• Date

    03 Jun 2024
  • Category

    Advisory
  • Author

    Graham Fitzgerald

Academy trusts: Tips on writing trustee reports & governance statements

There is a natural tendency to focus on the numbers when preparing the annual financial statements, however there is an increasing focus on those extensive written sections that sit before the mass of numbers and disclosures.

The Education and Skills Funding Agency (ESFA) seem to be paying more attention, and the guidance in recent years from them has focused more on the contents. Other users are also looking at these reports, for example, there has been a steady stream of mergers and other activity, and the due diligence process can involve a review of all information that supports the numbers, including trustee reports. It is an opportunity to provide useful context to the numbers, so with the annual financial statements being on the public record, it is important that trusts get this right.

From our experience with the many examples we have seen at Azets, it is of course the responsibility of the academy trust and not any other party to produce the reports. We get to see a lot of examples across Azets, so here are some useful tips in getting the content and messages right:

  • Draft the reports early. In many cases, the trustees’ report and governance statement has been a bit of an “afterthought”, and the preparation may be rushed. This leaves limited time for trustees and leaders to review and assess the content. The input of all trustees and the accounting officer is an essential feature of effective and compliant reporting.
  • Don’t just duplicate last year’s reports. Some of the content may be okay to leave if there have been no changes, but it is very likely to see some significant changes year on year. You should think about any changes involving future plans, objectives, achievements, KPIs, financial matters, key risks, and internal audit findings. These are all examples of areas where there should be narrative to reflect the current position.
  • Ensure the data is accurate and up to date. Whilst much of the content is narrative driven, there are some key numbers included. Make sure to obtain the relevant information early and ensure the report has the appropriate KPIs, financial information and meeting attendance data included.
  • Additional requirements for larger trusts. Under company law, larger trusts have some additional requirements. This is defined as a trust where two of more of the following apply in two consecutive years – gross income over £36m, gross (total) assets over £18m, more than 250 employees. With Multi-Academy Trust (MAT) growth, more academy trusts are being captured. The additional requirements to report cover engagement with suppliers and customers, narrative around promoting the success of the company, and energy and carbon reporting. Trusts with more than 250 employees also need to include details on engagement with employees, regardless of the financial position.
  • Ensure you add useful context to the numbers. Reproducing school data, KPIs and financial information is a useful starting point, but it should be supplemented by relevant narrative and context to paint a picture for the reader as to what it all means. This doesn’t need to be too extensive, but should include enough to leave the reader with a good understanding of what underpins the data.
  • Use up-to-date examples in the review of value for money. We often see draft reports with very brief examples, or examples that have been duplicated from previous years. It’s important to highlight recent examples, and how this has impacted on the outcomes of the trust. It should also reference the use of funding to ensure the trust’s estates are safe and well maintained.
  • Explain the effectiveness of the governance model. Ensure your reports are updated annually, explain any changes to people or processes, how you ensure effectiveness, the results of internal and external governance reviews and the key findings around the internal scrutiny process.
  • Check your report against the ESFA Coketown model accounts. The ESFA’s Coketown model accounts include a very useful template, with guidance boxed and links to other documents. Does your report contain all of the information that is expected, and does it take account of the inevitable annual changes and the other information provided by the ESFA? It would also be useful to carry out a final sense check and proof read before you include it in the financial statements.

 

We are here to help

If you have any questions on writing trustee reports and governance statements, please get in touch with your usual Azets advisor or a member of our specialist Academies team.

 

Information correct at time of publishing, but may be subject to change in future. This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek professional advice before taking or refraining from taking action on the basis of the contents of this article.

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Graham Fitzgerald

Partner Wynyard

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