Finance

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  • Created by: Rehgallab
  • Created on: 16-06-22 16:44
What are Trusts sources of income?
Revenue & Capital
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What are the types of revenue income?
- GAG
- Special and Alternative Provision Academy
- Educational Services Grant (old)
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What are the types of capital funding?
- SCA funding formula
- Condition Improvement Fund (CIF)
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What does is the GAG for?
running costs
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How is the GAG calculated?
National Funding Formula

1. Per pupil cost (age weighted)
2. Additional needs
3. School Led funding (premises/sparsity)
4. Geographic costs
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What is the point of the National Funding Formula?
To remove discrepancies in funding allocations nationally.

Provides a minimum funding guarantee.
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What is the minimum funding guarantee with the national funding formula?
No school will lose more than 1.5% over 2 years or 3% in total.
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What is the GAG calculations based on?
October census (or agreed estimated numbers)
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How are new academies treated in regard to GAG?
Bigger GAG for setting up costs
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How do schools know what GAG they will be getting?
Receive the Funding Allocation Statement by 31 March each year.
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How do Trusts receive the GAG?
Monthly equal amounts by BACS on 1st of the month.
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Is there a limit to how much GAG can be carried forward?
No
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What does the AFH say about GAG?
- MAT can pool it
- MAT must consider the funding needs of each academy
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What does AFH say about PFI funds?
- MATs cannot pool PFI finds
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How do academies complain about their funding allocation?
- MATs must have an appeals process
- failing that they can then appeal to ESFA who have final say and can remove pooling provision
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What is the special and alternative provision academy fund?
high needs top up funding

or

funding for commissioned SEN/alternative provision services from LA/commissioning schools
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What is SCA funding?
- School conditions allocation for MATS over 5 schools or 3000 pupils
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What is SCA for?
priority maintenance needs
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What are the Trusts responsibilities in terms of maintainance?
- Comply with H&S building regulations (including asbestos)
- long term assessment management strategy
- maintain estate by modernising key buildings with preventative/replacement works
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What is CIF?
Condition Improvement Fund (expansion too)

SATS, Single academies or sixth forms can apply
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What issues receive priority in CIF bids?
Compliance issues
1. fire, gas, electric, asbestos
2. weather, heating, water
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What other grounds can an academy apply for CIF if not for repairs?
Good/Oustanding academies can apply to expand and address over crowding

DfE might suggest opening a new school rather than expand
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How many CIF bids can an acadmey submit?
2 projects
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What are the bid brackets?
Primary - £20k-£4 million
All through/secondary/6th form - £50k-£4 million
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What is the project is below the bid brackets?
Must come out of revenue funding
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What is the assessment criteria for Bid applications?
60% - project need
15% - project planning
25% - project cost
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Why is getting CIF bid so hard?
- people use specialists
- always over subscribed
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Can a Trust get a loan for works?
No but can get a CIF loan or Salix loan to cover part or all of project cost to show commitment to scheme
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How are CIF and Salix loans repaid?
At public works board rates of interest

- paid through abatement of revenue funding paid to the Trust
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List other kinds of funding Trusts might receive?
- PFI
- 16-19 funding
- Pupil Premium
- UIFSM
- PE/Sport premium
- Year 7 catch up funding
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What are PFI academies?
Private Finance initiative academy.

Maintained by PFI provider contract.
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What if a PFI wanted to expand?
Trust must negotiate with PFI
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What is the 16-19 funding?
- ESFA allocate using formula
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How is basic funding calculated?
Numbers on roll last year that meet criteria and stay on course for set time.
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What factors affect 16-19 funding?
- number of students (banding based on programme size)
- national funding rate per pupil
- retention factor
- programme cost weighting
- disadvantage weighting
- large programme
- area allowance
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What do you get a funding uplift for in 16-19 funding?
Area uplift
SEN
Expensive course
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What is the aim of Pupil Premium?
To close the gap between disadvantaged and non-disadvantaged pupils
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Who receives PP funding?
Primary - Reception to Yr 6 (Ever6 FSM)
Secondary - Yr 7 - Yr 11 (Ever6 FSM)
LAC: in care or provided accommodation by English authority for 1 day
Previous LAC: adopted, special guardianship, child arrangement order, residence order. Left care.
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What is important to note about PP funding for primary and secondaries?
- Receive a lower rate that LAC/prev. LAC
- Also war pension scheme or armed forces compensation scheme (lower)
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When do schools receive PP funding?
Start of financial year, 1 April.
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What is PP funding based on?
January census
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What is the Education Endowment Foundation?
Provide a teaching and learning kit of PP spending and an evaluation tool
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What must academies publish around PP?
- PP strategy (previous year)
- PP report (previous year)
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What must be included in the PP strategy and report?
- Amount £ spent
- Barriers faced and impact of £
- reasons for approach
- date of next strategy review
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What is UIFSM?
Universal Infant Free School Meals

