Changes to the Academies Accounts Direction (AAD) published for 2021/22

This years Academies Accounts Direction (AAD) has been recently published, detailing the requirements for Academy Trusts in preparing their financial statements.

As well as the main AAD, the model set of accounts, the “Coketown model”, have been updated and released.

The main changes to the AAD for this year that your Trust should be aware of are:

• The ESFA have updated their feedback on non-compliance with the Direction (paragraph 1.21) and updated the themes arising from ESFA’s assurance work (paragraph 1.22)
• Clarification had been made that an academy trust should, in line with the SORP, describe the organisational structure of any subsidiaries, joint ventures and associates within their trustees’ report. (paragraph 2.8)
• A new section has been added to the governance statement which requires academy trusts to explain how conflicts of interest are managed (paragraph 2.36)
• A new disclosure requirement has been introduced for severance payments to reflect changes in guidance published by HM Treasury whereby payments made must also be disclosed in bands (paragraph 2.135). This does not change the existing disclosure on special staff severance payments.
• Additional clarity has been provided on financial reporting requirements relating to service concession arrangements (paragraphs 3.42 to 3.46) and guidance has been updated whereby academy trusts are now encouraged to provide narrative to support the numerical disclosures (paragraph 3.46).
• New guidance has been included on accounting for buildings whose construction was overseen by Department for Education (DfE) or a local authority and transferred to the academy trust on completion (paragraphs 3.50 and 3.51).
• A new section has been included to provide guidance on the accounting treatment for business rates (paragraph 3.66) where, from 1 April 2022, billing authorities have opted into the new process and are paid directly by the ESFA instead of by the academy trust.
• The previous requirement to submit dormant accounts to ESFA (paragraph 3.102) has been removed.
• The requirement to produce trading accounts for teaching school (hubs) as separate notes to the financial statements has been removed and clarification made to where and how transactions relating to such activities should be shown in the rest of the financial statements. They have also extended the guidance to cover other types of hub which academy trusts may operate (paragraph 3.141):
• Clarification made on why financial reporting requirements may differ between the Direction and the Academies Accounts Return (paragraph 1.4)

If you have any questions on the changes to the AAD or any other matter, please contact your Bishop Fleming representative.