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Academies accounts direction for 2023 to 2024 | What are the key changes

Academies accounts direction for 2023 to 2024 | What are the key changes

Education Team

Changes in the Academy Accounts Direction 
The Academies Accounts Direction 2023 to 2024 has now been published for academy trusts preparing their annual report and financial statements for accounting periods ending on 31 August 2024.

Introductory changes

  • A new section ‘What an academy trust must do’ has been added to remind trustees of their compliance-based duties as officers of a limited company. 

Changes to disclosures within trustee’s report and governance statement

  • The requirement to explain how the board maintains effective oversight, if it meets less than six times a year has now been removed. 

  • Within the review of effectiveness of internal control in the governance statement there is an enhanced requirement to include a conclusion on whether the academy trust has an adequate and effective framework for governance, risk management and control. Recommended paragraphs, for consideration by the trust board, are included on page 24 paragraph 2.48 of the AAD.

  • Emphasis has been placed on the importance of providing suitable detail of the internal scrutiny procedures carried out and this must be included within the risk and control framework detail. Trusts must state whether the internal auditor/reviewer has delivered their schedule of work as planned, provide details of any significant control issues arising as a result of the internal auditor’s/reviewer’s work and, if relevant, describe what remedial action is being taken to rectify the issues.

Guidance on the statement of regularity, propriety and compliance

  • There has been guidance provided on what the accounting officer should consider as part of their statement and sources of information they can use to form their opinion. This can be seen on page 26 paragraph 2.57 of the AAD. 

  • In the statement, the accounting officer should report all areas of non-compliance split between those that affect underlying financial transactions and those that are other weaknesses. Where known, state the monetary amounts involved.

In 2022-23, the most common disclosures made within the regularity statement were; 

  • Management accounts, including not producing and/or sharing them with the Board, not preparing them in a timely manner or having key sections such as cash flow statement or balance sheet missing.

  • Improper recording of related party transactions including; 

    • Prior approval not sought from ESFA before entering into a related party transaction or non-disclosure within the financial statements.

    • Conflicts of interest issues including, trusts failing to manage conflicts of interest appropriately.

    • Rejections, including where prior approval was sought from the ESFA.

    • ‘At cost’ policy issues including where the ‘at cost’ requirement had not been adhered to.

  • Website and ESFA financial return deadlines being missed, trust websites not being updated in a timely manner, and trusts not meeting the financial statements 31 December submission deadline.

  • Financial control weaknesses, including monthly bank and balance sheet reconciliations not performed and fixed asset registers not being held or updated.

  • Chief financial officer and accounting officer roles being vacant for a period of time and payments made to consultants to accommodate long-term absenteeism.

Changes to disclosures - notes

  • Where the academy trust has recognised a pension asset for any local government pension scheme consideration must be given to what element of that asset has been restricted and on what basis. There is a requirement within the pension note to state why the trust has not recognised the pension asset or give justification for any restriction. The pension notes have been updated to reflect the recent Teacher Pension and LGPS valuations with updated rates, scheme valuations and deficit included for the Teacher Pensions’ scheme. 

  • There is no longer a requirement to separate COVID-19 grants within the funding for education activities note and subsequent disclosures within the funds note. (Paragraph 2.98)

  • non-monetary benefits should be disclosed on the staff note as a separate line classified as other employee benefits and covers all forms of consideration given by an entity in exchange for services rendered by employees. Examples include benefits such as medical care, housing and cars. (paragraph 2.134)

Long-term leases
One of the largest changes relates to the valuation of premises on long-term leases with the local authority or any other organisations (paragraph 3.27). There are four appropriate methods of valuation of the land and buildings; 

  • obtaining a valuation from a chartered surveyor 

  • obtaining a valuation from the relevant local authority 

  • if a new build premises, obtaining a valuation from the construction company, where appropriate 

  • assessing the value of any assets from a transferring academy trust

  • There are two methods, that trusts have commonly used, these are deemed inappropriate; 

  • valuation certificates provided by DfE, these are prepared under International Financial Reporting Standards to enable DfE to place a value on the national school estate

  • insurance valuations represent the rebuilding cost of the asset rather than its fair value

This may have a significant and costly impact on the Trust’s approach to valuation. The accounts direction states that trustees must determine a reasonable and reliable estimate of the current value with supporting assumptions. 

There are a number of reminders that Annual Accounts Return (AAR) submissions have contained inconsistencies in reporting between the statutory financial statements and the reporting within the AAR. The suggestion is to complete the AAR before filing the statutory accounts to avoid any validation errors and identifying issues early. 

Academies who have adopted the ESFA chart of accounts can map these codes to the statutory financial statements and AAR reporting and benchmarking.
One of the changes this year is the allocation of the 16-19 core funding to material non GAG ESFA/DfE funding to align with the reporting on the AAR. 

Contact out Acadamies team today
for more information on how these new changes will effect your adacadmy and how Moore (south) can help you contact our specialist academies team today