2025 to 2026: what the findings tell us, and the ethical questions they raise

Introduction

On 11 September 2026 the Department for Education published its annual account of what its assurance work found across the academy sector. The report draws on four strands: the review of trusts’ audited financial statements for 2024 to 2025, financial management and governance reviews, funding audits, and the schools resource management self-assessment checklist. Findings on early years funding audits are to be published separately.

The document is not a league table and it names no trusts. Its purpose is diagnostic: it sets out where things went wrong often enough to be worth flagging, so that boards can test themselves against the pattern. Read that way, it is as much a statement about governance culture as about accounting technique. Almost every recurring issue in it has an ethical dimension, because academy trusts are charitable companies spending public money on children’s education, and the rules being breached exist to protect exactly that.

1. The headline picture: broadly sound, with a stubborn tail

The sector-level numbers are reassuring. Just under 97% of trusts filed their 2024 to 2025 financial statements by the 31 December 2025 deadline, up slightly on the previous year. Qualified audit opinions stayed at 0.6%. Going concern and material uncertainty opinions fell from 13.4% to 10.7%. Modified regularity conclusions eased a little, from 7.9% to 7.6%. In the governance reviews, 98% of trusts visited were judged fully compliant, good or satisfactory against the Academy Trust Handbook, the same as last year.

So the story is not one of widespread failure. It is a story about a persistent minority, and about the specific places where good intentions break down. Five trusts had still not filed audited accounts for 2024 to 2025 at all. That is a small number with a disproportionate significance: filing accounts is the most basic act of public accountability a trust performs.

Where regularity conclusions were modified

Regularity is the auditor’s judgement on whether funds were used for the purposes Parliament intended and in line with the Handbook. The distribution of reasons is the most revealing table in the report.

Two categories dominate and have done so for years: the quality of internal financial management and reporting, and related party transactions. Three movements are worth pausing over. Human resources and payroll appears for the first time, with 16 instances. Non-contractual payments, severance and honoraria have more than doubled. And breaches of delegated powers, together with the absence of any independent check on controls, have fallen to nil, which suggests some structural weaknesses genuinely are being designed out.

2. The recurring themes

2.1 Internal financial management and reporting

The largest single category, and growing. The specific faults cited are the production and circulation of management accounts, weak internal control frameworks, and missed publication or submission requirements, including website content, information held on Get Information About Schools, and DfE deadlines.

None of this is exotic. It is the ordinary machinery by which a board can see what is happening to its money in time to act. Where management accounts are late, thin or never reach trustees, the board is not governing; it is receiving history. The ethical weight here sits in the consequences rather than the act: a board that cannot see a deficit forming cannot protect the staffing and provision that pupils depend on.

2.2 Related party transactions and conflicts of interest

The second largest category, essentially flat year on year at 46 instances. The failures divide into two kinds. First, process failures: not obtaining the DfE’s prior approval before entering a relevant transaction worth £40,000 or more, and not reporting transactions below that threshold. Second, and more serious, trusts failing to manage conflicts of interest properly through their register of business and pecuniary interests.

This is the clearest ethical fault line in the report. Related party rules exist because trustees are volunteers drawn from local business and professional communities, and their networks are often a genuine asset. The rules do not forbid dealing with connected parties; they require transparency, at cost, and independent decision-making. A failure to declare or to step aside is not a technical slip. It is the point at which a trustee’s duty to the charity and their own interest are allowed to sit unexamined in the same room. Even where no money is lost, the appearance of self-dealing corrodes confidence among staff, parents and the wider public, and that confidence is the thing that makes voluntary governance work at all.

The governance reviews reinforce the point from another angle: maintaining and publishing the register of trustees’ business and pecuniary interests was listed as an area where trusts need to develop. Declaration without publication only satisfies half the obligation.

2.3 Human resources and payroll: a new entry

Sixteen modifications arose from HR and payroll, a category new enough that it has no prior-year comparator. Two causes are named: off-payroll payment arrangements for chief executives or chief financial officers, and, more starkly, no accounting officer or chief financial officer in place at all.

Off-payroll arrangements for the most senior post holders are a long-standing concern across the public sector. Whatever the commercial rationale, paying a chief executive through a personal service company shifts tax risk, weakens the line of personal accountability that the accounting officer role is built on, and looks, to a reasonable outside observer, like an arrangement that suits the individual rather than the charity.

