An education group which runs free schools and academies is under investigation over its finances and the way "it manages learners".
The Barnfield Federation, which confirmed the inquiry is taking place, said "grade massaging" is also being looked into.
It oversees a range of institutions, like Luton-based Barnfield College.
The Department for Education and the Skills Funding Agency say they are investigating "allegations".
Stephen Hall, one of the federation's two interim chief executives, said the investigation was "broad ranging" adding: "The way in which we manage our learners is an area of concern."
In an interview with BBC 3CR, Mr Hall confirmed the massaging of grades was one of the areas under investigation.
However, he added no report had yet been completed and none of the allegations were proven.
He added he did "not think" interfering with students' grades had taken place.
In a joint statement, the Department for Education and Skills Funding Agency said: "We are taking these seriously and are investigating. We do not comment on ongoing investigations."
'Long had concerns'
The Luton branch of the National Union of Teachers (NUT) said it was concerned the federation might have overstretched itself in trying to take on too many schools too quickly.
David Mingay, a spokesman for the Luton branch of the National Union of Teachers (NUT), said: "We at the NUT welcome the investigation. We've long had concerns."
Responding to the NUT's financial concerns, a spokesman for Barnfield said: "The college has significant cash reserves and is financially stable.
"Our students are at the very centre of all we do at Barnfield and our recent restructure was designed to create even better education delivery in the future, reduce our costs and enable us to offer an excellent service to the Luton community."