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Academies Accounts Direction and related documents – 2022 Update

Academies Accounts Direction and related documents – 2022 Update

Gemma Roger


The “Academies accounts direction 2021-2022” was released in March alongside the “Academies model accounts” and “Framework and guide for external auditors and reporting accountants of academy trusts”.

The following updates have been made to the accounts direction with appropriate amendments following through to the model accounts and framework.

  • There is a new section in the Governance Statement requiring explanation on how conflicts of interest are managed, including details of the processes in place.
  • There is a new disclosure required for severance payments which requires the values of any severance payments in the following set bandings: £0-£25k; £25k-£50k; £50k-£100k; £100k- £150k; £150k+. The value of non-statutory/non-contractual severance payments should continue to be individually disclosed.
  • Updated guidance regarding service concession arrangements (affecting premises held under PFI contracts) requiring a narrative supporting numerical disclosures and describing what payments relate to (for example catering, cleaning and utilities) as part of the “long term commitments” note.
  • New guidance on accounting for buildings where the construction was overseen by the DfE or local governing authority and transferred to the Academy on completion – when the buildings are not in educational use they should not appear on the balance sheet (unless the trust is contributing to the construction costs in which case the costs should be capitalised as Assets under Construction). When transferred to the Academy’s use the asset and corresponding donation income should be recognised.
  • From April 2022, for billing authorities that have “opted in” academies no longer have to pay and reclaim their business rates. Where applicable, the ESFA will pay the business rates directly to the billing authority. In such cases, the academy should recognise in their accounts the appropriate business rates expense and corresponding grossing up of GAG income.
  • The requirement for dormant accounts to be submitted to the ESFA has been lifted.
  • The requirement for teaching schools to submit trading accounts as noted to the financial statements has also been removed.
  • The Trustees Report should include the organisational structure of subsidiaries, joint ventures and associates.

As a result of feedback from the review of academy trust accounts, audit and internal scrutiny reports, the following points of common non-compliance with the direction have been highlighted this year for consideration when preparing the 2021/22 accounts:
  • It is the responsibility of the Trustees to ensure that their trust’s accounts accurately reflect the performance of their trust and comply with the financial reporting framework • Once again, the ESFA have highlighted the importance of using the Coketown Accounts text as a guide (rather than directly copying non-relevant wording into the trusts accounts). In addition, they have emphasised the importance of updating text to reflect the circumstances of the current year.
  • Where the direction/model accounts state that points must be included in the accounts, such points are specifically required. These include:
    • Details taken to review the effectiveness of the board of trustees, or otherwise, an indication of when such a review is planned (Governance statement)
    • In the cases where the board has met less than 6 times in the year details as to how effective oversight has been maintained (Governance statement)
    • Details of the frequency of Internal Scrutiny activity (Governance statement) 
    • Disclosure of the salary and name of any staff member who is also a Trustee in the year (Notes to the Accounts)
The ESFA have confirmed that there is no intention to release an update to the Covid-19 bulletin this year, however, the 2020/21 bulletin remains relevant and applicable.