Spotlight on Education€¦ · Spotlight on Education.....which highlights some of the latest...

Spotlight onEducation

Issue Autumn 2018

Welcome to Thorne Widgery’s Spotlight on Education...

...which highlights some of the latest educational, financial and accounting issues, affecting academy schools and colleges.

At Thorne Widgery we’re proud to be the leading accountancy firm in Herefordshire when it comes to assisting schools and colleges in our region and beyond.

If you have any comments on our bulletin, or would like further information on the services Thorne Widgery is able to offer to single academies and multi-academy trusts (MATS) both pre and post conversion, or to independent schools and sixth form colleges, please contact Diane Sheldon on 01432 276393.

Meet the TW Senior Education Team...

Lisa WeaverLisa has nearly 25 years of accounting and auditing experience. She joined our team in 2012, having been head-hunted from a leading national firm and is now our Head of Audit and Assurance. With an in-depth knowledge of the education, charities and other non-profit industries, she is particularly involved in developing our services to meet the needs of clients in these sectors. [email protected]

Francesca Watkins Francesca joined TW in 2011 and fully qualified as an accountant in 2012. Her role within the Company now focuses on management of some of the firm’s audit clients, including Academies, Charities and Companies, as well as assisting the Accounts Department and training junior members of the team and works closely with TW’s Head of Audit, Lisa Weaver.

Hannah Ayres Hannah joined TW in 2013 as a HGTA apprentice and is now working towards ACCA. Hannah is an integral part of the audit team, supporting Rebecca and Lisa in particular and is heavily involved in academy accounts and audit work. Her role also includes preparing client accounts and VAT returns as well as supporting the audit team. Hannah is also involved in the development of less experienced members of the team.

Kevin Tong Kevin has more than 30 years’ experience, providing business advice to clients, mainly working in the education, charities and agricultural sectors. Kevin currently works with around 20 educational establishments, assisting them with financial reporting, budget forecasting and management, as well as VAT issues affecting the education sector. He is also the Senior Statutory Auditor for our education/charities sector audits. [email protected]

Rebecca Jenkins Rebecca joined TW in 2010 as an HGTA accounts apprentice and has since gained her AAT and ACCA qualifications. Her role within TW now concentrates on the management of many of the firm’s audit clients including Charities, Companies and Academies in addition to preparation of client accounts. She also works closely with Lisa, Head of Audit and Assurance, in managing the charity independent examination clients.

Sam King Sam joined TW in 2014 and is our Xero accounting software guru. He oversees training with our education clients on the Xero for Education software system - which has been exclusively developed for use by schools. As Xero is so user-friendly, our clients find that after initial training they’re quite at home using Xero, but Sam and his team are always on call to provide ongoing support.

Welcome to Thorne Widgery’s Spotlight on Educationthornewidgery.co.uk02 Welcome to Thorne Widgery’s Spotlight on Education

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Contact Us01432 276 393 [email protected]

Sarah JenkinsSarah joined TW in 2010 after moving from the banking sector and is both AAT and ACCA qualified. Sarah works on a varied portfolio including the education, charity, agricultural and corporate sectors.

Contents04 Come and see award winning XfE in action05 Robot appears before MPs / Funding for special needs at ‘crisis point’06 Debt amongst academies soars to £65million07 Academy Trust accused / Snow days replaced with ‘e-learning’ days08 New research reveals pupil poverty concerns09 Trust with £1million deficit allowed to bid for new schools 10 ESFA plans to tighten rules11 Changes to Academies Financial Handbook

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Come and see award-winning XfE in action at the NEC Academies Show

Come and see award winning XfE in actionthornewidgery.co.uk04 Funding for special needs at ‘crisis point’


other service on the market is able to replicate what we do, which is why we are already working with a number of schools and accountancy firms across the country to roll XfE out to new areas.“Being recognised at this year’s British Accountancy Awards for our revolutionary XfE software is really the icing on the cake for us.“We are looking forward to spreading the word again at the Academies Show and demonstrating our software to prospective users so they can see just what they are missing!”Xero accounting software isn’t new – in fact, it is the UK’s number one accounting software platform and has more than one million users worldwide. What is unique, is Thorne Widgery’s ability to offer, via XfE, a bespoke and suitable solution for the education sector which has made it a potential game changer for schools and colleges. Our exclusive software package is uniquely configured for the needs of Business Managers, Head Teachers, Governors and Auditors and meets both ESFA legislation and the Academies Financial Handbook regulations.

