The Academies Financial Handbook 2017 has been released by the ESFA (Education and Skills Funding Agency) and takes effect from 1 September 2017.

This handbook is a key document that sets out the financial framework for academy trusts reflecting their status as companies, charities and public bodies. It balances requirements for effective financial governance and management of funds, with the freedoms that trusts need over their day-to-day business.

Compliance with the handbook is a requirement in trusts’ funding agreements with the Secretary of State and we recommend that you take the time to review the updates.

The key changes are listed on pages 5 and 6, but here are a few worth highlighting for your attention:


  • There is updated information about the roles of members and trustees to provide greater understanding of expectations, including emphasis on having significant separation between the roles. The Department’s view is that the most robust governance structures will have a significant degree of separation between the individuals who are members and those who are trustees. If members also sit on the board of trustees this may reduce the objectivity with which the members can exercise their powers. The Department’s recommendation is for a majority of members to be independent of the board of trustees;
  • There is additional information for trusts about improving efficiency (1.5.11). Where ESFA has concerns about the financial management of a trust, but has not issued an FNtI, it may prescribe working with an expert in school financial health and efficiency to support the trust and identify where improvements could be made. The Department has produced a range of additional information, tools and training to help trusts improve their financial health and efficiency;
  • The handbook explains that trusts should refer to the key features of effective governance in the Department’s Governance Handbook when assessing their effectiveness (1.5.17);
  • It points trusts to ESFA’s investigation reports and to its guidance on reducing risk of financial irregularity, which trusts should consider when managing their own risks (4.8.3 and 4.8.4).

Financial control

  • There is an emphasis that the board of trustees’ decisions about levels of executive pay must follow a robust evidence-based process and are reflective of the individual’s role and responsibilities. (2.3.5);
  • It clarifies that trusts’ delegated authority to make non-statutory/non-contractual staff severance payments under £50,000 is before income tax and other deductions (3.7.6);
  • There is an updated Annex C: Schedule of requirements (the “musts”). Annex C brings together in one list all of the “musts” requirements to be followed by academy trusts.


In the foreword to the handbook, Lord John Nash highlights the importance of boards reviewing and refreshing their skills and knowledge, particularly if their trust is in transition. The financial handbook indicates where to find resources to help you do this including, for the first time, a competency framework for governance to identify and address gaps in skills at board level. We would be pleased to carry out a review for your trust  – for further information please see our Governance services webpage.

We recommend that all key personnel review the new handbook and are aware of any changes to their roles and responsibilities. We also recommend that the handbook is included in any trustee induction pack.

Should you have any questions please contact your usual Bishop Fleming representative.


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