and its membership in good stead when the upturn comes.

Acquisition

Recruitment of new students 24,843 24,388

The economic climate has made it harder to attract new students but our continued investment in recruitment activity resulted in a strong final quarter for the registration of new students. We will continue this investment in 2011.

Students achieving the Technician/Diploma level of the qualification

7,741 8,469

Another good year for student achievement. This is the result of high student recruitment in previous years as well as specific activities focused on supporting students to successful completion.

Deepening

Retention of students and affiliates

51,103 or 68.9%

49,009 or 64.9%

A disappointing result, due to the continued high levels of unemployment and the impact of the continued decline in funding in the education sector.

Retention

New MAATs recruited 4,408 4,592

Another positive year of growth in full members. This follows three strong years in new student recruitment. This signifies that the qualification continues to be seen as a valuable asset by those who are successful in achieving their goals.

F/MAATs membership renewal level

42,722 or 93.4%

44,186 or 93.5%

The retention of full and fellow members remains exceptionally high even in such difficult economic times, showing that people continue to value their MAAT status and the professional credibility it demonstrates.

Members who recommend AAT 6,459 5,747

Nearly one in four of our new students has been recommended to AAT by an existing member and demonstrates the value of building advocacy from within our own membership.

Fulfilment

Monitored job advertisements that mention AAT

30% 31.7% A slight improvement on last year shows that AAT qualifications and membership continue to be held in high esteem in the employment market.

Surplus/(deficit) of income over expenditure

£0.6m or +3.2%

(£1.0m) or -5.4%

This planned deficit is a direct result of our commitment to invest in e-learning and assessment and to the development of our revised AAT Accounting Qualification. This investment will help us to improve what we offer to our members and prospective students.

Financial

Level of income reserves

£8.4m or 46.1%

£7.7m or 41.0%

The strong performance of AAT’s investment portfolio has contributed to an end of year reserves position in excess of targeted levels (35%). This ensures we remain in a strong financial position to take advantage of new opportunities and manage risk.

Diversification

Number of students and members in AAT(SA)

1,468 3,193

The Local Government Accounting Certificate’s reputation continues to grow with funding for the qualification now available across all nine of South Africa’s provinces. Building on this success, AAT(SA) has also now launched the Local Government Advanced Accounting Certificate, the second level in this suite of qualifications.

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Factors within and outside AAT’s control which are relevant to the achievement of our objectives The main factor within our control is our organisational structure and the recruitment, retention, motivation and training of staff with the appropriate skills. We have a dedicated, loyal and hard working team who have together identified the actions we need to take to help us achieve our objectives. To ensure our staff have the appropriate ICT tools available to achieve these objectives Council has approved a major investment in our ICT infrastructure. This will ensure greater flexibility and will better support the development and delivery of new products and services. The main factors outside our control include the actions of our competitors, the UK and global economic climate and government policy, particularly with respect to the funding of our qualifications, which has become more and more precarious as the UK Government has unfolded its Comprehensive Spending Review. Our senior managers regularly review the competitive risks we face in order to identify the appropriate actions to be taken to minimise or counter the effect of these risks; risks that can hamper us in the achievement of our objectives. Financial review Group operating results for the year Despite what has been a challenging year we have maintained a strong financial position, which will enable us to continue to invest income reserves in developing initiatives in order to meet our business plan objectives whilst ensuring risk reserves are maintained at a prudent level. The financial statements on pages 22 to 38 are based on the results of the AAT group, therefore the comparative figures in these statements and accompanying notes have been revised to include the results of the AAT’s subsidiaries and joint venture company. The Statement of Financial Activities on page 22 shows a level of net outgoing resources before other recognised gains and losses of £957,000 (2009: net incoming resources of £605,000), or -5.4% (2009: +3.2%) of total incoming resources. This planned deficit resulted from the investment in third party costs made related to developing the revised AAT Accounting Qualification (£576,000), and the delivery of our e-learning and e-assessment strategy (£934,000). The net movement in the unrestricted income funds of the AAT group, before the deduction of the pension reserve arising under FRS 17 was a decrease of £251,000 (2009: increase of £812,000). This means that the unrestricted income funds of AAT group amounted to £9,696,000 as at 31 December 2010 (2009: £9,947,000). Included in this total were the net gain on investments of £832,000 (2009: £335,000), and funds held of £133,000 (2009: £140,000) in relation to the net assets of the Accounting Technicians Educational Trust, a subsidiary of AAT. Review of AAT’s final salary pension scheme With effect from 1 May 2010 Council, the Trustees of the scheme and the active members agreed to close the scheme to the future accrual of benefits and break the link with final salary. During the year and subsequent to the year end the scheme actuary has been preparing the triennial valuation of the scheme. The current draft valuation shows that the scheme had an estimated deficit of £1,128,000 as at 1 January 2010 (2009: estimated deficit of £2,187,000 as at 1 January 2009) based on estimated assets of £9,332,000 and estimated liabilities of £10,460,000. As recorded in Note 6 to the Financial Statements the FRS 17 deficit decreased by £837,000 from £3,140,000 to £2,303,000. This decrease in the deficit was mainly due to the closure of the scheme, which released an actuarial reserve for future salary increases and benefit accruals, and the adoption of the Consumer Prices Index (CPI) as opposed to the Retail Prices Index (RPI) allowed under the rules of the scheme as the basis for the revaluation of benefits in the future.

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Reserves policy In accordance with Charity Commission guidance, we annually review the level of income reserves that we consider are necessary to maintain the financial security of AAT and at the same time fund its business plan. Our reserves policy for the year ended 31 December 2010 was as follows. AAT’s definition of income reserves Income reserves are defined as the total of net current assets and readily realisable fixed asset investments less deferred income and rent reserve. Our income reserves are required to serve two purposes, namely to mitigate risks and to provide finance for new developments.

