An academy trust that spent over £2,400 on a wellbeing conference and spa break for senior managers has been ordered by the government to take “urgent action” to resolve issues with its financial management.
The Education and Skills Funding Agency has published a report of an investigation into the Learning Academy Partnership (South West), a multi-academy trust with eight primary schools. The trust reported an in-year deficit of £185,000 in its 2017-18 audited accounts.
ESFA has significant concerns in respect of value for money being demonstrated
The investigation, prompted by “wide-ranging” allegations received last April, revealed concerns over value for money of spending decisions, and found several breaches of the trust’s own financial policies and the academies financial handbook.
Officials visited the trust last year, upgrading a fact-finding visit to a full investigation.
They found the trust had spent £2,482.50 on a wellbeing conference and spa break at a hotel in Dartmouth, attended by 10 senior managers from the trust, including the chief executive Lynn Atkinson and current chief finance officer Karen Barnett.
The money spent included additional costs of £330 for extra spa treatments “over and above the hotel’s spa break package rate”, the report said.
The invoice provided to the ESFA was not a VAT invoice, and did not provide full details of money spent. The ESFA also found there was “no documented rationale or approval by the board, for this expenditure”.
“ESFA has significant concerns in respect of value for money being demonstrated by spending a total of £2,482.50 of public money on this activity, which includes £330 being spent on additional treatments,” the report said.
However, the trust told Schools Week it “strongly refutes” the claim that £330 was spent on additional treatments.
“There was an organised conference as part of professional development and there was no additional or separate expenditure on any treatment,” a spokesperson said.
Officials also examined £19,220.99 spent on “hospitality”, including £260 for catering at a “trustee strategy day”. The ESFA said that “being a half day event, the expenditure was unnecessary”.
A total of £7,708.15 was spent with the same supplier, all of which was “coded to hospitality”.
But the ESFA found there was “no documented comparison of costs to determine if this represents best value, or that the trust considered alternative options”.
“As this caterer is 10 miles away from the trust, delivery costs have also been incurred.”
The trust also charged four hotel stays totalling £1,999.40 to its procurement card. Two of the stays included dinner with no itemisation.
One of the stays, a night in London for the CEO, director of education and former CFO costing £708, was booked in the name of the CEO’s husband, who is not a trust employee.
His rewards card was also used, which is against the trust’s policy that loyalty cards “should be issued in the Learning Academy Partnership name and all benefits obtained from these cards are to be redeemed to benefit the Learning Academy Partnership”.
The ESFA also found there was “no recorded justification or rationale for the level of expenditure incurred on any of these stays”.
“For comparison, the trust has paid for other members of staff to stay in budget hotels,” the report added.
Analysis of expense claims found two that “should not have been authorised”, one because it contained a claim for alcohol and another because the receipt was unreadable.
Other spending was also probed, and officials found a number of large items of expenditure for which multiple quotes were not on file.
For example, the trust was invoiced for £30,435.38 by one unnamed company for a two-year contract, but there were “no other quotes on file, when there should have been 3”.
Another service level agreement for £11,805 for HR services was on file, but again, there were no other quotes.
ESFA raises governance and recruitment concerns
The ESFA also looked at the trust’s governance arrangements, and found they were “not in line” with the DfE’s “strong preference” that trusts have at least five controlling members. The trust had three, including the chair of trustees.
The investigation also cited a “lack of independence” between the board and the joint finance and audit committee, of which the CEO was a member.
Officials also found the trust had “not consistently complied with its own recruitment and selection policy”. Board minutes from December 2018 show a decision was made to offer the post of CEO to the trust’s director of education once Atkinson retires “without any recruitment or selection activity”.
The trust had also made a “direct short-notice appointment” of a recruit suggested by the director of education with “no records of interview or the job being advertised”. The director of education was also a referee for the successful applicant, and the ESFA said “good practice would dictate that a full recruitment exercise would have been undertaken to fill the post permanently”.
The trust also produced termly budget reports, when the academies financial handbook states they must be prepared monthly. A lack of detail also meant they were not “sufficient to monitor the trust wide financial position”.
The ESFA warned that documented business cases were not in place to justify £46,494 in statutory/non-contractual severance payments made to three members of staff in 2017-18.
The report concluded that the trust “needs to take urgent action to resolve the issues, including greater consideration given to the robustness of financial management, governance arrangements and oversight by the board”.
A spokesperson for the trust insisted it had “always acted honestly, with integrity and in the best interests of its children and staff”.
“An investigation carried out by the ESFA in June 2019 related to historical matters between 2016-2018, during a period of growth and during the introduction of new systems, processes and software.
“The trust acknowledges that in common with all trusts, there will always be areas for continuing improvement and has already addressed or acted upon any recommendations. The trust looks forward to continuing to work positively with all partners to continue to provide the best possible education for our children.”