Academy trust expenses claims: The dos and don’ts

It was hard not to be shocked by the Dispatches/Observer investigation into academy trust expenses and perks.

The Department for Education (DfE) states that academy trusts are independent charitable companies. They are also classified by the Office for National Statistics as central government public sector bodies.

While academies are responsible for their own financial management, they are subject to public standards of accountability. It follows that expenses and benefits for senior staff should be proportionate and take account of the Academies Financial Handbook.

Academy trusts should set out in a policy the expenses and benefits that they will pay employees and trustees. Having regard to government policy can be useful for deciding what is deemed appropriate in the public sector.

The Education Funding Agency (EFA) also publishes academy trust financial management and governance reports, which are always worth reading as they give insight into what is considered appropriate.

So how does an academy trust frame its policies and procedures to avoid public criticism?

Staff Travel:

– The expenses policy should set an expectation that rail travel will be second class or the most cost effective way to travel, rather than simply specifying second class standard. Most travel can be pre-booked these days and the fare will be significantly less than buying a ticket at the station on the day of departure. First class is occasionally less expensive but the policy should set out when it might be appropriate and what evidence is required to justify.

– Similarly the use of taxis should be set out and require prior authorisation. Availability and ease of use of public transport should be a factor as should time of day.

– HM Revenue and Customs sets out mileage rates for business use of an employee’s care along with what can be claimed and what needs reporting to HMRC. It makes sense to use these rates when employees need to claim for essential travel.

– In considering whether a company car is appropriate, look at the likely distances to be travelled and be aware of the tax implications. Typically a company car is deemed an employee benefit and there is a deemed value which is taxed. If the employer is maintaining and covering tax/insurance the benefit may well outweigh the tax paid. A company car should not be confused with a salary sacrifice car scheme.

Subsistence:

– Academy trusts should not reimburse the cost of alcohol.

– Consider setting limits for the cost of necessary overnight accommodation and for the cost of meals.

– Clarify that additional personal expenses will not be reimbursed (room service, newspapers etc).

Mobile Phones and Broadband:

– Some employees may need a work mobile phone. The expenses policy should set out who these employees are likely to be and what the phone should be used for. Other staff may occasionally use their mobile phone for work purposes. There is no reason for an employee to make a claim unless they have exceeded their monthly allowance and have itemised evidence of this.

– The Observer article specifically mentioned one trust that pays for the CEO’s broadband at their holiday home. Again, HMRC provides useful guidance about expenses for home working which specifically says you can’t claim for things you use for both private and business use (e.g. broadband). Furthermore, an employer does not have to provide reimbursement for voluntary home-working.

Generally, employees and trustees should always be asked to provide original receipts for expenses claims. Payment cards are best avoided but if the academy does use them, there should be clear guidelines about use and a system for reconciling and authorising transactions each month.

The trust’s financial processes should be robust enough to ensure claims are properly authorised and that duplicate or excessive claims can be flagged. Receipts should be scrutinised before authorisation and claims should be rejected if there is no proof of payment attached.

No academy trust should want its expenses claims laid bare and open to criticism. Having some key principles and simple controls will avoid this.