Accounting changes for Academies – 2017



Following the end of election purdah restrictions, the Education and Skills Funding Agency (ESFA) has issued its annual revision to the Academies Accounts Direction (AAD) 2016 to 2017, which will determine the format of accounts prepared by Academy Trusts for the year to 31 August 2017.


The changes noticed by most trusts will be limited, but there are additional disclosures and clarifications for trusts with specific circumstances. We have set out some of the highlights below.


First period accounts


The ability to defer accounts in the first period for up to 18 months is removed. For example, if a new academy was incorporated on 1 May 2017, it now needs to have audited accounts to 31 August 2017.


To clarify this, the AAD states that it applies to all trusts with a funding agreement and to any academy open during the accounting period. It would appear that the grants offered to new trusts preparing short period accounts are not being repeated.


Additional accounting disclosures


Trusts should make the following additional accounts disclosures:


• Financial instruments (including cash and debtors) – add disclosure of the accounting policies adopted.


• Apprenticeship levy – account for levy payments as expenditure, and disclose on separate line in staff costs note.


• Teaching schools – if a trust has teaching school status and receives a core funding grant, record as a restricted fund. There are new separate lines on the Statement of Financial Activities (SOFA) for income and expenditure. Trusts should not use the General Annual Grant (GAG) to support the work of the teaching school. Trusts are likely to need separate certification to the National College for Teaching and Leadership (NCTL) (plan for this with your auditor).


• Academy combinations and dissolutions. There is additional accounting and disclosure guidance for these increasingly common transactions. It applies where acquiring a school or Single Academy Trust (SAT), or a SAT joining a Multi Academy Trust (MAT), or a school leaving a MAT, or an Academy Trust (AT) is dissolving. For transfers between trusts, balances need to be formally agreed between transferring and receiving trusts (eg keep trial balance). Trusts must agree dates and account for opposite sides in the same accounting period, so Government accounts are complete.


• Local Government Pension Scheme – there is added disclosure of sensitivity analysis. Actuaries should be able to supply disclosures in this format – you might need to ask the actuary when requesting 31 August 2017 information; however note that 2016 reports to Local Government included this information as standard, so no extra request may be needed.


Accounting policy updates


There is new guidance on when to recognise income for where the Education and Skills Funding Agency (ESFA) is constructing an asset for the trust under either the Free Schools or Priority School Building Programme.


In addition there is extensive new guidance on accounting for land and buildings in church academies. This should be read carefully and discussed with your professional advisers.


Premises under Private Finance Initiative (PFI) contract – many academies are in contracts with the Local Authority (LA) to support the PFI by making contributions to costs. These contractual payments will typically be accounted for as lease commitments (lease costs or premises costs).



Gender pay gap reporting

Trusts with more than 250 employees will be required to publish information on their own website and on the government website (by 31 March 2018 for data for the year to 31 March 2017) statistics on gender pay gap:


o Average (mean and median) hourly rate of pay
o Average (mean and median) bonus paid
o Proportions of employees receiving bonuses
o Proportions of employees in each quartile pay band


Governance Statement


The Board must also disclose:


• Coverage of their work.

• Board’s performance / assessment of effectiveness and challenges faced.

• Information about quality of data used by Board and why the Board finds it acceptable.


Further information

The full text is on the Education Funding Agency (EFA) website .  We have also allowed access to our prepared, more detailed information sheet .


This article orignially appeared on the blog of MHA member firm,