The Education Funding Agency’s (EFA) last e-bulletin before Christmas – on 22 December when many schools had already broken up for the festive season – sneakily revealed some changes to the Budget Forecast process.
In recent years, academy trusts have had to submit their Budget Forecast Return (BFR) by 31 July, although some trusts were also selected in Autumn 2016 to complete a second BFR.
The EFA have now announced that there will be TWO BFRs for all academy trusts in 2017. The first will be in the Spring, with a second BFR required in the Autumn. Specific details have not yet been published, so the new filing deadline for this Spring return is not clear at the moment. However, the e-bulletin did say the EFA intend to bring forward the timing of the next BFR so presumably it will need to be filed by 30 June or maybe even 31 May.
The reasoning behind this forthcoming change is to support the move to a new academies sector annual report and accounts or ‘SARA’. The Department for Education (DfE) have agreed new financial reporting arrangements for the academies sector with HM Treasury and Parliament in response to the continual qualification of the DfE’s annual accounts. In December 2016 the National Audit Office issued an adverse opinion on the truth and fairness of the DfE’s group financial statements for the second year in a row. This is largely because the government department’s accounts consolidate individual academy trusts (which all have a 31 August year end compared to the 31 March date the DfE are required to prepare its accounts to) into their group financial statements. This 7-month difference in reporting periods results in the need for complex methodology to present results.
The DfE will prepare a SARA for the first time for their reporting period 1 September 2015 to 31 August 2016; the SARA will align with the financial reporting period of individual academy trusts taking away one of the major issues the DfE have experienced to date. The DfE expects the new arrangements to speed up validation checks by up to two months and enable accounts production much earlier than in previous years. The new online August Accounts Return, which academy trusts and their auditors are currently working on ahead of the deadline of 31 January, has also been developed in response to this need to speed up the data collection and validation process.
What do I need to do?
You should watch out for future announcements from the EFA which clarify the arrangements, although naturally we will keep you up-to-date in future blog posts as and when we know more.
As soon as the deadline for the spring BFR is clarified, we recommend that you schedule time to prepare the return and also contact your auditors if you normally ask them for some assistance with the figures.
Please remember that whilst many academy trusts will delegate financial matters to a Finance Committee, it is a requirement of the Academies Financial Handbook for the full Board of Trustees to approve the budget. Of course there is nothing wrong with initially taking the budget to the Finance Committee, and this probably is a good idea, but approval by the Finance Committee does not take away the need for the full board to approve the budget. You will, therefore, want to ensure that there is sufficient time after you complete the budget for the Trustees to approve it, so we recommend you schedule a full board meeting probably two or three weeks ahead of the BFR submission deadline - whenever that may be. Do remember to minute the decision to approve the budget clearly, including any discussions or questions that were raised about specific rows or figures.
If you have any questions about the changes discussed in this blog, please contact your local UHY adviser or complete our online contact form. Or, if you would like to read more academy focused blogs, please click here.
