Academies: Spending watchdog warns of 'pervasive' errors in DfE accounts

National Audit Office publishes highly critical report and says department is failing to give Parliament a clear view of academies' spending

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The National Audit Office (NAO) has published a highly critical report on the Department for Education’s financial statements, warning that the department is "failing" to provide Parliament with a clear view of academy trusts’ spending.

The public spending watchdog said today that the level of "error and uncertainty" in the department’s financial statements was "both material and pervasive".

It warned that the department’s policy of autonomy for academies “brings with it significant risks if the financial capability of the department and academies are not strengthened.”

This, it said, would “become even more significant" with the planned expansion of academies.

The DfE responded to the report by saying that the consolidation of the accounts of thousands of academies was "one of the largest and most complex procedures of its kind".

It is the second time the watchdog has issued a warning about the DfE's accounts. Last year it said the department’s figures did not give a "true and fair" reflection of its financial activity.

'Truth and fairness' in question

Amyas Morse, head of the NAO, 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…in 2017."

A spokesman for the DfE said: "Academies are subject to a rigorous system of accountability and oversight, tougher and more transparent than maintained schools. This is reflected in the NAO’s finding that there are no material inaccuracies in individual academies' statements. However, the consolidation of thousands of those accounts into the format required by Parliament is one of the largest and most complex procedures of its kind. 

"All of these accounts are published individually by trusts ensuring they can be held to account by the department and the public.

"We recognise the challenges with the current format and have developed a new methodology for the 2016-17 financial year, which the NAO has said will provide a solution to a number of these issues. With the Education Funding Agency’s rigorous oversight of the academy system and the expanding role of the regional schools commissioners, we are confident that the accountability system for the expanding academies programme is robust and fit for purpose."

Neil Carmichael MP, chair of the education select committee, also reponded to the report, adding: "At a time of continued pressure on public spending, it is vital government departments file their accounts on time to enable proper, effective public scrutiny."

The verdict from the NAO, he said, had given the committee "serious reason to question the DfE’s ability to manage its programme of educational reform.”

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