“Highly unusual” financial practices at county-based academy trust highlighted

The Wrenn School in Wellingborough. The academy chain which runs the school, as well as a number of others in our area, has been accused of 'highly unusual' financial practices in a report.
The Wrenn School in Wellingborough. The academy chain which runs the school, as well as a number of others in our area, has been accused of 'highly unusual' financial practices in a report.

A financial review of an academy chain with seven schools in Wellingborough and Rushden has found a series of “highly unusual” and irresponsible practices by the board of trustees.

In a report published by The Education Funding Agency, a number of concerns have been expressed about the financial management of the county-based Education Fellowship Trust.

The trust, which sponsors Rushden Community College and Risdene Academy in Rushden, Windmill Primary in Raunds and the Wrenn School, Ruskin Junior School, Warwick Primary School and Olympic Primary School in Wellingborough, was found to have made a number of appointments of head office staff who were family members of senior members of staff.

In one case, the director of communications, at a salary of £70,000 per year plus benefits, was appointed when there had been no advertising or competition for the post.

On another occasion an administrative support worker, on an estimated wage of £22,000, was appointed following no advertisement or competition for the post despite the fact it was her first employment after leaving university.

The report states that the chairman of the trust was paid more than £90,000 in respect of his role as chairman, but apparently not as a trustee. This is in breach of the trust’s governance guidelines.

It was also found that the HR file, for the chairman, who was formerly the CEO, did not contain a contract of employment, a job description, a role description, confirmation of what his new job role is or confirmation of the salary for the new role.

There was also a number of related party transactions with companies in which the chairman had a controlling interest.

The report found that two governors had received expenses of £45,000 in 2012/13 and there were “very high levels of private car usage, travel and subsistence and accommodation costs incurred for business travel”.

It states: “The CEO has exceeded 10,000 miles in the current financial year. We found no evidence that the Trust had considered whether this was best value for money or whether alternative arrangements, such as using lease cars, would be more cost effective and provide better value for money.”

The expenses policy the trust used, which applied to an individual academy, also allowed for ‘moderate consumption’ of alcohol despite the fact the use of public funds to purchase alcohol is deemed to be an improper use of funds.

The report states: “Our review of expense claims identified that items were being reimbursed in excess of the policy that had been adopted by the executive; for example, hotels and meals.”

A list of “irregular and improper” expenditure was identified including the purchase of 350 trust Christmas cards with a tailored design at a cost of approximately £1,000.

The trust also bought 60 corporate umbrellas primarily for sponsors and donors, but also for headteachers, at a cost of £630.

A research trip to New York, costing £20,000, was approved by the board despite “no detailed costings to factor in to that decision.”

The report states: “While the benefits of the trip were identified, the number of members of staff in the party raises concerns that this may not be best use of public funds.

“A smaller number undertaking the visit and then disseminating the learning to others may have been more acceptable.

Staff leaving lunches were also paid for on expenses and the trust was fined £630 for late filing of accounts and HMRC information.

Some staff expense claims included reimbursement for broadband and home phone line packages but the trust’s policy only covers work calls made.

The trust was also fund to have breached its own governance rules by employing a non-executive director on a temporary contract and remunerating one for “professional architectural services” which resulted in the majority of the board receiving financial benefit (three out of five).

A replacement laptop was also claimed for a trustee but it was not clear who approved the original laptop purchase or the rationale for the purchase.

The trust which sponsors 12 schools including nine in Northamptonshire, was also found to have a very “decentralised” approach and there had been “minimal advantage” taken from centralising various functions across the academies in order to obtain economies of scale.

The Education Funding Agency has served the trust with a written notice to improve financial management, control and governance and the agency will now “monitor its progress” towards meeting 26 recommendations for improvement.

If the trust does not improve its financial practices, the agency could terminate its funding agreement.

In response to the review, the trust said that “significant structural changes” had been made since the period covered by the report, which was up to August 31, 2013.

A trust spokesman said: “The EFA are very clear that all issues found are from pre-September - before significant structural changes were made and Johnson Kane was appointed as CEO. The Fellowship had already commenced on change of policies and governance in November 2013, before the review took place.

“The EFA acknowledged to The Fellowship that it was under a different structure and clear evidence was showing that there was a positive change in the operation since September 2013.

“The EFA are working with The Fellowship closely to ensure they successfully grow and continue to have the enormous impact it has already within its schools.”

Gordon White, county secretary for the Northamptonshire branch of the NUT, said the report demonstrated “abuses” of public funds.

He said: “This report demonstrates why we need to re introduce a system of local accountability for academy and free schools to avoid what appear to be abuses of public funding for schools.

“There appears to be no requirement for TEFT to act retrospectively to pay back very questionable expenditures on junkets to New York for example.“