The National Audit Office (NAO) has qualified the accounts of the Department for Education (DfE) and the Education Funding Agency (EFA) on a number of grounds, largely relating to the methodology used to consolidate the accounts of academies into the group financial statements which was a requirement for the first time in 2012-13.
Amyas Morse, head of the NAO, said in his report he had identified 'a number of errors and uncertainties' in the approach used for this. The DfE consolidated 2,823 academies using a series of data sources spanning different time frames, given that its year end is 31 March and academies produce accounts to 31 August each year.
In addition, as charities, academies have a different financial management regime to the DfE and the freedom to determine their own spending profiles, which the NAO said results in 'an inherent set of risks' as the DfE is accountable for financial activity over which it has no direct control.
NAO pointed out the EFA did not have 'robust data' to support its assumption that all land and buildings used by academies should be capitalized within the DfE's group balance sheet which recognises their value as £25.1bn.
Morse said: 'The consolidation of academy accounts was always going to be a complex and challenging task. It has demonstrated, however, key and continuing risks to the Department's ability to exercise strategic financial management of the academy sector and to the sustainability of the Department's current approach.'
The EFA has now implemented a new assurance framework for the 2013-14 academic year to address the issues raised in the NAO's report.
