What has changed in this edition?
The main changes in the 2014 edition are as follows:
Governance
We have added information on the meaning of the term ‘member’ (page 8).
We emphasise that accounting officers should share ‘Dear Accounting Officer’
letters with their board of trustees, their chief financial officer and other members
of the senior leadership team (1.5.5).
We emphasise that a Financial Notice to Improve (FNtI) may be issued to an
academy for breaching the duty, principles and requirements governing connected
party relationships set out in this handbook (1.5.8).
We emphasise that an academy trust subject to an FNtI may be prevented from
entering into transactions with connected parties without Education Funding
Agency’s (EFA’s) prior approval (1.5.9).
We emphasise that trustees must understand their statutory duties as company
directors, particularly when entering into transactions with connected parties
(1.5.13 and 3.1.12).
We emphasise that the board of trustees must provide details of its governance
arrangements in their governance statement published with its annual accounts
(1.5.14).
Academy trusts producing audited accounts for the first time must set out in their
governance statement what they have done to review and improve their
governance structure and composition of their board of trustees (1.5.15).
We clarify, in accordance with an academy trust’s articles of association, that the
principal or chief executive may act also as an ex officio trustee (2.1.2).
We emphasise that the chair of the board of trustees and the accounting officer
must manage their relationships with connected parties to avoid both real and
perceived conflicts of interest (3.1.13).
Academy trusts must recognise that their relationships with some connected
parties attract greater public scrutiny, and require high standards of accountability
and transparency (3.1.14).
Academy trusts must capture relevant business and pecuniary interests of
members, trustees, local governors of academies within a multi-academy trust and
senior employees (3.1.17).
We emphasise that academy trusts should consider whether to include the
interests of other individuals in the register, with a presumption in favour of
disclosure to support transparency and accountability (3.1.18).
Academy trusts must publish on their website the relevant business and pecuniary
interests of trustees and members (3.1.19).
We emphasise, in accordance with legislation, that academy trusts must ensure
their use of confidentiality clauses does not prevent an individual’s right to make
disclosures in the public interest (3.1.24).
We introduce a de minimis threshold of £2,500 on the ‘at cost’ requirements
applying to connected parties, to reduce bureaucracy on minor transactions.
Above this limit academy trusts must pay connected parties at no more than ‘cost’
(3.2.3).
We clarify the circumstances where the ‘at cost’ requirements are relevant to
organisations providing legal advice or audit services (3.2.5).
We provide additional information on fraud reporting, confirming that academy
trusts must notify EFA if they incur losses through fraud or theft in excess of
£5,000, individually and cumulatively, in any academy financial year (4.8.2).
Financial control
Academy trusts must publish the accounting officer’s value for money statement
on their websites by the end of January following the financial year to which the
statement relates (1.5.22).
The board of trustees must approve a written scheme of delegation of financial
powers (2.1.4).
We have amended the title of principal finance officer to chief financial officer
(2.1.9).
We emphasise that the board of trustees, and any separate committee
responsible for finance, must receive and consider information about the financial
performance of the trust at least three times a year (2.2.4).
The board of trustees must notify EFA within 14 days if it is formally proposing to
set a deficit revenue budget for the current financial year, which it is unable to
address after funds from previous years are taken into account (2.2.5).
We introduce the principles that academy trusts must apply when making an
investment (2.2.9).
Academy trusts with boarding provision must, from 1 September 2015 and earlier
if possible, recover full costs plus an additional rate of return of 8% (2.2.12).
Academy trusts can opt in to the Department for Education’s (DfE’s) risk protection
arrangements from 1 September 2014 (2.3.8).
We emphasise that academy trusts must seek EFA’s prior approval for
transactions with connected parties that are novel and/or contentious (3.1.15).
We emphasise that academy trusts must obtain EFA approval in advance for all
ex gratia transactions, in accordance with their funding agreements (3.7.15).
We emphasise, in accordance with their funding agreements, that multi-academy
trusts must not pool Private Finance Initiative (PFI) funding from the Secretary of
State (3.10.5).
Audit
We emphasise, in accordance with funding agreements and the accounts
direction, that academy trusts must publish their annual accounts on their website
by the end of January following the financial year to which the accounts relate
(1.4.5).
We clarify that staff employed by the academy trust should not be members of an
audit committee, or participate as members when matters relating to audit are
discussed in a combined finance and audit committee, but that senior staff should
routinely attend to provide information and participate in discussions (2.4.4).
The term ‘responsible officer’ is no longer used to describe a trustee assigned to
check the trust’s internal controls, although the role remains an option for trusts
(2.4.8).
We identify those transactions in part 3 of this handbook that academy trusts must
disclose in their audited annual accounts (3.1.8).
Academy trusts must disclose individually all non-statutory/non-contractual staff
severance payments, of any value, in their audited annual accounts (3.1.9).
Usability
The sections in this handbook are reordered to improve clarity, accessibility and
readability for users.
We have updated the list of definitions [Annex A].
We introduce a new schedule of academy freedoms and delegated authorities
[Annex B].
We have updated the schedule of requirements and the musts are also reflected
in bold throughout this handbook [Annex C].
Links to sources of guidance are updated [Annex D].
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