Academies Financial Handbook

Last updated

Academies Financial Handbook is a handbook issued by Education and Skills Funding Agency in England that sets out finance-related requirements for academy trusts in terms "musts" and "shoulds".

Contents

The Handbook was first published in September 2006. [1] It was substantially revised in 2012. Since then it has been updated annually.

Overview

Academy schools are state-funded schools in England which are directly funded by the Department for Education and independent of local authority control. The terms of the arrangements are set out in individual Academy Funding Agreements. [2] [3] Most academies are secondary schools (and most secondary schools are academies). However, slightly more than 25% of primary schools (4363 as at December 2017 [4] ). There are no academies in Wales or Scotland where education has been devolved

Academies are self-governing non-profit charitable trusts and may receive additional support from personal or corporate sponsors, either financially or in kind. [5]

The Education Funding Agency monitors financial management and governance of academies. In March 2016 the Perry Beeches The Academy Trust, a multi-academy trust, was found to have deleted financial records for £2.5 million of free school meal funding, and that the chief executive was being paid by sub-contractors as well as by the trust. Its schools are likely to be taken over by a new trust. [6] In August 2016, the former principal and founder of Kings Science Academy, the former finance director, and a former teacher who was the founder's sister were found guilty of defrauding public funds of £150,000. [7]

In October 2017, the Wakefield City Academies Trust collapsed, and The Observer reported that "Wakefield City Academies Trust now stands accused of 'asset stripping” after it transferred millions of pounds of the schools’ savings to its own accounts before collapsing. On 8 September it released a statement announcing it would divest itself of its 21 schools as it could not undertake the ´rapid improvement our academies need' ". [8] The Academies Financial Handbook describes the correct way of managing public assets. 'Compliance with the handbook is a condition of each trust’s funding agreement'. [9]

Document

The Academies Financial Handbook sets out the financial management, control and reporting requirements that apply to all academy trusts. It describes a financial framework for trusts that focuses on principles rather than detailed guidance and reflects their accountability to Parliament and to the public. [9]

It is sixty sides long, and is divided into 4 sections with a foreword and appendices. [10]

2.1 Financial oversight
2.2 Financial planning, monitoring and reporting
2.3 Internal control
2.4 Internal scrutiny
2.5 Transparency
3.1 Proper and regular use of public funds
3.2 Trading with connected parties
3.3 Novel, contentious and repercussive transactions
3.4 Borrowing
3.5 Gifts
3.6 Write-offs and entering into liabilities
3.7 Special payments
3.8 Acquisition and disposal of fixed assets
3.9 Leasing
3.10 Managing the General Annual Grant (GAG)
3.11 Applicability of delegations and freedoms
4.1 Statutory audit
4.2 Regularity audit
4.3 Financial management and governance self-assessment
4.4 Funding audit
4.5 National Audit Office and Public Accounts Committee
4.6 Audit access rights
4.7 Provision of information
4.8 Investigation of fraud, theft and/or irregularity

Compliance

Some governing bodies have difficulty with the document. The Commons public accounts committee concluded that “too often academy trusts are falling short” of the “highest standards of governance, accountability and financial management” and that the Department for Education is often “too slow to react”. [11] In May 2018, The Guardian highlighted the failings in one multi-academy trust comprising four primary schools. The schools serving 2000 pupils were awarding the head a salary in excess of £211,082 which had been raised by 10% from the year before. She had taken £6 250 to fund a fact finding mission to the far east. In 2014, £26,000 had been spent on refurbishing the heads office.Four of her staff had been issued with £1 250 laptops while the school had been running an in-year deficit of almost £1 000 000. “Discussions with both the head and the acting chair of the board demonstrated a poor understanding of the current financial situation of the trust.” Also criticised was the way that large contracts for consultancy and advertising were taken out without following the tender procedure, and invoices could be produced. [11]

Related Research Articles

<span class="mw-page-title-main">Accounting</span> Measurement, processing and communication of financial information about economic entities

Accounting, also known as accountancy, is the processing of information about economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used as synonyms.

<span class="mw-page-title-main">KPMG</span> Multinational professional services and accounting company firm

KPMG International Limited is a multinational professional services network, and one of the Big Four accounting organizations, along with Ernst & Young (EY), Deloitte, and PwC. The name "KPMG" stands for "Klynveld Peat Marwick Goerdeler". The initialism was chosen when KMG merged with Peat Marwick in 1987.

