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Academies Accounts Direction 2017/2018 (AAD)

Detailed guidance for academy trusts and auditors in preparing and auditing academy trusts annual financial statements has recently been updated and you will be pleased to see there are no significant changes.

For accounting periods ending 31 August 2018

The AAD 2017 and 2018 was released in May 2018 and runs to 160 pages. The brief changes are as follows:

  • Reinforcing that the deadline for submission of accounts is 4 months after the accounting period, for most academies this is 31 December 2018.
  • Requirement to include information on trade union facility time and also fundraising practices in the trustee’s report.
  • Areas to be covered in the auditor’s report to comply with revised auditing standard.
  • Expenditure on raising funds to be split between direct and support costs.
  • Funds note to include comparative information and an analysis showing the combined position for both years.
  • Treatment of capital grants if there is no land and buildings in the accounts.
  • Treatment of the apprenticeship levy payment and funded training received.
  • Revision of fixed asset note to align classifications with the annual accounts return.
  • Enhancing the related party note.
  • Disclosure of activities relating to teaching schools.

Levels of executive pay

In December 2017 and February 2018 the Education and Skills Funding Agency (ESFA) sent letters to the Chair of Trustees of academies whose accounts showed they were paying an executive salary above £150,000. The Academies Financial Handbook 2017 states that, ‘the board of trustees must ensure that their decisions about levels of executive pay follow a robust evidence-based process and are reflective of the individual’s role and responsibilities.’ This is to ensure that due consideration is given to salary setting and a thorough process is followed. The letter requested further information regarding executive salaries from the academies.

Best practice in financial management and governance

We recently received a letter from the Parliamentary Under Secretary of State for the School System as part of their drive to increase awareness of best practice in financial management and governance. The areas covered in the letter were:

  • General Annual Grant (GAG) pooling
  • Integrated Curriculum Financial Planning (ICFP)
  • 3 year forecasting
  • Better use of KPIs and benchmarking
  • Best of breed templates
  • Auditors’ management letters
  • Internal audit requirements
  • Operational challenge

In the letter we were encouraged as auditors to discuss these areas with our clients. We will be doing so in due course as part of the audit process.

Please do get in touch with me, if you would like to discuss any of the updates raised here in more depth.



Date: 24th July, 2018
Author: Wendy Bambrick


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