ESFA Financial Handbook – What to expect
Posted on: November 6th 2023 · read
In due course we expect the ESFA to release the new Financial Handbook. The Handbook will set out the Department for Education’s (DfE’s) financial governance, management and control requirements for further education and sixth-form college corporations.
The Handbook will apply equally to institutions designated under Section 28 of the Higher and Further Education Act as being in the further education sector. The requirements of the Handbook will also apply to any subsidiary forming part of the parent college group.
The Handbook is set to comprise short topics explaining requirements that colleges must follow, as well as elements of good practice that colleges should follow, unless an alternative approach works better.
The Handbook has been developed by a working party that consists of financial professionals within the sector, auditors, governance professionals, umbrella associations and the ESFA; it is intended that the Handbook will be effective from 1 August 2024 and will remain in force until updated or replaced.
What we expect the Handbook to cover We are expecting the Handbook to:
- Describe the financial responsibilities of colleges, reflecting their status as charitable corporations acting in the public interest classified as central government bodies for the purposes of national accounts.
- Explain when colleges must obtain approval in advance for certain financial transactions. Colleges must ensure they are familiar with these requirements.
- Balance the need for effective financial management with the freedoms that colleges need over their day-to-day business.
- Reflect the 7 principles of public life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership) to which public office holders must adhere.
- Cover further education colleges, sixth form college corporations, designated institutions, and the subsidiaries of any of these bodies.
- Be complied with as a requirement of colleges’ accountability agreements with the Secretary of State for Education.
- Set out that the DfE may take action, in accordance with the framework for college oversight: support and intervention, where there are concerns about a college’s compliance with financial management requirements.
The good news is that the ESFA have confirmed that this Handbook does not contain any new rules that have not already been highlighted within the Dear Accounting Officer letter and Bite-Size Guides that have been released on reclassification matters.
We are expecting the Handbook draft to be released in November/December 2023 upon which ‘comment’ may be given from the sector to address any significant issues that might arise from its implementation. We expect the final version of the Handbook to be released in March 2024.