There is no doubt that managing finances is high on the list of priorities for schools and academies.
To get the most efficient use out of your budget, your finance team must understand such things as: the complexities of preparing for an audit, how to effectively set a budget and plan for the future, and the difference between school and academy financial systems if you are considering conversion.
So, what do you need to know?
Schools vs academies
If your school has already converted to an academy, you will already be aware of the significant financial differences for schools, academies, and multi-academy trusts. If you are considering conversion, school business managers must prepare for the changes in their job roles and the addition of extra duties. The main differences in financial responsibilities for schools, academies and Multi-academy trusts are as follows:
Schools are required to:
- Set strategic medium term financial plans.
- Create budgets for funding.
- Follow financial compliance regulations set by the local authority (LA).
Academies and free schools must:
- Understand the complex nature of academy accounts and take complete ownership, instead of the LA taking responsibility.
- Report finances directly to the Department for Education (DfE) and the Education and Skills Funding Agency (ESFA).
Multi-academy trusts need to:
- Ensure finances are running consistently through the trust and have the right systems and processes in place.
- Report directly to the Department for Education (DfE) and the Education and Skills Funding Agency (ESFA).
Each year all schools irrespective of status must set their budget, and it’s essential that it is set realistically and effectively, taking into consideration:
- Aligning your budget with your school improvement plan
By linking your budget with your school improvement plan you’ll have a clear idea of your school’s goals. It will also ensure you have the right resources in place to drive improvement and maintain high standards of education.
- Challenging everything
Ask department heads to provide evidence of the impact their spending has on pupils. Does it offer real value?
Consider collaborating with other schools and educational facilities to review staffing structures and ensure they support your strategic priorities.
- Planning for the unexpected
Believe it or not, unplanned expenditure can be prepared for.
This includes areas such as health and safety.
Setting some funds aside in your budget is always good practice. You never know when you’re going to need to make some adhoc repairs so it’s best to prepare ahead of time.
- Additional funding and grants
Additional funding is always available. Whether you’re looking for a loan to purchase energy efficiency solutions to reduce energy bills, extra money to help expand pupil capacity, or funding to help establish a multi academy trust, you can find it.
Funding opportunities like these usually appear as annual bidding rounds and it is usually best practice to prepare your application prior to the opening date. This will give you the opportunity to understand the scoring system and ensure your bid meets the criteria. It will also allow you to use an external bid writer and gather all supporting documents relating to the bid.
Have a look at our recent blogs regarding current funding opportunities:
Preparing for External Audit
Audits can be a daunting process for academies, but if you prepare well enough in advance for it, it can be a breeze.
When preparing for an audit you should always:
- Try to learn what information your auditors require so that you can structure your filing system accordingly.
- Complete month ends in a timely manner and deal with any variances as soon as you find them.
- Minute governing body meetings accurately and complete actions within prescribed deadlines.
- Keep electronic files along with paper copies of any important documents.
- Ensure that your income and expenditure is coded to the correct financial year and correct nominal codes.
- Follow all the procedures within your finance policy throughout the year.
- Arm your employees with the understanding of how to support the auditors and respond to the questions they are asked.
Preparing for an external audit is difficult, but SAAF are here to make the process simple and efficient by providing advice and support where we can. If you want to learn more about preparing for audits then read our latest blogs:
Considerations for outsourcing
Outsourcing your financial management can bridge the gap between skill levels in schools and academies by providing technical accounting and practical finance software support that may not be available in-house.
You could seek support and guidance to put processes and systems in place that prevent financial mismanagement and ensure finance staff understand their roles and responsibilities.
This removes the risk and hassle of financial management, and gives school and academy leaders one less stressor.
To find out more about the support we offer, visit our services page by clicking the button below.