The Education and Skills Funding Agency (ESFA) has published an updated edition of the Academies Financial Handbook. The Handbook is a key reference tool that sets out the financial management, control and reporting requirements that apply to all academy trusts.
The new edition introduces a more robust process to manage related-party transactions. From April 2019, trusts will have to seek approval from ESFA for related-party transaction payments of more than £20,000. In addition, all related-party transactions below £20,000 will need to be formally declared.
The handbook also sets out clear expectations around the process for setting executive pay. The board’s approach to pay must be “transparent, proportionate and justifiable”. There is a basic presumption that non-teaching pay should not increase at a faster rate than that of teachers. Damian Hinds, the Secretary of State for Education, has already signalled that, where salaries are too high, ESFA will publicly challenge trusts and boards to justify themselves.
These changes have been introduced to reflect the accountability of academy trusts to Parliament and to the public.
You can access the new and existing versions of the handbook here. The main changes are summarised on pages 6 and 7 of the handbook.