- Reception to Year 2
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What is UIFSM based on?
Average number of school meals recorded in October and January census.
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What is the PE/Sport premium?
For primaries

- based on pupils in Year 1 to 6.
- Special schools 5-10 years old

Based on January Census
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When do academies receive sport premium payments?
November and May
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What is sport premium use for?
increase capability and capacity in school

develop Sport offer beyond NC
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What do DfE say are the 5 indicators of improvement for PE/Sport funding?
1. regular pupil activity (60 minutes a day - 30 mins in school)
2. Raise profile of sport as a tool for SIP
3. increase staff confidence
4. broaden sports offer
5. increased participation in competitive sports
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What can't PE/Sport premium be used for?
Coaches or teachers to cover NC or PPA
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What should be published for PE/Sport premium?
Annual report/strategy
- £ received/spent
- impact on participation and attainment
- sustainability improvements
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What is Year 7 catch up funding?
For pupils below ARE in KS2 tests.
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How is the amount for Year 7 catch up determinded?
Based on last years cohort and adjusted to reflect size in October census
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When is catch up funding received?
1 March
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What must catch up funding be used on?
Known 'effective' methods
- tuition
- external services & materials
- summer schools
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What must be published about catch up funding?
- Amount received and spent
- impact and how impact is assessed
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How are MAT central services paid?
- top slice (3-5%)
- Pool GAG and allocate on need
- one school does admin and cross charges other schools
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What does the model funding agreement expect Trusts to do?
Encourage donations
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What is the point of Gift aid?
Maximises donations via tax relief
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What must a Trust apply for to receive gift aid?
- Recognition as a charity
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What can be claimed back using gift aid?
- tax as a 'gross' equivalent of any donation
- 25% claimed on any bucket donations
- Cash or card under £30
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What do you have to claim bucket donations through?
Gift Aid Small Donation Scheme (GASDS)
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What is the maximum tax that can be claimed through gift aid each year?
£2000
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What must Trusts do to claim gift aid under GASDS?
- claim normal gift aid the same year
- not incurred penalty in last 2 years

- claims on April 2017 or before donations
Made a successful claim in 2/4 last years with no more than 2 year gap
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What is the maximum number of times GASDS can be claimed?
10 times a tax year
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What records must be kept of GASDS?
- total of cash donations collected
- date of collections
- date it was paid into bank
- records of any contactless donations
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Do Trusts need to pay tax?
As charitable company don't need to pay tax on income used for charitable purpose
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What proof do Trusts have of charitable company status?
HMRC letter of recognition
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What can the HMRC letter of recognition be used for?
To receive tax free interest in bank account
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What is 'primary purpose trading'?
service in furtherance to schools and education (usually tax exempt)
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Why can't charities engage in trade?
- it can be a significant risk to assets
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How can charitable companies safeguard against asset risk and trade?
Subsidiary Company who can then gift aid profits to the Trust
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What types of contracts should Trusts be careful of with subsidiary trading?
Catering operations and lettings due to VAT and if grants were used.
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What fundraising information needs to be included in the Trustees report (Annual Statement)?
- approach to fundraising
- work with/professional fundraisers
- fundraising confirmed to recognised standards
- monitoring carried out on fundraising
- fundraising complaints
- protection of public from intrusive approaches and pressure to donate
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What information should be included in the Financial Statement (Trustee report- annual report)?
- Cost of all fundraising events, non-charitable trading
- cost of all fundraising other than charitable trading (marketing)
- Cost of trading for fundraising purpose (goods sold, services provided)
- Cost of investment management (if applicable)
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What does the model funding agreement say about borrowing £?
Must not borrow against public funded assets without secretary of state approval
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When can credit cards be used?
AFH
- business expenses
- clearing a balance before interest
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What is a Salix loan?
Upfront funding capital costs of energy efficient technology
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How is a Salix loan paid back?
Via predicted savings on energy use (interest free)

over 4-8 years, Direct Debit x2 a year in March and September
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How does a Trust qualify for the Salix loan?
- Project must pay itself in 8 years in energy savings
- Project must not exceed £200 per tonne of CO2 saved
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What is the Accounting Reference Date?
Date accounts are prepared (31 August)
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When does a Trust get an ARD?
Generated by Companies House when incorporated
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When must ARD be set for?
Trust must make sure ARD is set for 31 August
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Who is usually the Accounting Officer?
CEO/Principal
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How is the Accounting Officer appointed?
AFH

