'Uncertainty' over DfE accounts
The National Audit Office (NAO) has issued a rare "adverse opinion" on the Department for Education's accounts, signalling that it does not trust the accuracy of the figures.
There is a substantial level of "error and uncertainty" in the department's financial statements, the public spending watchdog warned.
Since 2012/13, the DfE has brought together the accounts of all academy trusts with its own and that of its executive agencies.
As academies have a different reporting period this has made it difficult to make sense of the figures, it was suggested.
NAO chief Amyas Morse said that the inability of the department to provide statements that give a "true and fair view" of the financial activity of its organisations means that it is not meeting the requirements of Parliament.
"I have provided an adverse opinion on the group financial statements, concluding that they are not true and fair, and that the level of error I have identified is both material and pervasive," he says in his report.
The watchdog says that problems have arisen because the DfE has had to combine the accounts of more than 2,500 bodies, including academy trusts collectively running 3,905 individual academies, its own statements and that of its executive agencies.
The DfE has a different reporting period to academy trusts, with the former due to produce its statements by the end of March, whereas the latter sees its year end on August 31, in line with the school year.
This has left the department facing a significant challenge in preparing and providing accounts that give a fair and true reflection of the financial activity across all bodies over the 12 months and the financial position at the end of the year, the report says.
Mr Morse said: "I recognise the importance of not placing unnecessary additional burdens on the academy sector. But the inability of the Department for Education to prepare financial statements providing a true and fair view of financial activity by its group of bodies means that it is not meeting the accountability requirements of Parliament.
"In particular, I believe that, if the challenge posed by consolidating the accounts of so many bodies and the fact that so many have a different reporting period is to be surmounted, the department and Treasury need to work together to find a solution."
A DfE spokesman said: "We are pleased the NAO has found no material inaccuracies in the financial statements of the department, the EFA and the 3,905 academy trusts included in this report.
"However consolidating the accounts of thousands of academies is an enormous task - a complex procedure and the largest of its kind carried out in the UK - and we recognise the issues identified by the NAO with this process. We take the concerns very seriously.
"We are working closely with the HM Treasury to find a more sustainable solution to this process."
The report says the DfE has made improvements in how it combines accounts, but adds that the number of academies has grown by a further 1,082 during the year, increasing the amount of potential error.
It does note that the NAO did not identify any "material inaccuracies" in the accounts of any individual body making up the DfE's overall accounts.
The last time a major government department was given a similar adverse opinion was in 2004/05 when the Home Office's accounts were disclaimed because they were in too much disorder to be audited.