Academy Trust Handbook 2023

The Education & Skills Funding Agency (ESFA) has published its new Academy Trust Handbook and it is a much shorter and sharper document.

The Handbook, which takes effect from 1 September 2023, contains several changes and is accompanied by a new Schedule of Musts – the requirements contained in the Handbook brought together into one helpful list.

The five standout changes in the 2023/24 Handbook include:

• Related party transactions: increasing the threshold beyond which ESFA approval is required for related party transactions from £20,000 to £40,000.
• Annual reporting: removing the requirement for explanations in annual accounts when holding fewer than six board meetings per year.
• Budget setting: providing an additional month to submit annual budget forecast returns.
• Budget monitoring: providing more discretion in the distribution of management accounts.
• Sustainability: confirming that salary sacrifice schemes can be set up for electric vehicles, in most cases without ESFA approval.

The EFSA has also created and published a Schedule of Musts, which can be found here. It is an abbreviated list of the requirements published in the Handbook brought together into one list presented as a checklist.

It should be noted, however, that whilst published referencing the relevant sections of the Handbook, it is heavily abbreviated and should not be used as a substitute for the full Handbook. It is also an entirely optional resource with no requirement to submit to the ESFA.

Estates Management

The ESFA has again reinforced its focus on good estates management throughout the Handbook, reminding Trusts that the “estate is both an asset and a mechanism to deliver outcomes for pupils” and “expects academy trusts to manage their school estate strategically and effectively and maintain their estate in a safe working condition”.

The issue of Reinforced Autoclaved Aerated Concrete (RAAC) guidance is a current hot topic within the sector and has recently been highlighted by the National Audit Office reporting that 700,000 pupils attend schools that need major repairs. Trusts are reminded of the need to report Condition Data Collection to help the Department for Education to understand the condition of government funded schools across England for the purposes of targeting funding where it is needed most.

Increasingly the ESFA will be expecting academy trusts to build estate management into all elements of day-to-day operations, from the risk register and budgets internal scrutiny programmes, value for money statements and year end reporting within its financial statements. Trusts are expected to demonstrate at all levels how they are complying with their statutory duties and fulfilling their responsibilities.

More guidance can be found at https://www.gov.uk/guidance/good-estate-management-for-schools

Budget forecast returns and management accounts

The ESFA have taken steps to help Trusts with their internal reporting providing an additional month to submit budget forecast returns and allowing more discretion over the distribution of management accounts.

With continued rising costs and the current uncertainty surrounding staff pay and the impact of industrial action. It has never been more important for Trusts to take time to set realistic budgets ensuring that these are stress tested, applying sensitivity analysis checks for best and worst case scenarios and flowing this through to their three to five year forecasts. This will not only allow leadership teams to make informed decisions that are in the best interest of its pupils, but also also help paint a true picture of the strain the sector will face as a whole without additional support.

Trust should also use their management accounts to monitor those costs ensuring that appropriate action is taken to address variances between budgets and actual results.

Related parties

Trusts continue to require ESFA approval for contracts and other agreements for the supply of goods or services to the trust by a related party agreed, with the threshold lifted from £20,000 to £40,000. Approval is not needed if that supply comes from a college, university or schools that are sponsors of the academy trust or a state funded school.

Trusts are reminded that transactions should not be considered in isolation but across all transactions for the entire year.

Notice to Improve

Changes have also been made to the section of the handbook that addresses NTIs, making it clearer when an NTI may be issued. Further engagement with Trusts is expected in developing its approach to interventions including the process to be followed by the department’s Regions Group and the evidence that they will rely on to determine the strength of trustees’ oversight of performance.

For further information regarding the Academy Trust Handbook, or to speak to a member of our team, please contact us today.