Investigations and Common Themes

In a letter sent to all academy trusts on 10 June 2021 from Baroness Berridge, Minister for the School System, the Financial Notice to Improve was renamed to a Notice to Improve.

Baroness Berridge stated that this name change will better reflect the current parameters of the Handbook and Notice, to ensure coherence and recognise the duties on trusts and the important role they have beyond financial oversight, a role that has been made even clearer through the pandemic.

The level of scrutiny on the Academy sector from both the ESFA and the public has never been higher. There are currently 37 open financial notices to improve across the Academy sector, with the earliest being issued in 2015 – that’s a long time to be under such scrutiny from the ESFA!

A notice to improve will apply certain conditions to an Academy Trust and a number of delegated authorities are revoked, and it is worth noting that lots of these conditions come with very short timeframes, some examples are:

• Submitting notice of all board minutes to the ESFA and sending agenda and draft minutes
• Freedoms under Part 3 and Annex B of the AFH are revoked
• A School Resource Management Advisor (SRMA) will be deployed
• Provide ESFA with monthly management accounts, including a cashflow report each month
• Have monthly monitoring meetings with the ESFA
• Produce a financial plan to be approved and monitored by the ESFA
• Must employ a third party to undertake a full governance review.

Of all the Notices to Improve that we have seen there are generally very similar themes, and they mostly surround the theme of governance, highlighting the importance of the Trust Board to have sufficient oversight of the Trust’s operations, both financially and non-financially and to have the required skills within the Board to adequately challenge the Accounting Officer.

It is important to have the right systems in place to firstly enable that challenge from the Board but also to ensure that challenge is documented in the Board minutes and ensuring that those minutes would stand up to third party scrutiny. Ensure the rationale for significant decisions is documented, ensure the whole Board or committee are contributing and decisions aren’t being made unilaterally.

Remember that notices to improve can come about in different ways whether that be by failure to comply with the Academies Handbook, poor financial forecasts and management or complaints from staff, parents, students or the public which can lead the ESFA into an investigation.

Ensuring that all deadlines are met for statutory submissions, ensuring a robust budgeting and forecasting process is in place and ensuring that the Trust complies with the “musts” and the Academies Handbook will mean that your Trust should be able to avoid what would be a spotlight on your Trust and a thorough review from the ESFA.