Common issues identified from DfE's assurance work: 2024 to 2025
Updated 17 September 2025
Applies to England
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This publication is available at https://www.gov.uk/government/publications/academy-trusts-themes-arising-from-esfas-assurance-work/common-issues-identified-from-dfes-assurance-work-2024-to-2025
1. Introduction
This report provides an overview of the findings from DfE’s 2024 to 2025 assurance programme. It includes a review of:
- academy trust financial statements
- financial management and governance reviews
- academy funding audits
- school resource management self-assessment checklist
This publication highlights common issues to help improve financial governance. It is for:
- academy trust accounting officers
- finance staff
- trustees
- auditors of academy trusts
2. Review of academy trust financial statements
Overall findings
We review trusts’ financial statements and auditors’ reports, to provide assurance that funds provided to trusts have been used for the purposes intended.
The deadline for trusts to submit their 2023 to 2024 financial statements was 31 December 2024. By this date trusts were required to submit their:
- audited financial statements
- auditor’s management letter
- internal scrutiny summary report
We found that just under 96% of trusts submitted their 2023 to 2024 financial statements by 31 December – this was just over 95% in 2022 to 2023.
The main reasons for the delays were the same as in previous years, that trusts:
- closed during the year and had not submitted accounts as part of the closure process
- which were in intervention had not submitted their accounts by the deadline
Five trusts have not submitted their audited financial statements for 2023 to 2024.
The percentage of qualified 2023 to 2024 financial statements was 0.6%. In 2022 to 2023 this was 0.4%. The main reason for the qualified opinions was due to local government pension scheme (LGPS) valuations.
There has been a 3.5% increase in ‘emphasis of matter’ or ‘material uncertainty’ opinions to 13.4%, compared with 9.9% in 2022 to 2023. This is broken down as:
- 8.3% for trusts closing or transferring – in 2022 to 2023 this was 6.7%
- 3.2% financial health issues – in 2022 to 2023 this was 1.3%
- 1.9% other – in 2022 to 2023 this was 1.9%
The percentage of modified regularity conclusions on the 2023 to 2024 financial statements was 7.9%. This was similar to 2022 to 2023 when it was 7.8%.
The main issues for the regularity modifications were consistent with the previous year – internal financial reporting and trusts not adhering to the pre-approval requirement for those relevant related party transactions with a monetary value of £40,000 or more.
Financial statements audit opinions
Figure 1: Reasons for qualified opinions
| Auditor opinion reason | 2022 to 2023 | 2023 to 2024 |
|---|---|---|
| LGPS actuarial valuation | 5 | 12 |
| Accounting treatment land and buildings | 1 | 2 |
| Other | 5 | 0 |
Figure 2: Reasons for material uncertainty opinions
| Reasons for material uncertainty | 2022 to 2023 | 2023 to 2024 |
|---|---|---|
| Going concern - closing or transferring | 166 | 196 |
| Going concern - financial issue | 32 | 75 |
| LGPS actuarial valuation | 41 | 35 |
| Accounting treatment for land and buildings valuations | 4 | 3 |
| Other | 3 | 6 |
Financial statements regularity conclusions
The highest number of reasons for the modified regularity conclusions in the 2023 to 2024 financial statements related to internal financial reporting. This was the same in 2022 to 2023. The reasons included:
- issues with management accounts:
- management accounts not produced at all
- not sharing with the board
- key sections missing – for example, the cash-flow or balance sheet omitted from the information provided to the board
- weaknesses in financial management – mostly poor internal control frameworks
- no fixed asset register in place or updated when necessary
The second highest number of modified regularity conclusions was in relation to related party transactions. This includes:
- prior approvals and declarations:
- not seeking prior approval from DfE before entering into a related party transaction
- not reporting to DfE where the value is less than £40,000
- business and pecuniary interests – the main issue was where trusts had failed to manage conflicts of interests appropriately
- ‘at cost’ policy – the main issue was where the ‘at cost’ requirement was a mandatory requirement, but trusts did not have the evidence to confirm compliance
Figure 3: Reasons for modified regularity conclusions
| Number of modifications | 2022 to 2023 | 2023 to 2024 |
|---|---|---|
| Accounting policies | 0 | 0 |
| COVID-19 | 0 | 0 |
| Land and buildings | 1 | 1 |
| Capital funding and capital expenditure | 5 | 4 |
| No independent check of controls | 5 | 4 |
| Non-contractual payments, severance, honoraria | 1 | 5 |
| Breach of delegated powers | 0 | 6 |
| Borrowing and finance leases | 11 | 8 |
| Fraud and theft | 15 | 10 |
| Financial health | 6 | 11 |
| Procurement and tendering | 16 | 19 |
| Internal scrutiny | 23 | 19 |
| Alcohol | 17 | 21 |
| Other control weaknesses | 33 | 41 |
| Related party transactions | 52 | 47 |
| Financial management and reporting | 69 | 61 |
Internal scrutiny
Trusts are required to submit to the DfE their internal scrutiny summary report by 31 December, alongside their audited annual accounts.
