Changes to the Academies Accounts Direction 2023/24

As we approach the 2024-year end, the Education and Skills Funding Agency (ESFA) has published the Academy Accounts Direction (AAD) 23/24 which will be relevant for the preparation of the financial statements for the year ended 31 August 2024.

The academies accounts direction (AAD) is the reference pack for academy trusts and their auditors to use when preparing and auditing financial statements. Once again changes from previous years are not significant and the focus is on clarifying the existing requirements. We have listed the key changes for 2023/24 below:

• There is a new section on ‘What an academy trust must do’ – this has been included to help academy trusts understand their obligations and lists out the key requirements (but does not try and cover all the ‘Musts’)
• There is more guidance on the relationship between the financial statements and other financial returns. For example, the difference between the financial statements and the Annual Accounts Return
• There is a new requirement to include a conclusion on whether the academy trust has an adequate and effective framework for governance, risk management and control. This must either be a positive statement or explain why the framework is not effective
• Annex A provides feedback from the ESFA on the outcomes of its assurance work and compliance with the Direction
• The AAD provides further examples of sources of information to inform the accounting officer’s statement of regularity, propriety, and compliance. For example, a review of board minutes, review of management accounts, ensuring compliance with the “musts” of the Academies Trust Handbook, review of the School Resource Management Self-assessment Checklist, review of Notice to Improve letters and other ESFA correspondence, ensuring compliance with funding agreements and terms and conditions as well as many more
• The AAD confirms how 16-19 core education funding should be disclosed in the financial statements. It makes it clear that any trusts receiving 16-19 core education funding should disclose these separately under “non-GAG DfE/ESFA grants” rather than include them with GAG funding
• There is clarification that the staff costs note should separately identify ‘other employee benefits’. These are other forms of remuneration given to employees – for example, benefits such as medical care, cars, housing, etc. Accounts teams will need to ensure their accounting records provide the information required for disclosure in the financial statements
• A new section clarifies how an academy trust might value a long leasehold property. This is an area that causes frequent difficulties
• The AAD has updated the information to be disclosed for agency arrangements. This will particularly affect Trusts with 16-19 bursary funds who will now need to state the amount of unspent funding they are holding and how much is repayable to the ESFA
• And finally, references to the COVID-19 supplementary bulletin have been removed as Covid-19 grants have either stopped or become part of business-as-usual activity

The changes described above should not cause Trusts too much difficulty. However as ever we recommend that the Trustees Report and Governance Statement is drafted as early as possible to ensure plenty of time is available for their complication.

A full copy of the Academy Accounts Direction can be found here. If you have any questions relating to the above article or any other topics included in the AAD, please contact our Academies and Education team.