The seminar is timed to coincide with the expected publication dates of the new Academies Financial Handbook and the new Academies Accounts Direction. We will cover the main changes in a clear and understandable way.
These technical presentations will be complemented by other relevant and topical matters, including, governance and risk management, VAT and Integrated Financial Curriculum Planning - which is currently a very popular financial health check review of the ESFA.
Our intention is for the seminars to be relaxed and informal, offering you opportunities to ask questions and to meet your counterparts from other Trusts.
Topics include:
• Update on the Academies Accounts Direction
• Update on the Academies Financial Handbook
• What does a good board look like?
• Integrated Curriculum Financial Planning
• Are you managing risk?
• VAT Update
4. OUR CENTENARY YEAR
We are celebrating because:
National 2018 Charity Finance Audit Survey league table special
commendation for overall service.
96% of our clients ranked the service they receive from us as good (the
highest option).
Highest placed regional firm in the UK for the number of audit services to
charities – a good start to our centenary year!
Thank you to all our clients who took part in the survey.
5. PROGRAMME
10.05 – Academy Accounts Direction 2018/19 – Darren Perry
10.30 – Academies Financial Handbook 2019 – Katie Skea
10.50 – What does a good board look like? – Louise Bridgett
11.10 – Break
11.30 – Integrated Curriculum Financial Planning (ICFP) – Katie Skea
11.55 – Are you managing risk? – Darren Perry
12.15 – VAT update – Daniel Austin
12.35 – Questions
12.45 – Lunch
7. ACADEMY ACCOUNTS DIRECTION 2018/19
WHAT’S NEW?
Published April 2019, for accounting periods ended 31 August 2019
Relatively few changes of significance, but greater clarification on issues
Coketown Academy Trust proforma accounts and Regularity guidance
now in an appendix at the end (Annex A & B)
Download your copy from:
https://assets.publishing.service.gov.uk/government/uploads/system/upload
s/attachment_data/file/795646/Academies_accounts_direction_2018_to_20
19.pdf
8. No longer a requirement to include dates of payments made regarding
non statutory / non contractual staff severance payments
However information still expected to be required in the Academy Accounts
Return
Removing the combined funds note showing both the current year and
prior year combined funds position
Only introduced last year, however it was promptly agreed by ESFA that its
omission would not cause a significant issue and it has now been removed
ACADEMY ACCOUNTS DIRECTION 2018/19
DISCLOSURES REMOVED
9. ACADEMY ACCOUNTS DIRECTION 2018/19
GOVERNANCE (S1.6.3)
Requirement that a copy of the annual report and financial statements
must be sent to every member of the company and to every person who is
entitled to receive notice of general meetings
Existing requirement of the Companies Act 2006
Inclusion suggests that not all trusts had been doing this
The normal approval process for the accounts would be for the directors to
approve the accounts prior to the 31 December filing deadline. The accounts
would then be ratified by the members at the Annual General Meeting,
although this is typically a formality
10. ACADEMY ACCOUNTS DIRECTION 2018/19
GIFT AID FROM SUBSIDIARY COMPANIES (S5.1.19)
Referencing SORP update bulletin 2, section 3 covering income
recognition for donations to academy trusts from trading subsidiaries
Income should only be accrued when there is a legal obligation to make
the payment
Typically a trading subsidiary would gift aid profits to the parent academy,
mitigating the corporation tax liability
Previously such gift aid payments may have been accrued, but now this is
only an option if a legal obligation in place (like a deed of covenant)
As a result the subsidiary accounts may show a profit
This doesn’t affect tax position as gift aid donations paid within 9 months of
the year end are still eligible for tax relief in a wholly owned subsidiary
11. ACADEMY ACCOUNTS DIRECTION 2018/19
FIXED ASSET CLASSIFICATION (NOTE 14)
Coketown proforma accounts have revised categories in line with the
Sector Annual Report and Accounts
Freehold Land & Buildings
Leasehold Land & Buildings
Leasehold Improvements
Assets Under Construction
Furniture and Equipment
Plant and Machinery
Computer Equipment
Motor Vehicles
Omit any categories that are not relevant.
Grounds to amalgamate if not material to the accounts
12. ACADEMY ACCOUNTS DIRECTION 2018/19
DISCLOSURES (NOTES 27, 30, 32, 37)
Prior year position comparative required for:
Agency arrangements
Events after the reporting period
Contingent liabilities
Comparatives would be ‘helpful’ for guarantees, letters of comfort and
indemnities
Clarifying the pensions note that Parliament guarantee regarding LGPS
liability relates to academy trusts and not individual academies. The TPS
element has been updated to reflect that revised employer contribution
rates are expected to be payable from 1 September 2019
We understand employer contribution will increase to 23.6% so model
accounts narrative may need further amendment
13. ACADEMY ACCOUNTS DIRECTION 2018/19
ACCOUNTING POLICIES (S6.3.13)
Where an asset comprises of two or more components which have
substantially different lives, for example roof, boilers, lifts, each component
must be depreciated separately over its useful economic life
Depreciation rates should best reflect the useful economic life of the asset.
‘Substantially different’ is open to judgement
Exemption if impractical or requires undue cost of effort
14. ACADEMY ACCOUNTS DIRECTION 2018/19
GRANTS FOR CAPITAL PURPOSES (S7.4.3)
Specifying grants received for capital purposes and that these must be
spent on capital projects in line with the terms and conditions of the grant
Interesting inclusion (!)
Capital grants are recognised in full when there is unconditional entitlement
Check terms and conditions of the grant to ensure spent in time
DFC – 3 financial years with year one being the year payment is made
SCA – check terms and conditions – typically 1 year carry over of allocation
15. ACADEMY ACCOUNTS DIRECTION 2018/19
RELATED PARTY TRANSACTIONS (S6.6)
New requirements from 1 April 2019 to report all transactions with related
parties to the ESFA and to obtain approval where certain limits apply
Explicit confirmation narrative of this is now required in the related party
transactions note
Coketown proforma includes an example disclosure relating to the
purchase from a Trustee’s business and the employment of a Trustee’s
spouse.
16. ACADEMY ACCOUNTS DIRECTION 2018/19
RENT FREE PERIODS (S7.7)
Requirement that if an academy trust wishes to recognise the use of
premises, where these are given rent-free, for a remaining notice period it
should reflect the future notional donation as a debtor with a
corresponding entry for the future rental expense as a creditor.
