CIF Condition Improvement Funds.

Overview

The Condition Improvement Fund (CIF) is a capital grant provided by the Department for Education (DfE) to academies for essential building maintenance, structural repairs, and expansion projects. As the funding is for capital purposes, it is classified as a restricted fixed asset fund under the Charities SORP and FRS 102.

Income Recognition Policy

CIF funding is recognised on an accruals basis, not on a cash. Although the DfE approves CIF allocations in advance, funds are only released upon submission of evidence of capital expenditure. As such, income is recognised only when the following conditions are met:

• Entitlement: The academy has received approval from the DfE for a specific capital project.
• Probability: It is probable that the funding will be received based on the DfE’s approval and the progress of the project.
• Measurability: The amount of income can be reliably measured based on incurred and certified expenditure.

This ensures that the CIF income is matched to the periods in which the related capital costs are incurred.

Example

Scenario 1 – Ongoing Project with Quarterly Claims

An academy is constructing a new classroom block over 18 months, with CIF funding approved at £1.2 million. The project is delivered by a third-party contractor, and expenditure is claimed quarterly, subject to DfE verification.

Year 1 (e.g. 2024–25):

• Capital expenditure to date: £500,000
• Claim submitted and approved by DfE: £500,000

Dr Accrued Income / DfE Receivable                    £500,000
   Cr Restricted Fixed Asset Fund (Capital Grant Income)   £500,000

Dr Bank                                               £500,000
   Cr Accrued Income / DfE Receivable                      £500,000

Dr Tangible Fixed Assets – Assets under Construction  £500,000
   Cr Bank (or Creditors)                                 £500,000
    

Scenario 2 – Project Cancelled After Partial Work

• Approved: £1.2 million
• Work completed before cancellation: £200,000
• No further claims allowed
• DfE reimburses £200,000

To recognise income up to amount allowed by DfE:

Dr Accrued Income / DfE Receivable                    £200,000
Cr Restricted Fixed Asset Fund (Capital Grant Income) £200,000
    

When reimbursement is received:

Dr Bank                                               £200,000
Cr Accrued Income / DfE Receivable                    £200,000
    

Capitalise actual expenditure:

Dr Tangible Fixed Assets – Assets under Construction  £200,000
Cr Bank (or Creditors)                               £200,000
    

If the asset is not usable due to cancellation (i.e. project abandoned), it may need to be impaired:

Dr Impairment Loss (I&E)                           £200,000
Cr Tangible Fixed Assets – Assets under Construction  £200,000
    

Scenario 3 – Work Done, but Claim Not Yet Submitted

• Work completed: £300,000
• Claim not yet submitted to DfE

Based on policy, income and receivable will only be recognised upon submission and acceptance of the claim from DfE.

No income recognised until expenditure is certified by DfE. Capitalisation may occur if liability is incurred (e.g. invoice received).

Dr Tangible Fixed Assets – Assets under Construction  £300,000
Cr Creditors / Bank                                  £300,000