2017 Edition of the Academies Financial Handbook (AFH)
The DfE have now published the 2017 Academies Financial Handbook, which comes into effect on 1st September 2017. Click here to download the 2017 Academies Financial Handbook .
This handbook sets out the financial management, control and reporting requirements that apply to all academy trusts. It describes a financial framework for trusts that focuses on principles rather than detailed guidance.
There haven’t been too many changes. The main theme for changes in the 2017 edition is a real focus on segregation and skills alongside some issues which have arisen from ESFA academy trust investigations.
All those involved in making decisions on behalf of Trusts, are recommended to read the new edition, in particular Annex B and Annex C.
Summarised below are the main changes of the 2017 edition of the Academies Financial Handbook (AFH) with a supporting note:
- The ESFA have updated information about the roles of a member and to provide greater understanding of expectations, including emphasis on having significant separation between the roles.
- A reminder to trusts that the ‘seven principals of public life’ apply to everyone holding public office (1.1.2)
Note: All employees of the Trust must not be appointed as members unless permitted by their articles of association. The current model articles do not allow members to be employees but older versions may. It is also suggested that Trusts with older articles may wish to consider adopting the latest model articles to help improve their governance model as a result. The DfE’s preference is that no other employees, other than the senior executive leader, to serve as a trustee. This preference is to ensure there are clear lines of accountability through the senior leader and again, Trusts may wish to adopt this as their governance model.
- Annual letters to Trusts’ Accounting Officers from ESFA’s Accounting Officer about the accountability framework must be discussed by the board with action taken where appropriate to strengthen the trust’s systems (1.5.5).
Note: These letters MUST be shared with members, trustees, chief financial officer and other members of the senior leadership team and discussed by the board of trustees. Therefore, it would be highly recommended that these discussions are clearly documented within the Trust’s board meeting minutes.
- The ESFA have provided additional information for Trusts about improving efficiency (1.5.11).
Note: If the ESFA have concerns about the financial management of a Trust but not enough to issue a FNtI (Financial Notice to Improve) they may specify that the Trust needs a school financial health and efficiency expert to identify where improvements can be made and support the Trust. They may prescribe this as a condition of an FNtI.
- Emphasis has been put on the importance of addressing any skills gaps on the board at key transition points such as growth periods in the Trust (1.5.16).
- Draws attention to use the Department for Education’s (DfE’s) competency framework for governance when determining skills gaps (1.5.16).
- Why Trust’s should refer to the key features of effective governance in the Department’s Governance Handbook (see above link for Governance Handbook) when assessing their effectiveness (1.5.17).
Note: Trust’s should be looking to implement all of the above as part of their annual assessment of their effectiveness and skill-set, as well as documenting these discussions within board meeting minutes. Trust’s should develop their own annual reminder to ensure they carry out an check of their board’s skill-set and improve governance training where possible.
- Introduction of additional information about the appointment of the trust’s statutory auditor (4.1.1).
Click here to download the Governance Handbook
- Emphasis that the trust’s record of key individuals on Edubase must remain up to date (4.7.4).
Note: This has been highlighted due to ESFA investigation reports have found that Trusts are not keeping their records up to date as to who are members and trustees following appointments or resignations. Both Edubase and Companies House records need to be kept up-to-date. It is quite often usual for the company secretary to undertake this task within their role.
- General notification that they have updated the references to submission of budget information to ESFA to reflect changes in reporting requirements (2.2.3).
- Emphasising the decision’s about levels of executive pay must follow a robust evidence-based process (2.3.5)
Note: All Trust boards should ensure that their decision making on executive pay follows a robust process and are well documented with supporting evidence. All decisions should be noted also within confidential minutes etc.
Provided an explanation on repercussive transactions requiring ESFA approval, alongside those that are novel or contentious, and that ESFA may refer these to HM Treasury (3.3.1).
Note: Trusts should always think hard about the wider implications and how it will impact upon the wider sector and prudent to consult with the ESFA before entering into transactions.
- Clarification regarding delegated authority to make non-statutory/non- contractual staff severance payments under £50,000 is before income tax and other deductions (3.7.6).
- Notification that the ESFA have updated the handbook to reflect the Department’s introduction of an academies’ sector annual report and accounts (4.1.6).
Members and Trustees
All academy trusts have both members and trustees. The roles of members and trustees are described in further detail within the DfE’s Governance Handbook.