Academies Accounts Direction 2017 to 2018

6th June 2018

The Academies Accounts Direction 2017 to 2018 was released today and you will be pleased there are no significant changes.  We remind you that this document must be used by all academy trusts when preparing their financial statements for the period ending 31st August 2018.

The main changes to the Accounts Direction are:

  • Clarification is provided that audited accounts and a copy of the audit findings presented to those charged with governance must be submitted to the ESFA by 4 months after the accounting period end date. Those academy trusts which have become inactive e.g. all academies have transferred out of the trust, may wish to shorten their accounting period.  This is still permitted however you must now ensure that the accounts are submitted to the ESFA 4 months after the revised accounting period end.
  • Trusts must now include information on fundraising practices in the trustees’ report.
  • Trusts must also include information on trade union facility time in the trustees’ report.
  • You must now analyse expenditure on raising funds between direct and support costs in the notes to the financial statements. This is generally note 6 or 7 in your financial statements.
  • The funds note in the accounts is expanded to include the income and expenditure in the current year, prior year and then a combined position of both years.
  • A note must now be included where the trust has received a capital grant for a site which is not recognised on the balance sheet. For example this could be a capital grant (CIF) received to carry out works on the school building which is owned by the Diocese and occupied by the trust.
  • Confirmation that the apprenticeship levy payments are to be accounted for as social security expenditure.
  • The classifications of the fixed asset note have been amended to align with the accounts return. Mainly, this is the introduction of an assets under construction category and splitting additions and acquisitions.  If your trust has categories which do not align with the accounts return this may result in them being renamed this year.
  • Enhancing the related party transaction note to distinguish between income and expenditure transactions. A further statement must be made for transactions over £2,500 to confirm it is provided at no more than cost and is supported by a statement of assurance from the related party confirming this.  A proforma Statement of Assurance can be found on the ESFA website here.
  • A separate note is now added for Teaching School activities. This is effectively an income and expenditure account relating solely to the Teaching School activities.  To help complete this note we recommend using separate ledger codes or cost centres for these activities.  Alternatively, you may find it more convenient to run a separate system.
  • The ESFA have also highlighted common areas of irregularity within academy trusts as follows:
    • Lack of prior approval for finance leases (which constitute borrowing.) Please also remember that the use of an overdraft facility also constitutes borrowing.
    • No statement of assurance for connected party transactions.
    • Connected party transactions are not at cost.
    • Non-contractual severance payments made without the required approvals.
    • Weak internal controls.
  • The ESFA also list incidents of irregularity and impropriety which the accounting officer and reporting accounting should be alert to. These are:
    • Use of public funds for personal benefit
    • Lack of appropriate authorisation for expenditure, including failure to obtain ESFA approval where required.
    • Inappropriate procurement processes.
    • Inappropriate authorisation – specifically giving example of the Chair of Governors acting beyond powers to authorise contracts / payments.
    • Irregular expenditure not for the purpose intended, again specifically naming excessive gifts and alcohol.

If you have any queries regarding the Academies Accounts Direction or would like to discuss how these changes might affect your trust please do not hesitate to get in touch with a member of our academies team.

 

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