Currently under the Academy Trust Handbook, academies do not require approval for taking out operating leases (other than those on land & buildings with a term…
In the last few days the ESFA has published a supplementary bulletin to the Accounts Direction in order to introduce some additional requirements in light of the Covid-19 pandemic. The bulletin is designed to give additional guidance to auditors, trustees and accounting officers as well outlining some new requirements that must be complied with. The bulletin has been awarded the same status as the Accounts Direction itself.
The bulletin points out that the scope of the regularity audit remains unchanged and that the ESFA is not seeking any additional assurance from reporting accountants. However, any new Covid-19 funding should be covered as part of the income and expenditure regularity work. The format of the regularity statement also remains unchanged.
Considering the impact of Covid-19 on the audit remains a matter of professional judgement for the external auditor but the bulletin points out that there are a range of factors in determining what the implications for the audit may be. These are:
- Capacity – in summary, to what degree were the governance and control arrangements, staffing levels and operations affected by Covid-19?
- Proactivity – when were the issues identified by the academy trust and what guidance or consultation took place?
- Reaction – what action did the academy trust take?
- Evidence – has the academy trust retained a detailed audit trail of its decision making process and associated rationale?
Procurement policy notes and value for money
PPN 02/20 and supporting guidance were issued in March and April 2020. PPN 04/20 was then issued in June 2020.
These documents are all applicable to academy trusts. The bulletin reminds auditors that the requirements set out in these documents should be considered during their work on regularity. DfE has also published sector specific guidance on the application of PPN 02/20 and 04/20.
In their Governance Statement, accounting officers must reflect cases where these notes have been applied in their value for money review. They should also explain any situations where Covid-19 has adversely impacted VFM.
As they are charitable companies, the recent Covid-19 advisory guidance issued by the Charities SORP Committee is applicable to academy trusts.
The advice states that trustees need to consider the impact on the financial statements as a result in the changing activities of the charity itself. Trustees will also be aware that it will be important to provide users of the accounts with information about material decisions they have had to take on judgements and uncertainties.
The bulletin provides a list of areas trustees may wish to consider when preparing the trustees report, covering areas such as the impact on fundraising, employees, financial uncertainties and activities.
Financial statement additional disclosures
Academy trusts may have incurred additional costs or have received, or be eligible for, additional financial support in relation to Covid-19.
The basic principles of income and expenditure recognition apply as normal, but the bulletin sets out the additional disclosures for academy trusts in receipt of this funding.
Detailed guidance is provided for trusts where:
- They meet the criteria for the financial support scheme for schools and they have incurred exceptional costs which are eligible for support
- They have furloughed staff and claimed support under the Coronavirus Job Retention Scheme
Where this applies, note 4 “Funding for the academy trust’s educational operations’ in the Coketown model accounts in the AAD is impacted and the bulletin illustrates the required disclosures.
National free school meals support
Where trusts have participated in the national free school meals voucher scheme, no additional disclosure is required. Trusts may, however, decide to include some narrative in their trustees’ report to explain their involvement with the scheme.
The bulletin does not cover funding receivable in respect of costs incurred in 2020/21, including Coronavirus (Covid-19) Catch-Up Premium.