The Academies Accounts Direction (AAD) for the financial year 2023-2024 has now been published by the ESFA.
The AAD sets out the requirements and obligations for academy trusts along with guidance for preparing the financial statements and annual reports for the accounting period ending 31 August.
Melanie Bailey, Head of Academy Services has reviewed the AAD and summarised the key changes which academy trusts should be aware of in advance of the fast-approaching year end.
Whilst none of the changes made by the ESFA will impact on the day-to-day running of the academy trust, all academy trusts must reflect the changes in reporting requirements in their financial statements for year ended 31 August 2024.
What an academy must do
The AAD 2023-24 has included a new “what an academy trust must do” section on page 4. This includes a helpful list of “musts” regarding the requirements of an academy trust when preparing its financial statements. These “musts” are as follows:
- Prepare accounts for the academy trust’s financial year
- Ensure the content of the accounts complies with company law, charity law and the AAD
- Ensure a governance statement is included in the annual report, which provides a conclusion on whether the academy trust has an adequate and effective framework for governance, risk management and control
- Maintain adequate accounting records
- Have the accounts audited by an independent registered auditor, who will express an opinion on their content
- Ensure the accounting officer has made a statement on regularity, propriety and compliance
- Include an independent reporting accountant’s conclusion on regularity, as part of the accounts
- Submit the audited accounts, external auditor’s findings report and an annual internal scrutiny report to ESFA by 31 December 2024
- Provide a copy of the accounts to every member and to every person who is entitled to receive notice of general meetings
- Publish the full accounts on the academy trust’s website by 31 January 2025
- File the accounts with Companies House by 31 May 2025.
Removal of references to COVID-19 supplementary bulletin
Another change this year is the removal of references to the COVID-19 supplementary bulletin and removal of COVID-19 related disclosures, as COVID-19 grant funding has either stopped or become part of normal business activities.
Updates to the governance statement
The disclosure requirements for the governance statement have been updated in the “review of effectiveness” section. Academy trusts must now include a conclusion on whether the academy trust has an adequate and effective framework for governance, risk management and control. An example of this can be found on pages 23-24 of the 2023-24 model accounts.
16-19 funding
Where academies are in receipt of 16-19 funding allocations alongside their GAG allocations, the 16-19 core funding is now classified as a separately identifiable funding stream and is to be split out, where material, within the “funding for the academy trust’s charitable activities” note where other material grants from the ESFA are also split, such as the UIFSM, PE Grant, Teachers Pay Grant etc.
If your academy trust is in receipt of 16-19 bursary funding, the information required to be disclosed has been updated for 2023-24. The updated disclosures now include the total cumulative unspent fund balance, which should then identify the amount immediately repayable to the ESFA. Prior year comparatives must also be disclosed.
Staff costs
The staff costs note has now been expanded and is now called the “staff costs and employee benefits” note. With this change, a new requirement has arisen where academy trusts must now separately identify and disclose the costs incurred in providing “other employee benefits”.
FRS102 defines employee benefits as:
“All forms of consideration given by an entity in exchange for services rendered by employees”.
Examples of such benefits as provided in FRS 102 (other than wages, salaries, social security and pension costs) include non-monetary benefits such as medical care, housing, cars.
If your academy trust provides any such benefit to its employees, please ensure these costs are identified and disclosed as required in the financial statements moving forward.
If you would like to access the Academies Accounts Direction full guidance document, please click here.
Model accounts
Each year, the ESFA produce a document separate to the AAD entitled “Academies model accounts” which goes hand-in-hand with the AAD.
This provides academy trusts with a template set of financial statements and guidance surrounding disclosures and content to be included.
In addition to the changes in accounting requirements and disclosures as identified in the AAD above, there are further changes in the model accounts for 2023-24 to be aware of:
- The requirement to describe “how the board maintains effective oversight if it meets less than 6 times a year” within the governance statement has been removed following the updates to the Academy Trust Handbook;
- The pensions note has been updated to reflect the latest Teachers’ Pension Scheme valuation and recently implemented employer contribution rates;
- The pensions note has been updated to add a reconciliation or explanation surrounding the restriction of recognition of any LGPS surplus asset this should now also be added into the “Critical accounting estimates and areas of judgement” note.
If you would like to access and download the model accounts full document, please click here.
We hope you have found our summary of changes useful. Please do not hesitate to contact us if you would like to find out more about what audit, accountancy and other support services we can provide to your academy trust.
