As academies around the country sign off their 2012/13 accounts, some will be receiving management letters from their auditors flagging up gaps in risk management processes. These cannot be ignored.
The identification, assessment and reporting of risks forms an important element of running an academy and an essential part of the governance statement in the annual report. It is an area that auditors will examine.
“Even where auditors have not honed in on risk management issues this year, they will do so in future,” says Bill Mitchell, a senior manager in Moore Stephens’ Governance, Risk & Assurance team. “Auditors are laying down a marker to focus more intently on the issue once an academy has become more established. Whenever auditors do raise a point about risk management, academies must take note. Sound risk management isn’t just a matter of compliance; it's is a vital requirement for running a sound business.”
Academies face many risks: from financial mismanagement to fraud, from a decline in learning standards, poor Ofsted results to IT, HR and safeguarding issues. “A major problem in any of these areas can cause substantial reputational damage,” Bill warns. “That in turn can result in falling pupil numbers, reduced income from the Education Funding Agency and a tougher challenge to balance the books.”
Academies therefore need to have risk registers and risk management processes in place – and be able to demonstrate clearly what steps they have taken to mitigate the risks they face. “Where academies are part of a federation or group, this risk information needs to be rolled up from each entity to be considered also at the group level,” says Bill. “This can be a challenge.”
While the Charity Commission provides some advice on the types of risk a charity might face, it does not provide specific guidance for schools and academies. What academies need is a low-cost, easy-to-use, targeted solution to help them identify, monitor and report on their risks and the actions taken to mitigate them.
“At Moore Stephens, we have developed a version of Rhiza, our secure online risk management software solution,” says Bill, a school governor himself. “Rhiza gives a clear and simple structure to capturing, evaluating and reporting on risks. We provide a version of Rhiza which is especially designed for academies and guides them on the risks that they are likely to face, based on our wide knowledge of the academy sector. It enables academies to take control of their risk management processes, without needing to rely on expensive external support.”
For more information on risk management and Rhiza, please get in touch.
Governance, risk & assurance