BERMUDA COLLEGE FINANCIAL STATEMENTS MARCH 31, 2006 Office of the Auditor General Reid Hall, Penthouse 3 Reid Street Hamilton HM 11, Bermuda Tel: (441)296-3148 Fax: (441)295-3849 Email: oag@oaabenriuda.bm Website: www.oagbennuda.gov.bm INDEPENDENT AUDITOR'S REPORT To the Minister of Education 1 have audited the accompanying financial statements of the Bermuda College, which comprise the statement of financial position as at March 31, 2006, and the statements of operations, changes in net assets and cash flows for the year then ended and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in Bermuda and Canada, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in Bermuda and Canada. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my qualified audit opinion. Basis for Qualified Opinion As with many not-for-profit organisations, the Bermuda College derives a portion of its revenues from donations received, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, my verification of these revenues was limited to the amounts recorded in the records of the Bermuda College and I was not able to determine whether any adjustments might be necessary to donation revenues, deficiency of revenues over expenses, assets, deferred contributions, deferred capital contributions, restricted contributions and net assets. The Bermuda College had an accounting system migration, from the Positive Retail Manager System to the Booklog Inventory and Point of Sale System, wherein some information on the inventory details were not fully migrated to Booklog Inventory and Point of Sale System. Due to the system migration and missing source documents, I was unable to obtain sufficient appropriate audit evidence to complete the valuation testing of the Bermuda College's inventory amounting to $196,901 as at March 31, 2006. Consequently, I was unable to determine whether any adjustments might be necessary to inventory and excess of revenues over expenses. Qualified Opinion In my opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraphs, the financial statements present fairly, in all material respects, the financial position of the Bermuda College as at March 31, 2006, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in Bermuda and Canada. Other Matters The financial statements for the year ended March 31, 2005 were qualified. Since opening balances enter into the determination of the results of operations, I was unable to determine whether adjustments to revenues, expenses, deficiency of revenues over expenses and opening net assets might be necessary. Hamilton, Bermuda April 30, 2013 Heather A. Jacobs Matthews, JP, FCA, CFE Auditor General BERMUDA COLLEGE STATEMENT OF FINANCIAL POSITION MARCH 31, 2006 2005 2006 $ Restated (Note 16) ASSETS CURRENT ASSETS Cash and cash equivalents Accounts receivable Prepaid expenses Due from the Coco Reef Resorts Limited (note 8) Due from the Government of Bermuda (note 11) Inventories 2,052,646 31,005,902 32,133,488 2,035,923 1,892,312 34,744,459 36,078,446 744,685 576,652 429,654 30,876 114,485 711,813 329,700 269,900 30,876 344,584 1,896,352 1,686,873 342,428 448,475 24,841,001 25,998,200 2,035,923 1,892,312 29,115,704 RESTRICTED ASSETS (note 5) 1,212,664 167,841 82,980 14,122 339,423 235,616 1,702,634 CAPITAL ASSETS (note 4) 1,024,250 132,662 74,447 11,000 263,374 196,901 30,025,860 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable and accrued liabilities Employee future benefits (note 12) Due to the Government of Bermuda (note 11) Deferred contributions (note 7) Long-term debt, current portion (note 6) LONG-TERM DEBT (note 6) DEFERRED CAPITAL CONTRIBUTIONS (note 9) RESTRICTED CONTRIBUTIONS (note 5) The accompanying notes are an integral part of these financial statements. BERMUDA COLLEGE STATEMENT OF FINANCIAL POSITION (continued) MARCH 31,2006 2006 2005 $ $ Restated (Note 16) NET ASSETS Invested in capital assets Unrestricted net assets 4,508,103 1,120,652 5,342,229 710,357 5,628,755 6,052,586 34,744,459 36,078,446 COMMITMENTS (note 13) The accompanying notes are an integral part of these financial statements. BERMUDA COLLEGE ! STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED MARCH 31, 2006 2006 2005 Restated (Note 16) Invested in Capital Assets Unrestricted BALANCE, BEGINNING OF YEAR (Deficiency) excess of revenues over expenses BALANCE, END OF YEAR Total $ 6,052,586 Total $ 5,342,229 $ 710,357 (834,126) 410,295 (423,831) 1,164,051 1,120,652 5,628,755 6,052,586 4,508,103 The accompanying notes are an integral part of these financial statements. $ 4,888,535 BERMUDA COLLEGE STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31. 