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UHY’s 2016 academies benchmarking report
“Adding value for our academy clients”
For academic year 2014/15
www.uhy-uk.com/academy-schools
CONTENTS
1. Foreword from UHY’s Academies Chair					 1
2. Staff costs, numbers and teaching staff to pupil ratios		 2
3. Pension costs and liabilities							8
4. Income										11
5. GAG expenditure and non-staff costs					 15
6. Capital expenditure								16
7. Cash balances									18
8. Surplus or deficit								21
9. Governance and audit findings 						 22
Where does your academy fit within the results?			 29
What our clients say...								31
About UHY Hacker Young							34
Your local UHY academy specialists						35
Our services include:
•	 Transition support and advice
•	 Audit and assurance
•	 Accounts preparation
•	 Academies accounts return
•	 Teachers’ Pension Scheme EOYC
•	Payroll
Other specialist services include:
• VAT and tax advice
• Internal audit/Responsible Office assistance
• Company secretarial
• Financial compliance
• Support for your finance team
• Governance reviews
www.uhy-uk.com/academy-schools
We have worked with UHY since we were first
established in 2010. UHY continues to provide a top
rated service for us as a large academy Trust as
it did during our infancy. The technical support the
team have provided has been invaluable. At all times
answers to any questions have been given without
delay and UHY take time to provide regular updates
to aid my requirements before I even know I have
them.
Lee Miller, Thinking Schools Academy Trust
I can’t believe this is our fourth
benchmarking report for the academy sector,
it seems only a short while ago we sat down
to write our first. And how the sector has
changed in four years.
As of 1 January 2016 there were over
5,000 open academies, of which 70% were
converter academies and the remaining 30%
sponsored. Around 56% of this total are
primary academies, but with an increasing
number of secondaries making the transition
each year. For the second year running
around 1,000 academies have opened
during the academic year, a phenomenal
number. With a further 300+ free schools,
plus studio schools and University Technical
Colleges taking the total number to around
5,500 schools.
With the Government keen to see further
expansion of the academy programme, and
new powers to force “coasting” schools
(those not adding value to their pupils) to
become academies, this number is sure to
continue to rise rapidly. DfE statistics already
reveal that a further 576 academies are in
the pipeline at this early point in 2016.
This year our benchmarking report has
expanded to cover 150 academies in total;
a mix of primary schools, secondary schools,
free schools, special schools and MATs.
To provide a wider spectrum, our sample
includes a mix of UHY Hacker Young clients
and other academies, whose information
has been sourced from their websites and/
or Companies House. MATs are notoriously
difficult to benchmark, and so we have
opted to break these down and have
included the component academy data in
our report.
The sections we introduced last year covering
areas such as trustee movement have been
retained. Our academy clients always seem
very keen to understand how the number of
audit management letter recommendations
they have received compare to other
academies, and so we expect that this
section to once again be popular.
Please do take the opportunity to use the
benchmarking page, on page 29 of the
report, which contains space for you to
add your own school’s data alongside the
average results in key areas. We are able to
produce a graphical representation of your
results, so please contact us if you would
find this useful.
We are already well into the 2015/16 year,
and you will soon be preparing your Budget
Forecast Returns for 2016/17. A word to
describe the outlook for the next couple
of years is perhaps “challenging”. I am
sure many of you would choose a stronger
description than this. Budget pressures
remain, and indeed are set to intensify.
The education sector as a whole awaits
clarification over how the National Funding
Formula will work in practice, and on which
academies are set to gain and lose from the
fairer funding changes.
We still await a special academy SORP,
additional to the existing Charity SORP.
Academy trusts will be preparing their
2015/16 financial statements in accordance
with a new Accounts Direction based on
new charity accounting standards. The
impact on most academies will be minimal,
but there will be increased disclosures, in
the interests of transparency, over senior
management remuneration, including how
the remuneration is set. This may produce
some interesting data for us to analyse next
year!
I hope that you enjoy our report and find it
interesting. If you have any questions after
reading it I would be pleased to answer
them, as would our other national academy
team specialists. You can find details of your
local specialist on page 35. We are always
keen to improve our benchmarking report so
if you have any suggestions for next year, do
feel free to let us know. Happy reading!
Welcome to our fourth
annual benchmarking
report for academies.
The report is designed
to bring together
information which you
can use to
benchmark your
academy against
others, and
throughout the
report we provide
commentary on
topical issues.
1
1. FOREWORD FROM UHY’S ACADEMIES CHAIR
Allan Hickie
Chair of UHY’s national
academies group
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
on staffing, however the results of our
benchmarking show that this is not
necessarily the case.
The key ratio to consider is the percentage
of staff costs as a percentage of either total
costs or total income:
There may be specific circumstances which
explain such a high ratio but, without
restructuring, in most cases this would not
be sustainable for any period of time. A total
of eight academies in our sample had staff
costs in excess of 80%.
Generally, we will discuss their high staff
costs ratio with our academy clients if it
begins to go beyond 75%, certainly
77-78%.
High staff costs can occur where an
academy is highly geared in terms of senior
staff, or it could simply be because they are
operating less efficiently. If they are highly
geared through choice, perhaps to improve
education standards, that is one thing,
but if they are not aware they are being
inefficient, that should raise concern with
rising staff costs in the future.
2
2. STAFF COSTS, NUMBERS AND TEACHING
STAFF TO PUPIL RATIOS
Staff costs are the largest part of an
academy’s annual budget. Maintaining
educational standards whilst balancing
staff costs is perhaps one of the most
fundamental challenges for an academy.
It would be reasonable to expect most
academies to spend broadly similar levels
The chart above shows that the average
academy, whether a secondary school or a
primary school, has maintained staff costs
of around 70% of total costs over the past
three years. The overall average for 2014/15
was 72%, up slightly on 71% in 2014.
It will be interesting to see how different this
chart looks in our report next year, once the
impact of rising pension and NIC costs is felt.
The average for primary schools is
fractionally higher than for secondary
academies, although the gap has closed.
The gap between primary and secondary
schools is not as high as might be expected.
Academies at the ends of the spectrum
reported staff costs as high as 84% of total
costs.
The gap between
staff costs
for primary
and secondary
schools is
not as high
as might be
expected.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Average staff costs as % of total costs
2014/15 2013/14 2012/13
Primary academies 72% 72% 74%
Secondary academies 71% 70% 72%
Staff costs represent such a large proportion
of an academy’s budget that where it
becomes necessary to make cuts it is almost
inevitable that these will need to come from
employment costs. Delving deeper, salaries
paid to senior leadership team members
often make up a considerable proportion of
the total, and savings are often made most
easily by cutting senior leadership costs.
It is certainly worth analysing a cost versus
benefit ratio to determine the level of actual
teaching time that your senior leadership
team are involved with.
Additional disclosures regarding senior
management salaries will be required in
academy trusts’ 2015/16 accounts. In
accordance with the requirements of the
new Charity SORP, on which the Academies
Accounts Direction is based, it will be
necessary to disclose:
3
•	the total remuneration paid to senior
management; and
•	the trust’s policies for setting the salaries of
the senior management team.
Next year we will include an analysis of
senior management salaries within our
report, and believe the results will be very
interesting indeed.
The National Insurance changes, with a rise
of 3.4% in employer contributions, only
came into force in April 2015 and, therefore,
had a limited impact on the 2014/15
data, the full effect of which will be felt in
2015/16.
The school with the lowest staff costs, at
42% of total cost, was a free school which
had high set up, premises and other support
costs relative to staff costs. Only a further
nine had staff costs of less than 60% of total
costs.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Additional
disclosures regarding
senior management
salaries will be
required in academy
trusts’ 2015/16
accounts.
TEACHING STAFF TO PUPIL RATIO
The first section of this report touched on
efficiency, and this leads us to consider staff
costs versus the number of pupils at the
school.
Almost half (43%) of the academies in our
sample had a teacher: pupil ratio of
10-18:1. This has fallen from last year when
over 54% reported a ratio within this range.
So what has happened?
Far more academies this year have a ratio of
less than 10:1 (13% compared to 7%), and	
there has also been a similar increase in the
18-20:1 ratio (13% compared to 5%).
It is difficult, once again, to know how much
to read into this. We commented last year
that the very low ratios would be impressive
at top independent schools, and it is likely
that the different approaches to calculating
average teaching staff numbers is largely
responsible.
Academies must disclose their employee
numbers on a Full Time Equivalent (FTE)
basis, however if there is significant
difference between the numbers of a FTE
and a headcount basis then, to comply
with company law, academies ought to
be disclosing on a headcount basis as
well. Whilst this is a minor disclosure,
we recommend that it is made in order
to fully comply with company law.
Last year there was a suggestion that
future Accounts Directions may require
disclosure on a head count basis but to
date there has been no clarification on
this.
Staff costs
are by far
the largest
expense for an
academy, and
are often where
cuts have to be
made.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
4
SUPPLY STAFF
Academies inevitably have to rely on supply
staff from time to time, and some of our
clients have suffered from exceptionally high
supply costs this year as a result of
unusual/specific circumstances.
The average secondary academy spent
£101k on supply costs, up from £89k in
2014. One school suffered from supply
costs of £466k, and another was not far
behind with £413k. These two were both
large schools, however, and supply costs
represented about 7-8% of staff costs.
Other academies in our sample reported
supply costs of well over 10%, with a
few so reliant on supply staff that costs
represented over 20% of total staff costs.
These range from a high number of staff off
on long term sick leave, to a large number of
staff pregnancies.
The average primary spent £45k, very similar
to the £47k last year, although one primary
reported over £222k of temporary staff costs
(at 9% of total).
Once again a minority of academies had
none or virtually no supply costs, despite
disclosure of such costs being a requirement
of the Accounts Direction.	
In 2014/15 just over a quarter (27%) of
academies made at least one compensation
or severance payment; remarkably, the same
percentage as 2013/14.
As noted above, staff costs are by far the
largest expense for an academy, and are
often where cuts have to be made.
Unfortunately, staff cuts can lead to
short term costs, such as redundancies,
compensation settlements and severance
payments. This reiterates the importance of
the need for forward planning; if you fail to
address these impending issues in good time,
your academy may have insufficient funds to
pay the immediate restructuring costs.
Special staff severance payments are paid
to employees outside of normal statutory
or contractual requirements when leaving
employment in public service whether they
resign, are dismissed or reach an agreed
termination of contract.
The 2013/14 Accounts Direction only
required academy trusts to disclose the total
value of such payments made during the
year, plus individual disclosures of items over
£5k.
This was extended for 2014/15 so that
all such payments had to be disclosed
individually, and anonymously, regardless of
the amount.
COMPENSATION AND SEVERANCE PAYMENTS
5
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
RANGE OF COMPENSATION PAYMENTS
Where academies made compensation
payments, the amounts were thankfully
relatively low. 42% of the academies paid
out no more than £10k, and 82% paid less
than £40k.
There were, however, still some significant
amounts. 2% of the sample paid out over
£100k, with a further 5% paying
£50k - £75k.
The highest payment by a single academy
(note this is an academy and not necessarily
a trust since our benchmarking data focuses
on the individual schools) was £138k.
Although still a considerable sum this is a
great improvement on the higher amount of
over £200k last year! 	 If your
academy is
considering
making a staff
severance
payment above
the statutory
or contractual
entitlements,
you must
consider whether
the proposed
payment is in
the interests of
the trust.
Of the academies who made highest
compensation payments of less than £10k,
39% of the payments fell within the
£5k – £10k range. 8% of academies paid
pay between £30k - £40k to an individual,
demonstrating once again how expensive
compensation and severance payments can
be.
You should remember that if your academy
is considering making a staff severance
payment above the statutory or contractual
entitlements, you must consider whether
the proposed payment is in the interests of
the trust, and whether such a payment is
justified. This judgement should be based
on a legal assessment of the chances of
the trust successfully defending the case at
employment tribunal. Trusts’ also need to
obtain prior approval from the Secretary of
State for certain large payments, however
the usual Value for Money rules apply to all
payments, regardless of the amount.
0% 20% 40% 60% 80% 100%
42% 16% 24% 11% 5%
0%
2%
< £10k
£10k to £20k
£20k - £30k
£30k - £40k
£40k - £50k
£50k - £75k
£75k - £100k
£100k +
Range of compensation payments
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
6
Primary school
Headteachers
are,
unsurprisingly,
generally paid
less, however
this year the
average has
increased
dramatically to
£82k from £64k
in 2013/14.
HEADTEACHER/PRINCIPAL SALARIES
As previously mentioned, there will be
an increase in disclosure requirements
in 2015/16 for remuneration paid to
senior management, and this expands
on the disclosures already required for
Headteachers. The individual disclosures for
Headteachers will remain.
There have been further headlines in the
national press about the remuneration of
Headteachers during 2015. Unfortunately,
these things tend to go in cycles and certain
topics or sectors become the flavour of the
month. There is a danger that antagonist
headlines give the impression that all
Headteachers are grossly overpaid,
when the majority are not, holding highly
responsible positions which have the ability
to influence thousands of young people.
Where we believe it is right to question
payments is compensation payments paid
to Headteachers and Principals. With their
higher salaries it follows that many of the
large compensation payments are made to
Headteachers, often leaving their post in
response to a poor Ofsted report or similar,
and it cannot be right that payments can
be seen as a reward for failure because this
does not reflect well on the sector. The rules
concerning payments made in situations like
this should certainly be reviewed.
The chart above shows the average, highest
and lowest salaries paid to the Headteachers
of academies within our sample.
Whilst the best paid secondary school Head
received £217k (up from £182k last year),
the average was closer to £100k, similar to
2014, with some receiving a modest £55k.
Primary school Headteachers are,
unsurprisingly, generally paid less, however
this year the average has increased
dramatically to £82k from £64k in 2013/14.
One primary Headteacher received
approaching £200k, far more than most
secondary leaders. But of course, some
primary schools, especially those in London
and other major cities, can be as large as
some secondary schools.
7
The graphic below shows the distribution across various salary bands, with fairly equal
numbers paid in the lower three bands. A significant number (13%) are paid more than
£125k.
Our data reveals
that, as you
would expect,
secondary
schools are far
more likely to
have high earning
employees.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Academy trusts are required to disclose, on
a confidential basis, how many employees
received remuneration in excess of £60k.
The disclosures are made in bands of £10k,
and we thought it would be interesting to
compare the figures between academies.
The chart reveals that, as you would expect,
secondary schools are far more likely to
have high earning employees.
Many secondary schools have two or three
deputy or assistant Headteachers in addition
to the Head or Principal, possible explaining
why 48% of secondary schools employed
three or more members of staff earning in
excess of £60k.	
Only 14% of primary academies employed
three or more staff earning more than £60k;
but 79% (down from 86% last year) did not
pay anyone, or only the Headteacher, at this
level.
Often, where two otherwise similar
academies have very different movements in
the LGPS liabilities it is due to the individual
staff profiles. The age of staff, for example,
can have a significant impact.
The chart below shows that a high majority
of academies (87%) saw their LGPS liabilities
rise during the course of 2014-2015, with
over half (55%) experiencing a modest rise
of no more than 10%.
