Academy Trust Handbook 2024

The latest version of the Academy Trust Handbook 2024 (“ATH”) was released in July 2024, with changes effective from 1 September 2024.

Although the changes are minimal, there are some important clarifications in the form of finance leases and Electric Vehicle (“EV”) car schemes which many Academy Trusts will welcome.

Finance leases

In anticipation of a new International Accounting Standard (IFRS 16) from 1 September 2024, certain finance leases are now permissible for academy trusts, with these deemed to have received prior consent from the Department for Education (DfE). Academy Trusts that have applied for finance lease approval in the past will no doubt agree that obtaining approval was very rare, even with strong value for money arguments. This relaxation effectively means academy trusts can enter into finance leases that meet certain criteria without additional burden.

The list of assets with prior consent includes:

• all existing leases in place before 1 September 2024 for items included in this list
• leases related to IT equipment (for example laptops, tablets, desktop computers, printers, photocopiers, servers, door entry security systems, CCTV Systems, whiteboards and touch screen boards)
• leases related to telephony (for example mobile phones, landline phones and telephone systems)
• leases related to catering and cleaning equipment (for example tills, water coolers, vending machines, dishwashers, washing machines, ovens, fridges, freezers, water boilers, small kitchen appliances, crockery and cutlery)
• leases related to furniture (for example desks, tables and chairs)
• leases related to bathroom and sanitary items (for example hand dryers, towel dispensers, sanitary bins)
• leases related to gym equipment (for example treadmills, free weights and weight machines, rowing machines and exercise bikes)
• leases related to groundskeeping equipment (for example lawn mowers, string trimmers, leaf blowers and salt spreaders)
• leases related to LED lighting systems or to support renewable activity (for example lightbulbs, control mechanisms and control panels) - consent is granted where the product has been sourced with support from the Department for Education through Get help buying for schools or from a recommended route on our Find a framework website
• leases related to minibuses and other vehicles for the use of the school
• leases related to temporary classrooms and equivalent structures (but not land leases they sit on, which may require separate consent – see school land transactions guidance)

EV Car Schemes

With EV car schemes rising in popularity, it is important to ensure transparency. These schemes create personal tax and salary implications for employees, in a sector that is not familiar with salary sacrifice and benefit in kind taxation.

The latest iteration of the ATH confirms that from 1 September 2024 academy trusts must approach the Education and Skills Funding Agency (ESFA) to seek approval for:

• entering into a new electric vehicle salary sacrifice scheme and/or,
• accepting any further employees onto an existing electric vehicle salary sacrifice scheme. 

You must contact the ESFA early in the planning stage, both in relation to new schemes and accepting further employees onto existing schemes.

Prior to this change EV schemes that did not result in any liability for the employer were technically permissible without prior ESFA consent, potential or otherwise. However, in practice there are few (if any) such car schemes available where this is the case and the few Academy Trusts who have established EV car schemes in place have needed to obtain prior ESFA approval anyway.

Managing reserves

Section 2.8 of the ATH reinforces the need for academy trusts to have a clear plan for managing reserves. This clarification may seem like common sense to many but should be taken against a backdrop of increased focus on reserves by the ESFA. The ESFA has contacted a number of academy trusts over the past 12 months to understand the trust’s plans, where reserves fall outside of the normal ranges (typically between 5-20% of income).

The following requirements form part of the disclosures necessary under the Charities SORP:

• an explanation of what the Trust’s target level of free reserves is
• an explanation of the Trust’s actual level of free reserves v budget and how any difference has arisen
• the Trust’s plans for those reserves in the future. 

Internal scrutiny for larger multi academy trusts (MATs)

Trusts with an annual revenue income over £50 million should  deliver internal scrutiny using any combination of the following:

• an in-house internal auditor
• a bought-in internal audit service.

From 1 September 2025 this will be revised from a ‘should’ to a ‘must’.

All academy trusts regardless of income levels, may also use other individuals or organisations where specialist non-financial knowledge is required.

For larger trusts the option to adopt a peer review is no longer permitted and reflects the increasing scope, complexity and risk associated with larger MATs. Larger trusts currently adopting a peer review process should start to consider which option is more suitable, and tendering exercises should be considered where relevant and required as part of the trust's internal procedures.

Capacity within the audit profession more generally will mean sufficient time should be allowed to ensure a suitable Internal Audit partner is selected.

Circumstances in which a Notice to Improve may be issued

Where the DfE or the ESFA have concerns about financial mismanagement or governance in an academy trust, the department may issue and make publicly available, a Notice to Improve (NtI). 

Previous versions of the ATH have extended the areas where a NtI may be issued to include governance and constitutional matters, in addition to finance concerns. The 2024 ATH extends this further to include concerns where trustees and the executive fail to manage their school estate and maintain it in a safe working condition strategically and effectively.

This is against a backdrop of increasing focus on the suitability and safety of school buildings which has received a lot of publicity over recent years, in the form of the NAO’s Condition of school buildings report and the recent RAAC issues experienced by many schools across the country.

It should also be noted that the Accounting Officer’s Statement on Compliance includes a specific confirmation, to confirm that the Accounting Officer has adequately discharged their duty regarding their responsibilities for estates safety and management.

A spotlight on Technology and Cyber Security

The 2024 ATH recognises the increasing use of new technologies within the school system, whilst emphasising the increased risks this creates. The ATH now includes a requirement for trusts to take appropriate action to meet DfE’s cyber security standards, which were developed to help them improve their resilience against cyberattacks.

Cyber attacks can lead to significant operational risks such as:

• safeguarding issues due to sensitive personal data being compromised 
• impact on student outcomes 
• a significant data breach 
• significant and lasting disruption, including the risk of repeated future cyber incidents and attacks, including school or college closure 
• financial loss 
• reputational damage

The DfE standards on cyber security are designed to help schools and colleges to reduce risks related to a cyber incident by preventing access to potentially malicious sites or resources. The guidance can be used in conjunction with the Cyber Essentials certification, which focuses on the technical elements of cybersecurity. Although Cyber Essentials is not mandatory for the academy sector, it is considered best practice and executive teams should consider whether accreditation is useful for their trust.

You can find the 2024 ATH here, or speak to your Crowe contact for more information.