UHY’s 2016 academies benchmarking report...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

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 tobenchmark your academy against others, and throughout the report we provide commentary on topical issues.

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1. FOREWORD FROM UHY’S ACADEMIES CHAIR

Allan HickieChair 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.

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2. STAFF COSTS, NUMBERS AND TEACHING STAFF TO PUPIL RATIOSStaff 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.


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:

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• 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.


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.


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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

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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


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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.

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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.


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 LIABILITIESAcademies 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.


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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%!


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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.


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

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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.


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.


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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.


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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.


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.

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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

Inco

me

per

pupi

l (£)

Recurring Income per pupil (£)

Q1

Median

Q3


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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.


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.


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 EXPENDITUREGenerally, 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.


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

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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.


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 BALANCESThe 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.


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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 held2014/15

< £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.


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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

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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.


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


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?

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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!


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.

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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.


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


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.


-

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


Each bubble represents one academy

38%48%

43%

62%52% 57%

0%

20%

40%

60%

80%

100%

2014/2015 2013/2014 2012/2013per DfE

% of schools

No suchtransactions

Related partytransactionsdisclosed

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?


1

7

30

0

5

10

15

20

25

30

35

40

Quartile 1 Average Quartile 3

£000

s

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!


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 dataNumber 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

IncomeTotal 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

ExpenditureTotal 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


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 sheetFixed 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


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


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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.


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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.


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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 YOUNGWe 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


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YOUR LOCAL UHY ACADEMY SPECIALISTSIf 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 groupwww.uhy-uk.com/academy-schools


Birmingham

Malcolm WinstonAcademies partnert: 0121 233 4799 e: [email protected]

London

Colin WrightAcademies partnert: 020 7216 4600 e: [email protected]

Sheffield

Roland GivansAcademies partnert: 0114 262 9280 e: [email protected]

Brighton

Chris Kyffin-WaltonAcademies partnert: 01273 726 445 e: [email protected] Manchester

Mark RobertsonAcademies partnert: 0161 236 6936 e: [email protected]

Sunderland

Paul NewboldAcademies partnert: 0191 567 8611 e: [email protected]

Chester

Alex MakinsonAcademies partnert: 01244 320 532e: [email protected]

Nottingham

Jon WarsopAcademies partnert: 0115 959 0900 e: [email protected]

York

Hayden PriestAcademies partnert: 01904 557 570 e: [email protected]

Sittingbourne

Allan HickieNational academy group Chairt: 01795 475 363e: [email protected]

Letchworth

James PriceAcademies partnert: 01462 687 333 e: [email protected]

Royston

Scott RouseAcademies associatet: 01763 247 321 e: [email protected]

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

Documents

UHY’s 2016 academies benchmarking report...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