Academy Accounts Direction 2024/25

The DfE released the new Academy Accounts Direction for 2024/25 on Wednesday 26 March 2025. The DfE do provide a summary of what has changed but to apply the accounting concept of prudence we have carefully compared this version to the last, to make sure we’re not missing anything by spending 30 seconds reading the “What has changed in this edition?” paragraph on page 8 and then swiftly moving on. We now have comfort that we have thoroughly checked it and we have shared our findings below.

Companies Act reminder

First and foremost, let’s look at the key changes that are clearly highlighted on page 8. Firstly, they refer us to paragraph 2.13 where they have alerted certain Trusts of the Companies Act requirement or the inclusion of a non-financial and sustainability information statement within the strategic report.

This additional wording states “Academy Trusts will also want to consider whether they must include a nonfinancial and sustainability information statement, within their strategic report, as required by the Companies Act 2006, Section 414CA and 414CB. This requirement applies if the Academy Trust’s turnover in the year, was more than £500 million and the Academy Trust had 500 or more employees.”

By our calculations this will only affect one academy trust in the country but smaller trusts may wish to include a statement that covers some of these requirements if their trustees have a particular commitment to sustainability and management of the associated climate related risks.

Finance leases

For those who read our blog on the Academy Trust Handbook 2024 you will be aware that as a result of upcoming changes to Financial Reporting Standards the ban on finance leases has been lifted and replaced with a list of assets that can be leased without checking if they are permissible based on whether they constitute operating or finance leases. The need to check whether a lease is an operating or finance lease remains. Until the changes to FRS 102 take effect (which won’t be until the year 2026/2027) finance leases still need to be accounted for and disclosed differently. Paragraph 3.128 now clarifies the accounting treatment which was previously not applicable:

“Assets held under finance leases are recognised initially at the fair value of the leased asset or, if lower, the present value of minimum lease payments as determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Assets held under finance leases are included in tangible fixed assets and depreciated over the shorter of the lease term and the estimated useful economic life of the asset and assessed for impairment losses in the same way as for owned assets.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charges are allocated to the statement of financial activities, over the period of the lease, in proportion to the capital element outstanding”

So, what impact will this have on the financial statements?

Firstly, there may be disclosure in the critical areas of judgment note beneath the accounting policies as there is judgement required as to whether the lease is classified as a finance lease rather than an operating lease. The asset to which the lease relates will then be included in the fixed asset note with disclosure wording underneath as to what value of fixed assets relates to assets on finance leases.

There will be a line in the creditors note, most likely both due in less than and more than one year for the total obligations under finance leases and a separate note confirming the minimum lease payments in less than one year, between two and five years, and more than 5 years.

Finally, there will be disclosure in the statement of cash flows for the capital and interest elements of the lease repayments and also the finance lease cash movement in the analysis of changes in net debt.

The minor changes

With the closure of the ESFA on 31 March, merging into the DfE, one of the main changes noticed is the change of reference throughout, something we’ll have to get used to and stop the acronym “ESFA” rolling off the tongue. We did do a quick check however to ensure they replaced all references to the ESFA and noted 5 references to “DfE/ESFA grants”. We contacted the DfE to ask about whether they intended to keep these references but have not received a response.

Below are the other changes we’ve noticed that have not been highlighted. These are mostly presentational rather than being of significant importance, but we have included below for completeness.

Rather than sending any questions or suggestions to the DfE it is now suggested to use the Customer Help Portal.
Re-ordered the useful tests as to whether expenditure is regular and proper in paragraph 2.55. This does not change any requirements for Trusts and is just a more sensible order to list the tests in.
Removed the wording ” ESFA’s accounting officer writes to academy trusts’ accounting officers annually to share some outcomes of ESFA work and these provide a useful aide-memoir.” from paragraph 2.64
Auditor opinion options are now scheduled into a table rather than bullet points in paragraph 2.76
Transposed the table in paragraph 2.82 on funds analysis so that the different restriction categories are now the rows rather than the columns
Removed all instances of the phrase “for the avoidance of doubt”, this has sometimes been replaced with “to note”
Removed the table of accounting policies that was in paragraph 2.128 and instead made each element of this table its own note number, changing the note numbers of everything that was previously paragraph 2.129 onwards
Added the word “Totals” next to the total in the model format of the note for long term commitments in paragraph 3.46
What was paragraphs 3.115 and 3.116 has now merged into one, this makes room for the note references to then still follow the same format once the new leases section comes in paragraph 3.128
Annex A – feedback to the sector has been removed which had a table of issues, consequences and improvements such as late submission or weak internal scrutiny arrangements

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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