- TB appoint in writing 1 person to be accountable for the Trust
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According to the AFH what is the remit of the Accounting Officer?
- Personal responsibility to Parliament & ESFA accounting officer for Trust funds
- High standard of probity in management of public funds
- Value for money
- Regularity (legal, funding agreement, AFH compliant)
- Propriety (parliamentary intentions kept)
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What must the Accounting Officer submit annually to ESFA?
Annual statement of regularity, propriety and compliance

+ audited accounts (inc. Gov Statement on value for money)
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What does the Accounting Officer have oversight of?
- Ensure property & assets are under TB control
- Preventative measure against damage and loss
- ensure bank accounts, records, financial systems are operated by more than 1 person
- Maintaining accounting records to support annual accounts
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Who usually carries out the operations of Accounting Officer?
CFO delegated to by CEO
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What can't the CEO delegate?
Responsibility for compliance
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What must the Accounting Officer do if the Trust is not compliant?
Notify the TB in writing
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What should the Accounting Officer do if the Trust Board are acting against compliance?
Notify ESFA in writing immediately
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What is the CFO responsible for?
AFH

- detailed financial procedures
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How is the CFO role split into 2?
Technical role - following processes

Leadership role - process and systems are robust and in place
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Does the CFO need qualifications?
No, It's up to the TB to decide if need any specific qualifications.
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What is the point of Financial Planning (according to AFH)?
It ensures the continued viability of the Trust
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How is the budget set?
TB approve surplus budget at meeting with written resolution in minutes.
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When must the Trust submit it's budget forecast to ESFA?
- 3 year budget forecast by 30 July each year

- budget forecast return/outturn on 21 May.

!Must be approved by TB first!
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What is the TB responsibilities in regard to budget setting?
- ensure accurate and realistic assumptions made
- based on learned lessons
- TB challenge pupil number estimates (basis of Revenue income)
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What is the TB responsibilities in regard to budget monitoring?
- Monthly Management accounts set out Trust financial performance and position
- budget variance reports
- cash flow forecasts
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How often so monthly management accounts need sharing?
Chair - monthly
TB - x 6
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How can a TB balance it's budget?
Bring forward unspent funds
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What must a Trust avoid in their budget?
A cumulative deficit position
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What is the budget is due to be a deficit?
Must notify the ESFA in 14 days if can't balance the budget! (AFH)
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What are features of effective executive performance management?
- process agreed in advance and documented
- independence (objective scrutiny, avoid conflicts of interest)
- robust decision making
- proportionality (relative to public sector market)
- commercial interests (transparent)
- documentation (recorded & reta
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What if executive pay in inappropriate?
ESFA will challenge as mismanagement of the Trust
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What so the ESFA think is high?
individual - £150,000
multiple - £100,00 - £150,000

will receive regular letters from ESFA.
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Can a Trust invest?
AFH - yes if managed properly
AFH - must have an investment policy
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What must be included in the investment policy?
- investment strategy (advised and reviewed regularly)
- attitude to Risk
- return and liquidity challenges
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What kind of investments need ESFA pre-approval?
"novel, contentious and/or repercussive"

- can be referred on to Treasury (AFH)
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How do TB monitor Trusts financial performance?
- The current and forecast financial position
- regular reconciliation if bank and control accounts
- regular financial reports to TB meetings
- Ensure budget monitoring takes place
- Ensure tracking and controlling expenditure
- identify where corrective
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What happens if there's cash flow issues?
- ESFA can issue financial notice to improve (how to improve)
- Trust are bound to act!
- ESFA can withdraw delegated authorities (acquisition and disposal of assets, Managing GAG, leasing) all need pre-approval
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What if a Trust fail to provide financial information/cash flow to ESFA?
- ESFA can send investigators to collect
- ESFA can publish late returners names
- Investigation costs taken out of funding
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Can Trusts reclaim VAT?
Yes on business related goods and services and charge VAT

