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By Kerry Ace, Finance & Policy Manager at CIPFA
Implementation of sound financial regulations makes good business sense. For education institutions they have additional significance as their grant funding depends upon it. Institutions are required by their funding body to have a sound system of internal financial management and control in place; and financial regulations are a core component of such a system.
The control environment in which institutions operate is becoming ever more complex as they enhance their customer focus, exploring new ways of working which include increased use of internet payments, use of debit and credit cards and greater activity overseas. In such circumstances institutions must ensure their controls are fit for purpose and guard against the potential for fraud.
Like colleges and universities, academies are independent and autonomous. However, the academy sector as a whole needs to demonstrate that it has taken heed of criticisms regarding ineffective financial management and poor internal control. Clearly not all academies have problems, but the perceived risks with the sector are higher because they are new and having to manage their finances themselves for the first time. The challenge for all involved with academies is to ensure that they stay financially strong eliciting greater value for money and ensuring resources are focussed on improving the quality of education and opportunities available for young people across England.
In response to these issues, CIPFA has developed and published a new edition of its model set of financial regulations which now includes academies as well as colleges and universities. This model set is designed to help institutions establish and test financial regulations that set out the financial policies of the institution. The model set is not intended to be prescriptive and has been written in a format that will enable finance professionals to modify the regulations to the structure, size and circumstances of their own institutions before being presented to their governing bodies for approval.
This latest edition includes new sections on topical issues such as the receipt of income by credit or debit card; internet receipts; and procedures for the prevention, detection and investigation of fraud. It covers the following principal types of institution – universities and colleges of higher education; further education institutions and sixth form colleges; and has now been adapted to cover academies (including free schools) and multi academy trusts. Any differences between these types of institution are clearly signalled in the text.