Academy Accounts Direction 2022-23 released

The Education & Skills Funding Agency (ESFA) has published its Academies Accounts Direction 2022-23 (AAD) and it appears to be listening to the concerns of the industry. Changes are light but none the less important.

The Accounts Direction sets out the requirements and provides guidance for academy trusts preparing their annual report and financial statements for the period ending 31 August 2023.

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

Here is a brief summary of the main changes introduced in the AAD 2022-2023.

Trustees and how they should use the AAD

The AAD states that readers should be ‘familiar with accounting concepts, principles and terminology’. It recognises, however, that trustees are not expected to have detailed understanding of the AAD’s technical requirements, but should seek support from their chief financial officer, and will find the AAD helpful in fulfilling their responsibilities. You can, of course, contact us here at Kreston Reeves to seek further support or we can organise a bespoke training session for the Trustees’.

Feedback on non-compliance

Trustees are responsible for ensuring that the accounts ‘fairly reflects the academy trust’s performance and circumstances’. This is in response to the ESFA seeing text copied from model accounts, text that has not been updated from the previous year, and inconsistencies between the accounts and accompanying documents. See paragraph 1.21 of the AAD for further guidance.

School buildings’ safety risk

The AAD in response to school buildings’ safety risk has:

• Clarified that the trustees report on principle risks and uncertainties should consider how those risks impact their responsibilities to ensure the estate remains safe and well-maintained.
• Clarified that value for money statements include safety and management.
• Suggest how accounting officers demonstrate how they use funding to ensure the estate is safe and well-maintained.
• Confirmed that the statement on regularity, propriety and compliance encompasses estate safety and management.

Kreston Reeves can provide a detailed template for the Trustees’ Report and Governance Statement and we would recommend that this document is drafted early in the audit process, so that we can assist you in confirming its completeness and compliance, particularly as its length and complexity increases.

Loan treatment

The AAD now requires all amounts owed, accrued or deferred by an academy trust should be shown on the balance sheet under ‘creditors’ and show the amount that the trust expects to pay to settle the debt.

Additional funding

AAD acknowledges that the majority of funding for the academy sector comes from DfE and ESFA, with the largest amount being GAG. GAG must be disclosed separately in this note. Academy trusts are, however, reminded that any other material funding must also be separately listed in the note.

Teaching assistants

The AAD requires the reporting of the average number of employees by headcount. This is analysed between teaching, administration and support, and management headings. Management should include senior leadership team members who do not have day-to-day teaching duties. The head of academy should always be considered as management, irrespective of any teaching duties. The administrative and support heading includes all other staff who do not have day-to-day teaching duties, which will include teaching assistants.

ESFA wants to hear from you

The EFSA continues to seek the feedback from the sector on the AAD, including the model accounts document, and is asking trusts and auditors to complete a short survey. The survey can be found here.

Kreston Reeves will shortly complete this survey and we would encourage all of our academy trust clients to do the same.

If you have any questions related to this topic or would like further information or guidance, please contact us today.