The document provides an update on the changes to the Academy Accounts Direction for 2019, highlighting clarifications in financial reporting requirements and governance practices. Key points include the removal of specific disclosures, enhanced governance expectations, and the introduction of mandatory risk registers. Additionally, it outlines updates to the Academies Financial Handbook concerning internal scrutiny, related party transactions, and whistleblowing procedures.

1. T R U R O A N D P LY M O U T H
A C A D E M Y U P D AT E 2 0 1 9

2. INTRODUCTION
Louise Bridgett, Director

3. HOUSEKEEPING
@pkfFrancisClark
#FCAcademyUpdate19

4. OUR CENTENARY YEAR
We are celebrating because:
 National 2018 Charity Finance Audit Survey league table special
commendation for overall service.
 96% of our clients ranked the service they receive from us as good (the
highest option).
 Highest placed regional firm in the UK for the number of audit services to
charities – a good start to our centenary year!
 Thank you to all our clients who took part in the survey.

5. PROGRAMME
 10.05 – Academy Accounts Direction 2018/19 – Darren Perry
 10.30 – Academies Financial Handbook 2019 – Katie Skea
 10.50 – What does a good board look like? – Louise Bridgett
 11.10 – Break
 11.30 – Integrated Curriculum Financial Planning (ICFP) – Katie Skea
 11.55 – Are you managing risk? – Darren Perry
 12.15 – VAT update – Daniel Austin
 12.35 – Questions
 12.45 – Lunch

6. ACADEMY ACCOUNTS
DIRECTION 2018/19
AND OTHER TOPICAL
POINTS
Darren Perry

7. ACADEMY ACCOUNTS DIRECTION 2018/19
WHAT’S NEW?
 Published April 2019, for accounting periods ended 31 August 2019
 Relatively few changes of significance, but greater clarification on issues
 Coketown Academy Trust proforma accounts and Regularity guidance
now in an appendix at the end (Annex A & B)
Download your copy from:
https://assets.publishing.service.gov.uk/government/uploads/system/upload
s/attachment_data/file/795646/Academies_accounts_direction_2018_to_20
19.pdf

8.  No longer a requirement to include dates of payments made regarding
non statutory / non contractual staff severance payments
 However information still expected to be required in the Academy Accounts
Return
 Removing the combined funds note showing both the current year and
prior year combined funds position
 Only introduced last year, however it was promptly agreed by ESFA that its
omission would not cause a significant issue and it has now been removed
ACADEMY ACCOUNTS DIRECTION 2018/19
DISCLOSURES REMOVED

9. ACADEMY ACCOUNTS DIRECTION 2018/19
GOVERNANCE (S1.6.3)
 Requirement that a copy of the annual report and financial statements
must be sent to every member of the company and to every person who is
entitled to receive notice of general meetings
 Existing requirement of the Companies Act 2006
 Inclusion suggests that not all trusts had been doing this
 The normal approval process for the accounts would be for the directors to
approve the accounts prior to the 31 December filing deadline. The accounts
would then be ratified by the members at the Annual General Meeting,
although this is typically a formality

10. ACADEMY ACCOUNTS DIRECTION 2018/19
GIFT AID FROM SUBSIDIARY COMPANIES (S5.1.19)
 Referencing SORP update bulletin 2, section 3 covering income
recognition for donations to academy trusts from trading subsidiaries
 Income should only be accrued when there is a legal obligation to make
the payment
 Typically a trading subsidiary would gift aid profits to the parent academy,
mitigating the corporation tax liability
 Previously such gift aid payments may have been accrued, but now this is
only an option if a legal obligation in place (like a deed of covenant)
 As a result the subsidiary accounts may show a profit
 This doesn’t affect tax position as gift aid donations paid within 9 months of
the year end are still eligible for tax relief in a wholly owned subsidiary

11. ACADEMY ACCOUNTS DIRECTION 2018/19
FIXED ASSET CLASSIFICATION (NOTE 14)
 Coketown proforma accounts have revised categories in line with the
Sector Annual Report and Accounts
 Freehold Land & Buildings
 Leasehold Land & Buildings
 Leasehold Improvements
 Assets Under Construction
 Furniture and Equipment
 Plant and Machinery
 Computer Equipment
 Motor Vehicles
 Omit any categories that are not relevant.
 Grounds to amalgamate if not material to the accounts

