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the NAO (2012) notes that of these latter, only 16% publish accounts
ontheir own or their sponsor’s website.
Systems and guidance are being tightened in response to criticism,
forexample from the PAC, and as a result of internal review (DfE, 2012e).
This action was certainly necessary, again reflecting the insufficiency
of existing systems to deal with the unanticipated extent and speed
of academisation following the 2010 Education Act. The Comptroller
and Auditor General’s report to the Houses of Parliament on the
YPLA’s 2011 – 2012 accounts noted that, in 2011, 21% of academy
accounts werenot filed on time (NAO, 2012). Further, 54% of Financial
Management and Governance Evaluation (FMGE) self-assessment
returns to the EFA were also filed late. The EFA has been asked what
it could do to increase timely submission in the future, as the number
of academies and hence the assurance gap increases (Smith, 2012).
TheDfE’s evidence to the Commission outlined the steps that have
beentakentosecure this.
The NAO gave a qualified opinion on the YPLA’s accounts with
regards to the regularity of the spending of public money, that is, it
could not gain sufficient assurance that the money had been spent on
the purposes for which it was intended. The NAO noted that the current
assurance framework, which monitors compliance with the academy’s
funding agreements, was insufficient. This is because the current funding
agreements and the accompanying Academies Financial Handbook
do not fully reflect requirements for central government entities.
Inparticular, the YPLA did not take sufficient action to ensure that
special payments (such as severance payments in excess of contractual
commitment) were reported so as to pass them through the necessary
HMTreasury approvals process.
As Smith (2012) observes, inconsistency
in 2011 academy financial statements may reflect not only a lack of
clarity about requirements but also a lack of guidance for academies.
For example, inconsistencies ‘could be partly attributed to guidance
in the 2011 Accounts Direction being issued on 31 August, the last day
of the academy financial year’. Smith concludes: ‘Any audit code, and
new framework for academy assurance laid out therein, must come
early enough to give academy auditors time to provide their staff with
the skillsneeded toprovide government with the levels of assurance
theyrequire.’
The PAC is looking at academies’ financial due diligence, with the
NAO (2012) having issued its report on the expansion of the academies
programme shortly before the production of this report. The PAC’s
report, Department for Education: accountability and oversight of
education and children’s services (May 2012), has raised some concerns
around financial mismanagement in academies and a lack of systems
to monitor this. The specific concerns go beyond the capacity of this
Commission to consider them, given the constraints imposed by the
Commission’s design as a ‘speed Commission’. The technical issues
arising will be addressed by the NAO and the PAC. However, it is
appropriate to note that, in a statement on the PAC’s report, its Chair,
theRt Hon Margaret Hodge MP, said that the committee ‘remain[ed]
The NAO noted
that the current
assurance
framework,
which monitors
compliance with
theacademy’s
funding agreements,
was insufficient
7. Governance and public accountability: the role of central government
52
Unleashing greatness – getting the best from an academised system
126
very concerned at the weakness of the proposed arrangements to ensure
accountability for value for money.’
30
The Commission also notes evidence on the volume of whistle-
blowing in the school sector (Public Concern at Work, 2012; Audit
Commission, 2012), and a concern that whistle-blowing – the facilitation
of which is perhaps especially important in relation to autonomous
institutions – may be impeded by the lack of local offices to which to take
concerns.
31
The current arrangement for whistle-blowers to approach
government (the DfE) may appear remote and intimidating. In keeping
with our recommendation later in this chapter that the remit of the
Local Government Ombudsman (LGO) be extended to accept general
complaints about local schools, we suggest that the LGO should provide
a mediating tier toreceive any concerns about fraud and to pass these
totheEFA.
To conclude this section, the Commission would expect, as a
minimum, that every academy would have routine accounting practices
to ensure probity, transparency, and both efficient and effective use of
resources. These should – at least for secondary academies – include basic
reporting essentials, regular risk assessment and an audit committee. The
question of scale poses a potential problem for primary academies. The
Commission considers that all academies should ensure that they have
sufficient expertise on their governing body and an identified responsible
member of staff. In the case of primary academies, this person might be
responsible for commissioning external financial/audit expertise.
The role of the Education Funding Agency
Turning to the second issue of EFA capacity, there is particular scepticism
– from many different quarters – about the Agency’s capacity to provide
thorough oversight and to secure accountability for individual academies.
