Earlier this summer the Department for Education (DfE) published the new Academy Trust Handbook which takes effect from 1 September 2021 and we summarise the key changes here. It is also known as, and previously more commonly referred to as, the Academies Financial Handbook.
The new addition has been developed to highlight academy trusts' responsibilities in a wider range of areas, than primarily focussing on financial issues. Whilst the handbook does contain some new provisions, it also reminds academy trusts of their pre-existing responsibilities, so as to consolidate the various requirements in one document. Indeed, Baroness Berridge notes in her opening commentary that the new version of the handbook will provide close to a "one stop shop for trustees, local governors and leaders of trusts".
The Academy Trust Handbook focuses on the governance of academy trusts. The main changes to the roles and responsibilities are as follows:
- trusts must make sure that their existing and future members are not subject to a direction made under section 128 of the Education and Skills Act 2008;
- all trusts should have reserved places for parents, carers and other individuals with parental responsibilities in their governance structure;
- clauses 1.15, 1.17 and 1.20 highlight trusts’ responsibilities in relation to safeguarding, health and safety, and estates management. The handbook contains further guidance to assist academy trusts with complying with these obligations;
- from 1 March 2022, any newly appointed senior executive leader may only be a trustee if (1) the members appoint them as such, (2) the senior executive leader agrees, and (3) the trust’s articles of association permit it;
- clause 1.32 highlights the value of objective independent reviews of the effectiveness of a board. These reviews are particularly important before a board undertakes significant change. Further, the DfE’s preference is that these reviews are conducted routinely as part of a wider programme of improvement;
- trusts are to liaise with their Regional Schools Commissioner to discuss their structure and options when their senior executive leader is planning to leave the trust;
- each academy trust board must appoint a “Governance Professional”. This was previously referred to as a “Clerk”; and
- academy trusts must ensure enhanced DBS certificates are obtained for all staff and supply staff (where appropriate). There is also a requirement for members, trustees and individuals on any committees to have an enhanced criminal records certificate from the DBS.
Main financial requirements
The handbook also explains some of the financial requirements of academy trusts in further detail. This includes:
- details about when academy trusts should review their scheme of delegation. Specifically, schemes of delegation should be reviewed annually, and immediately after there has been a change in trust management or organisational structure;
- an update to the information that trusts need to publish on their website in relation to employee benefits. A trust must publish on its website the number of employees whose benefits exceeded £100,000 for the previous year ended 31 August. Benefits include salary, employers’ pension contributions, other taxable benefits and termination payments; and
- clause 2.51 reminds academy trusts of the governance documents which need to be made available for public inspection.
- The Academy Trust Handbook highlights that the chair of the audit and risk committee should not be the same person as the chair of the finance committee, and also explains that internal scrutiny must not be carried out by a member of the senior leadership team.
Annual accounts and internal audit
- Academies are advised that academy trusts should re-tender for their external audit service at least every five years.
- Clause 5.12 provides that academy trusts must obtain prior approval for staff severance payments of £100,000 or more which include a non-statutory/non-contractual element, and/or where the employee in question earns over £150,000.
The regulator and intervention
- The handbook introduces a new requirement for academy trusts to provide the Education & Skills Funding Agency (ESFA) with authority to obtain third party information, where the ESFA has concerns about the financial management and/or governance at a trust;
- Clauses 6.16 and 6.17 provide advice and guidance on cybercrime. This includes an obligation on academy trusts to obtain permission from the ESFA before it pays any cyber ransom demands. This new advice and guidance has been provided following the rise of cyber-attacks involving ransomware affecting the education sector; and
- The “Financial Notice to Improve” has been renamed to “Notice to Improve”. This reflects the shift to the ESFA intervening in broader governance issues, rather than just financial issues.
As above, the Academy Trust Handbook has been developed and rebranded to highlight the broader responsibilities of academy trusts. Whilst this article provides a summary of some of the key changes implemented by the handbook, we recommend that trustees familiarise themselves with the handbook in full, a copy of which can be accessed here. Should you have any further queries about the Academy Trust Handbook, or in relation to academies more generally, please do not hesitate to get in touch with Kirsteen Hook or Laura Sherratt.
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