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Accountants & Business Advisers

ESFA Assurance work 2020 to 2021

The ESFA has recently published a briefing note on its key assurance findings from the 2020/2021 year, including the review of annual accounts and other returns to the ESFA.

  • 97% of accounts were received by the 31 January deadline – a good result for both academies and their auditors after the disruption of Covid-19.
  • Less than 1% of academies had qualified audit reports.  Of reports including an ‘emphasis of matter paragraph, the majority of these related to going concern issues.
  • The percentage of modified regularity reports (the second report signed by the auditors as reporting accountants and included in the annual accounts) was 8.5%, an increase from 7.1% in the previous year.  Only 15% of these qualifications related to the pandemic, of which a significant number related to the lack of internal assurance reviews.

The main reasons for modified regularity reports are listed below.  These are a useful reminder of key control areas academies should watch out for:

  • Management accounting, including the frequency of producing them and sharing them with the board.
  • Poor financial management, including value for money issues, accounting reconciliations and approval of payroll and other expenditure.
  • Governance issues such as not updating the GIAS website and not publishing financial statements on the academy website.
  • Related party transactions, such as the lack of ESFA approval, the ‘at cost’ policy not being adhered to and not identifying and dealing with conflicts of interest.

The ESFA was pleased that academies were making good progress towards complying with the Academies Financial Handbook (now called the Academies Trust Handbook), with further development areas including internal assurance / scrutiny, management accounting processes and having a sound internal control framework, including clear procedures, supervision and checks.