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Written by: Ashley Goldsmith, Product Manager (Accounts)

The number of academies registered in the UK continues to rise steadily, meaning that the Academies Accounts Direction (AAD) applies to more and more people year on year (as per the government’s statistics below):

Of these academies, the vast majority are now multi-academy trusts as shown here:

The Education and Skills Funding Agency has published the 2018/19 AAD. The changes apply to academy trusts preparing statutory financial statements for the period ending 31^st August 2019.

It is important for Accountants and Auditors alike to understand the new rules due to the tight reporting deadline which ESFA impose on Academies. The audited accounts must be filed with them within just four months of the year end – which for the vast majority of Academies (with a 31 August year-end) will mean the end of the calendar year.

The audited accounts must also feature “prominently” on the Academy’s website within five months of the year end (31 January) and they must be filed with Companies House within nine months (31 May).

WHAT ARE THE NEW RULES?

There have been relatively few changes in this year’s AAD but one obvious change is that the “Coketown Academy Trust” sample accounts now feature towards the back of the document – as can be seen by downloading the full version here.

The revisions to FRS 102 detailed in the Update Bulletin 2 are not required for Academies this year as they only apply to accounting periods commencing on or after 1 January 2019 – therefore these changes will be incorporated into the 2019/20 Accounts Direction. However, any academies incorporated after this date will need to comply with these changes.

The main changes are highlighted below:

Funds note

The 2017/18 AAD introduced a requirement for an additional table within the Funds note which showed the combined position of the current and prior period fund movements. This table is no longer required by the current AAD.

Tangible fixed assets note/accounting policy

The categories of tangible fixed assets have been revised to align with the Sector Annual Report and Accounts (SARA). The following categories should be used (where relevant to your academy):

• Land and buildings (analysed between freehold and leasehold)
• Leasehold improvements
• Assets under construction
• Furniture and equipment
• Plant and machinery
• Computer equipment
• Motor vehicles

The AAD also requires consideration of component accounting – where an asset comprises of two or more parts which may have substantially different useful economic lives (e.g. roofs / boilers / lifts etc. within a building).

Comparative information

There is now a requirement to disclose comparative information on a number of additional notes including Agency arrangements and Events after the reporting period. If you disclosed a contingent liability in the prior year, your current year accounts should include an update on this contingency where relevant.

Related party disclosure

ESFA has also clarified that all related party transactions must be reported to them in advance of the transactions actually taking place. Approval must also be sought for any contentious transactions which exceed certain limits – either a single transaction of more than £20,000 or if the cumulative value of the same transaction amounts to more than £20,000 in a financial year.

*These are the opinions of CaseWare Product Managers to provide information and insight to our products and should not be considered as a replacement to statutory guidance.