ESFA provide academies with “good practice” guides
As the requirements on financial reporting for academy trusts increase, many trusts are now producing reports on information they have no previous experience of and hence no templates to follow. Of course, following a template is not always the best model but it can sometimes help as a useful starting point.
In recent years, the Institute of School Business Leaders (ISBL) have provided a range of template documents in a good practice library which are free to access online. This also included model policies for trusts.
Now the ESFA have looked to assist Trusts by providing their own “good practice” guides on financial management. The documents include the following:
- Operating an academy trust as a going concern
- Choosing an external auditor for an academy trust
- Academy trust deficit recovery
- Academy trust risk management
- Leasing guidance for academy trusts
- Academy trust management accounting
The guides can be accessed from the ESFA website using the following link: https://www.gov.uk/government/publications/academy-trust-financial-management-good-practice-guides
This document looks at what is meant by going concern and helps provide trusts with a clear understanding on trust’s monitoring their financial situation. The guidance also provides some example questions for Trustees to ask to help challenge trust finances.
Choosing an external auditor
The guidance here is welcomed and should hopefully provide trusts with a consistent model to follow. Too often we receive a variety of tender invitations that all follow a variety of formats from the various templates are in the sector.
The guidance gives a summary of what is meant by a deficit and the significance of these to the ESFA. It also provides some practical steps for trusts to take in reducing expenditure, boosting income and improving liquidity.
The focus on this section is around maintaining a risk register and methodology behind the process.
As we have mentioned previously, leases are often a complex area for trusts. Not just because of the complexities around whether it is an operating or finance lease, but also the added scenario where the supplier is also pushing the sale as an operating lease when it perhaps might not be.
The guidance provides clear definitions and questions to consider before entering into any agreement.
Very often we are asked what is the right content for management accounts. The guidance here provides some standard ideas around content. However it should be stressed that the content will vary depending on the trust makeup and also what the board want to see reported.
The guides are there to support trustees, accounting officers and chief financial officers to develop good practice for their trust, so do read the content and see if there are any improvements your trust can make to its financial reporting processes.
Make sure you download your complimentary copy of Kreston’s Academies Benchmark Report 2019 here: http://eepurl.com/ge8wvr
This year the report includes over 350 Trusts representing nearly 1000 schools and is based on those Academies that prepared financial statements for the period ended 31 August 2018 and which were audited by member firms of Kreston UK.
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