Existing or potential trustees and finance operatives for academy schools should take note of the hefty assurance requirements that they are responsible for.
Academy schools are subject to special regulations related to financial assurance and reporting due to their status as both independent charitable companies and central government public sector bodies.
Under sections 12(1) and 12(4) of the Academies Act, effective August 2011, academy schools are exempt charities and do not have to register with the Charity Commission. The Department for Education (DfE) regulates academy schools whilst the Education Funding Agency (EFA) is charged with ensuring compliance and working with academy schools to maintain a balance of public accountability related to funding and of academy schools’ independent operations.
Thus serving as accounting staff and managerial or trustee positions at academy schools requires a certain level expertise regarding the financial assurance regime.
Dealing with Initial Set-up and Ongoing Financial Responsibilities for Academy Schools
For new academy schools, the EFA provides a Financial Management and Governance Self-Assessment that can help ensure the primary requirements are met. It can also offer an Academies Account Direction reference package that can assist in preparing compliant financial statements.
Academy schools must then produce financial statements and returns in accordance with the Charities’ Statement of Recommended Practice (SORP) which must be submitted annually on 31 August. The accounts must be audited by an independent firm, and the independent auditor’s statement of approval must be submitted by 31 December. Results then should be published to the academy trust’s website by 31 January.
Specialist accountancy firms and professional groups for charity accounting specialists like ICAEW can also provide invaluable support and guidance in managing academy schools finances.
Structure and Organisational Elements of Academy School Finances
The DfE and EFA publish the Academies Financial Handbook annually on 1 September. The Handbook outlines the governmental structures and regulations in detail that are vital for academy schools, including cases in which academy schools must seek consent of the Secretary of State.
The 2014 edition was produced in cooperation with a steering committee of academy schools representatives and is updated with a new requirement; the trust’s register of interests must include all relevant pecuniary and business interests. Further, the 2014 edition lays out stricter regulations on academy schools’ trust governance and introduces principles for trading with connected parties.
Academy schools are also obligated to take certain actions to reduce the risk of financial fraud. For instance, well communicated policies regarding anti-fraud and whistleblowing, measures to prevent conflict of professional and personal interest, employee background checks, appropriate segregation of controller duties, and a physical security system for asset protection are all strong measures to manage and reduce the risk of financial fraud.
For specialist advice regarding managing academy school finances contact Alex Bottom