The growing number of free schools and academies are turning to valuers and surveyors for professional advice, it was claimed today.
Birmingham-based CPBigwood has won a number of instructions as new educational establishments call in the professionals to meet their property needs.
Richard Stowe, a director in the firm’s valuation department, said: “The expansion of academies and free schools is significant.
“But it is critical that they are business-like operations from the start and run as such. That means one of the important factors they must adderess is their land and buildings and how they are accounted for on the financial books.
“In this regard the challenges are not really any different from other sectors – manufacturing, retail, leisure or whatever. It is just that these schools are effectively starting from scratch and hence it is critical to get the figures correct from the outset as a base position. Otherwise things could start going badly wrong.
“Valuations are required and surveyors and valuers are the professionals ideally placed to provide that service.”
Academies were begun under the previous Labour government and continued and greatly extended by the Coalition.
There are now more than 1,000 academies across the country with more being approved all the time.
In addition 24 new free schools have sprung up in England in the last 15 months – driven by individuals and groups inspired by the Government’s invitation to set up their own schools. Faith groups, parents and teachers are among those seeing their bids become a reality.
Academies and free schools have a similar ethos – publicly funded and independent; benefiting from greater freedoms to innovate and raise standards; operating outside local authority control; having the ability to set their own pay and conditions for staff; greater flexibility as to the delivery of the curriculum; and the ability to change the length of terms and school days.
However, they are required to value their tangible fixed assets, such as land and buildings. Then they must carry those assets forward in future financial statements detailing their current value.
The current value has to be in accordance with the Accounting Standards Board’s Financial Reporting Standard (FRS) 15.
Mr Stowe said: “This can sound somewhat technical to the layman but these schools are in effect small and medium sized businesses and they need to act accordingly.
“If they are to draw up proper accounts then they must have a grasp of the fundamentals including the value of their land and buildings. Land and buildings do not last for ever and have to be maintained and ultimately replaced or refurbished. And their associated costs will be an important consideration when economic performance figures, basically profit and losses, are calculated each year.”
Typically, valuations will utilise the Depreciated Replacement Cost approach to establish market value.
Mr Stowe went on: “DRC is based on the economic theory of substitution and is defined as the current cost of replacing an asset with its modern equivalent less deductions for physical deterioration and all relevant forms of obsolescence and optimisation.
“DRC is used where there is no active market for the asset being valued – that is, where there is no useful or relevant evidence of recent sales transactions due to the specialised nature of the asset.
“As a method of valuation DRC is well established although its adaptation for this particular purpose, educational establishments, is a developing one and where CPBigwood are experienced in the field having received a number of instructions regarding such matters.
“Many of those running these new faith schools and academies are extremely go-ahead and know exactly what they want to achieve. It is a great privilege to help them, providing the property advice they need. It is just one element, but an important one, in terms of them getting to where they want to be and seeing children achieve, gain qualifications, reach their potential and go out into the world as well-rounded individuals who are an asset to society.
“With government backing and wide enthusiasm for faith schools and academies from across the public spectrum they are clearly here to stay and keen to make their mark. And CPBigwood is determined to play its part in making sure that happens.”