The updated Accounts Direction includes a number of new disclosure requirements, alongside some updated guidance around areas such as going concern, regularity and governance. However, there are no changes in underlying accounting principles that would impact how the financial statements are compiled.
The key changes compared to previous versions of the Accounts Direction are set out below.
Trustees’/directors’ report update for large academies
Academies meeting two of the following criteria qualify as large under the Companies Act 2006: a turnover of more than £36 million; a balance sheet total of more than £18 million; more than 250 employees are required to include additional disclosures.
Engagement with employee (> 250 employees)
Disclosures include: how the trust has had regard to employee interests and how this has impacted decision making during the year; how employees are encouraged to be involved with the trust’s performance; how employees are provided with information; and the trust’s policy in respect of applications for employment from disabled people and their training, development and promotion.
Engagement with suppliers, customers and other business relationships
There is a need to include a statement summarising how they have had regard to the needs to foster these relationships. Streamlined energy and carbon reporting for trusts that are large and consume more than 40,000 kwh of energy in a reporting period. They must include statistics on energy use, including annual use in kwh and an emissions intensity ratio and narrative around energy measures taken to improve efficiency. The ESFA is also encouraging relevant trusts to publish this information on their website.
Trustees’/directors’ report update – other matters
The governance statement should now explicitly refer to the guidance in the Governance Handbook and Competency Framework for Governance where trustees have reviewed and taken account of these publications. The risk management disclosures should include further descriptions of the internal scrutiny function and, if applicable, describe how these arrangements have been impacted by the revised Ethical Standard for Auditors published by the Financial Reporting Council, which strengthens the provisions relating to auditor independence, including internal audit.
Other disclosure changes
Legal costs (defined as “those where an opinion is sought from a legal professional”) should now be separately disclosed and identified within support costs.
The accounting officer’s and reporting accountant’s opinion on regularity has been clarified that if any instances of irregularity, impropriety or non-compliance are noted in the accounting officer’s statement and the reporting accountant’s report, where possible, the amounts should be quantified.