Additional clarification for accounting entries
Most likely to be relevant to academies with Diocese / Church land and
buildings
Can be difficulties in agreeing a value for the use of the premises
17. ACADEMY ACCOUNTS DIRECTION 2018/19
REGULARITY
Clarifying that irregular expenditure includes all alcohol and any excessive
gifts, including those purchased from unrestricted funds
Welcome clarification that all alcohol purchases are irregular – flag any with
your auditor
May need to be reflected in report on Regularity and Propriety statements
Requirement would extend to trading subsidiary
Sets out additional areas to consider when testing governance to support
the conclusion on regularity
Primarily guidance for auditors, but increased from 2 to 14 bullet points
Includes new requirements of 2018 AFH
18. OTHER TOPICAL ISSUES
CARBON ENERGY REGULATIONS
Effective for financial years starting on or after 1 April 2019 (i.e. 31 August
2020 onwards). Therefore need to data from 1 September 2019.
Reporting requirement for large companies i.e. those meeting 2 out of 3
criteria:
Total income > £36m
Balance sheet total (gross assets before liabilities) > £18m
Employees (total number) > 250
Entities will need to disclose in the Trustees report:
UK energy use, as a minimum electric, gas and transport fuel (i.e. kwh)
Associated carbon emissions (i.e. tonnes of Carbon Dioxide emissions)
At least 1 intensity metric (i.e. energy usage to turnover/staff/pupil numbers)
Information about energy efficiency measures and methodologies
19. OTHER TOPICAL ISSUES
CARBON ENERGY REGULATIONS – S172 STATEMENT
Whilst reporting at a Trust level, all schools within a MAT will need to
capture the information
Should be straight forward for gas and electric
Transport includes fuel used for business purposes in company cars, fleet
vehicles (minibus), personal cars for business use, private jets etc (!)
Transport does not include fuel associated with journeys that the company
doesn’t operate i.e. train travel, commercial flights, taxis etc
Online tool to convert energy usage available at
https://www.gov.uk/government/collections/government-conversion-factors-for-
company-reporting
Some exemptions from reporting if less than 40 mwh per annum or if
seriously prejudicial to the interests of the organisation
May give some interesting benchmarking data
20. OTHER TOPICAL ISSUES
ESFA CHART OF ACCOUNTS (COA)
Standard codes for financial data to underpin the AAR and BFR
Adopting COA is voluntary, but ‘recommended’ by ESFA from September
2019
Will potentially enable automated data transfer to the ESFA for 2019/20
financial returns
May be able to map existing codes to new COA, but it will require sufficient
code structure, including balance sheet codes, for full automation or you may
still need to make manual entries
Several codes won’t typically be required and should be marked inactive
Schools can still use local cost centres for their own reporting
Speak to your software supplier re transition / software guidance
Consider if and when you adopt the change (software change? merger?) and
allow yourself sufficient time
22. ACADEMIES FINANCIAL HANDBOOK 2019
Published June 2019, effective from 1 September 2019
What are the key changes? As outlined in Lord Agnew’s foreword:
Internal scrutiny of controls
Emphasising areas including:
The governance role of the Board
The role of the clerk to the Board
Slight tweaks in requirements/wording in relation to:
Management accounts
Whistleblowing and
Executive pay
Lots of new links to further information
What is driving the changes?
23. INTERNAL SCRUTINY
Previously this was covered through a small subsection of the Handbook.
Now internal scrutiny has a whole part of the Handbook dedicated to it,
(Section 3), with various ‘musts’ and guidance covering:
The Board’s role in relation to internal scrutiny
Who can provide internal scrutiny assurance checks
Reporting internal scrutiny assurance checks
It has now mandated procedures which most Trust’s are probably applying
in any case with a few extra requirements.
24. INTERNAL SCRUTINY
Why?
Good internal
controls operating
effectively
Good financial
management
Efficiency
Risk management
Minimise the risk
of fraud/error
and error
detection
Consistency
Compliance
Protect assets
Reliable reporting
25. THE BOARD’S ROLE IN RELATION TO INTERNAL SCRUTINY
The Board
Audit/finance
committee
Changes:
- Must meet at least 3 times a year
- The Chair of trustees should not be the chair of the
audit committee
- The committee must have written terms of reference
describing its remit.
- Must take responsibility for internal scrutiny
No change:
- If annual income >£50m, must have a dedicated audit
committee. Other trusts must have a dedicated audit
committee or combine it with another committee.
- Employees should not be audit committee members but
where audit is combined with another committee,
employees should not participate as members when audit
matters are discussed.
26. THE BOARD’S ROLE IN RELATION TO INTERNAL SCRUTINY
Audit/finance
committee
must:
Agree an annual
programme of
work that
delivers internal
scrutiny
Agree who will
perform this
work –
considering
quality and
independence
Consider reports
from the internal
scrutiny provider
and consider
progress against
recommendations
Consider outputs
from other
assurance
activities i.e.
external audit
Report back to
the Board
For MATs, the
committee’s
oversight must
consider
constituent
academies
Oversight must ensure
that information
submitted to ESFA that
affects funding, (capital
and revenue), by the
Trust/constituent
academies is accurate
and compliant i.e. pupil
numbers.
Risk register
(Now
mandatory)
FPM: Key
financial and
other controls
27. WHO CAN PROVIDE INTERNAL SCRUTINY ASSURANCE
CHECKS?
Internal scrutiny
provider
In-house
internal
auditor
TrusteeBought in
service
Peer
review
Separate letter of
engagement needed if
performed by external
auditor
The provider must:
- Be independent and objective
- Be suitably qualified and experienced
- Complete a timely programme of work spread
evenly over the year
The Trust must continually review its
approach to internal scrutiny. Changes to
Trust size, complexity or risk profile may
warrant a change to internal scrutiny
approach
28. REPORTING INTERNAL SCRUTINY ASSURANCE CHECKS
Internal
scrutiny
provider
must
Complete
testing on the
agreed annual
programme of
work
Directly report back to
the audit committee,
including providing a
report on the findings
with insights and
recommendations for
improvements where
weaknesses are
identified.
Prepare a short annual
summary report for each
academic year outlining the
areas reviewed, key findings,
recommendations and
conclusions
These reports
must also be
shared with all
Trustees
Annual summary must
be submitted to the
ESFA with the audited
annual accounts by 31
Dec each year
29. OVERVIEW OF THE SYSTEM OF INTERNAL SCRUTINY
Internal scrutiny
provider
Risk
register
Key financial
and other
controls
All Trusts must have a
programme of internal
scrutiny to provide
independent assurance
to the Board that
financial and other
controls and risk
management
procedures are
operating effectively.
The Board
Now
mandatory,
previously
a should
Audit
committee
Financial
Procedures
Manual
30. THE ROLE OF TRUSTEES
Further wording added:
‘… robust governance…’ ‘…effective financial management…’
Links to the Governance Handbook – which describes 6 key features of
effective governance and will aid compliance with the AFH:
Effective
governance
Strategic
leadership
Evaluation
Compliance
Structures
People
Accountability
- Educational
standards
- Financial
performance
31. THE CLERK TO THE BOARD
As referred to in Lord Agnew’s foreword, the handbook includes further
detail on how a clerk to the Board may help by providing:
Administrative and organisational support
Guidance to ensure that the Board works in compliance with the appropriate
legal and regulatory framework
Advice on procedural matters relating to operation of the Board
Appointment of a clerk to the Board remains a ‘should’ rather than a
‘must’.
Links to further information on clerking.
32. INFORMATION ABOUT KEY INDIVIDUALS IN THE
TRUST
No significant changes in this area
Wording has tightened and clarifies that all fields within the Get Information About
Schools (‘GIAS’) system must be completed with any changes notified to the ESFA within
14 calendar days for the:
Members
Chair of Trustees
All other Trustees
Accounting Officer
Chief Financial Officer
Clarification that the same details also need to be completed/updated on GIAS for
constituent academies in a MAT for:
Head teacher
Chairs of local governing bodies (where adopted)
Local governors (where adopted)
Direct contact details are needed for all except local governors.
33. MANAGEMENT ACCOUNTS
Previously:
AFH 2018:
• The Trust must prepare monthly
management accounts setting out:
• Financial performance and position;
• Budget variance reports;
• Cashflow forecasts and
• Information to manage cash, debtors
and creditors
• Format ‘should be adjusted to be suitable
for different users including summaries and
supporting narrative as appropriate.’
• Where the Board has concerns about
financial performance, it should consider
whether additional financial reporting is
appropriate.
Changes:
• Format must include:
• An income and expenditure account;
• Variation to budget report
• Cashflows and
• Balance sheet
• Where the Board has concerns about financial
performance, it should act quickly ensuring the
Trust has adequate financial skills in place.
• Links to further information.
34. RELATED PARTY TRANSACTIONS
Previously:
AFH 2018 introduced the new rules requiring:
• All RP transactions to be reported to the
ESFA ,in advance, using the on-line form
from 1/4/19.
• Prior ESFA approval to be obtained for:
• Any contract exceeding £20k on or
after 1/4/19
• Any contract (after 1/4/19) of any
value which would mean that the
cumulative value of contracts
supplied by the RP for the year
exceeds £20k
• ESFA approval needed for transactions
with RP that are novel, contentious or
repercussive
Changes:
• In relation to the requirement to report to the
ESFA: transactions replaced with ‘contracts and
other agreements.’
• Further guidance on ‘novel, contentious or
repercussive’ RP transactions:
• Subject to separate arrangements:
• Must be reported to the ESFA through the
enquiry form rather than the on-line form
• Prior approval must be sought regardless of
value.
35. WHISTLEBLOWING
The new handbook slightly expands the requirements in relation to
whistleblowing.
No change:
- The Trust must have procedures in place
for whistleblowing
- The Trust must ensure that all staff are
aware of the process and how concerns
will be managed
- The Trust must ensure that all concerns
raised are responded to properly and fairly
Changes:
- The Trustees must agree the whistleblowing
procedures.
- The Trust should appoint at least 1 Trustee and 1
member of staff who other staff can contact to
report concerns.
- Staff should know what protection is available to
them if they report someone, areas of malpractice
or wrongdoing covered under whistleblowing and
who they can approach with any concerns.
36. PAYROLL RELATED CHANGES
EXECUTIVE PAY
There are few changes in this area but some clarifications and extended
wording:
Clarification that the Board are responsible for setting executive pay and benefits
Extensions to wording:
The process of deciding executive pay must also be a reasonable and defensible
reflection of the individual’s role;
Executive pay and benefits must be kept proportionate;
Executive pay and benefits represent good value for money.
New section flagged to consider: ‘commercial interests’: ensuring that the Board is
sighted on wider business interests held by senior executives and any payments
made by the Trust to these interests. (Transparency requirements of disclosing pay).
More links to further information in relation to executive pay and staffing/employment
advice.
37. PAYROLL RELATED CHANGES
TAX ARRANGEMENTS FOR SENIOR EMPLOYEES
This covers the requirement to ensure that senior employees’ payroll
arrangements fully meet their tax obligations.
The wording has been expanded to clarify that:
Senior managers with significant financial responsibilities should be
exclusively on payroll, and therefore subject to Pay As You Earn with
income tax and NI deducted at source.
38. VARIOUS AREAS HAVE BEEN EMPHASISED
NEW: Audited accounts must be provided to every member (CA06
requirement)
NEW: Note that trusts must ensure they are familiar with the delegated
authority limits – beyond which prior ESFA approval is required, (see handout)
NEW: In relation to Trusts issued with FNtI:
The Trust must publish the FNtI on their website within 14 days of its issue and retain
it on the website until it is lifted
Clarification of the delegated authorities that are revoked and a listing of transactions
that must be approved by the ESFA in advance
NEW: Secretary of State interventions over concerns about an individual
managing a Trust: the most significant change being that the ESFA may refer
an individual to the Insolvency Service – where conduct will be reviewed and a
potential disqualification order sought.
39. WHAT DOES A GOOD
BOARD LOOK LIKE?
Louise Bridgett
40. GOVERNOR DUTIES
Governor = director = trustee
The 7 principles of public life
Ensure clarity of vision, ethos and strategic
direction
Hold executive leaders to account
Oversee and ensure effective financial
performance.
41. EIGHT ELEMENTS OF
EFFECTIVE GOVERNANCE
1. The right people around the table
2. Understanding the role & responsibilities
3. Good chairing
4. Professional clerking
5. Good relationships based on trust
6. Knowing the school – the data, the staff, the parents, the children, the community
7. Committed to asking challenging questions
8. Confident to have courageous conversations in the interests of the children and young people
42. THE RIGHT PEOPLE AROUND THE TABLE?
How many
Governors?
Future skill
requirements?
Governor
tenure?
Recruitment
process?