2006 2006 $ 2005 $ Restated (Note 16) REVENUES Government of Bennuda operating grants (note 11) Student fees (note 10) Amortization of deferred capital contributions (note 9) Ancillary operations and other revenues Interest income Unrealized loss on investments Restricted contributions (note 5) 14,982,000 3,391,041 1,157,199 1,112,810 2,076 - 14,874,808 3,411,317 1,199,969 876,918 68,188 (14,478) 36,834 20,645,126 (DEFICIENCY) EXCESS OF REVENUES OVER EXPENSES 6,089,131 5,580,908 2,520,968 2,305,617 1,991,325 998,532 437,457 246,952 150,000 142,500 605,567 6,037,032 5,627,126 2,151,605 1,965,102 2,130,245 119,697 355,985 244,567 150,000 142,500 365,646 21,068,957 EXPENSES Academic studies Academic services Physical plant and maintenance Administration Amortization of capital assets Ancillary operations Public relations Empoyee future benefits Career Centre grant (note 11) Adult Education School grant (note 11) Other 20,453,556 19,289,505 (423,831) 1,164,051 The accompanying notes are an integral part of these financial statements. BERMUDA COLLEGE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2006 2006 2005 $ $ Restated (Note 16) CASH FLOWS FROM OPERATING ACTIVITIES (Deficiency) excess of revenues over expenses Items not affecting cash: Amortization of capital assets Amortization of deferred capital contributions Unrealized loss on investment Changes in non-cash working capital: Decrease in accounts receivable Decrease in prepaid expenses Decrease (increase) in due from the Coco Reef Resorts Limited Decrease (increase) in due from the Government of Bermuda Decrease (increase) in inventories Increase (decrease) in accounts payable and accrued liabilities Increase in employee future benefits Decrease in deferred insurance proceeds Decrease in deferred contributions Increase (decrease) in due to the Government of Bermuda Decrease in due to the Coco Reef Resorts Limited Cash flows from operating activities (423,831) 1,164,051 1,991,325 (1,157,199) - 2,130,245 (1,199,969) (14,478) 35,179 8,533 1,311,907 46,367 3,122 (14,122) 76,049 38,715 (69,523) (87,187) 32,872 246,952 (1,494,392) 329,700 (275,290) (7,200) 159,754 (10,228) (818,878) 1,011,471 991,003 CASH FLOW FROM rNVESTTNG ACTIVITY Purchase of capital assets (863,739) (312,670) CASH FLOWS FROM FINANCING ACTIVITIES Non-cash restricted assets Restricted contributions Repayment of long-term debt (143,611) 143,611 (336,146) (136,210) 150,688 (361,487) Cash flows used in financing activities (336,146) (347,009) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR I (188,414) 331,324 1,212,664 881,340 CASH AND CASH EQUIVALENTS, END OF YEAR 1,024,250 1,212,664 The accompanying notes are an integral part of these financial statements. BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2006 1. AUTHORITY Bermuda College (the "College") was established under the Bermuda College Act 1974 (the "Act") to provide full and part-time education and training for persons over the compulsory school age. The College is managed and controlled by a Board of Governors under the provisions of this Act and amendments thereto. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting principles generally accepted in Bermuda and Canada. For financial reporting purposes, the College is classified as a government not-for-profit organization and has adopted accounting policies appropriate for this classification. The policies considered particularly significant are set out below: (a) Revenue recognition Contributions in the form of operating grants are recognized as revenue on the statement of operations. Contributions relating to the acquisition of capital assets are deferred and recognized as revenue on the same basis as the amortization expense of the related capital assets. The College follows the deferral method of accounting for contributions. Under the deferral method, restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Restricted investment income is recognized as revenue in the year in which the related expenses are incurred. Unrestricted investment income is recognized as revenue when earned. (b) Cash and cash equivalents Cash and cash equivalents are comprised of cash on hand and cash held in the bank. (c) Inventories Inventories are valued at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. (d) Capital assets Capital