Have you got your Academies Financial Handbook?

With the current school year coming to an end, albeit a short one, the Government have recently released the Academies Financial Handbook for the school year 2020-2021. Effective from 1^st September 2020, the handbook provides updates and aims to provide clarity on questions from the 2019 version. It’s readily available on the GOV.UK website, but we’ve summarised the key points below; 

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What’s changed?

Governance

• Further information on the trustees’ responsibility to maintain the trust as a going concern.
• Confirmation that members must not be employees or occupy unpaid staff roles.
• Members must remain informed about trust business.
• Trusts must appoint a clerk to the board.
• Clarification that trusts must keep their register of interests up to date.

General Controls and Transparency

Updated clarifications on the following;

• Maintenance of a fixed asset register.
• Termly review of pupil number projections.
• Use of integrated curriculum and financial planning.
• Avoidance of overdrafts.
• Publication of information about high pay.
• Confirmation that the trust’s funds must not be used to purchase the likes of Alcohol.
• The board and committee responsibilities for risk management.
• Completion of the school resource management self-assessment tool.

Internal Scrutiny

• Updated text including clarification that internal scrutiny covers both financial and non-financial controls.
• Removal of the option for internal audit to be performed by the external auditor.
• Confirmation that trusts can use additional individuals or organisations to support internal scrutiny where specialist non-financial knowledge is required.

Annual Accounts

• More information on the audit and risk committee’s role in relation to the external audit.

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Our View

The annual update to the Academies Financial Handbook is keenly awaited in the sector to understand the latest focus and emphasis of the ESFA. The updates seen this year follow recent trends of clarifying points of ambiguity from earlier Handbooks, whilst pushing forward with an ever more stringent and robust framework for trusts to adhere to.

The backdrop to this is a steady stream of financial failures in the sector that can be linked back to poor governance, poor financial controls, or a combination of both. Particular emphasis is placed in this year’s Handbook on the importance of the system of Internal Scrutiny, along with the role of the external auditor and the effectiveness of the working relationship between these two distinct areas and the Audit and Finance Committee.