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Academies Chart of Accounts - Is now the time to plan your transition?
20 April 2021
Back in May 2019, the ESFA published its first ‘academies chart of accounts’ for academy schools. This was a comprehensive list of account descriptions and codes that could be used in the sector for consistent financial reporting. The chart of accounts (COA) was a response to the inevitable disparities in financial reporting that existed as a legacy of reporting structures inherited from predecessor local authority reporting, as well as a myriad of ways that an individual academy trust could tailor its COA within its own financial management system (FMS).
Given that academy trusts are required to submit financial data several times a year to the ESFA, this diversity of reporting becomes a pain point when academies are required to input their figures on periodic returns, specifically the Annual Accounts Return (AAR) and Budget Forecast Return.
The ‘then’ Parliamentary Undersecretary for Schools, Lord Agnew, commented:
“Our better financial reporting programme’s a great step forward in our work to improve efficiency in schools. We’ve recognised the current system of submitting financial data to the department’s time consuming and offers insufficient benefit to academy trusts.”
“By having a standard chart of accounts, we create the essential building blocks for the new system as it provides a consistent way of recording financial data for all academy trusts. This will allow us to reduce the burden on trusts through the electronic submission of financial data directly from finance systems and adding greater value to trusts by enabling us to create new financial efficiency tools as well as improve the timeliness and quality of the existing tools.”
Despite the move to a consistent COA being optional, many ‘early-adopter’ academy trusts will have moved forward and have this in place ready for the 2019-20 financial year. However, a large number of trusts who were considering picking this up in early 2020 will no doubt have been tackling the immense challenges of COVID and adopting the COA is likely to have been pushed further down the ‘to do’ list.
The ESFA’s guidance was refreshed in January 2021, with a view to academy trusts being able to plan ahead for a transition later in the year.
Where are we with software?
The Department of Education worked with a range of FMS suppliers to develop the chart of accounts in 2019, the suppliers included are:
- Access Education
- Capita SIMS
- Civica Corero
- Hoge 100
- PS Financials
Academy trusts should consider talking to their software supplier or IT team about any implications and viability of adopting the chart of accounts with the current version of their software.
The move to a standardised COA was always seen as beneficial, but the up-front time requirement for academies, who were already busy, not to mention COVID, has meant this initiative hasn’t gained the traction that ESFA would originally have hoped for.
Our view on this is that the benefits are clear in terms of the consistency of reporting and time saved from automating the population of ESFA returns. Benefits for MATs are available by having a consistent financial data model for all schools in the trust and for future new schools transferring in or between trusts.
Now’s a great time to revisit this initiative and plan ahead with a view to transitioning from 1 September 2021 (2021-22 financial year). It’s something our Academies team specialise in, so why not speak to Richard Buckby, on transitioning now?
The Government have recently released the Academies Financial Handbook for the school year 2020-2021, read on to see the updates.