The Academy Accounts Direction was published by ESFA in March and contained only minimal changes to the requirements expected in the academy accounts for 2020/21.
The main changes to be aware of are largely around the structure of the document, which is now split into three parts: the main guidance document; the “Coketown” model accounts document, compliance with both being a requirement of each trust’s funding agreement; and lastly an auditor/reporting accountant framework and guide.
Although there are only few technical changes this year, there is increased guidance around expectations in terms of the financial review section of the trustee’s Report and it is stressed that trusts should avoid using the template ‘Coketown’ narrative to make this report more appropriate and relevant. The ESFA expects that academy trusts should take the opportunity to shed light on the numbers shown in the financial statements, including why and how they have arisen, in terms that a non-accountant would understand.
Therefore, it’s advisable to set aside sufficient time this year to prepare this report, due to the importance of including comment on all key areas:
Greater emphasis on this comprehensive part of the annual statements may mean that this section requires a more thorough update, as opposed to a simple ‘rolling forward and annual update’ of what has been included in previous years.
Staffing disclosures required for key management personnel and higher-paid staff must now also be applied where the academy trust has entered an ‘off-payroll’ arrangement with someone who is not an employee. There is also further clarification around the classification of funding sources to further align academies’ financial statements to the Academy Accounts Return (AAR).
All other expectations in the Accounts Direction document remain relevant.