Now that the furore surrounding the general election has somewhat subsided, the Education and Skills Funding Agency (ESFA) has released the updated Academies Accounts Direction (AAD) for 2016-17.
A small number of changes have been made since the previous version, particularly in comparison to past releases, yet they are still worth taking note of.
Deferral of accounts no longer allowed
Previously, Academy Trusts incorporated on or after March 1st could opt to defer their first accounts until the next August. The reason behind this was that the Companies Act 2006 did not permit the production of accounts for a period exceeding 18 months from the date of incorporation.
In the latest AAD, the ESFA has removed the option to defer altogether so that it can include all necessary information in the accounts that it submits to the Government.
Therefore, regardless of whether an academies incorporation date falls after March 1st 2017, it must produce audited financial statements up to August 31st 2017. It must then submit these to the ESFA by December 31st 2017.
One pitfall is that academies which incorporate in July or August could end up producing accounts to cover an extremely short period of time.
It is also worth noting that all Trusts with a funding agreement in place and an open academy in 2016/17 must submit audited accounts. The National Audit Office (NAO) criticised the transparency of accounts back in 2016, casting doubt over how honest academies had been about their spending. Audited accounts and financial statements are now an integral part of the plight to remove ambiguity from academy accounts.
In addition, Trusts must adjust their accounting year end to August 31st 2017 with Companies House. They will also need to submit accounts to Companies House before the deadline.
The 2016/17 Academies Accounts Direction features enhancements to accounting disclosures – in particular, relating to the transfer of existing academies into Trusts and how to report acquired assets and liabilities.
The same level of disclosure is also required when an academy transfers out of a Trust.
Other enhancements, again designed to improve the transparency of accounts, include:
- Financial instruments must be included in Trusts accounting policies
- The Apprenticeship Levy will feature as a separate item within the staff costs note
- Trusts with teaching school status must report their annual grant as an item within restricted funds
- The Pensions obligations note is enhanced
Within the AAD, there is also guidance relating to the recognition and reporting of buildings, fair value and income on the balance sheet, as well as a reminder that many Trusts will need to publish a gender pay gap report.
The complete AAD document can be found here.
At George Hay, we can assist with meeting the unique responsibilities that come with academy status, including fulfilling your reporting obligations. We provide expert accounts preparation and audit services to ensure you’re operating compliantly and confidently. We also offer expertise in specialist areas, including VAT registration and the reclaiming of VAT on non-business activities, any liability to corporation tax that may arise, for example on lettings income, as well as advice on pensions issues. To find out more, you can contact our Academies Manager, Colin Airey.