‘Significant financial irregularity’ at Cambridgeshire college raises questions about how schools’ accounts can be effectively monitored

Janet Downs's picture
 14
Serious allegations from a whistleblower about possible misuse of public money at Sawtry Community College, a Cambridgeshire academy, have been investigated by the Education Funding Agency (EFA). The EFA probe found significant shortcomings and the academy has been issued with a Financial Notice to Improve (FNtL).

The EFA told Sawtry Community College it must comply with the Academies Financial Handbook - the tome that details how academies should deal with their finances. If Sawtry doesn’t meet the requirements of the FNtI then its Funding Agreement may be revoked, the EFA said, and the academy must take ‘reasonable steps’ to recover taxpayers’ money if it’s subsequently found that public funding has been ‘misused’.

The accounts* of Sawtry Community College for the year ending 31 August 2013 claim the academy had ‘an effective system of internal financial controls’: the Governors had delegated responsibility for ensuring these controls represented ‘good financial management’ to the then Principal who acted, like most academy heads, as Accounting Officer.

Ofsted later criticised the governors: a monitoring report in July 2014 following the resignation of the Principal, Chair and Deputy Chair of Governors, said the Governing Body had been ‘unaware of their responsibilities and had neglected to hold the academy’s dysfunctional leadership to account.’

The accounts were audited and signed off on 20 December 2013 by an external auditor who found nothing untoward in the accounts. But seven months later a whistleblower raised significant concerns which the EFA confirmed.

This case raises several questions which apply to academies:

1Whether the monitoring of academy accounts is effective.

2 Whether academy governing bodies and trustees are sufficiently knowledgeable about their responsibilities as directors of a company and trustees of a charitable trust.

3Whether governors are too ready to delegate responsibility for day-to-day management of finances to an academy’s Accounting Officer who is generally the Principal.

4Whether it is wise to allow academy Principals to be the academy’s Accounting Officer.

And one specific to local authority (LA) maintained schools:

1LAs are now required to report any fraud found in its maintained schools to the National Audit Office. However, this doesn’t overcome the problem of lax financial control within a school which falls short of fraud or governors being over-generous when deciding value for money.

In addition, there are questions which apply to both academies and LA maintained schools:

1Whether expenditure is ‘value for money’. Value for money is subjective: a head’s salary, for example, may be regarded as value for money by governors but seen as excessive remuneration by taxpayers. Even the Education Secretary is concerned about huge salaries paid to heads.

2Whether the EFA and LAs have sufficient resources to monitor how the schools they oversee use (or misuse) their funding.

And, finally, there’s the question we’ve asked before. Do Local Authorities and the EFA rely too much on whistleblowers to draw attention to possible financial irregularities in academies and maintained schools?

NOTE: Sawtry Community College is now led by an Acting Principal who was praised in the latest monitoring report. Inspectors said she had ‘galvanised staff and created a cohesive and effective senior leadership team. This team has done a remarkable job, in a very short time, in establishing new ways of working and ensuring that procedures and policies are updated and communicated to staff.’ The College is working towards joining the multi-academy trust, CMAT.

*I can’t provide a direct link. Google Sawtry Community College Accounts.

UPDATE 7 December 2014. The EFA investigation is here. The findings included 'expenditure (from private school funds) within the summary relating to the period as an academy totalled £24,544. This amount included expenditure on alcohol, hospitality, shopping, gift cards, home appliances/furnishings
and generally items of a nature which did not obviously appear directly related to the running of the academy.'
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Comments

rogertitcombe's picture
Sat, 25/10/2014 - 15:02

Any system that relies on whistleblowers to reveal shortcomings is not fit for purpose. As a commentator on a parallel thread has suggested, proper regulation could reveal a cavernous pit of malpractice.


agov's picture
Sun, 26/10/2014 - 10:01

Perhaps the governors were local worthies who saw being a governor as a badge of status not a job of work and regarded it as just a touchy-feely, sherry pouring, cake slicing exercise in hugging each other and singing Kumbayah?

I don't know what evidence there is to suggest local authorities do not provide regular monitoring of maintained schools given that finance officers make regular inspections. Not to say that errors and misjudgements can never occur but it's not like maintained schools get to go their own sweet way as if they had a higher class of governor like academy schools.

