Recent developments for academy schools

UHY Hacker Young
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Changes to 2011/12 payment timetable

The Young People’s Learning Agency (YPLA) has announced that they are bringing forward the payment dates for all regular payments to Academies for the 2011/12 academic year. This is in response to concerns that Academies incur significant costs (for example payroll) in advance of normal payment dates.

From September 2011, all regular payments from the YPLA will be brought forward from the 18th of the month to the 1st of the month (or the following working day, if the first falls on a weekend or a bank holiday). This means that Academies will receive payment in 12 instalments during 2011/12, rather than in 13 instalments which applied previously.

These changes are entirely about the timing of payments in 2011/12 and have no effect on the total amount of funding paid to each Academy.

Pupil Premium now part of GAG

 

We understand that the General Annual Grant (GAG) now includes the pupil premium. This could lead to a problem for some Academies when they assess whether they are likely to exceed their maximum 12% carry forward at 31 August 2011.

The issue here is that most Academies did not receive this funding until late July, and so it has not been included in budgets and is unlikely to be spent in time.

With only two weeks before the end of the accounting year, Academies need to look at this now if there is a chance of exceeding the 12% maximum.

It is possible to apply to the YPLA to request permission to carry forward more than the standard 12%, but these applications need to be made to the YPLA before 31st August.

If you require any assistance with the carry forward calculation, or applying to increase your carry forward allowance, then please contact a member of our Academy schools team.

16-19 Bursary Fund - arrangement for requests for additional funding

The YPLA has confirmed that they guarantee to make extra payments to any Academy which has more students in the defined vulnerable groups than they can afford to pay full bursaries.

The YPLA has produced a note - available to download at www.ypla.gov.uk - which sets out the arrangements that they will operate where an Academy requests funding additional to the allocation that it received in June 2011 for the 16-19 Bursary Fund.

Opening balances for new academies

Surplus funds in the school bank account at the date of conversion are transferred to the new Academy once the Local Authority has agreed the amounts. This transfer is treated as a donation in the Academy’s first accounts, along with any property or other assets transferred across.

It is important that consideration is also given to applying the correct cut off between the old school and the new Academy. Whilst the Local Authority may be content for a school not to worry about a full close down with adjustments for prepayments and accruals etc., it will be necessary to calculate any significant prepayments or accruals in order to prepare true and fair accounts for the Academy. The YPLA has confirmed that they expect prepayments to be calculated.

There is a distinction between applying a correct cut off for physical payments and receipts, and the recognition of income and expenditure.

Cut off issues regarding payments and receipts may be dealt with through the final balance transferred from the Local Authority. Alternatively the cash balance donated can be adjusted for payments and receipts that fall in the wrong period. Some of the issues likely to arise are:

  • the final VAT payment from the Local Authority will not be received until after conversion;
  • the final month’s payments to suppliers may not clear the bank before conversion; and
  • the PAYE/NIC liability arising on the final month’s salary may be paid the month following conversion.

When it comes to dealing with income and expenditure, the donation from the Local Authority should be adjusted for significant items received or paid before conversion, but which relate to the period after conversion, or vice versa. For example:

  • a school converting on 1st April will have already paid for examinations taken in the summer term post conversion. An adjustment is required to bring the prepayment in as an opening balance; and
  • any late purchase invoices received after conversion should be treated as an opening accrual so that the expense is not reflected in the Academy’s accounts.

Governance

When a school becomes an Academy it becomes subject to charity law, and it is important that all of the Governors are aware of the revised responsibilities this brings.

The Academies Financial Handbook comments on certain aspects of governance, but the Charity Commission issues its own guidance for charities generally. Governors should be aware that this guidance exists, and should take the time to read some of the articles available.

To steer Governors in the right direction, the following are some of the more important documents:

CC10 ‘The Hallmarks of an effective charity’ - www.charitycommission.gov.uk/Publications/cc10.aspx

“The Essential Trustee” - www.charity-commission.gov.uk/Library/guidance/cc3text.pdf

CC25 ‘Managing charity assets and resources: an overview for trustees’ - www.charitycommission.gov.uk/Publications/cc25.aspx

For further advice please contact your nearest UHY office or visit www.uhy-uk.com

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