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:
- Updated information about trustees including emphasis on robust governance [1.11]
- More about the clerk to the board [1.38]
- Links to information on good estates management [2.14]
- More about the requirements for producing management accounts including what they contain [2.18, 2.21 and 2.23]
- Explaining the board’s review of executive pay includes other payments/benefits to such individuals [2.30 and 2.31]
- More information on gender pay gap reporting [2.32]
- More about ensuring senior employees are on payroll [2.33]
- Mandating a risk register [2.36]
- More about whistleblowing [2.41 to 2.46]
- More about notifying the Department of information about key individuals, including contact details for all members and trustees [2.51 to 2.55]
- Additional 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 ESFA [3.1 to 3.22, and 1.17]
- Emphasising trusts’ audited accounts must be provided to the members [4.4]
- Emphasising the need for prior ESFA approval for certain financial transactions [5.1]
- Providing additional clarification on the reporting and approval of related party transactions [5.40 to 5.43]
- A requirement for trusts under a financial notice to improve to publish it on their website [6.15]
- Listing the delegated authorities revoked if under a financial notice to improve [6.17]
- More about how the Secretary of State may intervene over concerns about an individual managing an academy trust [6.19 to 6.23]
- Further links to supporting guidance so navigation is easier.