The ESFA launched the Better financial reporting programme in 2019, with a view to getting more consistent and accurate information from academy trusts and with a longer-term intention of automating much of the financial reporting.
By Ed Passmore
Under the programme information is submitted directly from the financial management software to the ESFA. Currently using the DfE’s standardised Chart of Accounts (CoA) enables the Accounts Return and draft financial statements to be prepared using the DfEs automated products, which should speed up the process and increase accuracy.
Within the CoA there are approximately 1,700 codes, which should cover all the various reporting requirements – although it should be noted that not all codes need to be used. The adoption of the standard chart of accounts is voluntary, but where trusts are considering a change in financial management software, we do recommend considering its use.
There are currently various ways in which it can be used. This CoA is being adopted by software providers, and so trusts could have the CoA built directly into their accounting software. Alternatively existing charts of accounts could be mapped across, which some software providers are enabling, which would mean inputting the information using existing structures and having the software convert it to a usable format – this is unlikely to have the required level of detail to enjoy all of the benefits however.
Once the chart of accounts is established it should also cut the costs of switching between financial management suppliers, as compliant software packages will not need to be tailored to meet the requirements of the school. Over time a generic level of knowledge will be built up by school finance staff and auditors across the sector. Benchmarking between schools should also become more relevant.
In order to get started with the chart of accounts, there will be financial costs as the information within the financial management software will need to be mapped across and imported into to the new CoA. Time will also need to be spent training finance staff as the information that can be extracted from the system is only as good as the information that is entered into it, and it is likely that information will need to be input on a more granular level.
For those interested in exploring this further, the ESFA hold webinars and dial in sessions, or contact one of our academy trust specialists.
See our Academy Trust page to find out about our specialist services for academies, and download our latest academies publications.