XfE software is:Modern, very cost effective, fully supported, scalable, compliantand beautifully simple to use – and definitely not ‘clunky’!

If you would like to find out more please visit us at the Academies Show or, alternatively, contact our education team now for a free, no obligation demonstration.

Robot appears before MPs to explain role of technology in the classroomA robot named Pepper has appeared before the Education Select Committee to brief MPs on the role of technology in classrooms.

It is believed that Pepper’s appearance was the first time that Artificial Intelligence has been used to respond to questions raised by a parliamentary committee. The robot is part of an international research project developing the world’s first culturally aware robots.

Pepper formally introduced himself by bowing to MPs, saying: “Good morning, chair. Thank you for inviting me to give evidence today. My name is Pepper and I am a resident robot at Middlesex University.” Committee member James Frith asked: “what role humans have in the fourth industrial revolution?”

Pepper replied: “Robots will have an important role to play, but we will always need the

soft skills that are unique to humans to sense, make and drive value from technology.

“As technologies fuse and are used in ways that were not envisaged before, a new way of thinking is needed by tomorrow’s workers. We will need people who can spot ideas and think across traditional sector divides to drive value from technological innovation.”

Although Pepper appeared extremely life-like with its arms and head moving during its appearance, the robot was in fact giving pre-programmed answers to questions which had been sent in advance.

MPs were told that the real reason behind Pepper’s appearance was to demonstrate how students at Middlesex University had successfully programmed the robot’s interfaces in order to work with primary school children and those with special needs, to help develop their skills. At the end of the robot’s evidence, committee chairman Robert Halfon led a round of applause, with Tory MP Lucy Allan commenting: “First of all, Pepper, I just want say you’re better than some of the ministers we have had before us.”

Mr Halfon joked that the MPs were not auditioning for a sequel to The Matrix, but that he had visited Middlesex University and been impressed by Pepper and the students’ work.

We are delighted to once again be taking part in The Academies Show in Birmingham -demonstrating our innovative and award-winning ‘X for Education’ financial software.During the show, being held at the NEC on 21 November, we will be offering school business managers and headteachers the opportunity to learn more about our unique and innovative cloud-based system - which was responsible for TW winning the British Accountancy Awards ‘Xero Small Practice Innovation of the Year Award for 2018.’In the past twelve months, we have significantly extended our network of X for Education (XfE) users, including being an approved supplier to Churchmarketplace. As such, we anticipate seeing even more interest at the show.You can join us on Stand H14 to learn more about this unique, tailored solution, which specifically meets academies’ requirements.Lisa Weaver, our Head of Audit and Assurance, said: “Our entire team is so proud of what we have achieved with our XfE solution. No

Funding for special needs at ‘crisis point’ – school leaders warn A survey of school leaders has suggested that funding to support pupils with special needs and disabilities is at ‘crisis point’ due to increased pressure on school budgets.

The National Association of Head Teachers (NAHT), which carried out the survey of its members, found that 94 per cent of respondents said they now found it harder to support such pupils, compared with two years ago.

“The picture facing schools supporting children with special educational needs is bleak. Not only are school budgets at breaking point, there have been severe cuts to health and social care provision,” said Paul Whiteman, the NAHT’s general secretary.

“Schools are left struggling to meet the needs of our most vulnerable pupils. Without sufficient funding and a more coherent approach, the special education needs code of practice is nothing more than an empty promise from government to parents and children.” In a report to the DfE, the union has called for a full review of high-needs funding requirements and an immediate cash injection from

the Treasury. The report provided the DfE with a number of case studies where pupils with special needs or disabilities are being let down due to lack of available funding.

It included a response from one school leader, who wrote: “A child arrived [last] September in a wheelchair with cerebral palsy. We have to provide one-to-one support and two-to-one for toileting. We have received not a penny. Applied for top-up funding, still waiting.”Of those who responded to the survey, 83 per cent said no funding had been forthcoming from health and social care budgets to support pupils with special needs statements or individual education, health and care plans.

Around 1.28 million pupils are recognised as having special educational needs.Mr Whiteman continued: “The financial burden of additional support penalises those mainstream schools that are the most inclusive. This is unsustainable.

“Schools are seriously struggling to fund special needs support in the face of crippling budget pressures that sees them forced to cut critical support staff. We urgently need the government to recognise the scale of the problem and to secure an immediate increase in funding from the Treasury. It is make or break time for school funding.”


