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SARA – does any Academy Trust identify with the sector results as a whole?

Posted by Rebecca Watkin on November 30, 2017

SARA – does any Academy Trust identify with the sector results as a whole?

The ‘Academy Schools Sector in England’ Consolidated Annual Report and Accounts (SARA) was released in October 2017.

This report consolidates the results of the 2,984 Academy Trusts that submitted accounts to 31 August 2016.

The headline performance figure is that the sector reported an operating surplus of £534m for the year ended 31 August 2016. But does any Academy Trust recognise this level of surplus generated?

Based on the data collected for the Kreston Academies Benchmark Report 2017 (KABR), which included the results of over 320 schools, there was an overall deficit for these Academy Trusts, with 72% of Academy Trusts reporting a deficit. Therefore, the result reported in the SARA will probably come as a surprise to most. There are several possible explanations for how this surplus has been achieved, such as unspent capital grants or the fact that the SARA is prepared on a different accounting basis to Academy Trusts that have to follow the Academies Accounts Direction.

This is the first year that the SARA has been produced. When there are two years of results it may become more apparent as to how all of the financial results are consolidated.

How many Academy Trusts make payments in respect of land and buildings operating leases? As a sector £39m has been spent. This came as surprise given that very few of the Academy Trusts included in the KABR have operating leases in relation to land and buildings due to not having the need. Additionally, prior approval from the ESFA has to be obtained for all leasehold or tenancy agreements on land and buildings that are in excess of 7 years.

There is one significant statistic that many Academy Trusts will be able to identify with in the SARA, and that is the percentage of costs that are attributable to staff costs, which was 71%. A similar percentage was reported in the KABR.

The SARA was qualified on the basis that there wasn’t enough evidence to support the recognition and valuation of Academy Trust land and buildings assets. The land and buildings collection tool that all Trusts were required to complete in October 2017 was set up in order to improve the evidence obtained by the ESFA. So we wait to see whether the SARA will be qualified for the year ended 31 August 2017.

The Report of the Comptroller and Auditor General to the House of Commons contained a number of recommendations. One of which was that the Department for Education should ‘Continue its efforts to minimise the reporting burden for Academy Trusts by streamlining the accounts production process further and enhancing engagement with the sector’. This recommendation will no doubt please all within the sector. We would request that this streamlining starts with a timely release of the Accounts Return form, which for this year still contains bugs at the time of writing. A fix is set to be released in early December, but the timing of this is not helpful to any involved in the sector given the reporting deadline of 19 January.

The SARA provides an overview of the sector, but does not contain many financial measures that our clients will recognise. If you are looking for useful benchmarking tools then refer to the Kreston Academies Benchmark Report which is available here: http://www.bishopflemingacademyaccountants.co.uk/wp-content/uploads/2017/01/Bishop-Fleming-Academies-Benchmark-Report-2017.pdf.

However, if you want to benchmark against other Trusts within your local authority then there is a useful tool available here: https://schools-financial-benchmarking.service.gov.uk/BenchmarkCharts.

If you have any questions on benchmarking then please speak to your usual Bishop Fleming representative.