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Local school authority must improve 'financial governance and financial management' says Department for Education

The Mowbray Education Trust, which operates seven education settings in the Melton area has been served a notice to improve letter by the Department for Education (DfE).


The letter, dated 21st March, has just been made public by the DfE and it outlines concerns by the governing body relating to financial governance and financial management at the trust.


The Education and Skills Funding Agency has assessed the trust's breaches of the Academy Trust Handbook relating to financial governance and financial management and they are significant enough to warrant a Notice to Improve (NtI).


The breaches relate to the following sections of the ATG which state that the academy trust must ensure spending has been for the purpose intended and there is propriety in the use of public funds including in relation to any actual or perceived conflicts of interest


Novel, contentious and/or repercussive transactions must always be referred to ESFA for approval, and the request must be made to ESFA before the transaction occurs. Novel transactions are those of which the academy trust has no experience, or are outside its range of normal business.


Contentious transactions are those that might cause criticism of the trust by Parliament, the public or the media. Repercussive transactions are those likely to cause pressure on other trusts to take a similar approach and hence have wider financial implications.


Trusts must recognise that some relationships with related parties may attract greater public scrutiny, such as: transactions with individuals in a position of control and influence, including the board chair and accounting officer payments to organisations with a profit motive, as opposed to those in the public or voluntary sectors and relationships with external auditors beyond their duty to deliver a statutory audit.

Mowbray Education Trust Ltd must improve according to the DfE.


Trusts must report all contracts and other agreements with related parties to ESFA in advance of the contract or agreement commencing or being renewed, using ESFA’s related party on-line form.


Novel, contentious and/or repercussive related party transactions are subject to separate arrangements. Trusts must obtain ESFA’s prior approval for any contracts and other agreements with related parties that are novel, contentious and/or repercussive, regardless of value. Approval must be sought using ESFA’s related party on-line form. Trusts should carefully consider the impact of this requirement and its relevance to transactions involving the board chair and/or the accounting officer.


Academy trusts must ensure any agreement with an individual or organisation referred to in section 5.49 to supply goods or services to the trust is properly procured through an open and fair process and is: supported by a statement of assurance from that individual or organisation to the trust confirming their charges do not exceed the cost of the goods or services, and on the basis of an open book agreement including a requirement for the supplier to demonstrate clearly, if requested, that their charges do not exceed the cost of supply.


The letter issued to Mowbray Education Trust Ltd by the DfE serves as a written notice to improve financial governance and financial management at the trust. It reflects continued concerns regarding governance and oversight of financial management by the Board.


Being issued with an NtI means that certain delegated authorities, as defined in the ATH, are revoked.


All transactions previously covered by these delegations, regardless of their size, must now be approved in advance by ESFA, specifically: special staff severance payments, compensation payments, writing off debts and losses, entering into guarantees, indemnities or letters of comfort, disposals of fixed assets beyond any limit in the funding agreement.


It also includes taking up a leasehold or tenancy agreement on land and buildings of a duration beyond any limit in the trust’s funding agreement, carry forward of unspent general annual grant (GAG) from one year to the next beyond any limit in the funding agreement and pooling of GAG.


ESFA will monitor progress made towards meeting the requirements of the NtI and will keep the DfE updated through regular case reviews. A decision to lift the NtI will be taken when they are satisfied the requirements set out in the Annexes have been met in full.


A spokesperson for the Trust said: “The notice to improve relates to an isolated matter, identified in Autumn 2023, regarding compliance with the Academy Trust Handbook.


“We are treating this very seriously, and have been working in close conjunction with the ESFA, which has recognised the positive action we have taken to date, to rapidly rectify this. We are confident in the actions we are taking to resolve this as quickly as possible.”


The Mowbray Education Trust was established in 2014 and has Ab Kettleby Primary School, Brownlow, John Ferneley College, Oasis Pre-School & Retreat, Sherard Primary School, Somerby Primary School and The Grove Primary School in its portfolio.



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