The August bank holiday is behind us, the new school year is a matter of days away. With the new academic year comes a new Academies Financial Handbook – effective from 1 September. In this week’s blog we will reflect on the key changes introduced.
But First – What’s in the EFA Planner for September
As always, we preview the new month with a reminder of what is in the EFA’s Business Planner. Full details of the planner can be found at: https://www.gov.uk/government/publications/efa-business-cycle
In September the EFA will:
- Issue results of pupil number adjustment exercise to academies and free schools on estimated pupil numbers
- Publish final allocations at provider level for 2014 to 2015 academic year
- Pay the first 2014 to 2015 academic year GAG payment, equal to one-twelfth of the annual allocation
- Issue desktop land and property valuations to academies that opened between April 2013 and March 2014
There are no actions listed for Academies, but of course with the financial year ends on 31 August there are lots for Academies to be contemplating. Whilst I’m sure that the Accounts Direction made good reading whilst you enjoyed 6 weeks sat on the beach (yes, we all wish), if you have not yet downloaded a copy it is available at https://www.gov.uk/government/publications/academies-accounts-direction
The EFA Academies e-bulletin issued on 14 August also reminded academy trusts that they need to submit their value for money statement to the EFA by 31 December 2014.
All academy trusts are required by the ‘Academies Financial Handbook’ to complete an annual value for money statement to help them self-assess what they have done to maximise the impact of their money during the academic year. Each trust must submit a copy of the statement to the Education Funding Agency (EFA) by 31 December. and must also publish their statement on their website by 31 January.
Guidance is provided at https://www.gov.uk/government/publications/academies-value-for-money-statement
And Now It’s. . . The Academies Financial Handbook 2014
The new handbook is available at https://www.gov.uk/government/publications/academies-financial-handbook
- Sets out the responsibilities and requirements relating to academy trusts’ financial governance and management
- Describes a financial framework for academy trusts that reflects their accountability to Parliament and the public
- Explains the circumstances in which trusts must seek EFA prior consent before making a financial transaction
The 2014 handbook comes into effect on 1 September 2014. Academy trusts producing financial statements as at 31 August 2014 should refer to the 2013 edition of the handbook.
In an earlier blog, we commented that there was one direction in the Academy Accounts Direction for 2014 – one that leads to better governance and financial management. This handbook continues that direction. In the foreword Lord Nash says,
‘Accountability is a fundamental part of the academies and free schools programme and of public life generally. For academy trustees this brings specific duties to safeguard the trust’s resources, to avoid conflicts of interest and to promote transparency through the publication of accounts. The public expects academies to be run properly in the interests of their pupils, and so where standards of accountability fall short it is right that we address these swiftly.’
Lord Nash goes on to require that governors and boards think more deeply about their role, and how to protect their public and reputational assets. In particular he refers to transactions between connected parties and calls upon chairs and accounting officers to recognise the highest standards of public accountability that they need to aspire too.
So what has changed? The changes in the 2014 edition are summarised on pages 5 to 8 of the handbook under the headings Governance, Financial Control and Audit. Some of the changes you will find are:
- Clarification of what is required (must) and what is regarded as minimum best practice (should) – both in the handbook and wider company and charity law. Annex C in the handbook provides a useful summary of these.
- Additional information about the term ‘members’ and their role and responsibilities in ensuring good governance.
- Further guidance in recording business interests, and managing activities between connected parties. Information on relevant business and pecuniary interests should be published on the trust’s web site. The presumption is in favour of transparency.
- Trustees must now approve a written scheme of delegation of financial powers – though many have as it was previously a should.
- A governance statement in the accounts that considers the composition of the boards, its skills and effectiveness.
- The production of timely monthly management accounts, including income and expenditure on an accrual basis, cash flow statements and balance sheets as appropriate.
- All trusts need to maintain a risk register.
- The term ‘responsible officer’ is no longer used, but there remains a number of options for handling internal control.
A number of the accountancy practices have produced commentary on the new handbook, links to two commentaries are provided below.
Hacker Young – Click here
Reeves – Click here
The direction taken in the 2014 Handbook comes as no surprise given the comments from the Public Accounts Committee (see blog 16 June) and the number of high profile Financial Notices to Improve. If you require any assistance regarding financial governance then please get in touch with us.
Visit http://www.schoolbusinessservices.co.uk/contact-us/ or call us on 0845 300 8179 option 2.