Academies: how to choose your auditor


All trusts are required to have their accounts audited and selecting the right auditor is very important. Trusts must be assured that their auditor not only has the right sector experience and financial knowledge, but also the necessary expertise and capacity to support the trust effectively and be able to meet its needs.

The 2021 Academy Trust Handbook provides guidance on the role of the audit committee in overseeing the audit process and evaluating the auditor’s performance. For the first time guidance is also provided on the frequency of tendering external audit.

While the Handbook refers to at least every five years, this is not a ‘must’ requirement, the ‘should’ inferring that this is best practice guidance only. It continues to be the decision of those charged with governance as to when and how frequently to go out to tender.

This is reiterated in the Education and Skills Funding Agency’s (ESFA) guidance on ‘Choosing an external auditor for an academy trust’, which was updated on 4 August 2021 and provides a useful steer on key considerations.

The guidance makes it clear that “There are no set rules as to how often you re-tender for audit services”. It notes that “Good auditing requires a good understanding of the audited entity, so it can be counter-productive to change auditor too often.” And that the process can be very time consuming for both the trust and the audit firms involved. It concludes by saying “The main thing is to ensure you are getting the best out of your auditor for your needs.”

A number of trusts will have been engaged with their auditors for a long time and potentially since the trust was formed and may, therefore, be considering going to tender, if for no other reason than to sense check the fees they are charged and the service provided.

Assessing your current auditor

The Trust Handbook requires audit and risk committees to evaluate the performance of their auditor as part of the audit process. Below are the key questions committees should consider.

  • Does your auditor have sufficient and demonstrable sector expertise?
  • Auditor understanding - Does your auditor take time to understand the needs of the trust and its activities? Have they taken time to explain any issues when they have arisen? Did they cater for your needs?
  • How was the audit process? Did the audit run smoothly and to the agreed timetable?
  • If there were issues arising, were they communicated on a timely basis and to the right people within the academy trust?
  • Are you satisfied with the quality of your auditor’s comments and recommendations arising from their work and findings, particularly in relation to key areas and significant risks?
  • Are you satisfied with the competency and integrity of the audit partner and their team and their ability to provide management with sufficient and robust challenge where appropriate? Were the audit staff thorough in their work and how was their interaction with academy trust staff and Trustees?
  • Was the partner engaged in the audit process and available to attend key committee and other meetings?
  • Value for money - were the audit fees charged in line with expectations? Were there any unexpected additional costs?
  • How has the auditor used technology as part of the audit process?

There are three broad themes underpinning the questions, experience, communication and quality.

It is important that your auditor has the right experience both in terms of sector knowledge but also expertise. As Trustees you need to be reassured that your auditor has the right resources and technical understanding to be able to support and advice on key issues impacting the trust? Was this provided in the year just audited and are you confident going forward when considering future plans for the trust?

Good communication is vital. Management and Trustees should feel comfortable in being able to pick up the phone and talking to their auditor. Your auditor should also be communicating with you throughout the year, providing guidance on emerging issues and discussing matters with you regarding the trust itself as they arise. If your only communication with your auditors is at the planning stage after the year end it may mean that issues are not dealt with promptly and the information you have been using throughout the year is incorrect.

Similarly, during the audit process itself, your auditor should be engaging with you promptly and explaining the implications of matters as they arise and the solutions available.

Trustees need to be happy with the quality of the audit. Is the audit process sufficiently thorough and robust, the audit team knowledgeable and asking the right questions? Are the auditors prepared to ask the difficult questions and challenge management and Trustees where required? How engaged is the audit partner and are they visible during the audit process and at key meetings? Trusts must consider value for money when appointing auditors but the focus must not be on just fees. Audit quality and the additional value your auditor brings must be given a high weighting. Saving money in the short term can result in higher costs later on, a less robust audit and potentially a weak and inefficient audit process leading to significant amounts of additional time being required by the trust.

If your auditor is addressing the above points there may be no reason to go to tender other than for good practice. In such situations, trusts may wish to first of all undertake a desktop review, speaking to other trusts and reviewing financial statements of other similar sized trusts, to see if the quality, service and price of your audit are broadly in line.

Things to consider when looking for a new auditor

If a decision is taken to go out to tender, the ESFA provides guidance on matters to consider when compiling a shortlist and evaluating. This is in addition to the matters highlighted above. A number of considerations have been listed below.

Size and complexity of the academy trust - Is the trust a single academy trust or a multi academy trust?

The more complex the trust the higher the potential risk. Therefore, the auditor being considered should have demonstrable knowledge of trusts that are similar to yours. For example, a firm dealing primarily with single academy trusts is unlikely to be the right firm for a large, growing multi-academy trust. Ask the audit firm for a list of the trusts they audit which are similar to yours and follow up with references. A good firm should be happy to introduce you to their clients. Also speak to your contacts, ask for their recommendations and also similar sized trusts and ask them about their auditors.

Are there any nuances within the trust? For example, PFI contracts, inclusion of a special school, boarding provision, trading subsidiaries and so on, where the experience of particular accountancy firms may be of benefit.

Experience in these areas will mean the auditor is able to conduct their audit more robustly and also support you more fully. If they do not have the relevant experience they will effectively be learning from you! Generally speaking the more partners in the firm that operate in the sector the better as this will allow your audit partner to draw upon the firm’s knowledge from other clients, to supplement their own experiences.

Local or national firm - Would a local or national firm suit the needs of the academy trust better? Does the trust have a wide geographical spread which a national firm would be better placed to advise?

A Multi-academy Trust with hubs and schools across the country will in general be better served by a national firm. Check how National the firm really is and how closely they work together, some firms operate under the same name but are not closely interlinked. If they do not work together regularly the benefits of using them as a national firm will be much reduced.

Experience of the audit firm - Market presence, Does the firm have a good reputation? Has the firm established itself as reliable and knowledgeable, particularly within the academy sector? Capacity and resources to take on and service new clients

This is a key question. Many firms will claim to have sector knowledge, but test this. Ask for the firm’s credentials, read what they are saying on social media and their website. Ask your own contacts – are they well known? Again ask about their existing clients and for references. How long has the firm been operating in the sector? A firm which has been involved in the sector since it began will have built up knowledge and contacts which should not be underestimated.

It is useful to gain an understanding of the total partner and staff resource of the firm as well as more specifically the numbers of partners and staff dealing with academies. Whilst good firms will be busy they should be able to commit to a timetable and be able to provide the right mix of staff who have the right training.

Will the firm be able to offer a sufficient level of support to the academy trust, both during the audit and throughout the year?

The academy trust should be able to utilise the expertise of the auditors for any ad-hoc accounting queries. Subject to the complexity/frequency of the queries, many firms will provide such support without additional charge. You need to be clear on this so that when you are assessing fees you are comparing like with like. Check references and speak to contacts to check that what a firm is telling you is supported by what they actually do.

Quality assurance and independence - Ask the firm about its overall approach to quality assurance and how it deals with potential conflicts of interest.

These are important points to cover and an area of increased focus and expectation within the audit sector. Audit quality should be uppermost in the thoughts of both the auditor and the trust. Where available request and review the Firm’s transparency report.

If you would like to discuss this issue further then please contact Darren Rigden or your usual Crowe contact.


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Darren Rigden
Darren Rigden
Partner, Audit and Business Solutions