Key Changes in the Academy Trust 2024 Handbook

On 31 July 2024, the Education and Skills Funding Agency (ESFA) published the latest edition of the Academy Trust Handbook. The 2024 handbook introduces several changes aimed at enhancing operational flexibility, internal scrutiny and overall management within academy trusts.

Effective date

The Academy Trust Handbook 2024 is effective from 1 September 2024.

It is worth noting that although enhanced internal scrutiny measures for trusts with annual revenue income of over £50 million are emphasised in this release, they are to be made mandatory from 1 September 2025.

Finance leasing flexibility

One of the most notable changes in the 2024 handbook is the new freedom granted to academy trusts regarding finance leases, first indicated by the guidance issued by the Department for Education (DfE) on 28 March 2024. Previously, trusts were restricted to operating leases unless they sought prior approval from the ESFA to enter into a finance lease.

However, starting from 1 September 2024, trusts can enter into finance leases without prior approval, provided the asset type is listed on the DfE’s approved list. This change offers trusts greater flexibility in managing spending decisions locally, facilitating more effective asset management.

Trusts are still requited to obtain ESFA approval for:

• Taking up finance leases on any asset not on the DfE approved list.
• Taking up a leasehold or tenancy agreement on land or buildings for a term of seven years or more.
• Granting a leasehold interest, including tenancy agreements, of any duration, on land and buildings to another party.

Enhanced internal scrutiny

The 2024 Handbook stresses the importance of proportionate internal scrutiny based on the size and complexity of the trust. Trusts with revenue income exceeding £50 million per year should establish a professional internal audit function, either through an in-house internal auditor or a bought-in internal audit service.

This will be mandatory from 1 September 2025, providing an additional layer of assurance for boards overseeing substantial financial operations.

In addition to the above, where a trust uses trustees or peer reviewers to perform internal scrutiny work, the Handbook emphasises the need to ensure that the reviewers have appropriate qualifications and/or experience relevant to the area being reviewed.

Temporary pause on Electric Vehicle Salary Sacrifice Schemes

The Handbook also addresses the ongoing discussions around Electric Vehicle Salary Sacrifice (EVSS) schemes. There is a temporary pause on EVSS provisions included in the 2023 to 2024 Handbook.

From 1 September 2024, trusts must contact the ESFA via the customer help portal in the early planning stages of a new scheme or before adding employees to existing schemes.

Reserves policies

Following the updating of the ESFA’s good practice guide on reserves in April 2024, the Handbook clarifies that when setting a policy for holding reserves and explaining it in the annual report, trustees must ensure that the policy includes a clear plan for managing reserves. At a time when many trusts are struggling to balance the books, how reserves are monitored and managed is of critical importance.

Other changes

Other changes in this edition include:

• Moving some content relating to the register of business interests from Part 5 to Part 1 of the Handbook.
• Reminding trusts of the importance of the DfE’s digital and technology standards and clarifying that trusts must take appropriate action to meet the DfE’s cyber security standards.
• Extending the list of examples where a Notice to Improve (NtI) may be issued to include management of the school estate.

How can Mercia help?

Mercia’s range of audit methodology products include robust acceptance and continuance procedures. We also offer a range of other support services including file reviews (whether hot or cold) and answering your technical queries. Our extensive range of training courses may also be of benefit.