A multi-academy trust (MAT) has been told to take “urgent action” to resolve financial management issues after an investigation revealed spending  on “excessive gifts and alcohol” as well as a breach of policy when procuring a catering contract and employing consultants.

Galileo Multi Academy Trust, which consists of 10 primary academies in Redcar, North Yorkshire, was investigated by the academies watchdog, the Education and Skills Funding Agency (ESFA), which identified “failings and weaknesses in financial management that breached the Academies Financial Handbook (AFH)”.

The trust, which has a new chief executive, says it has now dealt with the issues raised in the ESFA’s report.

The report published today reveals:  

• “A five-star luxury golf and spa hotel” was booked for a day at a cost of £1,750, including £175.00 for ‘conference tea and coffee’.” The invoice stated it was for 35 delegates but the chief executive said later “approximately 75 had attended in the afternoon”.
• An invoice of £1,476 for another local venue for all trust and school staff, including £1,000 for a grand marquee.
• A cheque for £907.95 was paid to a local restaurant for a Christmas meal for “some of the trust central team and trustees” and included £241.65 on alcohol. However, all but £55.05 had been reimbursed at the time of the review, and that amount has been received since the review.
• A “sample” of 23 taxi journeys totalling £401.54 taken in London by the chief executive - of which 18 were between 8am and 6pm - despite the trust’s travel and expenses policy stating taxis should only be used “where it is not reasonable to use public transport or travel on foot”.
• A laptop and case were purchased at a total cost of £748.99, despite this being above the transaction limit allowed by the trust’s purchasing card policy.
• A leather MacBook case for the chief executive, which was ordered from the US at a total cost of £86.82, including free personalisation.

Issues came light after allegations were made to the ESFA, which carried out a financial management and governance review.

Its report states: “A number of instances of non-compliance with the trust’s policies in relation to purchasing card expenditure, particularly in relation to gifts and hospitality” and “ irregular expenditure not for the purpose intended, eg, excessive gifts and alcohol.”

It adds: “Our review identified a number of breaches of both the trust’s policies and the AFH, including weak internal controls in respect of procurement, and recruitment and selection processes not being in line with policy and best practice. The review has highlighted a number of areas for improvement which need to be addressed to prevent any future potential loss or further value for money concerns.”

Key findings of the report include:

• The trust did not comply with its financial procedures policy when procuring a new catering contract. The contract was awarded to a related party on a “for profit” basis.

• The register of business interests on the trust’s website was not complete. In relation to related party transactions, conflicts of interest are not always declared or recorded correctly during trust board and committee meetings.  

• In relation to the procurement of consultants, the trust did not comply with its financial procedures policy.  

• Recruitment processes in operation were not in accordance with the trust’s recruitment and selection policy, and best practice in respect of a fair and open competition.

• Instances of conference expenditure and marketing expenditure which may not represent value for money.

The report concludes that the trust needs to take urgent action,  “including giving greater consideration of the robustness of financial management and governance arrangements”.

The trust says that, in acknowledging and responding to the findings in the report, an interim executive board was established to address the improvements recommended, and a new CEO has now been appointed. 

Interim chair of the trust Les Walton CBE said: “The report deals with issues which occurred nearly two years ago, however I am delighted to say that all the issues that the report raised, such as contract tendering, financial scrutiny and procedures, have been dealt with.

“In fact, most recently, our internal audit presented a glowing report on the governance and financial oversight of the Trust.”