Academies update-Academies Financial Handbook 2016
The Education Funding Agency (EFA) issued the Academies Financial Handbook 2016 in July 2016 this is effective from 1 September 2016.
The main changes in the 2016 edition with regard to Governance and Financial Control as follows:
- Boards of trustees should identify the skills they need and address any gaps in their skills through recruitment or training.
- The terminology used in the Governance Handbook has been aligned.
- All trusts must have a senior executive leader who should also be appointed as accounting officer, and that these roles must not rotate.
- The text on registers of interests has been amended. Trusts must publish the relevant business and pecuniary interests of their accounting officer regardless of whether they are a trustee. Confirmation that local governors are included when identifying relevant interests from close family relationships.
- Trusts must use Edubase to notify the Department for Education (DfE) of the appointment and vacating of the positions of member, trustee, local governor in a multi-academy trust, chair of trustees, chairs of local governing bodies, accounting officer and chief financial officer.
- Variances between budget and actual income and expenditure must be understood and addressed.
- Exposure to investment products must be tightly controlled so that security of funds takes precedence over revenue maximisation.
- Where there are concerns about financial management in a trust, the trust may be required to report information about its cash position to EFA.
- It is now a requirement, rather than a recommendation, for trusts to have a whistleblowing procedure.
- Trusts should consider opting into the risk protection arrangement (RPA) unless commercial insurance provides better value for money.
- Trusts must implement reasonable risk management audit recommendations that are made to them by risk auditors.
- The audit committee’s oversight of its trust must extend to the controls and risks at its constituent academies, where the trust has them. Oversight must also ensure that information submitted to DfE and EFA that affects funding is accurate and compliant.
- When considering a staff severance payment, trusts must satisfy the conditions in the handbook and obtain the required approval before making a binding commitment to staff.
Letter from P Lauener, Chief Executive of EFA to all Accounting Officers issued 6 October 2016
This letter emphasised a few points in relation to maintaining strong financial management and governance and stated that the following were important:
- Lines of internal accountability should be appropriate.
- Policies should be established and monitored and trustees should be comfortable defending these in public if it became necessary to do so.
- The accounting officer should be able to evidence compliance.
- There should be the right mix of skills on the board.
- Transactions with related parties should be managed appropriately.
Education and Adoption Act 2016
There were the following key changes to this act:
- The definition of ‘eligible for intervention’ was extended.
- The term ‘coasting schools’ was introduced but no schools will be labelled as such until after data is published in December 2016/January 2017.
- The process around warning notices has changed.
- The intervention powers for the Secretary of State have been increased.
- It has made mandatory in some cases to make an Academy Order.
- The Academy conversion process should be consultation and co-operation.
If you would like to discuss any of the changes I’ve outlined here, please do get in touch.
Date: 21st November, 2016
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