43. IDEAL TRAITS OF A GOVERNOR
Ability to listen
Openness
Understand the stakeholders
Ability to challenge
Common sense
Correct motivation
Be able to ask the right questions
44. HOW EFFECTIVE IS YOUR BOARD?
Have you checked?
How frequently have you checked?
External support and guidance includes:
https://www.nga.org.uk/Knowledge-Centre/Good-governance/Effective-
governance/Twenty-Questions.aspx
https://www.nga.org.uk/Knowledge-Centre/Good-governance/Effective-
governance/Twenty-one-Questions-for-Multi-academy-Trust-Board.aspx
45. SUPPORT, CHALLENGE, TRUST
Balance between support & scrutiny.
Honest feedback important from both sides.
Governors should have free and open access to
the schools.
How close is too close?
47. WHAT SHOULD EACH PERSON DO?
The Chair should:
Lead the Board
Ensure engagement and participation
Encourage relevant discussion,
effective decision-making,
appropriate implementation
Nurture the relationships between
Governors.
The CEO should:
Manage day to day operations
Deliver objectives
Act as main point of contact between
the Board and the academy
53. INTEGRATED CURRICULUM FINANCIAL PLANNING
(ICFP)
What is ICFP?
Why is it important?
How do you do it?
How can you interpret/benchmark the results?
What conclusions can you draw?
54. WHAT IS ICFP?
The typical budgeting approach in Trusts
ICFP or curriculum led planning is essentially planning the curriculum with a
focus on finance. Providing the best curriculum for the money you have
available.
Trust’s should ask themselves 2 questions:
1. What are the educational needs of all pupils at the academy?
2. Can we afford to run this curriculum?
The key cost in running a curriculum is teacher costs. ICFP is a series of KPIs
focussing on teacher costs.
ICFP is not new and most Trusts are probably applying aspects of ICFP
without realising it.
55. WHY IS IT IMPORTANT?
General austerity in the sector drives the need for savings and
efficiencies.
Tackles the ‘large’ cost proactively rather than reactively
Benchmarking capability – highlighting areas for improvement
ESFA favoured model
MAT Development and Improvement Fund grants
Lord Agnew’s letter – June 2018
‘Top 10 planning checks for Governors’/ SRM checklist
The future?
56. ICFP
Cost per lesson
Pupil to teacher ratio
(PTR)
Curriculum
headroom
Average teacher cost
Contact ratio
% of spend on:
- Staff
- Teaching staff
- SLT
Average class size
HOW DO YOU DO IT?
57. WHAT DATA?
First step – consider what data set you are going to calculate the
KPIs on?
Review historic data or use for future planning?
Date
Efficiency
What are you planning to compare against? Compare like
against like
58. PRACTICAL SESSION
Using the data sheet and workbook provided, calculate the
following ratios:
Average teacher cost
Cost per lesson
Pupil: Teacher ratio
Contact ratio
5 minutes
Curriculum bonus – we will work through this calculation later
59. AVERAGE TEACHER COST
Use ‘full cost’ of all teaching and SLT staff
Only use teacher and SLT costs
Example - Academy 1:
Answer: (323,000+2,802,000)/(3.5+52) = £56,306.31
Teacher cost
Average teacher cost =
No. of FTE teachers
60. COST PER LESSON
Use ‘full cost’ of all teaching and SLT staff teaching time
This ratio tells you the full cost of running each taught lesson
Example assumes that there is no SLT teaching time
The cost per lesson should be approx. £2,000/lesson
Example:
Academy 1: 2,802,000/1,045 = £2,681
Teacher cost
Cost per lesson =
No. of teaching periods per week
61. PUPIL TO TEACHER RATIO (PTR)
Include SLT staff
This ratio tells you your balance of pupils to teachers
Example:
Academy 1: 1,030/ (3.5+52) = 18.56
Total number of pupils
PTR =
No. of FTE teachers
62. CONTACT RATIO
Include SLT staff (ESFA guidance)
Normalise the same period i.e. a week
This ratio tells you the average amount of time that all teachers spend with pupils,
(a contact ratio of 1 would be 100% of their time)
Contact ratios should always be less than 1 to allow for PPA time, CPD, admin,
pastoral care etc.
An optimal average contact ratio is approx. 0.78 (ASCL)
Application to primary schools
Example:
Academy 1: 1,045/ ((3.5+52)*25) = 0.75
No of teaching periods
Contact ratio =
Total no. of available periods
63. CURRICULUM HEADROOM / BONUS
We have seen different ways of calculating this metric
Regardless of the method used, this ratio indicates how much excess teaching time is
available, (ESFA focus)
SLT teaching time should be included in this analysis (example assumes no SLT teaching
time)
A desirable curriculum bonus is less than 8%
1) Calculate the number of classes needed
No. of classes needed = Total pupils
Target class size
2) Calculate the number of FTE teachers needed based on your target contact ratio, (0.78)
No. of teachers needed = No. of classes needed
0.78
3) Calculate excess number of FTE teachers
Excess = Actual FTE – FTE needed (above)
4) Calculate curriculum bonus
Curriculum bonus = Excess no of teachers x 100%
Actual no of teachers
64. CURRICULUM HEADROOM / BONUS
1) Calculate the number of classes needed
No. of classes needed = 1,030 = 38.1
27
2) Calculate the number of FTE teachers needed based on your target contact ratio, (0.78)
No. of teachers needed = 38.1 = 48.9
0.78
3) Calculate excess number of FTE teachers (assumed no SLT teaching time)
Excess = 52 – 48.9 = 3.1
4) Calculate curriculum bonus
Curriculum bonus = 3.1 x 100% = 6%
52
Example – Academy 1:
65. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
You’ve calculated the data, how do you interpret it?
Compare with:
Your own historical data for the academy
Other academies within your MAT
Other known, similar academies
ESFA approved data – Outwood Grange – youtube video – links on
ESFA website
Beware of:
Differences in calculation
Comparing like with like: dates/ years/ school types
Note that many other KPIs and ratios can be used for benchmarking
66. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
Let’s consider the example:
What can we glean from these metrics comparing to other
academies in the Trust and ESFA recommendations?
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
% of total spend on teaching staff pay 56% 53% 62%
Average teacher cost 56,306 52,691 56,644
Cost per lesson 2,681 2,668 2,835 2,000
PTR 18.56 15.79 16.71
Contact ratio 0.75 0.71 0.71 0.78
Curriculum bonus 6% 20% 13% <8%
67. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
With focus on the 3 metrics integral to ICFP:
1. Cost per lesson
Indicates that all 3 schools need to reduce this, academy 3 in particular
Reduce teacher cost by reducing FTE?
