13 December 2017
The Chief Executive of the Education & Skills Funding Agency (ESFA) recently issued a letter to accounting officers within academy trusts, which details their accountability for ensuring that financial management at their trust is efficient, presents value for money, and is appropriately conducted.
Although this letter is aimed at the accounting officer, typically the executive head of a multi-academy trust or the head of the single school academy, it is important that this letter is passed on to trustees and governors to remind them of their responsibilities as far as the accounting function of their trust is concerned.
The themes that are covered in the letter include the following:
Standards of Governance
The letter highlights the need to ensure that those involved in governance understand their role, have the right skills for that role, and there is not an imbalance of power so to better enable challenge and decision-making.
Balancing freedoms and accountabilities
It is stressed that although the ESFA provides the framework for the governance and financial management regulations which should be applied, the freedom and responsibility to implement these principles lies with the accounting officer and the board.
Promoting transparency
In order to demonstrate accountability, accounting officers are encouraged to be fully transparent about how they manage their finances and spend money. It is suggested that this can be done by publishing annual financial statements as soon as they have been signed off, as well as using the accounts to make clear any measures taken to improve governance and manage risk.
Managing relationships
Vigilance over related party transactions and full disclosure of these in financial statements is strongly advised in order to comply with the ESFA’s requirements.
The letter goes on to discuss a review of trusts’ financial statements for the year ended 31 August 2016 and notes that 2% received a qualified audit opinion.
In addition, the letter comments on the results of the assurance visits that the ESFA have made to various trusts which again emphasises the importance of maximising value for money. The suggested actions include a review of executive pay and of purchasing and procurement arrangements.
Finally, the letter confirms the departure of Peter Lauener from the ESFA who will be replaced by Eileen Milner from the Care Quality Commission.
Click here to read the full letter.
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