Updated financial handbook

The Academies Financial Handbook 2013 has been updated with these amendments:

http://www.education.gov.uk/aboutdfe/executiveagencies/efa/efaebulletins/h00229303/issue-39/academies-financial-handbook-update

31 October 2013 update:

Granting of leaseholds on land and buildings (paragraph 2.4.8)
We have clarified that the granting of a leasehold interest on land and buildings to another party, regardless of length, requires the approval of the Secretary of State. This is to ensure consistency with the provisions of the Academies Act 2010.



Not for profit principles (paragraphs 2.6.1 to 2.6.8)
We have included additional information about the principles that apply to the supply of goods and services to academy trusts by sponsors and other connected parties. Trusts should ensure that such transactions maintain a ‘not for profit’ basis. They should follow cost accounting conventions and allow these accepted practices and principles to guide decisions. Additionally:

• Charging for overheads:
Overhead charges should be proportionate to the amount of work being done for the trust.
For example, if 10% of the connected supplier’s activity is for the trust then that trust should pick up a maximum of 10% of the supplier’s total overheads. However, if at the end of the year, the charges for overheads recouped by the supplier exceed the total paid for overheads by the supplier, we would expect the supplier to reduce the charges to the trust in the next financial year. This will ensure the trust is complying fully with the ’not for profit’ principles by not paying more than the proportionate sum for the services received, and the supplier is not drawing inadvertent profits; and

• Services supplied by self-employed consultants:
Whilst a self-employed consultant may not factor in specific ‘profits’ to their day rate, we would not expect consultants to charge trusts the same as they would charge a customer in the commercial market. How much less than the market rate charged will be a matter for negotiation. The trust must ensure this process is based on an understanding of market rates, and only enter into such a contract when satisfied that the agreed ‘at cost’ figure is reasonable and justifiable.

Application of delegations and freedoms (paragraphs 2.6.29 to 2.6.34)
We have included additional information about those academy trusts to which some of the delegations and freedoms in the handbook that go beyond those in a trust’s funding agreement do not apply.