Is SLT too big? i.e. staff profiling
Teacher cost
Cost per lesson =
No. of teaching periods per week
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
Cost per lesson 2,681 2,668 2,835 2,000
68. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
2. Contact ratio
Academies 2 and 3 in particular need to increase this ratio
Reduce total number of available periods by reducing FTE?
No of teaching periods
Contact ratio =
Total no. of available periods
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
Contact ratio 0.75 0.71 0.71 0.78
69. HOW CAN YOU INTERPRET/BENCHMARK THE DATA?
3. Curriculum bonus
Indicates that academies 2 and 3 need to decrease this ratio
1) Calculate the number of classes needed
No. of classes needed = Total pupils
Target class size
2) Calculate the number of FTE teachers needed based on your target contact ratio,
(0.78)
No. of teachers needed = No. of classes needed
0.78
3) Calculate excess number of FTE teachers
Excess = Actual FTE – FTE needed (above)
4) Calculate curriculum bonus
Curriculum bonus = Excess no of teachers x100%
Actual no of teachers
Trust: Secondary schools ESFA
Academy 1 Academy 2 Academy 3 recommendation
Curriculum bonus 6% 20% 13% <8%
• Increase class sizes/ Decrease
number of classes?
• Tweak this ratio for key
years?
• Classes do not need to
remain consistent?
• Interaction with contact ratio –
higher contact ratio ~ less
teachers needed
70. WHAT CONCLUSIONS CAN YOU DRAW?
Very useful for planning/comparing
Can uncover new insights
Indicative rather than conclusive
ESFA favoured analysis
Help available
72. ASSESSING AND MANAGING
RISK
What is risk management?
Risk identification
The risk management policy
Assurance
The risk register
Reserves
Stress testing
73. ‘The forecasting and evaluation of risks, together with the identification of
procedures to avoid or minimise risk impact’
An academies risk management procedures will likely include:
Identification of risks – the risk register
Their approach to managing risk – the risk management policy
Steps taken to mitigate the risk – the procedures and controls
Ongoing review of risk – by management and Trustees
Reserves policy
WHAT IS RISK MANAGEMENT?
74. Strategic versus operational risks
Risk categorisation
Impact assessment
Likelihood assessment
RAG rating
RISK IDENTIFICATION - THE RISK REGISTER
10
9
8
7
6
5
4
3
2
1
1 2 3 4 5 6 7 8 9 10
L
i
k
e
l
i
h
o
o
d
Impact
75. The risk management policy
Risk objectives
Risk approach
Risk appetite
Procedures and controls
Assessing risk
What action is required?
Tolerate
Treat
Transfer
Terminate
ASSESSING AND MANAGING RISK
76. ASSURANCE
Assurance
1st line – Management
Policies
Control framework
Management review
2nd line – Corporate oversight
3rd line – External sources of assurance
77. BACK TO THE RISK REGISTER
Update the risk register for the assurance and any identified actions
Residual risk scoring
Additional information to include
The risk owner
A timeline for the required actions
A timeline for review
Ongoing monitoring
Risk reporting
Red Amber Green
Financial 1 4 2
Governance 0 1 1
Safeguarding 0 2 5
Curriculum 0 3 3
etc 1 4 2
78. What are reserves?
Liquidity
Why does your academy need to hold reserves?
Are you holding the right level of reserves?
Developing a reserves policy
Are you articulating your reasoning in your reserves policy?
RESERVES
In order to consider the long term
sustainability of your organisation
you need to consider your risks in
the context of your current level of
reserves and your reserves policy.
Your free reserves are your:
Unrestricted funds +GAG x
Less:
Tangible fixed assets (x)
Programme related investments (x)
Designated funds (x)
Any other commitments (x)
Free reserves x
79. STRESS TESTING
What combination of risks would lead to
failure?
For example increased costs and funding
reduction?
Have you tested to the
point of failure?
Costing up of your risks
It’s not all bad news
80. FINAL THOUGHTS
SWOT analysis
Blank sheet approach
Trustee skills mix
What haven’t we thought of?
82. TABLE OF CONTENTS
Overview of VAT
Business and Non-Business Activities
Common Supplies and Pitfalls
Making Tax Digital
Other points
83. VAT - OVERVIEW
Charged on a supply of taxable goods or services (business activities).
Required to register where taxable turnover exceeds £85k (historic or 30
day test)
Includes all schools within a MAT
Also includes reverse charges
Agents fees
Software licences
Overseas services
Voluntary registration possible if taxable turnover below £85k
84. VAT OVERVIEW – BUSINESS ACTIVITIES
Lettings
Room hire
Sports facilities
Business
Activities
Catering provided
to non-pupils
Staff
to ‘profit making’
organisations
Services
Consultancy
Advertising
Administration
Uniform
Entertainment
e.g. School prom
Vocational training
and nurseries
School photograph
commission
85. VAT OVERVIEW – NON-BUSINESS ACTIVITIES
Non-Business
Activities
Free
Education
Donations and
sponsorship
Grants
Closely related
to education
Examples:
• Student accommodation
• Breakfast and after school clubs
• School trips
• School meals
• Musical instruments
• Goods for use in the classroom
• Stationery
• Ipads/laptops
• books
Staff
To other ‘non profit
making’ schools
86. VAT – COMMON SUPPLIES AND PITFALLS
Supply Liability Pitfall
Catering Non-business or taxable Subcontracted out has caused
issues, vending machines
School Uniform Standard or Zero Reselling at cost assuming
closely connected
School Prom Per HMRC Standard rated TOMS?
School Plays Exempt or Non-business Requirement to pay changes
liability
Before & After Clubs Non-business or Exempt Is there a profit motive
Consultancy Services Standard or Exempt Depends on service provided
Staff Exempt, Standard or Non-
business
Depends to who, what is
charged and what they do
87. INPUT VAT
VAT registered businesses can recover VAT incurred on purchases where
this relates to a taxable business activity
Academies can also recover VAT attributable to non-business activities
Overhead costs need to be apportioned (Business-Non business split
followed by partial exemption)
Academies that are not registered for VAT (VAT126) cannot recover input
VAT in relation to business activities
88. RECOVERY AND APPORTIONMENT – VAT 126
Business Mixed
Apportion
Using a fair and
reasonable basis
Non-business
RecoverBlocked
89. RECOVERY AND APPORTIONMENT – VAT REGISTERED
Business Mixed
Taxable Mixed Exempt
Recover Apportion Blocked
Apportion
Using a fair and
reasonable basis
Non-business
Recover
90. MAKING TAX DIGITAL FOR VAT
From 1 April 2019* VAT registered businesses with a taxable turnover
>£85,000 must:
Maintain their VAT records digitally
File VAT returns directly through software
That’s it…
* HMRC announced a 6 month deferral for specific entities, most notable
Local Authorities and VAT groups.
