UHY Hacker Young | Chartered Accountants

Automated Financial Reporting

29 May 2019

The Department for Education (DfE) has launched a new academies chart of accounts which is a first step to automated financial reporting. This is DfE’s standard for financial data that underpins the academies accounts return and budget forecast returns.

Adopting the chart of accounts is voluntary, however, the DfE recommends adopting it for use from September 2019. Adopting the chart of accounts will enable the potential for automated data transfer from an academy trust’s finance system to ESFA for financial returns relating to the 2019/20 financial year.

Adopting means using the ledger codes in the chart of accounts. However, your cost centres don’t need to change. You can map your existing ledger codes but you will need to consider whether your existing coding structure has enough detail for full automation, particularly the balance sheet reporting in the accounts return. If there is insufficient detail you may still need to enter data manually using the accounts return online form.

The chart of accounts can be found here.

By using the chart of accounts the DfE will be able to understand your data and automatically match it to the right part of the online forms when they introduce automation. The DfE hope that this will reduce the amount of time you currently take to fill out the online forms.

The DfE has worked with a number of finance systems suppliers to develop the chart of accounts, although you should talk to your supplier about the implications of adopting the chart of accounts with your version of their software.

Adopting the new chart of accounts will require an investment of time and effort from trusts but this should lead to significant future benefits. Around 65% of the accounts return comes from data within a trial balance. Being able to have the data pre-populated will be extremely helpful to trusts.

Launching the new initiative Lord Agnew said; “Our better financial reporting programme is a great step forward in our work to improve efficiency in schools. We have recognised that the current system of submitting financial data to the department is time consuming and offers insufficient benefit to academy trusts.

By having a standard chart of accounts, we create the essential building blocks for the new system as it provides a consistent way of recording financial data for all academy trusts.  This will allow us to reduce the burden on trusts through the electronic submission of financial data directly from finance systems and adding greater value to trusts by enabling us to create new financial efficiency tools, as well as improve the timeliness and quality of the existing tools.”

An additional benefit is that the DfE can provide richer and more accurate financial benchmarking information allowing academies to compare their finances with other similar academies with greater confidence.

Our national benchmarking report also allows you to compare your trust with other similar trusts.

If you have any queries about the financial reporting process for your trust, please contact me or your nearest academy specialist.