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Key changes to the Academy Trust Handbook 2021

A full copy of the Handbook can be found here.

The handbook is updated annually and, as explained in the letter sent to all academy trusts on 10 June 2021 from Baroness Berridge, the name of Handbook has changed to the Academy Trust Handbook (also known as the Academies Financial Handbook).

The Handbook seems to now have more of a governance theme to it, so the new name is a more accurate reflection of its content. The main changes are helpfully listed on page 9 of the Handbook. Some of the key changes/clarifications that will have an impact are summarised below:

  • Paragraph 1.23 - From 1 March 2022 any newly appointed senior executive leader can only be a trustee if the members decide to appoint them as such, the senior executive leader agrees and the trust’s articles permit it. The Department’s strong preference is for no other employees to serve as trustees, nor for trustees to occupy staff establishment roles on an unpaid voluntary basis, in order to retain clear lines of accountability.

This means that if your Trust appoints a new Accounting officer from 1 March 2022, members must be involved in the process and Articles must be reviewed. The process should be minuted.

  • Paragraph 1.36 - When the senior executive leader is planning to leave the trust (for example retirement or resignation), the board of trustees should approach their Regional Schools Commissioner (RSC) in advance to discuss their structure and options, including plans for recruitment.
  • Paragraph 2.32 - The trust must publish on its website in a separate readily accessible form the number of employees whose benefits exceeded £100k, in £10k bandings, for the previous year ended 31 August. Benefits for this purpose include salary, employers’ pension contributions, other taxable benefits and termination payments. Trusts may wish to display this information in a tabular form showing in each column salary, pension etc. Where the academy trust has entered into an off-payroll arrangement with someone who is not an employee, the amount paid by the trust for that person’s work for the trust must also be included in the website disclosure where payment exceeds £100k as if they were an employee.
  • Paragraph 3.10 - The chair of trustees should not be chair of the audit and risk committee. Where the finance committee and audit and risk committee are separate, the chair should not be the same.
  • Paragraph 5.12 - In accordance with HM Treasury’s Guidance on Public Sector Exit Payments, academy trusts must obtain prior ESFA approval before making a staff severance payment where: 
    • an exit package which includes a special severance payment is at, or above, £100,000; and/or 
    • the employee earns over £150,000.
  • Paragraph 4.5 - academy trusts must appoint an auditor to give an opinion on whether their annual accounts present a true and fair view of the trust’s financial performance and position. Trusts should retender their external audit contract at least every five years and must consider the relevant points in 4.17 when evaluating. 

It is important to note that trusts do not have to change their current auditors, even if they do go through a retender process. The audit and risk committee must assess the effectiveness and resources of the auditor to provide a basis for decisions by the trust’s members on reappointment. The audit and risk committee’s consideration might include their current auditors knowledge and understanding of the trust and sector expertise.

In summary, we would strongly advise that the Handbook is read by all those involved in the decision making and trust governance. With the latest handbook updates, the ESFA are striving to improve trust financial management and governance. A particular hot topic is Cypercrime, especially since the onset of the Covid 19 pandemic. The latest Handbook introduces some guidance to trusts in addressing this area of risk (paragraphs 6.16 and 6.17).

The next step

UHY can help your trust to comply with the ‘musts’ set out in the Handbook. We can help you demonstrate strong governance and financial management. For more information, please get in touch with your usual UHY adviser.  

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