I'm a big fan of systems, procedures and standardisation

9 Jul 2019 | by Stephen Mitchell

I’ve found myself over the last couple of months in a really conflicted place. You may have seen that the ESFA have released a standardised Chart of Accounts (CoA) for an implementation (voluntarily) this September. I may have missed previous announcements about this, but it was the first I had heard about it when the ESFA bulletin dropped into my inbox.

Those of you that know me will understand that I am a big fan of systems, procedures and standardisation. It can give us roadmaps to drive up quality, efficiency and allow focus where we want it to be - on improving education for our children.

So, why then am I conflicted? 

The concept
I appreciate the concept of a standard CoA. The Department must have a heck of a job consolidating and trying to add meaning to the thousands of submissions they get every reporting cycle. It’s bad value for money and needs addressing.

Getting all academies into a standard CoA would make understanding the sector that much easier and takes away the inconsistencies and disputes about where to code certain transactions.

Implementation plan
I know this is a voluntary implementation from September. As autonomous entities, I’m not sure the Department could force a CoA, even if they wanted to anyway. But September is really early for all of the thinking that needs to go into such a process. I’ve just been through a complete remapping of our CoA for a new finance software that we’ve moved to. It was hell. And took months of planning. We managed to map all our previous transactions - going back to 2012, across what was then 14 academies. We wanted to bring our historical data for comparative and review purposes. Mapping one code structure to another is never going to give complete accuracy on transfer unless you get down to transactional level, which is just impossible to do. Therefore, whilst we have useful historical data, it’s not perfect. A transition to a standard CoA risks losing an awful lot of intelligence in the process.

There’s a carrot being dangled for early adoption - being able to submit automatic reports for AAR, BFRO information etc. This is great, but we need to be careful to get the migration right in the first place. I worry for small Trusts, and those without much resource, at being able to pull this off in time. I know we can’t, and we won’t be doing this for September 19. Maybe September 2020.

Operational challenges
The guidance that has been issued is that cost centres should be used for internal management purposes. This makes sense on a macro level but opens a real can of worms for individual academies to implement. Just taking our own example, we have set our finance system up to work through using cost centres for the automated workflow processes, and some global dimensions for academy reference codes etc. If we were to implement this standard CoA, then we would need to fundamentally rethink our implementation of our cost centres.

Where does this end up?

There is the stated intention that academies can end up with automatic reporting to the Department for returns. As I’ve said above, this is a good thing. I have some concerns though about where this can end up – does it open a route to granular reporting?  Will they be able to suck out transactional information?  Will Department systems get information in real time rather than us sending it through? How does that all sit with the autonomy of academies?

The growing dialogue between ESFA and the sector is to be welcomed, but we can and should be doing more. There is a working group for Financial Reporting drawing opinions and feedback from a cross sector of schools and academies. Since kicking up a bit of a flurry about the CoA there have been some useful conversations about this, and I would welcome any comments that you would want to make. I can be reached on Twitter @ImSteveMitchell. I’ll make sure all comments are passed on. This is an opportunity to really input into policy development. Let’s make it work.

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