Academies Accounts Direction 2024 to 2025

The Academy Accounts Direction (AAD) 2024-25 will apply to accounting periods ending on 31 August 2025 and was published on 26 March 2025 in line with last year’s timeline and as planned by the Department for Education (DfE). The AAD is used by academy trusts, their auditors and reporting accountants to prepare and audit financial statements for the accounting period ending on 31 August and is updated annually.

As in recent years, the Accounts Direction is split into three documents:

• Academies Accounts Direction;
• Model Accounts; and
• Framework and Guide for External Auditors and Reporting Accountants of Academy Trusts.

Updates to the AAD and Model Accounts

Changes to the AAD and Model Accounts have been kept to a minimum, with few surprises. The main changes are:

Disclosure updates – AAD

• Under the 2024 Academy Trust Handbook, changes were introduced reflecting the freedom for trusts to take out certain finance leases that appear on the DfE approved list. Model disclosures have been included for the notes to the financial statements, to assist those trusts that may have entered into such leases.

Disclosure updates – Model Accounts

• There is updated wording in the following key statements:
  • The Accounting Officer’s Statement of regularity, propriety and compliance;
  • The Independent Auditor’s report on the financial statements;
  • The Independent Reporting Accountant’s report on regularity.
• The Pensions Note narrative has been updated to reflect the implementation date for the next Teachers’ Pension Scheme valuation.
• Wording has been updated throughout the model document to reflect the transfer of the Education and Skills Funding Agency (ESFA) functions to the DfE. It should be noted however that references to ‘ESFA income’ will still remain within the 2025 accounts, given that income from September 2024 to March 2025 was still received from the ESFA.
• The recent updates to the Accounting Officer’s Statement of regularity, propriety, and compliance have shifted the focus from specifically addressing ‘funding non-compliance’ to a broader scope of ‘non-compliance’.

Additional reminders within the guidance for larger trusts

• There is a requirement for the inclusion of a non-financial and sustainability information statement within those with the Strategic Report for large trusts (over £500k income and 500 employees).
• There needs to be specific reference to the Academy Trust Handbook 2024 requirement on how trusts with an annual revenue income over £50 million deliver internal scrutiny.

Framework update – Regularity tests

The framework (aimed at external auditors and reporting accountants) has received a more significant update this year, largely to make the DfE’s expectations clearer and more focused, and to reflect the transfer of ESFA functions to the DfE.

A notable addition has been made to the guidance list of regularity tests – a new section has been added, entitled ‘Fraud and cyber ransoms’, checking that trusts are aware of the risk of cybercrime, have put in place proportionate controls, and take appropriate action where a cyber security incident has occurred. Trusts must obtain permission from the ESFA to pay any cyber ransom demands and should take appropriate action to meet the DfE’s ‘Cyber security standards for schools’, which was most recently updated on 10 March 2025.

With the DfE’s release of the ‘Good practice guidance for colleges and academy trusts on novel, contentious and repercussive transactions’ on the same date of release of the new AAD documents, it seems the DfE have kept changes to the academy trust accounts minimal this year and focused more on updating guidance on their expectations of the wider regularity engagement.

The guidance can be found on the GOV.UK website and please get in touch if you would like to discuss in more detail.