Much has been made of the Department for Education’s accounts for 31 March 2014 which were released into the public domain last week. Discussions and other forums talked over the facts and figures with many references to academies and ultimately the disqualification of the DfE’s accounts by the NAO.
However, not much comment was made regarding the EFA’s accounts as these seemingly slipped under the radar of many. The difference being that the DfE’s accounts included the facts & figures of all educational establishments. Whereas the EFA accounts include only the EFA themselves and all academy trusts open at 31 March 2014! Therefore, these accounts give a much more accurate picture of the academy sector at 31 March 2014.
The accounts included some 3,905 academy schools (through their 2,585 academy trusts) open at 31 March 2014. Some of the other facts and figures selected from the accounts are:
- 1% of academy trusts at 31 March 2014 were on the national list of concerns (that’s 26 trusts)
- The EFA state this “held steady” which is good but actually means the number increased as there was less academy trusts in 2013!
- There has been 45 contacts from people with concerns about academy schools since April 2012 – some leading to formal investigations
- The EFA spent £5.1m to prepare the financial statements, £5.0m related solely to the consolidation
- The EFA group incurred audit fees of £25,762,000 (2013: £13.03m) in relation to academy trusts which were paid to local auditors – that’s an average fee of £9,966 per academy trust (not per school!)
- Only 92% of academy trusts submitted their accounts and audit management letter by 31 December 2013
- Only 74% of academy trusts submitted their Value for Money statements by 31 December 2013
- 80% of academy trusts submitted their Budget Forecast Returns by 31 July 2013
- 93% of academy trusts submitted their August Accounts Return by 31 January 2014
- The consolidation of the EFA group is one of the largest in the world!
- The number of bodies included in the consolidation is already twice the number of the rest of the UK public sector
- The average cash balance for 3,905 academies at 31 March 2014 was £632,000
- The average local government pension scheme deficit at 31 March 2014 was £622,000
- EFA are not concerned by “high” cash balances but will investigate further and issue a report by the end of February 2015
The 31 March 2013 EFA accounts were qualified by the NAO. One of the qualifications in 2013 regarded regularity. The good news is that the NAO have now removed this qualification as they are comfortable with the audit evidence obtained from the local auditors to academy trusts. However, 3 qualifications remain and they are:
- A material misstatement arising due to academy trusts being consolidated using data from different accounting periods
- The recognition of land and buildings
- A material misstatement regarding the comparative figures for 2013
The NAO provide further information regarding the reasons behind the qualifications on pages 75 to 82. However, what is evidently clear is that the level of error between 2013 and 2014 has increased. This is mainly due to the different accounting periods being used to consolidate. The NAO do not consider this approach to be sustainable long-term and urges the EFA and HM Treasury to look into other methods.
Two options would be to:
- Amend all academy trust year ends from 31 August to 31 March; or
- Request all academy trusts prepare an additional set of accounts at 31 March!
The EFA discuss both options in the Report and state an additional set of accounts would cost academy trusts an additional £30m per annum and that this money would be better spent on the children’s education – who would’ve thought it!
Aligning academy trusts to 31 March is also dismissed as a 31 August year end suits the academic period of academy schools.
So where does this leave academy schools? Personally, I feel that the NAO will now place so much pressure on the EFA and HM Treasury that an academy trust year end will become 31 March. After all, the whole point of the academy system is to allow freedoms and also promote transparency! The EFA Group accounts are anything but transparent in their current format unfortunately.
The EFA accounts can be seen in full here – some 149 pages!