Exclusive: Auditors ‘failed to spot problems’ at academy trusts

Governors say that some of the auditors who check academy accounts are not giving early warnings about problems

Auditors failed to spot problems early enough at academy trusts that later received financial notices to improve, says Emma Knights, of the National Governance Association

Auditors have failed to spot problems at academy trusts that later triggered formal government action, a governors’ leader has warned.

Academy trusts are legally required to publish their annual financial accounts, which the Department for Education argues means that they are subject to “higher levels of accountability and transparency than local authority schools”.

However, the National Governance Association (NGA) has now questioned whether some of the independent auditors that sign off the accounts are doing a thorough enough job.


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The concerns were raised as academies minister Lord Agnew told auditors that the DfE would take “any appropriate action open to us” if serious issues developed at a trust that were linked to previous audits, but were not flagged up in the management letters they included with the accounts.

Flagging up problems at academies

Speaking at a Westminster Education Forum conference about priorities for multi-academy trusts this week, NGA chief executive Emma Knights raised her concerns with Parliament’s spending watchdog.

She told Mark Parrett, audit manager at the National Audit Office: “We are working with some MATs who have had financial notices to improve and we have noticed that auditors haven’t, in our opinion, spotted things as early as they should.”

Ms Knights asked Mr Parrett whether he thought that auditors should be “a little more robust in their auditing”.

In response, he said there has “undoubtedly been a push to improve the quality of auditing”, including from those in his organisation.

He added: “Other audit firms ought to be looking at their quality as well, saying how they do make greater use of the technology that has been available for a long time to do analysis more quickly.

“Yes, it would be nice to pick up everything early on, wouldn’t it? There are inevitably things that crop up later. Should they have been found sooner?

“If they are found sooner then people would praise them then maybe they might, but yes, there is a big push on improving quality of audit.”

Speaking after the event, Ms Knights told Tes that it was an important issue because of the amount of money academy trusts spend on auditors, and the role they should play in giving an early warning of problems.

She added: “We are worried that auditors don’t necessarily say to boards, ‘Are you aware of X?’.

“They have to say whether they think the trust is a going concern – it’s like saying it’s a disaster or not a disaster – but we would like to see auditors have conversations with boards where they say, ‘Yes, you are a going concern, but do you realise that your management of this is not as good as it should be?'"

 

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