End of Year Scrutiny Report

The AFH requires trusts to submit an annual report, summarising the areas reviewed by, key findings from, and recommendations and conclusions arising from the work of the internal scrutineer, as presented to the audit committee during the year. This needs to be sent to the ESFA by 31 December each year (although for this year, as with the accounts filing deadline, this has been moved back a month to January 2021).

The intention is that this report will also provide the Accounting Officer with key evidence to enable them to sign off their statement on regularity, propriety and compliance and the board with information for its annual governance statement, both of which are submitted to ESFA with the audited accounts.

In essence, the EOY report should “tell the story” of how you identified, managed and were assured about risks over the course of the year, and where you directed your internal assurance activities as a result (plus the results of these).

Although the report is technically the trust’s to submit, where you have opted for a bought in internal audit provider to carry out reviews for you, the report will in practice be completed jointly with internal auditor, as the expectation is that they will be able to complete this report to the extent of areas covered by their work. The question for trusts however is: How do we know everything else is working ok in the absence of any specific work in that area from the internal auditor? Where else can we / have we receive(d) assurance from?

On a related note, it’s certainly been a difficult six months for the sector. Already dealing with the “normal year” challenges of increasing financial pressures/cuts and ever-more rigorous scrutiny, in March you had, at very little notice, to gear up for the previously unimaginable task of supporting entire-school remote learning and the simultaneous provision of childcare for key-worker children.

For a number of trusts, one of the many impacts of this is not being able to carry out internal audit visits either on site as planned or, in some cases, at all.

This may cause some problems in completing your End of Year Scrutiny report, but you can still work with your auditors to jointly prepare a summary of what was able to be done.

If no actual fieldwork was possible, perhaps instead you can provide some narrative about how you maintained visibility over all your risks, those pre-existing as well as emerging risks due to COVID19.

We have worked with several trusts over the last few months to provide facilitated discussions / training for boards, audit/finance committees and management teams regarding the trust’s current approach to risk management, to provide observations and suggestions for how trusts could evolve what they currently do to gain greater visibility and assurance.

Describing this in the Internal Scrutiny summary report would explain to the ESFA that you took proactive action in response to the restrictions of lockdown to review and enhance a key expanding theme of recent financial handbooks.

Other examples of alternative support we have provided include reviewing initial and re-opening COVID19 risk assessments prepared by schools, to challenge their completeness and achievability in practice, and in turn to provide assurance to boards / committees that everything stated “on paper” was actually in place rather than “to be done”.

We are also now being asked to be involved in, or indeed to facilitate, trusts’ own “lessons learned” review of whether the overall response to COVID and related lockdown was effective, which areas worked well, whether certain aspects would be addressed differently in future, how emerging risks were monitored and addressed, and if any wider lessons learned have been properly reflected in the trust’s existing disaster recovery and related procedures.

Some trusts went even further and asked us to review what they were proposing from a student/staff wellbeing point of view, looking at how the overall “wellness” of students, staff, governors, and other trust personnel/contractors managed. How did the trust identify key needs, develop effective strategies to meet these needs, had the ability to implement the strategy in practice and therefore review its effectiveness and resulting adaptation.

These examples show the different approaches and focuses that internal audit can adopt, with the aim of providing you with key assurance over the things that really matter to you.