What you need to know from the ESFA annual accounts

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The Education and Skills Funding Agency (ESFA) has published its annual report and accounts for the last financial year.

The organisation, an arms-length body of the Department for Education, was responsible for distributing £65 billion of funding to the education sector in the year to March 31 2022.

Here’s what you need to know…

1. 20% rise in cost-cutter savings

ESFA’s cost-cutters – or “school resource management advisers” – found £292 million of potential savings for reinvestment across 366 school visits.

This is up by nearly 20 per cent compared to the previous year, the ESFA said.

However, the report does not say whether schools enacted these savings. A National Audit Office report released last year revealed the conversion is very low.

In total, 88 per cent of schools visited rated the service as good or very good, and 80 per cent found the recommendations useful.

The ESFA also provides extra financial support to academy trusts facing short to medium-term financial difficulties.

The agency said the amount of additional financial support in the last year came to less than a third of what was offered in the previous year, though it did not give figures.

2. £2.1m paid to wrong recipient

The ESFA admitted that in December 2021, £2.1 million was “erroneously paid to a wrong vendor” in an “unexpected issue”.

It happened when a new vendor was added to the system using an incorrect reference number.

But the money was full recovered and re-issued to the correct payee and ESFA has made improvements to the process to help prevent errors.

3. At least £30k in ESFA exec bonuses

Ten executive staff members received a bonus, meaning at least £30,000 was handed out, about half of the total value of payouts in the previous years.

Warwick Sharp, who served as director of academies and maintained schools during the time period, received a bonus of between £10,000 and £15,000. Four others were given between £5,000 to £10,000 each.

John Edwards, the ESFA’s interim chief executive officer, was paid a salary of between £135,000 and £140,000. This is below the salary of previous CEO Eileen Milner who was on £150,000 to £155,000.

David Withey was appointed as permanent CEO in August 2022, so his pay is not in these accounts.

4. Late tax submission cost £2.5m

A late submission of a VAT reclaim for “contracted out services” meant ESFA lost £2.5 million. It “reviewed controls” to prevent this happening again.

The government will sometimes waive debts owed by academies as part of their re-broker to new sponsors, or to support closure of trusts.

The largest sum written off related to schools appears to be “Sexeys School Trust” at £700,000. Another £1.9 million was written off across three University Technical Colleges.

5. Audit capacity problems at councils

The ESFA said nearly half of all local authorities had outstanding audited financial statements – a “significant” increase to the previous year.

This was mainly due to finance team and external auditor capacity issues, which has been exacerbated this year by a “technical accounting issue”.

These audits help the ESFA to understand the use of funding by local maintained schools.

But it sought “more detailed assurances” from councils assessed as “presenting an increased risk, considering whether there is a potential assurance gap”.

It concluded that funds had been used properly but are keeping this as an “area of risk” going forward.

6. Possible £75k tribunal bill

The accounts reveal how the ESFA is dealing with an employment tribunal which is expected to finish after April next year.

Its assessment of damages if it loses is £50,000 for loss of earnings and injury to feelings, with court costs expected to be up to £25,000.

7. Fewer fraud allegations

There were 27 new allegations of fraud, down on 32 the previous year. Thirteen cases remained ongoing in March this year.

An “irregularity” was identified in two cases, down from six the previous year.

ESFA lost £1.5 million to fraud, with £244,132 recovered. Trusts lost £548,383, down on £1.3 million in 2020-21.

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