An updated handbook to help improve the financial management and governance of academy schools has been issued by the EFSA, with guidance on compliance, risk, pay and whistleblowing
An updated handbook to help improve the financial management and governance of academy schools has been issued.
The key change to the handbook is a new requirement for academy trusts to show they have checked the compliance and efficiency of their internal systems. This must be done through an independently- prepared annual report submitted to the Education and Skills Funding Agency (ESFA).
The handbook also includes enhanced material on the role governing bodies should play to make sure the pay and other benefits of senior staff are reasonable and reflect their responsibilities.
It highlights the need for trusts to maintain a risk register to ensure procedures and systems are adequately scrutinised.
It also says that a whistleblowing procedure must be put in place, as well as a structure that protects and supports staff so theycan report concerns in confidence.
The guidance explains the role of trustees, emphasising the importance of robust governance and highlights the DfE’s powers to act to tackle rare cases of mismanagement – including removing trustees from a trust.
Academies Minister Lord Agnew said: “Academies are raising standards in our schools by placing freedom in the hands of school leaders. In the majority of cases, standards have risen more quickly in sponsored academies than similar council-run schools.
“But we must build on that, and it is important that we hold academy trusts to account to ensure that all academies offer the best education possible and spends public money reasonably.
“To do that, trusts must have strong financial management and governance structures – and this handbook will help trusts to deliver it.”
The updated handbook builds on the government’s work to improve the financial management and accountability of academies and clampdown on trusts not adhering to the requirements set out in the Academies Financial Handbook.
Lord Agnew has recently written to 213 academy trusts in the last 18 months, asking them to justify excessive salaries.
Now the ESFA has published new guidance to support academy trusts in making decisions about executive pay.
The guidance sets out key factors that should be used by academy trust boards when setting or reviewing executive salaries, so they are set at fair, reasonable and justified levels.
The guidance for setting executive pay enables boards to be confident and accountable for the decisions made on their executive salaries.
Lord Agnew said: “Over the past 18 months, we have cracked down on excessive executive pay. However, our focus is not only on challenging trusts where we identify disproportionately high salaries, but in providing support to trusts to enable them to make robust, evidence-based decisions about pay.”
“We expect trusts to make the most of this guidance to ensure that their salary levels are publicly justifiable and provide the best value for money for their institution.”
Eileen Milner, ESFA chief executive said: “We continue to keep a watchful eye on ensuring that excessive executive pay is challenged.
“It is crucial that executive salaries are set at a fair and justified level so that public funding is invested wisely on children’s education.
“Our guidance will help support academies in their decisions on how much executive pay should be set, so that salaries can be set confidently at a reasonable limit.”
The updated handbook on academy financial management says that the academy trust must have procedures for whistleblowing, to protect staff who report individuals they believe are doing something wrong or illegal.
The trustees must agree the whistleblowing procedure and the trust should appoint at least one trustee and one member of staff who other staff can contact to report concerns.
The trust must ensure all staff are aware of the whistleblowing process, and how concerns will be managed. Staff should know what protection is available to them if they report someone, what areas of malpractice or wrongdoing are covered in the trust’s whistleblowing procedure, and who they can approach to report a concern.
The trust also must ensure all concerns raised with them by whistleblowers are responded to properly and fairly.
Academy trusts need to conduct checks to ensure systems are effective and compliant.
This involves having a programme of internal scrutiny to provide independent assurance to the board that its financial and others controls, and risk management procedures, are operating effectively.
Internal scrutiny must focus on evaluating the suitability of, and level of compliance with, financial and other controls. This includes assessing whether procedures are designed effectively and efficiently, and checking transactions to confirm whether agreed procedures have been followed.
Internal scrutiny procedures must offer advice and insight to the board on how to address weaknesses in financial and other controls, acting as a catalyst for improvement, but without diluting management’s responsibility for day to day running of the trust.
Internal scrutiny must also ensure all categories of risk are being adequately identified, reported and managed.
The trust must identify on a risk-basis, with reference to its risk register, the areas it will review each year, modifying its checks accordingly. For example,
this may involve greater scrutiny where procedures or systems have changed.
The Academies Financial Handbook is updated annually by the ESFA to support academy leaders, trustees, accounting officers and auditors by describing the requirements to run effective, compliant and successful trusts.