27 July 2017
As academy trusts approach their financial year ends on 31 August, their finance teams and accounting officers often find themselves under pressure to prepare for their audits. To help assist you in this process, we have listed below the key areas that you should consider and act upon to help ensure that your audit process goes as smoothly as possible.
- Agree a timetable for the audit process, including the following: an audit planning meeting with your auditors; dates for draft management accounts and agreed ‘deliverables’ to be available to your auditors; audit fieldwork visits; date for draft trustees’ report to be available; draft audited accounts to be circulated, draft management letter circulated; discussion meeting with the finance team and accounting officer; audit or finance committee and board completion meetings.
- Obtain from the auditors a list of documents required for the audit (deliverables) and agree how they will be made available (paper file, emails, dropbox etc.). The academy should obtain this list before the year end so there is adequate time to prepare for the audit.
- Review any new requirements in the ESFA’s 2016/17 Academies Accounts Direction that will affect your academy when preparing the year end accounts. (Our summary of the key changes in this year’s AAD can be seen here.)
- Arrange an audit planning meeting with your auditors to discuss the audit process, timing, identified audit risks, audit team and documents required for the audit.
- Obtain the Local Government Pension Scheme (LGPS) valuation reports from your pension providers. This should be requested before the trust’s year end and the valuation should include the information required to be disclosed in the notes to the accounts.
- Obtain any required land and building valuations. This should be requested as soon as possible to avoid any delays in obtaining the valuation holding up the audit.
- Ensure copies of all minutes of the meetings of governors/trustees and all committees are available.
- Ensure your finance manual and all policies and procedures, the risk register and all governance documents are up-to-date and available for your auditor’s review.
- Details of all changes to directors/trustees, members and the trust should be provided to the auditors.
- If your academy has stock (such as catering stock, books for sale, uniforms) year end stock counts should be arranged. Your auditors should be told the dates of the stock counts so they can decide whether they wish to attend.
- Ensure your opening balances are correct. The prior year’s audit adjustments should have been correctly included in the management accounts with the 2016/17 opening fund balances agreeing to the audited accounts for 2015/16.
- Start thinking about your year end accruals and prepayments and their likely make-up and ensure at year end that they are all correctly recorded in your accounts.
- Agree responsibilities for preparing the draft trustees’ report for inclusion in the audited accounts. This should include the strategic report and discussions on objectives, educational achievements, future plans and KPIs, as well as your value for money statement.
- Arrange for the preparation of the draft governance statement for inclusion in the audited accounts, including the governance structure, internal controls, risk management, control issues arising during the year and outcomes of governance reviews.
- Prepare a list of related parties and any transactions carried out with related parties during the year. Ensure that any goods or services provided by related parties were provided at ‘no more than cost’ and that the supporting ‘statements of assurance’ are available.
- Prepare a schedule of counter-party transactions during the year. This information needs to be included in the Academy Accounts Return which is best prepared at the same time as the year end accounts.
- Check that the trust has properly accounted for its funds (unrestricted, restricted, designated, fixed assets funds) with the various income and expenditures of each type of fund adequately separated and included in the appropriate accounts.
- Ensure that government grants and pupil premium are correctly accounted for and in the correct financial period with any deferred income which relates to the next year being carried forward.
- If the trust has a subsidiary company, the audit of the company should be arranged and carried out at the same time as the trust.
- At the year end check whether monies have been received for future events in the next accounting period. Such funds should be carried forward as deferred income and any event expenses paid by the year end carried forward as prepayments.
- For MATs information and disclosures on central trust services should be available to the auditors as well as how the trust’s year end balances and GAG carry forwards are apportioned across all academies.
- Details of any of the following should be available as they need to be disclosed in the accounts: ex-gratia, compensation, gifts, losses, severance payments, heritage assets and indemnities.
- Details of any new bank accounts should be provided to your auditors as soon as possible so that they can request bank confirmation letters.
- Details of any claims, legal cases, litigation or contingencies should be discussed with your auditors as soon as possible so that the auditors can consider the accounting treatments and obtain any legal letters from the trust’s solicitors.
- Details of any property or asset leases in place during the year should be provided to the auditors along with any required ESFA approvals.
- A review of capital expenditure should be done to ensure its completeness and that additions to fixed assets have been made in accordance with the trust’s agreed accounting policies.
- A review of fixed assets depreciation and useful lives should be made to ensure that a full year’s depreciation has been included.
- Check that the trust’s fixed assets register is up-to-date and agrees to the management accounts for costs, depreciation and net book values.
- Review the prior year auditor’s management letter and ensure that all weaknesses and recommendations for improvement have been adequately addressed and resolved in the current year.
- Review the internal audit recommendations during the year and check that all issues arising have been adequately addressed and resolved.
- Obtain a copy of the board approved 2016/17 budget for your auditors and ensure that going concern has been adequately considered.
- Where any novel or contentious payments or severance payments have been made during the year, ensure the details and required ESFA approvals are available.
If you would like to discuss any aspects of your year end audit, or if you require any assistance, please contact your local UHY academies expert.
