Changes to the Academies Trust Handbook 2022

Published by Kimberley Foulkes on 26 August 2022

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The Academies Trust Handbook 2022 has now been published (a little later than usual) and there are changes to financial reporting and day to day operations which come into force from 1 September 2022 that academy trusts should be aware of and abide by. A copy can be downloaded here.

The changes include:

Financial reporting – The academy trust must submit to the Education, Skills, and Funding Agency (ESFA) in a form specified by them an Academies budget forecast return each July, which must be approved by the trustees before submission. The board of trustees must notify ESFA within 14 calendar days of its meeting if proposing to set a deficit revenue budget for the current financial year, which it cannot address after taking into account unspent funds from previous years, (as this would be non-compliant with the funding agreement and the handbook). This is different from previous years and confirms the withdrawal of the Budget Forecast Return Outturn (BFRO) (paragraph 2.15).

Special payments: In accordance with HM Treasury’s Guidance on Public Sector Exit Payments, academy trusts must obtain prior ESFA approval before making a special staff severance payment where an exit package (which includes a special severance payment) is at or above £100,000, or the employee earns over £150,000 (paragraph 5.12). This is the only change that has been made with regard to special severance payments and all other requirements still apply.

Indemnities: This update to the AFH confirms that trusts will be able to enter into indemnities which are in the normal course of business without seeking approval (paragraph 5.19).

Indemnities – The academy trust must obtain ESFA’s prior approval for:
• Writing-off debts and losses
• Entering into guarantees or letters of comfort; and
• Entering into indemnities which are not in the normal course of business.

Unless these special payments are below the delegated limit (1% of total annual income or £45,000 (whichever is smaller) per single transaction.

Religious Character: Other changes to this edition of the handbook apply to academies with a religious designation and the provision of services to protect and develop their religious character and ethos, which can only be provided by their religious authority, are regarded as meeting the ‘at cost’ requirement (paragraph 5.57).

Kimberley Foulkes at Kreston Reeves comments: “These changes provide greater clarification for academy trusts around certain areas of financial reporting and day to day financial operations and it is essential that academy trusts fully comply with the handbook. With the publication of this guidance this week (24th August) and its coming into force next week, (1 September) just a few days apart, it is important to ensure your academy trust is not in the process of or makes any financial decisions which could subsequently be in breach of the guidance.”

“Thankfully there is not a vast number of changes to the handbook which I am sure we are all thankful for. It seems that there is enough on the plates of all education staff at the moment, as well as the imminent return to school.”

“We would recommend that all Trustees and academy leaders read this new AFH and do not hesitate to contact us at Kreston Reeves LLP should you require any advice on this updated document or any other academy finance and governance matters. At Kreston Reeves we can also provide your Trust with finance and governance training, specifically tailored to your needs, incorporating these key changes.”

For further information, please get in touch with us.

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