12. ACADEMY ACCOUNTS DIRECTION 2018/19
DISCLOSURES (NOTES 27, 30, 32, 37)
 Prior year position comparative required for:
 Agency arrangements
 Events after the reporting period
 Contingent liabilities
 Comparatives would be ‘helpful’ for guarantees, letters of comfort and
indemnities
 Clarifying the pensions note that Parliament guarantee regarding LGPS
liability relates to academy trusts and not individual academies. The TPS
element has been updated to reflect that revised employer contribution
rates are expected to be payable from 1 September 2019
 We understand employer contribution will increase to 23.6% so model
accounts narrative may need further amendment

13. ACADEMY ACCOUNTS DIRECTION 2018/19
ACCOUNTING POLICIES (S6.3.13)
 Where an asset comprises of two or more components which have
substantially different lives, for example roof, boilers, lifts, each component
must be depreciated separately over its useful economic life
 Depreciation rates should best reflect the useful economic life of the asset.
 ‘Substantially different’ is open to judgement
 Exemption if impractical or requires undue cost of effort

14. ACADEMY ACCOUNTS DIRECTION 2018/19
GRANTS FOR CAPITAL PURPOSES (S7.4.3)
 Specifying grants received for capital purposes and that these must be
spent on capital projects in line with the terms and conditions of the grant
 Interesting inclusion (!)
 Capital grants are recognised in full when there is unconditional entitlement
 Check terms and conditions of the grant to ensure spent in time
 DFC – 3 financial years with year one being the year payment is made
 SCA – check terms and conditions – typically 1 year carry over of allocation

15. ACADEMY ACCOUNTS DIRECTION 2018/19
RELATED PARTY TRANSACTIONS (S6.6)
 New requirements from 1 April 2019 to report all transactions with related
parties to the ESFA and to obtain approval where certain limits apply
 Explicit confirmation narrative of this is now required in the related party
transactions note
 Coketown proforma includes an example disclosure relating to the
purchase from a Trustee’s business and the employment of a Trustee’s
spouse.

16. ACADEMY ACCOUNTS DIRECTION 2018/19
RENT FREE PERIODS (S7.7)
 Requirement that if an academy trust wishes to recognise the use of
premises, where these are given rent-free, for a remaining notice period it
should reflect the future notional donation as a debtor with a
corresponding entry for the future rental expense as a creditor.
 Additional clarification for accounting entries
 Most likely to be relevant to academies with Diocese / Church land and
buildings
 Can be difficulties in agreeing a value for the use of the premises

17. ACADEMY ACCOUNTS DIRECTION 2018/19
REGULARITY
 Clarifying that irregular expenditure includes all alcohol and any excessive
gifts, including those purchased from unrestricted funds
 Welcome clarification that all alcohol purchases are irregular – flag any with
your auditor
 May need to be reflected in report on Regularity and Propriety statements
 Requirement would extend to trading subsidiary
 Sets out additional areas to consider when testing governance to support
the conclusion on regularity
 Primarily guidance for auditors, but increased from 2 to 14 bullet points
 Includes new requirements of 2018 AFH

18. OTHER TOPICAL ISSUES
CARBON ENERGY REGULATIONS
 Effective for financial years starting on or after 1 April 2019 (i.e. 31 August
2020 onwards). Therefore need to data from 1 September 2019.
 Reporting requirement for large companies i.e. those meeting 2 out of 3
criteria:
 Total income > £36m
 Balance sheet total (gross assets before liabilities) > £18m
 Employees (total number) > 250
 Entities will need to disclose in the Trustees report:
 UK energy use, as a minimum electric, gas and transport fuel (i.e. kwh)
 Associated carbon emissions (i.e. tonnes of Carbon Dioxide emissions)
 At least 1 intensity metric (i.e. energy usage to turnover/staff/pupil numbers)
 Information about energy efficiency measures and methodologies

19. OTHER TOPICAL ISSUES
CARBON ENERGY REGULATIONS – S172 STATEMENT
 Whilst reporting at a Trust level, all schools within a MAT will need to
capture the information
 Should be straight forward for gas and electric
 Transport includes fuel used for business purposes in company cars, fleet
vehicles (minibus), personal cars for business use, private jets etc (!)
 Transport does not include fuel associated with journeys that the company
doesn’t operate i.e. train travel, commercial flights, taxis etc
 Online tool to convert energy usage available at
https://www.gov.uk/government/collections/government-conversion-factors-for-
company-reporting
 Some exemptions from reporting if less than 40 mwh per annum or if
seriously prejudicial to the interests of the organisation
 May give some interesting benchmarking data