In 2013/14 there was a much more even
split between rising and falling LGPS
liabilities. The difference between the two
years is because 2013/14 included a lot of
adjustments for actual performance versus
previous assumptions, made in the year
following the full valuation of the LGPS.
The liability included in the year-end financial
statements is based on a detailed FRS 17
report prepared by a qualified actuary.
The actuary assesses specific data for your
academy, such as staff profile and number
of active members, and calculates a liability
looking at stock market performance of
assets and using various assumptions, such
as life expectancy.
Academy schools pay a different contribution
rate to Local Authority (LA) schools, and the
rates for academies can vary enormously
depending on where the school is located.
However, the rates can also vary between
academies within the same LA.
3. PENSION COSTS AND LIABILITIES
Academies have at least two pension
schemes: the Teachers’ Pension Scheme (TPS)
and the Local Government Pension Scheme
(LGPS). The TPS is an unfunded scheme,
which means an academy does not need
to include its share of the liabilities on the
trust’s balance sheet; indeed quantifying an
individual share would be very difficult.
Academy accounts do include the LGPS
liability, however, this figure can cause a
great deal of confusion, and is often the
focus of questions we are asked whenever
we attend governors’ meetings.
The LGPS, like the TPS, is a defined benefit
scheme, however from April 2014 the new
LGPS scheme is calculated on an average
salary, rather than a percentage of final
salary. The objective is to significantly reduce
the future pension costs and help to reduce
the large liabilities in these schemes.
Pension liabilities are still a common topic
of conversation at trustees’ meetings, but
most schools which have been academies
for some time are now comfortable that
these liabilities are not generally anything to
be concerned about. They understand that
the key requirement is to understand the
monthly contribution rate and how future
changes may affect them.	
Just as in previous years, some academies
in our sample have seen their liabilities rise,
whilst others have seen them fall, and this
can make it difficult to determine a trend.
There are also several examples where a
large rise one year is followed by a fall the
following year.
A high majority
of academies
(87%) saw their
LGPS liabilities
rise during the
course of
2014-2015.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
8
3%
3%
7%
55%
30%
2%
% movement in LGPS liability - 2014/15
< -20%
-20% to -10%
-10% to 0%
0% - 10%
10% - 20%
20% - 30%
4%
14%
21%
19%
23%
19%
% movement in LGPS liability - 2013/14
< -20%
-20% to -10%
-10% to 0%
0% - 10%
10% - 20%
20% - 30%
A word of warning...LAs may have the
discretion to take into account various
factors when setting LGPS employer rates,
following a recent decision by East Riding
of Yorkshire Council. They were recently
allowed to increase an academy’s LGPS
employer contribution rate from 20%
to 43.3% as the result of an anomoly in
the way the assets were allocated prior
to conversion. It is a complex situation,
but there is a concern that administering
authorities will be emboldened by the
decision (after an appeal by the academy
the decision was upheld by the Pensions
Ombudsman).
Any schools yet to convert certainly need
to understand the administering authority’s
approach to asset allocation and confirm
the rate of employer contribution.
The scatter chart below shows the range of
LGPS liabilities across our sample. Despite
the high number of academies which saw
increases in their liabilities, the average for
both secondaries and primary academies has,
interestingly, actually fallen. This is probably
as a result of new converter academies and
their relatively low LGPS liabilities.
The largest secondary liability was £3.67m
and the largest primary liability was £1.12m.
Last year, our analysis of pension data
revealed that the largest liabilities do not
necessarily sit with the largest schools, which
one would expect to be a fair assumption.
The size of the LGPS liability for an academy
is harder to predict because some academies
employ far more administration staff than
others, even before the detailed staff profile
such as age, length of service etc. are
factored in.
East Riding of
Yorkshire Council
has recently
been allowed
to increase
an academy’s
LGPS employer
contribution rate
from 20% to
43.3%!
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
9
Whilst there is some correlation, two of the largest pension scheme deficits are for academies
with less than 1,000 pupils, and some small schools of under 400 pupils can have a
surprisingly large liability.
(1)
-
1
2
3
4
1
Millions
Each point represents one school
LGPS liability (£m)
average primary academies (£408k) (2014: £415k)
average secondary academies (£1.19m) (2014: £1.25m)
The impact
of the rising
pension costs
is already being
felt, but will
become more
apparent later
in 2016 after
academies
prepare their
2015/16 financial
statements.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
The bar chart below shows that there is little
difference between secondary and primary
academies when you compare the ratio of
LGPS deficit to non-teaching staff. Whilst
the average LGPS liability per non-teaching
staff member is around £34k (up from £25k
in 2013/14), some academies have
much higher liabilities per member of
staff. The primary school with a liability
of £158k per member of support staff is
probably more a result of the allocation of
staff between categories than the pension
liability!
LGPS LIABILITY PER NON-TEACHING STAFF MEMBER
10
TEACHERS’ PENSION SCHEME
The TPS contribution rates changed in
September 2015, with a total contribution
rate of 26%. Scheme members are now
paying an average contribution rate of
9.6%, with the balance of 16.4% falling on
academy trusts as the employer. There will
be an additional 0.08% administration levy
charge, and the 16.4% rate will be payable
until the outcome of the following valuation
is implemented, which is expected to be
April 2019.
The additional contributions due by
academies represents a significant increase
in their pension costs of 16.3%.
We have estimated that this could easily add
over £20k to the budget of a reasonably
sized primary school, or £40k-£50k for a
secondary school.
The impact of the rising pension costs is
already being felt, but will become more
apparent later in 2016 after academies
prepare their 2015/16 financial statements.
It would not be unreasonable to expect the
deficit position to increase as a result of
these rising staff costs.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
GENERAL ANNUAL GRANT
Your key source of recurring income, as
an academy, is likely to be derived from
grant funding, and the General Annual
Grant (GAG) in particular. However, many
academies across the country do have other
significant sources of income. It is more
common for secondary academies to be in
a position where they are able to generate
significant other income, but there are some
primary academies with substantial non-
GAG, and even non-grant income.
We are increasingly talking to our academy
clients about setting up trading subsidiaries;
it is important that whenever there are
trading activities, you review your position
to minimise risk to trustees and to mitigate
corporation tax and VAT liabilities.
It is also important to ensure that your trust’s
articles permit trading activities if these do
remain in the academy trust itself; many
academy trusts are prohibited by their articles
from carrying out what are often referred to
as ‘significant trading facilities’.
The trend from the graph below is that the
percentage of income derived from GAG has
fallen compared to 2013/14.
The average primary generated 76% of its
income from GAG in 2014/15 compared to
78% in the previous year. This fall is probably
largely explained by the Universal Infant Free
School Meal income within the 2015 data,
a significant boost to non-GAG income
for some schools. The average secondary
figure has also fallen, to 80% from 82% in
2013/14, although it is less clear why this
change has occurred.
It is important
that whenever
there are trading
activities
academies review
their position
to minimise risk
to trustees,
and to mitigate
corporation
tax and VAT
liabilities.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
11
4. INCOME
OTHER INCOME
By other income we mean all non-grant
income, excluding assets inherited in the
year of conversion or other large one-off
sources of income, such as the donation of
an extension building from the LA.
Most academies generate some income
from lettings, whether by allowing local
sports groups to utilise their sports fields,
or letting other local community groups
rent a part of the building. Other sources of
income include providing services to other
schools, such as catering, IT assistance,
Headteacher consultancy, and secondment
of teaching and administrative staff.
Trustees have a responsibility to maximise
their academy’s income by utilising the
resources at their disposal, since this
maximises the funds available to spend on
the trust’s pupils.
We would always recommend that you seek
professional advice to ensure you have the
most appropriate structure before embarking
on any new activities or substantially
increasing the level of existing activities.
Complications can arise if sufficient thought
is not given to this from the outset.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
12
The Government
will introduce
the first ever
national funding
formula from
2017/18 to
try to ensure
transparency
and avoid
these large
discrepancies
between
locations.
It probably comes as no surprise that far
more secondary academies are generating
significant sums, with 13% generating
more than £500k of other income and
with 1% achieving over £1m. Just 10% of
primary academies are generating at least
10% of other income, although 1% did
manage over £0.5m! This is just a dream for
well over half who were able to bring in no
more than £100k.
You will note the large disparity between
the recurring incomes per pupil, visualised
in the bar chart overleaf (based on lower
and upper quartiles, therefore grouping
academies at the extreme ends of the scale).
Academies that generate a significant
amount of additional income from their
own resources would be expected to
feature at the top end of the scale here, and
primary academies feature
lower incomes per pupil than the secondary
schools, as you might predict, due to their
younger pupils’ lower educational demands.
With an approximate £2k difference
between the lower and upper quartile, it is
not difficult to see why the fairer schools
funding reform has been introduced.
The Government will introduce the first ever
national funding formula from 2017/18 in
an attempt to ensure transparency and avoid
these large discrepancies between locations.
Some areas will gain from the reform, and
academies in these LAs will welcome the
additional income this will bring at a time
when they will be struggling from the rising
staff costs in the previous couple of years.
The promise of this extra income may be
sufficient, with careful planning, to see these
academies through a difficult couple of years
in 2015/16 and 2016/17.
The charts below show the range of other income generated by secondary and primary
academies in 2014/15.
1% 3%
9%
29%
21%
37%
Secondary academies - other income % of total income
> £1m
> £750k - £1m
> £500k - £750k
> £250k - £500k
> £100k - £250k
< £100k
1%
9%
27%63%
Primary academies - other income % of total income
> £1m
£750k - £1m
£500k - £750k
£250k - £500k
£100k - £250k
< £100k
Unfortunately, as with any reform,
there will also be losers. It is vital that
the Government’s consultation of the
practicalities of making these changes, due
to take place later in 2016, gives academies
in this position plenty of time to plan. It has
already been announced that there will be
a transitional period, which will help, but
academies losing significant income will find
2017/18 a difficult year. If you are from an
academy in an LA which is towards the top
of the income per pupil tables, below, it
would be wise, if at all possible given other
pressures, to consider making cuts over the
next couple of years.
Some academies are already benefitting
from the initial phase of fairer funding
for 2015/16. As an example, Bromley
academies are receiving £4,553 per pupil
in 2015/16 compared to just £4,082 in
2014/15, a rise of 11.5%. Other LAs such
as Cambridgeshire, Sutton, Northumberland
and Shropshire have all seen percentage
increases of over 7% in 2015/16.
If you are from
an academy in
an LA which is
towards the top
of the income per
pupil tables, it
would be wise to
consider making
cuts over the
next couple of
years.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Don’t forget academy trusts, as exempt charities, qualify for grants available to the charity
sector. It is always worth reviewing the grant opportunities published on the websites of your
local councils and organisations such as Sport England.
13
Top 5 most poorly
funded LAs in 2015/16
£ per pupil
1. Wokingham £4,158
2. Poole £4,194
3. South Gloucestershire £4,196
4. Stockport £4,206
5. West Sussex £4,206
Top 5 best-funded LAs
in 2015/16
£ per pupil Top 5 best-funded LAs in
2015/16 (outside London)
£ per pupil
1. City of London £8,595 Nottingham £5,309
2. Tower Hamlets £7,014 Birmingham £5,218
3. Hackney £6,680 Manchester £5,088
4. Lambeth £6,384 Liverpool £5,048
5. Hammersmith and Fulham £6,248 Slough £4,862
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
All academies Secondary academies Primary academies
Incomeperpupil(£)
Recurring Income per pupil (£)
Q1
Median
Q3
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
14
With an increase
in MATs it will
be interesting to
see whether the
capital funding
for larger MATs
develops over
the next couple
of years.
Your academy’s capital funding can
comprise different elements. The core
devolved capital funding can often be
supplemented by applications for funding
for specific projects through the Condition
Improvement Fund (CIF), for example.
Academies which applied for CIF funding
last year should hear whether or not they
have been successful in March or April of
this year.
There was more money available in this
round of funding, but there were far
more academies and it is likely more will
have applied. The 2015/16 CIF was four
times oversubscribed, and we imagine the
2016/17 round was perhaps oversubscribed
by five or six times. It is likely, therefore, that
only the academies applying for projects
which qualify as “high needs” will be
successful. This will include projects which
concentrate on keeping academy and
college buildings safe and in good working
order by tackling poor building condition,
building compliance, energy efficiency and
health and safety issues.
With an increase in MATs it will be interesting
to see whether the capital funding for larger
MATs develops over the next couple of years.
A different system – Capital Maintenance
Funding - was introduced last year for MATs
with five or more academies and over 3,000
pupils whereby the trust receives a set
allocation of capital funding, which it is then
free to deploy across the trust. This can bring
certain key advantages:
•	the guarantee of funding is a major
attraction. It allows trusts to plan and
budget more effectively, and can be more
easily consolidated into their accounts and
reporting systems;
• 	affirmation of independence and self-
reliance, with priorities identified and
decisions made by trusts rather than the
EFA; and
• 	resource savings and procurement
efficiencies can be obtained, meaning
less time and money wasted on preparing
and submitting unsuccessful funding
applications.
Around 50 MATs have received funding in
this way to date, with the smallest allocation
being £429k and the largest being £6m.
CAPITAL FUNDING
In each of the last three years, by far the most academies (around 50%) have received at
most £50 of capital income per pupil, with a further 10% or so receiving between £50 and
£100. The lucky 5% of academies receiving more than £5k per pupil in 2014/15 will have
received significant CIF funding for major one off projects, but it is interesting to note there
has been a rise in the number of academies receiving funding at this level, and in the £2k to
£5k range, over each of the last two years.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Academies are able to break away from the
LA and find alternative service providers,
often at preferential rates, and academies
within MATs are often able to increase their
buying power further.
As your service level agreements come to
an end, you should be able to renegotiate
key contracts such as your catering, grounds
maintenance and payroll/HR services, saving
significant amounts of money in some
instances.
GAG COSTS
GAG income is an academy’s main source of
income, and it is inevitable that GAG costs
are a similar high proportion of total costs.
The chart below shows the variation in GAG
costs as a percentage of total expenditure.
The results are similar to those in 2013/14.
Around half of academies once again fell in
the 80-85% or 85-90% ranges, and 4% of
academies incurred GAG costs representing
over 90% of total costs. A further 19% fell
in the 85-90% range, and these academies
will typically be primary schools with little
non-GAG income. A large proportion, 21%,
reported GAG costs of less than 65% of
total costs, and these schools were generally
those that received significant other DfE or
LA grants.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
15
5. GAG EXPENDITURE AND NON-STAFF COSTS
GAG income is
an academy’s
main source of
income, and it is
inevitable that
GAG costs are
a similar high
proportion of
total costs.
BREAKDOWN OF NON-STAFF COSTS
We have already seen that staff costs
can, on average, account for 70% of an
academy’s annual budget. But where does
the remaining 30% of the annual spend
go?
The following data is based on the DfE’s
benchmarking data for the 2013/14
financial and academic year, released in
the summer of 2015. Since there was very
little difference in the data for secondary
and primary schools, the results cover all
academies.
Over a third (38%) of the remaining budget
goes on learning resources which are by far
and away the largest spend after staff costs.
Interestingly, the second highest spend is
actually on capital equipment. On average
16% of the non-staff budget (around 3.2%
of the total budget) is spent on topping up
capital funding which has not been
sufficient to meet the academy’s needs. The
other costs such as catering, cleaning, rates
and insurance are fairly similar in terms of
spend.
