Academies Accounts Direction 2020 to 2021 released

Published by Peter Manser on 31 March 2021

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The Education and Skills Funding Agency (ESFA) have released the Academies Accounts Direction (AAD) 2020 to 2021.

The direction of travel in recent times has been more emphasis on governance within Academy Trusts and the release of the latest AAD continues this theme.

Whilst the changes are not significant, it is clear that the ESFA are expecting more thought from Trustees particularly around their communication to stakeholders via the Trustees’ Report and Governance Statement.

The AAD has also now been split into 3 documents.

The model set of accounts (known as Coketown) now sit as a separate document. In addition, a separate guide primarily aimed at academy trust external auditors and reporting accountants has also been produced.

A full copy of the new AAD and accompanying documents can be obtained here.

So, what is new in the AAD 2020 to 2021?

Trustees Report – tell the story

As mentioned above, the ESFA are now looking for Trusts to use their Trustees Report to “tell the story” of their academic year they are reporting upon and in particular, in the financial review section.

They are essentially looking for Trusts to shed light on the numbers shown in the accounts and explain why and how surpluses or deficits have arisen. This should be in terms that a non-accountant would understand. Further guidance is provided in section 2.14 of the AAD.

Whilst there might be an argument that the Trust’s auditors may change the figures, the Trust should have a good idea of the expected outcome for their accounts and this should not be expected to significantly change by the time the accounts are signed.

Furthermore, where Trusts have been unfortunate to have been issued with a Financial Notice to Improve in the year this should be declared and more information provided such as a link to the report on the ESFA website and the key actions taking by the Trust to address the Notice. Further guidance is provided in section 2.15 of the AAD.

Governance Statement and “boiler plate” wording

A new section of the AAD provides feedback to the sector from the ESFA and stresses the need for Trusts to avoid using “boiler plate” text from the Coketown accounts and make this more relevant and appropriate to your circumstances.

In particular, it highlights the Governance Statement as being an area for improvement and text in Coketown should only be used where it is reflective of the Trust’s circumstances.

An example the ESFA often comes across is where an academy trust has significant governance, control or financial management issues (perhaps also raised in the external audit report), yet the relevant sections of the annual report paint a conflicting picture of the academy’s performance because the text provided in the model accounts has been copied without amendment.

Furthermore, the new section highlights areas for improvement in the Governance Statement where too often Trusts tend to omit any commentary. These are as follows:

  • Key changes in the composition of the board of trustees
  • Coverage of the board’s work
  • Details of actions taken to review the effectiveness of the board through a governance review
  • Where the board have met less than 6 times in the year, details of how effective oversight has been maintained.
  • Details of how the internal scrutiny function has been delivered, how the system of internal control has been reviewed for its effectiveness including which areas informed their review
  • Details of remedial actions taken or proposed to deal with any significant control issues identified

Accounts disclosures

Staff costs

The Academies Financial Handbook 2020 now states that Trusts must obtain ESFA approval where Accounting Officers or Chief Financial Officers are not employees.

As anticipated, the AAD now requires details of such transactions to be disclosed in the accounts and has been expanded this to include all “off payroll” arrangements where individuals are not employees.

The notes in question are the staff cost disclosures and those earning more than £60,000 per annum (higher paid staff) and Key Management Personnel. These notes must now include the amounts paid by the Trust for such persons’ work as if they were an employee.

It is clear the ESFA are looking to clamp down on any such arrangements.

Funding for educational purposes

The AAD now requires any material grants received from the DfE or ESFA to be disclosed separately rather than under the blanket heading “Other DfE/ESFA grants”. This is to align the accounts of Trusts to the Accounts Return requirements.

Therefore we will now see what Trusts receive in terms of Pupil Premium, UIFSM etc on an annual basis.

This will push Trusts to consider adopting the ESFA’s Chart of Accounts model which shows separate nominal codes for such items.


We often recommend that the Trustees Report and Governance Statement are drafted as early as possible and this push by the ESFA only goes to strengthen that argument. So do invest the time as these reports really do let stakeholders know of the fantastic work you are all doing in the sector in such turbulent times.

However, if you are concerned or indeed unsure of any of the changes mentioned above, you should discuss these further with your advisors.

The ESFA will also once again be releasing a supplementary bulletin to the AAD which will cover the continuing impact that COVID-19 has had during the 2020-21 academic year. As ever, we will publish the changes and impact this bulletin will have as soon as it is released.

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