Unaccountable academy heads : stories like this will become more common

[TalkinPeace]

www.theguardian.com/education/2014/may/13/headteacher-banned-thousands-pounds-personal-expenses

The "lighter touch" has been an utter disaster in the finance industry.
Lack of oversight and accountability always leads to problems
And yet BILLIONS of pounds of school budgets are being removed from Public Sector audit scrutiny.

Prepare for LOTS more stories like this.

As if we haven't already seen lots.

LA controlled schools have been shown over many years to be happy hunting round for fraud after too.

so how can fragmentation and academies and free schools make it better?

It can't and won't.

Free schools weren't set up as a remedy to fraud; they won't "make it better".

But neither are they worse.

what about converter academies that WERE under public sector oversight and are now not?

LEA schools have to publish every item of expenditure over £500 (as they come under Pickles)

Academies can file group or abbreviated companies house accounts that have no expenditure details at all of their £5million per site budgets

That didn't stop eg £2.7m going astray from just one LA school (head admitted false accounting, 12 months suspended sentence).

There is nothing (other than an evidence-free whispering campaign) to indicate that any particular management arrangement is more conducive to fraud than any other.

yet.

I investigate public sector bodies for a living and know that spotting fraud depends on the investigator having free rein and not being cowed by the management

in LEAs that was possible
in academies it is not

Our local primary under LEA control had £58k stolen by the school treasurer, who only received a suspended sentence. Apparently this had been going on for a while, someone messed up big time not picking up on this.

But surely, because the treasurer was caught it WAS picked up on?

the lady I put in jail got away with it due to nobbling the checkers

academies will ALWAYS be able to nobbler the checkers as they will never have to suffer truly independent auditors

She had been doing it for FIVE years, eventually it was picked up, a bit late in the day in my eyes.

well p-p-pickles has abolished the audit commission so he clearly does not care

Academies have to be audited. LA schools have in the past suffered significant frauds. One in my area was so huge it made all the papers and resulted in questions being asked in parliament. The article in the Graun doesn't make it clear, but it's likely the head in question had been indulging in fraudulent activities for many years while under LA control, and was caught out by the auditors. I don't like academies, I'd abolish them, I was the lone voice of reason arguing that our school shouldn't convert - but it is incorrect to say that academies are unaccountable. If anything the audit burden etc on them is higher than for LA schools.

Talkin', I'm afraid you are wrong about the issues of independence - the audit of academies is at least as likely to be independent as any audit of a LA school.

Why academies were ever allowed is beyond me.
It is ok [I think? probably? if they are consistently run well for decades]. Else, they are open to all sorts of possible abuse[yes I know it can still happen in LA schools, but there, there are so many people watching over and checks and balances.

Herc
the audit of academies is at least as likely to be independent as any audit of a LA school.
speaking as a public sector auditor I have to UTTERLY disagree with you.

Academies choose their auditors from the hundreds of firms touting for work.
Any firm that asked too many questions would get fired and replaced with a more compliant one.

LA auditors were appointed by the Audit Commission, now the NAO. THe LA has little or no say in the auditors and faces the risk of Public Interest reports
which do not apply to private companies (which is what Academy schools are)

Any firm that asked too many questions would get fired and replaced with a more compliant one

Interesting assumption. I have seen many private firms get seriously qualified reports from their auditors, including one that essentially said they couldn't confirm any of the figures in the accounts at all. In some cases the company concerned have stayed with the same auditors.

When I have been involved with audits of private companies I have always found the auditors to be fiercely protective of their independence and determined to ask all the questions they needed. The accountants I know who work as auditors are universally of the view that preserving their own reputation for independence is more important than keeping the business of any one client. Maybe my experience is unusual but I don't think so.

Auditors won't, necessarily detect fraud but they should flag up any inconsistencies between the accounts and the records, failure to disclose matters required by law, etc.

For academies the auditor is required to produce a statement for the EFA covering regularity, propriety and compliance.

None of this guarantees that fraud will be detected. I remain of the view that all forms of organisation are vulnerable to fraud. I have seen nothing to make me believe that any particular form of governance is less vulnerable than others.

talkin speaking as a director in a firm that covers both extensive public sector and private sector work I know you are wrong.

well, I'll be delighted to be proved wrong ....
but suspect I won't be

You're not wrong that there are a lot of issues with academies. Lots and lots and lots. You may not be wrong that some (probably not lots of) historic fraud - occurring before schools converted - will be uncovered now they are under properly independent oversight. It's already happened in some cases. You are wrong if you think the oversight of academies will be lighter than of LA schools. It isn't, and won't be. The problem is, oversight identifies problems after they have occurred. And lots of academies currently have people in charge of finances who just aren't qualified for that role. Shutting the stable door after the fact will get rid of the worst offenders but won't help the schools. :( LA schools benefit from rigorous tired and tested control systems which may not be adequately replicated in individual academies. As you will know, changing control systems is a classic fraud risk indicator. But fraud isn't the biggest risk in most cases - human error is. The old way wasn't broken at all except for the fact that it was ideologically unpalatable to the powers that be. The new way is ideologically simpatico for them - but fraught with risk. For little or no reward.

Tried and tested, not tired and tested! (Although, maybe in some cases... )

The lady I put in jail over-rode controls and bullied auditors.
BUT
"lighter touch" was what let her get away with it
and the fact is that the abolition of the Audit Commission and the emasculation of the NAO will not be good for governance over public funds
in education or any other area

all sorts of great ideas come out about "armchair auditors" and transparency codes
but there are no sanctions for when they are ignored

there are THOUSANDS of frauds waiting to hit the fan - but no pressure from above to deal with it

and turning schools into Ltd companies palms the problem off onto Companies House and the CCAB, neither of whom show any aptitude for enforcing compliance.

Talking I work in a very similar field to you... Do you work for a public sector organisation?

I don't like academies having public funds but the accountability is somewhat vague. They cannot be truly independent because they have stewardship of taxpayers money and must be accountable for it.

My issue would be whether auditors of academies understood the issues in respect of using public funds. It isn't straight forward tick and bash audit.

The changes to the audit commission and the NAO are not, in my view, a positive development. However one (probably not unintended) consequence is that private sector audit looks even better, in comparison, than it did before Pickles.

Audit oversight will be at least as strong and maybe stronger for academies. The control environment within which many academies operate may not be - and that's a key issue. And one of the main reasons why I do not think they are a Good Thing. Some academies are probably superbly run. We already know (and it's still early days, really) that some are not.

The EFA issues an Academies Financial Handbook designed to explain the requirements to academy trusts including the areas of Managing Public Money that are applicable. They also produce an annual Accounts Direction which includes details for both trusts and auditors covering the required format of accounts and ensuring regularity. There are also requirements set out in academy funding agreements.

I am not qualified to say whether these documents cover the requirements well enough to allow auditors and others to understand the issues.