On Thursday 27th June, School Minister Lord Agnew issued the new Academies Financial Handbook which will come into force 1 September 2019.
The biggest change to the handbook is the introduction of a new requirement for academy trusts to show how they check their internal systems, ensuring they are effective and compliant through an independently prepared annual report which will be submitted to the Education Skills Funding Agency (ESFA).
“Trusts must have strong financial management and governance structures – and this handbook will help trusts to deliver it.” Commented Lord Agnew
This legislation is updated annually by the ESFA to support academy leaders, trustees, accounting officers and auditors to run effective trusts. As over 50% of children are in state-funded schools across England, the updated handbook will build on the Government’s work to improve good financial governance. At the same time the updates to the handbook will allow for increased accountability across the sector, with governing bodies reviewing executive pay and other payments/benefits to employees. Over the last 18 months, Lord Agnew has written to 213 academy trusts asking them to justify excessive salaries. Lord Agnew has also published new guidance aimed to help school governors challenge and support school leaders.
The updated handbook also has more requirements for producing management accounts and what they contain, ensuring senior employees are on payroll. New material additionally outlines information to maintain internal scrutiny over controls and risks, including the role of the audit committee and a new requirement to send an annual internal scrutiny report to the ESFA; its emphasised that trusts’ audited accounts must be provided to the members. For sound financial practice, its stressed that certain financial transactions will need prior ESFA approval, with further clarification on the reporting and approval of related party transactions.
Click here to view the 2019 handbook
The changes include: