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21.04.16

DfE failing to provide ‘clear view’ on academy spending

The Department for Education (DfE) does not know how much it is spending on academies, the National Audit Office (NAO) has said in a report on delays and shortcomings in the department’s finances.

The DfE accounting officer was required to submit their accounts for the year by 30 November 2015, but did not do so and failed to admit the accounts would be delayed until 29 January 2016, two days before the NAO were required to lay the financial statements for all departments before Parliament.

The department then requested an extension until 29 April 2016, which was granted, but Sir Amyas Morse, head of the NAO, says in his report that the department accounts display “a level of misstatement and uncertainty which I consider to be material and pervasive”, including failure to comply with international accounting standards and a lack of oversight of spending on the government’s controversial academies scheme.

Morse said: “Providing Parliament with a clear view of academy trusts’ spending is a vital part of the Department for Education’s work – yet it is failing to do this. As a result, I have today provided an adverse opinion on the truth and fairness of its financial statements.

“The Department will have to work hard in the coming months, if it is to present Parliament with a better picture of academy trusts’ spending through the planned new Sector Account in 2017.”

The department’s financial statements record £662m expenditure, £622m income, £364m assets and £104m liabilities for the 468 academy trusts opened in 2014-15, but the report says that there is insufficient evidence to support the accuracy of these statements.

For example, the department included the value of all land and buildings used by academy trusts in their accounts, even though some may be being leased. Morse said that he did not expect this issue to be resolved for a number of years.

The government’s commitment to turn all schools into academies by 2022 has been attacked by local councils.

The report also said there were weaknesses in the financial management of the Priority Schools Building Programme, designed to address the needs of 260 schools in need of urgent repair, although there had been efforts to address this.

It recommended that the department make “significant and immediate improvements” to its spending predictions, ensure the accounts of academy trusts are incorporated into departmental accounts on a more timely basis and satisfy itself that it has the capacity to deliver a financial report by this summer.

Anna Croall of the Department of Education said: “This is an accounting issue, not an accountability issue.”

She added that the problems were a result of the challenges of consolidating academy accounts into the formula required by Parliament and that the accounts were separate from academies’ day-to-day expenditure, and that the department has now implemented a new methodology in consultation with the NAO.

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