Value for money statement
Incidences of inappropriate spending by academies have generated considerable publicity in the media and there is continuing focus on how academy schools are spending public funds.
In August, the EFA introduced the Value for Money statement. The statement is described as an opportunity to demonstrate to parents and the public that the academy trust’s use of public assets and funds has provided good value for money during the year and to identify opportunities for potential improvement.
Although the requirements of the statement are not prescriptive, the academy must include examples of areas where value for money has been achieved and where improvements could be made.
The Accounting Officer is personally responsible and publicly accountable for achieving the best possible value for money in the organisation. The Governors will also come under scrutiny on the basis that they should be challenging spending decisions to ensure that the funding is used most effectively.
The academy will need to demonstrate the policies and procedures in place which ensure that they are achieving the best possible educational and wider societal outcomes through the economic, efficient and effective use of all resources in the trust’s charge.
The headings included in the EFA guidance as suggestions of areas to cover include:-
– Improving educational results
– Financial governance and oversight
– Better purchasing
– Better income generation
– Reviewing controls and managing risks
– Lessons learned.
Improving educational results
The statement should include example of where educational results have been improved utilising the current level of resources most effectively. This could incorporate a review of staffing to ensure that teachers are being used in the most appropriate areas. Some academies are also working with other academies to share provision in some areas so that both sets of pupils have access to additional resources.
Financial governance and oversight
Any consideration of value for money must start with an effective system of financial procedures and controls. This will ensure that all transactions undertaken are authorised at the correct level of authority. Up to date financial reporting will be required which allows the leadership team and the Governors to review financial performance in line with budgets and assess whether there are any spare resources which could be better utilised in other areas. This in turn requires accurate and considered budgeting which allocates funding to areas where it can be utilised most effectively with the ultimate goal of improving educational results with the resources available. Examples could include a description of the budgeting process and how funds have been allocated across departments. A procedure by which allocations are allowed to be carried forward would indicate that budgetholders are not required to spend their whole budget buying items that they do not necessarily need. In addition to the standard tendering or quote procedures for expenditure over a certain level, some academies also require staff to check prices for smaller items from a number of different suppliers as significant variations can be found.
In addition to ensuring that funds are spent in the most appropriate areas, it is also necessary to manage the costs of expenditure that the academy cannot avoid. The report could include examples of where contracts have been reviewed or renegotiated. For example, following funding changes a number of Academies have revisited their insurance policies and amended them for areas where cover is not required.
The statement could also demonstrate how the academy has been working with other academies to generate economies of scale. This could vary between a formal buying consortium, to each academy researching the costs of different services in order to get the best deal for each.
Better income generation
The academy may also be able to identify areas where additional income has been generated using the resources of the academy. This could be by way of lettings or other fundraising events. This could also provide evidence of how the academy has been providing benefit to the wider community.
Reviewing controls and managing risks
Each academy will have prepared a risk register but it is important to demonstrate that this register is reviewed regularly and that new risks and opportunities are recognised on a timely basis and appropriate action take. Another consideration will be the establishment of a reserves policy as this will demonstrate that the Governors have considered the funds required to achieve the long term objectives of the academy. It could also be useful to include descriptions of how any reserves generated are managed effectively.
Examples can be included of what the academy has learned from its previous decisions and strategies in order to make the budget go further.
Overall, there is no definitive structure or content of the report and all the information in the guidance is merely suggested. Each statement should include the information that is most relevant and appropriate to the academy, but should emphasise those issues that had the greatest impact on the trust’s use of resources. The examples used need not be complicated or sophisticated. There are likely to be many simple examples of actions that the academy has taken which will demonstrate the effective use of resources.
Further guidance can be obtained from the EFA website or by calling one of the Academies Team at Chiks.