21 Sep 2020 3:36 PM

As specialists advisors to the education sector, we feel it's worth highlighting a few key areas that academies may wish to bear in mind.

Related party transactions

Any contracts with a related party must be declared to the ESFA before the contract is signed. Where costs exceed £20,000 individually or cumulatively then ESFA approval must be obtained prior to contracting.

Setting executive salaries

Executive salaries remains a sensitive subject and is of public interest. Academy trusts are therefore charged to ensure any awards made are transparent and supportable.

As academies operate with the use of public money, executive pay must be proportional and defensible to the public sector market and should reflect value for money.

Internal scrutiny

Under an update (Dec ’19) to the ethical standards applicable to external auditors, supplying an internal audit service is now prohibited for a firm who is also providing an external audit opinion on the financial statements.

Subsequently, the ESFA have clarified that they regard internal scrutiny of academies in the same way as internal audit.

Where academy trusts currently engage their external auditors to provide this service then they are expected to engage alternate providers from 1 September 2020.

Transitional regulations allow external auditors to fulfil existing internal engagements in line with contractual arrangements. For academies this is regarded as completion of the 2019/20 academic year.

Financial returns timetable

The following is a summary of the financial timetable of the returns as published by the ESFA in the Chief Executive’s July letter. Return

Submission date Land and building collection tool............17 Dec ‘20

Audited financial statements.........................................31 Jan ‘20

Accounts return..........................................................23 Feb ‘21

Budget forecast return outturn.....................................18 May ‘21

Budget forecast return three year..................................27 Jul ‘21

The ESFA have had a policy of naming individual academies who failed to deliver two or more of the first three above returns on time (2019: 43). Due to COVID this policy is under advisement.

Updated chart of accounts

The Department for Education has updated the academies chart of accounts for use in the academic year 2020/21.

The chart of accounts is the standard for financial data structure of the Department for Education, designed to underpin the academies accounts return and budget forecast returns.

Academy trusts who have already adopted the chart of accounts should ensure they update their own chart of accounts with effect from 1st September 2020 to reflect the changes. Other trusts are able to adopt the chart of accounts for the first time in 2020/21 should they wish, and to work with their software suppliers to do so.

Adopting the chart of accounts is not mandatory, however academy trusts who choose to adopt the standard will potentially benefit from future automated data transfer tools for financial returns.

If you have any questions on this matter please contact us.