How big a problem is financial malpractice in academy trusts? Can the EFA cope?

Janet Downs's picture
Ex-Secretary of State Michael Gove said academies are subject to greater financial accountability than local authority (LA) maintained schools. And recent investigations by the Education Funding Agency (EFA) have indeed revealed financial irregularities. Two of the groups criticized – E-Act and AET – were large multi-academy trusts (MATs) responsible for very large amounts of public money. Oddly, the Financial Notice to Improve (FNtI) issued to AET, now the largest MAT, has received very little publicity* despite AET being in a position to negotiate an outsourcing contract worth £400m over ten years for school services.

The EFA is responsible for overseeing academies. But the National Audit Office warned that the EFA (and also local authorities overseeing maintained schools) may lack resources to do the job effectively. But investigate it must if it receives complaints – sometimes from whistleblowers – or academy trust accounts reveal concerns.

The EFA doesn’t just have responsibility for issuing FNtIs to academy trusts after concerns have been raised. It’s also responsible for undertaking investigations into possible financial malpractice. A list of investigations is here.

Oddly, this list doesn’t include the reviews of Park View Educational Trust and Oldknow Academy Trust which were investigated as part of the Trojan Horse probe. Nor does the Education Fellowship Trust review appear. This ‘highlighted a number of highly unusual and potentially significant issues’. These reviews, however, aren’t easily found because they don’t appear on a central list.

It appears, then, the EFA is discovering malpractice in some academy trusts. However, it’s difficult to discover the scale of the problem because the information isn’t in one place. Earlier this year the Public Accounts Committee (PAC) praised the EFA, which is also responsible for funding academies as well as investigating them, for sending money to academies in time. However, PAC concluded the EFA had ‘not yet got to grips with effective oversight of how that money is spent.’

The PAC said:

‘The Agency is too reactive and does not spot risks or intervene in schools quickly enough. It needs more complete, accurate and timely information on academies’ finances and to get much tougher on those who fail to comply with reporting requirements: nearly one in ten academy trusts failed to submit their accounts on time last year.’

Even if academy accounts, which have to be audited by external auditors, are received in time they may hide inappropriate use of public money. In these cases, it would take a whistleblower to highlight alleged misuse. The full extent of financial malpractice in academy trusts could, therefore, go unnoticed. It appears the EFA, which is charged with reducing its operating costs while the number of academies and free schools rise, is facing an impossible challenge.

But this could result in millions of pounds of public money, which should be spent on educating children, being used in ways which have little to do with actual education.

*The story was covered here and in Academies Week but doesn’t seem to have been covered by any major media outlet.

NOTE : This is a longer (and corrected) version of a comment I left on this thread on 28 October at 8.52am.
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