A multi-academy trust has been told to take “urgent action to resolve issues” after it breached financial regulations and notched up “contentious” bar bills and “expensive” hotel stays.

The Leading Learners Multi-Academy Trust, made up of four primary schools in Manchester, was the subject of an Education and Skills Funding Agency (ESFA) investigation following “an anonymous tip-off.”

In a report, ESFA, an agency of the Department for Education, also finds the MAT breached regulations by having “no evidence of a proper procurement exercise” for expenditure on five consultants, including one who was known “in a personal capacity” to the trust’s accounting officer.

The investigation found that only one consultant was on a formal contract worth £38,500 (at £550 per day for 70 days). There was no evidence that a formal tendering exercise had taken place for any of the consultancies, as required under financial regulations. 

The report states: “The MAT uses five educational consultants, including a National Leader of Education and a secondee, at the direction of the AO [accounting officer]. No evidence of a proper procurement exercise was available for this expenditure (breaching the MAT’s latest financial regulations).

It adds: “The AO confirmed the consultants were known to her, one in a personal capacity and the others professionally. Consequently, the procurement of these consultants would require management of actual or perceived conflicts of interest. There was no evidence that this had taken place.”

The ESFA also highlighted “contentious and potentially irregular expenditure,” including £1,888 on alcohol/bar drinks as revealed in spending on the MAT’s charge card for 2015-16 and 2016-17. It also revealed spending over the same period, including:

• three hotel rooms at £277.44 per room per night - yet “no evidence was available to suggest cheaper alternatives had been considered”

• £164.50 on jewellery (gifts)

• £100 on a John Lewis Gift Card

• £451.83 labelled as “trustee xmas” on 20 December 2016 without a VAT receipt, for which “the AO stated this was a dinner for trustees and the senior management team”

The report concludes: “The MAT needs to take urgent action to resolve the issues, including greater consideration given to the robustness of financial management and governance arrangements by the board and AO.”

It adds: “The MAT should commission an independent review of financial management and governance covering the entire MAT to fully identify all issues (including compliance issues with all applicable frameworks) which need to be resolved. The review commissioning process, terms of reference and scope should be agreed with the ESFA in advance.”

Brian Wilson, chair of the Leading Learners Multi-Academy Trust, said the investigation had been conducted nearly two years ago and that the trust had continued to strengthen its financial governance since then, including by recruiting a new director of finance as well as a new financial management system with greater scrutiny of accounts.

He said: “The report rightly recognises that there were issues with our financial management at that time of their review. As we have stated before, this is not something that we have ever shied away from. When we grew from one to four schools, our financial expertise, systems and processes did not strengthen at the same rate as our education improvement.

“It is also important to stress that the ESFA are not issuing a Financial Notice to Improve to the trust, reflecting that they are happy that we have properly addressed the specific recommendations laid out in the report.

“In fact, our latest audit report for the financial year ending August 2018 found that there were ‘no significant findings to bring to the attention of Trustees’ and that there were ‘no regularity, propriety and compliance matters that we became aware of during the audit.’”