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Frequently Asked Questions about Academy Audits

Academy FAQs

Why does an Academy need an audit?

Schools, specifically their governing bodies have control of their own budgets.  This relies on sound procurement and governance practices to gain maximum benefits for the school and its pupils.

Whereas the financial monitoring of a maintained school is conducted by the school’s local authority, academy trusts are companies limited by guarantee, incorporated under the Companies Act 2006, and as such the appointment of an auditor is a requirement.  This is often referred to as an ‘external auditor’

Can Academies be exempt from an audit?

Under section 485 of the Companies Act 2006, a company’s annual accounts for a financial year must be audited unless the company is exempt from audit.  For exemption to apply a company must qualify as a small company, the criteria of which are set out in the Companies Act.  However under its funding agreement with the ESFA, academies are required to have an audit, and are not permitted to take advantage of the above exemption.

How does an Academy appoint an auditor?

For an academy trust’s first period of accounts, auditors are appointed by a board of trustees, usually at the first meeting of the board.  Generally an auditor will already have been selected at an earlier stage, normally as a result of a formal tender process.  But cannot take up the formal appointment as auditor until the first meeting of the board.

What if I want to change my auditor?

If for whatever reason you decide to change your auditor there are two methods:

Resignation.  If new auditors are selected in between AGMs then you should advise your existing auditor and ask them to resign to allow for the appointment of the new auditor at the next AGM.

Removal.  In rare circumstances the members may pass a resolution at the AGM for their existing auditors to be removed forthwith.  This process requires a majority vote accompanied with reasons behind the decision to be presented to the Academy’s board of Trustees.

In either case, the board of trustees must notify ESFA immediately of the removal or resignation of the auditors.

What does an Academy auditor do?

The auditor’s objective is to form an opinion on whether the financial statements of the Academy are free from material error.  In order to do this, the auditor will conduct a series of tests to establish that the school is operating within budget, within a reasonable level of error.

Auditors will apply a degree of materiality, i.e. the acceptable level of error within the financial statements, when auditing.  Any errors above this level of ‘materiality’ that causes the financial statements not to give a true and fair view will require adjustments.  There are circumstances where although within the given level of materiality, auditors will still require clarification of something contained within the financial statements, for example, where the transaction in question is of a sensitive nature.  This is a matter of the auditor’s professional judgment.

Auditors ultimately are seeking assurance that the Trust demonstrates an understanding of financial processes and issues, and that cash flow and risk registers are up to date.

The external auditor will perform as part of the assurance process requirements for ESFA:

  • A “true and fair” audit of the financial statements
  • Regularity audit on the financial statements
  • An accountants report to the accounts return.


What do I need to do to prepare for my Academy’s Audit?

In most circumstances the auditor will have issued a Memorandum of Requirements (also known as a ‘Prepared by Client List’) to the Chief Financial Officer in good time prior to the audit so as to cause minimal disruption to you and your finance team at the time of the audit.  This will generally ask for items such as trial balance, bank statements/reconciliations, inventory records, internal auditor’s report (if applicable) etc.

At the time of the actual audit you should leave plenty of time in your diary and ensure all of your key financial staff are on hand if the auditor has any questions during the fieldwork process, and that they too build in sufficient time in their diaries for this eventuality.

Where can I find an auditor?


Ask other academies who they would recommend.


Auditors will often promote their audit offering on their website.  They will often include written testimonials from existing Academy clients.

Register of Statutory Auditors

You can search for statutory auditors and UK auditing firms by individual, firm name, area, or recognised supervisory body at

Things to consider when choosing an auditor

Size and complexity of the Trust:

If for example you are a Multi-Academy Trust, or have requirements for additional advice and expertise i.e. you have trading subsidiaries, then have this in mind when selecting your auditor.


Are you a small single Trust, meaning a small local auditor can adequately resource your audit, or are you a multi academy trust with a wide geographical spread, in which case a national firm may be better suited to your requirements.

Additional services:

You may wish to outsource additional services to your audit firm for example management accounts, payroll services, accounts preparation, corporation tax advice, insurance, VAT advice, or company secretarial support.

Size of the audit team:

As all academy trusts have a year end of 31 August with an account filing deadline with the ESFA of 31 December, meaning that Autumn time is particularly busy for auditors with academy clients.  You should have this in mind when considering your auditor; is their team of sufficient size that they can sufficiently service your audit alongside their existing clients?  It’s useful to have an understanding of the total partner and staff resource of the audit firm, and in particular those who deal specifically with Academies.

How often do you need to change auditors?

Academies should have in mind the pros and cons of changing auditors.  There are no set rules as to how often you re-tender for audit services.  On one hand, an existing auditor should have a good understanding of the audited entity, so changing for change’s sake can be counter productive, given the time required for a re-tender process.

On the other hand, developing too close a relationship has the potential for complacency to creep in.  Academies should keep the auditor’s level of service and quality and value for money under review.

Mitchell Charlesworth can provide an efficient, comprehensive service to your Academy.  Our Academies experts understand the unique issues and challenges that you face.  Contact us to find out how we can remove these burdens from your shoulders, and support you on your path to conversion and beyond.

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