Internal Audit 2024-25 - a year in review | PLR Advisory

Internal Audit 2024-25 - a year in review

5th Sep 2025

Is there ever a year where the academy sector does not find it to be a challenging one? As usual, 2024-25 brought new challenges as well as the familiar perennial ones. But what didn’t change was the need to be aware of these challenges and have a plan for how to deal with them.

Events around the world continue to impact on the financial pressures that the UK is facing. This will no doubt continue as we all fear what news the Budget will bring at the end of November both personally and nationally.

Audit committees and boards should be more aware than ever that all of the above represents an ever-increasing workload for a finite senior management team. This is where an internal audit can help by providing assurance on most risks facing academy trusts. Let them help.

Risks facing the sector

Over the last few years, the greatest headache for Trusts has been their ability to recruit and retain staff at all levels. This continued in 2024-25 and will no doubt continue, even with the pay increases that have been awarded to the sector.

We also saw the expected change in government. This brought hope to the sector of “real change”, but so far, the only real change has been a timelier communication of pay increase announcements. Funding continues to remain tight, administration has been reduced (no more Education and Skills Funding Agency) and continued academisation of the sector appears to have hit a staggering halt. Strategic planning, therefore, is a real challenge and is more a multi-scenario contingency planning exercise.

Financial sustainability and staffing remain the top risks facing the sector. Funding is not keeping pace with rising costs, as schools face increased staff salaries that are not fully funded, increasing SEND challenges and crippling estates. For some, falling pupil numbers exacerbate this.

Workload pressures alongside SEND challenges are making recruitment and retention even more challenging, even with increased salaries. This can in turn lead to long-term absences in key roles, often impacting staff wellbeing even further.

An increasing risk over the past year has been meeting the needs of students with SEND. This presents significant challenges. The rise in demand for SEND provision is not faltering and the funding to meet this is insufficient. Trusts are also seeing a real lack of sufficient specialist provision for SEND pupils at all levels.

The government are looking to reform SEND, but from a school perspective, that reform appears to be a reduction in local authority funding and late payments. This creates real financial planning and cash flow management challenges. The sector feels the current SEND provision is “not working for anyone”.

We saw Artificial Intelligence (AI) really come to the fore in 2024-25, and this has seemingly also heightened the need for cyber security and ICT provision to be more robust. ICT infrastructure across many schools needs investment, but with the challenges mentioned above, this is a delicate balancing act. We all want to make use of the latest technology and reduce workload, but AI is still in its infancy and can be harmful if misused.

The crippling school estate is still here. Many schools who faced a RAAC crisis nearly two years ago are still awaiting “lift off” over either building replacement or alternative long-term solutions.

Other risks being featured in discussions and risk registers include:

Reputational damage – Poor Ofsted ratings, safeguarding incidents and financial stability all contributing.
Succession planning – Does your school have an effective plan? Are you susceptible to the loss of key staff members? Is there a conveyor belt of top talent coming through?
Industrial action – Pay increases may have helped stave off more walk-outs but the threat remains and could disrupt school operations and student learning.
Governance and accountability – The new Ofsted inspection framework is leading to more adaptation for schools. It could also be argued that with a reduced administration in the government, there is perhaps less likelihood of significant oversight in the academies sector. Therefore, is there increased risk of things “going wrong”?

Actions that could mitigate the risks

Strong leadership is needed, more than ever, to navigate these risks and challenges safely. Getting the balance right between identifying, assessing and addressing these risks, being prudent with expenditure and ensuring that the trust can continue to deliver on its strategic aims and charitable purpose is not a simple task.

“When we all help each other out, when we stand together, we are stronger together” – Hilary Clinton.

Exploring collaborative solutions could help. Trusts can benefit from collaborating and sharing best practices to address common challenges and improve efficiencies.

Continue to push for increased and consistent funding. Trusts need to collectively advocate that funding increases in line with rising costs. Engaging with policymakers to address concerns can help.

Look to ensure (as far as possible with budget constraints) that ICT infrastructure investment is made. Increase staff training regarding and awareness of cyber-attacks and data breaches.

Implement strategies to improve and prioritise staff wellbeing. Where possible, reduce workload pressures, support development and retain high-quality employees.

Risks that are here but not on the radar

By the end of 2025, all schools need to have in place a Climate Action Plan and a sustainability lead. Trusts are going to need to invest further in their built environment as well as effecting changes in behaviour to limit adverse climate change effects. Trusts need to recognise that they have a vital role to play in equipping tomorrow’s workforce with the skills, behaviours and expertise for a sustainable future.

Gen Z are those now looking to establish families. They have a real passion around climate change. Can you demonstrate you care as much as them? Will they want their children to attend a school lacking an environment that thinks and acts upon climate change?

We’ve already mentioned AI. It is expanding far quicker than we can learn about it. This expansion poses significant security threats as well as transformative opportunities for schools. Balancing these risks and opportunities is crucial for schools to harness its potential while safeguarding their communities.

Common themes arising from our reviews

The results of internal scrutiny visits we have conducted across our clients over the last year have indicated that, perhaps, with all the challenges the sector has been facing in recent years, the sector is seeing some burn-out from staff. Areas that had shown real improvement in recent years are now starting to show cracks appearing.

These included:

Payroll and HR – We flagged right to work checks as an area of concern last year and we continue to see this. Retainment of evidence for decision making around recruitment is also slipping—interview notes, job adverts, internal approval to advertise, etc.
Procurement – Trusts are not always following their own financial regulations and not undertaking value for money checks. Employees are using charge cards but also scanning their own personal loyalty cards to benefit personally.
Control accounts – Not all balance sheet accounts are being clearly reconciled and evidenced as such during the month end cycle.
Cashflow forecasts not reflecting a rolling 12-month forecast and only running to the end of the academic year.
Cyber and ICT – Departments are not documenting key procedures to keep schools safe, albeit they are taking place. But if staff are absent, will others know the procedure to keep the school safe?

The sector’s risk profile will continue to expand and widen. This will provide additional challenges to both management teams and boards to manage alongside the day-to-day core business. Having clarity and visibility over these risks while ensuring you can prepare and mitigate against them is going to be key. Draw on your internal auditors as to how best they can support you in obtaining assurance your mitigations are in place.

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