Academies: Academies Accounts Direction supplementary bulletin issued

Regularity and audit implications

There is no change to the scope of the regularity assurance engagement, the format or content of the regularity report. However, reporting accountants should continue to remain alert to the impact of the pandemic on the controls at academy trusts, which may give rise to breaches of regularity. The supplementary bulletin includes a list of questions for reporting accountants to consider when planning their work in this area.

Procurement policy note (PPN) 04/20 was in place until 31 October 2020, with further guidance on supporting suppliers issued by the DfE in February 2021. Reporting accountants should be familiar with the PPN and guidance to consider whether there are any implications for the regularity report.

Annual report

As in last year’s annual report, academy trusts should refer to the impact of the pandemic, particularly in relation to the financial performance and position, going concern and governance arrangements. In addition to the challenges faced, academy trusts should also refer to any opportunities and benefits that have arisen because of the pandemic.

Covid-19 support funding

There have been a range of funding streams available to support academy trusts during the pandemic and the bulletin includes an annexed list of the main ones, along with a brief description of their application. The usual accounting principles for recognition apply to these funding streams but the bulletin requires some additional disclosures.

Trusts in receipt of Catchup premium and / or funding from the Coronavirus Job Retention Scheme must separately identify these income streams in the note analysing funding for the academy trust’s educational operations and provide narrative to disclose the total costs incurred. These income streams must also be separately identified in the funds note.

Trusts in receipt of other Covid-19 support funding need not disclose each stream separately unless they are material. Where not material, they should be disclosed as “Other (DfE/ESFA) COVID-19 funding” or “Other COVID-19 funding”, as appropriate, in both the funding for the academy trust’s educational operations note and the funds note.

Academy trusts who have participated in the national free school meals voucher scheme have acted as facilitators to the scheme and will not have any additional funding or expenditure in relation to this scheme. However, where trusts have claimed additional costs for periods of restricted attendance, disclosures will be required as for other Covid-19 support funding.

Laptops and other devices

There are a number of schemes providing laptops and other devices to academy trusts to support disadvantaged children in accessing remote learning. This includes the DfE’s scheme, schemes run by local authorities and donations from third parties.

Trusts will need to consider whether they are acting as an agent or principle in relation to the provision of the devices and whether the devices are being lent or donated to the recipient to determine the appropriate accounting treatment.

Other matters

The bulletin confirms that amendment to FRS 102 for Covid-19 related rent concessions on operating leases is applicable for academy trusts.

Funding announced for 2021/22 in relation to tutoring or catching up on lost learning is not covered by this bulletin.

Further guidance may be issued by the ESFA where necessary.

What should I do next?

If you act for academies, you should familiarise yourself with the supplementary bulletin and ensure your clients are aware of it and the implications for accounts preparation, audit and the regularity assurance engagement.

How Mercia can help

Our Academies: Audit and Accounts Update course will cover these changes in detail. As well as covering up to date accounting and financial reporting regimes.

You can book the course here.