Must register
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What are the 3 types of VAT?
Standard
Reduced
Zero
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When must a company register with HMRC for tax purposes?
Turnover of £85,000 +

- must submit formal application and tax return
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How often must tax returns be submitted?
Monthly or quarterly (even if nothing to claim/pay)
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What is included in the Tax return submission?
- total sales/purchases
- amount of VAT owed
- amount of VAT to be reclaimed
- The VAT refund from HMRC
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Can Trusts not registered with HMRC reclaim tax?
Yes with form VAT126
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What is Financial Managment & Governance Self Assessment? (FMGS)
New Trusts must complete a financial managemen and overnance self assessment and submit to ESFA in 4 months of opening/joining MAT.

If joining a MAT it confirms that the same financial and governance arrangements are adopted
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What are ESFAs powers around financial management and governance self assessment?
- Can conduct reviews to check financial management to see is systems and control meet AFH requirments.
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What must the Trust control framework include?
- ensure delegated financial authorities are complied with
- maintain segregation of duties
- co-ordinaing planning and budget process
- apply discipline in financial management
- planning and oversight of capital projects
- management and oversight of as
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What ways can TB manage risk reviews and check financial controls?
- internal audit service (in-house, bought in, provided by sponsor)
- a supplimentary work by external auditors
- appointment of qualified non-employed Trustee
- peer review
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Where should the TB report which method of financial controls are in place?
In Governance Statament in Annual Report.

Should also explain why.
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What do TB controls and audits inform?
Accounting Officers report of regularity
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Who should the Accounting Officers report of regularity be available to?
Trustees promptly
ESFA can request
anyone who requests
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Who should routinely attend the audit committee?
Accounting Officer and relevant senior staff
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What should the audit committee agree?
A programme of works to 'provide assurance on financial controls and risks'
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How is regularlity, propriety and compliance reported?
In Accounting Officers annual statement with accounts for the ESFA
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What does regularity mean?
- all income and expenditure is compliant (laws, AFH, funding agreement, internal procedures)
- public money is spent on intended purpose
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What does propriety mean?
Deal with expenditure in accordance to parliaments intentions (conduct)
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What does Compliance mean?
legislation, statutory guidance, regulation, funding agreement
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What are the DfEs recommendations for procurement for schools?
'Deals for Schools'

- Energy, water, photocopiers, software liscencing, ICT
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What must Trusts consider when spending funds?
- Is £ being spent for purpose intended
- Is it value for money
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Who can spend Trust funds?
An individual can have delegated authority to buy on belaf of whole trust
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Why should indivudals purchasing be minimised?
- robust internal controls
- ecomonies and effciencies in purchasing
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What kind of policy should Trusts have for procurement?
AFH - Compentitive tendering policy
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As contracting authority what must Trusts observe?
OJEU procurment thresholds
- seek specialist advise, it's for high value contracts and the procurement process that must be followed.
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What themes do ADD identify in irregular expenditure?
- lack of prior approval for finance leases
- no statement for addurance for RPT
- RPT not at cost
- non-contractual severence payments made without approvals
- weak internal controls
- purchase not intended for purpose (gifts and alcohol)
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What does the AFH say on purchasing 'gifts'?
Must be reasonable

Alcohol is a grey area
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RPT - what do the following say?

AFH
Charity Law
Companies Act
AOA
AFH - declare interests and don't accept third party benefits
charity law - trustees can't be renumerated
Companies Act - directors should avoid conflicts
AOA - provisions for Trustees to deal with goods/services/rent but in interests of Trust
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Which superceeds the others?
Academies Financial Handbook
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What are the rules for RPT?
- must be 'at cost'
- applies to Trustees and Members
- related to indivudal or organisation (20% of share/vote)
- individual with right to appoint members/trustees
- recognised as sponsor
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When does RPT not apply?
- Below £2500 (above at cost)
- Salary/employment from trust
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What about services from the Diocese?
AFH - services from Diocese for ethos of academy that only they can provide is considered 'at cost'
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What RPT need ESFA pre-approval?
All RPT contracts/agreements
- over £20,000
- over £20,000 in cumulative year
- 'novel, contentious, or repercussive' transactions
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What RPTs are more at risk for public scrutiny?
- transactions involving those with influence (accounting officer)
- payment to organisations with profit motive
- relationship with auditors beyond statutory duty
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What must the TB ensure regarding RPT?
- record kept
- RPT managed across the Trust
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What must Trust ensure in financial statement about RPT? (AAD)
- Must distinguish income and expenditure
- must confirm that above 'de minimis' (£2500) is at cost.
-Must include statement of assurance from the related party
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What are the deadlines relating to Annual reports and accounts?
ESFA - 31 December
Companies House - 31 May

