August 2014 Accounts Return

1. August 2014 Accounts Return Andy Tilley

2. Terminology • An academy trust is the legal entity that prepares statutory accounts. • A trust may be a single academy trust (called a SAT) with one member academy or a multi-academy trust (called a MAT) with several member academies, each with their own funding agreement with the Secretary of State for Education. • The EFA is the operating arm of the Department for Education (DfE) that funds academies. • HM Treasury (HMT) on behalf of Parliament determines how departments should account for public assets, liabilities, income and expenditure. • The Office for National Statistics has classified all academy trusts as central government public sector bodies. • HMT has designated trusts as being within the DFE’s boundary for the DfE’s group accounts, requiring us to consolidate trusts’ accounts.

3. Who completes the August 2014 Accounts Return (AR)? You should complete the return if: • Your trust is preparing financial statements as at 31 August 2014, and • Your trust has academies open at 31 August 2014. Trusts that have been incorporated but are not preparing financial statements to 31 August 2014 or do not have any open academies should not complete this AR. In March 2015, the EFA will issue an alternative version for those trusts to complete.

4. What do we consolidate? • Parliament requires that the DfE consolidates academy trust accounts. In practice the EFA consolidates initially on the DfE’s behalf. • The DfE then consolidates EFA’s results, and finally HM Treasury consolidates the DfE’s results into the Whole of Government Accounts. • The EFA prepares its accounts to 31 March; different from the academy academic year-end of 31 August. • The EFA is using the annual accounts to 31August 2014 (captured via an August 2014 AR) of established trusts as a proxy for these trusts’ results to the following 31 March year-end. • The EFA’s accounts at 31 March 2015 need to include all academies open at that date, even if very newly opened.

5. Why do we need an AR? • The AR gives EFA financial information in an electronic format that we can analyse, and helps us to consolidate EFA’s accounts into the whole of government accounts. It asks trusts for additional, and in some cases different, disclosures from the financial statements . • In particular, we have to identify trusts’ transactions and balances with the rest of government and eliminate them from our consolidated accounts. • We ask all trusts in scope to complete an August 2014 AR as a standard electronic template (in Excel). • All trusts in scope should upload their completed AR to the EFA financial returns site by 31 January 2015 (details later).

6. Where is the AR and guidance? • The template and guidance can be found at https://www.gov.uk/government/publications/academies-august-accounts-return-template-and-guide on the EFA pages of the GOV.UK website. • The completed template needs to be submitted by 31 January 2015.

7. Sources of information for the AR? • August 2014 AR guidance booklet. • 2013/14 financial statements. • August 2014 management accounts or ledger reports. • Funding agreements and other contracts. • HR information on staff numbers and costs. • Budget software and other workings. • Statement of assets and liabilities transferred on conversion or between trusts on the transfer of academies in the year.

8. Structure of the AR • Standing data • Accountant’s report • Financial return – Statement of Financial Activity (SoFA) • Financial return – balance sheet (BS) • Financial return – other notes • Counterparty return • Subsidiaries • Benchmarking return • Land & property • CPIDs

9. Colour coding

10. You should complete the AR in £000s • This means • £1,534,755.42 is entered as 1,535 • £500.00 is rounded up and entered as 1 • £499.99 is rounded down and entered as 0 • We spend a lot of time checking and correcting incorrect entries and would really value your help

11. Accountant’s report tab • The external auditor should complete and sign off this tab. • The assurances given cover the whole of the return. • When you submit the return, you should attach a scan of the accountant’s report signed by the external auditors. • Trusts should also retain for their records: • A physically signed copy of their return • The original signed auditor’s statement.

12. Difficult areas and new features • Assets and liabilities transferred on conversion and between trusts • Pensions • Voluntary income • Staff costs • Finance and operating leases • Investment asset classes • Related parties • Exit packages • Losses and special payments

13. Inclusion of pensions in the AR (1 of 3) • Most academies will only have staff in the Teachers Pension Scheme (TPS) and the Local Government Pensions Scheme (LGPS). • Only the LGPS is an allocated scheme where actuaries can assess surpluses and deficits by employer. • If you have any staff in the LGPS, you will have an FRS17 valuation of your liabilities as part of preparing your 31 August 2014 financial statements. • The majority of pension information required by the AR will included in this valuation and your accounts.

14. Inclusion of pensions in the AR (2 of 3) • If your trust belongs to LGPS and TPS pension schemes, the only entries required in the AR are to : • Enter TPS employer contributions in cell G152 of the pensions note. • Copy the detail disclosures from the LGPS FRS17 note to your accounts to column G of the FRS17 pension disclosures. • If you have any other pensions, you will need to enter the employer contributions and (if relevant) FRS 17 disclosures for these.

15. Inclusion of pensions in the AR (3 of 3) • The EFA will need to replace the LGPS pension figures you enter. • It is therefore very important that you include pension figures in the AR consistently to your financial statements so that we can reverse them accurately and completely. • The total SoFA pension charge in the pensions note in the trust’s financial statements must equal the total of pension costs shown in the staff note in the SoFA worksheet. • This may mean the incorporation in the staff note of pension finance costs you may have shown elsewhere in your published financial statements.

16. Voluntary income in the AR • A capital donation is the gift of an asset. • You should disclose any cash donation, whether for capital purposes or not, under either private sponsorship or other donations. • Transfers on conversion are not voluntary income. • It is very important that voluntary income and transfers on conversion are classified correctly in the AR.

17. Operating and finance leases • A finance lease transfers the majority of this risks and rewards of ownership of the asset to the trust • The period of a finance lease will typically cover the majority of the useful economic life of the asset • An operating lease is any lease which is not a finance lease: land is always an operating lease • If you are in any doubt if a lease is a finance or operating lease; seek advice from your auditors

18. Operating and finance leases – worked example • Lease A – 10 years remaining at £10,000 • Lease B – 4 years remaining at £5,000 per year • Lease C – 2 years remaining at £15,000 per year

19. Submission of the completed return August 2014 AR needs to be submitted by 31 January 2015. Before you submit you will need to ensure you: • Complete all the worksheets. • Eliminate all error messages. • Obtain the Accounting officer ‘s completed declaration. • Include the external auditors’ completed assurance report. • Then submit the return. The submission route this year will be via Information Exchange, and we will provide full information later in the year via our e-bulletin and the accounts return web page.

20. Thank you • Register for our live webinar session on 2 December and access relevant training materials on our event page:https://registration.livegroup.co.uk/academyfinance/ • You can log any questions you want raised at the webinar in advance via the registration site. If you have further queries after the webinar, please email us at academy.questions@education.gsi.gov.uk