EFA publish not one, but TWO Academies Accounts Directions 2014 to 2015

The EFA have belatedly published the 2014 to 2015 Academies Accounts Direction, initially promised by the end of May.

To be exact, they have published two Accounts Directions, which are both in place for accounting periods ending 31 August 2015. It is therefore important that academy finance staff and trustees reading the Accounts Direction ensure they are viewing the correct version.

There are two different versions because of the new Charities Statement of Recommended Practice (SORP) which is effective for accounting periods beginning on or after 1 January 2015.

Most academy trusts preparing financial statements to 31 August 2015 will therefore be doing so in accordance with the Accounts Direction based on the old SORP 2005. All trusts that have previously prepared audited financial statements will use this version, as will any new trusts incorporated before 1 January 2015.

A minority of new academy trusts have been incorporated on or since 1 January 2015, and these trusts will be preparing accounts in accordance with the Accounts Direction based on the SORP 2015.

Both versions of the Accounts Direction can be downloaded from the EFA’s website here.

There are some changes, but thankfully most of these are in the SORP 2005 version. We will explore the changes in both versions in forthcoming Academy Updates once we’ve had an opportunity to review the publications in detail, but in the meantime the key changes have been highlighted by the EFA at the front of the documents, and include:

  • the separate Value for Money statement has been withdrawn, replaced by a new section within the Governance Statement;
  • the list of funding streams that comprise General Annual Grant for the purpose of calculating amounts carried forward at the year end have been updated;
  • all non-contractual severance payments will now need to be disclosed on an individual basis, regardless of value (however, these can remain anonymous);
  • a new section on connection charities has been added;
  • additional guidance has been added on buildings occupied by church academies; and
  • a new section has been included on accounting for risk protection arrangements.
Things are a little more interesting in the SORP 2015 version…

The SORP 2015 version is largely similar; however there are some key differences.

Trustees’ report
There are some changes to the trustees’ report, with additional disclosures required explaining the processes involved in setting the pay and remuneration of key management personnel. The trustees’ report will also require some additional explanation over the approach to reviewing reserves policies.

Employee benefits disclosure
Total employee benefits paid to key management personnel will need to be disclosed in the financial statement, and, thankfully, the SORP 2015 has clarified that this will capture the trustees together with the senior management team as listed on the reference and administrative details page at the beginning of the accounts.

You will also be pleased to note that only the total amount will need to be disclosed; there will be no need to make individual disclosures, with the exception of staff trustees for which the requirement still remains.

If you have any questions or are unsure which Accounts Direction is relevant to you, please get in touch with Allan Hickie, head of our national academies team, or find your local academy specialist.

Look out for our forthcoming summaries which will be useful resources for academies to circulate around their finance teams and trustees.