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Academies Financial Handbook 2017

06 September 2017

New term, new AFH. Tim Wrigley looks at the latest edition.

In line with most of the action we are seeing from DFE at the moment the key changes to the Academies Financial Handbook in the 2017 edition are around governance, financial probity and efficiency in both.

As usual the DFE includes a summary "what has changed" section in the document.

1. There is more emphasis on separating members and trustees.

We have written a lot on the topic of members and trustees over the years. For an overview of the roles, see our article here.

To recap the DFE's expectations are:

a) the majority of members will not be trustees. 

b) no employees can be members.

c) members should be "eyes on, hands off", i.e. they should keep a watching brief to ensure that the trustees are performing their role effectively.

There is more on this subject in our separate update on the Governance Handbook.

2. The ESFA annual letter to accounting officers must be shared with the members, trustees, CFO, and senior leadership team and must be discussed by the trustees.

Requiring this to be given to members is interesting as it bolsters the increasing practice of seeing members as some sort of audit function.  In law the members role is not to be the internal auditors, but in the DFE's model for academy trusts it is useful to give them a function. The quasi-audit function is as good as any.

There is no explicit requirement to share this with Local Governors. This may be indicative of ESFA expectations of more financial decisions being made at MAT level.

3. The competency framework for trustees.

Please see our separate article on the competency framework in relation to this.

4. Push on financial health and efficiency.

In addition to the (relatively) recent tools and guidance on this subject the new AFH contains a warning that the ESFA may require a trust to work with an "expert in school financial health" whether or not a financial notice to improve has been issued.

Technically the ESFA is unlikely to be able to take this action without agreement of the Trust or issuing a FNtI. However, this intention is indicative of earlier intervention.

The tools and guidance can be found here.

However, if you have streamlined outgoings as much as possible and are looking for a pot of gold you may wish to try the end of a rainbow or our articles on generating income here: Academies and boosting income through investment

There are no particular surprises as this has been the direction of travel for a long time.

As the DFE and ESFA become increasingly prescriptive on what MATs must do and what they must not do the Secretary of State will also need to ensure that MATs do retain autonomy (one of Gove's original academy freedoms) and independence from the state (a fundamental requirement of charity status) or risk undermining the entire system. Balancing these aspects will be a key feature of the AFH in years to come.

Further reading:

Academies financial handbook 2017 (For academy members, trustees, accounting officers, chief financial officers and auditors)

Article: Academies and boosting income through investment

Article: Potential liabilities of trustees, members & governors


If you would like to discuss any aspect of this article further, please contact Tim Wrigley or any other member of the Education team on 0113 244 6100.

You can also keep up to date by following Wrigleys Schools team on Twitter here

The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors



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