For a number of reasons, academies and Multi Academy Trusts (MATs) may find themselves needing to approach the Education Skills Funding Agency (ESFA) for guidance and support. The early timing of any approach or self-referral can make a material difference to the outcome and potential support package offered.
The most obvious reason for a trust to make contact with the ESFA is when there is a cashflow crisis that has developed and the AO, CFO and trustees become aware that the trust will not be able to meet its financial obligations. This can be for a number of reasons that may include an increase in pupil numbers, unexpected costs beyond the control of the trust or any other unforeseen circumstances.
Where you have any concerns regarding either the financial information you are producing, or the way the funding looks over the year ahead, it is the right course of action to seek help and advice. If you find your trust in this position, please contact us first to talk through your concerns.
We will then discuss the range of options available to assist the trust which include recovery plans, help with Integrated Curriculum Financial Planning (ICFP), or support and advice with a discussion with the ESFA at an early stage. Our advisory team have significant experience of advising trusts in a difficult financial position and we are keen to help any trust board that needs to discuss their next steps.
The earlier a financial concern is spotted the better because it allows the trust and the ESFA to resolve matters in a less drastic way. One way of identifying a potential problem is using the ICFP tool. Having undertaken over 35 of these to date, we have the experience to help and can also advise on how to use this tool for primary schools.
Once contacted, the ESFA will consider the information received and potentially arrange contact with the trust to explore and investigate. This can result in a number of actions being taken including being asked to work with a Schools Resource Management Advisor (SRMA) to help identify savings and efficiencies, or to recommend the trust undergoes an external review of financial management and control, along with a financial governance review.
The most extreme form of action can result in a Financial Notice to Improve (FNtI), combining some of the above-mentioned measures.
As a reminder, the 2018 Academies Financial Handbook (AFH) clearly states the financial information that must be sent to the chair of trustees on a monthly basis: financial performance (profit and loss/SOFA); financial position (balance sheet); budget variance reports, cashflow forecast; and key performance indicators. This can be a challenge, but the information will allow the chair (and trustees) access to the current financial position to identify financial pressures and problems early.
Looking at least one year ahead allows time to approach the ESFA if problems are identified, and get measures into place to work through to a solution.
Please contact our Academies team for help and advice.