Academies accounts direction and academies financial handbook

Below is a brief summary of the key changes in this edition, along with some suggested key action points. 

New statutory elements in the trustees’ report to cover:

• success of the Academy Trust
• employee engagement
• business relationships.

	Streamlined Energy and Carbon Reporting (SECR) to be included within the Trustees’ Report section of the financial statements, applicable to large Trusts only. See our insight for further details on SECR: Annual reporting requirement for large companies.
	Instances of irregularity, impropriety or non-compliance noted in the financial statements should state the relevant amounts, if known.
	Provide an explanation in the Governance statement of the impact on your auditor arrangements for Internal Scrutiny reporting following the revised FRS Ethical Standard, where applicable.
	Checklist to help trusts prepare for the external audit.
	Additional guidance for constituent Academies where funds are zero in the current and previous financial year.
	Encouragement to include within the Governance Statement, any review undertaken on the guidance provided by the ‘Governance Handbook’ or ‘competency framework for governance’.
	Accounting Officer to sign off regularity statement including the run-up to a Trust’s closure.

Key actions

1. Speak to your auditors! Hopefully us, but if not, please feel free to contact us should you have any further questions.
   
   
2. Ensure that whoever writes the Trustees’ Report familiarises themselves with the additional statutory elements required this year, for Trusts with more than 250 employees, greater detail is required.
   
   
3. Large Academy Trusts who consume more than 40,000 kWh of energy must include narrative and data within their Trustees’ Report under the SECR requirements. If this effects your Trust then, ensure you either have the expertise in-house or an appropriate specialist in place.
   
   Note: Where this is being undertaken in-house please use the guidance produced by the ESFA* and DEFRA/BEIS**.
   
   
4. Following the revision of the ethical standards from the FRC, Auditors providing external audit to an entity shall not also provide internal audit services to it.

Note: This is subject to transitional arrangements which permit existing audit engagements at 15 March 2020 to conclude.

Important: The ESFA are publishing, in July 2020, a supplementary bulletin to the Accounts Direction to cover the reporting of COVID-19. This will have the same status as the Accounts Direction and will contain additional requirements as well as further guidance.

The full version of  this year’s Accounts Direction is on the on the GOV.UK website.

Below is a brief summary of the changes in this edition, along with some suggested key action points.

Governance

	Information on trustees’ responsibility to maintain the Trust as a going concern.
	Members must not be employees or occupy unpaid staff roles.
	Members must remain informed about Trust business.
	Trusts must appoint a clerk to the board.
	Trust must keep their register of business interest up-to-date.

Executive team

	Accounting Officer (AO) and Chief Financial Officer (CFO) should be employees.
	Where the above is not true the Trust needs to seek ESFA approval.
	Larger Trusts to consider relevant qualifications of their CFO and CFO’s to maintain professional development.

General controls and transparency

• maintaining a fixed asset register
• termly review of pupil number projections
• avoidance of overdrafts
• publication of information about high pay
• whistleblowing
• Trust’s funds must not be used to purchase alcohol
• board and committee responsibilities for risk management
• completion of the School resource management self-assessment tool

Internal scrutiny

	Clarification that Internal scrutiny covers both financial and non-financial controls.
	Removal of the option for the external auditor to carry out internal audit.
	Confirmation that Trusts can use additional individuals/organisation to support internal scrutiny, where specialist non-financial knowledge is required.

Annual accounts

Additional information on the audit and risk committee’s role (the musts’).

Key actions

1. Again, speak to us, it’s best to discuss how these changes could affect your Trust, remembering the handbook comes into effect 1 September 2020 leaving only a few months to update people and systems alike.
   
   
2. Ensure that Members, Trustees and key management have been made aware of the relevant changes.
   
   In particular, the audit and risk committee should review the list of ‘musts’ to ensure they are being complied with.
   
   
3. Where AO’s or CFO’s are not employed by the Trust, re-evaluate the decision made and, where it is still considered necessary, seek approval from the ESFA prior to 1 September 2020.
   
   
4. Review for non-compliance with the 5 other ‘musts’ included as changes in this edition;
   
   
5. Familiarise yourself with the School resource management self-assessment tool.