20. OTHER TOPICAL ISSUES
ESFA CHART OF ACCOUNTS (COA)
 Standard codes for financial data to underpin the AAR and BFR
 Adopting COA is voluntary, but ‘recommended’ by ESFA from September
2019
 Will potentially enable automated data transfer to the ESFA for 2019/20
financial returns
 May be able to map existing codes to new COA, but it will require sufficient
code structure, including balance sheet codes, for full automation or you may
still need to make manual entries
 Several codes won’t typically be required and should be marked inactive
 Schools can still use local cost centres for their own reporting
 Speak to your software supplier re transition / software guidance
 Consider if and when you adopt the change (software change? merger?) and
allow yourself sufficient time

21. ACADEMIES FINANCIAL
HANDBOOK 2019
Katie Skea

22. ACADEMIES FINANCIAL HANDBOOK 2019
 Published June 2019, effective from 1 September 2019
 What are the key changes? As outlined in Lord Agnew’s foreword:
 Internal scrutiny of controls
 Emphasising areas including:
 The governance role of the Board
 The role of the clerk to the Board
 Slight tweaks in requirements/wording in relation to:
 Management accounts
 Whistleblowing and
 Executive pay
 Lots of new links to further information
 What is driving the changes?

23. INTERNAL SCRUTINY
 Previously this was covered through a small subsection of the Handbook.
 Now internal scrutiny has a whole part of the Handbook dedicated to it,
(Section 3), with various ‘musts’ and guidance covering:
 The Board’s role in relation to internal scrutiny
 Who can provide internal scrutiny assurance checks
 Reporting internal scrutiny assurance checks
 It has now mandated procedures which most Trust’s are probably applying
in any case with a few extra requirements.

24. INTERNAL SCRUTINY
 Why?
Good internal
controls operating
effectively
Good financial
management
Efficiency
Risk management
Minimise the risk
of fraud/error
and error
detection
Consistency
Compliance
Protect assets
Reliable reporting

25. THE BOARD’S ROLE IN RELATION TO INTERNAL SCRUTINY
The Board
Audit/finance
committee
Changes:
- Must meet at least 3 times a year
- The Chair of trustees should not be the chair of the
audit committee
- The committee must have written terms of reference
describing its remit.
- Must take responsibility for internal scrutiny
No change:
- If annual income >£50m, must have a dedicated audit
committee. Other trusts must have a dedicated audit
committee or combine it with another committee.
- Employees should not be audit committee members but
where audit is combined with another committee,
employees should not participate as members when audit
matters are discussed.

26. THE BOARD’S ROLE IN RELATION TO INTERNAL SCRUTINY
Audit/finance
committee
must:
Agree an annual
programme of
work that
delivers internal
scrutiny
Agree who will
perform this
work –
considering
quality and
independence
Consider reports
from the internal
scrutiny provider
and consider
progress against
recommendations
Consider outputs
from other
assurance
activities i.e.
external audit
Report back to
the Board
For MATs, the
committee’s
oversight must
consider
constituent
academies
Oversight must ensure
that information
submitted to ESFA that
affects funding, (capital
and revenue), by the
Trust/constituent
academies is accurate
and compliant i.e. pupil
numbers.
Risk register
(Now
mandatory)
FPM: Key
financial and
other controls

27. WHO CAN PROVIDE INTERNAL SCRUTINY ASSURANCE
CHECKS?
Internal scrutiny
provider
In-house
internal
auditor
TrusteeBought in
service
Peer
review
Separate letter of
engagement needed if
performed by external
auditor
The provider must:
- Be independent and objective
- Be suitably qualified and experienced
- Complete a timely programme of work spread
evenly over the year
The Trust must continually review its
approach to internal scrutiny. Changes to
Trust size, complexity or risk profile may
warrant a change to internal scrutiny
approach

28. REPORTING INTERNAL SCRUTINY ASSURANCE CHECKS
Internal
scrutiny
provider
must
Complete
testing on the
agreed annual
programme of
work
Directly report back to
the audit committee,
including providing a
report on the findings
with insights and
recommendations for
improvements where
weaknesses are
identified.
Prepare a short annual
summary report for each
academic year outlining the
areas reviewed, key findings,
recommendations and
conclusions
These reports
must also be
shared with all
Trustees
Annual summary must
be submitted to the
ESFA with the audited
annual accounts by 31
Dec each year

29. OVERVIEW OF THE SYSTEM OF INTERNAL SCRUTINY
Internal scrutiny
provider
Risk
register
Key financial
and other
controls
All Trusts must have a
programme of internal
scrutiny to provide
independent assurance
to the Board that
financial and other
controls and risk
management
procedures are
operating effectively.
The Board
Now
mandatory,
previously
a should
Audit
committee
Financial
Procedures
Manual

