The academy's 2012/13 accounts can be found on its website under the 'Support and Intervention' tab in the 'policies' section.
The accounts show a fundamental disagreement between the academy's auditors and its governors about the viability of the school. This article attempts to understand which of these positions the Education Funding Agency (EFA) agrees with.
The academy's poor GCSE results attracted attention in 2012 but this was overshadowed by its financial situation; its costs were outstripping its income by increasing amounts each year. This problem appeared to be brought to a head when the academy fell victim to an email scam that occurred in July 2013 and will cost it around £1.2 million.
The deficit
The academy's 2012/13 and 2011/12 accounts show the gap between the school’s incoming funds and its costs has been widening over the last three years. In 2012/13 the difference between the trust’s operating income and costs was a £437,000 deficit (before the additional £1,205,000 cost of a fraud).
A year earlier, in 2011/12, the difference between operating income and cost was £298,000 and in 2010/11 it was £131,000. The academy's governors said a deficit was expected due to falling funding and costs from improving the school.
Auditors vs Governors
The accounts also show that the academy’s governors and its auditors - Crowe Clarke Whitehill - had differing views about the trust’s viability.
The auditors said there was 'material uncertainty which may cast significant doubt about the academy's ability to continue as a going concern.'
This view was addressed by the governors in a section of the accounts titled ‘Going Concern’ which is copied here in full:
‘We believe the academy will remain a going concern. We have taken into account the current deficit and the operational cash flow position and have prepared financial plans for the short and medium plan. These indicate that the Academy will be able to meet their operational costs each year going forward. In 2013/14 and 2014/15 it is projected that the Academy will maintain the deficit. The Academy has projected an on-going increase in pupil numbers and having aligned increases in staffing to match these increases it is projected that from 2015/16 onwards the Academy will be able to reduce the deficit balance each year. It is anticipated that the Academy will be able to build reserves from 2020/21 onwards.
'The Academy believes that the EFA will provide support to enable us to manage the projected negative operational cash flows that would prevent the Academy from meeting its financial obligations. It is anticipated that this support would be through staged early drawdowns of funding that the academy would be required to repay.
'The evidence that we have for this assumption is: The EFA clearly layout their approach to supporting academies with negative cash flows through their document titled Academies Advances Funding.
• The EFA have already responded to our first request for advanced funding by providing £615,000 in November 2013.
• The EFA have shown their support for the academy through their investment of £11.1 million for the capital project.
• Finally, if the EFA are not fully assured that the governing body has the capacity or capability to manage the academy’s finances, under the funding agreement signed between the trustees and the EFA, the EFA will be able to remove the trustees and governors and put in place an alternative means for the academy to continue to support the young people and the community it serves.
Who does the EFA agree with?
So, does the EFA agree with the auditors who say the academy may not be viable, or the governors who say that it is? Some clues were provided in the next significant document in the academy’s financial history: the issuing of a ‘Financial Notice to Improve’ by the Education Funding Agency (EFA). This was sent to the school at the beginning of March 2014 and published on the DfE website in April 2014 - it was followed swiftly by revelations about the fraud.
The EFA said it took the decision to issue the notice because:
- …St Aldhelm’s had ‘to obtain deficit funding and advances of funding from the EFA’ – Does this imply that the EFA is less relaxed about providing financial support than the trust thought?
- …'the Trust’s acceptance that the current sponsorship model has not been successful '- Does this imply that the trust had not previously accepted this to be the case and may now be required to make more fundamental changes than expected? Also, if a new sponsor has to be found, would the EFA require the academy’s financial position to be fully estimated before passing the risk onto a chain managing other schools? Would it also require it to be in relatively good shape prior to negotiations?
- Part two of the Financial Notice to Improve said that the trust must ‘review its recovery plan and confirm the accuracy of the financial projections to the EFA’ - Does this imply that the original plan may have been lacking in some way?
Latest developments
The Financial Notice to Improve said the academy must respond to by Friday 16 May 2014. It was revealed on Monday 19 May that the existing head, Cheryl Heron, had resigned and new head, Monica Cross had been appointed.
On 23 May The Bournemouth Echo interviewed Monica Cross reporting: ‘It (St Aldhelm’s) is currently sponsored by Bournemouth University and the Diocese of Salisbury but the government is considering proposals to make it part of a bigger group of academies, also operated by the Diocese of Salisbury... Mrs Cross said: “It is becoming increasingly obvious across the country that stand alone academies are not as successful as those that are grouped.”’ (The Diocese of Salisbury set up its own multi-academy trust in November 2013: DSAT runs four schools but is too new to have produced a set of accounts).
On June 3 The Bournemouth Echo published a story with the headline: Major shake-up at St Aldhelm’s Academy could see senior staff axed due to ‘over-staffing.’
It said: ‘Mrs Cross has called a halt to the redundancy process started by her predecessor but is now working on a replacement. She said: “The staff will be reduced - the school has been over-staffed. It will all be done appropriately and properly.”’
Conclusion
St. Aldhelm’s has not been able to comment on this article so it is hard to know how accurate any of this speculation may be. But events and news stories that have occurred since the academy's governors and auditors disagreed over the state of the school, appear to suggest that the government is more sympathetic to the auditor's view. They also suggest that deep-rooted changes will happen.
If a multi-academy trust or chain is willing to take on this school without putting its existing member schools at risk, it should involve a detailed evaluation of those risks and the strength of the trust taking it on. Judging by the differing views that have arisen between St Aldhelm’s and its own auditors, there are likely to be differences of opinion between the EFA and any prospective new sponsor about the risks posed by such a transfer and the financial support the EFA can or should provide.
No comments:
Post a Comment