The detailed DfE results are available at:
www.gov.uk/government/statistics/income-
and-expenditure-in-academies-in-england-
2013-to-2014 and contain the details behind
these figures.
Non-staff costs as % of total costs
Trusts need to clarify the policy when it
comes to group or bulk purchase orders,
where a number of individually low value
items are acquired at one time. As an
example, it is not uncommon for an academy
to purchase 50 laptops in one go, and
collectively these may be worth £15k-£20k.
It is usually appropriate to capitalise large
orders like this, but your capitalisation policy
should make it clear whether there is a
different, higher, threshold for group orders,
or whether the same threshold used for
single asset purchases is applied.
A quarter of academies spent between £100
- £250 per pupil, but 19% spent under £50
per head, less than the 24% in this bottom
range last year.
6. CAPITAL EXPENDITURE
Generally, academies have spent more on
capital expenditure in 2014/15 than in
the previous year, with far more spending
in excess of £10k (5%) and a further 6%
spending between £2k-£10k per pupil. Of
course capital expenditure naturally largely
follows capital income which has also
increased as we have seen.
Academies capitalise assets in accordance
with their accounting policy, which can
vary enormously from trust to trust, making
comparisons difficult. Some academies
recognise qualifying expenditure over a £500
or £1k threshold as capital, others apply
much larger thresholds – we are aware of
one trust which only capitalises qualifying
expenditure over £20k.
Each trust’s policy should reflect its own
circumstances, so there is no right or wrong
approach. Remember that significant
expenditure funded from capital grants will
be treated as capital regardless.
Each trust’s
policy should
reflect its own
circumstances,
so there is no
right or wrong
approach.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
16
0% 5% 10% 15% 20% 25% 30%
< £50
£50 - £100
£100 - £250
£250 - £500
£500 - £750
£750 - £1k
£1k - £2k
£2k - £10k
£10k +
Capital expenditure per pupil (£)
2014/15 2013/14
8%
40%
27%
20%
5%
up to £1m £1m-£5m £5m-£10m £10m-£20m £20m-£30m
17
DEPRECIATION
Depreciation can be a somewhat strange
accounting concept. The idea of capitalising
the value of the school buildings and then
writing these off over a period of time is
hard to comprehend.
Freehold land is never depreciated, but
there remain a number of approaches
to depreciation of the buildings. Usually,
freehold property is written off over a 50
year period, but when it comes to leasehold
property there are a few options, each of
which has been utilised by academies within
our sample, they are to:
•	write off solely the building over the
period of the lease, usually 125 years;
•	write off the value of the buildings over
50 years – this is sometimes popular
because it avoids the need to carry out
an annual impairment review, which is
required when the useful life is deemed
to be over 50 years; or
•	write off both the land and buildings over
one of the above two methods.
Church land and buildings
There is a particular problem with church
land and buildings, and specifically whether
these should even be included within
academy trusts’ financial statements.
The Accounts Direction is fairly clear stating
that, where premises are occupied by
Church academies under a licence,
“Taking all considerations into account
it is likely that most church academies
will conclude that the asset should be
recognised on their balance sheet.”
The Catholic Education Service, amongst
other faith bodies, has struggled to accept
this view, and various publications have been
released “encouraging” member academies
to exclude the premises from their annual
accounts.
The approach taken by Church academies
has varied enormously with four or five
different accounting treatments followed. As
a result, further clarification and agreement
between the EFA and the faith bodies would
be helpful.
Fixed assets
Our final graph in this section shows the
differential in the value of fixed assets.
The largest component of fixed asset value
is generally the land and buildings, assuming
these have been capitalised. The valuation
is based on a mixture of a formal valuation
performed by a qualified surveyor, the EFA
commissioned desk top valuation exercise
available to new converters, and other
methods such as discounted insurance value.
40% of academies’ accounts contained fixed
assets valued between £1m-£5m.
The 5% reporting fixed assets with a net
book value of less than £1m will be those
that did not include the value of buildings
at all, for example some of the Church
academies or free schools occupying
short term buildings whilst they await the
construction of their long term buildings.
40% of
academies’
accounts
contained fixed
assets valued
between £1m-£5m.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Fixed asset value
With the perfect storm of falling income
and rising costs leading to an increasing
amount of deficits in the coming years, the
importance of holding a reasonable level
of reserves has been highlighted. There will
be many academies which become reliant
on cash accumulated in recent years to
see them through the next few years, and
without these historical cash balances many
more would undoubtedly need to contact
the EFA for emergency funding.
The chart below shows the split of cash
balances held by academies in our sample.
The general trend is a reduction, perhaps not
surprising as rising costs and falling incomes
start to bite.
7. CASH BALANCES
The press continue to comment on the
level of cash balances held by academies.
Despite these comments, the EFA remain
comfortable with the level of cash reserves
held by academies. Sometimes, where a trust
holds a high balance, the EFA will request
confirmation that this is correct and will
expect an explanation as to why the cash
balance is high. It makes sense to pre-empt
this by explaining high cash balances within
the Trustees’ Report narrative in the financial
statements.
The guide level is £1m although this is not a
formal threshold; the EFA will ask questions
if cash levels at an academy do not appear
reasonable for their circumstances.
There has been
a significant
movement in
the number of
academies
holding less
than £250k
and between
£250k-£500k.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
18
At the other end of the scale there has been
a significant movement in the number of
academies holding less than £250k and
between £250k-£500k. It will be interesting
to see the data next year, but it would seem
safe to predict that the overall trend will
once again be downwards.
There was a small reduction in the number
of academies holding over £2m, but a much
larger fall in the numbers within the next
two ranges with £1m+. No doubt the other
83% with less than £1m would love to
be in this position and may not feel much
sympathy!
32%
29%
23%
12% 1% 4%
Range of cash balances held
2014/15
< £250k
£250k - £500k
£500k - £1m
£1m - £1.5m
£1.5m - £2m
£2m +
27%
23%25%
14% 6% 5%
Range of cash balances held
2013/14
< £250k
£250k - £500k
£500k - £1m
£1m - £1.5m
£1.5m - £2m
£2m +
It is important to remember that the
cash balance as at 31 August is merely a
snapshot in time. This can be distorted by
the timing of payments, or the receipt of
significant capital funding.
It is interesting to compare the cash
balances held to the recurring levels of
income. The graphic below shows that
in 2014/15 21% of academies held cash
equivalent to less than 10% of their annual
income, compared to 30% in 2014 and
36% in 2013. This is a positive move, and
in many ways contradicts the previous data
showing a reduction in cash balances. There
are also more academies holding a high
ratio of cash compared to recurring
income. This may therefore be more about
size and type of schools within the sample.
There is a question mark hanging over what
high cash balances mean for an academy.
Does it mean the school has been extremely
well managed? Or has it not been spending
money on its current pupils? Something,
remember, which is set out in the funding
agreement.
It is therefore interesting to note that, as
a rule, the academies with higher cash
balances require little intervention compared
to those with low or no balances, suggesting
the levels of cash, relative to the size of the
school, go hand in hand with the quality of
financial governance.
It is interesting
to note that,
as a rule, the
academies with
higher cash
balances require
little intervention
compared to
those with low or
no balances.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
19
It is not surprising to see that secondary academies generally hold higher cash balances
than primaries. This is to be expected considering the average respective size of the schools.
There are, however, some primaries which are holding cash reserves almost at the same
level as some secondaries.
- 200 400 600 800 1,000 1,200 1,400
Q1
Average
Q3
£000s
Cash balances held at 31 August 2015
Primary academies Secondary academies
20
CASHFLOW DIFFICULTIES?
If your academy finds itself in the position
where it is predicting a deficit, and you have
resulting cash flow worries, it is vital that
you react quickly to this.
The EFA will expect you to produce a
recovery plan, but they also look far more
favourably on academies which recognise
they have a problem and who contact them
at an early stage. Unfortunately the EFA
have seen too many academies approach
them too late in the day, at the point the
cash has, or is about to, run out.
Emergency funding is available, although
this is generally given by way of an interest
free loan, with repayments taken from
future GAG funding. This does provide
the academy sufficient time to restructure.
Emergency funding is provided in the more
extreme circumstances, since the onus is on
academies to manage their own finances. If
you have a relatively small shortfall the EFA
are more likely to suggest you find a way to
resolve the problem internally.
If you are experiencing problems and require
financial assistance, there is a strong chance
that the EFA could look to impose a Financial
Notice to Improve (FNtI), but again this is less
likely if you have approached them in good
time rather than “burying your heads in the
sand”.
If you are part of a MAT there is an
expectation that the trust will support ailing
member academies. It is certainly less likely
that the EFA would consider providing
financial support to an academy if others in
the same trust are holding significant cash
balances. This is something that academies
should be aware of when joining a MAT.
If your
academy finds
itself in the
position where
it is predicting
a deficit, and
resulting cash
flow worries, it
is vital that
you react
quickly.
CASHFLOW
Monitoring cash flow is vital to highlight
the ebbs and flows of cash, and to highlight
periods of the year where there may be
surplus balances that can then be invested
safely.
When it comes to monitoring cash flow,
what should an academy be doing? Here
are some of the key points to consider:
•	Proper use of the purchase ledger can
enable you to post your purchase invoices
and review an aged creditor report to see
which invoices are due and how old these
are. A management decision can then be
made to pay certain key suppliers earlier,
whilst there may be other suppliers who
are happy to negotiate extended credit
terms;
• 	If you are using the special section 33
VAT reclaim scheme then you have the
flexibility to process reclaims periodically,
as long as each claim covers whole
calendar months. We have witnessed
some academies make only one or two
reclaims across the whole academic year,
but we would recommend that you
make your reclaims at least quarterly, and
indeed monthly if cash flow is particularly
tight.
•	Monitor actual spend against budget
regularly throughout the year. The
Budget Forecast should not just be an
Annual Return that is submitted and then
not looked at, reviewing actual spend
against budget can highlight areas for
improvement. In our experience, most
academies are pretty good in this area,
but there is always room for improvement.
Have you reviewed where you are against
the Budget Forecast Return for 2015/16
submitted to the EFA last July?
•	You can predict with reasonable certainty
when capital expenditure is likely to
be required, and a lot of this may take
place in the summer break. However,
capital expenditure should be considered
alongside cash flow forecasts to ensure
that such expenditure takes place at times
of the year when cash flow is strong.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
It will be interesting to see if the ratio of
surpluses to deficits changes in the coming
years as the pressure on budgets intensifies.
The most common result for primaries
in 2014/15 and 2013/14 was perhaps,
unsurprisingly, a result in the lower deficit or
surplus ranges up to £200k. It is noticeable,
however, there are most primaries with
higher deficits, 1% even reported a deficit
of over £400k, and including these, 14%
reported a deficit of over £200k. Fewer
primaries reported high surplus results.
The striking result for secondary academies
is the amount of schools with deficits above
£400k (28% compared to 20% last year),
with half of these experiencing deficits of
over £600k. Unless these academies have
restructuring plans in place many are going
to struggle over the next year.
8. SURPLUS OR DEFICIT
Here we review whether academies have
achieved a surplus or deficit, although we
are focusing on General Annual Grant
(GAG), since this is the main fund used for
running the school.
The overall movement or net income/
expenditure reported on the Statement of
Financial Activities is heavily influenced by
non-cash movements such as depreciation
or FRS 17 pension charges, and we feel it
is better to concentrate on GAG. Reading
the financial statements of academy trusts
is far from straight forward, even if you
have some financial knowledge. It is still
necessary to delve into the detail to get
a full understanding of the academy’s
financial position and results, and there is
little wonder that academy trustees can
sometimes find the finances difficult to
understand.
We have mentioned the pressure on budgets
throughout this report and the above charts
reveal how things have changed between
2013/14 and 2014/15.
Far fewer secondary and primary academies
reported a GAG surplus in 2014/15. Whereas
82% of primaries reported a surplus in
2013/14 only 66% were able to do so this
year.
Nearly half of secondary academies (46%)
reported a GAG deficit, compared to
27% for 2013/14, with pressure from the
reduction in sixth form funding being a key
contributor here.
A small minority of academies reported
a break-even result, probably as a result
of the way they have chosen to allocate
expenditure across different funds.
Interestingly,
primary
academies fared
better than
secondaries, with
84% of primaries
achieving a GAG
surplus.
21
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
The EFA introduced a new Accounts
Submission Form in 2013/14, and this
remained a requirement for 2014/15.
Indeed the form was expanded slightly.
The EFA introduced this cover form because
they use key information from the accounts
and the auditor’s management letters to
understand the significant issues being
faced by academies, and the form enables
them to assess the risk areas at the point of
submission.
This section of our report compares how
academies fared in areas such as changes in
staff and management letter points.
CHANGES IN STAFF
Last year, academic year 2013/14, around
one quarter of the academies in our sample
saw their Headteacher or principal leave,
however this number has fallen to 13% for
2014/15. There were slightly more primary
Headteachers leaving than secondary Heads,
but the results were very similar. Last time
more secondary Heads left their posts.
Proposed further
reductions to
the pension
lifetime
allowance
may see more
Headteachers
re-consider their
retirement plans
- could this
lead to a skills
shortage?
22
9. GOVERNANCE AND AUDIT FINDINGS
Of course Headteachers leave for many
reasons; sometimes an individual retires,
maybe he or she will move on to another
school for a different challenge, and there
are instances where Headteachers leave
after unfavourable Ofsted inspections or
negative educational results.
The Government is in the process of
making changes to the pension legislation,
including proposed further reductions to
the lifetime allowance permitted in an
individual’s pension scheme. A few years
ago the lifetime allowance was £1.8m, and
this has recently fallen to £1m. There are
rumours this will fall to £750k. This may
still seem like a very large pot, but due to
the way the pension value is calculated
for defined benefit salary schemes, like
Teachers’ Pensions, this allowance can
be reached relatively easily. The actual
results depend on investment performance
and other variables, however assuming
reasonable growth a 40-year-old earning
£40k, with an existing final salary pension
pot of £130k would hit a £750k limit by the
time they hit retirement. If this proceeds,
a substantial number of Headteachers and
senior teachers may need to re-consider
their retirement plans. Even with the existing
£1m allowance Headteachers would be wise
to ensure they understand their position.
We have also seen a frequent turnover of
finance staff in our academy clients in the
past – and we are never too sure whether
this is a result of the pressures arising from
academy status or merely a coincidence!
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Overall nearly one in six of the academies in our sample saw either their School Business
Manager or Chief Finance Officer change during 2014/15, with slightly more changes in the
primary sector (19%) compared to secondary schools (14%).
Nearly 1 in 6 of
the academies
in our sample
saw either their
School Business
Manager or Chief
Finance Officer
change during
2014/15.
23
TRUSTEE CHANGES
It is also interesting to note the number of changes within the boards of trustees.
We reviewed the financial statements of each of the academies in our sample, and noted
the number of trustee appointments and resignations during the course of the 2014/15
year, looking to see whether there was a trend.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
The conclusion is that there is no obvious
trend, with a fairly even split between
academies where the number of trustees
has increased and those where the numbers
have fallen. It is clear there is quite a regular
turnover, with just 20% of academies
showing no changes, and some of these will
have seen appointments and resignations
cancel each other out.
