Responding to COVID-19: insight, support and guidance
By Lisa Forster, Finance Advisor, CIPFA
The autonomy of academy status is an attractive badge for many - however do academies really know what this involves?
This is perhaps aptly summed up by quoting from a Spiderman movie. ‘With great power comes great responsibility’. This may seen rather out of kilter or tongue in cheek with a subject on academy finance, however it is critical that academies recognise that they are responsible for securing strong, stewardship and propriety within their schools.
The new Academy handbook released on the 21st September sets out the duties and obligations of academy trusts, and although the 2012 version is much shorter than it’s 2006 predecessor (26 pages compared to the 212 pages) the requirements for demonstrating strong governance and assurance are more critical than ever
Key changes are around audit, requiring mandatory audit committees for multi-academy federations and, as a minimum for all others, a committee that fulfils the functions of an audit committee. For many this will require a shift in current operations and a need to give thought to how assurance can be provided (to the committee) that risks and financial control are satisfactorily managed.
The new regularity, propriety and compliance statement provides an additional focus on financial assurance, and much of the academies audit committee and/ or audit work will be instrumental in ensuring that the external auditors can rely on the robustness of the academies systems.
In the past schools with cash flow shortages and budget deficits have relied on their local authority to provide them with the funds to keep afloat. For many, financial autonomy, and the need to ensure cash flow is managed effectively is new ground and has led to a realisation that they need to budget carefully to ensure there is enough money in the account to pay staff salaries at the end of each month.
Increased financial autonomy, does indeed lead to increased power, however the responsibility that goes alongside this should not be underestimated.