A Norwich-based multi-academy trust has been issued with a financial notice to improve by the Education and Skills Funding Agency, after it failed to adequately boost its “weak” financial situation.
The ESFA has been monitoring the Engage Multi-Academy Trust, which runs nine schools, since last September, but now it has requested that members of the senior leadership are replaced to sort out its precarious finances.
Mike Pettifer, the director of the ESFA’s academies and maintained schools group, wrote to Phillip Harris, Engage’s chair of trustees, in March to inform him that “concerns remain in relation to the weak financial position and financial management at the trust”.
“I recognise the cooperation and extensive discussions that have taken place between the trust and officials and the changes you have already made to strengthen accounting and internal financial controls,” he said. “However, my concerns remain in relation to the weak financial position and financial management at the trust.”
The notice highlights a “significant deficit” as the main problem at the trust, alongside a failure of the board of trustees to “ensure good financial management and internal control” and “ensure sufficient rigour and scrutiny in the budget management process”.
Other points raised included the board’s lack of understanding of the difference between the budget that was set and the actual income and expenditure, and their failure to “receive and consider information on financial performance at least three times a year, and take appropriate action”.
The conditions of the notice require the trust to provide a draft governance review action plan, a revised draft recovery plan, and a draft finance review action plan by April 20.
Pettifer also asked that the executive team be “strengthened” by replacing the current business manager with a fully qualified accountant, and the chief operating officer with “someone with a proven track record in business management”.
“This is to provide assurance that the trust has the capacity to implement the cost savings required,” the letter said.
Monthly management accounts must also now be provided to the ESFA, including a cashflow forecast, and an update on progress with implementing improvements.
Pettifer informed the trust that the financial notice to improve will only be lifted once the requirements have been met, and if the trust fails to comply it may have its funded terminated.