The Crime of Mr John Brodie?

January 29, 2012

Friday 27th January and a trip to The Wellington Academy for the biennial Independent Schools Seminar from solicitors Wilsons.

The unusual format combined lawyers, actors (from the Salisbury Playhouse) and the audience to great effect and facilitated an excellent mix of information dissemination, audience participation and the sharing of best practice.

The actors played the parts of Headmaster, Chair of Governors, Teacher, Parent and Bursar with a pupil from the Wellington Academy playing the (fictitious) part of the Pupil.  Whilst the parts were, naturally, played as rather larger than life (if any school I knew had a Chair of Governors like the one in the production I’d advise a swift intervention) it served the purpose well of raising various legal issues.

Some of the legal considerations raised includes:

  • Disciplinary investigations
  • Child protection concerns
  • Police investigations
  • Compromise agreements
  • ‘Heat of the moment’ resignations
  • Teachers’ use of social networking sites
  • Property issues in respect of school accommodation
  • ISI inspections
  • CRB checks
  • Parent/school contracts
  • The roles of Governors and the school Senior Management Team
  • Commercial considerations
The summary document presented post-production (well they didn’t want us to have the answers first did they?!) is an excellent document which is well worth a read by any person in any of the above-mentioned roles.
Also included in the seminar pack is a ‘Guidance for Governors’ document which is, again, an extremely comprehensive, well written and useful document for anyone who is already, or is considering becoming, a school Governor.
After the play we were lucky to have the benefit of a talk by Andy Schofield, Principal of The Wellington Academy.  He talked us through some of the more interesting aspects of working with the independent sector and being an academy including an amusing admission of how he tried to blag a signature from Michael Gove!
His talk was followed by an excellent school dinner (much improved since I was at school) and then a tour facilitated by school ambassadors of The Wellington Academy.
If you would like to get copies of the any of the above mentioned documents these can be obtained from Louise Moseley louise.moseley@wilsonslaw.com  Louise can also get you added to the mailing list for their excellent termly school newsletter.
Similarly, if you have the opportunity to visit The Wellington Academy I would strongly recommend a visit.

Posted by Lorraine | Filed Under Academies, Legal services, Social networking, State vs. Independent | Leave a Comment 

Academies Accounting 101

January 22, 2012

I attended a fabulous ’round table discussion’ session last week at the Basingstoke offices of Baker Tilly accountants.  A leading provider of accounting services to the academy sector (150+schools to date) Baker Tilly have a deep understanding of the sector and the challenges school business managers are facing.  However, not wishing to rest on their laurels they took the opportunity to bring together 17 of their clients from the Reading and Surrey areas for a round table discussion on various issues including accounting, payroll, local authority services and procurement.

Introducing the session was Kevin Barwick, Audit Partner at Baker Tilly, who opened proceedings with a straw poll of what accounting software the academies had opted for.  The bulk having opted for Corero an interesting discussion ensued about the training and support having been offered (or not, in some cases)!  The points of note which are worth repeating here are:

  • Sage and Corero have alot of similarities
  • When reporting on funds the view is you can’t have too much detail i.e. have a fund account allocated for each type of SEN funding.  You can always group them back together at year end for reporting purposes.
  • It was agreed that it would helpful if fund accounts were a mandatory field on Corero.  Apparently, this had not happen due to cost.  In addition it would be useful to be able to produce a trial balance by fund.  Stuart Parkinson from Baker Tilly is going to feed this back to them.
  • You can add new fund coded but going into journal enquiry
  • There will always be times where things are hard to allocate and require an allocation at year end e.g. exam payments come from GAG whereas re-sits go to ‘other income’.

The next discussion topic was around various aspects of Statutory Reporting for 31 August 2012 and the following interesting points were raised:

