Roles and responsibilities of academy trustees

Strong governance is vital for academy trusts to deliver their organisational purpose and meet their legal and regulatory responsibilities. Effective trustees and members are those who understand their roles, contribute positively both as individuals and as part of a team, and maintain a high level of integrity and accountability.

Responsibilities of Academy Trustees

Academy trustees play a crucial role in ensuring the success and integrity of their trusts. Trustees must possess a clear understanding of their roles and responsibilities. This includes comprehending the legal and regulatory frameworks within which the trust operates.

Annual governance reviews

An essential part of good governance is conducting an annual review of the board’s effectiveness. While the Department for Education (DfE) have softened prescriptive requirements in recent years, trusts must still regularly assess how well their governance arrangements are working.

Typically led by the Chair of Trustees, these reviews should evaluate:

What the board set out to achieve during the year,
How successful it has been,
What skills are needed to maintain or improve effectiveness going forward.

Useful frameworks and guidance for this process are available from the National Governance Association (NGA) and the Confederation of Schools Trusts (CST). Importantly, it is not enough to carry out a review without acting on its findings; the board must clearly document any follow-up actions and schedule the next review.

Clear record-keeping and accountability

In governance, if it’s not in writing, it hasn’t been done. Thorough documentation in trustee reports and minutes is essential. Detailed minutes not only provide a clear record of decisions made but also protect the trust by demonstrating accountability and legal compliance. This is especially important for decisions taken around the board table.

The role of the Chair of Trustees

A strong chair is pivotal to effective governance. This role demands significant time and dedication – it is often like a second job. The chair’s responsibilities include:

Leading the board and managing its effectiveness,
Keeping meetings focused, productive, and time-efficient,
Overseeing the annual governance review process.

Development programmes for chairs, such as those offered by the NGA and CST, can be invaluable in building the skills and confidence needed for this demanding role.

Governance as risk management

Effective governance is fundamentally about managing risk. Trustees, particularly through the audit committee, hold ultimate responsibility for identifying and mitigating risks that could impede the trust’s objectives. However, risk management is an organisation-wide responsibility; everyone involved should be aware of the risks relevant to their role.

There are four common approaches to managing risk:

Treat: Take action to reduce the risk,
Transfer: Shift the risk to a third party (e.g., through insurance),
Tolerate: Accept the risk where it is low or unavoidable,
Terminate: Eliminate the activity causing the risk.

Benefits of proactive risk management include fewer unexpected shocks, financial management, and enhanced use of internal audit for continuous improvement.

What are the responsibilities of academy trustees according to the Companies Act 2006?

Academy trustees are both the charity trustees and company directors of the academy trust, and are therefore responsible for following certain guidance from the Companies Act 2006.

Under this Company Law, directors have a duty to:

act within the powers of the articles
promote the success of the Company
exercise independent judgment
exercise reasonable care, skill and diligence (the ordinary prudent person of business)
avoid conflicts of interest
not to accept benefits from third parties
declare potential conflicts of interest (including close family members)

Charity law responsibilities

The Charity Commission have produced a helpful guide named ‘the essential trustee: what you need to know, what you need to do’. This document outlines the key responsibilities of trustees and be accessed here.

Charity law responsibilities are generally covered by 3 main duties, and these represent a specific legal responsibility a trustee has to follow as they are enshrined in the Charities Act 2022.

These include:

Duty of Compliance

Trustees must ensure compliance with charity law and requirements set by the Charity Commission. This includes preparing accurate reports, annual returns, and accounts, and adhering to the trust’s governing document and charitable objectives. Compliance also extends to other relevant legislation, such as the Education Act and Master Funding Agreement. Trustees must act with integrity, avoiding conflicts of interest and misuse of charity funds or assets.

Duty of Prudence

Trustees must ensure the charity remains solvent and uses its assets responsibly in line with its objectives. This means avoiding activities that could put the charity’s funds, assets, or reputation at undue risk. Extra caution is needed when investing or borrowing funds. Fulfilling this duty helps secure the charity’s long-term viability.

Duty of Care

Trustees should exercise reasonable care and skill, applying their own experience to ensure efficient operation of the charity. Seeking professional advice when risks arise or expert knowledge is required is essential to avoid breaches and protect the charity.

Internal financial controls

Internal financial controls play a crucial role in overseeing the financial performance of a charity and ensuring that funds are used effectively. The main aims of these controls are to safeguard the charity’s assets and manage potential risks such as conflicts of interest, loss, waste, bribery, theft, or fraud.

Additionally, these controls are designed to ensure that financial reporting is reliable and meets the necessary standards, while also ensuring that the charity’s trustees comply with relevant laws and regulations pertaining to finance. By implementing strong internal financial controls, charities can maximise their impact and maintain the trust and confidence of their stakeholders.

According to the Academy Trust Handbook, all academy trusts must have a programme of internal scrutiny to provide independent assurance to the board that its financial and non-financial controls and risk management procedures are operating effectively.

The audit and risk committee is responsible for:

Overseeing and approving the internal scrutiny programme,
Ensuring risks are appropriately addressed,
Reporting to the board on the adequacy of internal control frameworks.

Connected party relationships and ‘at cost’ requirements

Trustees must maintain impartiality in dealings with connected parties. For transparency, related party transactions should be clearly disclosed as required.

Academy trusts must ensure they do not pay more than the cost for goods or services provided by members, trustees, or connected individuals/organisations, except under employment contracts. This ‘at cost’ rule applies to contracts exceeding £2,500 annually. Proper procurement processes and statements of assurance are mandatory. Contracts up to £40,000 must be reported to DfE in advance, while those exceeding £40,000 require prior DfE approval. Please refer here for detailed guidance on DfE related party transactions.

Reserves policies

Every academy trust will have a reserves policy and broadly speaking it will be focused on one of the four following principles:

“our current reserves are too low and this is how we intend to build them up to the required level”
“our reserves are at the right level and this is how we will maintain the status quo”
“we have significant levels or reserves earmarked for specific projects after which they will be held at more normal levels”
“we have more than we need and this is how we intend to go about using them to the best advantage of the Trust and its pupils”

The DfE is increasingly scrutinising trusts with large or earmarked reserves and may require plans for their use in future financial returns.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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