30. THE ROLE OF TRUSTEES
 Further wording added:
 ‘… robust governance…’ ‘…effective financial management…’
 Links to the Governance Handbook – which describes 6 key features of
effective governance and will aid compliance with the AFH:
Effective
governance
Strategic
leadership
Evaluation
Compliance
Structures
People
Accountability
- Educational
standards
- Financial
performance

31. THE CLERK TO THE BOARD
 As referred to in Lord Agnew’s foreword, the handbook includes further
detail on how a clerk to the Board may help by providing:
 Administrative and organisational support
 Guidance to ensure that the Board works in compliance with the appropriate
legal and regulatory framework
 Advice on procedural matters relating to operation of the Board
 Appointment of a clerk to the Board remains a ‘should’ rather than a
‘must’.
 Links to further information on clerking.

32. INFORMATION ABOUT KEY INDIVIDUALS IN THE
TRUST
 No significant changes in this area
 Wording has tightened and clarifies that all fields within the Get Information About
Schools (‘GIAS’) system must be completed with any changes notified to the ESFA within
14 calendar days for the:
 Members
 Chair of Trustees
 All other Trustees
 Accounting Officer
 Chief Financial Officer
 Clarification that the same details also need to be completed/updated on GIAS for
constituent academies in a MAT for:
 Head teacher
 Chairs of local governing bodies (where adopted)
 Local governors (where adopted)
 Direct contact details are needed for all except local governors.

33. MANAGEMENT ACCOUNTS
Previously:
AFH 2018:
• The Trust must prepare monthly
management accounts setting out:
• Financial performance and position;
• Budget variance reports;
• Cashflow forecasts and
• Information to manage cash, debtors
and creditors
• Format ‘should be adjusted to be suitable
for different users including summaries and
supporting narrative as appropriate.’
• Where the Board has concerns about
financial performance, it should consider
whether additional financial reporting is
appropriate.
Changes:
• Format must include:
• An income and expenditure account;
• Variation to budget report
• Cashflows and
• Balance sheet
• Where the Board has concerns about financial
performance, it should act quickly ensuring the
Trust has adequate financial skills in place.
• Links to further information.

34. RELATED PARTY TRANSACTIONS
Previously:
AFH 2018 introduced the new rules requiring:
• All RP transactions to be reported to the
ESFA ,in advance, using the on-line form
from 1/4/19.
• Prior ESFA approval to be obtained for:
• Any contract exceeding £20k on or
after 1/4/19
• Any contract (after 1/4/19) of any
value which would mean that the
cumulative value of contracts
supplied by the RP for the year
exceeds £20k
• ESFA approval needed for transactions
with RP that are novel, contentious or
repercussive
Changes:
• In relation to the requirement to report to the
ESFA: transactions replaced with ‘contracts and
other agreements.’
• Further guidance on ‘novel, contentious or
repercussive’ RP transactions:
• Subject to separate arrangements:
• Must be reported to the ESFA through the
enquiry form rather than the on-line form
• Prior approval must be sought regardless of
value.

35. WHISTLEBLOWING
 The new handbook slightly expands the requirements in relation to
whistleblowing.
No change:
- The Trust must have procedures in place
for whistleblowing
- The Trust must ensure that all staff are
aware of the process and how concerns
will be managed
- The Trust must ensure that all concerns
raised are responded to properly and fairly
Changes:
- The Trustees must agree the whistleblowing
procedures.
- The Trust should appoint at least 1 Trustee and 1
member of staff who other staff can contact to
report concerns.
- Staff should know what protection is available to
them if they report someone, areas of malpractice
or wrongdoing covered under whistleblowing and
who they can approach with any concerns.

36. PAYROLL RELATED CHANGES
EXECUTIVE PAY
 There are few changes in this area but some clarifications and extended
wording:
 Clarification that the Board are responsible for setting executive pay and benefits
 Extensions to wording:
 The process of deciding executive pay must also be a reasonable and defensible
reflection of the individual’s role;
 Executive pay and benefits must be kept proportionate;
 Executive pay and benefits represent good value for money.
 New section flagged to consider: ‘commercial interests’: ensuring that the Board is
sighted on wider business interests held by senior executives and any payments
made by the Trust to these interests. (Transparency requirements of disclosing pay).
 More links to further information in relation to executive pay and staffing/employment
advice.

