It couldn’t happen here

 

The newspapers regularly contain sensationalist stories about the failure of Academy Schools.  Occasionally they focus on teaching standards or pupil behaviour but more often they are about breaches in regularity and propriety relating to the finances of the school.

 

Recently, the EFA has published a report about one such case.  It is worth noting that the review undertaken by the EFA came about as a result of irregularities identified from the financial statements.  The main issues identified as part of the review were:-

 

– There was a lack of a robust management and control framework

 

– There were no formal policies and procedures

 

– There was a high level of governor expenses and some expenditure that didn’t represent the best use of public funds

 

– A number of staff were family members of either trustees or senior members of staff and there had been no competition or advertising of the posts.

 

It is easy to say that these things would not happen in your school as you have policies and procedures in place. However it is unlikely that the Academy Trust in question set out with the intention to breach regularity and propriety requirements.  These things tend to start as small exceptions to normal procedures.  When something is permitted once it is difficult to enforce the original policy and breaches increase in magnitude.  Also, it may be that policies and procedures were set up on conversion but have started to slip after one or two years of activity and focusing on other things.

 

So how do you avoid becoming a headline?

 

– Review your financial policies and procedures.  It may be that your activities or structures have changed since they were established.  You may have new income streams, e.g. if you have taken your catering function in-house, you may have new staffing structures or a new computer system.  It is important that financial procedures are appropriate to your activities. It then becomes less likely that breaches will be required as there will be fewer exceptions to the norm.  Once these policies are in place ensure that they are adhered to.  Every Trust is required to have in place a process for independent checking of financial controls, systems transactions and risks.  The Board of Governors must be satisfied that whatever system they have in place, be it a Responsible Officer or internal audit, it is sufficient to satisfy this requirement.

 

– Ensure that other policies are in place. The specific policies mentioned in the EFA report include a fraud policy, employment policy and policy regarding employment of Trustees.  A register of policies should be maintained with dates set for review of all policies to ensure that they are still relevant or appropriate.

 

– Review your risk assessment.  As with financial procedures, your risk assessment needs to be regularly reviewed as activities may have changed since it was initially established.  This should be a working document that is regularly updated, action points followed up and new targets set with timescales and responsibility allocated.

 

– Document Board decisions.  A major criticism in the EFA report was that, although decisions regarding certain expenses and employment issues were approved by the Board, the reasons why these decisions were made and how these represented the best use of public funds was not sufficiently evidenced.  Ensure that where tenders or expenditure is being considered the reasons why decisions were reached is minuted and evidence provided of the options considered and the selection made.

 

– Review your Articles of Association and Funding agreement.  The report identified a number of breaches of the Articles of Association in terms of how the Board of the Trust was set up.  If any changes at Board level are required ensure that they will not breach the Articles of Association in terms of the make-up of the Board or how decisions are reached.

 

– Update your register of business interests.  You should have a register to document any business interests of the Governors/Trustees and those of members of their family. Ensure that these are updated regularly.  All Governor/Trustee meetings should include a requirement for declarations of interest and the Board should ensure that any transactions undertaken with a related party can be supported as being the best use of public funds.

 

The EFA report makes for interesting reading.  With hindsight I am sure the Trust involved wouldn’t have done things in the way that they did as they appear fairly damning when summarised in a single report.  With the various breaches spread over time, the Trust probably didn’t think they were doing anything wrong.  Don’t be next!