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2016/2017 Academies Account Direction

Adrian Brook

The ESFA has published its Academies Accounts Direction for 2016/17. Although the changes aren’t as significant as last year, there are a number of things to consider. As well as introducing new disclosure requirements, including academy transfers and the apprenticeship levy, and providing guidance on accounting for premises occupied by church academy trusts, the ESFA has taken the opportunity to re-affirm/clarify existing financial administrative and legal requirements.

Accounting for land and buildings occupied under licence by church academy trusts
New guidance is provided for church academy trusts on whether premises occupied under a licence meet the FRS102 definition of an asset and therefore should be recognised as such in the accounts. This new guidance focuses on the definition of control in terms of “control over access” and “control over works”. Church academy trusts should reconsider their accounting treatment of premises occupied under a licence in the light of this guidance.

Academy transfer disclosures
New disclosures are required for academy trusts, which either receive existing academies or transfer out academies. Academy trusts are required to present a summary of:

  • acquired assets and liabilities, together with any fair value adjustments for academies acquired;
  • assets and liabilities derecognised for academies transferred out.

It is expected that the transferring and receiving academy trust involved in the academy transfer should formally agree the value of transferred balances and the transfer date, so that the transfer is accounted for in the same accounting period and similar disclosures, setting out the assets and liabilities transferred, are presented. Academy trusts should ensure these matters are addressed during the transfer.

Apprenticeship levy
From 1 April 2017, all employers with pay-bills in excess of £3m are required to pay an apprenticeship levy at 0.5% of the pay-bill. Academy trusts should recognise and disclose these apprenticeship levy payments as staff costs.

Buildings funded by Free School or Priority Schools Building Programme
Where a building is being constructed under the Free School or Priority Schools Building Programme, and the academy trust is recognising an asset on the balance sheet, the academy trust should recognise the expenditure as an asset under construction (until it is completed).  The funding should not be recognised as a capital grant until there is unconditional entitlement.

Teaching schools
Academy trusts, with teaching school status, should recognise the separate annual grant, known as core funding, as restricted funds. GAG should not be used to support the work of the teaching school principles.

The Coketown Academy Trust model accounts, included in the Accounts Direction, have been updated to reflect these new disclosure requirements.

Other matters
Any academy trust, which has incorporated prior to 31 August 2017 and has carried out any accounting transactions, must produce full audited accounts for the period to 31 August 2017 (the option to have a longer first accounting period has been removed). Academy trusts, which have been dormant for the period from incorporation to 31 August 2017 (i.e. there are no accounting transactions), can apply section 480 of the Companies Act 2006 and prepare dormant accounts.

Academy trusts with a funding agreement and open academies, which may qualify as small companies under the Companies Act, must submit accounts, which comply with the Accounts Direction to the ESFA and Companies House (they cannot take advantage of “small company” filing options).

Larger academy trusts (with 250 or more employees) are reminded that they are required to publish gender pay gap information on their website under the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017.

The Accounts Direction is available from the ESFA here.

If you would like advice on the application of the new Accounts Direction, please contact Head of Education at MS South, Ann Mathias at