Risk and development reserves target

Council consider that the risk reserves held by AAT should be maintained at a prudent level of at least 25% of gross annual revenue expenditure, with development reserves being held of up to 10% of gross annual expenditure. These levels are considered to be in line with good financial governance and mitigate the impact of key risks to which AAT is exposed. Given these above components, when setting the target level for reserves for the 2010 to 2012 budget, Council considered that the total income reserves required to cover the risk and the development needs of AAT and set target reserves levels of between 25% to 35% of gross annual revenue expenditure for 2010, increasing to between 30% and 40% in 2011 and 2012. This increase from the level for 2010 of between 25% to 35% was set to ensure that the level of risk reserves is sufficient to allow AAT the breathing space it would require to restructure its finances to cope with the ongoing effect of a significant change in its fortunes, and to provide accessible funding for the major capital and revenue developments planned. These planned developments include investment into e-learning and e-assessment activities which are budgeted at £737,000, further development of the AAT Accounting Qualification budgeted at £329,000, diversification initiatives budgeted at £500,000, and the implementation of our Business Systems Strategy and ICT infrastructure review budgeted at £1,300,000, requiring a total of £2,866,000 of investment across our business planning period. Current level of actual income reserves Our income reserves amounted to £7,689,000 or 41.0% (2009: £8,408,000 or 46.1%) of gross annual revenue expenditure as at 31 December 2010 which compares to the target level set by Council of between 25% and 35%, or £4,690,000 to £6,565,000 of gross annual revenue expenditure. Although the actual position was in excess of the target set in 2009 for 2010, Council considers that this is wholly appropriate and prudent to ensure sufficient development reserves to allow investment in the activities outlined above, and provides a sound financial foundation to ensure reserves are within the target levels set for 2011. Calculation of income reserves Our calculation of income reserves is equivalent to the ‘free’ reserves defined by the Charity Commission, with the two calculation methods arriving at the same reserves level of £7,689,000, as at 31 December 2010. AAT Group’s total unrestricted income funds as at 31 December 2010 were £7,393,000 after allowing for a reduction in reserves of £2,303,000 arising from the deficit in our final salary pension scheme as calculated under FRS 17. Going concern Due to the reserves policy AAT has in place and through consideration of the business plan and financial projections for 2011 to 2013, the Directors have a reasonable expectation that the AAT group has adequate resources to continue its activities for the foreseeable future. Accordingly, we continue to adopt the going concern basis in preparing the financial statements as outlined in the Financial Responsibilities of the Council section on page 18. Investment policy AAT’s Investment Panel has appointed Ruffer LLP to manage our non cash assets and to achieve the investment policy objectives outlined below. AAT currently considers that a medium to long term investment policy which aims at preserving the capital value of the assets invested whilst trying to achieve a real return on the assets invested is wholly appropriate. In 2010 AAT increased the level of funds held in longer term investments. This decision was made after considering the business plan funding needs of AAT and in light of the low returns offered on cash deposits from financial institutions, as the base rate in the UK remained at the historic low of 0.5% throughout 2010.

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The investment of surplus cash in non cash deposits continues to be undertaken after proper consideration of the risks and returns involved and subject to appropriate controls, including regular monitoring of AAT’s investment managers by the Investment Panel. From time to time the Investment Panel may seek independent professional advice to assist it with major policy decisions, and to review and report on performance. The Investment Panel also seeks regular advice from our investment managers, Ruffer LLP, on the day to day management of our assets. During 2010 the Investment Panel reviewed and approved its treasury policy which permits short term cash deposits held by AAT to be placed with UK Government backed banks that have at least an AA(-) credit rating but preferably AAA or higher credit rating. As regards ethical investment it continues to be AAT’s policy not to invest in either (i) businesses whose activities would conflict with the aims of AAT or (ii) businesses whose activities are likely to alienate a significant proportion of our membership. The Investment Panel intends to review this policy during 2011 and if appropriate amend it to take into account current best practice in this important area of investment policy. Investment performance Ruffer LLP’s overall objective is firstly to preserve the capital we invest with them over a rolling twelve month period, and secondly to grow the portfolio at a higher rate (after fees) than could reasonably be expected from the alternative of depositing the cash value of the portfolio in a reputable United Kingdom bank. As at 31 December 2010 AAT held just under £9.2m (2009: £5.3m) with Ruffer LLP. AAT’s short term cash deposits are managed internally in line with the treasury policy approved by the Investment Panel in 2010. In order to assist the Investment Panel in measuring performance over time, we have adopted a benchmark for the portfolio which is the Retail Price Index (RPI) plus 4% p.a. However, the Investment Panel recognises that the actual performance of the portfolio may differ significantly from this benchmark from time to time and that the most important aspect of its performance monitoring is to meet regularly with Ruffer LLP in order to maintain a good understanding of its strategic approach. The Investment Panel monitors Ruffer LLP’s performance at least quarterly and in the past year has done so more regularly in the light of the volatility that has been experienced in the investment markets since the last quarter of 2008. Over the year ended on 31 December 2010, the market value of AAT’s investment portfolio increased in value by £832k. The overall return was an annualised return of +13.1% net of management fees which compares favourably to the actual benchmark return of +8.8% (RPI+4%) for the same period. Principal funding sources and how expenditure in the year has supported AAT’s objectives We receive our funding primarily from our membership in the form of subscriptions and assessment fees together with other qualification income, such as income from fees arising from the continuing professional development courses we organise for our members. The funding received from members has then been applied to support the delivery of the assessments and members’ services offered. Our expenses include the staff costs (of the staff directly involved in delivering or supporting the activities conducted by AAT) other than the non-executive Directors (Council members) of AAT who do not receive remuneration. Additionally: marketing; website; magazine; information and communication technology; office accommodation; administration; compliance; telephone; and printing and postage costs are all incurred by AAT in providing and supporting the services offered to our members. Funding of our branch network All of our UK and international branches operate under a Model Constitution. They are funded out of central AAT funds, and they remain under the overall control of the Council.

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Plans for the coming three years

At its meeting in December 2010 Council approved the budget for 2011 and projections for 2012 and 2013. The budget included the allocation of income reserves to the following projects.

E-learning and e-assessment The environment that we operate in is changing and we need to be sure that we are changing with it. We focused considerable effort during 2010 in e-learning and e-assessment – more than just the ability to study and for us to mark exams online. This work continues apace in 2011 and we plan to ensure that all levels of the qualification are supported with online learning products. We also successfully launched AAT LearnPlus in November 2010 as our online platform to aid both training providers and student members to better manage and monitor their progress through the qualification. It also acts as the platform for some of the assessments our student members undertake. AAT Access We launched a new level to our qualification in January 2011 called AAT Access. As the name suggests this is aimed at supporting our benefit to the public by giving access to those members of the public who want to see if the qualification is right for them by giving them a sound introduction to the basic principles of accountancy. Members in Practice Scheme In order to bridge the gap between membership and becoming self employed, provisional licensing will be launched in the last quarter of 2011. This will allow AAT the opportunity to provide focused support and guidance to members in practice to ensure that they are equipped to provide a high standard of service to their clients whilst starting out in practice. Business Systems Strategy Council agreed in November 2010 that we should identify and install a more flexible membership database, website and accounting software. Work is now underway to implement this strategy which should result in the new website and accounting software being installed in 2011 and the new membership database in 2012. Improved focus on customer relationship management We will be introducing a customer relationship management approach to our organisational structure. This builds on the work we commenced back in 2006 with our customer centricity and our workstyle workplace strategy. Diversification activities We very much feel that to rely too heavily on traditional sources of income is imprudent and that an effort must be made to diversify AAT’s potential income streams and also the customers that it can provide a benefit to. The reactivation of AAT’s trading subsidiary in 2010 will enable the AAT group to meet these objectives. 2011 will see the appointment of a Commercial Director to provide additional resource for targeting potential diversification opportunities and to widen public access to our services and products. Association of Accounting Technicians (SA) - AAT(SA) During 2010 AAT(SA) has increased its membership by 118% from 1,468 to 3,193. We have agreed a three year strategic plan with the South African Institute of Chartered Accountants (SAICA) to build on AAT(SA)’s two-pronged strategy of securing project-based income while building a sustainable membership base. Organisation and control Details of the Directors and senior staff The names of all of the AAT group’s Directors and senior staff are set out on page 2. All of the Directors of the parent charity are members of Council, AAT’s governing body and are also Trustees of AAT. Nature of governing document and how the AAT group is constituted The Directors of AAT are also Trustees and as such are responsible for ensuring that the group acts only in furtherance of our stated charitable objects in line with our Memorandum and Articles of Association. Two of AAT’s subsidiary undertakings were active during the year, namely, the Association of Accounting Technicians Educational Trust, and Accounting Technicians (Services) Ltd, a private limited company. The AAT group includes a 50:50 share in a joint venture company with SAICA, namely Association of Accounting Technicians (SA).

