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MAT that broke rules runs up £38k related-party bill

MAT that broke rules runs up £38k related-party bill

Academy trust previously criticised for not following procurement rules, spent tens of thousands of pounds with related parties on services including ‘immersive classrooms’ and sports coaching, new accounts show

28th January 2020, 5:57pm

Amy Gibbons

Mat Spent £38,000 On Related Party Transactions

A multi-academy trust with a history of poor financial management spent nearly £40,000 on related-party transactions last year, its accounts show.

Enquire Learning Trust (ELT), which was criticised over “serious weaknesses” in its financial management in 2017, spent on a number of services in which its trustees had a vested interest - including “immersive classrooms”, sports coaching, and property improvements, according to its accounts for the year ending August 2019.

The trust, registered in Wakefield, is in charge of 29 schools across the North East, Yorkshire and the Humber, and the North West. It has taken on three new schools - Easterside Academy, Rose Wood Academy, and Stakesby Primary Academy - in the past year.

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ELT’s accounts for 2018-19 show that it was invoiced £11,945 by a company called Interactive Immersive Classrooms Limited (IIC Ltd), which develops “immersive classrooms” for schools. The trust’s director of business development and operations, Paul Kennedy, is also a director of the company, which supplies five of the academies in the Enquire Learning Trust.

The trust also declared the following related party transactions concerning the MAT’s schools:

£16,280 for sports coaching services. Related party: DF Coaching - governor at Yarm Primary School.
£4,088 for maintenance services. Related party: L Con Ltd - husband of business manager at Endeavour Primary Academy.
£2,071 for supply services. Related party: mother of the principal at Bradley Green Primary Academy.
£1,746 for representative for Usborne Books. Related party: business manager at Downson Primary Academy.
£930 for property improvements. Related party: father of the business manager at Humberston Cloverfields Academy.
£800 for community behaviour services. Related party: Stepping Up Together - governor at Easterside Academy.
£504 for cleaning services. Related party: daughter of trust’s director of business operations.

Of the £38,364 due to be spent on related-party transactions, £498 was outstanding at the end of the year.

ELT’s accounts report states that all related-party transactions are “subject to an open and fair procurement process” and “any conflicts of interest are adequately and appropriately managed”.

However, in 2017, it was criticised for failing to follow a formal procurement process for almost £1 million worth of services it bought from an organisation linked to two of its trustees.

An investigation by the Education and Skills Funding Agency (ESFA) identified “serious weaknesses” in the trust’s financial controls, financial management and governance at the trust.

Darren Holmes, chief executive officer of ELT, said: “There are eight RPTs [related party transactions] across a workforce of circa 1,350, totalling £26,419. This represents 0.05 per cent of the trust’s total annual spend.

“The note relating to P. Kennedy is included as a RPT for transparency purposes. P. Kennedy is a director of IIC Ltd acting wholly as a representative of the trust and has no pecuniary interest in the company as set out in the legal instruments.

“Since 2017 the trust has reviewed and reshaped all governance processes including those related to financial management. A recent report from the EFSA confirms that they have trust and confidence in our work and that we comply fully with the Academies Financial Handbook.

“The trust reports all related party transactions in the annual accounts and we note that these form a very small proportion of our budget and in each case represent very good value for our pupils.”

A spokesperson for the Department for Education said: “We introduced a robust approval process for related party transactions so that all academy trusts are required to declare them up front and to seek approval for any related party transaction valued at £20,000 or more.

“We are currently reviewing the latest academy trust accounts for the 2018-19 academic year and will take action where we find evidence of non-compliance.”