Finding trustees who have both the
necessary skills, commitment and time is far
from easy. There seems to be a particular
shortage of trustees with finance skills, and
this may be because finance professionals
feel, and rightly so, that more would be
expected of them.
The EFA are particularly keen to harness
the skills of accountants to the benefit of
the large MATs. They wrote to many of
the top national firms of accountants and
auditors last year inviting them to encourage
individuals to become involved as pro-bono
non-executive directors. Their involvement
would be to provide strategic advice on
how the trust is run overall, provide robust
independent challenge to the Executive and
Finance Director, and to play a role in the
hiring (and firing) of senior staff.
AUDIT MANAGEMENT LETTER POINTS
The Accounts Submission form asked
academy trusts to confirm the number of
management points included by their audit
in the management letter, and to indicate
the number of high risk or priority points.
Our academy clients often ask “How do we
compare to other schools?” when they see
their management letter, and it is perhaps
understandable that they do not wish to be
seen as below average.
Finding trustees
who have both
the necessary
skills,
commitment
and time is far
from easy.
24
Number of management letter points
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
The vast
majority of
academies,
almost half, had
between 1-5 five
recommendations
(remarkably 45%
in both years!).
Naturally we have only seen management
letters for our own clients, so the chart
above is based on a slightly reduced sample
size. It is rare for academies to have no
recommendations in their management
letters, although 4% of our academies did
manage just that, up from 1% in 2013/14.
Generally, this reflects better understanding
with a higher number of established
academies, a few years post conversion.
Additionally, they have had the opportunity
to put in place the necessary system
improvements.
The vast majority of academies, almost half,
had between one and five recommendations
(remarkably 45% in both years!).
There were some academies which fared
less well, although in many cases these were
new converters, and 7% had more than 15
management letter points. There were then
far fewer academies with between 11-15
recommendations. The most management
letter points to a single academy was 30.
It is worth distinguishing between
high risk or priority points and other
recommendations. Fortunately, only 15%
of our academies had any high risk or
priority points, an improvement on 20% for
2013/14.
25
The types of issues were much the same as
before, and include the following:
•		significant improvements required to fund
accounting;
•		poor controls over invoicing;
•		failure to disclose business interest register
on the academy website;
•		failure to follow capital and revenue
tendering procedures;
•		connected party transactions with a profit
earned;
•		failure to obtain prior approval for a
finance lease;
•		VAT incorrectly reclaimed; and
•		trustees being paid for non-employment
services.
Where there is a need for improvement in
the financial controls and systems within
an academy, our results show that this
often transcends across all areas. Many
of the academies with one high priority
recommendation had several, with a handful
receiving four, five or even six high priority
recommendations.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
-
2
4
6
8
10
12
14
-20 0 20 40 60 80 100 120
Number of high risk or priority management letter points
26
It is interesting to note there has been a slight reduction in the number of academies
reporting related party transactions during 2014/15. Over 60% of academies did not have
any connected party transactions, and we wonder whether this is because many are shying
away from them altogether given the negative attention some trusts have with related party
transactions.
There has been a
slight reduction
in the number
of academies
disclosing
related party
transactions
during 2014/15.
RELATED OR CONNECTED PARTY TRANSACTIONS
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Each bubble represents one academy
38%
48%
43%
62%
52% 57%
0%
20%
40%
60%
80%
100%
2014/2015 2013/2014 2012/2013
per DfE
% of
schools
No such
transactions
Related party
transactions
disclosed
Academies with related or connected party transactions
27
Irregular
or improper
transactions
have been found
in less than 2%
of academies,
so it is clear
that the vast
majority are
compliant with
the regulations.
Of course as long as the transactions are
carried out on an arms length basis, without
profit to the related party, there should not
be an issue. Some of the headlines in the
national press have involved cases which
cast doubt as to how the trust allowed
the transactions to proceed without any
questions being asked, and most academies
would hopefully feel that the examples
in these cases would not be allowed to
happen within their trust.
It remains vital that there is transparency
over related party transactions within the
academy sector. This ensures that trusts
themselves and the EFA can demonstrate
that trustees are not benefitting unduly
from their positions.
Despite the continued focus on related
parties, the EFA recognise that there is a
problem in just a very small minority of cases.
Irregular or improper transactions have been
found in less than 2% of academies, so it
is clear that the vast majority are compliant
with the regulations.
In many instances the related party
transactions disclosed are with connected
charities, such as the school Parent Teacher
Association, or with other academy trusts,
rather than with trustees’ commercial
companies. Most transactions are also
low value, with an average highest value
transaction of just £6,790.
All academies should have begun disclosing
their register of business interests on their
website from 1 September 2014, since this
is a requirement of the Academies Financial
Handbook.
Trust should maintain an internal register
containing all business interests, which
should include the interests of key
individuals such as members, trustees, and
senior management, but also close family
members and other individuals connected
to the direct related party.
For example, the internal register should
include a list of the directorships and other
business interests of the spouse or children
of a trustee. It would not be necessary
to publish this information on the trust
website. Only ‘relevant’ business interests
for members and trustees need to be made
publicly available.
As a minimum this should include:
• 	all directorships, partnerships and
employments with businesses that provide
goods or services to the trust; and
• 	trusteeships and governorships at other
educational institutions and charities
irrespective of whether there is a trading
relationship with the trust.
ARE YOU DISCLOSING YOUR BUSINESS INTEREST REGISTER?
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
1
7
30
0
5
10
15
20
25
30
35
40
Quartile 1 Average Quartile 3
£000s
Value of highest related party transactions
28
UHY’S FINAL THOUGHTS
We hope you have enjoyed reading our
commentary and that our benchmarking
report has helped you to see how your
academy compares to others. Please do
use the average data sheet on page 30 and
contact one of our academy specialists on
page 32 if you would like us to plot your
data onto graphs.
Benchmarking in the education sector is
never easy. We often hear from clients that
have tried to use the DfE’s benchmarking
website, who have struggled to find a
sufficient number of comparable schools
to benchmark themselves against. Every
school is unique in its own way, and no
two secondary academies, or two schools
with similar pupil numbers, will produce the
same financial results.
The DfE’s benchmarking website is
nevertheless useful, it is just unfortunate that
the data for the most recent academic year is
not made available until late Spring to early
Summer.
It never ceases to amaze us how quickly one
academy financial year rolls into the next.
The period from September to December
is focused on year end accounts and audit,
and then August Accounts Returns need to
be filed in January. Teachers’ Pensions End
of Year Certificates follow quickly in May,
and by then we are already planning the
year end audits, and contacting clients to
book in planning and closing meeting dates.
Before we know it we will be writing our
benchmarking report for 2015/16!
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Every school is
unique in its own
way, and no
two secondary
academies, or
two schools
with similar
pupil numbers,
will produce the
same financial
results.
29
Use this sheet to compare your own school’s data with the averages from our sample. Alternatively, contact your local UHY academies
contact, on page 35, who can plot this information on your behalf from your annual accounts.
WHERE DOES YOUR ACADEMY FIT WITHIN THE RESULTS?
Your
academy
All
academies
Secondary
academies
Primary
academies
Average
2014/15
Average
2014/15
Average
2014/15
Non financial data
Number of teachers 35 57 17
Number of admin and support staff 28 39 18
Number of management staff 4 6 3
Number of pupils 530 791 302
Pupil : teacher ratio 18 15 21
Income
Total Recurring Income 3,267,782 5,088,105 1,674,999
% of total income 100% 100% 100%
Grant income 3,085,072 4,802,498 1,582,324
Grant income % of total income 95% 95% 95%
GAG income 2,631,690 4,199,446 1,259,904
GAG % of total income 78% 80% 76%
Other income 157,358 238,127 86,685
Other income % of total income 5% 4% 5%
Capital grant funding 276,371 421,636 149,265
Capital grant funding % of total income 15% 14% 15%
Capital grant funding per pupil 1,222 1,208 1,098
Expenditure
Total expenditure 3,388,751 5,330,678 1,689,565
% of total expenditure 100% 100% 100%
Staff costs 2,460,518 3,861,604 1,234,567
Staff costs % of total expenditure 72% 71% 72%
Staff costs % of total expenditure 1,983,738 3,139,190 972,717
Teach & ed support staff % of total staff costs 80% 82% 79%
Support/Non-teaching staff costs 423,757 645,457 229,691
Non-teaching staff costs % of total staff costs 17% 16% 18%
Supply teacher costs 71,626 101,518 45,470
Supply teacher costs % of staff costs 4% 4% 0
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
30
GAG expenditure 2,640,290 4,253,687 1,228,567
GAG % of total expenditure 75% 78% 72%
GAG surplus (8,600) (54,241) 31,337
Total surplus / (deficit) (120,969) (242,573) (14,566)
Total surpus ratio (% of total income)
Light and heat costs 47,537 78,983 20,022
Light and heat % of total expenditure 1% 2% 1%
Buildings and grounds maintenance 82,417 118,613 50,745
Maintenance % of total expenditure 3% 3% 3%
Cleaning and refuse 28,498 46,011 13,175
Cleaning and refuse % of total expenditure 1% 1% 1%
Educational supplies and services 113,462 182,228 53,291
Educational supplies and services % of total 3% 4% 3%
Examination fees 35,997 75,677 837
Examination fees % of total costs 1% 1% 0
Staff development 20,154 28,895 12,408
% Staff Development of total costs 1% 1% 1%
Governance costs 37,883 53,441 24,269
% governance costs of total 2% 1% 2%
Technology costs 44,947 69,893 23,118
% technology costs as % of income 2% 2% 1%
Income per pupil 5,912 6,034 6,034
Balance sheet
Fixed assets 7,414,696 11,653,881 3,705,409
Net assets 6,628,083 10,354,077 3,367,838
LGPS deficit as at 31 August 2015 772,120 1,187,429 408,725
Capital expenditure in the year or period 373,627 540,772 225,524
Capital expenditure per pupil 1,490 1,578 1,413
Cash and bank balances held 574,753 896,355 293,352
LGPS employers contributions 109,671 157,752 67,600
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Your
academy
All
academies
Secondary
academies
Primary
academies
Average
2014/15
Average
2014/15
Average
2014/15
31
Caroline Pearce, Queens’ School Bushey
What our clients say...
We have worked with UHY over many years and have never regretted
that decision. They have always been friendly and extremely efficient.
We would not have converted to an academy with anyone else.
UHY provide us with services of excellent quality, supported by their
good technical understanding of our sector requirements. The UHY
team have helped us to focus on business issues and have highlighted
areas of our work that needed improvement. It has been of real
benefit to have a consistent team who are all willing to really
understand how we work and who we are, which has resulted in an
excellent working relationship with them.
Rita Righini, New Bridge School
UHY have provided an extremely good quality of service, supported
by great technical knowledge. The team’s monthly visits have been
an immense help and my knowledge and understanding has greatly
improved as a result.
Jacqui Williams, St John’s Primary Academy
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
32
Linda White, Warren Road Primary School
Judy Hunt, James Brindley School
UHY are focused on, and flexible to, our needs. They listen to our
queries and concerns and provide an excellent quality of service and
technical understanding in response. UHY has been exemplary in their
support for us throughout our first ten months as an academy. I
would be happy to refer them to other academies.
UHY have been invaluable during our early months as an academy.
We are able to raise any query or concern and will receive a prompt
and reassuring answer making us feel our custom is valued and
important to UHY.
Jean Simmons, Dane Court Grammar
Academies need a strong working relationship with their accountants
if they are to succeed, and we have achieved this with UHY. Their
academies team provide a very good quality of service and we have
forged a strong relationship with them. They are professional and
trustworthy, which was imperative to us achieving academy status.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
33
Mary Rouse, New Generation Trust Schools
Marjorie Bell, Webster Primary School
We were able to build up an excellent and close professional working
relationship with our UHY team who at all times were courteous and
methodical in their approach and always anxious to ensure that
minimum disruption was caused to the workings of the School. It
was a pleasure to have UHY representatives in the school.
Our UHY team are responsive, supportive and always on hand to help
and advise. The staff are well trained , courteous, polite and have
excellent technical knowledge to give best practice advice. I would
certainly recommend UHY to other academies.
Carole Orford, Park Hall AcademySchool
The UHY team have always delivered our audit ahead of time and to
a consistently high quality. In addition, UHY are hugely supportive
on our journey to becoming a Multi-Academy Trust and are always
available to discuss strategic as well as minor matters. I have no
hesitation in recommending them.
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
34
Our offices
around the UK
now act for
more than 200
academies and
free schools,
including the
first special
needs school to
convert to an
academy.
Our services to academy schools and free
schools include:
•	external audit;
•	information to be considered in the
academy conversion process;
•	governance reviews;
•	Trustee and Accounting Officer training;
•	special services to MATs including advice
on structures, top slicing and accounting
system set up;
•	year end statutory audit and Academy
Return completion;
•	preparation of your accounts in line with
the EFA Accounts Direction;
•	Teachers Pension End of Year Certificate
(EOYC) audits;
•	advice in connection with the Academies
Financial Handbook;
•	internal audit and monitoring visits to
provide assurance on systems and controls;
•	VAT reviews and advice on the best
method for academies to reclaim VAT;
•	advice on the best structure for commercial
trading activities; and
•	payroll and employment tax issues.
Our demonstration of our experience to date
within the education sector, and specifically
with academies, has led a number of
established academies to leave their previous
adviser to benefit from our breadth of
specialist knowledge and support.
ABOUT UHY HACKER YOUNG
We work with numerous clients in the
education sector, including academy schools,
free schools and independent schools.
Our education specialists have years of
experience in the sector and have a particular
expertise in academy schools - our offices
around the UK now act for more than 200
academies and free schools, including the
first special needs school to convert to an
academy. As such, we understand that
independence from your LA is likely to
require improved internal controls for your
school’s finances.
UHY are a Top 15* firm of accountants
and auditors. Our academy client base
includes old style sponsored academies,
new converter academies, and MATs. As
the expansion of the academies programme
continues our number of clients in this
rapidly changing sector has increased
significantly.
Our experts enjoy the challenge of this
exciting and rapidly changing sector. We
keep ourselves up to date with all the EFA’s
requirements so that we can keep our clients
abreast of regulatory and other changes. We
also maintain a regular Academies blog on
our website and prepare regular Academy
Schools Updates on topical issues that affect
academies.