The absence of an accounting officer or chief financial officer is more fundamental still. The accounting officer holds a personal responsibility for regularity, propriety and value for money, and answers for it. A trust operating without one has no identifiable person carrying that duty. Vacancies happen, particularly in small trusts and during periods of turbulence, but leaving the post unfilled is a governance decision with ethical consequences, not an administrative gap.

2.4 Internal scrutiny that is thin or absent

The most common issue found in the annual internal scrutiny reports was that no internal scrutiny had taken place. Where reports were submitted, quality varied widely and some contained only minimal information. Thirteen regularity modifications related to internal scrutiny, and the governance reviews separately flagged both the delivery of an appropriate scrutiny programme and the oversight of whether recommendations are acted on.

Internal scrutiny is a trust’s own check on itself, commissioned by trustees and reporting to them. Doing none of it, or doing it and then not following through on what it finds, means a board is choosing not to know. That choice is harder to defend than an honest mistake, because the information was available for the asking. The governance reviews also flagged the establishment of an audit and risk committee, and the regular review of risk registers, as areas needing development, which points at the same underlying habit: a board that treats assurance as a filing exercise rather than a source of uncomfortable information.

2.5 Propriety in spending: alcohol, severance and fraud

Three smaller categories carry an ethical charge out of proportion to their numbers.

• Alcohol produced nine modifications, down sharply from 21. The underlying rule is straightforward: public money for educating children should not be spent on alcohol. The fall is real progress, but the category still exists.
• Non-contractual payments, severance and honoraria rose from five to 13, the sharpest proportional increase in the table. These are payments a trust was not obliged to make. They demand a documented public interest justification and, above certain thresholds, departmental approval. They are also the payments most often associated with settling a difficult departure quietly, which raises the question of what else is being settled at the same time.
• Fraud or theft held steady at ten instances. Detection is not the same as incidence, and a sector in which no fraud was ever reported would be a sector with weak detection rather than perfect honesty. Still, ten cases represent real money diverted from children’s education.

2.6 Funding accuracy: a marked deterioration in pupil premium

Funding audits test whether census and eligibility data were accurate, because those data determine how much money a school receives. The report describes error levels as still relatively low, and in absolute terms they are. But the direction of travel deserves more attention than the framing gives it.

Every rate roughly doubled or worse, and the pupil premium rate rose more than fourfold. The stated cause is insufficient evidence to support free school meals entitlement, alongside a rise in errors on the post looked-after children factor, where schools had not retained adequate evidence of eligibility.

This is the theme with the most direct ethical consequence for pupils. Pupil premium and the post looked-after children factor are the parts of the funding system explicitly designed to direct extra resource to the most disadvantaged children in the country. Errors here are not neutral. If entitlement cannot be evidenced, either money has flowed where it was not due, taking from a finite national pot that other disadvantaged children draw on, or, just as troubling, the record keeping around vulnerable pupils has slipped in a way that may mean the support attached to that status has slipped too. Record keeping about looked-after and previously looked-after children is not only a funding control; it is part of how a school keeps track of pupils who need it most.

2.7 Transparency and publication duties

Several findings across different strands point at the same behaviour: trusts complying privately but not publicly. Website publication requirements appear among the financial reporting failures. The register of interests appears among the governance development areas. And in the validation of self-assessment checklists, one of the two main areas where trusts did not assess themselves as compliant was publishing the number of employees whose total benefits exceeded £100,000.

Publication duties are the sector’s substitute for the local democratic accountability that maintained schools have through their local authority. Parents cannot attend a trust board meeting, but they can read its accounts, its register of interests and its senior pay disclosures. Where those are absent, accountability rests entirely on the regulator, which is a thin form of it. Non-publication of high pay is particularly sensitive: it is the disclosure most likely to attract criticism and therefore the one whose omission most readily looks deliberate, whether or not it is.

2.8 Financial fragility

Going concern and material uncertainty opinions fell overall, but the fall is almost entirely accounted for by fewer trusts closing or transferring rather than by improved financial health. Opinions driven by financial health barely moved, from 3.2% to 3.0%, and financial health as a reason for regularity modification rose from 11 to 13. Alongside this, the governance reviews identified budget monitoring, the completeness of management accounts, board action to maintain financial viability, investment policy and investment management as development areas.

Financial distress in a trust is not only a technical problem. It narrows the options available to leaders and creates pressure to make decisions, on staffing, on curriculum breadth, on estate maintenance, that they would not otherwise make. Boards that monitor budgets poorly tend to discover this late, when the ethical choices have already become harder.

