An updated Academies Financial Handbook (AFH 2015) has been published by the Education Funding Authority (EFA) and came into force on 1 September 2015. The main changes relate to governance arrangements, but amendments have also been made to the provisions around financial control and audit. We have sought to highlight the key changes below.
The key governance changes are as follows:
- The AFH 2015 clearly states that academy trusts must not have de facto trustees or shadow directors in place.
A definition of both can be found in Annex A, but these are effectively individuals who have not been officially appointed as a trustee/director but are acting as a trustee/director of the academy trust.
- Academy trusts must publish up-to-date details of their governance arrangements on their websites, in a readily accessible form.
This must include noting areas such as the structure and remit of the members, their dates of appointment, relevant business interests and meeting attendance records, amongst others.
- The AFH 2015 puts a greater emphasis on academy trusts publishing relevant business and pecuniary interests of local governors on their website.
A trust’s register of interests must identify close family relationships between members or trustees, and between members or trustees and the trust’s employees.
Other governance-related changes include:
- Confirmation that a Financial Notice to Improve may be issued by the EFA due to governance concerns (as well as financial concerns);
- An emphasis that accounting officers must adhere to the ‘seven principles of public life’;
- Stating that medium-sized and larger trusts should consider more frequent board meetings than are required; and
- Academy trusts must now notify the EFA of the appointment of members or trustees/governors.
The AFH 2015 has simplified the requirements relating to budget monitoring. Academy trusts were required to prepare timely monthly management accounts but this has been replaced by the preparation of monthly budget monitoring reports only.
Amendments have also been made to the powers of delegated authorities:
- Increases to the delegated limits for academy trusts to write-off debts or enter into liabilities to a ceiling of £250,000; and
- Increased power for delegated authorities to take up a leasehold or tenancy agreement on land.
The only audit related change in the AFH 2015 is that academy trusts with an annual income in excess of £50m must have a dedicated audit committee.
Whilst the latest Academies Financial Handbook has introduced fewer changes than previous versions, there are still a number of areas that academy trusts must consider to ensure compliance.