New academies chart of accounts – a first step to automated financial reporting?

New academies chart of accounts – a first step to automated financial reporting?

The Department for Education (DfE) has launched a new academies chart of accounts which could signal the first step towards automated financial reporting

Although voluntary, the DfE hopes the initiative will become the new standard for financial data, as part of an academy’s accounts and budget forecast returns.

According to the National Audit Office, the existing system causes issues regarding the ‘truth and fairness’ of the reporting of academy finances in DfE accounts, resulting from the fact that the DfE’s year end differs from academies’ year ends.

Any academy which voluntarily adopts the new standard is set to benefit from an automated data transfer from their finance system, for the 2019/20 financial year.

The DfE claims academies that opt in will also receive more accurate financial benchmarking information that will in turn allow them to compare their finances with similar academies more accurately.

Parliamentary Under Secretary of State at the DfE, Lord Agnew, said: “We have recognised that the current system of submitting financial data to the department is time consuming and offers insufficient benefit to academy trusts.

‘By having a standard chart of accounts, we create the essential building blocks for the new system as it provides a consistent way of recording financial data for all academy trusts.

‘This will allow us to reduce the burden on trusts through the electronic submission of financial data directly from finance systems and adding greater value to trusts by enabling us to create new financial efficiency tools as well as improve the timeliness and quality of the existing tools.’

Although the DfE recognises that the new chart of accounts will require an investment in both time and effort on the part of Trusts, it claims the long term benefits makes becoming an early adopter extremely worthwhile.