Are you up to speed with the latest academy accounting rules?
The Education and Skills Funding Agency (ESFA) has provided its latest detailed guidance for academy trusts for the preparation of annual financial statements, for the current financial year ending 31 August 2019
All academy trusts must now use the new Academies Accounts Direction which includes the requirements set out by the Charity Commission in its statement of recommended practice (SORP) and translates them into a form applicable to academy trusts.
The directive sets out all aspects which must be included in an academy trust’s annual report, along with the required financial statements and accounting procedures.
Key rule changes include:
- Presenting the model annual report and accounts and the regularity reporting section as annexes to the document rather than within the document
- Removing the requirement to include dates of payments made in relation to non-statutory/non-contractual staff severance payments
- Removing the table in the funds note which showed current year and prior year 12 months combined position
- A new requirement to send a copy of the annual report and financial statements to every individual who is entitled to receive notice of general meetings
- A new auditor requirement to reference SORP Update Bulletin 2 section 3 covering income recognition for donations to academy trusts from subsidiary trading companies, confirming that the income is only to be accrued where there is a legal obligation to make the payment
- Auditors must also clarify in the accounts that the parliament guarantee relating to teachers’ pension liability relates to academy trusts rather than to individual academies
- Where assets such as a roof or boiler has a substantially different life, each component must show separate depreciation
- Grants received for capital purposes must be specified and spent on capital projects in line with the grant’s terms and conditions
- Approval from the ESFA must be sought on all transactions with related parties. Where an academy trust wishes to recognise the use of premises, where these are given rent-free, for a remaining notice period it should reflect the future notional donation as a debtor with a corresponding entry for the future rental expense as a creditor.
The team at Haslers are here to support academies so if you require help or need clarification regarding the latest ESFA rule changes, please contact us and we will be happy to help.