Tuesday, May 20, 2014

EFA asks academy principals and boards to think about fraud

Today the chief executive of the Education Funding Agency sent a letter to accounting officers (i.e. principals) at all academies in England. It reminded them of the requirements in relation to fraud, connected parties and special payments.

The letter included an annex setting out questions for principals and trustees to consider in order to minimise the risk of fraud or irregularity:

  • Authority – Do you have a written scheme of delegation, approved by the trustees, so that individuals are clear about their levels of financial authority?
  • Purchasing – Are you confident you are procuring all goods and services in an open, competitive and transparent way?
  • Payroll – Do you have robust controls for payroll including checks that payments are for the right amounts and paid to bona fide employees?
  • Oversight – Do you ensure that financial reports are produced that fairly reflect the activity at the trust, that they are properly reconciled at least monthly and are shared regularly with the trustees for formal review?
  • Cash management – Are your bank accounts reconciled at least monthly?
  • Assets – Is all of the trust’s property under proper control and measures in place to prevent loss or misuse?
  • Segregation – Do you have appropriate separation of responsibility in your finance team? And are you providing proper management support to your finance staff to help them to operate in a role where they are well-placed to provide you with a “first line of defence” in terms of upholding propriety, regularity and value for money in the use of public funds?
  • Records – Do you have robust procedures for recording, documenting, evidencing and monitoring information and especially the reasons for entering into major spending commitments?
  • Scrutiny and audit – Do you have properly constituted arrangements for internal review (such as a responsible officer or internal auditor) to give you and trustees a further safeguard that the trust’s financial systems and controls are operating effectively and efficiently? Does the trust debate, and agree how to act upon, recommendations arising both from these internal reviews and from the work of its external auditors?
  • Risk – Do you have an effective process for identifying and responding to the major risks that the trust faces?
These are all basic and sensible measures.

Next month I will be talking about fraud risk at the EdExec Live conference. I will be explaining what more academies can do to protect themselves from fraudsters both inside and outside their organisations.