Auditors have provided a “qualified” opinion of the academy sector’s accounts, owing to doubts over the Department for Education's valuations of academy land and buildings.
The first ever combined academy sector annual report and accounts, published this afternoon, reveals that the Comptroller and Auditor General provided a “qualified audit opinion”.
The report states: “There is still a limitation of scope in place around the [Department for Education] having insufficient evidence to support the recognition and valuation of academy lands and building assets”.
It adds: “The department is working hard to collect the necessary evidence to remove this qualification as soon as possible, including collecting additional information from the academy sector and undertaking a detailed review of the approach towards valuing land and buildings.”
The combined report has been published for the first time because the Comptroller and Auditor General provided an "adverse" opinion on the DfE’s last set of consolidated accounts.
This was partly because of the issue around academy land and building assets, but also because academies report their accounts over a different timeframe to the DfE group – which contravenes accounting standards.
While the publication of the standalone academy accounts has addressed the issue relating to different reporting dates, the issue in relation to properly recognising and valuing academy land and buildings has not yet been addressed, today's report says.
It states that the DfE places the value of academy trust land and buildings at £45bn as at 31 August 2016, up from £40bn as at 1 September 2015.
But, the auditor, Sir Amyas Morse writes: "The audit evidence available to me in respect of these balances was limited."
He adds: "The department is unable to provide me with sufficient, appropriate evidence that the carrying value of the academy trust land and buildings it has recognised is a materially accurate reflection of the fair value of the underlying estate."
According to today’s report, there were 136 trusts, representing 4.5 per cent of the academy sector, where independent auditors found “some element of income or expenditure that may have been outside permitted use, or where the trust’s own agreed procedures were not followed”.
The Education and Skills Funding Agency reviewed these trusts and discovered failures to comply with requirements in relation to internal controls, internal financial management or reporting, procurement processes and “related party transactions”.
The report states: “Many of the irregularities at [trusts] that received modified audit opinions… were already known to ESFA through existing involvement, or were at relatively newly established [trusts] where arrangements were in the process of being developed.”