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Anonymous
#1 Posted : 20/10/2017
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Joined: 3/2/2018(UTC)
Posts: 868

How have organisations been treating the apprenticeship levy in the CIPFA standard subjective analysis? I am leaning towards treating it as an indirect employee expense, but none of the sub-groups listed seem to be applicable?
Anonymous
#2 Posted : 20/10/2017
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Joined: 3/2/2018(UTC)
Posts: 868

I''m inclined to think it''s a direct employee expense.
So far we have been paying it, without any choice about whether we want to or not, but because government dictate we must, and not deriving any benefit from it.

At some point we may receive training as a result, but that''s only if we choose to use it, and then it''s effectively a government subsidy towards training (but not material enough to create transactions on our ledger for).
Anonymous
#3 Posted : 20/10/2017
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Joined: 3/2/2018(UTC)
Posts: 868

I''m hoping CIPFA provides some guidance on this (e.g. do we treat any unused levy as an asset / prepayment at year end) in the forthcoming guidance notes for 17/18.
schandler
#4 Posted : 20/10/2017
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Joined: 2/24/2018(UTC)
Posts: 7
Organisation: East Riding of Yorkshire Council

We have treated it as a direct employee expense (an additional on-cost) in the absence of any guidance, and the payroll system has been configured to calculate the levy and cost out to services (and schools).
I expect guidance will be provided by CIPFA on the above and also on the treatment of any unused funds left in the digital account at 31 March.
Anonymous
#5 Posted : 30/10/2017
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Joined: 3/2/2018(UTC)
Posts: 868

Thank you for the feedback. Prior to the posts we reviewed this again and were coming round to treating it as a direct employee expense, regarding it as similar to a national insurance contribution.
Mr James Land
#6 Posted : 02/11/2017
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Joined: 2/24/2018(UTC)
Posts: 1
Organisation: Bristol City Council

@Stephen Chandler - can I ask which Payroll system you use?
MJILES
#7 Posted : 03/11/2017
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Joined: 2/24/2018(UTC)
Posts: 3

We''re treating it currently as a prepayment, and releasing into the I&E on a normal staff training subjective to the extent that the levy is actually used for staff training (i.e. actually invoices paid via the government system). We''ll probably also have a set up an earmarked reserve to account for the lag between payment and use, and also estimate a write-off for likely unused levy. We''ve chosen to post it corporately, rather than into divisions. The 10% additional government contribution is even more complex, but we may well conclude we''ll never utilise it and so not recognise it.
schandler
#8 Posted : 06/11/2017
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Joined: 2/24/2018(UTC)
Posts: 7
Organisation: East Riding of Yorkshire Council

@James Land

We use iTrent (Midland HR)
Vbamm
#9 Posted : 07/11/2017
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Joined: 2/24/2018(UTC)
Posts: 5

Hello @stephenchandler
We also use ITrent but were advised that it couldnt split out the Levy to cost centre level so we have been manually distributing it from a control account via journal, could you advise if you were able to programe ITrent yourselves or if you had to use a consultant to facilitate this automatic posting from the payroll system each month? I would be very grateful for any information, my email address is victoria.bamber@rugby.gov.uk
mr stephen coker
#10 Posted : 23/11/2017
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Joined: 2/24/2018(UTC)
Posts: 3
Organisation: Plymouth City Council

We distribute the cost out to departments and are not planning on prepaying any balance left at year end. We are unlikely to use all of the funding available so prepaying would store up a problem for future years if we continue not to use the annual fund available. We were not able to get iTrent to do the allocation.
JenniCarter
#11 Posted : 13/04/2018
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Joined: 2/24/2018(UTC)
Posts: 1
Organisation: Test Valley Borough Council

I have read the CIPFA guidance in the year end bulletin regarding accounting for the apprenticeship levy but I am still a little unsure.

We have treated the payment of the levy as a direct employee expense (DR expense, CR cash), but have not made any accounting entries for the top up received in the digital account or the amounts paid to training providers from the digital account. The amounts are small, but I wondered if anyone has worked out how we are meant to be accounting for these?
MW
#12 Posted : 16/04/2018
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Joined: 2/24/2018(UTC)
Posts: 60

I think we are supposed to recognise the training costs per the digital account as expenditure with a matching grant income. This seems to be what the govt financial reporting manual has set out for other public sector areas & I think we are supposed to be doing same thing, extract from the reporting manual below:

• 8.4.1 The government introduced the Apprenticeship Levy from 1 April 2017. Payment of the levy is considered a form of taxation for ONS purposes, and entities should therefore account for the payment of the levy as a tax expense as part of staff costs.
• 8.4.2 Income received in an entity’s Digital Apprenticeship Service (DAS) account is considered to be a government grant for accounting purposes as resources (the training services) are transferred to the entity in return for compliance with certain conditions (providing approved training to its employees). Such assistance should be recognised as grant income at the same point in time that an associated expense for training services is recognised, as per IAS 20

Our amounts are very small compared with the amount of the levy.
ayeshakhan
#13 Posted : 17/04/2018
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Joined: 4/17/2018(UTC)
Posts: 4

Thanks: 1 times
Originally Posted by: Anonymous Go to Quoted Post
I''m inclined to think it''s a direct employee expense.
So far we have been paying it, without any choice about whether we want to or not, but because government dictate we must, and not deriving any benefit from it.

At some point we may receive training as a result, but that''s only if we choose to use it, and then it''s effectively a government subsidy towards training (but not material enough to create transactions on our ledger for).


Looking at the situation, I think it is a direct employee expense.
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