The anticipated supplementary bulletin has recently been issued by the ESFA. As with last year’s bulletin, it has the same status as the Academies Accounts Direction…
A number of our clients have contacted us following the recent launch of the Academies Chart of Accounts (CoA). The new CoA is the DfE’s standard for financial data that will feed into both the Budget Forecast Return and the Academies Accounts Return in due course.
Currently, the guidance recommends adopting the CoA from September 2019, although adoption remains voluntary at the current time. Essentially you would be able to adopt the CoA at any point, however it would clearly be most sensible to do this at the financial year end or potentially where there are other changes affecting your accounting records, such as changing software provider or as a result of a transfer / merger.
One of the intended key benefits is that it should be possible in future to automatically transfer data to the ESFA for the 2019/20 financial returns, which should also mean greater consistency of posting between academies and hence better and more accurate financial benchmarking. The current process of completing the financial returns can be time consuming and involves rekeying significant amounts of data from the accounts system, so a substantial degree of pre-population should be beneficial for academies.
The DfE have worked with the major software providers in developing the CoA and it should be possible to map your existing ledger codes to the new structure. However if you don’t have enough detail in your existing codes (such as on the balance sheet) you will need to make additional manual entries on the returns in due course.
Since the CoA covers all the DfE’s types of assets it appears very substantial, however it is likely that you will not need to use several codes which you can mark as inactive. The CoA should be sufficient for most academies reporting needs and academies can continue to use cost centres for any additional internal reporting needed. The DfE will update the CoA in future if required by changes in accounting standards or reporting requirements, or if they receive sufficient requests for additional codes. However, there will still be an option for academies to create extra codes in the CoA if needed for local reporting.
If you are planning on adopting the CoA, you should speak to your software provider at an early stage for guidance on any software specific points. You should also make sure additional time is set aside to set up the new COA, map your existing codes across if applicable, and to establish familiarity with the full chart of accounts so that postings can be made appropriately.
Even if you choose not to adopt the CoA at this stage, the mapping list remains a useful reference guide to the categories in which the DfE is expecting various income and expenditure streams to be reported, which in turn can only be good for consistency in reporting and benchmarking across all academy schools.
The chart of accounts and the ESFA guidance is available here.