Debts of £4.5m threaten future of academy trust

Debts of £4.5m threaten future of academy trust sponsored by grammar school

CREDIT: This story was first seen in TES

The future of a troubled academy trust that runs nine schools in north-west England could be in jeopardy if it cannot defer the payment of millions of pounds it owes the government, TES reports.

The latest financial accounts for the Bright Futures Educational Trust (BFET) warn that there are “material uncertainties” about its future and also reveal that the trust was a victim of a £16,000 fraud.

The accounts say that failure to agree a new action plan with the government’s Education Funding Agency (EFA) would “cast doubt on the ability to proceed on a going concern basis”.

The news is only the latest blow to the trust, sponsored by Altrincham Grammar School for Girls. Last year, it was put under a government financial notice to improve. It has also received a pre-warning termination letter regarding Cedar Manor Academy after it was put in special measures, and is set to see Wigan UTC transferred to a new sponsor.

John Stephens, who took over as BFET chief executive from Dame Dana Ross-Wawrzynski on January 1, said working with the EFA “to reach a satisfactory conclusion on all of the points raised” was his priority.

He added: “Like all other trusts, we face some important challenges, but we remain committed to working constructively with other schools, trusts and partners in order to provide the very best for the children, young people, families and communities that we serve.”

BFET’s 2015-16 accounts show it owes the EFA about £2m for overpayments it made to Connell Sixth Form College after it failed to recruit its target number of students, and a further £2.5m for capital projects at other schools.

Three of its schools recorded a deficit last year, while the trust’s central services had a deficit of £1.551m.

The accounts said Cedar Mount Academy’s deficit of £298,000 was due to a lag in its funding, because each year’s government grant was based on the previous year’s number of pupils. It said its roll had started to rise since then.

You might also like...  Ofsted launches investigation into 'scandal' of schools gaming the system

The plan BFET has put to the EFA includes asking for some or all of this “lagged funding” to be paid early, as well as deferring its payments to the EFA, and the trust itself making “additional savings”.

Dr Stephens said the EFA had “given us assurance that they are committed to working with us and agreeing a suitable way forward to enable the continued development of BFET”.

In their statements in the trust’s accounts, accountants Grant Thornton said that, because of the uncertainties surrounding the trust’s finances, “we do not express an opinion on the financial statements”.

It also noted five areas in which BFET had not followed the Academies Financial Handbook, including not preparing management accounts between September 1 and December 31, 2015.

The accountants also found that, out of a sample of 50 invoices, there were 18 cases where “full and formal approval was not obtained prior to payment, as required by the internal procurement policy”.

BFET said it accepted “there have been some instances of weaknesses in some internal controls”, but said they were not the cause of the trust’s financial difficulties, and it had set out plans to improve those processes.

The accountants also noted the trust was a victim of a fraud, where it paid a “valid, appropriately approved purchase invoice” for £15,999 into a fraudulent bank account. It has recovered £10,702 of this money.

A Department for Education spokesperson said: “Academy trusts operate under a strict system of oversight and accountability – more robust than in council-run schools – which means any issues are identified and we can take swift action.

“We issued a financial notice to improve in March 2016 following concerns about the trust’s financial management, governance‎ and oversight.

“The Education Funding Agency is now working with the new leadership team to agree a robust recovery plan‎ for the trust.”