No internal audit for trust with £8.4m deficit

A trouble-hit academy trust has admitted it did not conduct internal financial checks as its deficit swelled to more than £8 million and it received another government loan to keep it afloat. 

Accounts for the Arthur Terry Learning Partnership show the 24-school MAT could also receive a further £1 million in emergency funding. 

Schools Week previously revealed how Arthur Terry had racked up seven-figure losses after purchasing iPads as part of an initiative to provide 11,000 devices for all pupils and staff. 

The news comes after another major trust pulled itself out of six-figure deficit and into a surplus of more than £1 million. 

Deficit grows

In 2024, Arthur Terry was issued with a notice to improve by the DfE on financial grounds after being offered a £1.5 million government loan and posting an almost £4 million deficit. 

But 2024-25 accounts, published this week, show it received more “deficit funding”, as it slipped to an £8.4 million deficit. 

In all, it has been loaned £3.5 million, all of which “had been drawn down by the year end”. 

The accounts added trust chiefs had struck an agreement in principle with officials for “an additional £1 million of repayable funding”. 

A trust spokesperson said it “has navigated through several financial challenges over the past few years”. 

While it “accept[s] that some are due to internal issues, it is also well recognised that the … landscape for schools over this period has caused and is causing all schools to make difficult decisions”.

Internal checks

Accounts also said “no financial internal audit activity took place” over the year. This was “due to significant changes being implemented to financial processes, systems and platforms, alongside considerable turnover within the finance team”. 

An audit of “changes implemented in 2024-25 has since taken place, with an initial review undertaken during November to validate and assess the changes implemented”. 

However, Phil Reynolds, of PLR Advisory, said the checks could have helped with the deficit as procedural issues “could be slipping the net quite easily” without them.

“An internal audit isn’t there to find financial issues. If that wasn’t done this year, how can the trustees get assurance that these are being adhered to?”

The academy trust handbook says trusts must establish “a programme of internal scrutiny … to provide independent assurance to the board that its systems, controls and risk management procedures are operating effectively”. 

The trust stressed it “obtained assurance during the year through several deployments” of government school resource management advisers (SRMAs). 

Its spokesperson added the MAT has “worked with several external professionals over the year to ensure that financial planning is scrutinised”. 

Deficit to surplus

Elsewhere, the Diocese of Norwich Education and Academies Trust posted a £1.4 million surplus after a £180,000 deficit the year before. 

Oliver Burwood, its chief executive, said the MAT – which runs 40 primaries and one secondary – “overachieved on its budget this year”. 

He acknowledged the trust had been “overoptimistic in terms of income” predictions before shifting to a “cautious” approach.