Publish on website - 31 Jan (for previous year)
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Where would you find model reports and statements?
AAD
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What are the annual accounts produced under?
SORP
Charities Statement of Recommended Practice

+ in line with AFH
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What must be included in the Annual Report?
- Trustee report
-Governance Statement (value for £ review)
- Statement of regularity, propriety, compliance
- Statement of Trustee responsibilities

- Independant auditors report on financial statements
- independant reporting accountants assurance repor
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What additional items must be included in the Annual Report according to AAD?
Fundraising practices
+
TU Facilities Time (if over 49 FT employees in 7 months)
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What should be included in the TU Facilities time?
- number of TU reps
- number of employees and % of time spent
- % of pay bill spend on facility time
-details of paid TU activities
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What should also be submitted with the Annual Report?
Financial Statament
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What should be included in the Financial Statament?
- SOFA (statement of financial activity)
- Balance Sheet
- Cash flow statement
- notes on financial statement
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What is the Financial Statement supported by?
Trustees Report
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What is in the Trustees report?
- reference and admin details
- opening section
- structure/governance
- objectives and activities
- strategic report
(review of trust and risks, achievements and performance, finanical review, future plans, funds held as custodian trustee on behalf of o
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What is the suppliment to the AFH called?
AAD
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What does the ADD include?
- reuqirements for Annual Report & Financial Statement
- must have accounts audited independantly
- submit audited accounts by 31 Dec to ESFA
- File accounts with Companies House by 31 May
-Arrange audit of regularity
- include report on regularity in Tr
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How should MAT annual reports and accounts look?
Single set of accounts covering all academies
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What additional disclosures should MATs make in accounts?
- Identify the funds for each academy
- Provide narrative on academy actions if they are in deficit
- Identify amount each academy spent on: Teaching and education staff, support staff, educational supplies, other costs
- Central services provided (type,
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Where does it state that Trust accounts must be audited?
Companies Act & Funding agreement
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Why must accounts be audited?
To ensure shows a fair and accurate representation
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How is an auditor appointed?
By Members
- written contract and letter of engagement (only about the external audit service)
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Who can be an auditor?
Must be ceritfied by recognised body
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How do Members remove auditors?
- intention notice of resolution (28 days), sent to auditors
- auditors send written response (must circulate)
- normal resolution at meeting, not written
- notify ESFA immediately with statement of explanation
-notify Companies House in 14 days
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What should Trusts get from Auditors when their term of office expires?
Auditors statement highlighting anything for ESFA or Members attention (handed to office)
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Should ESFA be notified is an auditors term of office ends?
No
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Who should the Auditors statement go to?
Members within 21 days or apply to court to not do a statement.

- if no court application auditors must send a copy to Companies House in 7 days
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What does the AFH say about TB duties regarding Auditors Statament?
- The TB are obligated in reposnse to any findings
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Is there any limit on reserves?
No
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What will happen if a Trust has surplus reserves?
ESFA will report to DFE Trusts who seem to have no plans for reserves
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How do Trusts justify any retention?
Reserves policy
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Does the Trust need an Asset register?
No but used to and helpful to.
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Who is reponsible for fixes assets?
Accounting Officer should ensure it's under TB control and measures in place against loss or damage
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What did the fixed asset register used to require?
- value
- date acquired
- details to calculate depreciation
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What transactions does the AFH say Trusts need prior approval for?
- acquiring freehold of land/buildings
- disposing of freehold of land/buildings
- disposing of heritage assets, beyond any limits in funding agreement
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Other cards in this set

Card 2

Front

What are the types of revenue income?

Back

- GAG
- Special and Alternative Provision Academy
- Educational Services Grant (old)

Card 3

Front

What are the types of capital funding?

Back

Preview of the front of card 3

Card 4

Front

What does is the GAG for?

Back

Preview of the front of card 4

Card 5

Front

How is the GAG calculated?

Back

Preview of the front of card 5
View more cards

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