  • The YPLA four month window to produce your accounts and provide your report to them.
  • All the accountancy firms dealing with academies will have a significant amount of work to get done in a short window of opportunity.  As such it’s best practice to schedule in as many of the meetings as possible.  You should leave a two week gap between the finance committee meeting and the Governors sign off meeting.  It’s recommended you timetable in as close to the end of December as possible and plan NOW.
  • The finance committee will be presented with draft accounts and the audit findings.  It’s worth pointing out that the audit plan can be presented to the finance committee in advance of year end and, again, this is recommended so it’s fully understood and helps to show who is responsible for what.
  • It’s well worth having a year end checklist of things that your accountant will need.  If you can take it a step further and use that checklist at month end too then you’ll make year end just like a month end.
  • Accounting direction for year end August 2012 will be issued around Easter time.
  • There is talk of possible slippage of the 31st December deadline to 31st January 2013 but this is still rumour rather than fact.
  • Another area where you can help make the year end process smoother is with regard to the Governors report which has to be included in the academies accounts.  This report includes the schools achievements, future plans, strategies etc.  It was generally agreed, by those in attendance, that this report should NOT be written by the school business manager and that it should be prepared well in advance of year end – there’s no real need to wait for the numbers to be finalised.  It was also recommended that the report and accounts are published on the school website.  The accounts are available to the public anyway and so it will build trust and encourage communication between the academy, its parents, pupils and staff.
Moving on there was a session on some more technical aspects of accounting during which the following points were raised:
  • Land and buildings should be included on your balance sheet.  Even if you don’t own them a 125 year leasehold is effectively the same as a freehold.
  • It was strongly recommended, by those who have already been through a year end process in August 2011, that you set up your Fixed Asset Register as soon as possible after your training on it.
  • With regard to the valuation of assets it’s worth getting an independent valuation on a Depreciation Replacement Cost (DRC) basis.
  • For ‘other’ assets there was a great deal of debate on a realistic starting valuation.  Some schools had a minimum asset value of £1000, some £2000 and others £5000.
  • Go back to invoices and have a look at the prices paid and, another good tip, speak to all your heads of department and ask them to give you a list of assets within their department which they believe to be over the minimum threshold you are working to.
  • With regard to a depreciation policy this is usually set by the board of Governors but should be based on the determined value of the asset at the end of its lifetime i.e. computers are usually a nil value after 2 years, vehicles after 5 years and so on.
The next item on the agenda probably provoked more debate than any other; pension deficits!  We’re talking Local Government Scheme as opposed to Teachers Pension Scheme.
Many had seen the letter from Education Secretary Michael Gove advising academies that they can now opt back in to the Local Authority scheme and it was agreed that this certainly made accounting much easier.  If you remain outside of this scheme you will need to go to your actuary every year to get a valuation.  The pro of staying outside of the LA scheme is that you have control of your own scheme.  The con is that by going back in you’re taking on the deficit of all those in the scheme not just those TUPE’d across.  It was recommended that SBM’s run through the sample accounts in the YPLA Academies Handbook and loom at the disclosures re FRS17.
It was also recommended to sign up for the Finance Directors Forum for Academies as an excellent source of advice and opinion as well as the opportunity to share best practice.
Most SBM’s indicated that they really aren’t pensions experts and are concerned about even making the decision about whether to opt back in or remain outside of the LA scheme.  Baker Tilly were clear in their direction to take independent advice from experts on the matter and they have access to advisors who can assist.
Two final points in this section on some of the more technical aspects of the accounting for academies.  Firstly, there is still conflicting advice being given on whether to use GAG funds first and then private funds next.  Baker Tilly’s official line is you should use GAG funds first due to the fact that there is a restriction on what you can do with them, unlike private funds.
Finally, be aware that the Head and any staff Governors will have to have their salaries disclosed in the Related Party Transaction section of the accounts.  The Head’s salary will be stipulated alone, the staff Governor’s as a total so if there are three of them it’ll be all three salaries together.  It’s worth raising this with them all early so there are no surprises later on down the line.
The group were then given an excellent run down of what really happens through a year-end process via Pamela Richardson the School Business Manager from Reading School.  Having been through the year end of 31st August 2011 Pamela really brought to life some of the issues she’d faced but was quick to point out that the process had been far less painful than she’d anticipated it to be.
As well as confirming much of what had previously been advised in the session she also raised the following points:
  • The abbreviated accounts you have to produce, whilst containing the same information as the annual accounts, are in a different format and so you should allow time to ensure you can produce them.
  • In terms of timescales Pamela advised the following:
    • Mid-April – funding for next academic year advised
    • 30/6 – budget approved
    • 31/8 – year end
    • 31/12 – filing of accounts due
  • Pamela advised that in some cases timescales you’re given for things are unreasonable and if this is the case don’t be afraid to push back.
  • The FMGE self assessment is due in February.  You have to grade yourself i.e. satisfactory to good.  There is a summary or full return required.  The first return must be a full return.  Thereafter you can do a summary return unless you plan to regrade yourself – if you do you need to complete a full return.
  • At the end of March the Whole Government Accounts (WGA) return guidance comes out in respect of the return which is due by June.  You may or may not be asked to do this return it really depends on the size of your school.  The larger the school the more likely you’ll be asked to complete the return.  It’s also worth noting that “good is good enough” here as by the time your figures are added to all the other schools the sun total is in the millions.
