The Education and Skills Funding Agency (ESFA) has published its Academies Accounts Direction (AAD) 2017-18 which is applicable to academy trusts preparing statutory financial statements for the period ending 31 August 2018. Although the changes aren’t as significant as those seen in previous updates, there are still a number of things to consider.
Timely filing
The ESFA has stressed the importance of filing the statutory accounts four months after the period end. The ESFA takes compliance with the deadline seriously and may consider action against academy trusts that do not comply including issuing a Financial Notice to Improve (FNtI) and publicising defaulters. If your trust becomes inactive, e.g. through re-brokerage, in the current accounting period, you should prepare the accounts as soon as is practicable after the last academy has transferred out. These accounts should then be submitted to the ESFA no later than four months after the date to which the accounts are prepared.
New disclosure requirements
The AAD has introduced new disclosure requirements for the trustees report on any trade union facilities, to comply with the Trade Union (Facility Time Publication Requirements) Regulations 2017, and included information on fundraising practices, to comply with the Charities (Protection and Social Investment) Act 2016. The trade union facilities comprise the duties and activities taken up by an employee who is a relevant union official during a relevant period.
Changes to the financial statements and accompanying notes
The financial statements for periods ending 31 August 2018 are now expected to show an analysis of expenditure on raising funds between direct costs and support costs. There is also a revised fixed asset note to include classifications which are more aligned with the academies annual accounts return.
The AAD also includes updated guidance regarding the treatment of capital grants in the financial statements, where a site is not recognised as land and buildings, and the treatment of the apprenticeship levy payment and any funded training that is received.
A note requirement has been added aiming to capture financial activity relating to activities as a teaching school. Where your trust has teaching school status, you are now required to include a teaching school trading account in the notes to the financial statements.
Two existing notes within the financial statements have been expanded from prior periods. The related party transaction note has been enhanced to distinguish between income and expenditure related party transactions and include confirmation regarding the treatment of elements above £2,500. The funds note has been expanded so that you now have to include comparative information in respect of the proceeding period and, where the current and prior periods have been 12 months long, an analysis showing the combined position to reflect SORP Information Bulletin 1.
Report updates
The auditor’s report is to be updated to comply with revised ISA700 and the regularity report is to be updated to reflect the findings from the ESFA’s investigations.
What do the changes mean for academies?
As mentioned at the outset, the changes within the new AAD aren’t too significant and, for many academies, will result in few changes to their financial statements. The key point is to ensure you’re updating your financial statements accordingly to comply with the new directions.
We will be issuing a further, more-detailed update on the changes shortly. In the meantime, if you have any questions about the updates within the new AAD and how they will impact your academy, contact
Ann Mathias
Click here to view the academies accounts direction.