‘The capacity of the Department for Education and the Education Funding
Agency to oversee an all-academy system remains in doubt.’
ADCS, written submission
Concerns expressed were two-fold. Some respondents doubted that
the EFA has sufficient capacity to monitor funding agreements for
individual academies and hold academies to account for any breaches,
given the numbers. This first concern was expressed by a range of
different organisations and individuals, including governors and academy
headteachers. These submissions broadly echoed the PAC’s concerns:
30. The PAC observed in its Progress Report (PAC 2012a) that the DfE’s third draft
Accountability System Statement remained ‘weak’, suggesting that the DfE will ‘rely on a mix
of local accountability mechanisms, information systems, inspection, and oversight bodies
to gain the necessary assurances over regularity, propriety, and value for money’. In its report
published the following month (PAC, 2012b), the PAC called for the DfE to ‘do more work
to clearly define how funding streams will be monitored, audit arrangements, and processes
to support whistleblowers’. The May report and the Chair’s statement are available here:
www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-
committee/news/dfe-accountability-report-publication/
31. Concerns voiced by MPs at a Commissioners’ meeting with MPs, 6 November 2012.
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‘There is a question mark over whether the Education Funding Agency
will have the capacity and skilled staff to oversee the growing number
of academies… among our concerns is whether the Department has the
ability to pick up early warning signs of improper spending or poor value
for money, such as academies paying very high salaries to senior staff or
incurring questionable expenditure.’
PAC, 11 May 2012
Questions about capacity also extend to how converter academies might
be held to account for their promised collaboration with struggling
schools for school improvement purposes, specified in their applications
for conversion (see chapter 2). The EFA does not appear to see
accountability for such commitments as part of its role. Yet such school-
to-school support comprises one of the key elements of the government’s
plans for school improvement via academisation.
Other respondents, especially individual respondents and unions,
were worried about the capacity of the EFA to act effectively to
resolvecomplaints.
In relation to both points, the PAC’s report notes the urgency for
adequate systems, given that resources across the education sector
are declining. The DfE and the EFA have taken a series of steps
to addressthe PAC’s recommendations, increasing capacity and
improvingtransparency.
The DfE’s Statement of Action in response
tothePAC’s recommendationsincludes:
• establishing the Education Funding Agency (EFA) to take over
the financial monitoring and regulatory role for academies
previously carried out by the YPLA
• the establishment by the EFA of an ‘accountability framework
that allows academies totake responsibility for ensuring their
own effective financial management’
• the redrafting of the financial handbook for academies with
a ‘shorter principles-based focus’ to come into effect from
1September 2012
• the DfE’s publication of academies’ finance data in 2012
toimprove transparency.
The EFA states that the proportion of academies submitting their
audited accounts on time has increased and that it works closely to
ensure that all academies make returns as soon as possible. In terms
of the questions about sufficient capacity at the EFA to provide robust
accountability and oversight of academies’ use of public funds, the
DfE responds that, ‘Academies are a priority for the Department and
its academies’ functions have been staffed accordingly’ (although we
note that this response was provided before recent announcements of
significant staff cuts at the DfE). The Commission heard that the EFA
has doubled the number of itsaccountants this year. The EFA reviews
all academies’ self-assessments, and visits a sample number of schools.
According to the DfE’s evidence to the Commission, the EFA visited
5%of academies to validate the FMGE sample [now no longer required],
and 5% regarding fundingaudit.
7. Governance and public accountability: the role of central government
50
Unleashing greatness – getting the best from an academised system
128
In responding to concerns about the capacity of the YPLA (now the
EFA), the DfE has said:
‘The Department keeps under review the requirements of the growing
number and greater diversity in the types of Academy to ensure that
its capacity and that of YPLA keep pace with developments. Both
the Department and YPLA have re-directed resources within their
organisations to expand their capacity to fund and to monitor the
performance ofthe increased number of Academies.
However, the rise in the number of Academies should not lead to a
corresponding increase in the support capacity. The Government’s policy
is that the relationship between the Department, YPLA and Academies
should be one characterised by a light touch, reflecting the expectation
that successful schools, sponsors, federations and other groupings of
Academies will support others.’
