Academies Financial Handbook 2020

Sep 28, 2020 | Finance Posts

The updated Academies Financial Handbook (AFH) 2020 came into effect on 1 September 2020.

This year there are some significant, and perhaps surprising changes, which are likely to alter the way in which some Academy Trusts currently operate. 


Perhaps the most surprising shift this year is that the ESFA has altered its position on Membership of Academy Trusts and means employees of the school can no longer act as Members.  This has implications for many Trusts in which the Chief Executive or Headteacher/Principal is a Member. We are concerned that the change apparently leaves the Membership without assurance of specialist educational advice or perspective regarding the specific Trust, should that be concerned by the Trust as important.   We are also concerned by the DfE’s apparent preference for there to be no employees on the Board of Trustees (Governors), other than the Headteacher/Principal.

Within this section of the AFH the ESFA also emphasises the responsibility of Trustees to maintain the Trust as a going concern, the need for ensuring their register of interests is up-to-date at all times and the importance of ensuring the Trust’s Members remain informed about Trust business.   It is also important to ensure that the Trust has appointed a Clerk to the Board who is not a Trustee, Principal or Chief Executive. 

Executive Team

Within this section, the ESFA emphasises the importance of ensuring that the Trust’s appointed Accounting Officer (AO) and Chief Financial Officer (CFO) are employees of the School.  Should the Trust consider this is neither possible nor appropriate, ESFA approval is required for the appointment of the contracted AO or CFO.

This ESFA is also shifting its position further towards the need for Trusts to consider relevant accountancy qualifications for the CFO, and the need for the CFO to maintain professional development. We are aware that the CFOs in many Trusts are not qualified accountants, and while this is still permitted, we believe Trusts should be alert to the shifting position. 

Greater Controls and Transparency

From September, there is a requirement for Trusts to publish the salaries of any employee with a salary/benefits of more than £100k on their website; although the name does not need to be published, in effect this is likely to be the Headteacher or Principal only.  This information is already included within the Trust’s accounts (also on the Trust’s website), and we cannot think of any other organisation or business which publishes its Chief Executive’s salary as a separate website item, apparently to draw specific attention to it, and this step concerns us.  

The board of Trustees is encouraged to make use of the DfE’s Integrated Curriculum and Financial Planning model, and the use of overdrafts must be avoided.  The need to maintain a fixed asset register is highlighted and there is now a requirement for Trustees to review and challenge pupil number projections on a termly basis.  The Trust’s funds must not be used to purchase alcohol, and the Whistleblowing Procedure/Policy must now be published on the School’s website. 

The ESFA draws attention to the requirement for Trusts to manage risk, including the maintenance of the risk register, and they are required to complete the School Resource Management Self-Assessment Tool by the annual deadline (published each year).

Internal Scrutiny

The Internal Audit function can no longer be carried out by the Trust’s External Auditor, and additional individuals or organisations can be used to support the process of internal scrutiny, which is now emphasised as covering both financial and non-financial controls.

Annual Accounts

The Trust’s Audit Committee must review the external audit work plan, review findings, assess the effectiveness of the external auditor, and produce an annual report to advise the board of Trustees.

How can we help?

We work with many schools and academies on the interpretation of new regulations and guidance and in supporting the implementation of any changes which may be necessary.  We are currently working with Trusts in areas such as Integrated Curriculum and Financial Planning (ICFP) and supporting with services such as Internal Scrutiny, including Internal Audit.  If you have any questions regarding the changes to the AFH this year and you think we can be of assistance, please do not hesitate to call us on 0208 819 3231 or get in touch via our contact form.

For the full updated guidance visit the website here.