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Responsible Officer Role (What’s the Value for your Academy or Trust?)

November 16th, 2017

What does a ‘Responsible Officer’ do?

A responsible officer is an independent advisor who works with schools to ensure their finances and procedures are in working order.

The Responsible Officer (RO) checks that:

  • The financial responsibilities of the Governing body are being properly discharged
  • Resources are managed in an efficient, economical and effective manner
  • Systems of internal financial control are being maintained
  • Financial considerations are fully taken into account in reaching decisions

Essentially, the RO is responsible for ensuring that academies are following the Academies Financial Handbook, whilst helping schools to strengthen their internal controls. Should these falter, it can most certainly result in a drop in teaching and learning standards.

This article is a walk-through of the most serious, as well as the more subtle, consequences of weak internal controls in schools. As you will see, 3 (percent) is the magic number!

Consequences of Weak Internal Controls – 2 Scenarios

 Scenario 1: ‘We’ve been caught’

Weak internal controls can lead to serious financial troubles which can attract the attention of the Education Skills and Funding Agency (ESFA). The ESFA are likely to take one or both of the following actions:

Financial Notice to Improve (FNI)

The ESFA issues a Financial Notice to Improve. An FNI is issued if the ESFA deems that the Trust has “failed to ensure good financial management and effective internal controls” (AFH 2.2.4).

If your academy is issued with an FNI your delegated authority is revoked and all such transactions need to be referred to the ESFA for approval.

Within two months of receiving the notice you must

  1. Submit a new, externally validated, financial recovery plan
  2. Commission a full and independent review of financial management and governance across the Trust
  3. Allow the ESFA to monitor your progress in any manner that they deem necessary. This mainly consists of submitting, on a monthly basis:
    1. Income and expenditure budget monitoring report
    2. Balance sheet
    3. Cash flow forecast report
  4. Continue to comply, in full, with all other AFH requirements

Failure to improve will result in the termination process being triggered, as detailed in your funding agreement.

There are currently 39 open Financial Notices to Improve listed on the ESFA website which 3% of the country’s MATS are responsible for.  And they are being issued with greater frequency. According to TES, the ESFA issued 18 notices to improve in 2016-17 and this represents 1/3 of all notices ever issued since 2012.

Special Measures

Following an Ofsted inspection, during which the leadership and management is graded as inadequate, a school or academy will be put into special measures.

Your delegated authority is revoked, and all such transactions need to be referred to the ESFA for approval.

In 2013 3% of schools were in special measures. In the 2017 data from Ofsted, 3% of all recent academy inspections resulted in a rating of inadequate.

If a school is placed in special measures for financial trouble, then they have one final opportunity to improve. Usually a new governing body is brought in and new systems and procedures will need to be implemented immediately, with a steep learning curve.

Scenario 2: ‘We’ve not been caught (yet)’

If you’re in the other 97% of schools then you do not need to worry, right? Certainly, you do not need to panic, but there may still be serious causes for concern brewing under the surface.

Before being issued with a financial notice to improve or being put in special measures, here are some consequences of weak internal controls that can affect your school:

Fraud

Fraud can be costly and embarrassing for a school. All schools have some measures in place to try to prevent this, but weaknesses still abound. The most common type of fraud is frequent and low-level. These are the hardest to find, so one-off checks are essential.

There are a number of ‘behavioural red flags’ that accompany instances of fraud including appearing overworked but refusing assistance, unusual associations with a customer or vendor or living beyond apparent means.

Errors in Data

Poor data (especially financial data) can cascade directly through all the other items listed here. Good data is the foundation of good decision making. At worst, bad decisions will be made from the data (poor deployment of resources for example) but almost as bad is a mistrust of the data and therefore not using it at all for strategic decision making.

Poor Decision Making

If procedures are not followed, then management cannot rely on the data to make decisions. On the other hand, if management have been assured that procedures are adequate and are being followed, then they are free to make strategic decisions based on the data coming from the admin team.

Increased Costs

Poor contract management will result in schools paying too much or for too long for goods and services. Worse still, it can mean that the school pays for services it doesn’t need at all.

Decrease in Staff Moral

When staff get the sense that the back office are running a tight ship, it helps them feel proud of where they work, reassured that their data is in good hands, and that the finances of the school will probably be in good shape. If staff have any doubts regarding the above it could make for disgruntled staff, or even cause tension between teaching and non-teaching staff.

Decrease in Staff Productivity

Not following good systems, or not having good systems, leads directly to poor productivity. Admin staff take too long to carry out their tasks and teaching staff take too long getting things done with the office staff. Good systems mean everyone can spend more time on their own roles.

Reduction in Teaching and Learning Standards

All of the above can cascade down to the most important thing in your school: the teaching and learning experience for the children. The back office supports the teaching and learning. Are those supports strong enough?

How Can the Responsible Officer Help with this?

Working with an RO once a term means you get an independent, trusted advisor to act as a ‘critical friend’. They are not there to catch you out. They are there to give assurance, help you improve, and to be confident that you are doing things in the best way for your Trust.

An independent RO will not only help you to be compliant with the Academies Financial Handbook, but also conduct their tests through the prism of ‘helping management ensure that the Trust’s priorities are delivered’. That means that tests will be made bespoke to your Trust, and they should alway consider the uniqueness of your schools while matching your procedures to the ideal.

So whether you are in the 3% or comfortably in the 97% you can always do with a helping hand. Don’t be afraid to take it – good systems and processes are always a good investment.


Octavo’s Schools Finance team offer a Responsible Officer service to academies and trusts who may need that little bit more support. For more information contact Patrick Leavy, Schools Finance Manager (patrick.leavy@octavopartnership.org).