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Academies Accounts Direction for 22/23: No New Requirements

  • 27th April 2023

The ESFA have recently published the Academies Accounts Direction 2022 – 2023 along with their model accounts and framework and guide for external auditors and reporting accountants of Academy Trusts.

We have provided a summary of the main changes to the Direction below, however, to view the full document please follow the link>>> here.

Main changes to this year's edition

1 - Clarified how trustees should use the Direction

The Direction, including any supplementary bulletins published, is mandatory for all types of academy trust with a funding agreement with the Secretary of State and an open academy at any point during the accounting period. It must be used by academy trusts to produce accounts for any period to 31 August 2023, and by their auditors to audit them.

2 - Clarified the expectations for interim arrangements, in the absence of key signatories

The board should ensure there is adequate coverage in the event of the departure or long-term absence of key signatories, including the accounting officer. The board should decide what interim arrangements are required, as at all times the trust is required to have an accounting officer. See paragraph 1.18 of the document for further information.

3 - Updated feedback on non-compliance with the Direction

Trustees are responsible for ensuring the content of their accounts fairly reflects their academy trust’s performance and circumstances and is compliant with the financial reporting framework. See paragraph 1.21 for further information.

4 - Updated the themes arising from ESFA's assurance work

ESFA publishes statistics on the sector’s performance and the themes arising from its assurance work. Key information relevant to the financial statements includes:

  • The percentage of qualified financial statements for the 2020/21 year was 0.5% (2019/20: 0.5%). The main reasons for this were Local Government Pension Scheme (LGPS) valuations and the accounting treatment of land and buildings.
  • The percentage of modified regularity opinions in the 2020/21 year was 7.9%, which was lower than in the previous year (2019/20: 8.5%). The most common themes of modifications were internal financial reporting and related party transactions.

In response to school buildings' safety risk, the Direction's content has also been enhanced (points 5-8):

5 - Clarified the trustees' report on principal risks

The financial review should support the financial statements. Academy trusts should take the opportunity to shed light on the numbers shown in the financial statements, including why and how they have arisen, in terms that a non-accountant would understand. To view what the must include please see paragraph 2.14.

6 - Clarified that the review of value for money statement encompasses estates safety and management

A key objective is to achieve value for money not only for the organisation but also for the taxpayer more generally; whilst it involves an academy trust living within its budget and using its resources properly and with probity, value for money is primarily about how it continuously improves both the educational and wider societal outcomes for its pupils, as well as estates safety and management, with the resources available.

7 - Suggested that accounting officers 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, as one of their value for money examples

Academy trusts are free to decide how to set out these examples, which should be concise and focused on the information that is most relevant and appropriate to the academy trust, emphasising those issues that had the greatest impact on the academy trust’s use of resources. Up to three brief examples should be sufficient, covering the areas where the academy trust’s activities have contributed to achieving value for money and the areas of future focus. In particular, accounting officers 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.

8 - clarified that the statement on regularity, propriety and compliance encompasses estates safety and management

The statement also sets out that regularity, propriety and compliance with the terms and conditions of funding, under the academy trust’s funding agreement and the Handbook, encompasses estates safety and management. This means managing the school estate strategically and maintaining the estate in a safe working condition and complying with relevant regulations.

9 - Updated the guidance on the treatment of loans

All amounts owed, accrued or deferred by the academy trust should be included under the balance sheet heading, 'Creditors', at their settlement amount (being the amount the academy trust expects to pay to settle the debt). For more information please see paragraph 2.113.

10 - Reminded academy trusts of the need to separately disclose material income sources in note 4

The majority of funding for the academy sector comes from DfE and ESFA, with the largest amount being GAG. GAG must be disclosed separately in this note. Academy trusts are reminded that any other material funding must also be separately listed in the note. Any remaining non-material sources of funding, from these funding bodies, can be grouped together.

11 - Clarified that teaching assistants are categorised as support staff in the staff costs note

This is analysed between teaching, administration and support, and management headings. Management should include senior leadership team members who do not have day-to-day teaching duties. The head of academy should always be considered as management, irrespective of any teaching duties. The administrative and support heading includes all other staff who do not have day-to-day teaching duties, which will include teaching assistants.

Feedback from the sector

The ESFA are seeking feedback from academy trusts and auditors on the Academies Accounts Direction and the model accounts. To help us ensure these documents continue to meet your needs, please complete the short survey.

Please note there will be a separate survey to collect feedback on the Academies Accounts Return (AAR) and this will be available within the return itself.

Contact Us

Following the publication of the AAD 2022-23, if you have any queries or need any help with any information published in the documents, please do not hesitate to contact us.

Read more on: Academies

Written by: Mike Hall

Any news or resources within this section should not be relied upon with regards to figures or data referred to as legislative and policy changes may have occurred.