Changes to the Academies Accounts Direction (AAD) 2017 to 2018

The Education and Skills Funding Agency (ESFA) newly released academies accounts direction (AAD) 2017 to 2018 offers small changes of which school leaders should be aware.

Here are the key changes:

Trustees Report

There is a new requirement to include information on trade union facility time to comply with the Trade Union (Facility Time Publication Requirements) Regulations 2017.

This only applies where academy trusts have more than 49 full-time equivalent (FTE) employees during any seven months of the reporting period.

Under this change, the following must be disclosed:

  • The number of employees who were relevant union officials during the period
  • The number of employees and their percentage of time spent on facility time
  • The percentage of pay bill spent on facility time
  • Details of paid trade union activities

Information regarding calculation of the above information can be found in Statutory Instrument 2017 No.328, The Trade Union (Facility time Publication Requirements) Regulations 2017.

Inactive Academy Trusts

Under the new AAD, all academy trusts must submit their financial statements to the ESFA four months after the accounting reference date. Where academy trusts become inactive the same rule continues to apply.

Where a single academy trust sees its only academy transfer out on 31 December, it must, therefore, still produce financial statements up to this period and submit them to the ESFA by 30 April.

The trust must also submit an Accounts Return for the same reporting period to the ESFA. Once this and the accounts have been submitted, the Trust has fulfilled its reporting obligations.

Fundraising

Academies must include a section reporting on fundraising practices that the academy trust undertakes to enable compliance with the Charities (Protection and Social Investment) Act 2016.

This should cover:

  • The trust’s approach to fundraising
  • Work with, and oversight of, any commercial participators/professional fundraisers
  • Confirmation that any fundraising is conforming to recognised standards
  • Information on the monitoring of fundraising carried out on its behalf
  • Any complaints resulting from fundraising
  • Protection of the public, including vulnerable people, from unreasonably intrusive or persistent fundraising approaches, and undue pressure to donate.

Trustees may wish to refer to the Charity Commission’s publication “Charity fundraising: a guide to trustee duties (CC20)”, which provides further guidance on reporting these details.

Church Academies

Church academies which decide not to capitalise any site improvement costs and show them as expenditure in the Statement of Financial Activities (SoFA) are required to disclose this expenditure as a separate note.

The note should explain the grant received for the costs has been applied on improvements to diocesan property occupied by the Academy Trust.

Apprenticeship Levy

Apprenticeship Levy costs are to be included as part of Social Security costs and will, therefore, require a restatement of the prior year figures.

Where Apprenticeship Levy funded training is conducted in the year, this should be recognised as notional income and notional expenditure in the SoFA, as should the 10 per cent top-up funding provided by the government.

Related-party transactions

All related-party transactions should be separated between income and expenditure items and expenditure above £2,500 must now state it has been provided ‘at no more than cost’. Each Academy Trust must provide a statement of assurance confirming this. To help trust the AAD has provided clarification on the definition of the types of related-party transactions.

Also, for 2018, the related-party transactions note must disclose all inter-group transactions and cannot take up the exemption afforded in FRS102.

Teaching Schools

Trusts which operate Teaching Schools must now disclose a trading account (breakdown of income and expenditure) in the financial statements on the Teaching Schools performance in the accounting period.

Regularity

The AAD has clarified that the purchases of alcohol or excessive gifts are an example of irregular expenditure. Trusts must, therefore, re-think any purchase of alcohol for school events or as gifts.

If you are concerned or would like more information about any of the changes discussed, please contact our team.