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The Accounting Technicians Educational Trust is managed by two Directors appointed by AAT from members of the Council to the Board of the Trustee company (Accounting Technicians Educational Trustees Limited). The Trust was established in 1981 to undertake charitable activities on behalf of AAT, and operates under a Deed of Trust. The Directors of Accounting Technicians (Services) Ltd are currently all appointments from among the Directors and the Chief Executive of AAT. The four Directors of AAT's joint venture company, AAT(SA), are the Chief Executive and the Director of Education and Training of AAT; and the Chief Executive and Senior Executive: Professional Development - Transformation and Growth of the South African Institute of Chartered Accountants. Methods adopted for the recruitment and appointment of new Trustees The Directors of the parent charity are appointed either by election (up to 18) from among those who are full or fellow members or by being nominated (up to 12) by the sponsoring bodies. In addition the senior office holders of Council (the President, the Vice President and the two most recent Past Presidents), are ex-officio members of Council. Up to a further four Directors may be co-opted under Article 60 of the Articles of Association. The Vice President of AAT is elected by members of the Council in line with a formal process approved in 2007. AAT is sponsored by the Chartered Institute of Public Finance and Accountancy (CIPFA), the Institute of Chartered Accountants in England & Wales (ICAEW), the Chartered Institute of Management Accountants (CIMA), and the Institute of Chartered Accountants of Scotland (ICAS), as the technician level body offering appropriate education, training and membership facilities. Policies and procedures adopted for the induction and training of Council members A framework for Council members’ learning and development has been in place since February 2004 and was further reviewed during 2009. The purpose of the framework is to provide all Council members with the opportunity to develop their knowledge and skills, to help contribute effectively to the work of AAT and to support them in their continuing learning and development. A key element of induction is the learning and development day held in June each year, which all Council members are expected to attend. Further development sessions are held throughout the year to ensure that all Council members are kept abreast of changes in legislation and best practice, and where appropriate individual boards and panels run specialist training sessions specific to their needs. Organisational structure of the AAT group and how decisions are made AAT’s governing body is the Council, all members are non-executive and are responsible for managing AAT’s business as set out under Article 65A of its Articles of Association. Under a new meetings structure the Council met four times during 2010. The Council has responsibility for certain specific functions which it does not delegate; however, it also oversees a framework of delegation, with clear levels of authority, which enables other matters to be delegated to policy boards and the secretariat. Aside from its formal meeting structure, Council holds an awayday on an annual basis, normally in July, to provide a forum for strategic discussion. Council has in place a structure of boards and panels enabling AAT to respond quickly to changes in the external environment and to encourage the generation of new initiatives. Under this structure the policy boards are accountable to the Council. They implement policy within a set framework and make decisions on expenditure within the resources allocated to them by the Council. The primary responsibilities or ‘terms of reference’ of the policy boards and the sub panels are reviewed and agreed by the Council, at least annually. The Chief Executive is responsible for managing the day to day business of AAT, ensuring that the staff operate effectively and efficiently. In addition, many of AAT's members provide support, including facilitating and attending branch and CPD events and contributing to consultations on a voluntary basis. The benefits from this support cannot be overestimated in helping AAT achieve its objectives. As the Board of AAT’s subsidiary company, ATSL are appointments from among the Directors and Chief Executive of AAT, this ensures that all decisions taken by the Board are in line with the parent charity’s objectives and ensures any conflicts of interest are managed and addressed within the group’s best interest. The Board of ATSL met twice during 2010. The aim of the AAT(SA) is to provide a professional body and qualification for accounting technicians in South Africa and to regulate and support, in the public interest, the technical competence and professional standards of its members. The Board of AAT(SA) is formed of staff from both AAT and SAICA, and met four times during 2010.

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Identification and regular review of risks to which AAT is exposed AAT’s risk policy is to ensure that the level of exposure to risk is regularly reviewed taking into account the changing environment. Opportunities to grow and diversify are carefully researched in order to assess their potential for risk. AAT looks to maximise opportunity whilst operating a well-balanced regard for risk. The Council, its four main policy boards (the Learning and Development Board; the Members’ Services Board; the Regulation and Compliance Board; and the Resources Board), the ATSL Board and our staff are responsible for identifying, monitoring and managing the risks to which the AAT and its subsidiaries are exposed. These risks are formally recorded in a Critical Risk Register and those identified as having potentially the most impact on AAT or its subsidiaries are reviewed by the policy boards at each business meeting. AAT currently regards the threat of the withdrawal of funding for our qualifications; the lack of take up on student membership due to the poor economic climate; the renewal of full membership; competition from other awarding bodies; and the cost of funding the defined benefit pension scheme as being our key risks. A separate risk register is maintained for AAT(SA), which is regularly monitored by the Directors and staff of both joint venture organisations. In September 2010 both AAT and SAICA provided the Board of AAT(SA) with an assurance report outlining the risk management frameworks in place to ensure the highest level of professional standards are delivered. All new policy developments being considered by the boards include a risk assessment. Our Strategic Advisory Workshop is responsible for ensuring that the risk identification process is working consistently across the policy boards and that pan-organisational risks are identified and prioritised. Whilst it is recognised that systems can only provide reasonable, but not absolute assurance that major risks have been adequately managed, the Directors are satisfied that through the risk management process established for AAT, the major risks identified have been adequately managed. Governance and internal control AAT continues to pursue high standards of governance based on the Good Governance code for the Voluntary and Community Sector and The UK Corporate Governance Code. Where applicable this guidance is taken into account in managing the affairs of AAT. As an important component of good governance, AAT has in place a Code of Conduct for Council members. The Code is based on the Nolan Committee’s seven principles of public life and includes a mechanism for enforcing the Code. All Council members are obliged to sign up to and observe the Code at all times. AAT holds a register of Council Members’ interests in line with the Code’s principles of openness and honesty. Included within its governance structure AAT has an Audit and Assurance Board, which acts independently of the policy boards and reports directly to Council. The composition of the Board includes an independent member and its terms of reference are based on guidance issued by the Financial Reporting Council. The Audit and Assurance Board’s responsibilities include reviewing on behalf of Council the AAT’s financial reporting in accordance with FRS18 and confirming the appropriateness of the accounting policies of AAT and its subsidiaries, internal control and risk assessment and dealing directly, on behalf of Council, with the external auditors regarding the conduct of the audit. The Audit and Assurance Board has met three times during 2010. AAT has an Internal Auditor acting independently of the external auditors, undertaking a programme of internal control reviews and reporting to the Audit and Assurance Board on the effectiveness of these controls and associated risk management. The consideration of risk is embedded within our business planning process, and the Board reports to Council at each of its meetings on the AAT’s key strategic risks. Financial responsibilities of the Council The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations. Company and Charity law requires the trustees to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law.