assets are recorded at cost less accumulated amortization. Contributed capital assets are recorded at fair value at the date of contribution. Amortization is provided on a straight-line basis over the estimated useful lives: Buildings and car parks Furniture and fixtures Equipment Laptop project equipment - 40 years and 25 years, respectively - 10 years - 4 years for computers and 5 years for other equipment - 3 years BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 2. SIGNIFICANT ACCOLLNTING POLICIES (continued) (e) Financial instruments The College's financial instruments consist of cash and cash equivalents, accounts receivables, due from the Coco Reef Resorts Limited, due from the Government of Bemiuda, accounts payable and accrued liabilities, due to the Government of Bermuda and long-tenn debt. It is management's opinion that the College is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values due to their relative short-term nature. Certain items such as prepaid expenses, inventories and capital assets are excluded from fair value disclosure as they are not financial instruments. (f) Contributed materials and services Contributed materials and services are recognized in the financial statements when a fair value can be reasonably estimated and when the materials and services are used in the normal course of the College's operations and would otherwise have been purchased. (g) Use of estimates The preparation of financial statements in accordance with accounting principles generally accepted in Bermuda and Canada requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues earned and expenses incurred during the year. Actual results could differ from these estimates. 3. ECONOMIC DEPENDENCE The College is economically dependent upon the Government of Bermuda for its daily operations, cash flow, capital development and capital acquisitions. 4. CAPITAL ASSETS Cost Net Book Value 2005 Net Book Value $ Buildings and car parks Land Furniture and fixtures Equipment Laptop project equipment 2006 Accumulated Amortization $ $ $ 40,580,220 2,686,240 3,505,576 9,445,173 1,179,182 15,951,357 2,528,717 6.790,365 1,120,050 24,628,863 2,686,240 976,859 2,654,808 59,132 26,644,986 2,686,240 2,180,324 338,212 283,726 57,396,391 26,390,489 31,005,902 32,133,488 BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 5. RESTRICTED ASSETS AND CONTRIBUTIONS The College receives funds from private sources to be used for the provisions of scholarships, support for the Corange Science Center and other programs for the advancement of students' education. Changes in the restricted assets and contributions balance are as follows: 2006 $ Balance, beginning of year Add: contributions and interest Less: amounts recognized as revenue Add: unrealized loss on investments Balance, end of year 1.892,312 143,611 2005 $ 1,741,624 202,000 (36,834) (14,478) 318,216 439,486 378,486 112,159 308,048 419,292 360,731 109,386 1,197,457 787.576 694,855 2,035,923 Restricted cash 1,892.312 1.248,347 Restricted assets and contributions are comprised of the following investments: Bonds and government securities Equities Money market funds Fixed deposits 2,035,923 1,892,312 The cost of bonds and government securities amounted to $318,216 (2005 - $318,151) and for equities amounted to $439,486 (2005 - $442,512). BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 6. LONG-TERM DEBT 2006 2005 $ $ Loan payable to IBM bearing interest at 7.3% secured by laptops and related equipment, payable in monthly installments of principal and interest of $14,253 to September 2005. 97,551 Loan payable to IBM bearing interest at 8.5% secured by laptops and related equipment, payable in monthly installments of principal and interest of $14,188 to December 2005. 149.599 Loan payable to BELCO of $811,200, bearing interest at 8.5% per annum, secured by the energy controls system financed, payable in monthly installments of principal and interest of $11.675 to December 2009. 545.909 456.913 793.059 114,485 344,584 342,428 Current portion 456,913 448,475 Principal repayments required are as follows: 2007 2008 2009 2010 $ 114.485 115,420 125.622 101,386 456,913 BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 7. DEFERRED CONTRIBUTIONS Deferred contributions represent unspent resources for use on costs of specific programs and student tuition for certain programs. Changes in the deferred contributions balance are as follows: 2006 2005 $ S Balance, beginning of year Add: contributions Less: amounts recognized as revenue 30,876 Balance, end of year 30,876 - 38,076 (7,200) 30,876 During 2006, negotiations began for a new procedural arrangement, whereby the interim program funding has not been spent. 