Academy Finance Committee: Terms of Reference

The Academy Finance Committee (AFC) plays a crucial role in ensuring the sound financial management and sustainability of the academy. This document outlines the committee’s terms of reference, defining its purpose, responsibilities, membership, and operating procedures.

Purpose

The primary purpose of the AFC is to provide oversight and strategic advice to the academy trust board on all matters related to finance, resources, and risk management. The AFC ensures the academy operates within a sound financial framework, complies with relevant regulations, and optimizes the use of resources to support the academy’s educational objectives.

Responsibilities

The AFC’s responsibilities encompass a wide range of financial oversight functions, including:

• Budgeting and Financial Planning: Reviewing and recommending the annual budget for approval by the board, ensuring it aligns with the academy’s strategic plan and priorities. Monitoring budget performance throughout the year, identifying variances, and recommending corrective actions. Contributing to long-term financial planning to ensure the academy’s financial sustainability.
• Financial Monitoring and Reporting: Overseeing the preparation of accurate and timely financial reports for the board, the Education and Skills Funding Agency (ESFA), and other relevant stakeholders. Monitoring key financial indicators (e.g., cash flow, income, expenditure, debt levels) to assess the academy’s financial health. Reviewing and scrutinizing management accounts, highlighting areas of concern and recommending improvements.
• Internal Controls and Risk Management: Assessing the adequacy and effectiveness of the academy’s internal controls, including safeguarding assets, preventing fraud, and ensuring compliance with regulations. Monitoring and managing financial risks, including identifying potential risks, assessing their impact, and developing mitigation strategies. Reviewing the academy’s risk register and ensuring it is regularly updated.
• Audit and Compliance: Overseeing the external audit process, ensuring the academy complies with relevant accounting standards, regulations, and ESFA requirements. Reviewing the external auditor’s reports and recommendations, and ensuring that management takes appropriate action to address any issues raised. Monitoring compliance with VAT regulations and other tax requirements.
• Procurement and Value for Money: Reviewing the academy’s procurement policies and procedures to ensure they are robust, transparent, and compliant with best practices. Monitoring procurement activity to ensure value for money is achieved in all spending decisions. Evaluating the efficiency and effectiveness of resource utilization and recommending improvements.
• Investments and Asset Management: Overseeing the management of the academy’s investments, ensuring they are aligned with the academy’s financial objectives and risk tolerance. Monitoring the performance of investments and making recommendations for changes as needed. Reviewing the academy’s asset register and ensuring it is accurate and up-to-date.

Membership

The AFC should comprise individuals with relevant financial expertise, including accounting, auditing, or financial management. The committee should ideally include governors with experience in the education sector. The composition of the committee should be diverse to ensure a range of perspectives. The Headteacher/Principal or a senior finance officer typically attends meetings to provide information and support the committee’s work. The board formally appoints committee members.

Operating Procedures

The AFC should meet regularly, at least termly, or more frequently as needed. Agendas and supporting papers should be circulated to members in advance of meetings. Minutes of meetings should be accurately recorded and approved by the committee. The AFC reports directly to the academy trust board, providing regular updates on its activities and recommendations. The committee reviews its own terms of reference annually to ensure they remain relevant and effective.

These Terms of Reference are subject to review and amendment by the academy trust board.