Common issues identified from DfE's assurance work: 2025 to 2026
Updated 11 September 2026
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-2025-to-2026
Introduction
This report provides an overview of the findings from the Department for Education’s (DfE’s) 2025 to 2026 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
It does not include findings relating to academy early years funding audits, as these will be published separately.
This publication highlights common themes to help improve financial governance. It is for:
- academy trust accounting officers
- finance staff
- trustees
- auditors of academy trusts
Review of academy trust financial statements
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 2024 to 2025 financial statements was 31 December 2025. By this date trusts were required to submit their:
- audited financial statements
- auditor’s management letter
- annual summary internal scrutiny report
We found that just under 97% of trusts submitted their 2024 to 2025 financial statements by 31 December – this was just under 96% in 2023 to 2024.
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 2024 to 2025.
The percentage of qualified 2024 to 2025 financial statements was 0.6%, the same as in 2023 to 2024. The main reason for the qualified opinions was due to the accounting treatment of land and buildings, followed by local government pension scheme (LGPS) actuarial valuations.
There has been a 2.7% decrease in ‘emphasis of matter’ or ‘material uncertainty’ opinions to 10.7%, compared with 13.4% in 2023 to 2024. This is broken down as:
- 7.5% for trusts closing or transferring – in 2023 to 2024 this was 8.3%
- 3% for financial health issues – in 2023 to 2024 this was 3.2%
- 0.2% other – in 2023 to 2024 this was 1.9%
The percentage of modified regularity conclusions on the 2024 to 2025 financial statements was 7.6%. This was lower than 2023 to 2024 when it was 7.9%.
The main issues for the regularity modifications were similar to the previous year – internal financial reporting and trusts not adhering to the pre-approval requirement for those relevant related transactions with a monetary value of £40,000 or more.
Financial statements audit opinions
Figure 1: reasons for qualified opinions
| Reason | 2023 to 2024 | 2024 to 2025 |
|---|---|---|
| LGPS actuarial valuation | 12 | 6 |
| Accounting treatment land and buildings | 2 | 7 |
| Other | 1 | 1 |
Figure 2: reasons for material uncertainty opinions
| Reason | 2023 to 2024 | 2024 to 2025 |
|---|---|---|
| Going concern closing or transferring | 196 | 167 |
| Going concern financial issue | 75 | 66 |
| LGPS actuarial valuation | 35 | - |
| Accounting treatment for land and buildings valuations | 3 | 2 |
| Other | 6 | 3 |
Financial statements regularity conclusions
The highest number of reasons for modified regularity conclusions in the 2024 to 2025 financial statements relate to internal financial reporting. This was the same in 2023 to 2024. The reasons included:
- issues relating to the production and distribution of management accounts
- weaknesses in financial management – mostly poor internal control frameworks
- instances where requirements relating to website publications, GIAS reporting and DfE submission deadlines were not met
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 interest appropriately
The third highest number of modified regularity conclusions was in relation to human resources and payroll. This is a new entry, which was included because a number of issues were identified. The main reasons were:
- off-payroll expenditure for the chief financial officer or the chief executive officer
- no accounting officer or chief financial officer in place
Figure 3: reasons for modified regularity conclusions
| Reason | 2023 to 2024 | 2024 to 2025 |
|---|---|---|
| No independent check of controls | 4 | 0 |
| Breach of delegated powers | 6 | 0 |
| Land and buildings | 1 | 1 |
| Capital funding and capital expenditure | 4 | 1 |
| Borrowing and finance leases | 8 | 9 |
| Alcohol | 21 | 9 |
| Fraud or theft | 10 | 10 |
| Financial health | 11 | 13 |
| Procurement or tendering | 19 | 11 |
| Non-contractual payments, severance or honoraria | 5 | 13 |
| Internal scrutiny | 19 | 13 |
| Human resources or payroll | - | 16 |
| Related party transactions | 47 | 46 |
| Financial management or reporting | 61 | 66 |
| Other control weaknesses | 41 | 9 |
Internal scrutiny
Trusts are required to submit to DfE their internal scrutiny summary report by 31 December, alongside their audited annual accounts.
The main common issues identified was no internal scrutiny having taken place.
As in previous years, there continues to be a wide range in the quality of the annual summary internal scrutiny reports submitted. In some cases, only minimal information was provided.
Financial management and governance reviews
Our reviews are designed to provide assurance that trusts have appropriate financial management and governance arrangements and that those arrangements ensure trusts’ compliance with the academy trust handbook (ATH).
Our assurance findings indicated that most academy trusts reviewed were making good progress towards compliance with the ATH. 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 oversee, approve and 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
- trust investment policy and management of investments
- timely submission of the school resource management checklist
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 funding audits check for errors relating to both the:
- pupil census numbers, which are used to calculate the main school funding blocks (pre-16 and 16 to 19 funding)
- entitlement to free school meals (FSM) numbers, which is 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
- FSM eligibility factor
- English as an additional language factor
- high value and premium course factors
- post looked-after children and service children factors
The levels of error identified, while higher than 2024 to 2025, were still relatively low. The greatest level of error is in pupil premium funding. This is due to insufficient evidence to support entitlement to FSM.
For 2025 to 2026 we also saw an increase in errors relating to the post looked-after children component, with schools not retaining appropriate and sufficient evidence to support learners’ eligibility.
The results for 2025 to 2026 are:
- pre-16 census data random error rate was 0.21% (in 2024 to 2025 it was 0.11%)
- 16 to 19 census data random error was was 0.36% (in 2024 to 2025 in was 0.10%)
- pupil premium census data random error rate was 1.54% (in 2024 to 2025 it was 0.35%)
Schools resource management self-assessment checklist
The schools resource management self-assessment checklist helps academy trusts check they are managing their resources effectively and identify any areas for improvement.
Of the 2,089[footnote 1] academy trusts expected to submit their schools resource management self-assessment checklist, 1,668 (79.8%) were submitted by the deadline of 13 March 2026 – it was 87.8% in 2025.
The deadline response rate continues to be lower than the response rates achieved for other financial returns. However, at the date of publication, excluding those trusts that have closed, we have received 2,079 (99.5%) of all expected returns.
DfE works with trusts that submit financial statements and other returns late to understand the reasons for the delay and will consider appropriate follow-up actions to ensure there is no recurrence. DfE takes into account the late submission of documents in assessing academy trust risks.
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 schools resource management self-assessment checklist.
We found that, generally, the main areas where trusts did not self-assess themselves as compliant were:
- some trusts not publishing on its website the number of employees whose total benefits exceeded £100,000 for the previous year ending 31 August
- trustees being able to confirm there are no outstanding matters from audit reports
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2,100 academy trusts with an open academy on 31 December 2025 less 11 academy trusts that closed after 1 January 2026. ↩