Academy Update May 2023

Changes to the Academy Accounts Direction

As we approach the 2023-year end, the Education and Skills Funding Agency (ESFA) has published the Academy Accounts Direction (AAD) 22/23 which will be relevant for the preparation of the financial statements for the year ended 31 August 2023.

The new AAD does not introduce any new requirements but has provided clarification on existing requirements. These have been summarised below:

Clarified how trustees should use the Direction

The AAD explains that the Trustees/users should familiarise themselves with the accounting concepts, principles and terminology to fulfil their responsibilities. Although it is not expected that Trustees have a detailed technical understanding of the accounting requirements, they should know to seek additional support from relevant sources when necessary.

Clarified the expectations for interim arrangements, in the absence of key signatories (section 1.18)

A reminder has been noted that the board should ensure that there is adequate coverage in the event that a trustee or accounting officer resigns or takes a leave of absence. There is a governance requirement to have an accounting officer in situ at all times, and therefore the board needs to consider a suitable and informed replacement if the situation were to arise. We would expect that the Academy Trust has a clear provision in place and included in some of the Trust’s key documents for example the risk register.

Updated feedback on non-compliance with the Direction and updated the themes arising from ESFA’s assurance work (1.21)

The AAD documents that Trustees are responsible for ensuring compliance with the financial reporting framework and to ensure that the accounts adequately reflect the performance and circumstances of the Academy Trust within the year. The ESFA has highlighted examples where information has been identified as irrelevant or inaccurate. Some of the key points are as follows:

Text copied from the model accounts and not tailored to the Academy Trust
Text that is not updated from the prior year
Inconsistencies within the report

Specific guidance has been included in the AAD with regards to school building safety. The main points cover:

Confirmed that the review of value for money statement should encompass estates safety and management
Suggests that the Accounting officer should consider demonstrating how they have effectively used relevant funding to ensure the trust’s estate is safe, well-maintained, and complies with relevant regulations
Confirmed that the statement on regularity, propriety and compliance should encompass estates safety and management (2.60)

Updated the guidance on the treatment of loans (2.113)

The AAD now clarifies that it requires all amounts owed, accrued, or deferred by the Academy Trust to be included under the creditor balance sheet heading at their settlement amount (being the amount the Academy Trust expects to pay to settle the debt). The amounts owed should also be split between under and over 1 year.

Remind academy trusts of the need to separately disclose material income sources (2.130)

The AAD recognises that majority of funding is derived from DfE and ESFA sources with the largest amount of funding being GAG. Per the model accounts, this is already required to be disclosure separately in the notes to the accounts. The ESFA now reminds Academies that all other material sources of income are also to be disclosed separately. It does allow any non-material sources of income to be grouped and disclosed together.

Clarified that teaching assistants are categorised as support staff in the staff costs (2.137)

Staff are required to be analysed between the following categories: teaching, administration/ support and management. Management should include senior leadership team members who do not have day-to-day teaching duties. In addition, the head of the academy should also be considered management irrespective of any teaching duties they may undertake. The ESFA has now clarified that within the administrative and support heading, it should include all other staff that do not have day to day teaching duties – of which includes teaching assistants.

A full copy of the Academy Accounts Direction can be found here. If you have any questions relating to the above article or any other topics included in the AAD, please use the contact information below.

Contact Us

If you would like to arrange a virtual meeting to discuss your specific circumstances in relation to any of the above, please get in touch with your usual contact within James Cowper Kreston or contact me using the details below.

Rebecca Foy

Senior Manager

T: +44( 0)7769735400 | E: rfoy@jamescowper.co.uk

The information in this newsletter must not be relied on as giving sufficient advice in any specific case.