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There have been a number of instances recently where a Financial Management and Governance Review (FMGR) has had to be carried out at an academy due to reports and allegations of poor financial management and inadequate governance policies.
One of particular note is the recent case of investigations into the David Ross Education Trust (DRET), a 33 school multi-academy trust (MAT) with a general annual grant (GAG) of £66 million. The full report can be found here.
In the early months of 2017 a number of reports were made to the ESFA regarding the concerns about the number of resignations of senior personnel within DRET and the reappointment of these positions. In addition to this, there were further allegations of non-compliance with the Academies Financial Handbook (AFH), with suggestion of potential fraud. All the reports of non-compliance came from within the trust, both from individual schools and the central trust team.
Investigation
The evidence provided from the reports and allegations was no indication of any fraud or governance issues, but as a follow up the ESFA triggered an FMGR at DRET. The FMGR focused on the financial integrity of the trust, the governance policies in place and procurement.
Findings
The FMGR concluded a number of things:
Actions Taken
Acting on these issue DRET have put a number of action plans and policies in place, one of which being the ‘Shared Services Project’ which aims to distribute funds to individual academies, back office functions and the central team effectively. This is forecasting a £4.6million recovery over the next 3 years.
FMGR’s are carried out by the Education Skills and Funding Agency (ESFA) in response to concerns raised about an academy or academy trust. An FMGR can also be recommended by OFSTED in order to improve the rating of the academy. The aim of the review is to aid the academy’s governing body in becoming more skilled, learning to prioritise effectively and understand the policies and regulations that come with running an academy.