In the UK there are two legal definitions of insolvency. The first is where an individual or...
Managing Your School's Finance
The ESFA is placing an ever increasing burden on Trustees to ensure they have sufficient financial controls and systems in place to ensure appropriate safeguarding and management of their School budget and resources.
The management of public funding generally is a key focus in the media and so it is no surprise that the ESFA has continued to increase their requirements within the Academy Sector to further increase accountability for appropriate use of their funding.
The continued pressure on funding also requires many Academy schools and their Trustees to think differently and ultimately having to make difficult decisions to produce a balanced budget. The Academies Handbook 2018 which took effect from 1 September 2018 introduces further financial requirements for all Academy Schools.
- It is now a formal requirement for all Academies to provide monthly management accounts which must be reviewed by the Chair of Trustees each month.
- The Management accounts must also be reviewed by all Trustees, at least six times a year and this must be evidenced within the minutes of the Trustee meetings.
- Academies are also now required to prepare a 3 year forecast, to ensure they have sufficient reserves not just for the current financial year but projecting forward further. This should naturally take into account an element of sensitivity analysis regarding estimated pupil numbers and other variable factors within the schools budget.
In the latest guidance from the ESFA, they have also now confirmed their stance on other areas for Trustees (and auditors) to review including an ongoing review into high levels of executive pay with additional reporting requirements for executive pay exceeding £100,000. The ESFA have also referred to other possible risk areas of irregularity including lack of appropriate authorisation of expenditure; inappropriate procurement processes and irregular expenditure not for the purpose intended and given the example of “excessive gifts and alcohol”.
Whilst many Academies may already be adopting this management reporting approach as best practice, this may require some schools to adapt their current financial reporting process and Trustee meeting format for the new 2018/19 academic year.
If this sounds like yet another task to be juggled at the start of the Academic year, don’t panic as our specialist education team at Rickard Luckin Limited can provide additional support to help you through this. Please do contact firstname.lastname@example.org for further details of how we may be able to help your finance team and Trustees to meet their obligations.