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Financial reporting and regulation

Buzzacott's fourth feature looks into how financial reporting and regulation affects academies

Posted by Hannah Oakman | December 16, 2016 | People, policy, politics

The Government launched its White Paper in March 2016, which has been the subject of much interest in its aim to drive every school to be an academy. How far that particular aim is driven remains to be seen but the White Paper does continue along a path of radical change that all schools, currently within or outside the academy movement should take heed of. 

More than half of academies are already part of a multi-academy trust (MAT) with many more set to form or join MATs. The new language is ‘supported autonomy, alignment of funding, control, responsibility and accountability in one place, and institutional collaboration’. The White Paper signals a ‘school-led’ system where improvement is delivered by effective education leaders and every school is an academy.

Senior management and trustees should be familiar with the White Paper’s contents, which should form the backdrop to academies strategic planning. 

Whether you are in a single academy trust (SAT) or an MAT, you work in a complex statutory framework. This update covers some of the latest news on what is happening in the sector, including updates on key financial, compliance and assurance issues and helps signpost you to information relevant to your areas of accountability.

Buzzacott accountants have produced a series of short articles proving an overview of the academy sector.

Read on to read the fourth in our series on Financial Reporting and Regulation:

Regulation

Ofsted has published its School Inspection Handbook for inspecting schools in England under section 5 of the Education Act 2005. The document is primarily a guide for inspectors, but is made available to schools and academies so they can better understand the inspection process.

Financial reporting

The new Accounts Direction was issued by the EFA in May 2016 alongside an updated guide on transition to FRS 102 and the Charities SORP 2015. It applies to all accounting periods ending 31st August 2016.

The main reporting changes, other than some presentational changes, arising from the introduction of FRS 102 are:

• Key management personnel - i.e. those having authority and responsibility for planning, directing and controlling the activities of a reporting entity, directly or indirectly. The trustees report must include an explanation of the arrangements and policies for setting the remuneration for this group of people. Their remuneration must be shown in the notes to the financial statements.

• Reserves policy – needs to be disclosed along with a statement of the level of free reserves at the year end.

• Risk management – enhanced disclosure of the SAT or MAT’s key risks and their mitigating actions.

• Comparatives – must be shown for each fund either on the face of the Statement of Financial Activites (SOFA) or by way of a separate note.

• Holiday pay – must be calculated and accrued in the accounts if material.

• Local Government Pension Scheme – the allocation of pension charges to the SOFA will change requiring restatement of comparative information, although the balance sheet valuation will not change.

Key Reporting Deadlines

As with previous years, the audited annual accounts for academies must be submitted to the EFA by 31 December 2016. In addition, academies must submit their accounts return for the year ended 31 August 2016 in the required format to the EFA by 31 January 2017.

To find out more about Buzzacott, visit their website or email them at enquiries@buzzacott.co.uk.

Previously published features in this series are The Funding landscapeCompliance for academies and Assurance for academies

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