Rise in number of academies will worsen financial malpractice

Janet Downs's picture
 18
Auditors in one local authority (LA) have raised major concerns over financial malpractice and issued a warning that the rise in the number of academies is likely to make the problem worse.

Following a “robust” audit, Brent Council is concerned about financial management in six out of 10 schools it checked. Some of its primary schools had been locked into “toxic” equipment deals which tempt schools into entering costly agreements to lease equipment by offering a “cash-back”.  Others are paying heads an average of £10,000 a year more than they should.

According to the TES, Brent Council spends more time checking the finances of its maintained schools than any of the 20 London councils with published audit plans for 2012/13. Brent tightened up its auditing after an alleged £2.7 million fraud case involving Copland Community School in 2009. The Copland case reaches the Crown Court in October.

But Brent Council’s finance director told TES that academy expansion is likely to make financial mismanagement worse. “The only watchdog over them is the Department for Education itself. We [the Local Authority] have no relationship with them, but who does?”

Incoming president of the Association of Teachers and Lecturers, Hank Roberts, the whistleblower who drew attention to the financial problems at Copland, told TES that the misuse of taxpayers’ money is already widespread and “with more schools becoming financially autonomous academies, [the problem] will get infinitely worse.”

The TES wrote that the Department for Education was unavailable to comment.

 
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Ricky-Tarr's picture
Mon, 03/09/2012 - 12:01

Let me get this straight: your argument is that because 60% of a local authority's schools have dodgy accounts under LA management, academization will make things worse?

It's more likely that a proper set of governors (as opposed to LA stooges) will ensure they get better.

Rebecca Hanson's picture
Mon, 03/09/2012 - 13:06

Yes Ricky, the logic is that schools accounts are more likely to be kept in good order if they are regularly scrutinised by local authorities than if they are not.

Schools and governors have little interest in accounts. They care about kids. They need to be harried to keep things in good order and to take on board all the new accounting standards.

Sarah's picture
Mon, 03/09/2012 - 16:36

LA stooges? Most governing bodies have a single LA appointed governor. Often they are a locally elected member who can ensure that there is some local accountability on the governing body.

What's so special about an Academy that it's going to be able to have a 'proper' set of governors? They will still need to be drawn from exactly the same local community as governors of maintained schools.

You are falling into the trap of believing Gove's rhetoric - Academy good, Maintained school bad. There is nothing inherent in the Academy governance that will make governance stronger.

agov's picture
Tue, 04/09/2012 - 08:13

"It’s more likely that a proper set of governors (as opposed to LA stooges) will ensure they get better."

Why would you think that Ricky? And why are you insulting volunteers and people who care about anything other than their own bank account? Don't you believe in the big society?

Ricky-Tarr's picture
Mon, 03/09/2012 - 14:22

False logic, Rebecca.

As Brent's example clearly shows, LA run schools very often have poor accounting.
Academy governors jolly well do have an interest in accounts. They are personally responsible. They are the directors of the "business" and have the same fiduciary responsibilities as company directors or charity trustees.

Janet Downs's picture
Mon, 03/09/2012 - 15:16

Rebecca - in the case of the Priory Federation, Lincolnshire, Councillor Christine Talbot, one of the Federation’s trustees said she didn’t have “oversight” of many of the dubious financial decisions that were made (these are now being investigated by the police). As a trustee it was her responsibility to have oversight. However, she told the BBC that, “The governance arrangements for all academies need tightening up and this highlights the need for local accountability.”

So, a Conservative councillor in a council which has recommended that all its schools become academies said there needs to be local accountability because governance arrangements are too loose.

http://www.localschoolsnetwork.org.uk/2012/04/reflections-on-the-priory/

Rebecca Hanson's picture
Tue, 04/09/2012 - 08:22

I don't think Ricky gets those of us who, once we've got enough to cover the bills and do right by those we love, plough all our energy back into people and society agov.

I think he thinks we're all stupid and that he's arrived to rescue us from our ignorance with the James Maxwell 'the pursuit of money is the route to all good things' philosophy of life which contradicts all established wisdom and evidence.

Ricky-Tarr's picture
Thu, 06/09/2012 - 09:13

Yes, and those are the sort of people who serve on academy boards. As opposed to LA stooges.

Rebecca Hanson's picture
Mon, 03/09/2012 - 15:50

Who would be a governor then? It's hard enough to get governors in tough areas as it is.

I assume 'governor' will now be a professional role for an accountant then rather than something for a long term parent, a retired teacher or a senior member of the community then? Is it a good idea to replace highly experienced volunteers who understand the school and the community with professional accountants? I can see the benefits but what about all the costs - both financial and in terms of lost governors of the old type. Have these costs been calculated?

agov's picture
Tue, 04/09/2012 - 08:17

"As Brent’s example clearly shows, LA run schools very often have poor accounting."

