Academies Accounts Direction 2023/24: A summary of changes

Academies Accounts Direction 2023/24: A summary of changes

On 27 March 2024, the Education and Skills Funding Agency (ESFA) issued the annual 2023/24 Academies Accounts Direction (AAD). The guidance provides requirements and framework for academy trusts preparing their annual financial statements, for the accounting period ending 31 August 2024.

Although none of the changes appear to be significant in terms of day to day operations, academy trusts will be impacted.

We have provided a summary of the changes below:

1. A new ‘What an academy trust must do’ section, acting as a checklist to ensure that academy trusts are fulfilling the main responsibilities around financial reporting.
2. More clarity on the relationship between the financial statements and other financial returns (paragraphs 1.4-1.5). Essentially, this highlights the fact that the annual accounts and Academies Accounts Return (AAR) follow a different set of accounting requirements.
3. References to the Covid-19 supplementary bulletin have been removed, as Covid-19 grants have either stopped or become part of business-as-usual activity.
4. The review of effectiveness of the system of internal control has been expanded, to include a conclusion on whether the academy trust has an adequate and effective framework for governance, risk management and control. Academy trusts must include this conclusion (paragraph 1.17 and paragraph 2.48).
5. Updated ESFA feedback to the sector on the outcomes of its assurance work and compliance with the Direction (paragraphs 1.20-1.23 and Annex A). Annex A to the AAD lists a number of areas where there are recurring themes across the sector around non-compliance. We recommend that you review this section to ensure that your trust remains compliant.
6. Further examples given of sources of information to inform the accounting officer’s statement of regularity, propriety and compliance (paragraph 2.57). It is important that all accounting officers fully understand their responsibilities, especially when signing the annual declaration within the financial statements.
7. Confirmation of how 16-19 core education funding should be disclosed in the financial statements (paragraph 2.98). This confirms that 16-19 funding should be separately disclosed in the financial statements as it is likely to be material in those trusts with 16-19 provision. Those trusts with 16-19 provision should ensure that relevant grants are coded to an appropriate nominal account that identifies this funding.
8. Clarification that the staff costs note should separately identify ‘other employee benefits’ (paragraph 2.134). This clarifies that employee benefits should be disclosed in the accounts, so if any of your employees receive any benefits they should be disclosed in the financial statements alongside “standard” payroll costs. This will include benefits such as health/medical care, cars, cycle schemes, etc.
9. Clarification of how an academy trust might determine an appropriate value, for the initial recognition of premises occupied under a long leasehold (paragraph 3.27). If you are in a position where you are bringing new premises onto your balance sheet, please review paragraph 3.27 and obtain/appraise the appropriate information.
10. Updates on the information to be disclosed for agency arrangements, to include cumulative unspent fund balances (paragraph 3.132). The main such fund in academy trusts is 16-19 bursary funding, and the disclosure must make clear the total value of undistributed funds, and also the value that is repayable to the ESFA. This must include the equivalent figures for the prior year.

Should you wish to review the guidance in full, it is accessible here.

We are here to help

If you have any questions on the AAD or want to discuss how this may affect your organisation, please get in touch with your usual Azets advisor or a member of our academies team.

Information correct at time of publishing, but may be subject to change in future. This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek professional advice before taking or refraining from taking action on the basis of the contents of this article.