Academies Accounts Direction 2025/26: A summary

The Department for Education (DfE) has published the Academies Accounts Direction (AAD) for 2025/26. As with the last couple of years, the changes are fairly minimal and should not cause significant issues for academy trust and auditors.

There is some updated and refreshed guidance for auditors in the auditing framework, but this is unlikely to materially change the overall approach to audit and regularity reporting.

It is nevertheless a good opportunity for CFOs and finance teams to refresh their understanding of the key requirements.

Summary of key changes

1. Trustees’ report and governance statement

The trade union facility time section is no longer required in all trustees’ reports, and there is some updated text in respect of streamlined energy and carbon reporting for those larger trusts that are required to include this section. Trusts should ensure that these changes are reflected when preparing the written sections of the financial statements.

There is also a suggestion that the forthcoming changes to accounting standards and the new Charities SORP (impacting the 2026/27 financial statements) should be referenced in the trustees’ report. This is explored further below.

2. Payroll-related disclosures

The AAD includes some clarifications and updated definitions in respect of certain disclosures relating to employees and payroll:

Restructuring costs

The Direction now clarifies that payments in lieu of notice must be included in the restructuring costs figure (along with redundancy and severance payments) within the staff costs note –

not within the general gross pay figure. Trusts will need to ensure that such payments are included appropriately in the disclosure and provide the appropriate supporting information to their auditor.

Higher-paid staff (£60k+)

Clarification has been added for part time staff or staff who worked only part of the year.

Narrative is now required where the pro-rata basis for those staff would mean their remuneration was greater than £60,000. The Coketown model accounts provide an example of what this narrative may look like. Trusts should ensure that this information is provided to auditors and those preparing the financial statements.

Key management personnel (KMP)

The definition of KMP has been updated as: “those persons having authority and responsibility for planning, directing and controlling the activities of the academy trust, directly or indirectly”. There are disclosure requirements where KMP remuneration has been accrued and paid across different accounting years, with a specific explanation to be made in respect of the accounting officer. Trusts should ensure the updated definition is applied when collating information for the financial statements.

3. Related-party transactions where the principal/CEO is a trustee

The AAD wording has been updated for consistency with the Academy Trust Handbook. It clarifies that remuneration disclosure is not required where the CEO is not also a trustee –

a scenario becoming increasingly common. Trusts should ensure that the disclosure of trustees’ remuneration is compliant with the current requirements.

4. Church academies – expenditure on land and buildings

The narrative in the AAD has been updated to make it clearer, although this is unlikely to result in any changes to accounting practice or policy within church academies. We recommend that church academies review their accounting policies and current practice to ensure that they remain compliant with the Direction.

5. Definitions of regularity and propriety

There is a slightly expanded definition of regularity and propriety to tie in with an updated edition of “Managing Public Money”. These are unlikely to have a major impact in practice, as academy trusts follow the requirements of the Academy Trust Handbook, which already links to government policies and documents.

6. Additional updates to Coketown model accounts

All of the above changes have been recognised in the updated model accounts where appropriate, with some additional guidance also provided.

In addition, there have been some other minor changes:

1. Governance statement updated for trusts with revenue over £50 million in respect of the delivery of internal scrutiny/internal audit
2. Relocation of the note on special payments, write offs and specific land and buildings transactions (these are already required)
3. Some accounting policy wording has been provided for any academy trusts that have finance leases

As usual, all changes are highlighted in yellow in the Coketown accounts, so trusts should easily be able to confirm that their financial statements meet all of the updated requirements.

Upcoming changes: Accounting standards & the new Charities SORP

There is a helpful annex in the AAD summarising the changes from 1 September 2026, with the most significant impacts expected in leases and revenue recognition.

Trusts should:

• Review Annex B and the linked guidance
• Ensure all relevant staff are aware of the upcoming changes
• Assess the potential impact on management accounts, year end reporting and the 2027 audit

We’re here to help

We can support with reviewing your initial assessment of the potential impact on the management accounts, year-end financial statements and the 2027 audit - while maintaining full independence. To discuss, please get in touch with your usual Azets adviser or contact us via the form below.