The main common issue identified was no internal scrutiny having taken place.
There continues to be a wide range in the quality of the annual summary internal scrutiny reports submitted.
3. Financial management and governance reviews
Our reviews are designed to provide assurance that trusts have appropriate financial management and governance arrangements that ensure trusts’ compliance with the academy trust handbook.
Our assurance findings indicated that most academy trusts reviewed were making good progress towards compliance with the academy trust handbook. 98% of trusts reviewed fell within the ‘fully compliant’, ‘good’ and ‘satisfactory’ progression towards compliance categories. This was the same as the previous year which was 98%.
The areas where further development is needed include:
- establishing an audit and risk committee, to agree a programme of work and to address risks to both financial and non-financial controls
- delivery of an appropriate internal scrutiny programme and oversight of the implementation of recommendations
- monitoring the budget – including the production of management accounts, ensuring they contain all required elements, and support appropriate board action to review and maintain financial viability
- trusts’ maintaining and publishing the register of business and pecuniary interests of its’ trustees and governing structure on their website
- oversight of risk and regular review of the risk register
- the setting of executive pay
4. Academy funding audits
Our funding audits provide assurance that the main school funding grants have been properly claimed and used for the purposes intended.
DfE’s funding team check for errors relating to both of the following:
- pupil census numbers, which are used to calculate the main school funding blocks pre-16 and 16 to 19 funding
- the entitlement to free school meals numbers – the main factor in determining pupil premium funding
The funding factors for pre-16, 16 to 19 and pupil premium evaluated as part of our assurance work included:
- the basic per pupil funding factor (age-weighted pupil funding) confirmed by pupil existence and eligibility testing
- free schools meals eligibility factor
- English as an additional language (EAL) factor
- high value and premium course factors
- previously looked-after children and service children factors
The results of our academy funding audits continue to confirm very low error rates across the 3 main academy funding streams.
We have seen an increase in the pre-16 error rate. This is mainly because of the increased error in the free school meals component of this funding – schools do not retain appropriate or sufficient evidence to support learners’ eligibility.
In line with previous years, the levels of errors identified were low:
- pre-16 census data random error rate was 0.11% (in 2023 to 2024 it was 0.03%)
- 16 to 19 census data random error rate was 0.10% (in 2023 to 2024 it was 0.02%)
- pupil premium census data random error rate was 0.35% (in 2023 to 2024 it was 0.59%)
This year we have extended our testing to review the accuracy of the academy early years census data. This feeds into the calculations used by local authorities, when distributing the early years dedicated schools grant (DSG).
Early years DSG funding covers existing schemes, and new schemes introduced from April 2024, covering the following 5 cohorts of provision:
- early years disadvantaged 2-year-olds
- early years 3 and 4 years olds – universal hours
- early years 3 and 4 years olds – additional 15 hours for working parents, who meet the HMRC eligibility criteria
- early years 2-year olds – 15 hours for working parents, who meet the HMRC eligibility criteria (new from April 2024)
- early years 9-month-olds – 15 hours for working parents, who meet the HMRC eligibility criteria (new from September 2024)
This is the first year we have directly tested school early year places. Our initial findings show higher error rates in the early year census, compared to the school census. Generally, we found that:
- testing child eligibility or entitlement, with reference to parents’ entitlement to funded childcare hours, did not identify any significant errors.
- errors were identified from our testing of take-up of entitlement or attendance including:
- inconsistency in the quality and completeness of attendance records
- hours being privately funded yet still recorded in the census
- insufficient evidence to confirm attendance during the census period
5. Schools resource management self-assessment checklist
The schools resource management self-assessment checklist helps academy trusts check that they are managing their resources effectively and identify any areas for improvement.
There were 2,183 academy trusts with an open academy on 31 December 2024 and 7 academy trusts closed after 1 January 2025.
Of the 2,176 academy trusts expected to submit their schools resource management self-assessment checklist, 1,911 (87.8%) submitted by the deadline of 14 March 2025.
The deadline date response rate has increased slightly since 2024 when it was 84.7%. This return continues to have a lower response rate than other financial returns.
As part of the financial management and governance review process, we carried out a validation exercise to compare the findings from our work to the responses provided by trusts on the checklist.
We found that, generally, the checklist was completed accurately. Areas that trusts did not self-assess themselves as compliant included:
- trustees not always aware of their statutory duties under health and safety legislation
- trust balances being assessed at a reasonable level with trusts having a clear plan for using the money held in balances at the end of each year trustees being able to confirm there are no outstanding matters from audit reports
We received 2,171 (99.8%) of all expected returns. This figure excludes those trusts that have closed.