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New Academies Financial Handbook and Other Governance Updates - Are You Ready?

on Friday, 13 July 2018.

A new Academies Financial Handbook was recently published which comes into effect on 1 September 2018.

The Handbook continues to helpfully list all of the 'musts' in Annex C and it also still refers to those matters of minimum good practice which it refers to as the 'shoulds'. 

What's Changing?

There are a number of changes to the Handbook which simply emphasise the existing position and/or clarify wording.

The new obligations which it contains include:

  • Financial Oversight
    The board and its committees should meet regularly enough to ensure they discharge this duty and, if not, the board should explain how they maintain financial oversight in its governance statement.

  • Budget Forecasting
    The Trust must submit a budget forecast return outturn and a 3 year budget forecast return by specified deadlines and following the approval of the full board.

  • Budget Management
    There are new provisions around ensuring rigour and scrutiny in budget management by the board and its committees.

  • Procurement
    The Trust is referred to the national deals available to schools and the Department for Education's guidance.

  • Executive Pay
    There are new procedures that must be followed regarding making decisions about executive pay.

  • Internal Audit Processes
    There are a number of options available for the Trust to determine its programme of risk review and checking of controls which the Trust must choose from and explain its decision.

  • Related Party Transactions
    The Trust must report all related party transactions entered into on or after 1 April 2019 to the ESFA and obtain the ESFA's consent for transactions over the value of £20,000 or which would take the total value of such contracts beyond £20,000 in the same academy financial year.

For more detailed information about these new obligations as well as existing obligations within the Handbook, please see our checklist for compliance available on Academies OnStream.

ESFA's New Guidance on Tackling Fraud

The ESFA has updated its Academy trust guide to reducing fraud, which includes an anti-fraud checklist and new information about cyber-crime and cyber security. 

Academy trusts should consider the 10 questions asked in the anti-fraud checklist within the guidance and make appropriate arrangements should there be any gaps in their fraud risk management strategy. 

The guide contains a new cyber-crime and cyber security checklist which explains the different potential malicious attacks on computer software, such as email hacking, phishing and malvertising, and minimum actions that can be taken to tackle these risks of fraud.

Any fraud, theft or financial irregularity exceeding £5,000 (either individually or cumulatively in an academy's financial year) must be reported to the ESFA under the Academies Financial Handbook. Any fraud below this value of a particularly unusual or systematic nature must also be reported, such as regular low value theft.

We recommend that trustees familiarise themselves with the updated guidance and consider whether any further action is needed as part of their risk assessment for fraud in their academy trusts.

New Trustee Disqualification Rules

From 1 August 2018,  changes to the automatic trustee disqualification rules will affect academy trustees and senior managers. There will be two key changes:

  • There is an increase in the number of reasons that will disqualify someone from acting as a trustee, including certain unspent criminal convictions (eg terrorism offences, money laundering and bribery), or being named on the sex offenders register.
  • A person who is disqualified from acting as a trustee will also be disqualified from holding certain senior management positions within an academy trust (eg chief executives or chief finance officers).

The Charity Commission has published some useful guidance on what the changes are and how charities can prepare for them.


Sign up to Academies OnStream to access our free trustee declaration form, designed to help you trusts meet their obligations. 

For more information on how we can assist you with governance related queries, please contact Jaime Hobday in our Academies team on 0121 227 3703.

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