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Academies update – new accounting requirements

Academies update – new accounting requirements

All academies have to prepare accounts to 31 August each year and 2016 will see some changes.  The changes arise from a change in accounting standards that is affecting all UK companies and charities.

All existing UK accounting standards are being replaced by Financial Reporting Standard 102 (FRS102). In line with this, there is a new Charities SORP (SORP 2015).
The EFA have just issued their annual guidance on the year end accounts and this year they have also issued guidance on the transition to the new standards. The main points for academies to look out for include:
• academy trusts will need to identify their ‘key management personnel’ and disclose the total remuneration paid to this group, as well as describing any criteria used for setting pay;
• the reserves policy note will need to include a comparison of the level of reserves intended under the policy and the actual level of reserves;
• there are a few changes in presentation and description of items on the SOFA – on the whole these make things a little simpler;
• on the other hand, the comparative figures on the SOFA need to be disclosed for each column, rather than as a total – this makes things more complicated!
• there is a change to the way that computer software licences are accounted for, if the amount involved is material;
• all trusts will need to calculate the amount of annual leave accrued up to 31 August but not yet taken and account for the liability (if applicable and material);
• there are some transitional options regarding accounting for fixed assets, but these are unlikely to apply to most trusts;
• as a further sign of progress, what used to be called the ‘cash flow statement’ is now entitled the ‘statement of cash flows’! If anything, though, the actual content is a little simpler to follow as a result of some minor tweaks.
• FRS102 has changed the disclosure of leasing commitments – the good news is that the change will bring the accounts disclosure in line with the existing requirements of the Annual Accounts Return.
• there are various extra disclosures and narrative required in the first year of the new standards to explain the impact of the transition – these will be fairly standard for most academy trusts.

Of course, every academy is different and the impact of these changes will vary. However, every academy will have some impact and an early discussion with your auditors would be advisable.

For professional advice on all these issues, get in touch by emailing “”.

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