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Under company law the trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charitable company and of its net outgoing resources for that period. In preparing these financial statements, the trustees are required to:

• select suitable accounting policies and then apply them consistently • make judgments and estimates that are reasonable and prudent • state whether applicable accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements • prepare the financial statements on the going concern basis unless it is inappropriate to presume

that the charity will continue to operate.

The trustees are responsible for keeping proper accounting records that are sufficient to show and explain the charitable company’s transactions and disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with 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. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on AAT’s website. So far as the Directors are aware, there is no relevant audit information of which AAT’s auditors are unaware. The Directors have each taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that AAT’s auditors are aware of that information.

Our employees Recruitment AAT has a fair and consistent approach to recruitment which supports its commitment to equal opportunities. All candidates are assessed on their skills and experience against the person specification for each role to ensure that the right people are in the right jobs to enable us to meet our performance measurement targets. Performance management The performance management appraisal process ensures employee contributions to AAT’s value chain are measured on a regular basis. The process also includes a competency framework which supports the values and strategic direction of AAT and both of these components are considered when awarding performance related salary increases. Work life balance AAT supports employees through offering flexible working where the business can support it. On top of this it has a flexi system which most employees can benefit from, which allows up to 12 days flexi leave to be taken in lieu of any extra hours worked. Employee engagement and development AAT has taken part in the ‘Best Companies to Work For’ survey since 2009; the insight gathered from this survey is used to develop initiatives aimed at increasing employee engagement. AAT also invests heavily in its employees’ development, focusing on individual needs identified through the appraisal system plus organisation wide programmes that support our business plan objectives. Other matters Political and charitable donations AAT made charitable donations to the Accounting Technicians Educational Trust of £nil in 2010 (2009: £8,700). Policy on payment of creditors It is the AAT group’s policy to abide by the terms of payment agreed with our suppliers, either their standard terms or special terms where agreed beforehand. Auditors On 1 October 2010, Horwath Clark Whitehill LLP changed its name to Crowe Clark Whitehill LLP. The Council will be recommending to the Annual General Meeting that the firm of Crowe Clark Whitehill LLP be reappointed as auditors to the AAT group.

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Reference and administrative details of the AAT group The full name of the parent charity is ‘The Association of Accounting Technicians’, referred to throughout this report as AAT. The full name of the subsidiary undertakings are ‘Accounting Technicians (Services) Ltd’, referred to as ATSL and ‘Accounting Technicians Educational Trust’, referred to as ATET. The full name of the joint venture company is the ‘Association of Accounting Technicians (SA)’, referred to throughout the report as AAT(SA). AAT is registered as a charity with the Charity Commission for England and Wales and its registered number is 1050724. AAT is also a company limited by guarantee and is registered with Companies House in England and Wales under the registration number 1518983. ATSL is a private limited company and is registered with Companies House in England and Wales under the registration number 03116873. ATET is a registered charity set up under Deed of Trust for educational and other charitable purposes in connection with the affairs of AAT. Its registered number is 326012. AAT(SA) is an association incorporated under Section 21 of the Companies Act 1973 in South Africa under the registration number 2008/023530/08. AAT and ATSL’s registered office is at 140 Aldersgate Street, London EC1A 4HY (t: +44 (0)20 7397 3000 f: +44 (0)20 7397 3009, e: aat@aat.org.uk w: aat.org.uk). Details of AAT’s advisers The names and addresses of the third parties who were the main advisers to the AAT group during 2010 were as follows:

• Bankers - Lloyds Banking Group, Thavies Inn House, 6 Holborn Circus, London EC1N 2HP • Solicitors - Edwin Coe LLP, 2 Stone Buildings, Lincoln’s Inn, London WC2A 3TH • Auditors - Crowe Clark Whitehill LLP, St Bride’s House, 10 Salisbury Square, London EC4Y 8EH • Investment Managers - Ruffer LLP, 80 Victoria Street, London SW1E 5JL.

By order of the Council Mike Evans Director Chairman Resources Board 10 March 2011

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Independent Auditor’s Report to the members of the Association of Accounting Technicians We have audited the financial statements of the Association of Accounting Technicians for the year ended 31 December 2010 which comprise the Group Statement of Financial Activities, the Group and Company Balance Sheets, the Group Cash Flow Statement and the related notes numbered 1 to 23. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the charitable group’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’s 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 charitable company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of trustees and auditor As explained more fully in the Statement of Trustees' Responsibilities, the trustees (who are also the directors of the charitable company for the purpose of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. We have been appointed as auditor under the Companies Act 2006 and report in accordance with that Act. 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 company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. We read all the information in the Trustees’ Annual Report, President’s Report and the Chief Executive’s Report to identify material inconsistencies with the audited financial statements. 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 group’s and the charitable company’s affairs as at 31 December 2010 and of the group’s incoming resources and application of resources, including its income and expenditure, for the year then ended

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice

• have been prepared in accordance with the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Trustees Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

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Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• the parent charitable company has not kept adequate accounting records, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent charitable company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of trustees' remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit.

Michael Hicks Senior Statutory Auditor For and on behalf of Crowe Clark Whitehill LLP Statutory Auditor St Bride’s House 10 Salisbury Square London EC4Y 8EH 10 March 2011

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Association of Accounting Technicians Statement of financial activities for the group For the year ended 31 December 2010 Income and expenditure account 2010 2009 Notes £’000 £’000Incoming resources Incoming resources from generated funds Investment income 2 207 163Income from trading activities 20(ii) 94 -Incoming resources from charitable activities Subscriptions and fees 3 17,168 17,935Other income 332 746Incoming resources from joint venture undertaking Project income 21 1,079 589Subscription and fees 21 83 38 Remove joint venture income 21 (1,162) (627) Total incoming resources 17,801 18,844

Resources expended Costs of generating funds Pension scheme finance costs 4(i), 6

(75)

(157)

Investment management costs 4(i) (79) (25)Trading activities expenses 4(i), 20(ii) (94) -Charitable activities Learning and development 4(i) (7,982) (7,677)Members’ services 4(i), (ii) (8,548) (8,586)Regulation and compliance 4(i) (1,421) (1,165)Governance costs 4(i) (559) (629) Total resources expended (18,758) (18,239) Net (outgoing)/incoming resources before other recognised gains and losses

(957)

605

Net movement in interest in joint venture undertaking 21 48 (50) Other recognised gains and losses Investment gains 10(ii) 832 335Actuarial gains/(losses) on defined benefit pension scheme 6 663 (1,639) Net movement in funds, including pension reserve 586 (749) Fund balances brought forward 6,807 7,556 Fund balances carried forward at 31 December, including pension reserve 17 7,393 6,807 Statement of total recognised gains and losses

The above statement of financial activities, all of which are derived from continuing operations, includes all recognised gains and losses for the year, as defined by Financial Reporting Standard No. 3. The notes on pages 25 to 38 form part of these financial statements.