<span class="mw-page-title-main">Charitable organization</span> Nonprofit organization with charitable purpose

A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being.

<span class="mw-page-title-main">Financial endowment</span> Donation to a non profit enterprise for ongoing support

A financial endowment is a legal structure for managing, and in many cases indefinitely perpetuating, a pool of financial, real estate, or other investments for a specific purpose according to the will of its founders and donors. Endowments are often structured so that the inflation-adjusted principal or "corpus" value is kept intact, while a portion of the fund can be spent each year, utilizing a prudent spending policy.

An institutional investor is an entity which pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked companies, insurers, pension funds, sovereign wealth funds, charities, hedge funds, REITs, investment advisors, endowments, and mutual funds. Operating companies which invest excess capital in these types of assets may also be included in the term. Activist institutional investors may also influence corporate governance by exercising voting rights in their investments. In 2019, the world's top 500 asset managers collectively managed $104.4 trillion in Assets under Management (AuM).

<span class="mw-page-title-main">Academy (English school)</span> English school funded by the central government and independent of local authority control

An academy school in England is a state-funded school which is directly funded by the Department for Education and independent of local authority control. The terms of the arrangements are set out in individual Academy Funding Agreements. 80% of secondary schools, 39% of primary schools and 43% of special schools are academies.

<span class="mw-page-title-main">Man Group</span> British alternative investment management business

Man Group plc is an active investment management business listed on the London Stock Exchange. It provides a range of funds across liquid and private markets for institutional and private investors globally and is the world's largest publicly traded hedge fund company, reporting $151.4 billion in funds under management as of March 2022. The firm is headquartered at Riverbank House in London and employs over 1,400 people in various locations worldwide. The company was a sponsor of the Man Booker Prize from 2002 to 2019.

<span class="mw-page-title-main">Scottish Funding Council</span>

The Scottish Funding Council, formally the Scottish Further and Higher Education Funding Council, is the non-departmental public body charged with funding Scotland's further and higher education institutions, including its 26 colleges and 19 universities.

<span class="mw-page-title-main">Financial Reporting Council</span> Regulator responsible for promoting high quality corporate governance

The Financial Reporting Council (FRC) is an independent regulator in the UK and Ireland based in London Wall in the City of London, responsible for regulating auditors, accountants and actuaries, and setting the UK's Corporate Governance and Stewardship Codes. The FRC seeks to promote transparency and integrity in business by aiming its work at investors and others who rely on company reports, audits and high-quality risk management.

<span class="mw-page-title-main">Paul Myners, Baron Myners</span> British businessman and peer (1948–2022)

Paul Myners, Baron Myners, was a British businessman and politician. In October 2008 he was elevated to the House of Lords as a life peer and was appointed City Minister in the Labour Government of Gordon Brown, serving until May 2010. As City Minister Myners was responsible for overseeing the financial services sector during the global financial crisis and its aftermath, including leading the controversial 2008 United Kingdom bank rescue package. Myners sat in the House of Lords as a Labour peer until 2014, resigning to become a non-affiliated member before joining the crossbench group in 2015.

<span class="mw-page-title-main">Garden Bridge</span> Proposed pedestrian bridge in London, England

The Garden Bridge project was an unsuccessful private proposal for a pedestrian bridge over the River Thames in London, England. Originally an idea of Joanna Lumley, and strongly supported by then-Mayor of London Boris Johnson, the designer Thomas Heatherwick worked with Arup Group on a proposal by Transport for London (TfL) for a new bridge across the Thames between Waterloo Bridge and Blackfriars Bridge. The proposed concrete, steel, cupronickel clad structure was intended to carry pedestrians, with no cycles or other vehicles. It was to have been located some 200 metres (660 ft) from Waterloo Bridge and 300 m (980 ft) from Blackfriars Bridge, and have included some areas of planting. The project was to include a commercial building, built on former green space at the southern end of the bridge. The bridge was intended to be funded by raising over £140 million of private money and £60 million of promised public money, of which £30m was from Transport for London and £30m from the Department for Transport, adding up to projected funding of over £200m. In January 2017, the trustees of the prospective owner of the bridge, the Garden Bridge Trust, stated that costs would "substantially exceed" an earlier revised total of £185m and, in April 2017, a report by Margaret Hodge MP concluded, on the basis of the Garden Bridge Trust's own evidence, that the cost would be over £200m.