8. DUE FROM THE COCO REEF RESORTS LIMITED The amount due from the Coco Reef Resorts Limited as of March 31, 2006 is $11,000 (2005 - $14,122) which mainly represents annual electricity cost recoveries of $132,000 (2005 $132,000) less payments received of $121,000 (2005 - $117,878). 9. DEFERRED CAPITAL CONTRIBUTIONS Deferred capital contributions represent contributions made by the Government of Bermuda for the construction of the College and for the initial contents of the school. The Government of Bermuda continues to provide grants for the ongoing capital requirements of the College. The contributions are amortized to revenue on the same basis as the amortized expense of the acquired capital assets. Changes in the deferred capital contributions balance are as follows: 2006 2005 $ Balance, beginning of year Less: amounts amortized to revenue 25,998.200 (1,157,199) 27.198,169 (1,199,969) Balance, end of year 24,841,001 25,998,200 BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 10. STUDENT FEES In accordance with the College's policy of providing a number of free places for needystudents for whom the tuition fees are a deterrent to enrolment, full time fees in the amount of $36,605 (2005 - $138,428) have been waived. 11. RELATED PARTY TRANSACTIONS The College is related in terms of common ownership to all Government of Bermuda departments and agencies. The College enters into transactions with these entities in the normal course of business and such transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties. Significant transactions with the Government of Bermuda are as follows: (a) Government grants The College received Government grants totaling $14,982,000 (2005 - $14,874,808) during the year. Included in Government grants is $142,500 (2005 - $142,500) which the College has been instructed by the Ministry of Education to pay to the Adult Education School. The College remits a quarterly distribution directly to the Adult Education School. The College had also been instructed to pay the amount of $150,000 (2005 - $150,000) to the Career Centre. During 2005 the Government of Bermuda paid $1,014,808 on behalf of the College to settle a GEHI liability. This amount had been included as a prior year Government grant. The remainder of the grants received in the current year in the amount of $14,689,500 (2005 - $13,567,500) are to be used for operations and capital expenditures. (b) Other amounts 2006 I I 2005 Revenue (Expense) Revenue (Expense) Receivable (Payable) $ Student fees Training and Development Text books Facility rentals Pension Social insurance Insurance Audit Fees Payroll tax Miscellaneous Receivable (Payable) $ $ $ 274,258 75,805 2,996 69,260 (455,975) (169,748) (343,750) (20,200) (515,150) (11,023) 207,586 17,646 - 38,142 (75,770) (25,974) (61,181) (123,400) (132,306) (11,023) 463,843 69,260 2,917 75,805 (436,145) (161,521) (244,745) 266,913 32,519 (477,293) (36,000) (119,127) 39,991 (73,908) (25,811) (51,054) BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 12. EMPLOYEE FUTURE BENEFITS (a) Contributory defined benefit pension plan Employees of the College are covered by the Public Service Superannuation Fund (the "Fund"), which is a defined benefit plan administered by the Government of Bermuda. A service pension is available with a minimum of eight years credited service. Contributions to the Fund are required from both the employees and the College, at a rate of 8.0% each. These contributions represent the total liability of the College and are recognized in the accounts on an accrual basis. The College is not required under present legislation to make contributions with respect to actuarial deficiencies of the Fund. The College's contributions to the Fund as recorded as employee benefits during the year total $455,975 (2005 - $436,145). Amounts payable as at March 31, 2006 were $75,770 (2005 - $73,908). (b) Retirement allowance The College provides its employees with greater than ten years of service with continued pay for a period of up to twelve weeks, subsequent to their retirement. The length of the continued pay period is dependent on the length of service of the employee. An actuarial valuation was performed as at March 31, 2004, using the