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Association of Accounting Technicians Balance sheet As at 31 December 2010

AAT Group 2010 2009 2010 2009 Notes £’000 £’000 Fixed assets Tangible assets 9 1,946 1,526 1,946 1,526Investments 10 9,184 5,336 9,184 5,336Investment in joint venture 21 - - 61 13Total fixed assets 11,130 6,862 11,191 6,875 Current assets Goods for resale 91 112 91 112Debtors 11 2,127 1,947 2,047 1,947Investments 12 2,996 7,430 3,126 7,560Cash at bank and in hand 332 360 427 370Total current assets 5,546 9,849 5,691 9,989 Liabilities: Creditors: amounts falling due within one year Fees and subscriptions received in advance (603) (648) (603) (648)Creditors and accruals 13 (2,106) (2,090) (2,118) (2,090)Rent reserve reversing within one year 15 (91) (91) (91) (91)Total current liabilities (2,800) (2,829) (2,812) (2,829) Net current assets 2,746 7,020 2,879 7,160 Total assets less current liabilities 13,876 13,882 14,070 14,035 Deferred income 14 (4,070) (3,693) (4,070) (3,693) Total assets less current liabilities and deferred income

9,806 10,189 10,000 10,342

Provisions Rent reserve reversing after more than one year 15 (304) (395) (304) (395)Total net assets before deducting pension liability 9,502 9,794 9,696 9,947 Defined benefit pension scheme liability 6 (2,303) (3,140) (2,303) (3,140) Total net assets after deducting pension liability 7,199 6,654 7,393 6,807 Represented by: Unrestricted income funds 9,502 9,794 9,696 9,947 Pension reserve 6 (2,303) (3,140) (2,303) (3,140) Total unrestricted income funds 17 7,199 6,654 7,393 6,807 All funds are unrestricted

The notes on pages 25 to 38 form part of these financial statements. Approved by the Council on 10 March 2011 and signed on its behalf by: Neil Price, President Mike Evans, Chairman, Resources Board

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Association of Accounting Technicians Group cash flow statement For the year ended 31 December 2010 2010 2009 Notes £’000 £’000Reconciliation of changes in resources to net cash (outflow)/inflow from operating activities

Changes in resources before revaluations (957) 605Depreciation charges 608 559Decrease in stocks of goods for resale 21 23(Increase) in debtors (100) (429)(Decrease)/increase in creditors 18 (17) 683Pensions reserve funding deficit movements 18 (174) (141)Interest received (88) (130)Investment income (119) (33)Increase in deferred income 377 430(Decrease) in rent reserve (91) (30)Net cash (outflow)/inflow from operating activities (540) 1,537 Cash flow statement for the group Net cash (outflow)/inflow from operating activities (540) 1,537 Returns on investments and servicing of finance 18 207 163 Capital expenditure 18 (1,028) (300) Capital investment and long term investments 18 (3,016) (2,613) Management of liquid resources 18 4,434 1,221 Increase in cash 57 8 Reconciliation of net cash flow to movement in net funds Increase in cash in the period 57 8 Cash used to (decrease) liquid resources (4,434) (1,221) Movement in net funds in the year (4,377) (1,213) Net funds at 1 January 19 7,930 9,143 Net funds at 31 December 19 3,553 7,930 The notes on pages 25 to 38 form part of these financial statements.

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Association of Accounting Technicians Notes to the financial statements 1. Statement of accounting policies Convention The financial statements are prepared in accordance with applicable accounting standards in the United Kingdom and under the historical cost convention as modified by the inclusion of investments at market value, and comply with the current Accounting and Reporting by Charities: Statement of Recommended Practice (“the Charities SORP”) as revised and issued in March 2005 by the Charity Commission, and with the Companies Act 2006. Consolidation of financial statements of subsidiary and joint venture undertakings The consolidated financial statements consist of the financial statements of AAT, its active subsidiaries, and the group’s share of interests in its joint venture. AAT owns the whole of the share capital of the Association of Accounting Technicians Educational Trustees Limited, which is the Trustee Company for the Accounting Technicians Educational Trust, and the whole of the share capital of the Accounting Technicians (Services) Limited. The consolidated financial statements have been prepared on a line by line basis with the results and net assets position at the balance sheet date set out in notes 20 (i) and 20 (ii). The other subsidiary undertaking, Accounting Technician (Publications) Limited was dormant throughout the current and previous years. AAT have accounted for the group’s share of its joint venture company, namely AAT(SA) using the gross equity consolidation method. The results and net assets position at the balance sheet date are set out in note 21. Recognition of income Income attributable to the financial year is recognised as follows:

• student, full and fellow members’ subscriptions are accounted for over the period covered by the subscription

• student, full and fellow members’ registration fees are accounted for over the period covered by the registration

• assessment fees are accounted for in the date of each sitting that they relate to • investment income is accounted for over the period in which it is earned • other contributions and receipts are accounted for according to the period specified or contracted.

Deferred income Student, full and fellow member subscriptions are payable in respect of a rolling twelve month period and are credited to income over the period to which they relate. The balance of this income that falls into the following year at the year-end is shown as deferred income (see note 14). No obligation exists to repay this or any part of it to student, full or fellow members. Resources expended All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to the category. Support costs are those costs incurred directly in support of the objects of the group. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with use of the resources. Premises overheads and other overheads have been allocated on the basis of headcount. Governance costs are those associated with constitutional and statutory requirements. Foreign currency accounting policy Foreign currency transactions in relation to AAT’s joint venture company AAT(SA) are valued at the average rate for the year within the statement of financial activities, and at the year end rate within the balance sheet. Foreign currency gains or losses are credited or charged to the profit and loss account as they arise.

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1. Statement of accounting policies (continued) Depreciation The depreciation of fixed assets is charged on a straight line basis from the month that a fixed asset is first brought into use in order to write off their cost less any residual value over the expected useful lives (or the remaining period of the lease for leasehold improvements) which equates to the following rates:

The impairment of fixed assets is reviewed annually and provisions made where necessary. Capitalisation of equipment and development expenditure All single purchases of less than £10,000 (incl. VAT) are written off in the year of purchase unless forming part of a more comprehensive scheme where the total is £10,000 (incl. VAT) or more. Expenditure, other than own staff costs, incurred by AAT relating to the development and implementation of online services, e-learning and e-assessment and the development of AAT’s website and which is deemed to have a future economic benefit is capitalised at cost. The depreciation of such expenditure is charged on a straight line basis over the estimated useful economic life of the asset up to a maximum of three years. Leased equipment Rentals paid under operating leases are charged to revenue on a straight-line basis over the terms of the leases. AAT has provided fully for the estimated dilapidation costs relating to its leases on 140 Aldersgate Street over the remaining terms of the leases, these were estimated at £113,000 as at 31 December 2010, see note 13. Investments Investments listed on a recognised stock exchange, including investment and unit trusts, are stated at mid-market value at the balance sheet date. The Statement of Financial Activities includes the net gains and losses arising on revaluations and disposals throughout the year. It is AAT’s policy to keep valuations up to date such that when investments are sold there is no realised gain or loss arising. As a result the Statement of Financial Activities does not distinguish between the valuation adjustments relating to sales and those relating to continued holdings as they are together treated as changes in the investment portfolio throughout the year. Goods for resale Stocks of goods for resale are valued on the basis of cost, less any provision for diminution in value. Pensions Normal contributions to our final salary pension scheme ceased during the year. Any contributions made during the period were calculated on the basis of actuarial valuations and the proportion met by AAT was charged to revenue based on the current service cost under Financial Reporting Standard 17 (Retirement Benefits). Contributions to our group personal pension scheme are charged to revenue according to the period to which they relate.

