What happens when there are concerns over the financial management of an academy?
The recent Public Accounts Select Committee report on Academies financial management proved embarrassing to the government. The report describes a system peppered with overspends and errors, but subject to little oversight. Millions of pounds were wasted on the rapidly growing academies programme because of over-complex and inefficient funding systems, according to the report. Financial mismanagement, of course, is by no means the preserve of academy schools, as recent scandals have shown.
Where a chain or multi-academy trust has failed to address financial weaknesses in its operation, a financial notice to improve can be issued, requiring the trust to take action to address the underlying cause(s) of its financial weaknesses. The financial notice to improve is a set of conditions that the Education Funding Agency (EFA) would require the trust to meet. Ultimately, if a chain or multi academy trust fails to address the financial weaknesses the Secretary of State for Education has intervention powers which are set out in the individual funding agreements, and in the most serious circumstances, include the ability to terminate the funding agreement. The Education Funding Agency has issued two financial notices to improve since May 2010 to academy trusts.
The academies financial handbook sets out the duties and obligations on academy trusts and this includes personal responsibility on the academy trusts accounting officer (each trust has to appoint an accounting officer) for ‘high standards of probity in the management of public funds’.
Source-Hansard 25 April 2013