projected benefit method, prorated on years of service. The assumptions were government's best estimates of future events, including inflation rates, interest rates, and wage and salary rates. The results were then extrapolated to March 31, 2006, using the same assumptions, to produce the estimates of benefit costs and accrued benefit obligation included in the financial statements. There are no assets associated with this plan, as the College provides fully for the benefit. As well, there are no unamortized liabilities as at March 31, 2006. The discount rate used to determine benefit cost and accrued benefit obligation was 6.5% (2005 - 6.5%). The rate of compensation increase was 4.5%. Based on employees currently eligible for this benefit, the actuarial valuation determined that the accrued benefit liability as at March 31. 2006 was $576,652 (2005 - $329,700). 2006 $ Accrued benefit obligation, beginning of year Amortization of experience loss Current period benefit cost Interest accrued Benefit payments 2005 $ 329,700 195,673 29,747 34,687 (13,155) 301337 576,652 28,363 24,183 19,863 (15,683) BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31, 2006 12. EMPLOYEE FUTURE BENEFITS (continued) (c) Other benefits Other employee benefits include maternity leave, sick leave and vacation days. All of these plans are unfunded. Maternity leave does not accumulate or vest and therefore an expense and corresponding liability are only recognized when applied for and approved. There were no maternity benefits applied for and approved during the current year, and therefore no liability has been accrued in the accounts. Sick leave accumulates but does not vest and therefore an expense and corresponding liability are only recorded when an extended leave is applied for and approved. There was no extended sick leave applied for and approved during the current year, and therefore no liability has been accrued in the accounts. Vacation days accumulate and vest, therefore a liability is accrued each year. An actuarial study has not been performed for the vacation days benefit obligation, as there are no factors used in the calculation that are materially different from the figures that would be estimated by an actuary. A maximum often vacation days in the aggregate may be carried forward from one year to the next. The accrued vacation liability as at March 31, 2006 was $237,674 (2005 - $254,831). ] I 13. LEASE COMMITMENTS The cost as at March 31. 2006 for the leased property is $6,315,342 (2005 - $6,315,342) and accumulated depreciation is $3,877,633 (2005 - $3,719,750). Rent is based on the following base rent for the following periods: i (a) A yearly base rent: o o o o o o (b) May 1. 2003 - April 30. 2008- one peppercorn (if demanded) May 1. 2008 - April 30, 2013 - $200,000 May 1, 2013 - April 30, 2018 - $250,000 May 1, 2018 - April 30, 2024 - $300,000; May 1, 2024 - April 30, 2053 - rent shall increase from $300,000 by the percentage increase equivalent to the rate of increase in the consumer price index or to 110% of the passing rent whichever is greater and adjusted every seven years thereafter; May 1,2053 - April 30, 2128 - rent shall increase annually by an amount equivalent to the percentage increase in the consumer price index for the immediate preceding year provided that in any event that such rent shall be no less than the rent payable for the preceding year; and A yearly turnover rent equal to 20% of gross annual profits commencing May 1, 2003: Gross profits are as defined by Uniform System of Accounts for Hotels. i No rent receivable has been recognized as of March 31, 2006 as the Coco Reef Resorts Limited has had gross operating losses as at April 30, 2006, their fiscal year-end. BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 14. FINANCIAL RISK MANAGEMENT The College is exposed to various risks through its financial instruments. The College has overall responsibility for the establishment and oversight of its risk management framework. The College manages its risks and risk exposures through sound business practices. The following analysis provides a measure of the risks at the reporting date, March 31, 2006. (a) Credit Risk Credit risk arises from cash held with banks. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses on financial assets. The College determines, on a continuous basis, amounts receivable on the basis of amounts it is virtually certain to receive based on their estimated realizable value. (b) Liquidity risk Liquidity risk is the risk the College will not be able to meet its financial obligations as they fall due. The College's objective in managing liquidity is to ensure that it will always have sufficient liquidity to meet its commitments when due, without incurring unacceptable losses or risking damage to the College's reputation. The College manages exposure to liquidity risk by closely monitoring supplier and other liabilities, focusing on generating positive cash flows from operations and establishing and maintaining good relationships with various financial institutions. (c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the fair value of recognized assets and liabilities or future cash flows of the College's results of operations. The College has minimal exposure to market risk. (i) Foreign exchange rate The College's business transactions are mainly conducted in Bermuda dollars and, as such, it has minimal exposure to foreign exchange risk. (ii) Interest rate The College is exposed to changes in interest rates, which may impact interest revenue on short-term investments. 15. CAPITAL MANAGEMENT The College's objective when managing capital is to hold sufficient unrestricted net assets to enable it to withstand negative unexpected financial events. The College seeks to achieve this objective through receipt of operating grants from the Government of Bermuda and excess of revenues over expenses. The College seeks to maintain sufficient liquidity to meet its short-term obligations as they come due. The College is not subject to any externally imposed capital requirements. BERMUDA COLLEGE NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 16. PRIOR PERIOD ADJUSTMENT The obligation for employee future benefits included in accounts payable and accrued liabilities in the prior year was not determined based on an actuarial valuation. A subsequent actuarial valuation determined that the accrued benefit liability as at March 31, 2005 was $329,700. As a result, the 2005 balances have been restated. Employee future benefits As previously stated (March 31 2005) As restated Academic studies As previously stated (March 31 2005) As restated $5,626,870 $5,627,126 Administration As previously stated (March 31 2005) As restated $1,964,871 $1,965,102 Employee future benefits expenses As previously stated (March 31 2005) As restated $244,567 Net assets As previously stated (March 31 2005) As restated I 1 $6,035,777 $6,037,032 Academic services As previously stated (March 31 2005) As restated 17. $83,391 $329,700 $6,298,895 $6,052,586 $ FUTURE ACCOUNTING POLICY CHANGES In December 2010, the Public Sector Accounting Board approved an amendment to the introduction to the Public Sector Accounting Handbook. Effective for fiscal years beginning on or after January 1, 2012, government not-for-profit organizations are directed to use either the public sector accounting standards or public sector accounting standards for government not-for-profit organizations. The College is currently assessing the appropriateness and potential impact of the change in accounting standards on its financial statements for the year ending March 31, 2013. BERMUDA COLLEGE : NOTES TO THE FINANCIAL STATEMENTS MARCH 31. 2006 18. SUBSEQUENT EVENTS On May 4, 2009 the Board of Governors for the Bermuda College and the Coco Reef Resorts Limited signed a Deed of Addendum to extend their lease for an additional term of 75 years. The total term of the lease shall now be a period of 125 years commencing May 1, 2003. In March 2011, an amendment to the Companies Act 1981 to make clear that the Minister responsible for administering the Act can sanction the leasing of land by a local company for a period of up to 131 years was passed. The Coco Reef Resorts Limited's Memorandum of Association was amended to allow it to lease land for a period of up to 125 years with the prior sanction of the Minister of Finance. On May 19, 2011. the Minister of Business Development and Tourism granted permission for the Coco Reef Resorts Limited to lease the Coco Reef Resorts Limited and related lands for 125 years. On June 2,2011, the Lease Addendum was signed by the College Board and the Coco Reef Resorts Limited. The terms of the Addendum are identical to those contained in the first Addendum signed in May 4, 2009. I 19. COMPARATIVE FIGURES Certain of the comparative figures have been reclassified and restated to conform to current year presentation. i !