37. PAYROLL RELATED CHANGES
TAX ARRANGEMENTS FOR SENIOR EMPLOYEES
 This covers the requirement to ensure that senior employees’ payroll
arrangements fully meet their tax obligations.
 The wording has been expanded to clarify that:
 Senior managers with significant financial responsibilities should be
exclusively on payroll, and therefore subject to Pay As You Earn with
income tax and NI deducted at source.

38. VARIOUS AREAS HAVE BEEN EMPHASISED
 NEW: Audited accounts must be provided to every member (CA06
requirement)
 NEW: Note that trusts must ensure they are familiar with the delegated
authority limits – beyond which prior ESFA approval is required, (see handout)
 NEW: In relation to Trusts issued with FNtI:
 The Trust must publish the FNtI on their website within 14 days of its issue and retain
it on the website until it is lifted
 Clarification of the delegated authorities that are revoked and a listing of transactions
that must be approved by the ESFA in advance
 NEW: Secretary of State interventions over concerns about an individual
managing a Trust: the most significant change being that the ESFA may refer
an individual to the Insolvency Service – where conduct will be reviewed and a
potential disqualification order sought.

39. WHAT DOES A GOOD
BOARD LOOK LIKE?
Louise Bridgett

40. GOVERNOR DUTIES
 Governor = director = trustee
 The 7 principles of public life
 Ensure clarity of vision, ethos and strategic
direction
 Hold executive leaders to account
 Oversee and ensure effective financial
performance.

41. EIGHT ELEMENTS OF
EFFECTIVE GOVERNANCE
1. The right people around the table
2. Understanding the role & responsibilities
3. Good chairing
4. Professional clerking
5. Good relationships based on trust
6. Knowing the school – the data, the staff, the parents, the children, the community
7. Committed to asking challenging questions
8. Confident to have courageous conversations in the interests of the children and young people

42. THE RIGHT PEOPLE AROUND THE TABLE?
How many
Governors?
Future skill
requirements?
Governor
tenure?
Recruitment
process?

43. IDEAL TRAITS OF A GOVERNOR
 Ability to listen
 Openness
 Understand the stakeholders
 Ability to challenge
 Common sense
 Correct motivation
 Be able to ask the right questions

44. HOW EFFECTIVE IS YOUR BOARD?
 Have you checked?
 How frequently have you checked?
 External support and guidance includes:
 https://www.nga.org.uk/Knowledge-Centre/Good-governance/Effective-
governance/Twenty-Questions.aspx
 https://www.nga.org.uk/Knowledge-Centre/Good-governance/Effective-
governance/Twenty-one-Questions-for-Multi-academy-Trust-Board.aspx

45. SUPPORT, CHALLENGE, TRUST
 Balance between support & scrutiny.
 Honest feedback important from both sides.
 Governors should have free and open access to
the schools.
 How close is too close?

46. UNDERSTANDING ROLES – CHAIR VERSUS CEO
Chair CEO

47. WHAT SHOULD EACH PERSON DO?
The Chair should:
 Lead the Board
 Ensure engagement and participation
 Encourage relevant discussion,
effective decision-making,
appropriate implementation
 Nurture the relationships between
Governors.
The CEO should:
 Manage day to day operations
 Deliver objectives
 Act as main point of contact between
the Board and the academy

48. PROFESSIONAL CLERKING?
 2019 Academies Handbook
 Minutes
 Timely information
 Training

49. OTHER CONSIDERATIONS
Terms of
reference
Conflicts of
interest
Scheme of
delegation

50. “A good board is a victory, not a gift”

51. BREAK

52. INTEGRATED
CURRICULUM
FINANCIAL PLANNING
(ICFP)
Katie Skea

53. INTEGRATED CURRICULUM FINANCIAL PLANNING
(ICFP)
 What is ICFP?
 Why is it important?
 How do you do it?
 How can you interpret/benchmark the results?
 What conclusions can you draw?

54. WHAT IS ICFP?
 The typical budgeting approach in Trusts
 ICFP or curriculum led planning is essentially planning the curriculum with a
focus on finance. Providing the best curriculum for the money you have
available.
 Trust’s should ask themselves 2 questions:
1. What are the educational needs of all pupils at the academy?
2. Can we afford to run this curriculum?
 The key cost in running a curriculum is teacher costs. ICFP is a series of KPIs
focussing on teacher costs.
 ICFP is not new and most Trusts are probably applying aspects of ICFP
without realising it.