HMR
C
91. MAKING TAX DIGITAL FOR VAT
(MTDFV)
Therefore MTDfV does not apply where:
Not VAT registered such as academies
submitting returns using form VAT 126.
Academies with taxable business income of
below £85k.
HMRC sent out letters to affected
businesses earlier in the year.
92. OTHER MATTERS – CLIMATE CHANGE LEVY
Levy aimed at reducing green house gas emissions from the burning of
fossil fuels.
Charged at a fixed rate on supplies of non renewable fuel and energy
such as electricity and gas.
However exemptions include:
Use for non-business purposes (i.e. grant funded education).
Domestic use and small quantities
Check your utility bills if unsure!
93. OTHER MATTERS – VAT ON
CONSTRUCTION
Contractors will ordinarily charge you 20%
VAT on construction services.
Can be zero rated where building used for
Relevant Charitable Purpose (e.g.
classrooms!) Watch business use though…
Need to issue certificate to supplier before
construction begins.
Main advantage is cash flow
94. OTHER MATTERS – VAT INSPECTIONS
Academy client’s of the firm have received VAT inspections in the past 12
months
HMRC intend to visit both VAT registered and VAT 126 academies
Potential to charge penalties for errors
Main points:
Sports lettings – taxable?
Prom income standard rated?
Reiterated need to allocate input VAT to business and non business income
and undertake appropriate calculations.
96. 01392 667000
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01722 337661
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01823 275925
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Bristol
We start with a quick plug from us
We have featured prominently in some 2018 national data on our services to charities
The most pleasing thing is the special commendation on overall service. The roots of our firm are in providing high quality services to all our markets and that is the main reason we have grown and succeeded to such an extent.
If we get our service to you right, including the level of expertise needed to do that, then everything else follows. It looks like we are doing that and it is lovely to be recognised for it
Remember these are national awards, voted for by our clients, so we are really pleased to get such positive feedback from you.
We were 15th for number of audits to charities – up significantly from the prior year
So setting the scene, I start with some brief context from Baroness Stowell
To start with it might be useful to go back to basics.
In an academy school the governors are also directors of a company as well as being a charity trustee. Each of these positions comes with its own set of duties, derived from its legal origin.
Your board members are likely to be familiar with the duties they must fulfil as a governor but what about as a charity trustee or as a company director?
The 2019 Academies Financial Handbook reminds us that Governors, as public office holders, must adhere to The Nolan Principles (or the 7 Principles of Public Life) which are selflessness, integrity, objectivity, accountability, openness, honesty and leadership.
The Handbook sets out clearly what it sees as the duties of governors and says that the governors should focus on the three core functions of governance:
ensuring clarity of vision, ethos and strategic direction
holding executive leaders to account for the educational performance of the organisation and its pupils, and the performance management of staff
overseeing and ensuring effective financial performance.
So in practical terms, the governors need to be clear on the “why are we here” in order to establish the vision, mission and values of the Trust. They need to know “how we are going to do it” by setting the strategy and structure. The governors also need to know “what we are going to do” through clear delegation to management and by exercising accountability to stakeholders.
National Governance Association say that research and practice from a range of sectors tells them that there are eight key ingredients to ensure governing bodies fulfil their role well.
Governance is a huge topic but by looking at some these vital ingredients in detail we can identify some of the big game changers.
The ‘right’ people to lead the organisation will change as the organisation evolves. Does Board composition reflect this?
Governors should not serve for too long – consider the use of maximum terms. Over-familiarity/going native.
What skills does the academy need now? What will it need in future? Consider external challenges and strategic direction and whether you have the right people on board to handle these
Recruitment should ideally be skills-based and open. E.g. draw up a ‘job spec’ & interview against that. Shouldn’t be a closed process where the Governors nominate their own successors. Remember, Sir Alex Ferguson was allowed to select David Moyes and that didn’t turn out so well!
Diversity is important – there is plenty of research (e.g McKinsey and Co) that correlates a diverse top team with high organisational performance. Would your academy trust be more effective with more diverse voices leading it?
How do you encourage diversity? This could mean taking some very simple steps – e.g. if the Board meetings are at 2pm on a weekday, you may struggle to find Governors from a working population unless they have an understanding employer committed to supporting CSR.
What are the characteristics of a great governor?
The ability to listen and to actually hear what is being said
The ability to challenge – through scrutiny and challenge the Governor should be a critical friend to the Trust, offering advice and support and keep up the pressure on the school’s improvement. This takes time and new Governors need time to learn what matters, how the Trust operates and to spot the right questions.
It is important to note that this scrutiny and challenge doesn’t mean getting involved in the day to management of the school. We will talk a bit later about the different roles of the Board and the executive.
Understand the needs of the pupils, parents and other stakeholders. What do they need and expect from the Trust and how is that impact being measured?
Common sense approach and a willingness to be pragmatic.
Why does the person want to be part of the Board? The correct motivation is vital and they have to want to be a part of the Trust, not just ticking a box as School Governor on a CV.
Lord Agnew’s foreword to the 2019 Academies Financial Handbook makes specific reference to the Department of Education’s “Competency Framework for Governance” and trusts are actively encourage to use this is developing their own governance and board structures. The framework sets out the competencies needed for effective governance. It is non-statutory guidance and should be read alongside the Governance Handbook, particularly the section explaining the key features of effective governance.
In addition to looking at the framework you need to ask:
Have you carried out a skills audit recently and if so, was it rigorous? Do you allow your governors to self assess or do you do some cross-governor assessment? Make sure the skills audit covers the Trust Board, committees and the local governing boards.
Once you have identified a skills gap and drawn up an action plan, does this feed into recruitment as well as training? How do you deal with succession planning?
Another key question to ask yourselves is how often does your Board review its effectiveness, and on what basis? Are external governance reviews ever carried out?
