The Education and Skills Funding Agency (ESFA) has published a revised version of Academies Financial Handbook that contains some key changes and clarifications. In particular, it addresses a number of the issues that NAHT has been pressing the government to consider in order to protect the reputation and accountability of our academy sector. It contains new restrictions on academies engaged in related party transactions and new advice on how academies should set executive pay and make provision for whistleblowing.
New provisions include:
- Highlighting that the secretary of state can require the trust to remove a member or trustee, and make directions under section 128 of the Education and Skills Act 2008 to prohibit individuals from acting as a member, trustee, or executive leader of a trust
- Clarifying the expectations about the process for setting executive pay, including that it must be transparent, proportionate and justifiable
- Clarity about the budget forecast returns to submit to ESFA. Also requiring management accounts to be shared with the chair of trustees monthly and with other trustees six times a year
- A new requirement that all related party transactions must be reported to ESFA in advance and that 'expenditure' RPTs must be approved in advance by ESFA if over £20k individually or where the cumulative total with the related party in the year exceeds £20k. These requirements will take effect from 1 April 2019, and follow recent public accounts committee recommendations
- Clarity about the requirement to have a whistleblowing strategy.
First published 19 July 2018