Academies and VAT

The tangled web of VAT issues surrounding academy status schools has been effectively tackled by Randall and Payne with the publishing of their 'Academies VAT Guidance' booklet.

This addresses wide ranging areas and activities within academies in which VAT may or may not apply.

They include:

Randall & Payne, UK200Group Academy Forum member

To obtain full details of the above click here

Valuation of Land and Building

One of the major accounting issues arising for a converter academy is the valuation of land and buildings. Usually, land and buildings are leased by the academy, commonly on a 125 year term, for a nil or peppercorn rent. Consideration needs to be given as to whether the risks and rewards of ownership have substantially transferred to the academy. Where this is the case, as you would normally expect, the asset should be recognised on the balance sheet as a fixed asset, with a corresponding enry to voluntary income as a gift in kind. It is then necessary to determine an appropriate value for the asset.

David Robertson partner in Anderson Barrowcliff LLP member of the UK200Group Academy Forum

For full breakdown on this click here

The accounting treatment of the Local Government Pension Scheme deficit

Since the publication of the YPLA's 'Academies: Accounts Direction 2010/11', which included the Coketown Academy financial statements, there has been much debate as to whether the treatment of Local Government Pension Scheme deficit/surplus as a restricted fund was correct. After some deliberation and referral to the Department for Education, the YPLA recently issued the following statement:

"Since the issue of the 2010 /11 Accounts Direction, we have received several queries regarding the recognition of local government pension surplus/deficits against unrestricted funds. We have consulted further with the DfE and the outcome of these discussions is to confirm that any surplus/deficit on local government pension funds should be recognised against restricted funds in order to match it against GAG.

This is the default position and how the YPLA and DFE expects 2010/11 financial statements to be prepared. However, if an Academy Trust and/or its auditors believe that it is more appropriate, for any reason, to recognise the surplus / deficit against unrestricted funds then they ought to do that, but will then need to disclose in their financial statements the rationale behind the decision."

An addendum to the 'Academies: Accounts Direction 2010/11' should be issued shortly.

Paul Bartlett, partner in Price Bailey LLP member of UK200Group Academy Forum