Review of the Academy Accounts Direction

There is not a huge amount of change in the Academy Accounts Direction applicable to the year ending 31 August 2023 but here is a summary of the points that we would like you to be aware of:
 

Common areas for improved compliance

As last year, ESFA have included a section on non-compliance with the AAD by Academy Trusts. This is well worth having a read through just to help ensure that you avoid the main pitfalls.

Inconsistencies between:

• Different parts of annual report (e.g. Trustees’ Report & SOFA, or reserves policy and the funds note)
• Annual report and internal scrutiny annual submission
• Annual report and management letter

Disclosures that are "musts" but are often not adhered to, in particular:

• Trustees' report – how subsidiaries fit into the organisational and governance structures
• Governance statement, where you must ensure:
  • Adequate details of the governance framework for the audit and risk committee (often there are only details about the full board and finance committee given)
  • Adequate description of processes to manage conflicts of interest, including subsidiaries and Joint Ventures
  • Explanation of why a particular option for internal scrutiny was chosen
• Related Party Transactions and trustee remuneration including the name and salary of staff trustees
   

Clarified requirements

There aren’t that many new requirements, mainly because the underlying accounting regulations have not changed.  However, there have been a few clarifications. 

The first is the fairly obvious fact that a trust must have an Accounting Officer at all times.

Treatment of loans: There will often be concessionary loans (to further a charity's objects with no interest or interest below market rate). If so, then ensure they are dealt with in accordance with the Statement of Recommended Practice. Most of the time, this will be a simple recognition at amount received less repayments and the main point is to get the accounting policy correct. Recording at fair value and then amortised cost is probably a complication too far in most cases. The most common examples of the sort of loans we are talking about are Salix loans for energy efficient capital projects or loans inherited from the Local Authority on conversion.

There's a reminder to separately disclose all material income streams (in note 4) and that teaching assistants are support staff.

Very helpfully, the Coketown model accounts for 22/23 have changes highlighted in yellow, making it very easy to see them compared to last year.
 

New requirements

The one thing that the Direction does major on this year is for Academy Trusts to explain how they have maintained their buildings and kept them safe. If you have a look through the model accounts, half of the yellow highlighted bits are to do with estate safety and maintenance.

Principal risks/uncertainties: In this section, the Academy Trust “should include consideration of those risks impacting on trustees’ responsibilities to ensure the trust’s estate is safe, well maintained and complies with relevant regulations”.

Value For Money: In this section of the Governance Statement, the Academy Trust “should consider demonstrating how it has effectively used relevant funding to ensure the trust’s estate is safe, well-maintained, and complies with regulations.”  This section encourages the giving of examples.

Statement on regularity, propriety and compliance: Here there is new standard wording that the Trust “has complied with the requirements for estates safety and management.”

In connection with this, the ESFA publication “Good Estates Management for Schools” has been updated. There is an attached self-assessment tool to help ensure you have appropriate plans and processes in place. This self-assessment tool should be updated at least annually.

Pension guarantee note: Here there is new standard wording.
 

Removed requirements

There are none!

If you have any queries in connection with the AAD please contact us through your usual manager contact.