Coronavirus support for further education establishments

As a result of the global pandemic, many, if not all, further education establishments are expected to see a decrease in revenue, with one estimating revenue losses of up to £60 million and another college being advertised for sale for breaching loan conditions with possible insolvency looming.

Whilst cost savings are predicted, there is still expected to be a downturn in overall results.

However, to aid funding during these difficult times, there is additional support available from DfE.

Core Government Funding

It has been announced that the core funding will continue as normal, however there is an expectation that services will also continue to be provided as far as allowed.

Coronavirus (COVID-19) Business Interruption Loan Scheme

As a further education provider, the business is permitted to apply for various loans. This would include the Coronavirus Business Interruption Loan Scheme (‘CBILS’). The CBILS allows for establishments to obtain loans on more favourable terms than a typical commercial loan to assist during the current period.

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (‘CJRS’) allows for members of staff to be furloughed and continue to receive 80% of their pay, up to £2,500 and the associated on-costs. The scheme was first introduced during the first lockdown in March 2020. It was announced in December 2020 that the CJRS will continue to the end of April 2021.

Public sector entities, including further education establishments, are not expected to access the scheme in large numbers as their core funding is continuing and most staff are expected to be remunerated from this funding.

However, further education establishments (and other government funded entities) can access the scheme in respect of those employees who undertake activities which are not funded from public monies. These staff should only be furloughed if the following conditions are met:

  • The employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
  • The employee would otherwise be made redundant or laid off
  • The employee is not involved in delivering provision that has already been funded
  • The employee is not required to deliver provision for an attending child
  • The grant from the CJRS would not lead to financial reserves being created

This therefore allows for further education establishments to furlough staff however, they must be mindful of the overall position of the establishment.

The CJRS is also available on a flexible basis so employees could be working part time and furloughed part time.

Accessing Finance

The message from the government to further education establishments is to first look to reduce operating costs and access the CBILS and other loan options available before looking to other schemes such as CJRS.

As lockdown restrictions are lifted and we return to the tier system, there is hope that some of the private income generated will return, which will aid in ensuring continuous employment for those employees previously furloughed.

Contact us

For further information, please contact one of our team:

Brian Laidlaw (brian.laidlaw@taitwalker.co.uk)
Claire Hinshaw (claire.hinshaw@taitwalker.co.uk)
Marc Breeze (marc.breeze@taitwalker.co.uk)

Letter to academy trust accounting officers – July 2020

Eileen Milner, chief executive and accounting officer of the Education and Skills Funding Agency (ESFA), has written to the accounting officers of academy trusts.

The letter outlines information regarding the further actions that ESFA are taking in relation to academy trusts’ financial management during the COVID-19 pandemic, and includes advice to help academy trusts in maintaining sound governance, good financial systems and a healthy and safe school environment.

Read here:

Letter to academy trust accounting officers

Contact us

For further advice, please contact Brian Laidlaw or Marc Breeze.

New Academies Financial Handbook 2020 – everything you need to know

The 2020 Academies Financial Handbook has been published by ESFA. This version will come into effect on 1 September 2020, which will replace the 2019 version.

ESFA’s focus over the last year has been amendments and clarifications within the handbook, reflecting the departments belief that good governance and strong financial management are critical to an academy trust’s success. However, the radical and sweeping changes that had been called for from some quarters have taken a back seat in light of the current global pandemic.

The 2020 Academies Financial Handbook continues to emphasise the need for high standards of governance to be applied by all those involved in the management of academies. As expected, there are several changes to this edition which focus on this.

Governance

  • The trustees must also take ownership of the trust’s financial sustainability and its ability to operate as a going concern
  • Confirmation that members must not be employees or occupy unpaid staff roles
  • Members must remain informed about trust business
  • Trusts must appoint a clerk to the board (previously a ‘should’ requirement)
  • Trusts must keep their register of interests up to date

Executive Team

  • Both the accounting officer and chief financial officer (CFO) should be employees, and a requirement for ESFA approval if, exceptionally, they are not
  • Also encouraging larger trusts to consider relevant accountancy qualifications for their CFO, and for all CFOs to maintain professional development

General Controls and Transparency

  • Updated clarifications including maintenance of a fixed asset register
  • Termly review of pupil number projections
  • Use of integrated curriculum and financial planning
  • Avoidance of overdrafts
  • Publication of information about high pay and whistleblowing
  • Confirmation that the trust’s funds must not be used to purchase alcohol
  • Updated board and committee responsibilities for risk management
  • Completion of the School resource management self-assessment tool

Internal Scrutiny

  • Updated text including clarification that internal scrutiny covers both financial and non-financial controls
  • Removal of the option for internal audit to be performed by the external auditor
  • Confirmation that trusts can use additional individuals or organisations to support internal scrutiny where specialist nonfinancial knowledge is required

Annual Accounts

  • More on the audit and risk committee’s role in relation to external audit

ESFA are seeking to ensure that academies are once again achieving the high standards of governance and financial management expected by public bodies. The changes and clarifications to this version of the handbook are a clear statement of this intent, and therefore Trust’s need to ensure that their processes and procedures meet these standards.

Contact us

If you’d like to discuss the implications for your trust, please contact Brian Laidlaw or Marc Breeze on 0191 285 0321 or email advice@taitwalker.co.uk

The Academies Accounts Direction 19/20 has been published

The Government has published its detailed guidance for academy trusts and auditors on preparing and auditing academy trusts’ annual financial statements.

The Academies Accounts Direction is the reference pack for academy trusts and their auditors to use when preparing and auditing financial statements for the accounting period ending on 31 August annually.

It explains the elements you must include in your academy trust’s annual report and financial statements and the accounting treatments required. It also provides a model format for the report and the financial statements and ensures consistency of treatment between academy trusts.

The Accounts Direction outlines the requirements for each academy trust to:

  • Prepare an annual report and financial statements to 31 August
  • Have these accounts audited annually by independent registered auditors
  • Produce a statement of regularity, propriety and compliance and obtain a regularity assurance report on this statement from the auditor
  • Submit the audited accounts and auditor’s regularity assurance report to ESFA within 4 months of its year end, usually by 31 December
  • File the accounts with the Companies Registrar as required under the Companies Act 2006
  • Publish the audited accounts on the trust’s website, usually by 31 January

You can read the full document here: https://www.gov.uk/guidance/academies-accounts-direction

Contact us

As always, we are here to help and guide you through this process. For further information please contact Brian Laidlaw on 0191 226 8329 or email brian.laidlaw@taitwalker.co.uk

The Department for Education (DfE) cancels academies budget forecast return outturn

Each year, Academy Trusts are required to submit the financial outturn as at the end of March.

This information will allow the Education and Skills Funding Agency to ensure that the academy sector can accurately report its financial data to HM Treasury. The online form was due to be made available the week commencing 20 April.

Following the outbreak of the coronavirus, there has been added demands on schools and academies, as well as the difficulties encountered with remote working by some staff.

As a result of this, on 17 April The Department for Education have announced that the budget forecast return outturn will not be required this year.

At the time of writing, the budget forecast return 3 year is still required to be completed. The online form is scheduled to go live on 23 June.

Contact us

If you would like to find out how we can support your Trust in meeting ESFA requirements, please contact our specialists:

Brian Laidlaw, Business Services Partner
T: 0191 285 0321
E: brian.laidlaw@taitwalker.co.uk

Marc Breeze, Business Services Academy Manager
T: 0191 285 0321
E: marc.breeze@taitwalker.co.uk