The new Academies Financial Handbook (AFH) is out. You can find our full roundup of the changes here, but today, we wanted to focus on one of the key headlines:
Your auditors can no longer provide internal assurance for your academy trust.
It’s a change driven by an update to the Ethical Standard around auditor independence which applies to all companies – academies included. And it means any academy trust that currently uses their external auditor to provide internal scrutiny should find another way of delivering this assurance.
WHEN DOES THE CHANGE APPLY FROM?
It took effect from 15 March 2020. Arrangements in place for the current academic year can continue, but you will need a new arrangement from 1 September 2020.
WHAT SHOULD I DO NOW?
Review your current arrangements. If you need new internal scrutiny arrangements, talk to other advisers to retender as soon as possible. Remember the ESFA want this work to be timely, so you’ll want to be setting the programme of work early in the new academic year.
The Handbook has tightened up on who can do this work, and your arrangements will need to meet these conditions:
- Independent and objective – not a member of staff
- Suitably qualified and experienced
- Able to draw on technical expertise as needed
- Directed by your audit committee
- Informed by risk
- Gives regular feedback to the audit committee
- Provides an annual summary to support improvement
What does “suitably qualified and experienced” mean?
- a member of a relevant professional body
- or having qualifications in finance, accounting or audit
- and appropriate internal audit experience.
If you’re using peer review, the trust supplying the reviewer must have a good standard of financial management and governance, the Board must minute the decision and the peer reviewer must be independent of your trust.
HOW CAN WE HELP?
We’ve been providing internal assurance to academy clients for years. If you’d like to bounce around some ideas, we’d love to chat.
We’ve worked with trusts of all shapes and sizes, all over the country. And we’re leaders in the risk-based internal assurance approach. Why? Because we’ve been working with our clients like this since the start, before the Handbook mandated it.
Just some of the areas we’ve looked at include:
- Review of key financial processes
- Academies Financial Handbook compliance
- HR & Payroll
- Trust Structures and growth plans
- Management reporting
- Central services
EVERYONE SAYS THEY’RE DIFFERENT, RIGHT?
But we think you’ll find our people refreshing. That’s because we’ve championed our culture, with an ever-present belief that engaged, happy people produce incredible work.
It’s a belief that’s seen us crowned the 8th Best Company to Work For in the UK, and the Best Place to Work in Europe, and it’s never rung truer than in our Not for Profit team.
Everyone in the team specialises in working with schools and charities. In fact, that’s all we do, and because most of our leadership team are trustees and/or governors themselves, we know all about the unique challenges academies face, first-hand.
We’re all accountants, too, ticking the ‘suitably qualified’ box, and as approved partners of ISBL and ASCL, we’re always on top of current issues in the sector.
BUT WE LIKE TO SHOW, NOT JUST TELL
So, let’s chat. Get in touch with Sarah Chambers or James Taylor today to talk through your requirements.