Introduction
The Academies Accounts Direction 2022-23 and related documents applying to financial statements for the year ended 31 August 2023 were published in April 2023.
Structure of documents
As in 2021 and 2022, the Accounts Direction is split into three documents:
- Academies Accounts Direction (‘AAD’)
- Academies Model Accounts (‘Coketown accounts’)
- Framework and Guide for External Auditors and Reporting Accountants of Academy Trusts (‘Framework’).
ESFA published a supplementary bulletin to the AAD in 2020/21 which covered reporting of Covid-19 impacts and Academy Trusts are reminded that this remains applicable. The key implication is disclosure of Covid recovery grants in the income note, as in previous years, together with related explanation of its usage in the Trustees Annual Report.
We set out below a short summary of the changes made for 2023:
How Trustees should make use of the AAD
The AAD acknowledges that trustees are not expected to have detailed understanding of the Direction’s technical accounting requirements, and so they should seek support from their Chief Financial Officer, where required. The AAD notes that trustees will nevertheless find the AAD helpful in ensuring they fulfil their financial responsibilities.
Interim arrangements
Part 1.18 of the AAD has been strengthened and confirms that at all times the trust is required to have an Accounting Officer. It states that the board should ensure there is adequate coverage and decide what interim arrangements are required in the event of the departure or long-term absence of key signatories, including the Accounting Officer. There should be sufficient briefing and information available to enable the new Accounting Officer to understand the key issues to enable the accounts to be signed on time.
Feedback by ESFA to the sector on non-compliance in academy trust accounts
Each year ESFA review academy trust accounts, audit findings reports and internal scrutiny reports.
The 2023 AAD notes that the ESFA has identified the following points which should assist academy trusts in improving compliance:
- It sees regular instances where the annual trustees’ report does not appear to fairly reflect the circumstances and performance of the trust for the year. Often this is because the wording has not been updated from the previous year, or is too similar to the Coketown model accounts, or there are inconsistences between the trustees’ report and the audit findings report and /or the internal scrutiny report.
- When referring to the organisational structure within the trustees’ report, ensure subsidiaries etc are included.
- With regard to the Governance Statement:
- Ensure there is adequate disclosure of the framework for the audit and risk committee
- Disclose the processes in place to manage conflicts of interest, including subsidiaries – the AAD refers the reader to the Charity Commission Guidance
- Explain why the trust chose a specific internal audit option and disclose any significant control issues that arose
- Reminder that the personal name of any staff member who is also a trustee must be stated within the “trustee remuneration and expenses” disclosure.
School buildings’ safety and management
The ESFA has responded to national concerns about the safety of school buildings by enhancing the requirements of the AAD in relation to trust financial statements in several areas:
- Clarified that the paragraph in the trustees’ report on principal risks and uncertainties should consider those risks which impact on the trustees’ responsibilities to ensure the trust’s estate remains safe, well-maintained and complies with relevant regulations.
- Suggests that, in the value for money statement, 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. We suggest that this be one of the two or three examples provided.
- The Accounting Officer’s Statement of Regularity, Propriety and Compliance in the annual financial statements has been updated to refer to estates safety and management in the following sentence:
“As part of my consideration, I have had due regard to the requirements of the Academy Trust Handbook 2022, including responsibilities for estates safety and management.”
The AAD explains that this means managing the school estate strategically and maintaining the estate in a safe working condition and complying with relevant regulations (para 2.60).
The implication of the additional wording is that any material irregularity in relation to building safety and management such as breaches of regulations or other issues with the estate would need to be reported in the Statement.
Material income sources
The AAD reminds the reader that note 4 to the financial statements in relation to funding for educational operations must separately list each material funding source from the ESFA, the DfE and its other arm’s length bodies.
Average number of employees
The AAD clarifies that teaching assistants should be categorised as support staff within the staff costs note.
The headcount should be 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.
If you would like further guidance on these points or any other aspects of the Academies Accounts Direction and related documents, please contact one of your usual academy contacts at BHP for a discussion.
