An academy trust with 27 schools failed to follow a formal procurement process for almost £1 million worth of services it bought from an organisation that two of its trustees are connected to, a report reveals.

An investigation into the Enquire Learning Trust (ELT), which has hubs of schools in the North East, Yorkshire and the Humber and the North West, found “serious weaknesses” in financial controls, financial management and governance at the trust.

The report, published by the Education and Skills Funding Agency (ESFA) today, says it broke rules by employing senior managers off-payroll, through limited companies.

The report also raises concerns about how ELT procured services from its sponsor, Enquire Limited.

Over the past five years, ELT bought £970,150 worth of leadership, management and school improvement services from Enquire Limited. The report also says the trust had “incurred high costs for hotels and overnight stays relating to school improvement and other residential events”.

It says that two directors of Enquire Ltd are also trustees of the academy trust - which is “a significant related-party transaction and conflict of interest for the trust”.

‘Inadequate’ financial controls

An agreement between the two organisations and the Department for Education only allows Enquire Ltd to provide services to the trust if they are at cost, and follow procurement rules.

However, the report says “the chair of the board confirmed no formal procurement process was undertaken in engaging the services of Enquire Ltd” - in breach of the rules.

The report also says there is no formal contract between ELT and Enquire Ltd, and no statement of assurance that Enquire Ltd only charged the academy trust the cost of its services.

It also criticises the trust for not declaring two related-party transactions in 2015-16, and understating other related-party transactions that it did disclose.

The ESFA highlights ELT’s “inadequate” financial controls over the use of its credit cards.

It says that in March 2016, £3,968.64 was spent on trust credit cards. Of this, receipts were not presented for £1,538.06 of the spending.

And in October 2016, £3,356.90 was spent on credit cards. No receipts were presented for £1,009.75 of this.

The trust also “did not have a functioning audit committee” and its internal controls testing (responsible officer) “was not independent”.

The report says ELT “has acknowledged that these issues need to be urgently addressed to ensure internal control arrangements within the trust are operating effectively and assure the safeguarding of public funds”.

It adds: “They have recently constituted an audit committee and are working towards standardising the level of security and ICT infrastructure across the academies. They have also indicated that they will take steps to bring all senior staff on to the payroll and to regularise the procurement of school improvement services.”

Tes has approached ELT for a comment.

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