Draft letter from EFA to academies about financial returns 2011-12

Just in case business managers have not picked up the latest information – please find a  letter that provides the latest position covering the 2011-12 ‘return’

 

Dear Colleague

I am writing to let you know that I have decided to defer the submission date of the Accounts Return from December 2012 to the end of January 2013.

From your helpful feedback it is clear to me that this Return, which we sent to you earlier this month and which is being completed by all academies preparing statutory accounts for the 2011/12 academic year, is likely to put some of you at risk of not completing your statutory accounts on time.  I know that this has been exacerbated by the delays in getting the form of the assurance opinion agreed – this is now finalised and will be available on the website this week.  I hope that deferring the submission date for the Accounts Return to January 2013 will allow you to focus on and complete your statutory annual accounts on time by the end of this calendar year.

I am acutely aware that it feels that the burdens of academy status are increasing and diluting the financial freedoms announced with the publication of the new Academies Financial Handbook (AFH).  The accounts return has followed a demanding series of other financial returns and changes to the assurance regime and I want to explain some of the background to this as well as setting out how I intend to improve things by working with you.

I am absolutely clear you must be free to use your independence to best effect in delivering excellent teaching.  I am also clear that there must be strong accountability for the use of public funds.  The recently issued revised AFH sought to strike that balance.  It strengthened some aspects of the accountability framework within the context of offering more flexibility of approach, whilst introducing significant new freedoms.

We are looking at every opportunity to simplify the arrangements further, whilst delivering even more freedoms for academies.  Making further progress in this direction, however, does require us all to demonstrate that we can make the existing regime work.  The National Audit Office has in the past commented on the number of academies that have failed to meet the deadlines for returns set by the Department and on the quality of some of those returns.  In some cases this has included a failure to submit the statutory accounts on time.

It was within this challenging context that we had to secure agreement on all the freedoms in the new AFH.  This is in part why some of the returns were issued to you later than I would have liked, and certainly later than will be the case next year.  I did agree in recognition of the late issue that grants should be available to enable you to buy professional help in preparing some of your returns where they were submitted on time.  I am pleased to say that, so far, the majority of academies have submitted valid returns by the deadline, a clear demonstration of a joint commitment to accountability.

Looking forward, we will continue to work very hard to make sure that the Department’s business cycle supports academies and not the other way round.  To that end we are putting together a case that will allow us to use your August accounts in our accounts (which are produced at the end of March) rather than asking you to prepare an additional return in March each year.  The accountants tell me this is unprecedented but I am determined that we should start from the principle of academies operating a financial cycle that supports your business.  A number of you are helping us to prepare that case by preparing a second set of accounts.  In future, I aim to ensure only academies that opened too recently to prepare academic year accounts will be asked to prepare a one-off consolidation return for the financial year ending March.

I have also asked Simon Parkes, my Director of Finance and Maintained Schools Funding, to reconvene a reference group of academy finance directors and business managers.  I want this group to advise us all on the content and timing of future returns.  We will consult on the date academies are best able to submit a budget forecast for 2013/14.  We will also consult academies and professional bodies on the accounts return for 2012/13, ensuring that this return is the absolute minimum needed for our accounts.  We will continue to issue guidance and hold seminars but these will be shaped by what you tell us is useful and will take place earlier in the year.

Getting the right balance between flexibility and accountability is always going to be a challenge.  Every perceived failure in an academy will increase the pressure to strengthen accountability arrangements and you will, rightly, continue to press for increased flexibility.  Between us we must find a regime that achieves that balance and I look forward to working with you to do precisely that.

 

Education Funding Agency