* Latest Accountancy Age and Accountancy Magazine league tables
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
35
YOUR LOCAL UHY ACADEMY SPECIALISTS
If you would like more information about this report, or would like to understand more about how your school fits within these results, please
speak to your local academies expert, below:
UHY’s national academy
and free schools group
www.uhy-uk.com/academy-schools
UHY’S 2016 ACADEMIES
BENCHMARKING REPORT
Birmingham
Malcolm Winston
Academies partner
t: 0121 233 4799
e: m.winston@uhy-uk.com
London
Colin Wright
Academies partner
t: 020 7216 4600
e: c.wright@uhy-uk.com
Sheffield
Roland Givans
Academies partner
t: 0114 262 9280
e: r.givans@uhy-uk.com
Brighton
Chris Kyffin-Walton
Academies partner
t: 01273 726 445
e: c.kyffin-walton@uhy-uk.com
Manchester
Mark Robertson
Academies partner
t: 0161 236 6936
e: m.robertson@uhy-uk.com
Sunderland
Paul Newbold
Academies partner
t: 0191 567 8611
e: p.newbold@uhy-torgersens.com
Chester
Alex Makinson
Academies partner
t: 01244 320 532
e: a.makinson@uhy-chester.com
Nottingham
Jon Warsop
Academies partner
t: 0115 959 0900
e: j.warsop@uhy-uk.com
York
Hayden Priest
Academies partner
t: 01904 557 570
e: h.priest@calvert-smith.com
Sittingbourne
Allan Hickie
National academy group Chair
t: 01795 475 363
e: a.hickie@uhy-uk.com
Letchworth
James Price
Academies partner
t: 01462 687 333
e: j.price@uhy-uk.com
Royston
Scott Rouse
Academies associate
t: 01763 247 321
e: s.rouse@uhy-uk.com
UHY Hacker Young Associates is a UK company which is the organising body of the UHY Hacker Young Group, a group of
independent UK accounting and consultancy firms. Any services described herein are provided by the member firms and
not by UHY Hacker Young Associates Limited. Each of the member firms is a separate and independent firm, a list of which
is available on our website. Neither UHY Hacker Young Associates Limited nor any of its member firms has any liability for
services provided by other members.
A member of UHY International, a network of independent accounting and consulting firms.
This publication is intended for general guidance only. No responsibility is accepted for loss occasioned to any person acting
or refraining from actions as a result of any material in this publication.
© UHY Hacker Young 2016
www.uhy-uk.com

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UHYs-2016-academies-benchmarking-report

  • 1. UHY’s 2016 academies benchmarking report “Adding value for our academy clients” For academic year 2014/15 www.uhy-uk.com/academy-schools
  • 2. CONTENTS 1. Foreword from UHY’s Academies Chair 1 2. Staff costs, numbers and teaching staff to pupil ratios 2 3. Pension costs and liabilities 8 4. Income 11 5. GAG expenditure and non-staff costs 15 6. Capital expenditure 16 7. Cash balances 18 8. Surplus or deficit 21 9. Governance and audit findings 22 Where does your academy fit within the results? 29 What our clients say... 31 About UHY Hacker Young 34 Your local UHY academy specialists 35
  • 3. Our services include: • Transition support and advice • Audit and assurance • Accounts preparation • Academies accounts return • Teachers’ Pension Scheme EOYC • Payroll Other specialist services include: • VAT and tax advice • Internal audit/Responsible Office assistance • Company secretarial • Financial compliance • Support for your finance team • Governance reviews www.uhy-uk.com/academy-schools We have worked with UHY since we were first established in 2010. UHY continues to provide a top rated service for us as a large academy Trust as it did during our infancy. The technical support the team have provided has been invaluable. At all times answers to any questions have been given without delay and UHY take time to provide regular updates to aid my requirements before I even know I have them. Lee Miller, Thinking Schools Academy Trust
  • 4. I can’t believe this is our fourth benchmarking report for the academy sector, it seems only a short while ago we sat down to write our first. And how the sector has changed in four years. As of 1 January 2016 there were over 5,000 open academies, of which 70% were converter academies and the remaining 30% sponsored. Around 56% of this total are primary academies, but with an increasing number of secondaries making the transition each year. For the second year running around 1,000 academies have opened during the academic year, a phenomenal number. With a further 300+ free schools, plus studio schools and University Technical Colleges taking the total number to around 5,500 schools. With the Government keen to see further expansion of the academy programme, and new powers to force “coasting” schools (those not adding value to their pupils) to become academies, this number is sure to continue to rise rapidly. DfE statistics already reveal that a further 576 academies are in the pipeline at this early point in 2016. This year our benchmarking report has expanded to cover 150 academies in total; a mix of primary schools, secondary schools, free schools, special schools and MATs. To provide a wider spectrum, our sample includes a mix of UHY Hacker Young clients and other academies, whose information has been sourced from their websites and/ or Companies House. MATs are notoriously difficult to benchmark, and so we have opted to break these down and have included the component academy data in our report. The sections we introduced last year covering areas such as trustee movement have been retained. Our academy clients always seem very keen to understand how the number of audit management letter recommendations they have received compare to other academies, and so we expect that this section to once again be popular. Please do take the opportunity to use the benchmarking page, on page 29 of the report, which contains space for you to add your own school’s data alongside the average results in key areas. We are able to produce a graphical representation of your results, so please contact us if you would find this useful. We are already well into the 2015/16 year, and you will soon be preparing your Budget Forecast Returns for 2016/17. A word to describe the outlook for the next couple of years is perhaps “challenging”. I am sure many of you would choose a stronger description than this. Budget pressures remain, and indeed are set to intensify. The education sector as a whole awaits clarification over how the National Funding Formula will work in practice, and on which academies are set to gain and lose from the fairer funding changes. We still await a special academy SORP, additional to the existing Charity SORP. Academy trusts will be preparing their 2015/16 financial statements in accordance with a new Accounts Direction based on new charity accounting standards. The impact on most academies will be minimal, but there will be increased disclosures, in the interests of transparency, over senior management remuneration, including how the remuneration is set. This may produce some interesting data for us to analyse next year! I hope that you enjoy our report and find it interesting. If you have any questions after reading it I would be pleased to answer them, as would our other national academy team specialists. You can find details of your local specialist on page 35. We are always keen to improve our benchmarking report so if you have any suggestions for next year, do feel free to let us know. Happy reading! Welcome to our fourth annual benchmarking report for academies. The report is designed to bring together information which you can use to benchmark your academy against others, and throughout the report we provide commentary on topical issues. 1 1. FOREWORD FROM UHY’S ACADEMIES CHAIR Allan Hickie Chair of UHY’s national academies group UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 5. on staffing, however the results of our benchmarking show that this is not necessarily the case. The key ratio to consider is the percentage of staff costs as a percentage of either total costs or total income: There may be specific circumstances which explain such a high ratio but, without restructuring, in most cases this would not be sustainable for any period of time. A total of eight academies in our sample had staff costs in excess of 80%. Generally, we will discuss their high staff costs ratio with our academy clients if it begins to go beyond 75%, certainly 77-78%. High staff costs can occur where an academy is highly geared in terms of senior staff, or it could simply be because they are operating less efficiently. If they are highly geared through choice, perhaps to improve education standards, that is one thing, but if they are not aware they are being inefficient, that should raise concern with rising staff costs in the future. 2 2. STAFF COSTS, NUMBERS AND TEACHING STAFF TO PUPIL RATIOS Staff costs are the largest part of an academy’s annual budget. Maintaining educational standards whilst balancing staff costs is perhaps one of the most fundamental challenges for an academy. It would be reasonable to expect most academies to spend broadly similar levels The chart above shows that the average academy, whether a secondary school or a primary school, has maintained staff costs of around 70% of total costs over the past three years. The overall average for 2014/15 was 72%, up slightly on 71% in 2014. It will be interesting to see how different this chart looks in our report next year, once the impact of rising pension and NIC costs is felt. The average for primary schools is fractionally higher than for secondary academies, although the gap has closed. The gap between primary and secondary schools is not as high as might be expected. Academies at the ends of the spectrum reported staff costs as high as 84% of total costs. The gap between staff costs for primary and secondary schools is not as high as might be expected. UHY’S 2016 ACADEMIES BENCHMARKING REPORT Average staff costs as % of total costs 2014/15 2013/14 2012/13 Primary academies 72% 72% 74% Secondary academies 71% 70% 72%
  • 6. Staff costs represent such a large proportion of an academy’s budget that where it becomes necessary to make cuts it is almost inevitable that these will need to come from employment costs. Delving deeper, salaries paid to senior leadership team members often make up a considerable proportion of the total, and savings are often made most easily by cutting senior leadership costs. It is certainly worth analysing a cost versus benefit ratio to determine the level of actual teaching time that your senior leadership team are involved with. Additional disclosures regarding senior management salaries will be required in academy trusts’ 2015/16 accounts. In accordance with the requirements of the new Charity SORP, on which the Academies Accounts Direction is based, it will be necessary to disclose: 3 • the total remuneration paid to senior management; and • the trust’s policies for setting the salaries of the senior management team. Next year we will include an analysis of senior management salaries within our report, and believe the results will be very interesting indeed. The National Insurance changes, with a rise of 3.4% in employer contributions, only came into force in April 2015 and, therefore, had a limited impact on the 2014/15 data, the full effect of which will be felt in 2015/16. The school with the lowest staff costs, at 42% of total cost, was a free school which had high set up, premises and other support costs relative to staff costs. Only a further nine had staff costs of less than 60% of total costs. UHY’S 2016 ACADEMIES BENCHMARKING REPORT Additional disclosures regarding senior management salaries will be required in academy trusts’ 2015/16 accounts. TEACHING STAFF TO PUPIL RATIO The first section of this report touched on efficiency, and this leads us to consider staff costs versus the number of pupils at the school. Almost half (43%) of the academies in our sample had a teacher: pupil ratio of 10-18:1. This has fallen from last year when over 54% reported a ratio within this range. So what has happened? Far more academies this year have a ratio of less than 10:1 (13% compared to 7%), and there has also been a similar increase in the 18-20:1 ratio (13% compared to 5%). It is difficult, once again, to know how much to read into this. We commented last year that the very low ratios would be impressive at top independent schools, and it is likely that the different approaches to calculating average teaching staff numbers is largely responsible. Academies must disclose their employee numbers on a Full Time Equivalent (FTE) basis, however if there is significant difference between the numbers of a FTE and a headcount basis then, to comply with company law, academies ought to be disclosing on a headcount basis as well. Whilst this is a minor disclosure, we recommend that it is made in order to fully comply with company law. Last year there was a suggestion that future Accounts Directions may require disclosure on a head count basis but to date there has been no clarification on this.
  • 7. Staff costs are by far the largest expense for an academy, and are often where cuts have to be made. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 4 SUPPLY STAFF Academies inevitably have to rely on supply staff from time to time, and some of our clients have suffered from exceptionally high supply costs this year as a result of unusual/specific circumstances. The average secondary academy spent £101k on supply costs, up from £89k in 2014. One school suffered from supply costs of £466k, and another was not far behind with £413k. These two were both large schools, however, and supply costs represented about 7-8% of staff costs. Other academies in our sample reported supply costs of well over 10%, with a few so reliant on supply staff that costs represented over 20% of total staff costs. These range from a high number of staff off on long term sick leave, to a large number of staff pregnancies. The average primary spent £45k, very similar to the £47k last year, although one primary reported over £222k of temporary staff costs (at 9% of total). Once again a minority of academies had none or virtually no supply costs, despite disclosure of such costs being a requirement of the Accounts Direction. In 2014/15 just over a quarter (27%) of academies made at least one compensation or severance payment; remarkably, the same percentage as 2013/14. As noted above, staff costs are by far the largest expense for an academy, and are often where cuts have to be made. Unfortunately, staff cuts can lead to short term costs, such as redundancies, compensation settlements and severance payments. This reiterates the importance of the need for forward planning; if you fail to address these impending issues in good time, your academy may have insufficient funds to pay the immediate restructuring costs. Special staff severance payments are paid to employees outside of normal statutory or contractual requirements when leaving employment in public service whether they resign, are dismissed or reach an agreed termination of contract. The 2013/14 Accounts Direction only required academy trusts to disclose the total value of such payments made during the year, plus individual disclosures of items over £5k. This was extended for 2014/15 so that all such payments had to be disclosed individually, and anonymously, regardless of the amount. COMPENSATION AND SEVERANCE PAYMENTS
  • 8. 5 UHY’S 2016 ACADEMIES BENCHMARKING REPORT RANGE OF COMPENSATION PAYMENTS Where academies made compensation payments, the amounts were thankfully relatively low. 42% of the academies paid out no more than £10k, and 82% paid less than £40k. There were, however, still some significant amounts. 2% of the sample paid out over £100k, with a further 5% paying £50k - £75k. The highest payment by a single academy (note this is an academy and not necessarily a trust since our benchmarking data focuses on the individual schools) was £138k. Although still a considerable sum this is a great improvement on the higher amount of over £200k last year! If your academy is considering making a staff severance payment above the statutory or contractual entitlements, you must consider whether the proposed payment is in the interests of the trust. Of the academies who made highest compensation payments of less than £10k, 39% of the payments fell within the £5k – £10k range. 8% of academies paid pay between £30k - £40k to an individual, demonstrating once again how expensive compensation and severance payments can be. You should remember that if your academy is considering making a staff severance payment above the statutory or contractual entitlements, you must consider whether the proposed payment is in the interests of the trust, and whether such a payment is justified. This judgement should be based on a legal assessment of the chances of the trust successfully defending the case at employment tribunal. Trusts’ also need to obtain prior approval from the Secretary of State for certain large payments, however the usual Value for Money rules apply to all payments, regardless of the amount. 0% 20% 40% 60% 80% 100% 42% 16% 24% 11% 5% 0% 2% < £10k £10k to £20k £20k - £30k £30k - £40k £40k - £50k £50k - £75k £75k - £100k £100k + Range of compensation payments
  • 9. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 6 Primary school Headteachers are, unsurprisingly, generally paid less, however this year the average has increased dramatically to £82k from £64k in 2013/14. HEADTEACHER/PRINCIPAL SALARIES As previously mentioned, there will be an increase in disclosure requirements in 2015/16 for remuneration paid to senior management, and this expands on the disclosures already required for Headteachers. The individual disclosures for Headteachers will remain. There have been further headlines in the national press about the remuneration of Headteachers during 2015. Unfortunately, these things tend to go in cycles and certain topics or sectors become the flavour of the month. There is a danger that antagonist headlines give the impression that all Headteachers are grossly overpaid, when the majority are not, holding highly responsible positions which have the ability to influence thousands of young people. Where we believe it is right to question payments is compensation payments paid to Headteachers and Principals. With their higher salaries it follows that many of the large compensation payments are made to Headteachers, often leaving their post in response to a poor Ofsted report or similar, and it cannot be right that payments can be seen as a reward for failure because this does not reflect well on the sector. The rules concerning payments made in situations like this should certainly be reviewed. The chart above shows the average, highest and lowest salaries paid to the Headteachers of academies within our sample. Whilst the best paid secondary school Head received £217k (up from £182k last year), the average was closer to £100k, similar to 2014, with some receiving a modest £55k. Primary school Headteachers are, unsurprisingly, generally paid less, however this year the average has increased dramatically to £82k from £64k in 2013/14. One primary Headteacher received approaching £200k, far more than most secondary leaders. But of course, some primary schools, especially those in London and other major cities, can be as large as some secondary schools.
  • 10. 7 The graphic below shows the distribution across various salary bands, with fairly equal numbers paid in the lower three bands. A significant number (13%) are paid more than £125k. Our data reveals that, as you would expect, secondary schools are far more likely to have high earning employees. UHY’S 2016 ACADEMIES BENCHMARKING REPORT Academy trusts are required to disclose, on a confidential basis, how many employees received remuneration in excess of £60k. The disclosures are made in bands of £10k, and we thought it would be interesting to compare the figures between academies. The chart reveals that, as you would expect, secondary schools are far more likely to have high earning employees. Many secondary schools have two or three deputy or assistant Headteachers in addition to the Head or Principal, possible explaining why 48% of secondary schools employed three or more members of staff earning in excess of £60k. Only 14% of primary academies employed three or more staff earning more than £60k; but 79% (down from 86% last year) did not pay anyone, or only the Headteacher, at this level.
