CREDIT: This story was first seen in Tes
Recovery plan predicts troubled trust will return to overall surplus by 2021, Tes reports.
The troubled Academy Transformation Trust is continuing to operate while carrying a deficit of £2.5m, its accounts have revealed.
The trust, which runs 21 schools across the Midlands and East of England, was the subject of an Education and Skills Funding Agency investigation (ESFA) late last year, when it was discovered that there was “insufficient financial expertise on board” and “inadequate financial management at the trust”.
And in November, Ian Cleland, the founder and chief executive of the trust, resigned.
The financial reserves had depleted over a number of years, the ESFA report found, falling from £5m in September 2014 to a predicted £26,000 in September 2018.
Now the accounts for the year ending August 31, 2017, state: “A cumulative deficit of £2.513m is reported as the closing position in the accounts for the current reporting period.”
The independent auditor’s report to the trustees says that “material uncertainty exists that may cast significant doubt on the trust’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”
A spokesperson for the Academy Transformation Trust said: “The independent auditor does not cast significant doubt on our ability to continue as a going concern. They have not modified their opinion.
“The trust has been taking action to address this position and is in advanced discussion with the ESFA. A plan has been developed which shows the trust returning to in-year surplus in 2018-19. The statement of accounts shows the trust to have over £3m cash in the bank at August 31, 2017.”
The trustees’ report in the accounts adds that: “The executive have been working closely with the trustees and the ESFA to provide a recovery plan and short-term financial support and have begun to implement financial and staffing restructures to provide cost savings to assist ATT to return to a surplus financial positions.
“The ESFA has agreed to provide financial assistance to ATT. Trustees have considered this alongside the facts that a largely new executive are in place at ATT and governance arrangements have been strengthened and are now confident that ATT has adequate resource to continue its activities for the foreseeable future.”
The auditor’s note to the accounts also later states: “A recovery plan has been developed which shows the trust returning to in-year surplus in 2018-19 and overall surplus no later than 2021.
“The trustees conclude that the academy trust has adequate resource to continue in operational existence for the foreseeable future and whilst there are material uncertainties about the academy trust’s ability to continue as a going concern, they continue to adopt the going concern basis of accounting in preparing the financial statements.”
Initiatives set out in the report to reduce the deficit include: working with other multi-academy trusts on integrated curriculum financial planning, using benefits of scale to lower the cost of goods and services and internal projects to reduce centralised costs.
The trust is also seeing a number of schools increase their pupil numbers and some schools are expected to benefit more than average from the proposed national funding formula being introduced in 2018.