Over the past few years, a number of academy trust investigations by the Department for Education have reached an uncomfortable conclusion: the warning signs were there, but they were not being challenged.
In several cases, auditors had issued clean opinions while weaknesses in controls, governance, pay arrangements or regularity compliance quietly accumulated beneath the surface. The problem was not always technical failure. More often, it was more basic than that, a lack of professional scepticism, insufficient challenge, and audits that were simply too light touch for the risks being audited.
Those cases matter, not because they are typical, but because they underline a simple truth: a low quality audit does not fail loudly at first. It fails slowly, quietly and expensively.
Against that backdrop, audit quality is no longer an abstract professional debate. It goes directly to trustee protection, public accountability and regulatory confidence.
Operating under pressure, but price is the wrong starting point
School trusts are operating in one of the most challenging financial environments the sector has faced for many years. Funding pressures are real. Pay awards are often not fully funded. Deficits persist in parts of the system. Boards are being asked to do more, evidence more, and deliver more with fewer resources.
In that context, it is entirely reasonable that audit fees are scrutinised closely.
But when it comes to external audit, price alone is a poor proxy for value.
Audit quality has tangible consequences. It shapes the strength of governance, influences regulatory confidence and, in the most serious cases, determines whether issues are identified early or escalate into intervention and reputational damage. In the academy sector, you rarely get more than you pay for and when an audit fee looks too good to be true, it usually is.
Why audit quality matters more than ever
The regulatory environment for school trusts has shifted decisively. Through the Academies Accounts Direction, the Academy Trust Handbook and the Framework and guide for external auditors and reporting accountants of trusts, the Department for Education has made its expectations clear.
Assurance must be:
- Evidence led,
- professionally sceptical, and
- robust in areas of judgement and sensitivity.
Crucially, auditors are expected to challenge management where appropriate and trustees should expect nothing less.
Auditors are no longer expected to accept explanations at face value. Where approvals, documentation or rationale are missing, the consequences are increasingly clear: enhanced reporting, modified conclusions or regulatory escalation.
Against this backdrop, a low cost audit that relies on minimal challenge or junior resource does not manage risk. It creates it.
What actually defines a high quality school trust audit?
Audit quality is often talked about, but less often clearly defined. In practice, the characteristics are well understood.
Sector expertise, not just technical competence
Academy audits sit at the intersection of charity law, company law, public funds and education specific regulation. A quality audit team understands:
- the Academies Accounts Direction,
- the Academy Trust Handbook,
- DfE regularity expectations, and
- how these link to International Standards on Auditing (UK).
This is not knowledge that can be learned on the job mid audit. High quality academy audits depend on continuity, sector specialism and sustained investment in training and regulatory understanding.
The right people, at the right level
Audit quality depends heavily on who performs and reviews the work. A well priced but under resourced audit often means:
- limited partner involvement,
- over reliance on inexperienced staff, and
- insufficient challenge of management judgement.
By contrast, quality audits are characterised by early partner engagement, strong manager review and technical input on complex or sensitive areas such as senior remuneration, special severance payments, related parties and going concern and financial resilience.
Professional scepticism in action
Professional scepticism is not about being adversarial; it is about being curious, informed and willing to challenge where evidence does not align with explanation.
DfE expectations increasingly require auditors to probe:
- senior pay structures,
- accruals and timing of remuneration,
- whether transactions are novel, contentious or repercussive,
- whether transactions are in accordance with delegated authority,
- off‑payroll and consultancy arrangements, and
- exit payments and compliance with approval thresholds.
A “light‑touch” audit does not protect trustees. It exposes them.
Robust quality management and review
High quality audit firms invest in:
- internal quality reviews,
- compliance with ISQM 1, and
- continuous improvement driven by inspection findings and sector learning.
This infrastructure costs money, but it underpins reliable assurance and defensible conclusions.
The commercial reality: funding is tight, but shortcuts cost more
Boards are right to recognise that funding, in real terms, is under pressure and savings are being sought across trusts. External audit is not immune from that conversation.
The false economy arises where audit fees are driven so low that:
- risk assessment becomes superficial,
- audit work is scaled back below what risk requires, or
- issues emerge late, when options are limited.
In those cases, the real costs surface later:
- additional fees,
- management time diverted to firefighting,
- regulatory attention, or
- loss of confidence from stakeholders.
Put simply: the cheapest audit is rarely the most economical. So what does good actually look like?
By this point, the pattern is clear. Low quality audits do not usually fail through obvious errors. They fail by not asking the second question, not pressing for evidence, and not escalating discomfort. Over time, that silence becomes risk.
So if price alone is not the right starting point, what should trustees and audit committees actually expect from a high quality audit?
A high quality audit is not defined by price or process alone. It is defined by how effectively it protects trustees, supports governance and withstands regulatory scrutiny. In practice, that means:
- Appropriate professional judgement and scepticism
Auditors actively challenge assumptions, estimates and explanations, particularly in judgemental, complex and regularity sensitive areas. - A strong understanding of the organisation and its regulatory environment
Including governance arrangements, funding flows, internal controls and academy specific regulation. - Clear, risk based audit planning
Risks of material misstatement and irregularity are identified early and genuinely drive the audit approach. - Audit procedures that respond directly to risk
Work is focused where exposure is greatest and supported by sufficient, appropriate evidence, not checklist compliance. - Experienced teams with meaningful senior involvement
Key judgements are led, reviewed and challenged by senior audit staff with sector expertise. - Ongoing, sector specific training
Audit teams receive structured training on auditing and ethical standards and education specific guidance, not generic audit knowledge alone. - Continuity of audit teams
Allowing institutional knowledge to build year on year, strengthening insight, challenge and efficiency. - Clear communication with governors and audit committees
Audit risks, judgements and findings are explained transparently and in plain language. - Strong quality control and quality management
Engagement level review and firm wide monitoring underpin reliable, defensible conclusions. - Insight alongside assurance
A quality audit surfaces emerging risks, regulatory developments and areas for improvement, not just compliance.
External audit is not a commodity purchase. For academy trusts, it is a cornerstone of public accountability and a key line of defence for trustees themselves.
In a sector facing sustained scrutiny and diminishing tolerance for weak assurance, audit quality is essential, not optional. It gives Boards confidence to govern, regulators confidence to rely, and trusts the opportunity to address issues early rather than manage failure later.
Cost pressure is unavoidable. Cutting corners is not.
Trusts quite literally pay for what they get and when an audit fee looks unrealistically low, the most important question is not what is being saved, but what protection is being given up.
- Richard Lewis is Head of FE, Skills, and Academies at RSM
We welcome perspectives from a diverse range of guest contributors. The opinions expressed in blogs are the views of the author(s), and should not be read as CST guidance or CST’s position.
