Accounting changes
Understanding The Changes Happening in Accounting Practices for Schools
Make sure that you understand the impact that the adoption of IFRS 16 will have on schools.
What is happening surrounding accounting practices?
Welcome to our latest update on accounting practices for UK state-funded schools, building upon our previous blog from 2022 titled "How will IFRS 16 affect Finance Leases in schools". Here at CHG-MERIDIAN, we strive to provide our clients and partners with clear and accurate information. Recently, there has been confusion surrounding changes in accounting requirements, particularly regarding the consent for schools to borrow for specific equipment. In this blog, we aim to dispel any misconceptions and offer clarity on these vital matters.
Why are the changes happening?
Let's begin by examining the background of the issue, focusing on the adoption of the International Financial Reporting Standard 16 (IFRS 16). This standard has been gradually implemented worldwide to enhance consistency and transparency in financial reporting. Contrary to rumours, the changes were not a sudden decision to relax controls; rather, they are part of a global transition to IFRS 16, which eliminates the previous distinction between Finance Leases and Operating Leases. Now, all leases must be presented on the Balance Sheet as Finance Leases.
When will these changes take place?
Regarding the implementation timeline, while initially scheduled for introduction in 2022, the pandemic necessitated a two-year delay. Consequently, IFRS 16 came into effect from April 1st, 2024, for Local Authority maintained schools and will come into effect from September 1st, 2024, for Academies.
How do these changes differ between school types?
As we adapt to these changes, it's essential to consider several key factors. Different school types follow different accounting standards until the full transition to IFRS 16, with Academies following FRS102 Accounting principles until September 1st.
Additionally, while there haven't been specific directives from the Department for Education (DfE) or Education and Skills Funding Agency (ESFA) regarding procurement process amendments, schools must continue to prioritise obtaining Best Value for Money.
Why is this important?
Ensuring compliance with financial standards, such as the School Financial Value Standard (SFVS), is paramount. Our previous blog in 2022 addressed misconceptions and emphasised the importance of accurate information. Our commitment to upholding these standards remains unwavering.
Looking ahead following IFRS 16 adoption
Looking ahead, clarity is needed from the DfE and ESFA regarding the treatment of identifying Best Value for Money for leases in upcoming financial years. It's crucial to understand that these changes are a direct result of IFRS 16 adoption, not an opportunity to bypass financial standards.
Conclusion
In conclusion, at CHG-MERIDIAN, we are dedicated to providing transparent and compliant leasing solutions that align with evolving regulatory requirements. For further guidance and updates on accounting standards and compliance, we encourage you to visit official government websites. Remember, we are here to support you every step of the way as we navigate these changes together. Stay informed, stay empowered, and count on the CHG-MERIDIAN Education Team for assistance. For more information, please refer to the following official government websites:
For more information, we have highlighted a few articles that you can read via the links below:
Leasing Guidance for Academy Trusts
Contact Us
If you have any questions on how these changes are going to affect you, get in touch with the Education Team via education@chg-meridian.com or contact us directly.
Martyn Maskell
Business Development Manager - Education Team
- CHG-MERIDIAN UK Limited
- 65 High Street,
- Egham Surrey TW20 9EY
-
- +44 7738 124 383
- martyn.maskell@chg-meridian.com
Hannah Hulm
Business Development Manager – Education Team
- CHG-MERIDIAN UK Limited
- 65 High Street,
- Egham, Surrey TW20 9EY
-
- +44 7876 883117
- hannah.hulm@chg-meridian.com
Kim Plumb
Business Development Manager - Education Team
- CHG-MERIDIAN UK Limited
- 65 High Street,
- Egham, Surrey TW20 9EY
-
- +44 7966782948
- kim.plumb@chg-meridian.com