55. WHY IS IT IMPORTANT?
 General austerity in the sector drives the need for savings and
efficiencies.
 Tackles the ‘large’ cost proactively rather than reactively
 Benchmarking capability – highlighting areas for improvement
 ESFA favoured model
 MAT Development and Improvement Fund grants
 Lord Agnew’s letter – June 2018
 ‘Top 10 planning checks for Governors’/ SRM checklist
 The future?

56. ICFP
Cost per lesson
Pupil to teacher ratio
(PTR)
Curriculum
headroom
Average teacher cost
Contact ratio
% of spend on:
- Staff
- Teaching staff
- SLT
Average class size
HOW DO YOU DO IT?

57. WHAT DATA?
 First step – consider what data set you are going to calculate the
KPIs on?
 Review historic data or use for future planning?
 Date
 Efficiency
 What are you planning to compare against? Compare like
against like

58. PRACTICAL SESSION
 Using the data sheet and workbook provided, calculate the
following ratios:
 Average teacher cost
 Cost per lesson
 Pupil: Teacher ratio
 Contact ratio
 5 minutes
 Curriculum bonus – we will work through this calculation later

59. AVERAGE TEACHER COST
 Use ‘full cost’ of all teaching and SLT staff
 Only use teacher and SLT costs
 Example - Academy 1:
 Answer: (323,000+2,802,000)/(3.5+52) = £56,306.31
Teacher cost
Average teacher cost =
No. of FTE teachers

60. COST PER LESSON
 Use ‘full cost’ of all teaching and SLT staff teaching time
 This ratio tells you the full cost of running each taught lesson
 Example assumes that there is no SLT teaching time
 The cost per lesson should be approx. £2,000/lesson
 Example:
 Academy 1: 2,802,000/1,045 = £2,681
Teacher cost
Cost per lesson =
No. of teaching periods per week

61. PUPIL TO TEACHER RATIO (PTR)
 Include SLT staff
 This ratio tells you your balance of pupils to teachers
 Example:
 Academy 1: 1,030/ (3.5+52) = 18.56
Total number of pupils
PTR =
No. of FTE teachers

62. CONTACT RATIO
 Include SLT staff (ESFA guidance)
 Normalise the same period i.e. a week
 This ratio tells you the average amount of time that all teachers spend with pupils,
(a contact ratio of 1 would be 100% of their time)
 Contact ratios should always be less than 1 to allow for PPA time, CPD, admin,
pastoral care etc.
 An optimal average contact ratio is approx. 0.78 (ASCL)
 Application to primary schools
 Example:
 Academy 1: 1,045/ ((3.5+52)*25) = 0.75
No of teaching periods
Contact ratio =
Total no. of available periods

63. CURRICULUM HEADROOM / BONUS
 We have seen different ways of calculating this metric
 Regardless of the method used, this ratio indicates how much excess teaching time is
available, (ESFA focus)
 SLT teaching time should be included in this analysis (example assumes no SLT teaching
time)
 A desirable curriculum bonus is less than 8%
1) Calculate the number of classes needed
No. of classes needed = Total pupils
Target class size
2) Calculate the number of FTE teachers needed based on your target contact ratio, (0.78)
No. of teachers needed = No. of classes needed
0.78
3) Calculate excess number of FTE teachers
Excess = Actual FTE – FTE needed (above)
4) Calculate curriculum bonus
Curriculum bonus = Excess no of teachers x 100%
Actual no of teachers

64. CURRICULUM HEADROOM / BONUS
1) Calculate the number of classes needed
No. of classes needed = 1,030 = 38.1
27
2) Calculate the number of FTE teachers needed based on your target contact ratio, (0.78)
No. of teachers needed = 38.1 = 48.9
0.78
3) Calculate excess number of FTE teachers (assumed no SLT teaching time)
Excess = 52 – 48.9 = 3.1
4) Calculate curriculum bonus
Curriculum bonus = 3.1 x 100% = 6%
52
 Example – Academy 1:

65. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
 You’ve calculated the data, how do you interpret it?
 Compare with:
 Your own historical data for the academy
 Other academies within your MAT
 Other known, similar academies
 ESFA approved data – Outwood Grange – youtube video – links on
ESFA website
 Beware of:
 Differences in calculation
 Comparing like with like: dates/ years/ school types
 Note that many other KPIs and ratios can be used for benchmarking

66. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
 Let’s consider the example:
 What can we glean from these metrics comparing to other
academies in the Trust and ESFA recommendations?
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
% of total spend on teaching staff pay 56% 53% 62%
Average teacher cost 56,306 52,691 56,644
Cost per lesson 2,681 2,668 2,835 2,000
PTR 18.56 15.79 16.71
Contact ratio 0.75 0.71 0.71 0.78
Curriculum bonus 6% 20% 13% <8%

67. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
 With focus on the 3 metrics integral to ICFP:
1. Cost per lesson
Indicates that all 3 schools need to reduce this, academy 3 in particular
 Reduce teacher cost by reducing FTE?
 Is SLT too big? i.e. staff profiling
Teacher cost
Cost per lesson =
No. of teaching periods per week
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
Cost per lesson 2,681 2,668 2,835 2,000

68. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
2. Contact ratio
Academies 2 and 3 in particular need to increase this ratio
 Reduce total number of available periods by reducing FTE?
No of teaching periods
Contact ratio =
Total no. of available periods
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
Contact ratio 0.75 0.71 0.71 0.78

69. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
3. Curriculum bonus
Indicates that academies 2 and 3 need to decrease this ratio
1) Calculate the number of classes needed
No. of classes needed = Total pupils
Target class size
2) Calculate the number of FTE teachers needed based on your target contact ratio,
(0.78)
No. of teachers needed = No. of classes needed
0.78
3) Calculate excess number of FTE teachers
Excess = Actual FTE – FTE needed (above)
4) Calculate curriculum bonus
Curriculum bonus = Excess no of teachers x100%
Actual no of teachers
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
Curriculum bonus 6% 20% 13% <8%
• Increase class sizes/ Decrease
number of classes?
• Tweak this ratio for key
years?
• Classes do not need to
remain consistent?
• Interaction with contact ratio –
higher contact ratio ~ less
teachers needed

70. WHAT CONCLUSIONS CAN YOU DRAW?
 Very useful for planning/comparing
 Can uncover new insights
 Indicative rather than conclusive
 ESFA favoured analysis
 Help available

71. ARE YOU MANAGING
RISK?
Darren Perry

72. ASSESSING AND MANAGING
RISK
 What is risk management?
 Risk identification
 The risk management policy
 Assurance
 The risk register
 Reserves
 Stress testing

73. ‘The forecasting and evaluation of risks, together with the identification of
procedures to avoid or minimise risk impact’
An academies risk management procedures will likely include:
 Identification of risks – the risk register
 Their approach to managing risk – the risk management policy
 Steps taken to mitigate the risk – the procedures and controls
 Ongoing review of risk – by management and Trustees
 Reserves policy
WHAT IS RISK MANAGEMENT?

74.  Strategic versus operational risks
 Risk categorisation
 Impact assessment
 Likelihood assessment
 RAG rating
RISK IDENTIFICATION - THE RISK REGISTER
10
9
8
7
6
5
4
3
2
1
1 2 3 4 5 6 7 8 9 10
L
i
k
e
l
i
h
o
o
d
Impact

75.  The risk management policy
 Risk objectives
 Risk approach
 Risk appetite
 Procedures and controls
 Assessing risk
 What action is required?
 Tolerate
 Treat
 Transfer
 Terminate
ASSESSING AND MANAGING RISK

76. ASSURANCE
 Assurance
 1st line – Management
 Policies
 Control framework
 Management review
 2nd line – Corporate oversight
 3rd line – External sources of assurance

77. BACK TO THE RISK REGISTER
 Update the risk register for the assurance and any identified actions
 Residual risk scoring
 Additional information to include
 The risk owner
 A timeline for the required actions
 A timeline for review
 Ongoing monitoring
 Risk reporting
Red Amber Green
Financial 1 4 2
Governance 0 1 1
Safeguarding 0 2 5
Curriculum 0 3 3
etc 1 4 2

78.  What are reserves?
 Liquidity
 Why does your academy need to hold reserves?
 Are you holding the right level of reserves?
 Developing a reserves policy
 Are you articulating your reasoning in your reserves policy?
RESERVES
In order to consider the long term
sustainability of your organisation
you need to consider your risks in
the context of your current level of
reserves and your reserves policy.
Your free reserves are your:
Unrestricted funds +GAG x
Less:
Tangible fixed assets (x)
Programme related investments (x)
Designated funds (x)
Any other commitments (x)
Free reserves x

79. STRESS TESTING
 What combination of risks would lead to
failure?
For example increased costs and funding
reduction?
Have you tested to the
point of failure?
 Costing up of your risks
 It’s not all bad news

