Holiday pay accrual

However there is every chance that it may apply to your academy due to changing accounting rules. Next year academies will need to prepare their accounts using an Accounts Direction based on a new Charity Statement of Recommended Practice.

Under FRS 102 it is necessary to provide for holiday pay (or indeed any other employee benefits) outstanding at the 31 August year end.

The principle is that you need to accrue where entitlement to leave differs from that taken at year end. Most teaching staff contracts and holiday years will run to 31 August, but it is fairly common for admin staff to have a holiday year ending on 31 March, often going back to an academy’s old LA days.

Academies with staff in this position need to consider how much they would owe these staff for untaken leave if the employee left on 31 August.

If the amount is material, the 2016 accounts will need to include the holiday pay accrual, and the comparatives will need to be restated to include an accrual as at 31 August 2015 (in fact it goes further than this because you need to determine any holiday pay accrual at the beginning of the 2014-15 year i.e on 1 September 2014).

It is therefore important that you consider the following now:

  1. Do we have staff with a holiday year ending other than on 31 August?
  2. Can our systems identify the amount on untaken leave?
  3. Can we easily quantify the holiday pay accrual?
  4. Is the holiday pay accrual material to the financial statements?

You’ll potentially need to understand what the employment contracts for different category of staff say, and perhaps even with each category.

It may be worth considering aligning your holiday and financial years now to avoid the need to calculating this accrual in 2016.

If you require assistance in this area please contact me or an academy schools experts at your nearest location.

Let's talk! Send an enquiry to your local UHY expert.