Category Rates applied Plant and equipment 15.0% - 25.0% Office furniture 10.0% Leasehold building 10.0% Membership database 12.5% - 33.3% Website 33.3% - 50.0% Other computer related items 25.0% - 33.3% E-learning and e-assessment 33.3% - 50.0%

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2. Investment income AAT Group 2010 2009 2010 2009 £’000 £’000 £’000 £’000 Interest receivable 87 129 88 130Dividends receivable from UK investments 119 33 119 33 206 162 207 163 3. Subscriptions and fees Group 2010 2009 £’000 £’000 Full members’ subscriptions and fees 5,262 4,791Student members’ fees 5,470 5,389Sub total subscriptions and fees 10,732 10,180Paper based assessments 3,016 4,802Computer based assessments 1,717 205Simulation sales 1,478 2,497CPD events fees 225 251 17,168 17,935 4. (i) Analysis of total resources expended Group Staff costs

£’000Depreciation

£’000Other£’000

2010£’000

2009£’000

Cost of generating funds Pension scheme finance costs - - 75 75 157Investment management costs - - 79 79 25Trading subsidiary expenses - - 94 94 - - - 248 248 182 Charitable activities

Learning and development 2,411 236 5,335 7,982 7,677Members’ services (see 4(ii)) 3,764 325 4,459 8,548 8,586Regulation and compliance 698 50 673 1,421 1,165 6,873 611 10,467 17,951 17,428 Governance costs 306 - 253 559 629 7,179 611 10,968 18,758 18,239 Included in the amounts shown above are support costs totalling £2,615,000 (2009: £2,923,000) as shown in note 5.

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4. (ii) Further analysis of members’ services As members’ services incorporates several disciplines, a more detailed analysis of members’ services costs is given below for further information. The main items included under the heading of members’ services are: Group 2010 2009 £’000 £’000Services to members 2,200 2,931Publicity and promotion 3,843 2,766Influence and recognition 545 485Accounting Technician magazine contract costs 706 842Support costs 1,254 1,562 8,548 8,586 5. Support costs Group Chief

Executives Office £’000

ICT£’000

Financeand HR

£’000

Facilities £’000

Total2010£’000

Total2009£’000

Learning and development 10 371 494 37 912 1,129Members’ services 14 510 679 51 1,254 1,562Regulation and compliance 5 183 243 18 449 232Total 29 1,064 1,416 106 2,615 2,923 6. Employees Group 2010 2009Staff costs £’000 £’000Salaries and wages 5,923 5,645Staff recruitment and training 272 349Employer’s social security costs 606 511Employer’s pension costs 378 407 7,179 6,912 Employee numbers The average number of staff employed by AAT throughout the year was 170 (2009: 160). Emoluments of senior staff The number of employees whose total emoluments amounted to £60,000 or above for the year is as follows: 2010 2009 No. No.

£90,001 - £100,000 3 5£100,001 - £110,000 2 -£150,001 - £160,000 1 -£160,001 - £170,000 - 1

The details of employees whose emoluments amounted to £60,000 or above for the year is as follows: Directorate

(excluding Chief Executive) Chief Executive

2010 2009 2010 2009 £’000 £’000 £’000 £’000Salary 459 452 155 154Bonus 21 16 4 5Private medical insurance 9 8 1 2Total 489 476 160 161

29

6. Employees (continued) The ratio of the Chief Executive’s emoluments to the lowest paid employee is 9:1. From May 2010 all members of Directorate transferred to the Group Personal Pension Scheme. Prior to May, the Chief Executive and three of the five remaining members of Directorate detailed above were accruing retirement benefits under the defined benefit pension scheme and the other two members of staff were already members of our Group Personal Pension Scheme. The combined employer contributions into both schemes with respect to these six senior staff for the year amounted to £61,511 (2009: £76,070). Pension arrangements AAT operates both a closed final salary pension scheme and an ongoing group personal pension scheme in order to provide retirement benefits to its staff. The final salary pension scheme was closed to new members in June 2002 and closed to future accrual with effect from 30 April 2010. The group personal pension scheme involves no commitment by AAT other than that of paying an agreed level of normal contributions, currently set at 10.15% of basic salary (the employee rate is a minimum of 4% of basic annual salary). Contributions during 2010 were £307,000 (2009: £154,000), with contributions for 2011 budgeted at £401,000. The administration of the final salary scheme is the responsibility of the Trustees of the scheme, and its assets are held separately from those of the AAT and managed professionally. Contributions to the final salary scheme are determined by a qualified Actuary on the basis of triennial valuations using the attained age valuation method to determine contributions to the final salary scheme Financial Reporting Standard 17 (Retirement Benefits) disclosure The Financial Reporting Standard 17 (FRS) requires the actuary to use a more conservative basis for determining the overall position of the scheme than that adopted for the latest triennial valuation used by the Trustees and employer to set the pace of scheme funding. The Trustees invest predominantly in equities and are prepared to take some credit for an expectation of extra investment returns from this. The FRS does not allow this expectation of extra equity returns to be taken into account for the purposes of financial reporting. Nor does the FRS allow for the surplus or deficit to be spread over the period when recovery would normally take place. This means that the total surplus or deficit must be declared in full at the balance sheet date. Subsequent to the year end a review was carried out regarding the age at which members of the scheme are able to begin to take pension benefits. As a result, the assumption regarding retirement age was revised to reflect historic changes to the scheme rules. This resulted in an estimated increase in net liability of the scheme of £480,000 which has been fully provided for in 2010. The main financial assumptions used at the past three balance sheet dates were as follows: 2010 2009 2008Discount rate 5.4% 5.7% 6.7%Retail price inflation Consumer price inflation

3.4%2.9%

3.5% -

2.7% -

Increases to pensionable pay - 5.0% 5.7%Increases to pensions in payment

• Total pensions accrued prior to 6 April 1997 3.0% 3.0% 3.0%• Total pensions accrued between 6 April 1997 and

31 January 2007 3.4% 3.5% 2.7%

• Total pensions earned from 1 February 2007 2.2% 2.25% 2.25%Pre-retirement increases for deferred pensions 2.9% 3.5% 2.7%Commutation allowance 25.0% 20.0% 20.0% The mortality assumption used is in line with the following tables: mortality before and after retirement: S1PXABmc mortality tables projected by year of birth.

