ACADEMIES, CONTRACTING AND FINANCIAL CONTROLS

Can Academy Trusts award contracts to companies in which their Trustees have a stake ?Yes but no profit

Comment

All academy trusts are required to openly procure any externally sourced services, including those related to their trustees.

When a business controlled by or belonging to a trustee bids for a contract the academy trust must consider if that service is the most appropriate for the academy and offers the best value for money. If the academy trust decides to award the contract to the trustee-related service, that business must deliver its services at cost, with no element of profit.

 There have been some questions raised in the media suggesting that academies might have lax financial accountability.  There is  little  evidence though that suggests  that academies have an easier  financial accountability regime than maintained schools. There have always been cases in the  maintained sector of financial irregularities.   They still remain across all  schools, rare. Indeed the government argues that in terms of financial accountability because academies  effectively wear three hats- as companies, charities and public bodies- their financial accountability is more robust than in maintained schools. Academy trusts are constituted as companies limited by guarantee, so are subject to the full rigour of the Companies Act. This means that, unlike maintained schools, academies are required to file independently audited accounts.

But it is clear that, despite all  this, a few of  those running  academy schools  have a rather  self-serving mind set when it comes to  using their autonomous status. Contracts should be put out to open tender, best value must be the lodestar.  And its probably not  best practice to employ family and friends in the school(s) you are running even if  the recruitment process is transparent.    The government must be careful that the academies/free school brand is not undermined in the same way that the Charter school  brand  in the States  has been ,where  some excellent schools and chains have co-existed with others that have failed  to measure up both in terms of business  practice and student outcomes.

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