Readers of this blog may well have realised that I am not of the view that academies and multi-academy trusts are the root of all evil. My take is that where wrong-doing has been done in a trust this is down to the people within it. I can see that this may be seen as a “guns don’t kill people, people kill people” style argument. However, what I also do, fairly regularly is to call for stronger, more effective governance rules to prevent people making such errors of judgement.
Sadly there will always be people who seek ways to take advantage of rules to benefit themselves (though they will often convince themselves that they are only breaking the rules for the greater good) and the fight against this is a continual one. Gaps have to be plugged. Where the ability to bend to rules to someone’s advantage is found the rules need to be reinforced. This is an on-going process.
The main issue that I and many others have with regards to academy governance is that there are many identified weaknesses that the DfE/EFA have failed to plug right from the very start, and have continued in this failure even when they are pointed out to them. This failure is now starting to border on negligence.
This report, a Financial management and governance review of Academy Transformation Trust published over the weekend (naturally) highlights one of those. At the heart of this trust was a very clearly identified conflict of interest. The Accounting Officer, a person who needs to be above reproach and answerable to the board and to the members of the trust, was also a member and a trustee. Not only was he a trustee, the trust governance enabled him to remove the chair of the board of directors (governors) and appoint a new director (one of four appointed) as chair. Why would he do this? Well, it looks like it was done because the original chair suspended the Accounting Officer from his post. Why did the chair do this? Well, I suggest you read the report and make your own mind up about that. Here’s a sample:
This report highlights the impact of poor governance arrangements. They are not just poor in retrospect they were always obviously poor. Any governance provisions that enable an individual to sack the person authorised to hold them to account for their work are, by definition, weak.
The DfE needs to take some pre-emptive action here otherwise they are just going to be faced with these stories dripping out into the public domain on a regular basis over the coming years.
Firstly they have to establish the scope of the problem. This can be easily done as a piece of deskwork looking at the accounts of each of the Multi-academy trusts on their books. It took me about 10seconds looking at the accounts of ATT before I reached page 3 and saw this:
One individual working at all three levels of a trust given responsibility for the proper management of over £75 million of public funds.
An alternative route to a review of governance is to require each trust to include in their accounts an audited statement of adherence to approved governance guidelines. DfE/EFA can produce this and the auditors would be required to sign and include it in the accounts. This could be a backstop – it wouldn’t take more than a few weeks work for DfE to establish the position in every trust it has responsibility for, with further information drawn from the articles for the trust where appropriate.
Secondly, any trust where the governance is determined to be out of step with publicly acceptable standards the trust should be given 3 months to correct the situation. Some very simple standards need to be set and adhered to. Employees cannot be members. You cannot have the power to sack someone you are accountable to. Where a trust refuses to bring its governance into line with standards “..that would command broad public support…” then the DfE should commence action to terminate the funding agreement for that trust. Such an approach would have broad support in the education sector.
Thirdly, and this is one I’ve written about before. Simply put, an organisation that is responsible for £75m of public funds should have a suitably qualified employee as chief finance officer. In the trust highlighted here they were suitably qualified but not an employee, they were a contractor. This meant that there was, in the words of the report “…a lack of permanent staff with accountancy level financial qualifications in a MAT responsible for a total 2015/16 funding of £78.4m represents a significant risk for the trust.” An organisation that had its governance right wouldn’t permit this to happen.
Fourthly, there are questions to answer here regarding the RSC oversight of trusts. Again, from the report:
Whilst the advice given is, I guess, legally correct, I am a bit surprised at its seeming lack of engagement with the issue. I would like to hear more about what the RSC actually did to try and prevent this trust ignoring the very basics of good governance practices.
Finally, there is nothing in this report which could not have been foreseen. Given that the DfE have to approve every MAT application, including the governance arrangements, they cannot evade some responsibility for this mess. They now need to start clearing up.