30

6. Employees (continued) The scheme’s assets and liabilities were as follows:

Value at 31/12/10

Value at 31/12/09

Value at 31/12/08

Fair value of the scheme’s assets:

£’000

Expected rate of return £’000

Expected rate of return £’000

Expected rate of return

• equities 5,590 7.5% 6,125 7.9% 4,437 7.2%• bonds • alternatives • property

2,465 949 774

5.0%7.5%6.5%

2,069 - -

5.3% - -

824 - -

5.3% - -

• other assets 526 4.0% 1,157 4.0% 2,142 4.0% 10,304 9,351 7,403 Present value of the scheme’s liabilities

(12,607)

(12,491)

(9,045)

Deficit at 31 December (2,303) (3,140) (1,642) Analysis of the amount charged to net incoming resource 2010 2009 £’000 £’000Current service cost Curtailment gain arising due to the closure of the scheme

(94) 264

(253)-

Total operating credit/(charge) 170 (253) Analysis of amount debited to other finance costs

Group 2010 2009 £’000 £’000Expected return on pension scheme assets 637 460Interest cost on pension scheme liabilities (712) (617)Net cost (75) (157) Analysis of amount of actuarial gains/(losses) to be recognised after net incoming resources 2010 2009 £’000 £’000Actual return less expected return on pension scheme assets 285 885Experience gains and losses arising on the scheme liabilities 435 173Changes in assumptions underlying the present value of the pension scheme liabilities (57) (2,697)Actuarial gain/(loss) 663 (1,639) Movement in deficit during the year

2010 2009 £’000 £’000Deficit in scheme at beginning of the year (3,140) (1,642)Movement in year: Current service cost/(credit) 170 (253)Contributions 79 551Other finance costs (75) (157)Actuarial gain/(loss) 663 (1,639)Deficit in scheme at the end of the year (2,303) (3,140)

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6. Employees (continued)

History of experienced gains and losses

2010 2009 2008Difference between the expected and actual return on scheme assets:

Amount (£’000) 285 885 (2,121)Percentage of scheme assets 2.8% 9.5% (28.7%) Experience gains and losses on scheme liabilities: Amount (£’000) 435 173 -Percentage of the present value of the scheme liabilities 3.5% 1.4% - Total amount of actuarial gains/(losses) to be recognised after net incoming resources

Amount (£’000) 663 (1,639) 1,539Percentage of the present value of the scheme liabilities 5.3% (13.1%) 17.0% Cumulative actuarial gains and losses recognised in the statement of financial activities

The history of the actuarial gains and losses recognised in the statement of financial activities since 2002 (the first year for which any such calculations took place) is as follows:

Year Gains/(losses) recognised

£’0002002 5162003 (175)2004 (325)2005 (575)2006 (315)2007 (252)2008 1,5392009 (1,639)2010 663Total (563)

7. Council and Board expenses AAT and group 2010 2009 £ £ Includes expenses reimbursed to Directors: In respect of travel 65,781 60,384In respect of accommodation and subsistence 11,533 18,319Total of all expenses reimbursed to Directors (reimbursement was made to all but one of the Directors in office during the year)

77,314

78,703

Other costs borne directly by AAT (travel, catering, accommodation and venue hire)

152,127

163,268

Total Council and Board expenses 229,441 241,971 No payments are made to members of the Council for their services as charity Trustees or Directors other than the reimbursement of expenses incurred in providing such services. None of the Directors held any beneficial interest in the share capital of any of our subsidiary companies.

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8. Legal and professional fees AAT Group 2010 2009 2010 2009 £’000 £’000 £’000 £’000Includes amounts charged by the auditors in respect of: Audit 28 25 33 25Non audit services 40 24 40 24Total of charges by the auditors 68 49 73 49Legal and professional fees of solicitors, consultants and other advisors 890

920

890

920

Total legal and professional fees 958 969 963 969 9. Tangible fixed assets AAT and Group

Leasehold building

£’000

Plant and equipment

£’000

Membershipdatabase and

website £’000

Other computer

related items £’000

Assets under

construction £’000

Total £’000

Cost At 1 January 670 613 1,654 334 118 3,389Reclassification - - 118 - (118) -Additions 114 - 803 75 36 1,028At 31 December 784 613 2,575 409 36 4,417 Depreciation At 1 January (162) (206) (1,246) (249) - (1,863)Charge for the year (172) (53) (317) (66) - (608)At 31 December (334) (259) (1,563) (315) - (2,471) Net book value

At 31 December 2010 450 354 1,012 94 36 1,946 At 31 December 2009

508 407 408 85

118 1,526

Contracts for capital expenditure authorised but not provided for in these financial statements amount to £Nil at 31 December 2010 (2009: £Nil). All fixed assets are held for charitable use.

33

10. Fixed asset investments (i) AAT controls the following subsidiary undertakings:

Holding Nature of business Country of

incorporation /registration

Association of Accounting Technicians Educational Trustees Limited (see note 20 (iii))

100% £1 ordinary

shares

Trustee Company

Englandand Wales

Accounting Technician (Publications) Limited (see note 20 (iv))

100% £1 ordinary

shares

Dormant Englandand Wales

Accounting Technicians (Services) Limited (see note 20 (ii))

100% £1 ordinary

Shares

Private Limited Company Englandand Wales

Accounting Technicians Educational Trust (see note 20 (i))

100% Trust Not incorporated

Association of Accounting Technicians (SA) (see note 21)

50% Association incorporated under section 21 (in South Africa)

South Africa

AAT also controls the operation of 52 branches, including six international branches, details of which are available on request.

(ii) Investment portfolio AAT and Group 2010 2009 £’000 £’000 Investments on a recognised stock exchange 8,882 4,916Cash 302 420Total 9,184 5,336

2010 2009 £’000 £’000Investments on a recognised stock exchange are as follows: Valuation at 1 January 4,916 1,698Add: Acquisitions at cost 5,082 5,454Less: Disposals (1,869) (2,546)Net gains on revaluation 832 335Less: Management fees (79) (25)Market value at 31 December 8,882 4,916 2010 2009 £’000 £’000These investments are held in the following securities: UK equities 1,167 580Overseas equities 3,278 1,496Bonds 3,578 2,237Other 859 603Market value at 31 December 8,882 4,916

34

10. Fixed asset investments (continued) The historic cost of these investments is as follows:

2010 2009 £’000 £’000 UK equities 1,006 525Overseas equities 2,937 1,433Bonds 3,325 2,127Other 638 524Historic cost at 31 December 7,906 4,609 The investment portfolio included the following stocks which individually accounted for more than 5% of the total value at the balance sheet date. 2010 2009 £’000 £’000 1.25% Treasury Index Linked 22/11/2017 843 472CF Ruffer Baker Steel gold account 601 -USA Treasury notes 1.625% TIPS 15/01/15 USD 588 2712.5% Treasury Index Linked 26/07/2016 530 494 11. Debtors: Amounts falling due within one year AAT Group 2010 2009 2010 2009 £’000 £’000 £’000 £’000 Trade debtors 860 739 860 739Other debtors 117 96 166 96Prepayments 507 437 507 437Fees and subscriptions 449 569 449 569Amount due from subsidiary undertakings 129 - - -Amount due from joint venture (see note 21) 65 106 65 106 2,127 1,947 2,047 1,947 12. Current asset investments AAT Group 2010 2009 2010 2009 £’000 £’000 £’000 £’000 Scottish Widows Investment Partnership 1,496 1,430 1,626 1,560Treasury deposits 1,500 6,000 1,500 6,000 2,996 7,430 3,126 7,560 The current asset investments are amounts held on deposit in a sterling liquidity fund with Scottish Widows Investment Partnership, a subsidiary of Lloyds Banking Group, AAT’s bankers.

