Financial control and management are essential elements of a successful academy. Making the right accounting decisions isn’t always easy, but it’s worth investing the time to establish your obligations, explore the options and seek advice on the best way forward.
Here are some of the accounting considerations academies face:
Is an accountant required?
Like all businesses, academies need to take responsibility for their accounting systems and procedures. That said, under academy rules there is no obligation to employ a qualified accountant, unless the in-house team doesn’t have the skills or the desire to carry out the process themselves. If you are keen to retain this task in-house but are lacking skills, then training may be the solution. If this is the case, there are several training programmes available to provide the support that’s needed.
If you decide to look outside for the best solution, make sure you invest the necessary time to choose the most appropriate support for your unique needs.
Using software to full advantage
There are plenty of specifically developed academy software packages available on the market, but there’s no reason whatsoever that the likes of standard packages can’t be adapted to satisfy all your accounting requirements.
The most important consideration when selecting your software package is that it ties in precisely with the requirements of the Department for Education, as well as providing you with the information you need to manage the academy on the tight reign you’ll need and want to.
One thing to be aware of is that if you are planning to retain the software used by the school previously, it is essential that the software is re-licensed to the academy. With regards the possible timing of changing to new software, there is little doubt that the conversion date is the best time to change, because it allows a clean start and gives you the opportunity to fund the software from the conversion grant.
Academies are required to prepare audited statutory accounts for the period ended 31 August for submission to the Education Funding Agency by 31 December each year. This is in addition to the Academies Accounts Return (AAR).
From August 2012 this reporting also has to include information for the Whole of Government Accounts (WGA). This is prepared to 31 March each year.
As the timescale for carrying out an audit is limited it is sensible for the auditor to carry out some interim audit work during the financial period.
Accounting at conversion
At the point of conversion, an academy is be required to agree values of reserves transferred from the Local Authority to the academy. Once values have been agreed, these can be entered into the academy accounts. Any income or expenditure that crosses over the conversion period should be apportioned accordingly.
Central government funding
Academy funding is made up of central government’s General Annual Grant, plus any other grants that may be made available to the academy. The funding agreement entered into by the academy specifies how funding must be used.
Conversion to academy status gives rise to eligibility for a start-up grant of £25,000. This grant is intended to help with initial set up costs and, if not used in full can be subsequently credited to the academy cash fund.
Land transfer and leasing
Typically, academies enter into a 125-year lease with the Local Authority for the school’s land. That said, it is not unknown for freeholds to be transferred from Local Authorities to academies.
Academies will become responsible for the administration and management of staff pensions. Teachers transferring to the newly created academy will remain members of the National Teachers’ Pension Scheme, whereas support staff will stay members of the Local Government Pension Scheme.
Transfer of fixed assets
Academies are required to create a fixed asset register which contains details and values of all assets valued at more than £1,000, which have been transferred from the Local Authority to the academy.
The academy’s financial policies specify how income and expenditure is to be managed. Typically, a single academy will have one financial policy and multi-academies can either decide that a global financial policy is most appropriate to their needs, or if multiple financial policies will work better. Either way, for multi-academies, uniformity of procedures and practices will help maintain consistency of approach across the board.
Dealing with school funds
How school funds are dealt with will depend upon the purpose of the funds. School funds that are directly controlled by the academy can be accounted for in the statutory accounts, albeit held in a separate fund. That said, funds that are registered as belonging to individual charities need specific treatment.
If you’d welcome help to demystify your academy’s accounting and financial considerations, why not get in touch? We’re here to help make your academy an even greater success.