Academy trusts are recommended to review their auditors every five years. But what do management teams need to keep in mind when looking to change their accountants, and what are the critical questions they should be asking of their auditors?
Elizabeth Wicks looks at the regulations, the questions she would expect academy trust leadership to ask and explains how we can help.
Academy Trust Handbook
The new Academy Trust Handbook has tried to clarify guidance on the appointment of external auditors, commenting that trusts 'should' retender their external audit contract at least every five years.
Typically, larger academy trusts are in the habit of retendering their audits every five years to ensure they receive the best support at the right price, although that does not necessarily result in a change of auditors. Others who are happy with their auditors may simply review their current arrangements and fee structures, seeking simple comparison quotes without a formal tender process.
However, the handbook is formalising the approach academies must take when considering value for money, suggesting that a simple desk-top review of current audit fees may no longer be sufficient.
The handbook does not yet insist that trusts change their auditors or indeed undergo a formal review process. Yet as we all know the language used in the handbook can quickly change, necessitating a new approach.
The current guidance suggests trusts 'should' review their audits every five years. It would not surprise me if that changes to 'must' at some point over the next few years, meaning a more formal tender process to establish a meaningful benchmark.
What should academy trusts look for in their auditors?
Fees and fee structures are, understandably, important but academy trusts should be looking too much more than the simple numbers.
Firstly, academy trusts should look to the experience of their auditors. They should be active in the sector, working with similar sized trusts and broadly the same geographic region. This market presence is important. If you are a large MAT with schools across the country, a larger accountancy firm with a broad geographic spread is likely to be a better fit.
If, however, your MAT is concentrated in one area, a firm with a solid team in your patch will make visits and contact that much easier. Experience in auditing similar-sized trusts is a good sign that they will understand your ethos and work well with your trust and schools.
Secondly, look to whether they have the right team. Academy trusts will want to ensure that the team and those conducting the work are right for them. With appointments typically for a five-year window, academy trusts will want continuity in that team so they build a better understanding of your trust over that time. It can be frustrating for academy trusts if they need to spend time each year bringing their audit team up to speed. Always ask for and take up references to gain insight into an audit team.
Thirdly, what can the accountants offer over and above the audit? At Hillier Hopkins, we operate a helpline for academy trusts who can ask routine questions free of charge at any point in time. We also offer a regular seminar programme for academy clients and technical updates.
And finally, the fees. Academy trusts should expect a clear fee structure for all the services provided, including the audit for each of the years appointed, for tax support, and other reporting requirements.
How Hillier Hopkins can help
Hillier Hopkins offers a 30-strong highly experienced education team that works with 32 academy trusts alongside many independent schools.
The team offers the full range of support to academy trusts from audit and accounts preparation to VAT and tax advice.
In a complex and evolving landscape, training and development of the audit team is vital. Hillier Hopkins has a continuous training programme delivered via regular internal and external experts.
That ethos of continued training and development is extended to our clients with a regular seminar programme supported by newsletters and technical updates.
Hillier Hopkins also offers a telephone helpline for its academy trust clients where routine questions can be addressed free of charge.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.