Amyas Morse, the Comptroller and Auditor General
(C&AG), has qualified his opinion on the Academy Schools
Sector in England’s consolidated annual report and accounts for
the year ended 31 August 2016. Today’s report finds that, despite
improvements on previous years, the Department for Education was
unable to provide adequate evidence to support the £45 billion of
Academy Trusts’ land and buildings included in the
accounts.
This year, for the first time, the Department for Education
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 Department for Education’s 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
Department to publish its group accounts several months earlier
than in previous years and allowed the C&AG to remove his
qualification from the Department’s group financial
statements.
The report on the Academy Sector Accounts, highlights
progress that has been made on accounting for land and buildings
but points out that there are still some significant weaknesses.
The main weaknesses highlighted are:
· 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
Department 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. The C&AG’s
report Capital funding for schools (February
2017) noted the Department estimated it would cost
£6.7 billion 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.
Notes for Editors
1. The
Academies Act 2010 granted academy trusts exempt charity status.
Academy Trusts prepare their accounts in accordance
with Accounting and Reporting by Charities: Statement on
Recommended Practice (the Charities SORP). The
consolidated accounts of the Academy Schools Sector in England
are prepared in accordance with the Government Financial
Reporting Manual (FReM). These two frameworks have
different requirements on asset valuation.
