Academies Accounts Direction 2020 to 2021 outlines all the obligations for academy trusts when producing accounts for the period to 31 August 2021.

As your auditors, we are here to support you in understanding the guidance within the Direction and in complying with its requirements.

The Direction did not contain any substantial changes for this year. Below is a summary of the updates that were made.

There are three well-defined parts. These comprise of the main Direction and two supporting documents – a model set of accounts and a framework and guide for auditors and reporting accountants.

Feedback to the sector. There is a new section on feedback from the Education and Skills Funding Agency (ESFA) relating to areas the ESFA have identified when reviewing academy trust accounts.

Trustees’ report, financial review. There is greater clarity on the financial review section of the trustees’ report, including:

  • An explanation of the financial effect of significant events on the financial performance and financial position of the trust;
  • Details of the trust’s principal risks and uncertainties, as well as the plan for mitigating those risks (this was previously shown separately within the report rather than within the financial review section);
  • Description of any key factors that are likely to affect the trust’s financial performance or position going forwards;
  • Explanation of the overall financial position, paying particular attention to material or significant balances and transactions;
  • Identification of any fund or subsidiary undertaking that is materially in deficit, explaining the circumstances giving rise to the deficit and the action being taken to eliminate the deficit;
  • There is also a new requirement for trusts that have had a Financial Notice to Improve to declare this and provide more information.

Audit opinion. The main types of audit opinion expressed on the financial statements are explained.

Staff costs disclosure. Requirements around the inclusion of costs where an academy trust has entered into an ‘off-payroll’ arrangement with someone who is not an employee.

Funding for the academy trust’s educational operations. Clarification of which funding sources should be classed under each heading, to align more closely with the Academies Accounts Return.

Leases. There is a reminder for academy trusts to ensure the correct identification, classification and treatment of finance and operating leases.

Long-term commitments. Clarification that service concession commitments (payments made under secondary agreements with local authorities) should be disclosed as part of the long-term commitments note.