80. FINAL THOUGHTS
 SWOT analysis
 Blank sheet approach
 Trustee skills mix
 What haven’t we thought of?

81. VAT UPDATE
Daniel Austin

82. TABLE OF CONTENTS
 Overview of VAT
 Business and Non-Business Activities
 Common Supplies and Pitfalls
 Making Tax Digital
 Other points

83. VAT - OVERVIEW
 Charged on a supply of taxable goods or services (business activities).
 Required to register where taxable turnover exceeds £85k (historic or 30
day test)
 Includes all schools within a MAT
 Also includes reverse charges
 Agents fees
 Software licences
 Overseas services
 Voluntary registration possible if taxable turnover below £85k

84. VAT OVERVIEW – BUSINESS ACTIVITIES
Lettings
Room hire
Sports facilities
Business
Activities
Catering provided
to non-pupils
Staff
to ‘profit making’
organisations
Services
Consultancy
Advertising
Administration
Uniform
Entertainment
e.g. School prom
Vocational training
and nurseries
School photograph
commission

85. VAT OVERVIEW – NON-BUSINESS ACTIVITIES
Non-Business
Activities
Free
Education
Donations and
sponsorship
Grants
Closely related
to education
Examples:
• Student accommodation
• Breakfast and after school clubs
• School trips
• School meals
• Musical instruments
• Goods for use in the classroom
• Stationery
• Ipads/laptops
• books
Staff
To other ‘non profit
making’ schools

86. VAT – COMMON SUPPLIES AND PITFALLS
Supply Liability Pitfall
Catering Non-business or taxable Subcontracted out has caused
issues, vending machines
School Uniform Standard or Zero Reselling at cost assuming
closely connected
School Prom Per HMRC Standard rated TOMS?
School Plays Exempt or Non-business Requirement to pay changes
liability
Before & After Clubs Non-business or Exempt Is there a profit motive
Consultancy Services Standard or Exempt Depends on service provided
Staff Exempt, Standard or Non-
business
Depends to who, what is
charged and what they do

87. INPUT VAT
 VAT registered businesses can recover VAT incurred on purchases where
this relates to a taxable business activity
 Academies can also recover VAT attributable to non-business activities
 Overhead costs need to be apportioned (Business-Non business split
followed by partial exemption)
 Academies that are not registered for VAT (VAT126) cannot recover input
VAT in relation to business activities

88. RECOVERY AND APPORTIONMENT – VAT 126
Business Mixed
Apportion
Using a fair and
reasonable basis
Non-business
RecoverBlocked

89. RECOVERY AND APPORTIONMENT – VAT REGISTERED
Business Mixed
Taxable Mixed Exempt
Recover Apportion Blocked
Apportion
Using a fair and
reasonable basis
Non-business
Recover

90. MAKING TAX DIGITAL FOR VAT
From 1 April 2019* VAT registered businesses with a taxable turnover
>£85,000 must:
 Maintain their VAT records digitally
 File VAT returns directly through software
 That’s it…
* HMRC announced a 6 month deferral for specific entities, most notable
Local Authorities and VAT groups.
HMR
C

91. MAKING TAX DIGITAL FOR VAT
(MTDFV)
 Therefore MTDfV does not apply where:
 Not VAT registered such as academies
submitting returns using form VAT 126.
 Academies with taxable business income of
below £85k.
 HMRC sent out letters to affected
businesses earlier in the year.

92. OTHER MATTERS – CLIMATE CHANGE LEVY
 Levy aimed at reducing green house gas emissions from the burning of
fossil fuels.
 Charged at a fixed rate on supplies of non renewable fuel and energy
such as electricity and gas.
 However exemptions include:
 Use for non-business purposes (i.e. grant funded education).
 Domestic use and small quantities
Check your utility bills if unsure!

93. OTHER MATTERS – VAT ON
CONSTRUCTION
 Contractors will ordinarily charge you 20%
VAT on construction services.
 Can be zero rated where building used for
Relevant Charitable Purpose (e.g.
classrooms!) Watch business use though…
 Need to issue certificate to supplier before
construction begins.
 Main advantage is cash flow

94. OTHER MATTERS – VAT INSPECTIONS
 Academy client’s of the firm have received VAT inspections in the past 12
months
 HMRC intend to visit both VAT registered and VAT 126 academies
 Potential to charge penalties for errors
 Main points:
 Sports lettings – taxable?
 Prom income standard rated?
 Reiterated need to allocate input VAT to business and non business income
and undertake appropriate calculations.

95. QUESTIONS

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Taunton
01803 320100
Torquay
01872 276477
Truro
01752 301010
Plymouth
01202 663600
Poole
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