  • 11. Often, where two otherwise similar academies have very different movements in the LGPS liabilities it is due to the individual staff profiles. The age of staff, for example, can have a significant impact. The chart below shows that a high majority of academies (87%) saw their LGPS liabilities rise during the course of 2014-2015, with over half (55%) experiencing a modest rise of no more than 10%. In 2013/14 there was a much more even split between rising and falling LGPS liabilities. The difference between the two years is because 2013/14 included a lot of adjustments for actual performance versus previous assumptions, made in the year following the full valuation of the LGPS. The liability included in the year-end financial statements is based on a detailed FRS 17 report prepared by a qualified actuary. The actuary assesses specific data for your academy, such as staff profile and number of active members, and calculates a liability looking at stock market performance of assets and using various assumptions, such as life expectancy. Academy schools pay a different contribution rate to Local Authority (LA) schools, and the rates for academies can vary enormously depending on where the school is located. However, the rates can also vary between academies within the same LA. 3. PENSION COSTS AND LIABILITIES Academies have at least two pension schemes: the Teachers’ Pension Scheme (TPS) and the Local Government Pension Scheme (LGPS). The TPS is an unfunded scheme, which means an academy does not need to include its share of the liabilities on the trust’s balance sheet; indeed quantifying an individual share would be very difficult. Academy accounts do include the LGPS liability, however, this figure can cause a great deal of confusion, and is often the focus of questions we are asked whenever we attend governors’ meetings. The LGPS, like the TPS, is a defined benefit scheme, however from April 2014 the new LGPS scheme is calculated on an average salary, rather than a percentage of final salary. The objective is to significantly reduce the future pension costs and help to reduce the large liabilities in these schemes. Pension liabilities are still a common topic of conversation at trustees’ meetings, but most schools which have been academies for some time are now comfortable that these liabilities are not generally anything to be concerned about. They understand that the key requirement is to understand the monthly contribution rate and how future changes may affect them. Just as in previous years, some academies in our sample have seen their liabilities rise, whilst others have seen them fall, and this can make it difficult to determine a trend. There are also several examples where a large rise one year is followed by a fall the following year. A high majority of academies (87%) saw their LGPS liabilities rise during the course of 2014-2015. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 8 3% 3% 7% 55% 30% 2% % movement in LGPS liability - 2014/15 < -20% -20% to -10% -10% to 0% 0% - 10% 10% - 20% 20% - 30% 4% 14% 21% 19% 23% 19% % movement in LGPS liability - 2013/14 < -20% -20% to -10% -10% to 0% 0% - 10% 10% - 20% 20% - 30%
  • 12. A word of warning...LAs may have the discretion to take into account various factors when setting LGPS employer rates, following a recent decision by East Riding of Yorkshire Council. They were recently allowed to increase an academy’s LGPS employer contribution rate from 20% to 43.3% as the result of an anomoly in the way the assets were allocated prior to conversion. It is a complex situation, but there is a concern that administering authorities will be emboldened by the decision (after an appeal by the academy the decision was upheld by the Pensions Ombudsman). Any schools yet to convert certainly need to understand the administering authority’s approach to asset allocation and confirm the rate of employer contribution. The scatter chart below shows the range of LGPS liabilities across our sample. Despite the high number of academies which saw increases in their liabilities, the average for both secondaries and primary academies has, interestingly, actually fallen. This is probably as a result of new converter academies and their relatively low LGPS liabilities. The largest secondary liability was £3.67m and the largest primary liability was £1.12m. Last year, our analysis of pension data revealed that the largest liabilities do not necessarily sit with the largest schools, which one would expect to be a fair assumption. The size of the LGPS liability for an academy is harder to predict because some academies employ far more administration staff than others, even before the detailed staff profile such as age, length of service etc. are factored in. East Riding of Yorkshire Council has recently been allowed to increase an academy’s LGPS employer contribution rate from 20% to 43.3%! UHY’S 2016 ACADEMIES BENCHMARKING REPORT 9 Whilst there is some correlation, two of the largest pension scheme deficits are for academies with less than 1,000 pupils, and some small schools of under 400 pupils can have a surprisingly large liability. (1) - 1 2 3 4 1 Millions Each point represents one school LGPS liability (£m) average primary academies (£408k) (2014: £415k) average secondary academies (£1.19m) (2014: £1.25m)
  • 13. The impact of the rising pension costs is already being felt, but will become more apparent later in 2016 after academies prepare their 2015/16 financial statements. UHY’S 2016 ACADEMIES BENCHMARKING REPORT The bar chart below shows that there is little difference between secondary and primary academies when you compare the ratio of LGPS deficit to non-teaching staff. Whilst the average LGPS liability per non-teaching staff member is around £34k (up from £25k in 2013/14), some academies have much higher liabilities per member of staff. The primary school with a liability of £158k per member of support staff is probably more a result of the allocation of staff between categories than the pension liability! LGPS LIABILITY PER NON-TEACHING STAFF MEMBER 10 TEACHERS’ PENSION SCHEME The TPS contribution rates changed in September 2015, with a total contribution rate of 26%. Scheme members are now paying an average contribution rate of 9.6%, with the balance of 16.4% falling on academy trusts as the employer. There will be an additional 0.08% administration levy charge, and the 16.4% rate will be payable until the outcome of the following valuation is implemented, which is expected to be April 2019. The additional contributions due by academies represents a significant increase in their pension costs of 16.3%. We have estimated that this could easily add over £20k to the budget of a reasonably sized primary school, or £40k-£50k for a secondary school. The impact of the rising pension costs is already being felt, but will become more apparent later in 2016 after academies prepare their 2015/16 financial statements. It would not be unreasonable to expect the deficit position to increase as a result of these rising staff costs.
  • 14. UHY’S 2016 ACADEMIES BENCHMARKING REPORT GENERAL ANNUAL GRANT Your key source of recurring income, as an academy, is likely to be derived from grant funding, and the General Annual Grant (GAG) in particular. However, many academies across the country do have other significant sources of income. It is more common for secondary academies to be in a position where they are able to generate significant other income, but there are some primary academies with substantial non- GAG, and even non-grant income. We are increasingly talking to our academy clients about setting up trading subsidiaries; it is important that whenever there are trading activities, you review your position to minimise risk to trustees and to mitigate corporation tax and VAT liabilities. It is also important to ensure that your trust’s articles permit trading activities if these do remain in the academy trust itself; many academy trusts are prohibited by their articles from carrying out what are often referred to as ‘significant trading facilities’. The trend from the graph below is that the percentage of income derived from GAG has fallen compared to 2013/14. The average primary generated 76% of its income from GAG in 2014/15 compared to 78% in the previous year. This fall is probably largely explained by the Universal Infant Free School Meal income within the 2015 data, a significant boost to non-GAG income for some schools. The average secondary figure has also fallen, to 80% from 82% in 2013/14, although it is less clear why this change has occurred. It is important that whenever there are trading activities academies review their position to minimise risk to trustees, and to mitigate corporation tax and VAT liabilities. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 11 4. INCOME OTHER INCOME By other income we mean all non-grant income, excluding assets inherited in the year of conversion or other large one-off sources of income, such as the donation of an extension building from the LA. Most academies generate some income from lettings, whether by allowing local sports groups to utilise their sports fields, or letting other local community groups rent a part of the building. Other sources of income include providing services to other schools, such as catering, IT assistance, Headteacher consultancy, and secondment of teaching and administrative staff. Trustees have a responsibility to maximise their academy’s income by utilising the resources at their disposal, since this maximises the funds available to spend on the trust’s pupils. We would always recommend that you seek professional advice to ensure you have the most appropriate structure before embarking on any new activities or substantially increasing the level of existing activities. Complications can arise if sufficient thought is not given to this from the outset.
  • 15. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 12 The Government will introduce the first ever national funding formula from 2017/18 to try to ensure transparency and avoid these large discrepancies between locations. It probably comes as no surprise that far more secondary academies are generating significant sums, with 13% generating more than £500k of other income and with 1% achieving over £1m. Just 10% of primary academies are generating at least 10% of other income, although 1% did manage over £0.5m! This is just a dream for well over half who were able to bring in no more than £100k. You will note the large disparity between the recurring incomes per pupil, visualised in the bar chart overleaf (based on lower and upper quartiles, therefore grouping academies at the extreme ends of the scale). Academies that generate a significant amount of additional income from their own resources would be expected to feature at the top end of the scale here, and primary academies feature lower incomes per pupil than the secondary schools, as you might predict, due to their younger pupils’ lower educational demands. With an approximate £2k difference between the lower and upper quartile, it is not difficult to see why the fairer schools funding reform has been introduced. The Government will introduce the first ever national funding formula from 2017/18 in an attempt to ensure transparency and avoid these large discrepancies between locations. Some areas will gain from the reform, and academies in these LAs will welcome the additional income this will bring at a time when they will be struggling from the rising staff costs in the previous couple of years. The promise of this extra income may be sufficient, with careful planning, to see these academies through a difficult couple of years in 2015/16 and 2016/17. The charts below show the range of other income generated by secondary and primary academies in 2014/15. 1% 3% 9% 29% 21% 37% Secondary academies - other income % of total income > £1m > £750k - £1m > £500k - £750k > £250k - £500k > £100k - £250k < £100k 1% 9% 27%63% Primary academies - other income % of total income > £1m £750k - £1m £500k - £750k £250k - £500k £100k - £250k < £100k
  • 16. Unfortunately, as with any reform, there will also be losers. It is vital that the Government’s consultation of the practicalities of making these changes, due to take place later in 2016, gives academies in this position plenty of time to plan. It has already been announced that there will be a transitional period, which will help, but academies losing significant income will find 2017/18 a difficult year. If you are from an academy in an LA which is towards the top of the income per pupil tables, below, it would be wise, if at all possible given other pressures, to consider making cuts over the next couple of years. Some academies are already benefitting from the initial phase of fairer funding for 2015/16. As an example, Bromley academies are receiving £4,553 per pupil in 2015/16 compared to just £4,082 in 2014/15, a rise of 11.5%. Other LAs such as Cambridgeshire, Sutton, Northumberland and Shropshire have all seen percentage increases of over 7% in 2015/16. If you are from an academy in an LA which is towards the top of the income per pupil tables, it would be wise to consider making cuts over the next couple of years. UHY’S 2016 ACADEMIES BENCHMARKING REPORT Don’t forget academy trusts, as exempt charities, qualify for grants available to the charity sector. It is always worth reviewing the grant opportunities published on the websites of your local councils and organisations such as Sport England. 13 Top 5 most poorly funded LAs in 2015/16 £ per pupil 1. Wokingham £4,158 2. Poole £4,194 3. South Gloucestershire £4,196 4. Stockport £4,206 5. West Sussex £4,206 Top 5 best-funded LAs in 2015/16 £ per pupil Top 5 best-funded LAs in 2015/16 (outside London) £ per pupil 1. City of London £8,595 Nottingham £5,309 2. Tower Hamlets £7,014 Birmingham £5,218 3. Hackney £6,680 Manchester £5,088 4. Lambeth £6,384 Liverpool £5,048 5. Hammersmith and Fulham £6,248 Slough £4,862 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 All academies Secondary academies Primary academies Incomeperpupil(£) Recurring Income per pupil (£) Q1 Median Q3
  • 17. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 14 With an increase in MATs it will be interesting to see whether the capital funding for larger MATs develops over the next couple of years. Your academy’s capital funding can comprise different elements. The core devolved capital funding can often be supplemented by applications for funding for specific projects through the Condition Improvement Fund (CIF), for example. Academies which applied for CIF funding last year should hear whether or not they have been successful in March or April of this year. There was more money available in this round of funding, but there were far more academies and it is likely more will have applied. The 2015/16 CIF was four times oversubscribed, and we imagine the 2016/17 round was perhaps oversubscribed by five or six times. It is likely, therefore, that only the academies applying for projects which qualify as “high needs” will be successful. This will include projects which concentrate on keeping academy and college buildings safe and in good working order by tackling poor building condition, building compliance, energy efficiency and health and safety issues. With an increase in MATs it will be interesting to see whether the capital funding for larger MATs develops over the next couple of years. A different system – Capital Maintenance Funding - was introduced last year for MATs with five or more academies and over 3,000 pupils whereby the trust receives a set allocation of capital funding, which it is then free to deploy across the trust. This can bring certain key advantages: • the guarantee of funding is a major attraction. It allows trusts to plan and budget more effectively, and can be more easily consolidated into their accounts and reporting systems; • affirmation of independence and self- reliance, with priorities identified and decisions made by trusts rather than the EFA; and • resource savings and procurement efficiencies can be obtained, meaning less time and money wasted on preparing and submitting unsuccessful funding applications. Around 50 MATs have received funding in this way to date, with the smallest allocation being £429k and the largest being £6m. CAPITAL FUNDING In each of the last three years, by far the most academies (around 50%) have received at most £50 of capital income per pupil, with a further 10% or so receiving between £50 and £100. The lucky 5% of academies receiving more than £5k per pupil in 2014/15 will have received significant CIF funding for major one off projects, but it is interesting to note there has been a rise in the number of academies receiving funding at this level, and in the £2k to £5k range, over each of the last two years.
