Publication of the Academies Accounts Direction 2020 to 2021

  • Gemma Archer
  • 4 May 2021 17:00

The Academies Accounts Direction 2020 to 2021 has now been published by the ESFA. For the first time the model set of academy accounts has been published as a separate document, alongside a separate framework and guide for auditors and reporting accountants.

Three documents

This year there are three documents:

  • the Academies Accounts Direction (“AAD”), which sets out the requirements and guidance for academy trusts preparing annual reports and financial statements for accounting periods ending on 31 August 2021;
  • the Academies model accounts (“Coketown”); and
  • the framework and guide for external auditors and reporting accountants.

For the first time, those matters which are relevant to external auditors and reporting accountants are included in a separate framework and guide. This document outlines the ESFA expectations and provides details of the scope of the regularity engagement.

New requirement – Financial Notice to Improve

The most significant new requirement this year relates to academy trusts who have had a Financial Notice to Improve (FNtI) in place at some point during the year. Such trusts must disclose this in their financial review, along with the following information:

  • The period it was in place
  • A link to the FNtI on the ESFA website
  • Details of the key actions the trust is taking which it expects to lead to (or already have led to) the lifting or closure of the FNtI
  • When the trust expects to satisfy all of the FNtI’s conditions (in cases where the FNtI has not been lifted by the year end date)


Responding to feedback from the sector, most of the changes in this year’s AAD provide clarification of the expected treatment or disclosure of specific items.

  • There is now enhanced guidance on those matters which must be included in the financial review section of the trustees' report.
  • Where academy trusts have entered into "off-payroll" arrangements with someone who is not employee, the amount paid by the trust for that work must be included in the staff costs disclosure as if they were an employee. The prior year figure should be reported and restated if necessary.
  • Which funding sources should be classified under each heading of funding for academy trust's educational operations.
  • That service concession commitments (such as PFI arrangements) should be disclosed as part of the long term commitments note.
  • A reminder to ensure correct identification, classification and treatment of finance and operating leases.

Feedback to the sector

The AAD now includes a section providing feedback to the sector from ESFA accounts reviews.  relating to the application of and compliance with the Direction

Other information

To aid understanding amongst academy trust staff and boards, the AAD now includes explanations of the main types of audit opinions and modifications and examples of when they may be expressed by an auditor.

What should I do next?

If you act for academies, you should familiarise yourself with the updated guidance.

Begin conversations with academy clients regarding changes that they will need to make in order for you to prepare or audit their accounts efficiently.

How Mercia can help

Our Academies Conference will cover these changes in detail. Join us on 17 May at our one-day virtual conference to hear the latest position for the sector. As well as covering up to date accounting and financial reporting regimes, the conference will include a pensions update, the opportunity to hear from an academy trust and much more.

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