I would hope that the report below will give headteachers, governing bodies and councillors pause for thought before rushing into academy conversions or supporting forced academies. Conversions are often undertaken for financial reasons with governing bodies and headteachers saying they would let pupils down if they did not go for the extra academy funding - instead much of it may end up lining the pockets of the sponsors through high salaries for the chain bosses or 'extravagant expenses'.
This report is from the BBC:
A
leading academy chain has been criticised for widespread financial
irregularities in an official report. The Education Funding Agency
report highlights a culture of "extravagant" expenses,
"prestige" venues and first class travel at the E-ACT
group. The report obtained by the Times Educational Supplement and
seen by BBC News adds that E-ACT spent public money on unapproved
consultancy fees. The group currently runs 31 state-funded
free-schools and academies around England that have opted out of
local authority control.
E-ACT
was set up in July 2009 as an independent educational charity and
company with the principal purpose of "establishing,
maintaining, managing and developing schools colleges and academies".
Its director general, Sir Bruce Liddington, resigned last month. The
report found that E-ACT's systems of internal financial control were
"weak" and lacking "rigour" - and noted that the
governance of the group was "unusual". In particular it
notes that "the controls around expenses for trustees are weak".
"Expenses
claims and use of corporate credit cards indicate a culture involving
prestige venues, large drinks bills, business lunches and first class
travel, all funded from public monies," says the report. The
report says the director general's expenses may not have been
"subject to proper scrutiny". "Expenses claims and
card payments by senior managers in E-ACT have occasionally stretched
the concepts of propriety and value for money. Controls have been lax
and some payments have tended to extravagance... however we found no
evidence of fraud."
The
report also highlights a wider "culture of acceptance of
non-compliance with E-ACT's own policies for awarding contracts."
The investigation found that hundreds of thousands of pounds of
public money was spent by E-ACT on purchases that were not in line
with its own spending policies. Many purchases were made by Sir Bruce
himself. "Our review of the director general's cost centre
indicates that £361,000 has been spent on consultancy fees from
2008-9 with £237,000 of this not having an order," note the
authors.
The
report also raises concerns that trustees on the E-ACT board were
paid for consultancy work, stressing that "payment to trustees
is unusual in the charitable sector, where the basic position is that
trustees should not benefit personally from their position so that
they can exercise independent scrutiny over the charity's
operations." ”Around half of the 13 current board members have
or have in the past had contracts for service or services provided."
The investigation came after the group's auditors KPMG raised
concerns that its financial administration was "playing
catch-up" with its rapid expansion.
In
particular the report notes that some of the group's financial
practices were inappropriate for an organisation with a turnover of
many millions of pounds and that the boundary between E-ACT and its
money-making subsidiary E-ACT Enterprises Limited (EEL) was blurred,
with some EEL expenses being paid out of public money.
E-ACT
stresses that it has taken swift action to address the report's
concerns. Chairwoman Ann Limb, who joined the group a year ago, said:
"We have overhauled both the governance and the culture of E-ACT
to ensure that this can never happen again. As well as the departure
of the director general, the finance director and two trustees have
also left the organisation. E-ACT is about educational excellence and
the changes we have made will ensure we have operational excellence
to support that.
"We
are implementing a robust action plan which addresses all concerns
raised and are working closely with the Education Funding Agency to
ensure these changes are embedded throughout the organisation."
A
Department for Education spokeswoman said "Any misuse of public
money meant for schools is completely unacceptable. Academies cannot
hide from their responsibilities. All their accounts must be
externally audited and they are held to account by the Education
Funding Agency so any issues of impropriety are immediately
investigated.
"That
is exactly why the EFA has written to E-ACT requiring them to take
swift action to improve financial management, control and governance.
We are monitoring the situation closely and will take any further
action necessary."