Do your governors know what they need to do their job? Does your academy have a budget for governor development and training and if so, do you spend it?
We can help with a governance review – from reviewing your board papers and minutes to sitting in and observing meetings to provide some objective feedback on how your board functions and how you compare in terms of good practice functions.
Other resources include those signposted in the new AFH:
The 20 key questions for the governing board to ask itself, and 21 questions for multi-academy trust boards published by the All-Party Parliamentary Group on Education, Governance and Leadership.
Think for a moment about the dynamic between board and executives, Chair and CEO
Should promote a ‘culture of candour’, with openness to challenge and be challenged.
The Chair and CEO relationship needs to work effectively with high challenge and high support.
Relationships can be developed both in and out of the board room but it’s not advisable for these relationships to be too friendly, they must remain professional. Governors must remember that their role is not just about cheerleading.
Rarely see boards which fail to support or cheerlead – more common to see lack of challenge – relationship not sufficiently developed, lack of understanding by Governors of their role
Do your governors know what questions to ask? Have they attended governor training on key areas to challenge and what are good questions to raise? There are also lots of online resources to point them in the right direction. Are there barriers that are stopping effective challenge – we all know that education has its fair share of jargon. Is there too much jargon and is the time being taken to explain?
Honest feedback – don’t sit on your hands – but it is a skill, so area of possible training
Free and open access – ie don’t just rely on what the CEO tells you
Close – friendly but professional – not best mates!
It’s important that the role and responsibilities of the Chair and CEO are clearly defined to ensure the smooth running of the Board and academy itself.
If there are overlapping duties between the roles and this can create grey areas. If this relationship is unclear then there can be questions around who is leading who, which creates problems.
This is the day to day, month to month analysis – slightly different if looking at year to year or longer term where overlap on input to strategy, development of delivery model, approach to funding are all areas where both parties will have input and CEO will be key informant to board.
The Chair’s role is outlined on the slide but it could be summed up as being about :
Clarity of purpose,
Cohesive board,
Constructive relationships,
and Considered decision making
There is increased emphasis on the importance of having a good clerk to the board in the 2019 AFH.
The AFH makes the point that the academy trust should appoint a clerk to support the board of governors who is someone other than a governor, principal or chief executive of the trust.
For non-executive trustees a knowledgeable clerk to the board (or company secretary) is an essential part of their tool kit.
A good clerk will ensure that agendas and papers are available in good time – there won’t be good quality debate and decision making if the governors are inadequately briefed. The onus is then on the Governors to read the information and not just “wing it” or rely on someone else. Lord Agnew particularly refers to the importance of ensuring the board has regular information about the trust’s budget. Access to accurate and timely financial information underpins the Board’s ability to make informed financial decisions and will facilitate it taking prompt action when concerns arise.
What about minutes? Are yours a clear record of the basis for decisions made and the extent of debate and challenge? If not, how will you demonstrate why you did what you did if there is a problem later?
Has your clerk been effectively trained? The knowledge, skills and behaviours required to provide professional clerking to the board are covered in the Clerking competency framework which is the DfE’s governance clerking development programme aimed at increasing clerking expertise.
Where there is a committee structure it is vital to ensure that all roles and responsibilities are defined clearly and that there is no duplication of roles or things that are going to slip through the net.
The Governors have a duty to avoid conflicts of interest and all decisions must be taken in the public interest. The Charity Commission offers guidance in Manage a conflict of interest in your charity and CC29: Conflicts of interest: a guide for charity trustees.
Regular reviews of the scheme of delegation will ensure that decisions aren’t taken outside of the limits.
Quote from a Boardsource presentation about non profit making boards – attributed to Cyril O Houle
Today we are going to briefly run through the considerations involved in managing risk
We will look at:
What is risk management?
Risk identification
The risk management policy
Assurance
The risk register
Reserves
Stress testing
So why do we need to manage risk? Essentially to ensure that we are able to continue to providing education to our pupils, understanding the threats to our academy can help us ensure that we don’t fall foul of them
All organisations are susceptible to certain levels of risk, it is key to your organisations longevity that the risks are identified, understood and mitigated as far as reasonably possible, therefore managing and minimising the impact they would have if they come to fruition.
We all come across risk in our daily lives and manage or mitigate those risks accordingly – essentially considering the concept of ‘what if?’
Within an academy it is crucial to ensure that risk management is embedded within your organisation at all levels, from the staff that are on the ground with the pupils right up to the Trustee’s.
The first step in managing risk is to ensure that you understand the risks to which you are susceptible, the process of compiling a risk register is a crucial step in this process.
Once you understand the risks that you are exposed to you can start to formulate your approach and policy to managing these risks.
Your will already be actively using procedures and controls which help manage the risks on the risk register, what you need to understand is the impact that these steps have on the risks and whether these are sufficient to mitigate the risk – are there gaps?
Risk management is not just a one off exercise but will need to be continually reviewed and updated as things change – both internally and externally
Finally is there a link between the identified risks and your reserves policy?
Lets talk to each of these points in a bit more detail.
All well governed academies should have a risk register in place, it should be a living and breathing document that evolves with your organisation.
The risk register is a central place for recording all of the identified risks in an academy.
There will be risks in an academy that will effect different elements of the business and should therefore be monitored by different groups of people, these should be split within the risk register clearly identifying which risks are strategic and therefore the focus of the board and what risks are operational and therefore SLT’s responsibility.
Strategic risks can generally be categorised into the following categories:
Governance
Compliance
Financial
Reputation
Delivery of your objectives
Drawing this line ensures that the board will not get bogged down with the operational and day to day concerns.
It can also be useful to categorise the risks to make them easier to digest, categories may include – financial, governance, safeguarding, reputation etc.
The impact of each risk should be assessed, usually using a scoring of 1-10 or with one being minimal and 10 being severe, this identifies the effect the risk would have if it came to fruition
You also need to assess the likelihood of the risk occurring
From this analysis and by combining the likelihood and impact assessment you can then RAG rate your risks to easily identify those which are of immediate concern and require action
We should not ignore risks which are unlikely but have a high impact, hence the skew in the illustrative gragh
Your risk management policy will determine the academies approach to managing the identified risks.
The policy will likely set out:
The risk objectives – what is the overall aim of the policy?
The approach to risk management– how will you set out to achieve your strategy, this will include risk identification, ownership of risk etc.
