Eight top tips to support your trust’s financial compliance

Looking for straightforward advice on academy trust financial compliance? Here are some top tips, taken from a masterclass led by SBM Services’ Justine Berkeley

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Justine Berkeley is an experienced business manager and chartered accountant, who owns and manages SBM Services Ltd, which offers resources, training and consultancy to schools and academies. She has received an award for outstanding...

Whatever the size of your academy trust, financial compliance can be intimidating. Even if you’re sure you’re meeting the increasingly strict Education and Skills Funding Agency (ESFA) criteria, how can you provide the necessary evidence to prove it?

1. Use the SRMSA as a financial management tool

Auditors will often say, ‘if it’s not written down, it didn’t happen’. Therefore, a clear documented audit trail to demonstrate your financial compliance is essential.

While it is compulsory to complete the school resource management self-assessment tool (SRMSA), you can also use it as a helpful tool to identify areas for change and to ensure resources are managed to the right standards for achieving the best educational outcomes for pupils.

Your trust’s internal scrutiny and risk management processes are critical for ensuring that your control frameworks are robust and that you are meeting regulations. The SRMSA helps you to do this.

Working together makes financial transparency much easier for everyone because the process becomes less onerous and more efficient.

2. Work as a team to ensure financial compliance

Completing the SRMSA and keeping track of financial records is not just the responsibility of the chief financial officer (CFO). The whole team should be involved, including the trust board, senior leaders and the clerk/compliance officer.

Working together makes financial transparency much easier for everyone because the process becomes less onerous and more efficient.

Communication is, as always, key. Full board meetings must take place at least three times a year and preferably six. If you meet less than six times a year, you must explain how the board can still conduct its business effectively.

There are many ways to ensure that board members are aware of trust business, from holding an AGM and sharing minutes and annual reports to a shared portal of governance documents and a regular ‘newsletter’ email that details relevant data and survey results, and progress against targets.

3. Ensure the board have the skills required to fulfil their roles

Ask trustees to sign a declaration that they understand their role in ensuring compliance with company and charity law, and ESFA regulations – that is, meeting the requirements of three different groups of external stakeholders.

This includes stating that they have read and know where to find the necessary documents.

Boards must annually assess their composition during the year in terms of skills, effectiveness leadership and impact, and the findings must be reported in the annual accounts.

Ideally, every board member should complete a skills analysis self-assessment each year, which not only identifies focus areas for their own continuing professional development (CPD) but also identifies skills gaps for the whole board.

Following this evaluation, you can create a development plan with target dates for both individuals and the board, and ensure any training or other CPD is logged.

4. Ensure the clerk, accounting officer and CFO have the skills required to fulfil their roles

The clerk (company secretary and/or the compliance officer) needs not only a thorough knowledge of, for example, the articles of association and relevant company and charity law, but also strong communication and organisational skills. Ensure that they are supported and have opportunities to develop.

Finance roles and responsibilities must be clearly defined, for example via terms of reference. The most senior executive leader must be the accounting officer, while the CFO is a technical and leadership role.

Decide whether you require your CFO and others in key financial posts to have a business or accountancy qualification.

5. Prove the trust is a going concern

To demonstrate that your trust is financially sustainable now and in the future, your board must carry out a going-concern assessment to prove your ability to operate for 12 months from the date accounts were signed, specifically to meet obligations in terms of expenditure.

Keep to a budget planning timetable so there is sufficient time to prepare and consolidate budgets and get them approved ready for submission to the ESFA. The ESFA also provides good practice guides.

Bearing in mind the ESFA’s focus on process, make sure approval of the budget and the ESFA budget forecast returns are ratified at a trust board meeting and that the minutes reflect this has happened.

6. Keep on top of the monthly management accounts

Monthly management accounts are internal budget monitoring reports so you can put them in the format that trustees, senior leaders and budget holders find most useful.

In accordance with the Academies Financial Handbook, you must produce 12 sets, to include such elements as:

  • the income and expenditure report (year-to-date and forecast position against budget)
  • variances to budget with an explanatory commentary
  • KPIs with targets
  • balance sheet
  • a rolling 12-month cash flow
  • any trading accounts for areas such as catering or breakfast club.

Unfortunately, no single report can be printed from an accounting system that will accurately tell you the forecasted position to the end of the financial year, although system reports will be your starting point.

This means you have to proactively analyse each budget heading and apply your knowledge of the situation for each element.

The accounts should be prepared on an accruals basis. Doing this monthly is an advantage as it embeds processes and the makes year-end closure of accounts much easier.

Consider: what do the statistics tell you and do they mean you have to investigate or do something differently?

7. Regularly review staffing structure

Review the staffing structure annually along with the curriculum, plans for improvement, and as part of workforce planning.

Regular reviews enable your trust to:

  • invest in the right mix of staff
  • invest in high quality professional development
  • maximise pupil outcomes
  • ensure value for money

Leaders should have clear expectations of required standards and be direct and firm in upholding these, if necessary, so everyone knows the expected levels of performance.

This is particularly important as workforce and other integrated curriculum financial planning statistics are benchmarked to compare performance with other schools. They will be a key focus if a school has a school resource management advisor efficiency review.

You can prepare these statistics on the data dashboard section of the SRMSA. It will be automatically populated with your latest submitted accounts and census data but these figures can be overwritten with more current information.

Consider: what do the statistics tell you and do they mean you have to investigate or do something differently?

Don’t be alarmed at a red or amber outcome – the important to thing is to note and report the reasons for these alerts on the action plan so it’s documented with an audit trail.

Your trust is, after all, spending public money, so the internal scrutiny process needs to be robust.

8. Provide evidence of value for money

The DfE’s ‘View my financial insights’ (VMFI) tool is designed to support academy trusts in taking better financial management decisions by comparing them to similar trusts.

CFOs and other board members should use it proactively, not only to gain a snapshot of how the trust compares with others but also to access the latest commercial resources, framework contracts, financial guidance and training available via the DfE.

Make sure you engage with the national deals offered via the DfE (e.g. for insurance or office supplies). Keep evidence that you have engaged with the centrally procured deal and a note explaining if the contract was awarded elsewhere.

Your trust is, after all, spending public money, so the internal scrutiny process needs to be robust.

Reflection on financial reporting

As a board, ask yourself the following questions and consider the implications of the answers.

  • How often do you prepare / receive financial reports?
  • How easy are they to read and understand?
  • What elements do you think are missing from the reports?
  • How could your financial reporting be improved?
  • What actions are you going to take to ensure the improvement happens?
  • Will some things need to change to enable the improvement to happen?


Last Updated: 
29 Feb 2024