HFL Education was called in to support an academy trust in distress. The CFO had left the trust, and the financial accounts were in disarray.
A recent report, completed by HFL Education, found that there were no month end controls and procedures in place, and that management accounts being produced were not clearly setting out the financial position of the trust. The trustees were not receiving accurate financial information enabling them or the SLT to make informed financial decisions.
There were a large number of findings in the auditor management letter, including two high risk and six medium risk findings, and a risk around the accuracy of the financial information on the financial accounting system.
We were called in to provide support, eventually taking on the role of the trust’s CFO for a calendar year, with the approval of the ESFA.
Our first task was to complete a forensic review of the financial accounting system. Over twenty anomalous balances were identified, masking the trust financial position of the academy trust. We identified and corrected these balances and were able to provide the trust with a true overview of their financial position.
This highlighted that there was an imminent cash flow issue and that the trust would need to liaise with the ESFA to agree a cash loan to the trust. We attended these meetings, liaising with the ESFA and preparing the business case required to obtain the necessary cash required for the trust to see them through this difficult period.
Having worked through the immediate issues, we worked with the academy trust to set up new month end procedures, including balance sheet reconciliations, to ensure that these errors did not happen again.
We set up a new management information reporting pack, to include budget monitoring reports, cash flow reports, KPIs and key budget summaries, setting out the key risks and updates that SLT and Trustees needed to be aware of. The quality and accuracy of the information received by trustees was greatly enhanced, enabling them to undertake their statutory duties as Trustees effectively.
Since working with HFL Education, the trust’s financial position has significantly improved, going from an in-year deficit of £318k in 2019/20 to an in year surplus position of £744k in 2021/22.
No management points were raised in the 2021/22 audit for the first time, with auditors commenting on how well the audit went.
Attendance at Audit and Risk Committee meetings to discuss report findings.
The trust was able to fulfil its going concern requirements, despite the ongoing financial pressures within the education sector with no issues noted from auditors.
Trustees and SLT receiving accurate management information to support informed decision making for the trust.
Accurate information on the financial accounting system, with clear processes in place for checking and reconciling balances very month; as well as investigating and correcting unusual items.
Correct cash flow information for the trust, to support decision making and to ensure going financial health of the trust.
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If you’d like to know more about our financial services and how they can help to support your academy trust please contact us.