financial statements outcomes 2012 to 2013. overview outcomes of academy trust financial statement...
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Financial Statements Outcomes
2012 to 2013
Overview
Outcomes of academy trust financial statement
reviews 2012/13:
Submission requirements and timeliness of returns
EFA review process
Key themes
Statistics
Academy trusts are:
Companies limited by guarantee
Exempt charities
Obliged to follow the EFA requirements set by:
Funding agreement
Academies Financial Handbook
Academies Accounts Direction
Submission requirementsKey requirements for academy trusts for 2012/13:
Financial statements to 31 August 2013
Must be audited, and include a report on regularity
Submit to EFA by 31 December 2013
File with Companies House by 31 May 2014
Publish on trust website by 31 May 2014
NB: For 2013/14, trusts will need to publish their
financial statements on the trust website by 31 January
2015
Timeliness of returns
2,076 trusts submitted returns by the deadline of 31 December
Thank you to academy trusts who met the deadline
Late submission can in some instances indicate a lack of
financial planning or management
It can also impact on the EFA consolidation and submission of
its own financial statements
2010/11 2011/12 2012/13
No. of financial statements
450 1,472 2,256
Submitted by 31 December
83% 87% 92%
Submitted by 31 March - 98% 98%
First financial statements Financial statements must be to 31 August
First accounting period can be up to 18 months
The accounting period starts from the date of incorporation,
not the date of opening or conversion
If incorporated before 1 March 2013, financial statements to 31
August 2013 were required
Cannot prepare dormant financial statements covering
incorporation to just before opening (to defer first non-dormant
financial statements)
New trusts should change their accounting reference dates to
31 August with Companies House promptly
EFA review process
Risk based approach
Financial statements checks include:
Reviewing opinions
Checking disclosures
Management letter checks include:
Reviewing recommendations to assess potential
irregularity
Review of management response
Financial statements outcomes
2010-11 2011-12 2012-13
Total qualified audit opinions
1 29 (2.0%) 27 (1.2%)
Qualified audit opinions (salary disclosure only)
- 26 (1.8%) 21 (0.9%)
Total management letter recommendations
n/a 4,250+ 11,500+
Range of recommendations
n/a 0-46 0-93
Avg. recommendations n/a 3 5
Audit qualification reasons:
Main reasons for audit qualification:
Salary disclosure
Land and building valuations and accounting treatment
Actuarial information outstanding
Key themes from management letters Poor governance
Lack of financial management
Issues with accounting policies
Poor internal controls
Related party transactions and declaration of interests
Payroll/HR issues
Reconciliation of control accounts
Regularity outcomes
2010-11 2011-12 2012-13
Modified regularity report
n/a 35 (2.4%) 83 (3.7%)
Disclosures within AO statement
n/a n/a 44 (1.9%)
Auditor provided unsigned statement
n/a n/a 17 (0.8%)
Consistency between accounting officer statement and regularity report
We expect to see consistency between:
the accounting officer statement on regularity, propriety and
compliance
the independent auditor’s report on regularity.
Surprisingly, several sets of financial statements contained
clean accounting officer statements yet regularity issues were
raised in the auditors report on regularity
Reasons for modified regularity report Lack of approval for leases
Lack of approval for non-contractual severance payments
on or over £50k
Lack of independent checking e.g. Responsible Officer
No audit committee in place
Weak internal controls and lack of authorisation of
expenditure
Severance payments Followed up on disclosures in financial statements
149 trusts disclosed payments within the accounts return but
not financial statements. Reasons were:
Academy and auditor oversight
Immaterial
We require compliance with the accounts direction and the
transaction is material by nature.
The EFA will follow up where non-contractual severance
payments >= £50k are disclosed and approval is not clear
Also performed a 5% review of all non-contractual
payments made
Related party transactions (RPTs)
Be aware of, and follow, the requirements of the Academies
Financial Handbook in respect of connected party transactions
RPTs must be disclosed within the financial statements in line
with the Academies Accounts Direction
We will follow up if financial statements do not make clear
whether or not the academy trust had any RPTs
We will follow up if financial statements disclose RPTs, but the
disclosures are not sufficient for us to tell if those transactions
were properly entered into
Disclosures
Disclosures must follow the requirements and format of the
Academies Accounts Direction
Particularly relevant for the accounting officer statement and
the auditors opinions
Don’t simply carry forward wording from the previous year
without checking the latest Academies Accounts Direction
Multi-academy trust financial statements require disclosure
information at individual academy level, including the share of
funds attributable to each academy within the funds notes
Value for Money statement
Academy trusts open at 31 August 2013 were required to complete and submit Value for Money (VfM) statements for the first time by 31 December 2013
Guide to the VfM statement suggested a number of areas that a Trust should consider in assessing value for money
74% of statements were received by the deadline of 31 December 2013
Some academies just wrote out their best value policies, providing no specific examples of VfM achieved in the period
Value for Money good practice
Examples of good practice included:
Savings from large contracts and use of options appraisal
Economies of scale and shared services
Improvements in students gaining access to HE and reduction in NEETs
Provision of in-house school meals to provide improved nutritional meals at better value
Reduction in the achievement gap between free school meals pupils and non- free school meals pupils
Academy trusts open at 31 August 2014 will again be asked to submit and publish VfM statements
‘Dear Accounting Officer’ 2014
Peter Lauener wrote to all Accounting Officer’s (AO) on 19 May 2014. A copy of the letter can be found at https://www.gov.uk/government/publications/letter-to-academy-trust-accounting-officers
Key themes:
Fraud and irregularityCorrect implementation of internal controls can reduce the risk of fraud and the EFA has a zero tolerance approach to fraud
Connected party transactionsAnnex B provides key considerations for transactions and could be used as a checklist for AO
Special paymentsSeverance payments subject to £50k self approval, but values under this amount still need to be justified and show value for money
An ex-gratia payment (e.g. honorarium) will always require prior approval
Webinar timetable
You can register for the webinars at https://registration.livegroup.co.uk/academyfinance/
• You can submit questions for the panel in advance when you register, or log back in later and submit your questions
• If you can’t attend on 15 July, you can watch a recording of the webinar online after the event
Interactive webinars Date
Academies Financial Framework (academies)
15 July 2014 at 11am
Academies Financial Framework (auditors)
15 July 2014 at 2pm
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