The Academies Accounts Direction (the Direction) 2025 to 2026 has now been published. In addition to the Direction, updated versions of the Academies Model Accounts 2025 to 2026 and the Framework and Guide for External Auditors and Reporting Accountants are also available.
The Direction outlines requirements for academy trusts preparing their annual report and financial statements for accounting periods ending on 31 August 2026. As the requirements in the Direction are mandatory, it is an essential reporting document for all those involved in the preparation of the annual report and financial statements.
Changes to the Academies Accounts Direction
This year’s changes include a number of important clarifications and updates to existing disclosure requirements. The overall aim remains to improve consistency, reduce unnecessary complexity, and support transition towards future reporting developments.
Here are the key updates to note:
- Removal of trade union facility time disclosures
The requirement to report on trade union facility time within the annual report has been removed. This simplifies disclosures and brings academy accounts more closely in line with the wider charitable sector. - Updates to Streamlined Energy and Carbon Reporting (SECR)
The thresholds for SECR disclosures have been aligned with the latest Companies Act size criteria (turnover of £36 million, balance sheet total of £18 million and 250 employees, with two of the three thresholds to be met for two consecutive years). In addition, there is now an expectation for academy trusts to have a Climate Action Plan in place and to demonstrate progress against it. Academy trusts may wish to consider enhancing their disclosures to reflect activity in this area. - Clarification on staff-related disclosures
Several updates have been made to improve consistency and transparency:- Payments in lieu of notice (PILON) should be included within restructuring costs;
- Expanded disclosures for higher-paid staff (over £60,000), including narrative for part-year and FTE-adjusted employees where remuneration exceeds the threshold;
- The definition of key management personnel (KMP) has been widened to include former KMP engaged via consultancy or similar arrangements, with associated remuneration required to be disclosed; and
- Clarification that accrued KMP remuneration forms part of the financial statement disclosures.
- Related party transactions
Additional clarification confirms that related party disclosures apply where the Principal or CEO is also a Trustee, including their remuneration. - Revised definitions of regularity and propriety
The definitions have been updated following changes to Managing Public Money guidance, with greater emphasis on Parliamentary authority, legal compliance, and the role of internal controls. This may impact the Accounting Officer’s regularity statement and the associated assurance work. - Academy conversions
There are no changes to the accounting guidance for academy conversions or transfers. However, the inclusion of a template disclosure remains a helpful reference point, particularly given the continued policy focus on increasing the number of schools within academy trusts. - Preparation for the new Charities SORP
The Direction includes guidance on the upcoming Charities Statement of Recommended Practice (SORP), which will apply to most academy accounts for periods ending 31 August 2027. Early adoption is not permitted.
The Academies Accounts Direction for 2026-27 will comply with the new Charities SORP 2026 and provide further guidance.
Key areas highlighted include:
- The removal of the distinction between operating and finance leases, with most leases to be recognised on the balance sheet as right-of-use assets and lease liabilities; and
- Updated guidance on revenue recognition, with increased emphasis on performance obligations (although this is not expected to significantly impact grant income for academies).
Changes to the Academies Model Accounts
The Model Accounts help academy trusts see what the accounts should look like and have the same contractual status as the Direction.
Updates this year are largely driven by the changes outlined above, with amendments to reflect revised disclosure requirements and improved clarity in presentation.
Framework and Guide for External Auditors and Reporting Accountants
The Framework and Guide continues to support audit and regularity reporting across the sector. It applies to all external auditors and reporting accountants who deliver statutory audits and regularity reviews for academy trusts.
The updates to definitions of regularity and propriety, alongside wider clarifications in the Direction, may have an impact on audit approach and reporting, particularly in relation to internal controls and compliance.
The complete Academies Accounts Direction 2025 to 2026 can be downloaded here.
