Producing Academy Accounts in a challenging environment

Written  by: Ashley Goldsmith, Product Manager (Accounts)

The Academy reporting season is always an intense period for Accountants and Auditors alike with the Education and Skills Funding Agency (ESFA) requiring audited accounts for the period ending 31^st August each year by 31^st December.

There is an additional requirement to publish the accounts on your website no later than 31^st January each year, with the accounts filed with Companies House within 9 months of the period end (usually 31^st May for Academies).

This tight reporting window means that using software such as CaseWare’s Charity and Academy AccountsAdvanced template is increasingly vital for all firms involved in the preparation and the audit of Academy accounts in order to streamline the process.

The challenge for us as a software provider is to obtain the information from ESFA and then interpret the changes as quickly as we can, in order to update our template and release to our clients well ahead of the 31^st August reporting period end, so that firms can start rolling forward existing engagement files and perform as much work as possible prior to the 4-month reporting window.

COVID-19 impact

The unprecedented effects of the COVID-19 outbreak resulted in the final version of this year’s Academies Accounts Direction (AAD) being released on 16^th June 2020. Historically, this has been made available by the end of May and therefore this gave us a much shorter window to turn around our annual update which we released to clients on Thursday 23^rd July this year.

As outlined in her letter to accounting officers in academy trusts on 16^th July, ESFA’s Chief Executive Eileen Milner reported that a Supplementary bulletin will be released, with guidance on how to disclose the impact of COVID-19 with regards to regularity and audit implications, the Trustees’ report and how to report details of financial support received.

At the time of writing this article, the Supplementary bulletin was yet to be released and therefore it is impossible to predict with any certainty how much of an effect this bulletin will have upon our template. If any additional content is required, we will send out a further update as soon as possible.

Filing extension?

The indications are that ESFA will not be extending their December reporting deadline at the current time, although this is subject to change.

This means that CaseWare is still working to the usual timeline and thus a mid-season ePack update is scheduled for early October 2020 to incorporate any changes requested by clients based on the initial release sent out at the end of July (epCA4.04.06).

This year’s main changes

The main changes in this year’s AAD relate to additional disclosures required in the Trustees’ report:

• Engagement with employees (over 250 employees only)
• Engagement with suppliers, customers and others (large academies only)
• Statement describing how the trustees have promoted the success of the company under section 172(1) of the Companies Act 2006 (large academies only)
• Streamlined energy and carbon reporting (large academies consuming more than 40,000 KWh of energy in the UK). For further guidance on reporting in this area, ESFA have published this article.

All of these changes are incorporated into our standard Trustees’ report within our latest ePack update.

In addition, there is a requirement for Trustees to explicitly state that they have reviewed and taken account of the guidance in the Governance Handbook and competency framework for governance.

Similarly, Academies must disclose how their internal audit function has been affected by the new FRC Ethical Standard for Auditors.

There are regularity requirements now to state the monetary amounts of any instances of irregularity or non-compliance in the accounting officer’s statement on regularity, propriety and compliance and in the accountant’s report on regularity.

Other accounts disclosures include:

• Analysis of net debt note (to comply with the updated Charities SORP)
• Legal costs incurred by Academy trusts must be clearly identified and disclosed within the notes
• If multi-academy trusts have zero fund balances at the year end for both 2020 and 2019, they should include narrative to explain the lack of balances shown within the Funds Analysis note.

All of these changes are made available in the latest ePack update. There is also an update to the mapping database used for Academies. The main purpose of this change is to add in mapping numbers to disclose additions to fixed assets upon conversion to an Academy.

To benefit from these changes, please download and apply our latest ‘tPack’ which was released alongside the ePack in late July.