finance ebook

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Finance

Top5

Finance Considerationswhen transitioning to academy or multi-academy trust status

A Useful Guide

www.strictlyeducation.co.uk

Introduction 3

#1 Funding availablility 4

#2 Finance systems 5

#3 Banking & accounting 6

#4 Reporting & budgeting 7

#5 Skills & workload 8

Testimonials 9

In Summary 11

Written by:

Trish CainHead of Finance Services Strictly Education

[email protected] 576 393

when t rans i t ion ing to academy or mu l t i -academy t rus t s ta tusTop 5 Finance Considerations

www.strictlyeducation.co.uk /11

This e-book is aimed at head teachers and school leaders who are considering becoming an academy or part of a multi-academy trust (MAT).

Whilst academies are responsible for their own financial management, they are subject to public standards of accountability and have to comply with both charity law, and the basic financial management, control and reporting requirements set out in the government’s Academies Financial Handbook – all of which means additional responsibility and workload.

A school’s finances and systems will be thoroughly scrutinised as part of the academy application process and therefore it is an important element to get right from the start.

After helping over 200 schools make the transition to academy or MAT status we have put together this finance guide to provide an overview and reference tool when deciding to convert to academy status.

We hope you find it useful!

Trish CainHead of Finance Services

Why have we created this guide?

Introduction


Understand what sources of funding are available

#1 Funding availablility

Academies are funded by the EFA on the same basis as maintained schools through the General Annual Grant (GAG). This includes high needs top-up and pupil premium funding.

Other sources of funding are also available:

General Annual Grant: Annual funding provided by the EFA which replaces most parts of the S251 revenue received by maintained schools.

Support Grant: After receiving your academy order a £25k grant will be issued to support the cost of conversion

Small Schools Supplement: If you have less than 100 pupils you can apply for an additional £5k or 100 – 210 pupils, £2k.

Capital Funding: Academies can apply for the condition improvement fund (CIF) to improve the condition of their buildings.

Other EFA Grants: Other grants available to your academy.

Quick Checklist

Annual funding

. General Annual Grant

. High needs top-up

. Pupil premium allocation

Grants

. Small Schools Supplement

. Capital Funding

. Other EFA grants

£


Quick Checklist

Understand reporting requirements

. EFA

. Governors

. HMRC

Are systems fit for purpose?

. Review finance system

. Review budget software

Set-up

. Create new entity and cost-centre structure

The answer to this question lies in whether your current finance system will be able to meet the new reporting requirements of the EFA, Governors and HMRC.

The EFA requires returns and reports during the year that are expected in a coding structure that has been pre-defined. It is essential that your accounting system reflects this and your staff understand this requirement.

Likewise it is important to have robust budgeting tools that reflect these requirements and enables finance team members to understand and produce budgets that reflect the true position of the academy and allow easy integration with the accounting system.

If you decide that you do need a new finance system you will need to find out what systems are best suited to new academies, what other consolidations are required if forming a MAT and how to go about setting it up.

Do you have the right system?

#2 Finance systems


What needs to be done?

Academy trusts are independent charitable companies and, whilst the EFA aims to keep a reasonable balance between this independence and the need to account for public money, your administrative burden will increase.

As a new entity you will need to set up a new bank account, transfer any current direct debits and consolidate any school fund accounts. When closing down your old accounts it is important to talk to your local authority to find out what they expect. On a monthly basis you will need to prepare management accounts, including income and expenditure reports, cash flow reports and balance sheet reconciliations.

You will also have to prepare and submit monthly VAT returns. Rateable values will also reduce and will be claimable from the EFA. In this regard it is important to advise your local authority of your new charitable status for valuation purposes.

#3 Banking & accounting

Monthly Accounting Quick Checklist

. Management accounts

. Month end journals

. VAT return

Banking Quick Checklist (cont.)

. Advise suppliers

. Advise payroll provider

. Apply for new purchasing cards

Banking Quick Checklist

. Close old accounts

. Open new accounts

. Transfer direct debits


Quick Checklist

Reporting

. Understand EFA requirements

. Read Academies Financial Handbook

Budgeting

. Budget forecast due within 6 weeks of opening

Submissions

. FMGS within 4 months

. Land & buildings valuation within 6 weeks

. Teachers Pensions’ return due on 31 May

. Academy accounts direction by 31 December

. March accounts return if required

Understand EFA requirements

The timing and volume of financial reporting can be daunting for any school transitioning to academy status.

It is therefore important to fully understand EFA reporting requirements. All new academy trusts must submit their financial management and governance self-assessment (FMGS) within 4 months of opening.

Preparing and submitting a budget forecast for the new academy is one of the first tasks and needs to be completed within 6 weeks of opening if converted before the 1 April. If converted after, within 6 weeks or before the 31 July depending which is later.

When preparing the budget it is important to ensure that it is reflective of actual expected costs and revenues and that any top-slice payments to the Trust are included.

A land and buildings valuation is also due within 6 weeks of opening!

#4 Reporting & budgeting


Quick Checklist

Staffing

. Required headcount

. Capability assessment

. Professional qualifications

Documentation

. Finance policy & procedures

. Scheme of delegation

. Risk register

. Asset register

. Business continuity plan

This is a key question to ask before you become an academy and make all the necessary changes. Becoming independent and taking ownership of your financial management has many benefits but will require enhanced skill sets.

Getting to grips with EFA requirements and payment schedules, understanding funding streams, accrual accounting, creating new coding structures, preparing monthly accounts and managing the numerous submissions and reporting requests all require professional expertise and the implementation of robust processes and systems.

Finally as a new academy you need to make sure you have clearly documented policies and procedures including a scheme of delegation and risk and asset registers.

Do you have the required staff capability levels?

#5 Skills & workload


Testimonials

REAch2 Academy Trust“Strictly Education were REAch2 Academy Trust’s strategic partner for academy financial support services during our first three years of development. Their expertise, experience and scale of operation provided us with a full range financial support service.”

Dean Ashton, Business and Policy Director, REAch2 Academy Trust


Testimonials

Hillyfield Primary Academy“Strictly Education used their academy and finance expertise to make our academy conversion run smoothly advising and helping throughout the transition. Their staff have a wealth of talent and knowledge and I have no hesitation at all in recommending Strictly Education as a 1st class professional company in academy financial support.”

Heike King, School Business Manager, Hillyfield Primary Academy


We hope you have found this ebook guide useful and that it has provided you with an insight into the financial requirements that will need to be adopted by your school after conversion.

The biggest change that will occur once your school converts to academy status is within the finance function. Having a professional to help in this area can ease the burden and help your staff gain the knowledge and confidence to embrace the change. It will also provide them with the support they will need to continue operating at an effective level.

If you would like to discuss any of the information in this ebook or have any questions about what Strictly Education’s finance team can offer your school or trust please contact me directly.

Trish Cain Head of Finance Services

[email protected] 07876 576 393

Where do I go from here?

In Summary

finance ebook

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