  • 18. UHY’S 2016 ACADEMIES BENCHMARKING REPORT Academies are able to break away from the LA and find alternative service providers, often at preferential rates, and academies within MATs are often able to increase their buying power further. As your service level agreements come to an end, you should be able to renegotiate key contracts such as your catering, grounds maintenance and payroll/HR services, saving significant amounts of money in some instances. GAG COSTS GAG income is an academy’s main source of income, and it is inevitable that GAG costs are a similar high proportion of total costs. The chart below shows the variation in GAG costs as a percentage of total expenditure. The results are similar to those in 2013/14. Around half of academies once again fell in the 80-85% or 85-90% ranges, and 4% of academies incurred GAG costs representing over 90% of total costs. A further 19% fell in the 85-90% range, and these academies will typically be primary schools with little non-GAG income. A large proportion, 21%, reported GAG costs of less than 65% of total costs, and these schools were generally those that received significant other DfE or LA grants. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 15 5. GAG EXPENDITURE AND NON-STAFF COSTS GAG income is an academy’s main source of income, and it is inevitable that GAG costs are a similar high proportion of total costs. BREAKDOWN OF NON-STAFF COSTS We have already seen that staff costs can, on average, account for 70% of an academy’s annual budget. But where does the remaining 30% of the annual spend go? The following data is based on the DfE’s benchmarking data for the 2013/14 financial and academic year, released in the summer of 2015. Since there was very little difference in the data for secondary and primary schools, the results cover all academies. Over a third (38%) of the remaining budget goes on learning resources which are by far and away the largest spend after staff costs. Interestingly, the second highest spend is actually on capital equipment. On average 16% of the non-staff budget (around 3.2% of the total budget) is spent on topping up capital funding which has not been sufficient to meet the academy’s needs. The other costs such as catering, cleaning, rates and insurance are fairly similar in terms of spend. The detailed DfE results are available at: www.gov.uk/government/statistics/income- and-expenditure-in-academies-in-england- 2013-to-2014 and contain the details behind these figures. Non-staff costs as % of total costs
  • 19. Trusts need to clarify the policy when it comes to group or bulk purchase orders, where a number of individually low value items are acquired at one time. As an example, it is not uncommon for an academy to purchase 50 laptops in one go, and collectively these may be worth £15k-£20k. It is usually appropriate to capitalise large orders like this, but your capitalisation policy should make it clear whether there is a different, higher, threshold for group orders, or whether the same threshold used for single asset purchases is applied. A quarter of academies spent between £100 - £250 per pupil, but 19% spent under £50 per head, less than the 24% in this bottom range last year. 6. CAPITAL EXPENDITURE Generally, academies have spent more on capital expenditure in 2014/15 than in the previous year, with far more spending in excess of £10k (5%) and a further 6% spending between £2k-£10k per pupil. Of course capital expenditure naturally largely follows capital income which has also increased as we have seen. Academies capitalise assets in accordance with their accounting policy, which can vary enormously from trust to trust, making comparisons difficult. Some academies recognise qualifying expenditure over a £500 or £1k threshold as capital, others apply much larger thresholds – we are aware of one trust which only capitalises qualifying expenditure over £20k. Each trust’s policy should reflect its own circumstances, so there is no right or wrong approach. Remember that significant expenditure funded from capital grants will be treated as capital regardless. Each trust’s policy should reflect its own circumstances, so there is no right or wrong approach. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 16 0% 5% 10% 15% 20% 25% 30% < £50 £50 - £100 £100 - £250 £250 - £500 £500 - £750 £750 - £1k £1k - £2k £2k - £10k £10k + Capital expenditure per pupil (£) 2014/15 2013/14
  • 20. 8% 40% 27% 20% 5% up to £1m £1m-£5m £5m-£10m £10m-£20m £20m-£30m 17 DEPRECIATION Depreciation can be a somewhat strange accounting concept. The idea of capitalising the value of the school buildings and then writing these off over a period of time is hard to comprehend. Freehold land is never depreciated, but there remain a number of approaches to depreciation of the buildings. Usually, freehold property is written off over a 50 year period, but when it comes to leasehold property there are a few options, each of which has been utilised by academies within our sample, they are to: • write off solely the building over the period of the lease, usually 125 years; • write off the value of the buildings over 50 years – this is sometimes popular because it avoids the need to carry out an annual impairment review, which is required when the useful life is deemed to be over 50 years; or • write off both the land and buildings over one of the above two methods. Church land and buildings There is a particular problem with church land and buildings, and specifically whether these should even be included within academy trusts’ financial statements. The Accounts Direction is fairly clear stating that, where premises are occupied by Church academies under a licence, “Taking all considerations into account it is likely that most church academies will conclude that the asset should be recognised on their balance sheet.” The Catholic Education Service, amongst other faith bodies, has struggled to accept this view, and various publications have been released “encouraging” member academies to exclude the premises from their annual accounts. The approach taken by Church academies has varied enormously with four or five different accounting treatments followed. As a result, further clarification and agreement between the EFA and the faith bodies would be helpful. Fixed assets Our final graph in this section shows the differential in the value of fixed assets. The largest component of fixed asset value is generally the land and buildings, assuming these have been capitalised. The valuation is based on a mixture of a formal valuation performed by a qualified surveyor, the EFA commissioned desk top valuation exercise available to new converters, and other methods such as discounted insurance value. 40% of academies’ accounts contained fixed assets valued between £1m-£5m. The 5% reporting fixed assets with a net book value of less than £1m will be those that did not include the value of buildings at all, for example some of the Church academies or free schools occupying short term buildings whilst they await the construction of their long term buildings. 40% of academies’ accounts contained fixed assets valued between £1m-£5m. UHY’S 2016 ACADEMIES BENCHMARKING REPORT Fixed asset value
  • 21. With the perfect storm of falling income and rising costs leading to an increasing amount of deficits in the coming years, the importance of holding a reasonable level of reserves has been highlighted. There will be many academies which become reliant on cash accumulated in recent years to see them through the next few years, and without these historical cash balances many more would undoubtedly need to contact the EFA for emergency funding. The chart below shows the split of cash balances held by academies in our sample. The general trend is a reduction, perhaps not surprising as rising costs and falling incomes start to bite. 7. CASH BALANCES The press continue to comment on the level of cash balances held by academies. Despite these comments, the EFA remain comfortable with the level of cash reserves held by academies. Sometimes, where a trust holds a high balance, the EFA will request confirmation that this is correct and will expect an explanation as to why the cash balance is high. It makes sense to pre-empt this by explaining high cash balances within the Trustees’ Report narrative in the financial statements. The guide level is £1m although this is not a formal threshold; the EFA will ask questions if cash levels at an academy do not appear reasonable for their circumstances. There has been a significant movement in the number of academies holding less than £250k and between £250k-£500k. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 18 At the other end of the scale there has been a significant movement in the number of academies holding less than £250k and between £250k-£500k. It will be interesting to see the data next year, but it would seem safe to predict that the overall trend will once again be downwards. There was a small reduction in the number of academies holding over £2m, but a much larger fall in the numbers within the next two ranges with £1m+. No doubt the other 83% with less than £1m would love to be in this position and may not feel much sympathy! 32% 29% 23% 12% 1% 4% Range of cash balances held 2014/15 < £250k £250k - £500k £500k - £1m £1m - £1.5m £1.5m - £2m £2m + 27% 23%25% 14% 6% 5% Range of cash balances held 2013/14 < £250k £250k - £500k £500k - £1m £1m - £1.5m £1.5m - £2m £2m +
  • 22. It is important to remember that the cash balance as at 31 August is merely a snapshot in time. This can be distorted by the timing of payments, or the receipt of significant capital funding. It is interesting to compare the cash balances held to the recurring levels of income. The graphic below shows that in 2014/15 21% of academies held cash equivalent to less than 10% of their annual income, compared to 30% in 2014 and 36% in 2013. This is a positive move, and in many ways contradicts the previous data showing a reduction in cash balances. There are also more academies holding a high ratio of cash compared to recurring income. This may therefore be more about size and type of schools within the sample. There is a question mark hanging over what high cash balances mean for an academy. Does it mean the school has been extremely well managed? Or has it not been spending money on its current pupils? Something, remember, which is set out in the funding agreement. It is therefore interesting to note that, as a rule, the academies with higher cash balances require little intervention compared to those with low or no balances, suggesting the levels of cash, relative to the size of the school, go hand in hand with the quality of financial governance. It is interesting to note that, as a rule, the academies with higher cash balances require little intervention compared to those with low or no balances. UHY’S 2016 ACADEMIES BENCHMARKING REPORT 19 It is not surprising to see that secondary academies generally hold higher cash balances than primaries. This is to be expected considering the average respective size of the schools. There are, however, some primaries which are holding cash reserves almost at the same level as some secondaries. - 200 400 600 800 1,000 1,200 1,400 Q1 Average Q3 £000s Cash balances held at 31 August 2015 Primary academies Secondary academies
  • 23. 20 CASHFLOW DIFFICULTIES? If your academy finds itself in the position where it is predicting a deficit, and you have resulting cash flow worries, it is vital that you react quickly to this. The EFA will expect you to produce a recovery plan, but they also look far more favourably on academies which recognise they have a problem and who contact them at an early stage. Unfortunately the EFA have seen too many academies approach them too late in the day, at the point the cash has, or is about to, run out. Emergency funding is available, although this is generally given by way of an interest free loan, with repayments taken from future GAG funding. This does provide the academy sufficient time to restructure. Emergency funding is provided in the more extreme circumstances, since the onus is on academies to manage their own finances. If you have a relatively small shortfall the EFA are more likely to suggest you find a way to resolve the problem internally. If you are experiencing problems and require financial assistance, there is a strong chance that the EFA could look to impose a Financial Notice to Improve (FNtI), but again this is less likely if you have approached them in good time rather than “burying your heads in the sand”. If you are part of a MAT there is an expectation that the trust will support ailing member academies. It is certainly less likely that the EFA would consider providing financial support to an academy if others in the same trust are holding significant cash balances. This is something that academies should be aware of when joining a MAT. If your academy finds itself in the position where it is predicting a deficit, and resulting cash flow worries, it is vital that you react quickly. CASHFLOW Monitoring cash flow is vital to highlight the ebbs and flows of cash, and to highlight periods of the year where there may be surplus balances that can then be invested safely. When it comes to monitoring cash flow, what should an academy be doing? Here are some of the key points to consider: • Proper use of the purchase ledger can enable you to post your purchase invoices and review an aged creditor report to see which invoices are due and how old these are. A management decision can then be made to pay certain key suppliers earlier, whilst there may be other suppliers who are happy to negotiate extended credit terms; • If you are using the special section 33 VAT reclaim scheme then you have the flexibility to process reclaims periodically, as long as each claim covers whole calendar months. We have witnessed some academies make only one or two reclaims across the whole academic year, but we would recommend that you make your reclaims at least quarterly, and indeed monthly if cash flow is particularly tight. • Monitor actual spend against budget regularly throughout the year. The Budget Forecast should not just be an Annual Return that is submitted and then not looked at, reviewing actual spend against budget can highlight areas for improvement. In our experience, most academies are pretty good in this area, but there is always room for improvement. Have you reviewed where you are against the Budget Forecast Return for 2015/16 submitted to the EFA last July? • You can predict with reasonable certainty when capital expenditure is likely to be required, and a lot of this may take place in the summer break. However, capital expenditure should be considered alongside cash flow forecasts to ensure that such expenditure takes place at times of the year when cash flow is strong. UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 24. It will be interesting to see if the ratio of surpluses to deficits changes in the coming years as the pressure on budgets intensifies. The most common result for primaries in 2014/15 and 2013/14 was perhaps, unsurprisingly, a result in the lower deficit or surplus ranges up to £200k. It is noticeable, however, there are most primaries with higher deficits, 1% even reported a deficit of over £400k, and including these, 14% reported a deficit of over £200k. Fewer primaries reported high surplus results. The striking result for secondary academies is the amount of schools with deficits above £400k (28% compared to 20% last year), with half of these experiencing deficits of over £600k. Unless these academies have restructuring plans in place many are going to struggle over the next year. 8. SURPLUS OR DEFICIT Here we review whether academies have achieved a surplus or deficit, although we are focusing on General Annual Grant (GAG), since this is the main fund used for running the school. The overall movement or net income/ expenditure reported on the Statement of Financial Activities is heavily influenced by non-cash movements such as depreciation or FRS 17 pension charges, and we feel it is better to concentrate on GAG. Reading the financial statements of academy trusts is far from straight forward, even if you have some financial knowledge. It is still necessary to delve into the detail to get a full understanding of the academy’s financial position and results, and there is little wonder that academy trustees can sometimes find the finances difficult to understand. We have mentioned the pressure on budgets throughout this report and the above charts reveal how things have changed between 2013/14 and 2014/15. Far fewer secondary and primary academies reported a GAG surplus in 2014/15. Whereas 82% of primaries reported a surplus in 2013/14 only 66% were able to do so this year. Nearly half of secondary academies (46%) reported a GAG deficit, compared to 27% for 2013/14, with pressure from the reduction in sixth form funding being a key contributor here. A small minority of academies reported a break-even result, probably as a result of the way they have chosen to allocate expenditure across different funds. Interestingly, primary academies fared better than secondaries, with 84% of primaries achieving a GAG surplus. 21 UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 25. The EFA introduced a new Accounts Submission Form in 2013/14, and this remained a requirement for 2014/15. Indeed the form was expanded slightly. The EFA introduced this cover form because they use key information from the accounts and the auditor’s management letters to understand the significant issues being faced by academies, and the form enables them to assess the risk areas at the point of submission. This section of our report compares how academies fared in areas such as changes in staff and management letter points. CHANGES IN STAFF Last year, academic year 2013/14, around one quarter of the academies in our sample saw their Headteacher or principal leave, however this number has fallen to 13% for 2014/15. There were slightly more primary Headteachers leaving than secondary Heads, but the results were very similar. Last time more secondary Heads left their posts. Proposed further reductions to the pension lifetime allowance may see more Headteachers re-consider their retirement plans - could this lead to a skills shortage? 22 9. GOVERNANCE AND AUDIT FINDINGS Of course Headteachers leave for many reasons; sometimes an individual retires, maybe he or she will move on to another school for a different challenge, and there are instances where Headteachers leave after unfavourable Ofsted inspections or negative educational results. The Government is in the process of making changes to the pension legislation, including proposed further reductions to the lifetime allowance permitted in an individual’s pension scheme. A few years ago the lifetime allowance was £1.8m, and this has recently fallen to £1m. There are rumours this will fall to £750k. This may still seem like a very large pot, but due to the way the pension value is calculated for defined benefit salary schemes, like Teachers’ Pensions, this allowance can be reached relatively easily. The actual results depend on investment performance and other variables, however assuming reasonable growth a 40-year-old earning £40k, with an existing final salary pension pot of £130k would hit a £750k limit by the time they hit retirement. If this proceeds, a substantial number of Headteachers and senior teachers may need to re-consider their retirement plans. Even with the existing £1m allowance Headteachers would be wise to ensure they understand their position. We have also seen a frequent turnover of finance staff in our academy clients in the past – and we are never too sure whether this is a result of the pressures arising from academy status or merely a coincidence! UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 26. Overall nearly one in six of the academies in our sample saw either their School Business Manager or Chief Finance Officer change during 2014/15, with slightly more changes in the primary sector (19%) compared to secondary schools (14%). Nearly 1 in 6 of the academies in our sample saw either their School Business Manager or Chief Finance Officer change during 2014/15. 