It is make or break time for school funding.”


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Academy trust accused of making false claims for Government grants

Snow days replaced with ‘e- learning days’ Could an American initiative work here in the UK?

Debt amongst academies soars to £65 million New figures from the Department for Education (DfE) have revealed the far-reaching impact that Government cuts to school funding have had on academies.

According to the DfE’s latest data, academy trusts falling into debt have managed to build up a total deficit of £65 million – with just over 6 per cent of academy chains affected by a cumulative deficit in 2016/17.

This is up from just 5.5 per cent of chains that were affected during the previous financial year, when the cumulative deficit sat at £50 million.

The new figures also reveal that the proportion of academies in multi-academy trusts (MATs) with a deficit now stands at around 4.3 per cent, indicating that some 300 academies are now caught in this position.

Interestingly, however, the report also found that the vast majority (91.6 per cent) of academy trusts actually have a surplus, while 2.3 per cent have a ‘zero balance’.

Overall, the academy sector has a surplus of £2.4 billion, the report reveals.

Debt amongst academies soars to £65millionthornewidgery.co.uk06 Snow days replaced with ‘e-learning’ days


Commenting, Mary Bousted, Joint General Secretary of the National Education Union (NEU), said that the rise in the number of academy trusts facing a deficit was a clear sign of the detrimental impact of Government cuts on the sector.

“It is clear that the academies sector and schools as a whole are feeling the effects of an unsustainable funding model,” she said.

“The rise in the number of academy trusts that are in deficit is another sign of the impact of the Government’s cuts to school funding, cuts that will further limit pupils’ educational opportunities.”

She added that earlier in the year, some of the largest academy trusts had warned in their annual accounts of the risks that they faced due to funding pressures and deficits. However, she pointed out that these specific figures did not shed a light on the individual schools within MATs.

An investigation led by BBC Panorama has resulted in an academy trust responsible for running 10 UK schools being accused of ‘misusing’ funds received by the Government. The Bright Tribe Trust, which is headquartered in Stockport near Manchester, is facing accusations that it made ‘false claims’ for

A number of schools in the American state of South Carolina are taking a novel approach to reducing classroom down time during the winter months, by replacing snow-days with e-learning days.

Anderson County School District Five has announced that it plans to pilot the initiative when winter weather makes travelling to school too hazardous. Teachers will set their students assignments which can be downloaded via school-supplied tablets.“It just makes good sense,”

Government grants. The news comes after Panorama revealed that the academy trust received a sum of £566,000 to carry out work at Colchester Academy in Essex.

Bright Tribe was expected to use the funds to demolish, rebuild and improve ‘unstable’ walls at the academy, but according to BBC News, the trust instead “carried out a cheap repair using metal braces.” Leaked documents from an insider suggest that the job actually only cost the trust around £60,000 – yet the Government was falsely informed that the full £566,000 had been spent. On a separate occasion, Bright Tribe reportedly claimed another £255,000 in Government funding to aid with regards to a sports centre renovation which was again carried out to an unsatisfactory standard.

BBC News reports that the trust “failed to carry out essential fire protection work” and skimped on its responsibilities to install

fire doors and fix a ceiling void deemed to be “a fire hazard.”

These are just a handful of failings Panorama shed a light on during its investigations, with others noted across schools in Cumbria and other regions, too. Commenting, Conservative MP Trudy Harrison said that the trust’s actions were “wrong.”

However, a spokesperson on behalf of Northumberland County Council said that the Government should have done more to safeguard the money involved.

In response, businessman Michael Dwan, the founder of Bright Tribe, insisted that all of the funding received had been spent at the schools, but that his company had “made a substantial loss” on the work carried out. He added that he personally was not a trustee, and did not have control over the trust’s actions, acting merely as an “interested observer” as work was sub-contracted to his


Overall, the academy sector has a surplus of £2.4 billion, the report reveals.”

company, Blue Support, and other organisations linked closely to him.

“I am not in control of the trusts and never have been. I am a very, very interested observer. I have never had any authority, never any decision-making power and no vote,” he said. Academies Minister Lord Agnew said that Bright Tribe Trust should not be taken as “representative of all academies,” and that more than 95 per cent of trusts had no issues in terms of reporting academies’ finances accurately.

“We take the use of public money very seriously and will not tolerate those who try to exploit the system for personal gain. But I am clear that Bright Tribe Trust is not representative of all academies, & more than half a million children are now in good or outstanding academies that were typically previously underperforming schools, thanks to innovative trusts across the country,” he said.

