Allocation of pension deficits to restricted funds - amendments to the Accounts Direction

This morning the YPLA issued the following note confirming a change in the treatment of pension deficits from that shown in the Accounts Direction 2010/11 which was issued by the YPLA on 31 August 2011. In line with the treatment already adopted by many academies, the YPLA guidance has been amended to state that any surplus/deficit on local government pension funds should be recognised against restricted funds.

"Further to our meeting on the 21st [a meeting between the YPLA and a number of academy auditors hosted by Buzzacott] where many of you queried the treatment of pension surplus/deficits I am pleased to be able to tell you that DfE have agreed to amend their policy and I would appreciate it if you would assist in communicating the following message to academies. I have also arranged for a message to be posted on the FD forum and an addendum the Accounts Direction will be issued along with the AAR.

Since the issue of the 2010 /11 Accounts Direction, we have received several queries regarding the recognition of local government pension surplus/deficits against unrestricted funds. We have consulted further with the DFE and the outcome of these discussions is to confirm that any surplus/deficit on local government pension funds should be recognised against restricted funds in order to match it against GAG.

This is the default position and how the YPLA and DFE expects 2010/11 financial statements to be prepared. However, if an Academy Trust and/or its auditors believe that it is more appropriate, for any reason, to recognise the surplus / deficit against unrestricted funds then they ought to do that, but will then need to disclose in their financial statements the rationale behind the decision."

If you have any queries please do contact your usual Buzzacott contact or e-mail: enquiries@buzzacott.co.uk