Schools minister reminds academies of importance of management letters

The schools’ minister has written to academy finance teams reminding them about the importance of academy trust financial management and governance, it has been revealed.

The letters, published in April, show that Lord Agnew, the Parliamentary Under-Secretary of State for the School System, has asked academy bosses to improve in several key areas.

These strongly relate to management letters, used by the Department for Education (DfE) to help inform the assessment of the quality of governance and control frameworks in trusts.

The significance of management letters cannot be understated. Usually completed by your school’s external auditor, the management letter enables academies to identify issues early meaning decisive action can be taken immediately.

However, Lord Agnew has voiced concerns that a minority of trustees have not been totally supportive in handing over and reporting such information.

“Whilst a robust exchange of views between the client and auditor is healthy, it will be an immediate warning if trustees are in denial on material issues that you raise. If serious issues develop in a trust that are linked to previous audits, but they were not flagged in management letters, we will take any appropriate action open to us,” he said.

He added that academy finance teams and auditors should use professional judgment, rather than reliance on the standard channels for reporting audit findings, to avoid the risk of significant irregularity or impropriety.

This means that auditors should have a strong professional relationship with academy bosses in order to communicate effectively, especially on sensitive, difficult and potentially harmful issues.

Lord Agnew’s letter can be accessed in full here.

For advice on how any of the recommendations may affect your academy trust, please get in touch with our specialist academy finance team.

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