2.9 Late submission and the self-assessment checklist

The schools resource management self-assessment checklist had the weakest deadline performance of any return: 79.8% submitted by 13 March 2026, down from 87.8% the previous year, although 99.5% had been received by publication. The DfE states plainly that it follows up late submission and takes it into account when assessing trust risk.

An eight point fall in on-time submission for a self-assessment tool, when statutory accounts filing improved, suggests trusts are triaging their obligations by perceived consequence rather than by value. That is understandable behaviour in stretched finance teams, but it inverts the purpose of the exercise: the checklist is the return designed to benefit the trust itself rather than the department.

The validation exercise also produced a quieter finding. The other main area where trusts did not self-assess as compliant was trustees being able to confirm there were no outstanding matters from audit reports. In other words, recommendations are made and not closed out. The same pattern appears in the internal scrutiny findings, which suggests it is systemic rather than incidental.

3. Reading the findings ethically

It would be easy to treat all of this as compliance housekeeping. The more useful reading is that the recurring failures cluster around a small number of ethical duties, and that they map closely onto the Seven Principles of Public Life, which apply to academy trustees as holders of public office.

Stewardship

Trusts hold public money on trust for children they will mostly never meet. Weak management accounts, unmonitored budgets, unevidenced funding claims and money spent on alcohol are all, at root, failures of stewardship rather than of bookkeeping. The test is not whether a rule was broken but whether the resource reached the purpose.

Integrity and objectivity

The related party findings, the conflicts of interest findings and the off-payroll arrangements for senior staff all sit here. What these have in common is a moment where personal interest and institutional duty intersect, and the governance machinery designed to separate them was not used. Declaring an interest and withdrawing from a decision costs a trustee nothing except convenience; the alternative costs the trust its credibility.

Openness

Unpublished registers, missing senior pay disclosures and website non-compliance are failures of openness. They matter more in the academy sector than they would elsewhere, because publication is one of the few routes by which parents and staff can see how a trust operates.

Accountability

The absence of an accounting officer or chief financial officer, non-filing of accounts, and unresolved audit recommendations all represent accountability that has been deferred or left unassigned. Accountability only works if a named person carries it and if findings are closed rather than noted.

Honesty

Self-assessment depends on candour. The validation exercise comparing review findings with trusts’ own checklist responses exists precisely because self-reporting can drift towards the flattering. That the exercise found gaps is a reminder that assurance systems should be designed on the assumption of optimism rather than the assumption of bad faith, and that boards should look hardest at the answers they were most comfortable giving.

Equity

The pupil premium and post looked-after children findings raise a distinct issue that the other themes do not. Where evidence of entitlement is missing, the risk is not just financial irregularity but a failure of the redistributive purpose that this funding exists to serve. Of everything in the report, this is the finding with the most direct bearing on individual children.

Leadership and culture

The pattern across internal scrutiny, risk registers, audit committees and outstanding audit recommendations is consistent enough to suggest something cultural. These are all mechanisms for generating unwelcome information. A board that under-invests in all of them at once is not short of process; it is short of appetite for challenge. That is a leadership question rather than a technical one, and it is not fixed by a new template.

4. Questions a board might usefully ask itself

• When did we last receive management accounts, and were they complete enough to act on?
• Is our register of business and pecuniary interests current, complete for all trustees and senior staff, and actually published on our website?
• Has any related party transaction this year approached £40,000, and did we seek prior approval? Have we reported those below the threshold?
• Are any senior post holders, particularly the accounting officer or chief financial officer, paid off-payroll, and can we justify that publicly?
• Do we have an accounting officer and a chief financial officer in post, and does the accounting officer understand the personal nature of the role?
• What internal scrutiny took place this year, what did it find, and how many of its recommendations remain open?
• Do we have a functioning audit and risk committee covering non-financial as well as financial risk, and when was the risk register last genuinely reviewed rather than noted?
• Can every free school meals and post looked-after children claim be evidenced from records we hold now, not records we could reconstruct?
• Have we published our senior pay disclosure for employees with benefits over £100,000?
• Have we made any non-contractual, severance or honorarium payment this year, and is the public interest justification documented?

Source: Department for Education, Common issues identified from DfE’s assurance work: 2025 to 2026, corporate report published 11 September 2026. Figures quoted are as reported by the department. Contains public sector information licensed under the Open Government Licence v3.0.