The Education and Skills Funding Agency (ESFA) updated its guidance on internal scrutiny in academy trusts (‘Trusts’) in February 2024.

Trusts perform an important role in advancing education, promoting pupil welfare and keeping trusts’ estates safe and well-maintained. Trustees and management must have the skills, knowledge, and experience to run the academy trust.

The guidance states that all Trusts must have a programme of internal scrutiny to provide independent assurance to the board that its financial and non-financial controls, and risk management procedures are operating effectively.

Understanding internal scrutiny in academy trusts

Internal scrutiny is a critical component of an academy trust’s compliance with the handbook. It is the process through which Trusts evaluate the adequacy and effectiveness of their control environment, focusing on risk management, governance, and internal controls. The objective is to provide independent assurance to trustees that the risk management, governance and internal control environment is fit for purpose.

Key components of internal scrutiny framework

For a robust internal scrutiny framework within a Trust, the following areas should be considered:

• Evaluating the suitability of, and level of compliance with, financial and non-financial controls
• Offering advice and insight to the board on how to address weaknesses in financial and non-financial controls
• Ensuring all categories of risks are being adequately identified, reported and managed.

Internal scrutiny is designed to review and strengthen the overall control framework, ensuring the Trust adheres to the regulations and best practices. In doing so, the Trust benefits from transparency, demonstrating to your stakeholders that the Trust operates with integrity and efficiency.

Areas to consider when thinking of internal scrutiny

A risk-based approach should be taken when considering focus areas for internal scrutiny, therefore, the Trust’s risk management framework and those in charge of governance are required to actively provide insights when considering the risk landscape for the Trust. Below are a few areas we have delivered for our clients:

• Governance and management structure
• Estates management and health and safety
• Financial planning and budget control
• Core financial controls
• Procurement and payments
• HR and payroll
• Safeguarding
• Induction and training
• Whistleblowing
• IT security

Helping you with your internal scrutiny strategies

Our Risk Assurance & Advisory Services team can provide academy trusts with the tools and expertise to transform their internal scrutiny process. We understand that each Trust is unique. That’s why we offer tailored internal scrutiny services linked to your risk profile and risk management framework. From in-depth risk assessments to internal scrutiny plans, we ensure that you not only meet the necessary handbook requirements, but also excel in financial stewardship and operational excellence. Contact Rakesh Vaitha, Director and Head of Risk Assurance & Advisory Services, for more on how we can support you.