‘Significant financial irregularity’ at Cambridgeshire college raises questions about how schools’ accounts can be effectively monitored
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:
1 Whether 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.
3 Whether 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.
4 Whether it is wise to allow academy Principals to be the academy’s Accounting Officer.
And one specific to local authority (LA) maintained schools:
1 LAs 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:
1 Whether 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.
2 Whether 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.'