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Budget Forecast Return – deadline extended

The ESFA have recently announced that the deadline for academy trusts to submit their Budget Forecast Return 3 Year (BFR3Y) has now been extended from 30 July 2020 to 29 September 2020 due to the impact COVID-19 is having upon educational establishments. (Click here to access the announcement and guidance.)

This will come as welcome news to many Academy Trusts which are working to re-open for more pupils within ever changing health and safety guidelines. We know all too well from our client base that many CFOs have been involved in these plans/discussions and therefore unable to focus on some of their day to day tasks around this time of year such as the Budget Forecast.

In addition to the extended deadline, the ESFA have also announced some key changes to the BFR3Y, these are namely:

  • removing the need to submit forecasts for academic years 2021/22 and 2022/23 for this year only
  • including 8 summary revenue fields for 2018/19

The removal of the need for forecasts regarding 2021/22 and 2022/23 is likely be a welcome relief as many academy trusts would struggle looking into their crystal ball in the current climate to pre-empt what might be next for schools and indeed the whole country. However, it should be noted this “relief” is only for one year and the requirement to include forecasts will return for the 2021 BFR3Y. Furthermore, the forecasts will still be required for internal reporting purposes, as explained below.

The return still requires projected outturn figures for the current year (2019/20), split between actual figures to 31 March 2020 and calculated figures for the 5 months to 31 August 2020.

The summary revenue and expenditure figures for 2018/19 are required to allow the ESFA to understand the financial impact of school closures on their financial results. It will then use this information to review financial trends in the sector and to supply HM Treasury with a financial forecast for the next year.

Audit requirement and compliance with Academies Financial Handbook

However, before trusts get too excited by the news that forecasts are not required, it is worth remembering that academy trustees and external auditors will require sight of budgets and forecasts to enable them to assess going concern for a period of 12 months from the date of signing the accounts. This is likely to be around December 2020 and so auditors will need to see forecasts for 2021/22 as well as 2020/21.

The ESFA have also reminded academy trusts that they must still compile longer-term forecasts for their own internal financial planning as required in the Academies Financial Handbook (section 2.11). This states that budget forecasts must be prepared for “the current year and beyond”.

This year, it would therefore be possible to limit budget forecasts to 2 years rather than 3 years.