A Devon-based multi academy trust has been handed a financial notice to improve by the Education and Skills Funding agency.
Bay Education Trust has had many of its spending powers suspended, and has been warned it faces closure if it does not address concerns about its financial management.
The notice was issued because the trust had failed to improve its position enough after an initial warning last September.
It runs two primary schools, Curledge Street Academy and Kings Ash Academy, and one secondary, Paignton Community and Sports College. Set up in November 2014, it educates around 2,000 children in Paignton.
Mike Pettifer, director for academies and maintained schools group at the ESFA, wrote to the trust’s chair, Gavin Jones, on February 23, to say concerns remained about “the weak financial position an financial management of the trust”.
Pettifer acknowledged that after receiving a warning notice in September the trust had cooperated and held “extensive discussions” with the ESFA, as well as making changes to try to “strengthen accounting and internal financial controls”.
However, its position has not improved enough, meaning it now needs to commission “external reviews into governance and financial management”, including a review of the effectiveness of the trust head office and an audit of governance skills, by April 27.
The findings of these reviews should be used to put together an action plan of changes, Pettifer said. He requested an outline of how the trust will work towards “regularising arrangements for senior leaders pay”, which must be submitted to the ESFA no later than April 20.
A financial recovery plan that explains “how the trust will achieve a cumulative surplus position by the end of August 2019, and each year thereafter”, as well as an explanation of how savings will be made, is also required by April 13.
Other demands include putting together a report on ‘Integrated curriculum and financial planning’ by April 27, which includes details of the number of teaching assistants employed over the last five years and projections for the next year.
And each month Bay Education Trust will have to submit an income and expenditure report, a balance sheet and a detailed monthly cash flow forecast.
If the requirements are not met the trust could face having its funding agreement terminated.
The letter was also sent to CEO, Stephen Kings and Lisa Mannall, regional schools commissioner for the south west of England.