What multi-academy trusts need to know about finance and cloud accounting

Multi-academy trusts will need to know about cloud accounting under new government guidance. The government has laid down the knowledge, skills and behaviours it wants to see in the Chief Executive Officers of larger multi-academy trusts (MATs).  

Its latest guidance includes a lengthy section on what CEOs need to know about finance – and it includes an expectation that they will understand the benefits of cloud software. 

The government guide for CEOs of MATs

The Department for Education (DfE) recently published a 90-page document called Multi-Academy Trust Leadership Development: Chief Executive Officer Content Framework. 

The DfE describes the document as guidance which “sets out the knowledge, skills and behaviours” required by CEOs of larger trusts, adding: “The framework will form the basis of a professional development programme that will equip leaders with those capabilities.” 

The guide is aimed at serving and aspiring CEOs, the chairs of academy trustees and the organisations developing programmes for CEOs. 

It reiterates the government’s view – set out in a whitepaper in 2022 – that there are five pillars of a high-quality trust:

• High quality and inclusive education; 
• school improvement;
• workforce;
• strategic governance; and
• financial management.

What the government says about a CEO’s responsibility for finances  

The CEO framework makes it clear that the CEO is an Accounting Officer, with a personal responsibility to Parliament and the Education and Skills Funding Agency (ESFA) for the MAT’s finances. 

The CEO has personal responsibility for complying with the trust’s funding agreement and with the government’s Academy Trust Handbook. 

The document goes on: “Trust CEOs should consider which activities to delegate to appropriate specialists, such as the trust’s Chief Financial Officer (CFO) or other specialist finance/operations professionals, while maintaining oversight and responsibility.” 

The framework lists the principles that CEOs are expected to understand (these are called “knowledge that” statements) alongside ways to implement those principles (these are called “knowledge how to” statements).

What CEOs are expected to know about finance 

The framework sets out seven principles which CEOs must understand under the heading “finance”. They are: 

• The CEO is defined as the Accounting Officer in the Academy Trust Handbook; 
• The CEO is responsible for ensuring funding is used effectively and efficiently in the public interest;
• Finance is critically important and trusts need a professional finance team. Effective CEOs understand the expertise required of a strong CFO and the need for strong working relationships between the CEO, CFO and trustees;
• Trusts must produce annual audited accounts and adhere to the Academies Financial Handbook as a condition of their funding agreement;
• Strong trusts are built on effective and long-term planning, including financial planning, optimal use of resources, risk management and appropriate centralised functions;
• Integrated curriculum and financial planning (ICFP) provides metrics to help ensure staffing and resources are used within “sensible parameters”, which include money spent on staffing;
• CEOs, alongside trustees and, where applicable, local governors, must make sure resources meet pupils’ needs and achieve value for money.

What the government says CEOs should do about finance 

Alongside the principles above, the CEO framework contains a list of statements showing how those principles can be applied in practice. (These are the “knowledge that” statements.) 

When it comes to finance, these statements say CEOs should:

• Ensure the CFO and finance staff are appropriately qualified or experienced. This includes supporting the CFO in professional development and accessing supporting expertise within the trust or externally.
• Ensure finances comply with legal requirements. This includes producing accounts correctly and scrutinising the finances regularly throughout the year.
• Ensure sound financial management systems are in place. This includes embedding an annual financial planning cycle; ensuring plans are based on accurate pupil projections; understanding the importance of approximate top-down calculations to set the parameters of a budget; understanding the importance of estimation; identifying key months for forecasting; ensuring timely, detailed, consolidated management accounts are in place; and understanding the importance of reserves management.
• Direct the trust’s activities to achieve the most efficient and sustainable provision of education to the highest quality. This includes embedding ICPF; having a five-year capital and reserve budget, reviewed at least annually; considering how spending and staffing decisions compare with similar schools and trusts; achieving a balance between staffing and non-staffing costs; and considering shared central services for economies of scale.
• Standardise and optimise (and centralise where appropriate) services including finance. This includes considering the extent to which services should be centralised, and in which order.

What the government says about cloud software in MATs 

After laying out the principles which should guide finance operations, the DfE goes on to the subject of IT, saying: “It is an essential organisation service that needs proactive investment and maintenance.  Risks to the organisation increase as systems age.” 

It says the CEO should ensure their trust has an IT plan and resources to keep updating its network and devices.  

Among the ways they should do this are:

• “Standardising IT hardware, databases, software and processes, and intranet guidance across the trust”; and
• “Understanding the advantages of cloud-based systems, data centres and services to manage risk and maximise efficiencies.”
  
  

MATs and the advantages of accounting software

The requirement for MATs to understand the advantages of cloud-based systems will be a challenge.  

IT systems in the sector are dominated by “on-premise” software, making it difficult to pull information together from different sites in the same trust, or to get timely information. Recent research by iplicit found almost half the CFOs in existing MATs thought their software was not up to standard. 

But modern, cloud-based accounting packages are likely to be needed to maximise efficiency and security the way the government wants.  

The requirement for MATs to ensure value for money, produce timely consolidated accounts and to forecast and monitor effectively will be difficult to achieve with on-premise software.  

The guidance also requires a “robust purchase order system” to be in place, with “adherence to internal delegation limits and authorisation controls”, which is much easier to achieve with the automation features in modern software rather than legacy systems. 

The CEO Content Framework makes it clear that MATs’ finance teams will be expected to operate at high efficiency. They will need to employ the best data and tools to turn public money into the best possible educational outcomes.  

Learn more about how iplicit’s finance software helps multi-academy trusts