ESFA’s latest Financial Management & Governance Review – what academies can learn
The ESFA have recently published the latest Financial Management & Governance Review they have undertaken which relates to their 2018 visit to Shrewsbury Academies Trust.
Below I look at the key findings from the report which academy trusts can learn from.
Where CEOs raise purchase orders direct there needs to be an effective process for challenging or reviewing the spending decisions being made especially where the spending exceeds the agreed budget. This ideally needs to be independently authorised by the board of trustees.
An academy trust’s Scheme of Delegation needs to clearly set out the financial limits for expenditure which should be referred to the board for approval.
From a payroll perspective, where trusts allow overtime and expenses there should be appropriate forms in place to evidence authorisation. In addition, when pay awards are given there needs to be a clear audit trail of the decision and approval by the appropriate committee to authorise individual or collective pay progression following performance management reviews.
As required in the latest Academies Financial Handbook, trusts need to ensure that budgetary monitoring reports are produced on a monthly basis and discussions around the reports should be evidenced in appropriate committee minutes.
Where academy trusts are unable to produce monthly management accounts this should be acknowledged at Board level in minutes as a breach of the Academies Financial Handbook and an action plan put in place to rectify the situation.
Academy Trusts must ensure that the Board’s approval of the financial statements is clearly minuted.
Audit committee membership
The committee providing assurance over the suitability of, and compliance with, financial systems and operational controls should not have the CEO or CFO as members of the committee as this is breach of the Academies Financial Handbook. The CEO and CFO may attend to provide information and participate in discussions.
Regularity of capital transactions
Where trusts are running with a cumulative revenue deficit they are not allowed to apply General Annual Grant funds for capital expenditure, this constitutes both a breach of the Academies Financial Handbook and the Master Funding Agreement.
The Financial Management & Governance Review reports published by the ESFA can be fantastic resource for academy trusts to utilise to help ensure that their procedures are robust and in-line with ESFA expectations and rules. If you haven’t read through other previous reports published then these can be accessed here.
Subscribe to our newsletters
Our complimentary newsletters and event invitations are designed to provide you with regular updates, insight and guidance.
You can unsubscribe from our email communications at any time by emailing firstname.lastname@example.org or by clicking the 'unsubscribe' link found on all our email newsletters and event invitations.