What you need to know about the difference between accounting requirements pre and post Academy conversion Chris Beaumont Partner – Clive Owen & Co LLP

Agenda  What is an Academy  Is an Academy free  Matters to consider Pre/Post conversion  The various returns  Format of Year End Financial Statements  Interim Internal Reviews  Top Tips  Further information  Questions

What is an Academy?  Company limited by Guarantee  Members  Directors/Trustees  Governors  Exempt charity – Registered with EFA

Is an Academy ‘free’  Of Local Authority control – YES  Of Whitehall – NO - EFA/DFE/Treasury/NAO

Matters to consider (Pre Conversion)  Articles and memorandum  Land transfer – 125 year lease  LGPS Valuation  Insurance  Transfer of agreements e.g. photocopier leases  Service level agreement (SLA’s)

Matters to consider (Pre Conversion)  Committees - Members - Directors/Trustees - Governors - Finance - Audit *Governors skills Audit

 Financial Procedures Manual  Scheme of delegation/limits  Register of interests (including family members)  Appointment of auditors  Appointment of Responsible Officer (RO)/Internal Assurance  Appointment of Bankers  Appointment of Lawyers  Policies - Fixed assets/Anti Fraud/Risk Assessment/Whistle Blowing etc Matters to consider (Pre Conversion)

 Accounting system - PS Financials - Corero - Sage - Agresso -Capita Sims - Hoge 100 *Nominal Leger structure

Matters to consider (Pre/Post Conversion) *Management accounts -Income and expenditure account -Balance sheet -Cashflow forecast -Restricted v unrestricted funds *VAT (Section 33B) -S126 -Register for VAT

Matters to consider (Post Conversion)  Payroll Calculation of various deductions including - PAYE/NI deductions - Calculation of various deductions including - Teachers Pension Scheme - LGPS Pension Scheme - Union subscriptions - Dispensations / PIID’s - Payment of the above and net pay

The various returns  EFA Returns - Budget forecast (By 31 st July for following financial year) - Academy Accounts Return (AAR) - March return (1 st year for some) - Financial Management and Governance self assessment (FMGS)  Audited financial statements to 31 st August  End of Year Certificate (EOYC)  Companies House - Directors appointments and resignations - Annual return

Format of Year End Financial Statements  Model financial statements include: -*Trustees’ Report (C or T) -*Governance statement (C and AO) -Statement of regularity, propriety and compliance (AO) -Statement of trustees’ responsibilities (C) -Independent auditor’s report of the financial statements -Independent auditor’s report on regularity -Set of financial statements -Statement of financial activities (SOFA) -Balance sheet (C or T) -Cashflow statement -Notes

Trustees’ Report  Method of recruitment of trustees  Organisational structure  Risk management  Connected organisations  Objects and Aims  Achievement and Performance  Reserves Policy  Plans for future periods  Amongst others

Governance Statement  Trustees – meeting attendance during the year  FGPC – if appointed, meeting attendance during the year  Audit committee – if appointed, attendance during the year  Risks  Description of interim internal checks  Detail any material control issues

 Income > £10m or Assets > £30m MUST have an audit committee  All MAT’s below this should CONSIDER having an audit committee  All others MAY have an audit committee  Up to the Academy to identify risks and agree a programme of work to address Interim Internal Reviews Requirements

Can be undertaken by one or combination of the following  Internal Audit (In house or brought in)  Supplementary programme of work for the external auditor  Responsible officer  Peer Review Interim Internal Reviews

 Undertake a Governor skills Audit  Consider Governance structure  Consider internal resource  Research and plan the implementation of an appropriate accounting package  Review MIS requirements  Take advice – VAT, Gift Aid and potentially Corporation Tax  Prepare an outline 3 and 5 year financial forecast  Set appropriate level of reserves  Have costed ideas for capital projects Top Tips

Further information  Academies Accounts Direction 2013  Academies Financial Handbook  EFA website  EFA Bulletins  Charity Commission website  Your Advisers

Any Questions?

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