    • VAT, Tax and Employment issues came up next.  Luckily there was very little new of note which was raised with the exception of:
    • There have been issues with VAT only invoices being produced for catering and it’s worth remembering in respect of catering that you need to specify the % of spend which relates to staff and that which relates to pupils.
    • A reminder that if you are now an academy you will need to get a new P11D dispensation if you’re running your own payroll.   Apply now, before the end of the tax year, and you’ll have it backdated to when you converted.
    • HMRC are really hot on staff accommodation at the moment so make sure you’re completely happy that those in accommodation warrant being there i.e. caretakers.
    • Peripatetic teachers who fall below the NI threshold could be classed as employed so watch out for that.
    • If you have trading income >£50k (that’s turnover) you need to set up a trading subsidiary to receive this.  The profit from the trading company is then gift aided up to the academy.
    • Finally, a reminder that you have an allowance of £150 per person for Christmas parties but only if everyone on that site has the option to attend.
    At this point I was asked to present on procurement.  It was generally agreed that this was something which had not yet really got on to the radar of the School Business Managers as they were, at this stage, concentrating fully on the technicalities required for conversion.  However, it was also acknowledged that this would become increasingly important as time went on, as budgets diminished and, therefore, getting better value for money services would be essential.  There was also consensus that many services procured by schools would work well if purchased on a consortium basis and this is an area which warrants further exploration.
    In the area of procurement academies have little difference to independent schools in respect of the challenges they face:
    • A lack of time to complete a full review of suppliers
    • A lack of support – not enough colleagues with procurement or negotiation expertise
    • The difficulty in comparing apples with apples – it’s very rare that tenders come in that are identical and easy to compare
    • A lack of proactivity regarding contract renewals (again down to lack of time)
    • Complacency of suppliers who have been incumbent for many years
    • Thinking it’s all about price when quality of product and service are as important
    • Teachers being a law unto themselves!  Government Procurement Cards offer an excellent means of keeping a good control over where and how much cardholders can spend and an audit trail card by card too
    After coffee we then had a short presentation from Linda Swales who is an ex-employee of Reading Borough Council where she had previously worked in their schools department assisting them with finance and payroll matters.
    Linda is now running her own business offering financial and payroll support for maintained schools.  She recommended a National College of School Leadership (NCSL) Financial Reporting for Academies course.  It takes 8-12 weeks and she highly recommends it.  If you are feeling more committed there is also the Chartered Institute of Public Finances qualification but this takes several years to achieve.
    Linda’s talk about the support from your Local Authority was quite interesting as there were very mixed views around the table.  Those from the Reading Borough Council area felt that support had been limited and that they lack any degree of commerciality.  It was almost expected that schools would continue to use the services of the LA regardless of cost or quality of service.  Interestingly, those from the Surrey County Council area felt that their LA had been much more supportive.  It really depends on your LA and the individual within it as to the level of support and expertise you receive.  Procurement is, again, an excellent example, with the LA Procurement officers focused on ‘selling’ the services of the LA as opposed to looking outside of this at providers who offer better value for money.
    The final sessions of the morning offered up the following points:
    • The Responsible Officer role can be outsourced either to somewhere like the Local Authority Audit Department or to someone like Baker Tilly.  Ideally though best practice dictates it should be one of the Governors.
    • There is discussion around Responsible Officer visits being quarterly as opposed to termly.
    • There is the possibility of a “Governance Audit” being introduced to review everything you do and how you do it which effectively moves back to the level of control in place before.
    • An interim “regulatory audit” has been touted as being introduced by 31st March 2012 by this is very close so watch this space.  The National Audit Office is really pushing for this – at any opportunity push back!
    • School benchmarking is being discussed and reviewed as is the Financial Handbook (the latter got an ironic laugh as someone pointed out it has been under review for the last two years)!
    • Overall, Baker Tilly believe there is likely to be increased regulations from the YPLA.
    • Best practice for now is that Pupil Premium funding should be treated as a restricted fund.  There might be further guidance in the next set of directions issued but it’s best practice for now.
    One last point which was very important was around capital bids.  From those who have gone through the process already they strongly recommended having a series of projects planned out (a wish list so to speak).  Ensure they are planned out as far as possible and, not always possible, that planning permission is in place.  Where you know you won’t get planning in time have some slightly smaller projects outlined.  Be ready for any opening which might occur where capital funding might be available.  Rumour has it that there will be such a window at the end of January.
    If you need to get something set up in a hurry it’s worth considering using a company such as Synergy.  They, along with others, offer a pro bono service where they will get all the work done and when funding is agreed their fees can be taken from that.
    Overall the round table discussion was a great morning.  The feedback I got from those attendees I spoke to was all very positive.  many suggested that they wished they’d had this type of forum to come to before they’d converted.  Even so they all said it was a very good use of their time.
    For my part it helped develop my ‘education’ on some of the issues academies are facing and reinforced my view that having the ability to call on procurement expertise will become more and more important as time goes on.  Additionally, it was great to see Baker Tilly offering a forum to help their clients and show their obvious expertise in the education sector.

    Posted by Lorraine | Filed Under Academies, Cost savings, Effective procurement, VAT | Leave a Comment 

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