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Academies Financial Handbook 2020: What’s changed?

| Duncan & Toplis | 8 July 2020

The Education and Skills Funding Agency (ESFA) released the Academies Financial Handbook (AFH) 2020 on 23 June 2020.

The AFH sets out the requirements that academy trusts must comply with as a condition of their funding agreement. The 2020 handbook is effective from 1 September 2020.


The changes from the 2019 handbook focus on internal scrutiny. The ESFA are looking to see improvements in this area and expect to see trusts with internal scrutiny processes more in-line with further education entities.

Below is an overview of the changes:


  • Members of an academy trust must not be employees of the trust or occupy unpaid roles.
  • Trusts must keep their register of interests up to date.
  • Members must remain informed about trust business.
  • The handbook emphasises the importance that it is the trustees’ responsibility to maintain the trust as a going concern.
  • Trusts must appoint a clerk to the board.

Executive Team

  • The handbook confirms that the accounting officer and chief financial officer (CFO) should be employees. If in exceptional circumstances, for example where there is a sudden departure from either role and they are filled on an interim basis, they are not an employee, then the trust must obtain ESFA approval prior to appointment.
  • For larger trusts, those with more than 3,000 pupils, CFOs are encouraged to hold relevant accountancy qualifications. This should therefore be considered when appointing a CFO. All CFOs are expected to maintain their professional development.

General controls and transparency

  • Employees whose benefits, gross pay, taxable benefits and termination payments, are over £100k must be published on the trust’s website as an extract from the trust’s financial statements for the proceeding accounting period. Therefore, from 1 September 2020, the details of those meeting this threshold in the 2019 accounting period must be published until the 2020 financial statements are published. This must be reported in £10k bandings.
  • Trusts must now maintain a fixed asset register.
  • Trustees should challenge pupil number projections on a termly basis.
  • Trusts must avoid using overdrafts on any account, not just an overall position.
  • Trustees are encouraged to use integrated curriculum and financial planning so that they are confident about planning the best curriculum for their pupils and delivering the trust’s educational priorities with the funding they have available.
  • Whistle-blowing procedures must be published on the trust's website.
  • Alcohol must not be purchased, although there is an exception for religious services.
  • The risk register must be reviewed by the board, who retain overall responsibility for the register, at least annually and only receive support from the audit committee. Responsibility should not be delegated.
  • The audit committee must report to the board on the controls around non-financial risks as well as financial ones.

Internal Scrutiny

  • From 1 September accountancy firms can no longer offer both internal and external audit services to a trust in-line with the latest FRC ethical standard. Effectively, internal scrutiny is classified as internal audit when looking at the ethical standard.
  • Trusts should also ensure that internal scrutiny considers non-financial risks. Therefore, consider appointing a specialist auditor to test non-financial risks, in addition to the testing performed on financial risks.

Annual Accounts

  • The audit committee must assess the effectiveness and resources of the external auditor to provide a basis for decisions by the trust’s members about the auditor’s reappointment, dismissal or re-tendering.


The ESFA continues to push for high standards of financial management and governance, leading to increases in work for finance and audit committees. In particular, the changes to internal scrutiny present a change of focus and to the standard expected.


If you wish to discuss this or have any queries or concerns, please get in touch with your usual Duncan & Toplis contact. Alternatively, contact our team here. 


Looking for advice and guidance on support for the impact of coronavirus for your academy? Take a look at our article Coronavirus and schools: Advice for academies


Click here to download a copy of this guidance


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