23 TRUSTEE CHANGES It is also interesting to note the number of changes within the boards of trustees. We reviewed the financial statements of each of the academies in our sample, and noted the number of trustee appointments and resignations during the course of the 2014/15 year, looking to see whether there was a trend. UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 27. The conclusion is that there is no obvious trend, with a fairly even split between academies where the number of trustees has increased and those where the numbers have fallen. It is clear there is quite a regular turnover, with just 20% of academies showing no changes, and some of these will have seen appointments and resignations cancel each other out. Finding trustees who have both the necessary skills, commitment and time is far from easy. There seems to be a particular shortage of trustees with finance skills, and this may be because finance professionals feel, and rightly so, that more would be expected of them. The EFA are particularly keen to harness the skills of accountants to the benefit of the large MATs. They wrote to many of the top national firms of accountants and auditors last year inviting them to encourage individuals to become involved as pro-bono non-executive directors. Their involvement would be to provide strategic advice on how the trust is run overall, provide robust independent challenge to the Executive and Finance Director, and to play a role in the hiring (and firing) of senior staff. AUDIT MANAGEMENT LETTER POINTS The Accounts Submission form asked academy trusts to confirm the number of management points included by their audit in the management letter, and to indicate the number of high risk or priority points. Our academy clients often ask “How do we compare to other schools?” when they see their management letter, and it is perhaps understandable that they do not wish to be seen as below average. Finding trustees who have both the necessary skills, commitment and time is far from easy. 24 Number of management letter points UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 28. The vast majority of academies, almost half, had between 1-5 five recommendations (remarkably 45% in both years!). Naturally we have only seen management letters for our own clients, so the chart above is based on a slightly reduced sample size. It is rare for academies to have no recommendations in their management letters, although 4% of our academies did manage just that, up from 1% in 2013/14. Generally, this reflects better understanding with a higher number of established academies, a few years post conversion. Additionally, they have had the opportunity to put in place the necessary system improvements. The vast majority of academies, almost half, had between one and five recommendations (remarkably 45% in both years!). There were some academies which fared less well, although in many cases these were new converters, and 7% had more than 15 management letter points. There were then far fewer academies with between 11-15 recommendations. The most management letter points to a single academy was 30. It is worth distinguishing between high risk or priority points and other recommendations. Fortunately, only 15% of our academies had any high risk or priority points, an improvement on 20% for 2013/14. 25 The types of issues were much the same as before, and include the following: • significant improvements required to fund accounting; • poor controls over invoicing; • failure to disclose business interest register on the academy website; • failure to follow capital and revenue tendering procedures; • connected party transactions with a profit earned; • failure to obtain prior approval for a finance lease; • VAT incorrectly reclaimed; and • trustees being paid for non-employment services. Where there is a need for improvement in the financial controls and systems within an academy, our results show that this often transcends across all areas. Many of the academies with one high priority recommendation had several, with a handful receiving four, five or even six high priority recommendations. UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 29. - 2 4 6 8 10 12 14 -20 0 20 40 60 80 100 120 Number of high risk or priority management letter points 26 It is interesting to note there has been a slight reduction in the number of academies reporting related party transactions during 2014/15. Over 60% of academies did not have any connected party transactions, and we wonder whether this is because many are shying away from them altogether given the negative attention some trusts have with related party transactions. There has been a slight reduction in the number of academies disclosing related party transactions during 2014/15. RELATED OR CONNECTED PARTY TRANSACTIONS UHY’S 2016 ACADEMIES BENCHMARKING REPORT Each bubble represents one academy 38% 48% 43% 62% 52% 57% 0% 20% 40% 60% 80% 100% 2014/2015 2013/2014 2012/2013 per DfE % of schools No such transactions Related party transactions disclosed Academies with related or connected party transactions
  • 30. 27 Irregular or improper transactions have been found in less than 2% of academies, so it is clear that the vast majority are compliant with the regulations. Of course as long as the transactions are carried out on an arms length basis, without profit to the related party, there should not be an issue. Some of the headlines in the national press have involved cases which cast doubt as to how the trust allowed the transactions to proceed without any questions being asked, and most academies would hopefully feel that the examples in these cases would not be allowed to happen within their trust. It remains vital that there is transparency over related party transactions within the academy sector. This ensures that trusts themselves and the EFA can demonstrate that trustees are not benefitting unduly from their positions. Despite the continued focus on related parties, the EFA recognise that there is a problem in just a very small minority of cases. Irregular or improper transactions have been found in less than 2% of academies, so it is clear that the vast majority are compliant with the regulations. In many instances the related party transactions disclosed are with connected charities, such as the school Parent Teacher Association, or with other academy trusts, rather than with trustees’ commercial companies. Most transactions are also low value, with an average highest value transaction of just £6,790. All academies should have begun disclosing their register of business interests on their website from 1 September 2014, since this is a requirement of the Academies Financial Handbook. Trust should maintain an internal register containing all business interests, which should include the interests of key individuals such as members, trustees, and senior management, but also close family members and other individuals connected to the direct related party. For example, the internal register should include a list of the directorships and other business interests of the spouse or children of a trustee. It would not be necessary to publish this information on the trust website. Only ‘relevant’ business interests for members and trustees need to be made publicly available. As a minimum this should include: • all directorships, partnerships and employments with businesses that provide goods or services to the trust; and • trusteeships and governorships at other educational institutions and charities irrespective of whether there is a trading relationship with the trust. ARE YOU DISCLOSING YOUR BUSINESS INTEREST REGISTER? UHY’S 2016 ACADEMIES BENCHMARKING REPORT 1 7 30 0 5 10 15 20 25 30 35 40 Quartile 1 Average Quartile 3 £000s Value of highest related party transactions
  • 31. 28 UHY’S FINAL THOUGHTS We hope you have enjoyed reading our commentary and that our benchmarking report has helped you to see how your academy compares to others. Please do use the average data sheet on page 30 and contact one of our academy specialists on page 32 if you would like us to plot your data onto graphs. Benchmarking in the education sector is never easy. We often hear from clients that have tried to use the DfE’s benchmarking website, who have struggled to find a sufficient number of comparable schools to benchmark themselves against. Every school is unique in its own way, and no two secondary academies, or two schools with similar pupil numbers, will produce the same financial results. The DfE’s benchmarking website is nevertheless useful, it is just unfortunate that the data for the most recent academic year is not made available until late Spring to early Summer. It never ceases to amaze us how quickly one academy financial year rolls into the next. The period from September to December is focused on year end accounts and audit, and then August Accounts Returns need to be filed in January. Teachers’ Pensions End of Year Certificates follow quickly in May, and by then we are already planning the year end audits, and contacting clients to book in planning and closing meeting dates. Before we know it we will be writing our benchmarking report for 2015/16! UHY’S 2016 ACADEMIES BENCHMARKING REPORT Every school is unique in its own way, and no two secondary academies, or two schools with similar pupil numbers, will produce the same financial results.
  • 32. 29 Use this sheet to compare your own school’s data with the averages from our sample. Alternatively, contact your local UHY academies contact, on page 35, who can plot this information on your behalf from your annual accounts. WHERE DOES YOUR ACADEMY FIT WITHIN THE RESULTS? Your academy All academies Secondary academies Primary academies Average 2014/15 Average 2014/15 Average 2014/15 Non financial data Number of teachers 35 57 17 Number of admin and support staff 28 39 18 Number of management staff 4 6 3 Number of pupils 530 791 302 Pupil : teacher ratio 18 15 21 Income Total Recurring Income 3,267,782 5,088,105 1,674,999 % of total income 100% 100% 100% Grant income 3,085,072 4,802,498 1,582,324 Grant income % of total income 95% 95% 95% GAG income 2,631,690 4,199,446 1,259,904 GAG % of total income 78% 80% 76% Other income 157,358 238,127 86,685 Other income % of total income 5% 4% 5% Capital grant funding 276,371 421,636 149,265 Capital grant funding % of total income 15% 14% 15% Capital grant funding per pupil 1,222 1,208 1,098 Expenditure Total expenditure 3,388,751 5,330,678 1,689,565 % of total expenditure 100% 100% 100% Staff costs 2,460,518 3,861,604 1,234,567 Staff costs % of total expenditure 72% 71% 72% Staff costs % of total expenditure 1,983,738 3,139,190 972,717 Teach & ed support staff % of total staff costs 80% 82% 79% Support/Non-teaching staff costs 423,757 645,457 229,691 Non-teaching staff costs % of total staff costs 17% 16% 18% Supply teacher costs 71,626 101,518 45,470 Supply teacher costs % of staff costs 4% 4% 0 UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 33. 30 GAG expenditure 2,640,290 4,253,687 1,228,567 GAG % of total expenditure 75% 78% 72% GAG surplus (8,600) (54,241) 31,337 Total surplus / (deficit) (120,969) (242,573) (14,566) Total surpus ratio (% of total income) Light and heat costs 47,537 78,983 20,022 Light and heat % of total expenditure 1% 2% 1% Buildings and grounds maintenance 82,417 118,613 50,745 Maintenance % of total expenditure 3% 3% 3% Cleaning and refuse 28,498 46,011 13,175 Cleaning and refuse % of total expenditure 1% 1% 1% Educational supplies and services 113,462 182,228 53,291 Educational supplies and services % of total 3% 4% 3% Examination fees 35,997 75,677 837 Examination fees % of total costs 1% 1% 0 Staff development 20,154 28,895 12,408 % Staff Development of total costs 1% 1% 1% Governance costs 37,883 53,441 24,269 % governance costs of total 2% 1% 2% Technology costs 44,947 69,893 23,118 % technology costs as % of income 2% 2% 1% Income per pupil 5,912 6,034 6,034 Balance sheet Fixed assets 7,414,696 11,653,881 3,705,409 Net assets 6,628,083 10,354,077 3,367,838 LGPS deficit as at 31 August 2015 772,120 1,187,429 408,725 Capital expenditure in the year or period 373,627 540,772 225,524 Capital expenditure per pupil 1,490 1,578 1,413 Cash and bank balances held 574,753 896,355 293,352 LGPS employers contributions 109,671 157,752 67,600 UHY’S 2016 ACADEMIES BENCHMARKING REPORT Your academy All academies Secondary academies Primary academies Average 2014/15 Average 2014/15 Average 2014/15
  • 34. 31 Caroline Pearce, Queens’ School Bushey What our clients say... We have worked with UHY over many years and have never regretted that decision. They have always been friendly and extremely efficient. We would not have converted to an academy with anyone else. UHY provide us with services of excellent quality, supported by their good technical understanding of our sector requirements. The UHY team have helped us to focus on business issues and have highlighted areas of our work that needed improvement. It has been of real benefit to have a consistent team who are all willing to really understand how we work and who we are, which has resulted in an excellent working relationship with them. Rita Righini, New Bridge School UHY have provided an extremely good quality of service, supported by great technical knowledge. The team’s monthly visits have been an immense help and my knowledge and understanding has greatly improved as a result. Jacqui Williams, St John’s Primary Academy UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 35. 32 Linda White, Warren Road Primary School Judy Hunt, James Brindley School UHY are focused on, and flexible to, our needs. They listen to our queries and concerns and provide an excellent quality of service and technical understanding in response. UHY has been exemplary in their support for us throughout our first ten months as an academy. I would be happy to refer them to other academies. UHY have been invaluable during our early months as an academy. We are able to raise any query or concern and will receive a prompt and reassuring answer making us feel our custom is valued and important to UHY. Jean Simmons, Dane Court Grammar Academies need a strong working relationship with their accountants if they are to succeed, and we have achieved this with UHY. Their academies team provide a very good quality of service and we have forged a strong relationship with them. They are professional and trustworthy, which was imperative to us achieving academy status. UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 36. 33 Mary Rouse, New Generation Trust Schools Marjorie Bell, Webster Primary School We were able to build up an excellent and close professional working relationship with our UHY team who at all times were courteous and methodical in their approach and always anxious to ensure that minimum disruption was caused to the workings of the School. It was a pleasure to have UHY representatives in the school. Our UHY team are responsive, supportive and always on hand to help and advise. The staff are well trained , courteous, polite and have excellent technical knowledge to give best practice advice. I would certainly recommend UHY to other academies. Carole Orford, Park Hall AcademySchool The UHY team have always delivered our audit ahead of time and to a consistently high quality. In addition, UHY are hugely supportive on our journey to becoming a Multi-Academy Trust and are always available to discuss strategic as well as minor matters. I have no hesitation in recommending them. UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 37. 34 Our offices around the UK now act for more than 200 academies and free schools, including the first special needs school to convert to an academy. Our services to academy schools and free schools include: • external audit; • information to be considered in the academy conversion process; • governance reviews; • Trustee and Accounting Officer training; • special services to MATs including advice on structures, top slicing and accounting system set up; • year end statutory audit and Academy Return completion; • preparation of your accounts in line with the EFA Accounts Direction; • Teachers Pension End of Year Certificate (EOYC) audits; • advice in connection with the Academies Financial Handbook; • internal audit and monitoring visits to provide assurance on systems and controls; • VAT reviews and advice on the best method for academies to reclaim VAT; • advice on the best structure for commercial trading activities; and • payroll and employment tax issues. Our demonstration of our experience to date within the education sector, and specifically with academies, has led a number of established academies to leave their previous adviser to benefit from our breadth of specialist knowledge and support. ABOUT UHY HACKER YOUNG We work with numerous clients in the education sector, including academy schools, free schools and independent schools. Our education specialists have years of experience in the sector and have a particular expertise in academy schools - our offices around the UK now act for more than 200 academies and free schools, including the first special needs school to convert to an academy. As such, we understand that independence from your LA is likely to require improved internal controls for your school’s finances. UHY are a Top 15* firm of accountants and auditors. Our academy client base includes old style sponsored academies, new converter academies, and MATs. As the expansion of the academies programme continues our number of clients in this rapidly changing sector has increased significantly. Our experts enjoy the challenge of this exciting and rapidly changing sector. We keep ourselves up to date with all the EFA’s requirements so that we can keep our clients abreast of regulatory and other changes. We also maintain a regular Academies blog on our website and prepare regular Academy Schools Updates on topical issues that affect academies. * Latest Accountancy Age and Accountancy Magazine league tables UHY’S 2016 ACADEMIES BENCHMARKING REPORT
  • 38. 35 YOUR LOCAL UHY ACADEMY SPECIALISTS If you would like more information about this report, or would like to understand more about how your school fits within these results, please speak to your local academies expert, below: UHY’s national academy and free schools group www.uhy-uk.com/academy-schools UHY’S 2016 ACADEMIES BENCHMARKING REPORT Birmingham Malcolm Winston Academies partner t: 0121 233 4799 e: m.winston@uhy-uk.com London Colin Wright Academies partner t: 020 7216 4600 e: c.wright@uhy-uk.com Sheffield Roland Givans Academies partner t: 0114 262 9280 e: r.givans@uhy-uk.com Brighton Chris Kyffin-Walton Academies partner t: 01273 726 445 e: c.kyffin-walton@uhy-uk.com Manchester Mark Robertson Academies partner t: 0161 236 6936 e: m.robertson@uhy-uk.com Sunderland Paul Newbold Academies partner t: 0191 567 8611 e: p.newbold@uhy-torgersens.com Chester Alex Makinson Academies partner t: 01244 320 532 e: a.makinson@uhy-chester.com Nottingham Jon Warsop Academies partner t: 0115 959 0900 e: j.warsop@uhy-uk.com York Hayden Priest Academies partner t: 01904 557 570 e: h.priest@calvert-smith.com Sittingbourne Allan Hickie National academy group Chair t: 01795 475 363 e: a.hickie@uhy-uk.com Letchworth James Price Academies partner t: 01462 687 333 e: j.price@uhy-uk.com Royston Scott Rouse Academies associate t: 01763 247 321 e: s.rouse@uhy-uk.com
  • 39. UHY Hacker Young Associates is a UK company which is the organising body of the UHY Hacker Young Group, a group of independent UK accounting and consultancy firms. Any services described herein are provided by the member firms and not by UHY Hacker Young Associates Limited. Each of the member firms is a separate and independent firm, a list of which is available on our website. Neither UHY Hacker Young Associates Limited nor any of its member firms has any liability for services provided by other members. A member of UHY International, a network of independent accounting and consulting firms. This publication is intended for general guidance only. No responsibility is accepted for loss occasioned to any person acting or refraining from actions as a result of any material in this publication. © UHY Hacker Young 2016 www.uhy-uk.com