Local authorities may however be unable to continue that work as ever more funding is taken away and given to the tremendously successful academy sector that obviously knows what it is doing.

Andy V's picture
Sun, 26/10/2014 - 10:21

Taken from Henry's thread

Janet 24/10/14 @ 09.20 am

"the NAO warned that neither the EFA or LAs had the necessary resources to oversee school finances adequately."

http://www.localschoolsnetwork.org.uk/2014/10/the-academy-head-the-4500-...

agov's picture
Tue, 28/10/2014 - 08:54

Yes Andy, the EFA reacts but does it make regular visits to inspect the accounts?



[- As I had been trying to say since before 8.00 am yesday (27 October). Yet again the new 'CAPTCHA' system resulted in nothing at all happening when

'Submit your comment' was clicked. This problem is happening far more often than not. Is it just me? Have the rules changed?]

Andy V's picture
Tue, 28/10/2014 - 09:05

agov, I too encounter difficulties with CAPTCHA :-( Through experimentation I've found that if I make a copy of my comment and then close LSN and go back in the wretched CAPTCHA system resets itself and I am able to submit. Good luck :-)


Janet Downs's picture
Tue, 28/10/2014 - 10:45

Andy and agov - CAPTCHA was introduced because of problems with a large amount of spam appearing in 'pending'. Sorry if it's causing difficulties - CAPTCHA also catches me out (no consolation, I know).


rogertitcombe's picture
Wed, 29/10/2014 - 18:23

I too had great trouble with CAPTCHA. The site just didn't respond when I clicked on 'submit'. Sometimes Andy's method worked for me but not always. It was very frustrating. I was using Internet Explorer. I was advised to switch to Google Chrome. I did this and now it works fine.


Andy V's picture
Wed, 29/10/2014 - 18:29

Hope you have more joy that I do. I use chrome and it is still hit and miss.


Local Resident's picture
Thu, 06/11/2014 - 21:25

I would like to raise the question about how the accounting and financial team at the college have allowed this 'significant financial irregularity' to occur and only be raised through a whistle blower.

The college have recently a change to the governors, this was long overdue in my opinion,. Would it now be advisable to ensure that the same happens with the financial department, to prevent a recurrence.

Lets take this college back and ensure the direction of travel delivers not only the appropriate level of education, it delivers the appropriate financial value to the community.

The misuse of public funds should always be questioned and actioned at the highest levels.

Janet Downs's picture
Fri, 07/11/2014 - 09:30

Local Resident - academy heads are also the academy's Accounting Officer. This in my view is unwise. The governing body in this case appears to have been too trusting as well as ignorant about its responsibilities.

There is no chance of any academy being taken back by a local authority. The Gov't has ruled that out. Instead, Sawtry will join Cambridge Meridian Academies Trust (CMAT).

Note: this comment was corrected on 7 December 2014. I had written Swavesey instead of Sawtry.

Janet Downs's picture
Sun, 07/12/2014 - 14:56

The EFA investigation into Sawtry Community College has been published and is linked in the main article. The investigation found, among other things, dodgy expenditure totaling £24,544 which included 'expenditure on alcohol, hospitality, shopping, gift cards, home appliances/furnishings and generally items of a nature which did not obviously appear directly related to the running of the academy.’


Andy V's picture
Sun, 07/12/2014 - 15:11

Janet - Do you have a link for the report?


Janet Downs's picture
Sun, 07/12/2014 - 15:13

Andy - I linked it in the main article under Update. But to save you from scrolling up, here it is.


Andy V's picture
Sun, 07/12/2014 - 15:26

Janet _ Many thanks for that. I had missed the link at the top of the thread, so apologies for that.

For me what is more telling than the amounts and the nature of the expenditure is the narrative within the report for these items (e.g. lack of receipts, proximity to principal's home not academy and costs for car other than the principal's). The latter example is particularly interesting as it implies the principle had use of a vehicle funded or subsidised by the academy. This is more usual in the fee-paying independent sector.

It strikes me that all-in-all there appear to be prima-facie grounds for a criminal investigation.

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