Anderson School District Five superintendent, Tom Wilson, told The Washington Post. In previous years, any school days lost as result of bad weather, were added to the end of the school year but officials in Anderson County have admitted that only a small percentage of students bothered to attend the ‘makeup days’ - prompting the district to replace them with e-learning days. Mr Watson highlighted the fact that the district has, in recent years, invested $11million (£8.3million) in tablets for students from kindergarten age through to the 12th grade (sixth

form), adding: “We think we are in a position to make it work”. Responding to parental concerns regarding lack of access to the internet at home, school officials confirmed that this would not be accepted as a reasonable excuse for dodging schoolwork, pointing out that students would be able to “download assignments to their Chromebooks ahead of time to ensure access in the case of Wi-Fi outage”. Mr Wilson also added that students who are unable to carry out their assignments at home would be given five days to complete them once they return to school.


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New research reveals pupil poverty concernsthornewidgery.co.uk08 Trust with £1million deficit allowed to bid for new schools


New research reveals pupil poverty concernsA survey of more than 5,000 governors and academy trustees has revealed concerns about the level of pupil poverty that schools are increasingly witnessing.The research, which was conducted by the National Governance Association (NGA) and tes, found that some schools are offering additional pupil support and pastoral care such as laundry services, food and money.

The survey found that:

of schools provided financial support for the purchase of school uniforms.

provided a food bank.

said they wash school uniforms.

provide meals outside of term time.

provide emergency loans.

Emma Knights, chief executive of the NGA, said: “It is shocking that we have got to the point where schools are having to help young people come to school in clean clothes.“Because of the fact that other services and the welfare benefits system have been affected by a number of years of austerity, schools are having to pick up some of those pieces.“I do think it is about other public services having suffered, and therefore families not having other places to turn.”

Debt affects 30 per cent of schoolsThe major annual survey of school leaders also revealed that schools were facing monetary pressures of their own – with 30 per cent admitting they were currently in debt.

said balancing the budget was one of the most important issues facing their school

recruitment was a major concern

disagreed with the statement that funding pressures can be managed without any adverse impact on the quality of education

Trust with £1million deficit allowed to bid for new schools An academy trust was allowed to continue its expansion - planning the takeover of two existing schools and receiving initial DfE approval to open two new free schools – despite having significant financial problems.

The TBAP multi-academy trust (MAT) was established in 2013, with the aim of supporting challenging students who have been excluded from mainstream education.

However, the Trust, which runs 11 alternative provision academies, was served with a Financial Notice to Improve (FNtI) by the Education and Skills Funding Agency (ESFA) in August this year. The Trust’s financial statement for the year ending August 2017, published in February, revealed the trust was, by this point, already more than £1 million in deficit. Despite being in financial difficulty, board minutes obtained by Schools Week, reveal that far from putting the brakes on the Trust’s ambitious expansion plans, the DfE had encouraged

sponsorship of two more schools and had granted outline approval for two new free schools.

Board minutes dating back to December 2017 allegedly show that TBAP’s bid for new social, mental and emotional health free schools in Hounslow and Essex were initially accepted by the DfE – four months after the year-end financial statement had flagged a deficit. It was only in June 2018, that the minutes reveal the DfE had changed its mind and advised the Trust to step back from the bids due to its ongoing financial problems.

TBAP chief executive Seamus Oates and Paul Dix, chair of the trust’s board, have both stated that they “first became aware of cash flow issues and a likely significant deficit in December 2017” following an audit and that, since then the Trust has implemented “a recovery plan which involves restructuring at trust and academy level.”

It has been reported that, following the revelations, both free schools have been returned for the next round of bidding and it is likely that the two school sponsorships will be re-brokered.

The Trust has implemented a recovery plan.”

said their schools have in-year deficits

Of these...

expect their reserves to run out this year, 26 per cent next year, and 34 per cent in two years’ time

said they have sufficient funding for pupils with SEND

Amongst secondary school respondents:

had reduced the number of support staff

had cut the number of teaching staff

had cut the number of subjects on offer

had increased class sizes

had cut spending on premises;

had cut the number of qualifications on offer


Emma Knights, continued: “Most governors are saying our children are being affected by the levels of funding available at our schools.

“The answer is that if we want to avoid children being affected by the funding cuts, then we do need to increase the amount of money available to our state schools.

