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Academies are charitable companies and also classified by the Office for National Statistics as central government public sector bodies. Academies are therefore subject to public standards of accountability.
They are required to appoint an accounting officer (generally the principal) who will have personal responsibility to Parliament for regularity (spending money for the purposes intended by Parliament), propriety (handling money honestly and avoiding conflicts of interest) and value for money.
The 'Academies financial handbook' offers advice on the financial systems and controls that academies should have in place to meet the expected standards of accountability. From time to time the Education Funding Agency (EFA) may carry out financial reviews at academies to advise on these systems.
Within this framework, academies are responsible for their own financial management and, in particular, are expected to operate a balanced budget. However, the EFA has special responsibility for obtaining assurance on academies' financial health and requires them to submit a copy of their budget to the EFA each academic year. If an academy has a deficit it will be required to produce a recovery plan for agreement with the EFA.
New academies are also expected to complete a short self-assessment of their financial management and governance in their first year only. The EFA may undertake validation of the evidence provided.
Academies are required to prepare annual accounts for each academic year ending 31 August and to have these accounts independently audited and published. Exemptions may apply in a school’s first year of conversion.
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