35

13. Creditors: amounts falling due within one year AAT Group 2010 2009 2010 2009 £’000 £’000 £’000 £’000 Trade creditors 596 728 596 728Taxes and social security 203 181 209 181Other creditors 3 11 3 11Accruals 1,190 1,170 1,196 1,170Provision for dilapidation 114 - 114 - 2,106 2,090 2,118 2,090 14. Deferred income AAT and Group 2010 2009 £’000 £’000 Balance at 1 January 3,693 3,263Subscriptions and fees received 10,104 9,786Credited to income (9,727) (9,356)Balance at 31 December 4,070 3,693 15. Rent reserve AAT entered into two long term leases for its premises at 140 Aldersgate Street in March 2007. Both leases have an element of a rent free period. In accordance with UITF abstract 28 Operating lease incentives, the rent free period incentive has been spread over the term of the leases in line with their anticipated termination date. The movement on the rent reserve for the year was as follows: AAT and Group 2010

£’000 2009£’000

Balance at 1 January 486 516Reserve built up during year - 57Reserve released during year (91) (87)Balance at 31 December 395 486 Split of rent reserve: Reserve reversing within one year 91 91Current obligations 91 91 Reserve reversing within two to five years 292 269Reserve reversing within more than five years 12 126Non current obligations 304 395 Total 395 486

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16. Operating lease commitments The minimum payments, which AAT is committed to make in 2011 under operating leases, are as follows: AAT and Group Property

Plant and equipment

2010 2009 2010 2009 £’000 £’000 £’000 £’000Leases which expire: Within one to two years - - 44 4Within two to five years 167 162 - 51After five years 442 426 - - 609 588 44 55 17. Unrestricted income funds for the group 2010 2009 £’000 £’000 At 1 January 6,807 7,556(Deficit)/surplus for the year (957) 605Net interest in joint venture 48 (50)Investment gains 832 335Surplus before pension scheme actuarial gain/(loss) 6,730 8,446Pension scheme actuarial gain/(loss) (FRS17) 663 (1,639)At 31 December, including pension reserve 7,393 6,807 All funds are unrestricted. Included in this total are funds held of £133,000 (2009: £140,000) in relation to the charitable objects of the Accounting Technicians Educational Trust, a subsidiary of AAT. 18. Gross cash flows for the group 2010 2009 £’000 £’000Increase/(decrease) in creditors Fees and subscriptions received in advance (45) 18Trade creditors (132) 323Taxes and social security 28 29Other creditors (8) 9Accruals 26 304Provision for dilapidation 114 - (17) 683Pensions reserve funding deficit movements Current service cost (170) 253Contributions (79) (551)Other finance cost 75 157 (174) (141)Returns on investments and servicing of finance Interest received 88 130Dividends received 119 33 207 163Capital expenditure and financial investment Payments to acquire tangible fixed assets (1,028) (300)Payments to acquire fixed asset investments (4,885) (5,159)Proceeds from sale of fixed asset investments 1,869 2,546 (4,044) (2,913)Management of liquid resources Net cash transferred from short term deposits 4,434 1,221

37

19. Analysis of changes in net funds for the group At 1 Jan 2010 Cash flows At 31 Dec 2010 £’000 £’000 £’000Cash in hand, at bank 370 57 427Other current asset investments 7,560 (4,434) 3,126Total 7,930 (4,377) 3,553 20. Subsidiary undertakings and intra group transactions (i) Accounting Technicians Educational Trust

2010 2009 £’000 £’000Statement of financial activities Incoming resources: activities for generating funds and charitable donations

1 10

Resources expended: costs of activities in furtherance of the charity’s objects

(8) (18)

Net (outgoing) resources (7) (8)Accumulated fund at 1 January 140 148Accumulated fund at 31 December 133 140 Balance sheet Current assets: Investments Short term deposits and cash at bank

130 3

13010

Total net assets 133 140 Accumulated fund 133 140 There were no significant transactions between AAT and the Trust in either 2010 or 2009.

(ii) Accounting Technicians (Services) Limited The company recommenced trading in August 2010 and made a small loss of £400 in this period to 31 December 2010. Its activities for that period are summarised below. Profit and loss account for the year ended 31 December 2010 2010 2009 £’000 £’000Turnover 94 -Cost of sales (86) -Gross profit 8 - Other operating expenses (8) - Operating (loss)/profit - -Interest receivable - -(Loss)/profit on ordinary activities before taxation - -Tax on profit on ordinary activities - - Retained (loss)/profit for the financial year - - Net asset statement as at 31 December 2010 2010 2009 £’000 £’000Current assets 111 -Current liabilities (111) -Net current (liabilities) - -Total net liabilities - - Represented by: Unrestricted income funds - -

38

20. Subsidiary undertakings and intra group transactions (continued) (iii) Association of Accounting Technicians Educational Trustees Limited The value of its net assets of the Trustee company at 31 December 2010 was £2 (2009: £2). (iv) Accounting Technician (Publications) Limited The company has been dormant for several years, and the value of its net assets as at 31 December 2009 was £100 (2009: £100). We have taken advantage of the exemption under FRS 8 not to disclose transactions between AAT and its subsidiary undertakings which eliminate on consolidation. 21. Joint venture undertaking - Association of Accounting Technicians (SA) - AAT(SA) The joint venture company AAT(SA) commenced trading in October 2008. The following table provides a summary analysis of the financial results of the activities undertaken by the company and its net assets position as at 31 December 2010. Statement of income and expenditure Results for the year

ended 31 December 2010

2010 AAT 50%

share

2009 AAT 50%

share ZAR’000 £’000 £’000 £’000 Income Project income 23,996 2,157 1,079 589Membership fees from core membership activities 1,846 166 83 38Total revenue 25,842 2,323 1,162 627 Expenditure (24,982) (2,240) (1,120) (677)Surplus/(deficit) for the period 860 83 42 (50)Fund balances brought forward 368 25 13 63Exchange rate gain fund balance brought forward - 11 6 -Fund balances carried forward as at 31 December 2010 1,228 119 61 13

Net asset statement as at 31 December 2010 ZAR’000 £’000 £’000 £’000Current assets 5,445 526 264 155Current liabilities (4,217) (407) (203) (142)Net current assets 1,228 119 61 13Total net assets 1,228 119 61 13 Represented by: Unrestricted income funds 1,228 119 61 13 The related party transactions between AAT and AAT(SA) include recharges to AAT(SA) for salary costs of one full time employee, assessment production, membership services, membership application processing, magazine distribution and other costs relating to marketing design and collateral production. The end of year debtor balance is shown within note 11. 22. Taxation AAT is a registered charity and is therefore exempt from tax on income and gains falling within Section 505 of the Income and Corporation Taxes Act 1988 or Section 256 of the Taxation of Chargeable Gains Act 1992 to the extent that these are applied for charitable purposes within AAT's charitable objects. 23. Status The Association of Accounting Technicians is a company limited by guarantee (restricted to £1 per full member) and not having a share capital and is registered as a charity.

Association of Accounting Technicians

140 Aldersgate Street

London EC1A 4HY

t: 0845 863 0800 (UK only)

t: +44 (0)20 7397 3000

f: +44 (0)20 7397 3009

e: aat@aat.org.uk

w: aat.org.uk

Registered charity no. 1050724

A company limited by guarantee (No. 1518983) © 1

06

00

31

1-3

00

0

Cover image:

Michaela Birch MAAT

RSM Tenon Audit Ltd

Also available online at:

aat.org.uk/reportandaccounts