What’s the difference between a school and an academy?

It's all in the way the educational establishment is set up. A school is administered by local government, whereas an academy is directly under the control of central government. Both are publicly funded, but the way in which they receive and manage their funds are very different.

An academy is registered as both a charity and a limited company. While the academy is not filed as a charity with the Charity Commission, they do have to be registered with Companies House and, therefore, have to submit their accounts annually.

There are separate guidelines for an academy - and, although they're similar to a charity, they're not the same.

There are two key documents that are updated annually through the Education and Skills Funding Agency (EFSA)

• The handbook outlining how the academy must be run
• The accounts direction detailing how the accounts are to be produced

Because an academy is independent, they have control of their own finances and run more like a business.

That means that academies have to operate more along the lines of a large charity and that means that an audit must take place annually to ensure funds are being used appropriately. As all academies operate with a year end of 31^st August and a filing deadline of 31^st December - any audits must take place during the autumn term.

Unlike most SMEs academies have a board of governors made up of the head teacher, some of the teaching staff, some parents and various local independent individuals. This board must meet regularly and have a robust internal control system in place. When you consider that, even smaller academies usually have a payroll that runs into millions, with multi-academy trusts can run into tens of millions, that's just good business sense.

Multi-academy trusts are increasing with some running as many as 50 academies. This has advantages as they can centralise knowledge, staff, and resources. At this level the CEO and CFO are more likely to be professional managers, rather than teachers.

This means that, although academies must follow the rules, they can run more efficiently and have the freedom to spend any surpluses on improvements to buildings and equipment. This means that the finance staff need to have decent financial qualifications to ensure the huge set of accounts is accurate.

Academies are exempt from Corporation Tax. However, they are VAT registered, but zero rated for anything to do with the supply of education. They do charge VAT on hire of premises to clubs and other organisations and on anything else non educational.

The final accounts is a document bigger than even some PLCs will produce, with detailed information that presents a clear picture for anyone to read.

It's all about transparency. Academies have more interested parties than most entities - parents, teachers, government, local officials who want to know what the money is spent on and how funds are being managed. 

Accounts are filed at Companies House by the 31st December, and must appear on the academy's website.

Carrying out an audit for an academy is very different to auditing a business - and that's why autumn is when some of our team literally 'go back to school'!