HM Treasury, 2011
The Commission welcomes the important steps taken by the DfE and
EFA to secure compliance and transparency in financial management.
However, this needs to go further to ensure robust accountability, to
mitigate risks and reassure stakeholders. Capacity to maintain such
systems is also fundamental if academisation is to be driven forward.
Weare encouraged that review and development appear to be continuing
in this area. However, more work needs to be done, especially if the DfE
and the EFA are to be seen to be taking the initiative rather than simply
responding to concerns identified externally.
Three areas are of special importance:
• transparency
• parity
• policing.
In terms of transparency and parity, publishing academies’ spending
data is an important step. However, good practice ought to apply to all
schools. The DfE should publish (the same) data for all schools, whether
academies or not; the data need to be complete and presented in such a
way that fair comparisons can be made.
32
This transparent presentation
ofdata will also enable school leaders to benchmark and reflect on
practice (Lightman, quoted in Russell, 2012).
In terms of policing, the emphasis on self-governance reflected by
the DfE’s actions and the statement quoted above reflect the desire to
accentuate independence for academies and avoid bureaucracy. This is
understandable. However, we suggest that ‘light touch’ is the wrong phrase
to use in relation to the regulation of public spending; we are mindful
of the concerns of both the NAO and the PAC. Further, the ‘expectation
that successful schools, sponsors, federations and other groupings of
academies will support other schools’ suggests that the EFA is relying
32. The DfE (2012) hopes ‘over time’ to align the datasets for academies and maintained
schools, but says that it wishes to avoid ‘duplication of work and unnecessary bureaucracy for
all schools and [we] are considering how to achieve this’ (see Russell, 2012).
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on converter academies and chains/other groupings to support weaker
schools in terms of financial accountability. This may be optimistic. While
developmental work across schools is always welcome, this must be seen as
complementing strong financial management within each academy – which
should be essential for every academy. The reliance on local audit comprises
standard charitable practice yet, as we have seen, the arrangements for
academy governance, wherein the CEO (headteacher) is also a trustee,
mean that especially careful scrutiny is necessary. Cases highlighted by the
recent NAO report (2012) demonstrate how quickly schools can decline if
financial issues are not identified and managed. Transparent accountability
needs to be based on clear, universal expectations. Although it is important
to avoid ‘overkill’, the review procedures for self-assessments need to be
robust. The EFA should have sufficient capacity to visit enough schools to
ensure accountability in the use of public funds.
The Commission believes that ‘all publicly funded schools should
be placed within a common administrative and legal framework’ (Ron
Glatter, written evidence). This would certainly need to be the case if the
school system in England – or even just the secondary sector – were to
become fully academised. Further distinctions between schools through
greater autonomy and reduced transparency and accountability for
some schools and not others could reflect what Fullan (2011) has called
a ‘wrong driver’ for school reform.
33
What is seen as beneficial for some
schools in terms of for school improvement and effectiveness ought to
beapplied to the rest.
The Commission also regrets the decision to give academies exempt
charitable status, and considers that as charitable companies they should
be accountable to the Charity Commission, including submitting their
accounts to the Charity Commission. This might also help in terms of
releasing capacity for the EFA.
But if academisation is to be extended to all – or even to a majority
of – schools in England, radically different systems would need to be put
in place in order for the EFA to maintain proper scrutiny and appropriate
intervention: for example, automating data submissions. But the DfE also
needs to consider how the EFA would have the capacity to look beyond
high-level data adequately, to ensure robust scrutiny and to maintain a
meaningful number of both funding audit visits and investigations of
financial management. Systems that ensure transparency and sufficiency
in information are vital for a confident, successful academised system
because they allow for the necessary scrutiny to hold academies and
theirsponsors to account.
Recommendations
• Using the Education Funding Agency, the DfE should continue
to tighten systems of financial accountability and transparency,
ensuring there is capacity for a proportion of routine visits to
schools to be undertaken and for investigation of compliance
inorder to deter bad practice.
33. Fullan says that ‘wrong drivers’ ‘alter structures, procedures and other formal attributes
of the system without reaching the internal substance of reform – and that is why they fail.’
The Commission
believes that
‘all publicly-
funded schools
should be placed
within a common
administrative and
legal framework’
7. Governance and public accountability: the role of central government
Documents you may be interested
Documents you may be interested