The trustees need to discuss and understand their approach to risk. ‘their risk appetite’
The Trustees approach to risk may differ depending on the area of concern , where the risk is rated at a higher level than that which the trustees are willing to accept, procedures and controls will need to be introduced to mitigate the risk down to the acceptable level.
The policy will determine how the risk register scoring works, how the academy will assess the ranking of the impact and the likelihood.
Based upon the initial assessment of risk the academy will have to determine the course of action required, if any, for each of the risks.
The ESFA guidance on risk splits this into 4 categories:
To Tolerate – That you will accept or retain the risk in its current form without any further requirement to mitigate the risk, this maybe because the risk is deemed to be at a low enough level to require no further action, or it could be because the work involved in mitigating the risk may be so extensive or cost prohibitive that the cost benefit assessment determines that the risk should be accepted.
To Treat – The risk needs action, the trustees will determine a course of action to manage the risk and mitigate it down to an acceptable level. This will become an action for the risk register
To Transfer – to contract out the issue (outsource) or take out insurance to mitigate the risk
To Terminate – to avoid or eliminate the risk, if it is possible to terminate the risk without otherwise impacting the academy this is likely the best course of action.
Once you have identified the risks, recorded them, assessed them and determined what course of action is required you can look to mitigate the risks.
In order to mitigate the risks you will seek assurance.
The different levels of assurance, in increasing order of reliance are
1st line management - this may consist of POLICIES that have been put in place to manage the identified risks, for example cash handling procedures, the CONTROL framework that management have put in place to check and support the policies for example designated authority levels and MANAGEMENT REVIEW as an independent check on work that is completed by others, for example month end procedures.
2nd line corporate oversight – the board or sub committees perform their own review or checks to ensure that controls are operating as expected
3rd line independent assurance – that which can be gained from external regulators and advisors such as internal audit.
You could extend your review of the current assurance received by collating an assurance map, which can be a useful tool in identifying any gaps, this is something that we can help you with if required.
Once you have clear sight of the risks that you are exposed to and the current mitigations you can then start to look at your residual risk.
So we have identified our risks and recorded them on our risk register, we have assessed their likelihood and impact.
We have reviewed the risk in the light of our risk management policy and determined an appropriate action (or not) for each of the risks.
We have identified what assurances we have against each of the risks, so what is the next step?
Well we need to update the register, the register would ideally have a column for assurance and for the required actions.
We can then calculate the residual risk score, what is the likelihood and impact of the risk after it has been mitigated? Does this revised score change the RAG rating of the risk and is there still more action required?
Additionally the register should have additional information including:
The risk owner
A timeline for the required actions
A timeline for review
Something else to consider is how big is your risk register and is it manageable? whilst having a very in depth risk register can be very useful, it can make it difficult to see the wood for the trees.
The risk register needs to be regularly reviewed and updated. This will be both as part of the ongoing board meetings cycle but also when a change incurs either within the academy or in the external environment that requires you to re-visit risk.
You could consider reporting on risk as part of your monthly management accounts, this could be in a summary style with a simple chart of how many risks there are, how they are split between red, amber and green across the risk categories. Additionally you could then list the red risks as these are the ones of immediate concern
Your risks need to be considered in the context of your reserves policy
To do this you firstly need to understand:
What are reserves?
Well reserves are that part of the academies unrestricted funds that are freely available to spend on any of the academies purposes. They are your
Unrestricted funds & GAG
Less tangible fixed assets
Less programme related investments
Less Designated funds
Less commitments that have not been provided for in the accounts
Essentially these do not include restricted funds or those tied up in not current assets
You then need to consider what is the liquidly of your reserves?
Are they held in cash?
Tied up in debtors and creditors?
Are there notice periods attached to your savings? (if you are lucky enough to have any savings!)
Have you asked yourself - why does your organisation need to hold reserves – this is where the link with your risk register is key.
This will be different for each of you however some key considerations will be:
The risk of unforeseen or unplanned financial outlay
Peaks and troughs in cash flow
Core costs/overheads
Strategic investment
So are you holding the right level of reserves
If your reserves level is too low this increases the risk to the academies ability to continue to carry out its activities in the future, in the event of financial difficulties or if one of the on the risk register comes to fruition.
If the level of reserves you hold is too high your stakeholders may question why you are not spending these in the interest of your pupils
You therefore need to develop a reserves policy that serves the needs of your organisation and its risks
Developing a reserves policy
The Trustees should base their reserves policy on the risks that your academies and its beneficiaries might face and how to manage them
Your reserves policy is not just a requirement in your annual accounts, it should inherent in your organisation, it informs and assists in your strategic planning, your budgeting and risk management considerations
Setting the right reserves policy can secure your sustainability and instil confidence in your stakeholders.
You should continue to review and update your reserves policy as your organisation grows and develops
Finally are you articulating all of these elements in your trustees report?
Your reserves are held based upon a policy and an clear understanding of what the funds are held for
Your reserve's policy can provide you with the stage to demonstrate your resilience and capacity to manage risk
Key risks should not only be considered in isolation but also in the context of stress testing the organisation (i.e. what combination of risks would lead to failure).
This can provide comfort as to the resilience of the academy (particularly to a combination of external factors outside its control).
You can produce projections to understand the impact of individual sensitivities and then combine them to understand the pinch points.
You could essentially build them up one by one until you reach the point of failure – this will give you a feel for how much resilience you have as an organisation
If your costs go up in isolation you maybe able to continue as previously, but what if your costs go up and funding reduces
This concept links in with your reserves policy – have you got enough to continue if the pinch points occur?
One approach to understanding this is the costing up of your risks on your risk register, whilst in some instances this is difficult to do, and you may have to make some assumptions it can be a useful exercise to understand the financial impact of each risk. You can then compare this to your reserves level and work out which combination of these would lead to failure.
The out come of this may not be bad news, once you have been through the process you may actually gain assurance over your organisations sustainability
So a few final thoughts to leave you with today
Have you completed a SWOT analysis? Assessing your strengths, weaknesses, opportunities and threats can help you understand your organisations vulnerable areas.
Have you considered taking a blank sheet approach to risk? – you could ask the organisations stakeholders (including staff, trustees and pupils if appropriate) to prepare a SWOT analysis and risk register, some one sat in a different seat may think of something that you haven’t.
Some where we need to consider the skills mix of the trustee board, in order to ensure your risk management is effectiveyou need a trustee board with the right mix of skills and experience, without this effective decision making may falter
The final thought that I want to leave you with is what haven’t we considered?, it may be those risks that in the end could challenge our sustainability