Below are some initial thoughts from the academies team here at Lovewell Blake that you may wish to take on board, however if you have any areas of concern or questions please contact us and we would be happy to help.
You can find a copy of the letter here for reference.
1. From 1 September 2019 it will be necessary to provide internal scrutiny reports to the ESFA. The first submission will be due by 31 December 2019 and should be a copy of the latest internal scrutiny report. After this you will need to produce an annual report detailing the areas reviewed, the key findings, recommendations and conclusions.
The Academies Financial Handbook (AFH) now states that a risk based programme of works should be 'spread appropriately over a year'. This suggests, therefore, that internal scrutiny visits should be carried out more than once a year.
Whilst it is not necessary for smaller Trusts (with income of less than £50m) to have a dedicated audit committee, the ESFA’s suggestion that an audit committee should meet three times per year, would indicate that it would be good practice for audit reports to be discussed at least three times per year by Trust boards or committees. One example could be that a programme of work is undertaken in two visits, allowing the statutory report to be discussed in one meeting and the internal reports in the remaining two. This example means the Trust would be subject to audit in each of the academic terms – a statutory one in the Autumn, and internal scrutiny in the Spring and Summer.
It is possible for smaller academy Trusts to continue to undertake an annual review, as documented in the Good Practice Guide, if this is considered to be appropriate. However, as the report is due to be submitted by 31 December it may be appropriate to complete in the Summer term to avoid the final report being sent to the ESFA being almost a year old.
2. As you are aware local authority schools had a mandatory requirement to complete a SFVS each year. It is now mandatory for academy trusts to complete the, formerly voluntary, School Resource Management Self-Assessment Tool (SRMSAT) annually in order to maintain a good level of financial health and resource management. It will be necessary for the Trust to have completed the SRMSAT for the year ended 31 August 2019 and have submitted this to the ESFA by 14 November 2019.
Whilst it is not necessary for your accountant to audit the SRMSAT, it would be helpful if this tool could be completed prior to your audit as it would help your accountant to understand where the Trust assesses its financial health.
3. The letter has drawn awareness to the Good Practice Guides which have been issued by the ESFA providing suggestions for good practice across a range of financial topics such as risk management, internal scrutiny etc. One of these factsheets is in connection with setting executive pay and in light of the recent ESFA letters which have been sent to Academy Trusts where executives’ have, in their opinion, excessive salaries, we would recommend a review of this factsheet to ensure the Trust is following good practice recommendations.