Regulatory issues for starting an Academy School

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Regulatory Issues for Starting an Academy School

Academy schools were introduced over a decade ago in order to raise standards for disadvantaged pupils where existing schools were failing. Recent research by the Sutton Trust education think-tank shows that the best Academy Schools outperform other state-funded schools so it is likely that they will continue to a popular model for establishing schools.

Academy Trusts, the bodies under which Academy Schools are established, can be started in a number of ways including conversion of state schools, conversion of foundation or voluntary schools, or by local individuals or organisations starting new schools under the Department for Education’s Free Schools programme.

Whatever the basis for starting an Academy School, there are various legal and regulatory requirements that apply which are unique to these bodies. Any individuals or organisations creating or running an Academy School should be aware of these requirements and keep abreast of any changes to them.

The Basic Legal Framework for Academy Schools

Major changes were made to the way Academy Schools were regulated by the Academies Act which was passed on 27 July 2010.

All Academy Trusts are now automatically exempt charities. They are also classified as independent charitable companies. They are thus regulated both by the Companies Act 2006 and the Charities Act 2011. Their unique status means that they are responsible for their own financial management but must meet public standards of accountability.

Unlike other charities and normal state schools that are regulated by the Charity Commission and local authorities respectively, Academy Schools are not regulated by either. They are approved, regulated and funded directly by the Department for Education rather than local authorities.

Managing the Finances of Academy Schools

One of the main governance issues for those establishing Academy Schools relates to the management of their finances. In understanding what these entail, it is worth noting that the specific requirements have changed over time and are likely to continue to do so.

The financial activities of Academy Schools are overseen by the Education Funding Agency which aims to balance their accountability with minimising the administrative burden placed upon them. General financial guidance for academies is contained in the Academies Financial Handbook.

Upon opening, Academies must meet a checklist of requirements called the Financial Management Governance Self-Assessment (FMGS). Once operating, Academies must then comply with the Academies Accounts Direction which helps them with the preparation of audited financial statements and annual reports. The Academies Accounts Direction is based upon the Charities Statement of Recommended Practice (Charities SORP).


We provide specialist advice regarding the conversion to and the setting up of Academy Schools; for more information contact Alex Bottom