Governance, risk management and compliance (GRC) is the term covering an organization's approach across these three practices: governance, risk management, and compliance.

<span class="mw-page-title-main">Form 990</span> United States Internal Revenue Service form

Form 990 is a United States Internal Revenue Service (IRS) form that provides the public with financial information about a nonprofit organization. It is also used by government agencies to prevent organizations from abusing their tax-exempt status. Certain nonprofits have more comprehensive reporting requirements, such as hospitals and other healthcare organizations.

Keeping Kids Company (in liquidation), formerly Kids Company, was an incorporated and registered charity, founded by Camila Batmanghelidjh in 1996 to provide support to deprived inner city children. From its original "drop-in" centre in south London it expanded over the following two decades to be a prominent children's charity operating 11 centres, mostly within Greater London, but also in Bristol and Liverpool.

<span class="mw-page-title-main">Tuvalu Trust Fund</span> Sovereign wealth fund of Tuvalu

The Tuvalu Trust Fund is an international sovereign wealth fund established to benefit Tuvalu, a small, central Pacific island nation, by providing income to cover shortfalls in the national budget, underpin economic development, and help the nation achieve greater financial autonomy. The Tuvalu Trust Fund was established in 1987 by the United Kingdom, Australia and New Zealand.

<span class="mw-page-title-main">E-ACT</span>

E-ACT is a multi-academy trust responsible for 28 academies in England. Over 93% are now rated as “Good” or better by Ofsted.

Arena Academy is a coeducational secondary school located in the Perry Beeches area of Birminghamin the West Midlands of England.

Wakefield City Academies Trust (WCAT) was a multi-academy trust (MAT) that managed 21 schools across West Yorkshire, South Yorkshire, and the East Riding of Yorkshire. As an academy trust, it was an exempt charity regulated by the Department for Education (DfE).

Multi-Academy Trust (MAT) or academy chain is an academy trust that operates more than one academy school. Academy schools are state-funded schools in England which are directly funded by the Department for Education and independent of local authority control. The terms of the arrangements are set out in individual Academy Funding Agreements. The group of schools in a multi-academy trust work together under a shared academy funding agreement.

<span class="mw-page-title-main">Academy Transformation Trust</span>

The Academy Transformation Trust (ATT), or alternatively the Academies Transformation Trust, is a multi-academy trust administering 21 academy schools across 10 local authority areas in England. It operates in the East of England, South East England, East Midlands and West Midlands.

References

  1. "Academies Financial Handbook 2006".
  2. "What is a Funding Agreement? | a can of worms". davidwolfe.org.uk. 8 October 2011. Archived from the original on 4 January 2018. Retrieved 4 January 2018.
  3. "Academy and Free School Master Funding Agreement" (PDF). Gov.uk. Archived (PDF) from the original on 10 October 2015. Retrieved 18 March 2016.
  4. "Schools, pupils, and their characteristics (Official Statistics)". 13 January 2018. Archived from the original on 14 January 2018.
  5. "Charities and charity trustees: an introduction for school governors". Charity Commission website. Charity Commission. Archived from the original on 21 December 2018. Retrieved 3 May 2014.
  6. Richard Adams (28 March 2016). "Lauded academy chain to be stripped of schools after finances inquiry". The Guardian. Archived from the original on 28 March 2016. Retrieved 28 March 2016.
  7. "Bradford Kings Science academy staff convicted of fraud". BBC News. 1 August 2016. Archived from the original on 1 August 2016. Retrieved 1 August 2016.
  8. Perraudin, Frances (21 October 2017). "Collapsing academy trust 'asset-stripped its schools of millions'". The Observer. Archived from the original on 21 October 2017. Retrieved 22 October 2017.
  9. 1 2 "Academies Financial Handbook". GOV.UK. Retrieved 12 May 2018.
  10. "Academies Financial Handbook 2017" (PDF). gov.uk. Retrieved 12 May 2018.
  11. 1 2 Savage, Michael; Mansell, Warwick (12 May 2018). "Silver Birch Academy Trust in spotlight again over spending". The Guardian. Retrieved 12 May 2018.