BBC News

Concern over finances at academy provider

By Sean Coughlan
BBC News education correspondent

image copyrightThinkstock
image captionThe Education Funding Agency has raised a series of financial concerns

An investigation into an academy provider has found "highly unusual" financial practices.

The Education Funding Agency report highlights concerns about the Education Fellowship Trust.

It questions governors' expenses of £45,000, a trip to New York and unadvertised jobs for family members.

The chief executive has since stepped down and the report notes that the new chief is "committed to improving the performance of the academies".

In response to the review, the Northampton-based trust said that it welcomed the "guidance given by the Education Funding Agency".

And it says the report describes the situation before "significant structural changes were made" and that there is "clear evidence" of a "positive change in the operation".

'Significant breaches'

The Education Funding Agency, the agency delivering public funding to academies, carried out a review of financial management and governance at the Education Fellowship Trust, up to August 2013.

From 1 September 2013, the report says the trust had restructured with the chief executive officer stepping down.

The report raises a series of concerns about the trust before the restructuring, which paid its chairman £90,000 per year.

The concerns included "transactions with companies in which the chairman has a controlling interest".

The trust, with a turnover of £10m per year, was found to have committed "significant breaches of the Companies Act 2006, Charity Commission regulations and the Academies Financial Handbook".

The report, redacted in places, makes 28 separate recommendations.

The first academies converted to become part of the trust in October 2012 and the website lists 16 schools, mostly in Northamptonshire and Wiltshire.

The report highlights particular spending concerns, including expenses of £45,000 by two trustees and warned of "very high levels of private car usage, travel and subsistence and accommodation costs".

It also raised concerns about the appointment of support staff.

"We found that a number of the appointed head office staff were family members of either trustees or senior members of staff," says the report.

There had been no "competition or advertising" of the posts, which included a director of communication at a salary of £70,000 per year plus benefits.

It also queries £20,000 for a "research trip" to New York, £915 on printing Christmas cards and more than £600 for customised umbrellas. "It is questionable if this was the best use of public funds," says the report.

The report also notes that the trust had operated with only five trustees.

The Education Funding Agency says that the new chief executive is "committed to putting in place appropriate governance structures and controls and felt that the review will act as a catalyst for considerable change within the trust".

The Education Funding Agency report says it will consider the response and then "consider what further action will be taken".

A spokeswoman for the Education Fellowship Trust said: "The Education Funding Agency are working with the Fellowship closely to ensure they successfully grow and continue to have the enormous impact it has already within its schools."

Academies are independent state schools which operate outside of local authority control.

There have been calls for greater oversight of academies and academy providers.

The government has introduced school commissioners to monitor academies and Labour is proposing directors of school standards who would have oversight of all state-funded schools in their local areas.

A Department for Education spokesman added that it had served the Trust with a financial notice to improve and would take further action "if they do not take the necessary steps".

"Academies operate under a strict system of oversight and accountability - more robust than in council-run schools — which means any issues are identified and that we can take swift action to address them."

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