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New EFA Academies Financial Handbook tightens governance

Thu 23 Jul 2015


The EFA have issued the updated Academies Finance Handbook, which comes into force on 1 September 2015 for all Academy Trust Companies (ATCs). Accounts for the year ending 31 August 2015 must comply with the 2014 Handbook.

From our own experiences in the last year the EFA is tightening up its scrutiny of special staff severance payments and on governance reviews (which are now an annual requirement). This note sets out the key changes in the areas of governance and staffing.

No de facto trustees - No shadow directors

ATCs cannot have a person exercising functions that could only be exercised by a trustee (i.e. director for MATs, governors for SATs).

ATCs cannot have a person with whose directions or instructions the directors of the ATC are accustomed to act.

This change seems to run counter to the current EFA trend to expect members of ATCs to hold the directors/governors to account so particular care will be needed when members exercise oversight of directors/governors.

EFA Financial Notices to improve

These can be issued due to governance concerns at trust-wide or at School level even if there are no direct financial concerns.

Explicit Nolan obligations on CEO/Principal

The ATC’s Accounting Officer will now explicitly be required to following the seven principles of public life as set out by the Committee on Standards in Public Life in May 1995. www.gov.uk/government/publications/the-7-principles-of-public-life/the-7-principles-of-public-life--2

We can envisage situations where these principles will be used in disciplinary allegations against Headteachers.

Updating details on governance

ATCs will be required to maintain on their websites up to date details of governance arrangements. Schools should check immediately that their website content is correct – this includes in terms of the names of governors and members.

ATCs will also be required to notify the EFA within 14 days of the appointment of all members and trustees, as well the chair of the trustees, the Accounting Officer and the Chief Financial Officer.

Enhancing the Register of Business and Pecuniary Interests

The register published on the ATC’s website must show not only the interests of directors, trustees, members and senior staff but also the interests of members of local governing bodies.

The register must also identify close family relationships that the registered person has with other registered persons and also close family relationships the registered person has with ANY employee of the ATC (regardless of which School they work at).

Reducing the burden on internal control

The requirement that there must be “preparation of timely monthly management accounts, including income and expenditure reports on an accruals basis, cash flow forecasts and balance sheets as appropriate” is replaced with one that there must be “preparation of monthly budget monitoring reports”.

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