The Finance Guy on Academies: If Your Year-End Is August 31, Read This Now

Audits Today: Moving Beyond Paperwork

A lot of academies still expect the audit to be a straightforward “just check our invoices” process. That’s simply not the case anymore. The focus now is on understanding your finance processes, governance, risk management, and the judgments sitting behind the numbers. Auditors need meaningful discussions about risk areas, controls, related party transactions, key provisions, and whether your school is actually a going concern. International Standards on Auditing, like ISA 315 (risk), ISA 240 (fraud), and ISA 570 (going concern), demand this wider view, and the DfE’s Academy Trust Handbook pushes for robust governance and comprehensive financial controls. If your finance team is still approaching the annual audit like it’s 2010, you risk falling short of modern expectations.

Nail the Basics Early: Reconciliations and Schedules

A smooth audit starts way before fieldwork kicks off. One of the biggest causes of delays is incomplete or missing schedules. Payroll reconciliations can be left unfinished, income schedules may not tie back to funding announcements, and balance sheet schedules are sometimes stored in scattered locations. Retentions are frequently miscoded as accruals rather than other creditors. There are also recurring cut-off errors for capital projects, and remarkably, some academies don’t even maintain a fixed asset register.

Here’s what needs attention:

• Comprehensive Reconciliations: At year's end, make sure you have ESFA funding reconciliations, local authority income reconciliations, capital grant income reconciliations, and other income schedules. Check that accrued and deferred income calculations are accurate and properly evidenced. Getting these reconciliations right makes income testing faster and almost painless for both your team and the auditors.

• Maintain a Robust Fixed Asset Register: This isn’t just about recording values. Inherited assets should be flagged, with original cost and last valuation on record. Any new additions must have clear, supporting invoices that are easily retrievable for audit purposes. Always distinguish clearly between revenue expenditure and capital expenditure. Anything capital in nature should be capitalized; everything else should be expensed. Ensure all staff understand what constitutes a capital asset from the outset, as this avoids mistakes that can compromise recognition and disclosure. Depreciation per the fixed asset register should always reconcile with the trial balance. Keep an eye out for discrepancies. A major problem arises when disposals cannot be linked to specific assets because the fixed asset register doesn’t include clear markings or tagging. Without this, there’s a risk that assets no longer in use are still carried in your books. Consistent tagging and marking let you easily reconcile what’s on the books to what exists physically. Carefully check your repairs and maintenance ledger; sometimes expenditure that should be capitalised gets wrongly coded as revenue. Correct classification stops errors at audit and ensures compliance.

• Stay On Top of PBSE and Legal Issues

  Too often, academies wait until late in the audit to mention ongoing disputes, HR matters, or insurance claims, even though these issues can have a big impact on the accounts. Late disclosure means provisions, contingent liabilities, and post-balance sheet events (PBSE) details may be missed or incorrectly reported. Under ISA 501 and the Academy Trust Handbook, these matters need to be reviewed and properly disclosed well before the auditors arrive. The best approach is to maintain a running list of legal issues and PBSEs throughout the year, updating it as new matters arise. This proactive step ensures nothing important slips through the cracks, keeps your audit on track, and avoids last-minute stress for everyone involved.

• Prepare for Conversations, Not Just Paperwork

  The audit today is much more about dialogue than digging through every single invoice. Auditors are focused on understanding where risks lie and how they are managed. Identifying and documenting related party transactions is essential; these must be transparent and well-supported to avoid governance issues.

  Fraud risk assessment is another critical area. Auditors will dive into how your academy detects and prevents fraud, so having clear controls and policies in place is vital.

  Going concern discussions are particularly important now, especially with the financial pressures many Single Academy Trusts face as they join Multi-Academy Trusts. Auditors will want assurances that the academy can continue operating for at least the next 12 months. This requires senior leaders and trustees to be well briefed and ready to discuss finance plans, risk management, and contingency measures openly.

  Preparing your leadership ahead of time for these discussions not only smooths the audit process but also shows strong governance, which is a key focus for both ISAs and DfE guidelines. These conversations help auditors and academies build trust and ensure a thorough understanding of the academy’s financial health and risks.

• Auditors Have Responsibilities Too

  A smooth audit is never a one-sided effort. Audit firms must plan carefully and ensure they allocate enough experienced staff to each job. Academy audits are all tightly packed into a short season, and pushing people to work long hours risks reducing the quality of the work.

  Clear, early communication helps everyone prepare better. Sharing realistic budgets, providing prepared-by-client (PBC) lists well in advance, and offering templates for schedules and reconciliations make a significant difference to audit efficiency. When auditors take the time to plan properly and resource adequately, the whole process runs more smoothly, with less stress and fewer surprises for everyone involved. This collaborative approach benefits both auditors and academies and leads to higher-quality outcomes.

• Building Strong Partnerships for Successful Academy Audits

  The most effective audits happen when both auditors and academy finance teams view each other as partners, not opponents. When finance teams ask questions early and openly share any concerns before the audit begins, it sets a collaborative tone from the outset. Similarly, auditors should take the time to clearly explain their expectations and guide clients through the audit requirements. This open communication creates a calm and predictable process, reducing stress and last-minute surprises. By fostering a strong partnership built on trust and transparency, both sides can work together to ensure a smooth, efficient, and successful audit every year.

  Final Thoughts

  Year-end audits don’t have to be a frantic rush or a source of stress. With thorough preparation, clear communication, and a solid understanding of modern audit expectations, schools can approach the process confidently and calmly. Auditors, too, can focus on delivering quality work without the pressure of last-minute chaos. Remember, a successful audit starts well before the auditors arrive, it’s a steady, thoughtful process that pays off when planned carefully in advance.