The Academies Accounts Direction has been published by the Department for Education (DfE) for academies with periods ending 31 August 2025.
In this Insight, we take a closer look at what has changed, and what this means for those working in academy trusts.
What is the Academies Accounts Direction?
The Academies Accounts Direction sets out requirements, and provides guidance, for academy trusts preparing their annual report and financial statements for accounting periods ending on 31 August 2025.
The Academies Accounts 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 2025, and by their auditors to audit them.
Together with the Academies Accounts Direction is a set of model accounts which visually demonstrate an example of the presentation and content for a typical set of academy trust financial statements, with guidance on what to include to ensure compliance with applicable accounting standards and reporting requirements.
Who is the Academies Accounts Direction for?
Those involved in the preparation of the annual financial statements are the primary users of this guidance. It is relevant to accounting officers, chief financial officers, external auditors and reporting accountants of academy trusts.
It is also relevant for your trustees in order to be able to compile a fully compliant trustees report and governance statement to be included in the statutory financial statements.
As such, it is important that the Academies Accounts Direction for 2024 to 2025 is shared with your board of trustees, chief executive officer and chief financial officer in advance of your next board meeting. Appropriate discussion should be had regarding the changes applicable to this year, plus any introductions to this guidance for any new trustees or key management personnel that have been appointed since 1 September 2024 who may not be familiar with the previous versions of this document.
What has changed for 2024-25?
Non-financial and sustainability information statement
If your academy trust has total income in excess of £500 million, and more than 500 employees, you should now include a non-financial and sustainability information statement as required by the Companies Act 2006 section 414CA and 414CB.
Finance leases
Following the changes to the Academy Trust Handbook 2024 in permitting academy trusts to take out certain finance leases without requiring prior approval, there are additional accounting and disclosure requirements to reflect these new lease arrangements.
Where an academy trust has entered into a DfE-approved finance lease, the lease must be accounted for in accordance with FRS102 section 20.
Your note of accounting policies must now include a separate accounting policy describing the accounting treatment of these leases, being:
Leasing agreements, which transfer to the academy trust substantially all the risks and rewards incidental to ownership of an asset, are treated as finance leases.
Assets held under finance leases are recognised initially at the fair value of the leased asset or, if lower, the present value of minimum lease payments as determined at the inception of the lease.
The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Assets held under finance leases are included in tangible fixed assets and depreciated over the shorter of the lease term and the estimated useful economic life of the asset and assessed for impairment losses in the same way as for owned assets.
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charges are allocated to the statement of financial activities, over the period of the lease, in proportion to the capital element outstanding.
The critical areas of judgement note should now also include some narrative around the academy trust’s judgement of whether the leases entered into are operating or finance lease.
The tangible fixed assets note should now include a narrative underneath the note stating the value of assets held under finance leases.
The creditors notes showing amounts due within one year and greater than one year must clearly identify the obligations under finance leases separate to other creditors.
An additional note after the creditor’s notes must breakdown the ageing of future repayments, split between one year or less, between 2-5 years and greater than 5 years.
The notes supporting the cashflow statements must clearly identify the capital element of finance leases repaid in the year and the interest element of finance leases repaid in the year.
The analysis of changes in net debt note must now clearly identify the source of finance taken on in the year showing the finance lease obligations entered into.
For more information and for a visual representation of how this should look, please see section 3.127 to 3.129 of the Academies Accounts Direction (pages 93-96).
What hasn’t changed?
In prior years, the DfE have usually included some tweaks to the required content of the trustees report. The good news is that there are no substantial changes to the trustees report this year, however academy trusts should still consider whether any in-year growth has resulted in the trust meeting the definition of a large company, resulting in some new disclosure requirements to be included which would not have been considered previously.
Last year we saw several tweaks to the presentation of certain streams of income and staff costs. We are pleased to note that there are no further changes in these areas.
Any questions?
If you would like to discuss any questions you have about the changes in the Academies Accounts Direction, or any other questions you may have, please don’t hesitate to reach out – fill in the form below and a member of our specialist education services team will be in touch.
