Annual Accounts Direction

04 September 2017

The Annual Accounts Direction has now been issued following the delay as a result of the election. The key changes noted are as follows:

  1. Guidance has been updated to reflect the Secretary of State for Education as the principal regulator
  2. Additional clarity given with regard to the finance record
  3. Specific accounting guidance already covered in the underlying framework has been deleted
  4. Website publication of accounts is now within two months of approval and must include at least two years sets of accounts.

Revenue recognition

The direction clarifies and reaffirms the lagged funding principle. Funding cannot be anticipated even though higher student numbers may have been achieved in the current year.

Free school meals are not considered to be agency funds but unspent money must now be returned to the EFSA and hence a provision should be made in creditors for any such underspend.

Discretionary learner support funds are now part of the overall Adult Education Budget and are no longer agency funds either. The College can determine (within its own financial regulations) how to spend this money and it should be accounted for in the College’s income and expenditure account.

Apprenticeship levy

The default position for Colleges within the scope of the apprenticeship levy is that it will be charged in full to the income and expenditure account. Separate disclosure is optional.

However it may be possible to treat an element of the levy as a prepayment on the balance sheet relating to that amount that will be used to fund approved apprenticeship schemes within 24 months following the year end. A clear action plan will need to be provided in support of this prepayment. As funds are utilised they will be expensed to the income and expenditure account.

The 10% government ‘top up’ will be recognised when the related training services expense is recognised.

Casterbridge accounts

There are no significant changes here after last years adoption of FRS 102 but the following should be noted:

  1. Going concern disclosures are still considered very important and cannot be ‘boilerplate’
  2. A reserves policy is encouraged to be disclosed
  3. Colleges should be careful to explain their assurance processes in the ‘Risk and control framework’ section, particularly where they do not use a formal internal audit service
  4. Key management personnel disclosures are clarified. The number to disclose includes employer’s national insurance but ‘higher paid’ banding disclosures do not
  5. ‘Exceptional’ items do not exist as a concept under FRS 102 but separate line item disclosures on the face of the income and expenditure account are still possible
  6. The old ‘FRS 17’ disclosures reference to LGPS requirements is now actually FRS 102 (28) disclosures.

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