As day follows night, if we want to avoid bad effects upon our education then actually more money will be needed over the next couple of years.”


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Academies that purchase goods and services from companies linked to senior staff, will in future be required to seek permission from the Department for Education (DfE).

Earlier this year, a parliamentary public accounts committee recommended that academy trusts should be required to seek approval for ‘related-party transactions’.

In its response, the DfE has confirmed it plans to implement a number of rule changes “during the 2018-19 academic year”.

Key changes highlighted in the 2018 Academies Financial Handbook include:

Transactions that exceed £20K limits with related parties must obtain permission from the ESFA, in advance of the transaction taking place.

All related transactions must be notified to the ESFA in advance.

Trusts must obtain approval for transactions that are classed as novel, contentious and/or repercussive.

ESFA plans to tighten rules for related-party transactions

The new rules are expected to be fully in place by April 1st 2019.

In 2016, 40 per cent of academy trusts engaged in related-party transactions, worth a total of £120 million.

Some deals have led to controversy. Earlier this year, Janet Marshall, the founder and Chief Executive of the EMLC Academies Trust was forced to defend a deal which paid £1.5 million in consultancy fees to her family business.

Bright Tribe Trust also found itself in the spotlight for related-party transactions. It was found to have breached funding regulations and as a result took the decision not to offer future contracts to companies run by its founder, Michael Dwan.

If you have concerns regarding related-party transactions, please speak to the education team at TW. We can provide independent advice to help you ensure that your trust adheres to the latest regulations.

ESFA plans to tighten rulesthornewidgery.co.uk10 Changes to Academies Financial Handbook


Changes to Academies Financial HandbookWhat you need to know...The latest edition of the ESFA’s Academies Financial Handbook 2018 has been published and there are some important changes that you need to be aware of. The rules which took effect on 1 September 2018, range from small amendments to major revisions. Here are some of the key changes:

Management accountsThe Handbook has tightened up a number of rules regarding the preparation of management information and, in particular, how frequently this is shared with trustees.

These include:

• Preparing management accounts every month, setting out a Statement of Financial Activities (SOFA) or Income Expenditure Account, balance sheets, budget variance reports and cash flow forecasts.

• Sharing this information with the Chair of Trustees on a monthly basis, regardless of the size of the trust – and with all trustees (not just the finance committee) six times a year.

• Ensure key performance indicators are used regularly to measure performance

Setting clearer requirements for budgetingThe Handbook makes clear that the Budget Forecast Outturn in May, as well as the three year Budget Forecast in July must receive trustee approval prior to submission. Trustees will be expected to challenge any aspects of the Budget Forecast that may be deemed inaccurate or unrealistic.

Financial and governance requirementsThe Trust will be expected to have in place a robust control framework to avoid becoming overdrawn

Board meeting requirementsAlthough the board is required to meet at least three times per year, the ESFA has an expectation that, in the majority of cases six meetings per year should be held. The Handbook states that if fewer than six meetings per year are held the Trust should disclose within its annual governance statement how the board has maintained ‘effective oversight’ despite fewer meetings.



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Delegated authorities for related-party transactionsFrom 1 April 2019, all trusts will need to report any transactions with ‘related parties’ in advance of the transaction taking place. Any failure to notify the ESFA prior to the transaction (which includes either income or expenditure) will be deemed a breach of Handbook rules and will need to reported in the ‘regulatory and propriety’ statement in the trust’s annual financial statement. Any transaction of £20,000 or more will require prior consent from the ESFA. There are a few exemptions to the rule, but if in doubt, we suggest you seek specialist advice to check whether or not the rules apply.

Setting executive payThe recent focus on executive pay has prompted the EFSA to write to all trusts paying either their CEOs in excess of £150,000 or two or more staff £100,000 each per annum. There is also a greater focus on the rates of pay for non-teaching staff The Handbook states that there should be a basic presumption that non-teaching pay should not increase at a faster rate than that of teachers.

Risk protection arrangementThe Handbook underlines the fact that RPA does not cover all possible risks. A full list is not provided by the Handbook but includes motor insurance and overseas travel.

Handling of whistleblowersPreviously, trusts were simply required to maintain appropriate procedures for whistleblowing. Now, the Handbook states that: “the trust must ensure that all concerns raised with them by whistleblowers are responded to properly and fairly.”

A full copy of the Handbook is available to view here, www.gov.uk/government/publications/academies-financial-handbook

If you are concerned or would like more information about any of the changes discussed, please contact our education team.

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