No Ricky, some LA schools run by their governors and headteacher sometimes have poor accounting. Most of the time most clearly do not.

"Academy governors jolly well do have an interest in accounts."

No doubt especially their own in some cases.

"They are personally responsible. They are the directors of the “business” and have the same fiduciary responsibilities as company directors or charity trustees."

All £10 pounds worth of it.

You shouldn't rely on propaganda from Gove.

http://www.wellerslawgroup.com/site/services_business/academy_conversion...

Ricky-Tarr's picture
Mon, 03/09/2012 - 21:10

It’s hard enough to get governors in tough areas as it is.

Could you provide a link to evidence in support of this assertion?
What counts as a 'tough area' anyhow?

I assume ‘governor’ will now be a professional role for an accountant then ..

Please would you explain why you make this outlandish assumption?

Rebecca Hanson's picture
Mon, 03/09/2012 - 22:02

"Could you provide a link to evidence in support of this assertion?"

Direct experience - again and again and again. If you are teaching in a school in a very tough area (with a socially deprived catchment) the parents are also part of that population Ricky. Do you not understand that not all school catchments have educated, professional and confident parents who speak fluent English in them?

"Please would you explain why you make this outlandish assumption?"
Just by understanding the difference between the skills set you're assuming the local population have and reality.

Janet Downs's picture
Mon, 03/09/2012 - 15:18

An Academy Trust can be held liable for regulatory breaches (ie breach of Health and Safety at Work Act 1974) and Governors can be personally liable if they breach their duties and/or statutory obligations. But liability of Governors is limited to a nominal sum of £10 if the Academy Trust were to be dissolved: “Personal liability will not arise if governors carry out their duty acting in good faith… governors acting honestly, reasonably and within their powers will not incur personal liability.”

http://www.wellerslawgroup.com/site/services_business/academy_conversion...

So, if Governors act in good faith and let the Principal enter into questionable contracts as described above they would not be liable.

Janet Downs's picture
Mon, 03/09/2012 - 16:00

Academies, free schools and academy chains/federations and foundation schools are exempt charities and are not regulated by or registered with the Charities Commission. The principal regulator for academies, free schools and foundation schools is the Department for Education (DfE), assisted by the Education Funding Agency (EFA).

The DfE must ensure trustees comply with their legal obligations to manage a school which is an exempt charity. A principal regulator can ask the Charities Commission to open an inquiry, if necessary, but cannot do the investigation. The DfE must work with the Charities Commission to ensure that all its exempt charities are accountable to the public.

It is unclear how the DfE will ensure that 1,800 academies, 8,000 foundation schools and 94 sixth form college corporations in England* which are regulated by Secretary of State for Education will be “accountable to the public.” And the National Audit Office* is concerned there may be a conflict of interest between departmental interest and charity regulation.

http://www.charity-commission.gov.uk/Publications/cc23.aspx#exempt

http://www.charitycommission.gov.uk/start_up_a_charity/do_i_need_to_regi...

http://www.charity-commission.gov.uk/about_us/ogs/g057a001.aspx#_Toc2131...

*National Audit Office Briefing for the House of Commons Public Administration Select Committee, July 2012: “Regulating Charities: a landscape review” downloadable from:
http://www.nao.org.uk/publications/1213/regulating_charities.aspx

Rebecca Hanson's picture
Mon, 03/09/2012 - 16:06

Hmm yes this sounds familiar. Ofsted is accountable to the DFE..... In theory it should be in the DFE's interest to have a high quality regulator but in practice it's suiting Gove to have an Ofsted which operates in direct contradiction to the standards for regulation so that it can be his personal red guard of his cultural revolution.

It's really hard for most people who work in education to begin to fathom the depravity of Michael Gove because it's natural for people to use their own standards as their frame of reference for their assumptions about others.

Where does Gove get his personal fortune from?

Why is he in power?

Where are the systems and processes he'll be using to ensure academies apply all the latest accounting standards?

Ricky-Tarr's picture
Tue, 04/09/2012 - 09:12

I suspect it will come as news to Mrs Gove that her husband is in possession of a 'personal fortune'.

Why is he in power?

Well, there's this thing called democracy.....

Where are the systems and processes he’ll be using to ensure academies apply all the latest accounting standards?

It's called the Academies Accounts Direction and is downloadable from the DfE website.

Rebecca Hanson's picture
Tue, 04/09/2012 - 09:18

Is she not capable of reading wiki?

You call it democracy, I call it the extreme ignorance and stupidity of David Cameron.

And how's it being enacted in reality?

Rebecca Hanson's picture
Tue, 04/09/2012 - 09:20

Oh yes - re point 2 you could add Gove's own extreme self-delusion, hubris and ignorance.

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