Although the Department for Education (DfE) has improved its accounting for the academy schools sector in England, the National Audit Office (NAO) has qualified the accounts for the year ended 31 August 2016 on the grounds the department was unable to provide adequate evidence to support the £45bnn of land and buildings included
This marks the first year the DfE has produced consolidated accounts dedicated to the academy schools sector in England, instead of consolidating the results of academy trusts into its own group accounts. Consolidating 3,013 academy trusts into the group accounts was challenging as the trusts’ financial year end of 31 August did not match the department’s 31 March year end.
Removing the trusts from the department’s group accounts enabled the DfE to publish its group accounts several months earlier than in previous years, and also meant these accounts were no longer qualified.
However, the NAO found ‘significant weaknesses’ in the way in which the academy schools accounted for land and buildings.
The frameworks used to produce the academy sector accounts and the individual academy trusts’ accounts are different, meaning adjustments need to be made to some figures. The department has included in its accounts all land and buildings occupied by academies, regardless of whether they were occupied on a freehold, leasehold or licence basis. This means that the accounts may include land and buildings that do not meet the definition of an asset set by the financial reporting framework.
The DfE has reviewed the way it values its estate and improved controls over the professional valuation process but its processes to make sure the accounts reflect the current condition of the land and buildings remain weak. An earlier NAO report on capital funding for schools noted the department estimated it would cost £6.7bn to return all school buildings across both the academy and maintained sectors to satisfactory or better condition.
As well as addressing the specific weaknesses in the valuation of the estate, the report recommends producing the accounts more quickly and enhancing the annual report to allow Parliament to scrutinise more effectively how taxpayer’s money has been spent. The department should consider how it can use the data it collects both to support oversight of academies and provide them with information to improve their financial management.
Academy Schools Sector in England Consolidated Accounts 2015-16 is here.
Report by Pat Sweet
