Finance investigation at school flagged expenditure on alcohol, flowers and hospitality

AN investigation into the financial affairs at Lymm High School following the suspension of the principal and her deputy highlighted various concerns including cash and credit card expenditure on alcohol, flowers and hospitality.
The audit, which has been welcomed by the school governors, identified various weaknesses and issues in relation to financial management and governance, including missing personnel files – including those of the two senior members of staff who had been suspended.
The audit was carried out by the Government body – the Education Funding Agency’s (EFA) External Assurance Team, who visited Lymm High School Academy Trust (the Trust) in September 2013.
The team performed sample testing of financial transactions, reviewed supporting documentation and held discussions with Trust officials.
A number of control weaknesses and issues in relation to financial management and governance were identified.
These included internal controls within the Trust’s finance function, such as segregation of duties in purchasing and procurement, which had been weakened following the suspension of the principal finance officer, due to resource limitations.
The Trust reported the individual employed in the principal finance role may not have been appropriately qualified nor have the relevant experience required of the post. They were not able to substantiate this as the individual’s personnel file could not be located.
Personnel files for a number of senior staff could not be located during the visit. The apparent loss of these files was of concern particularly as they included the records for the two staff suspended and under investigation.
The loss of these files left the Trust exposed to the risk that personal data could be mis-used and data protection legislation may have been breached, with possible financial implications.
There were inadequate quotation/tendering records available at the time of the visit to fully support and explain the award of contracts or high value purchases.
A declaration of interest was not available for all members of the Governing Body and Finance Committee and some minor items of expenditure were identified that may not be considered proper use of public funds and could leave governors and employees of the Trust open to criticism. Examples included cash and credit card expenditure on alcohol, flowers and hospitality.
The External Assurance visit was carried out against a backdrop of concerns about the Trust’s performance and leadership, two senior staff suspensions and suggestions of financial irregularity.
The Trust had commissioned high level reviews of finance arrangements by its external auditors, who until early September fulfilled the Responsible Officer (RO) and Internal Audit functions.
The EFA were called in during the early summer of of last year when concerns were raised about the Trust’s performance and leadership.
The principal had been suspended in June 2013 and an investigation had been commissioned by Governors. In July 2013 the Trust’s principal finance officer was also suspended pending a separate disciplinary investigation.
Separate communications were received by the Department for Education and the EFA, including at least one direct to the Secretary of State, raising concerns including the suggestion of financial impropriety. These resulted in a two-day planned visit to the Trust by representatives of the EFA’s External Assurance (EA) team in September last year.
The purpose of the visit was to review the financial management and governance arrangements at the Trust in order to provide assurance to the EFA Accounting Officer over the use of public funds.
This was a review of the Trust’s arrangements at the time of the visit, although it was apparent that steps were being taken, following the appointment of the interim Executive Principal, to strengthen those arrangements.
During the course of the visit, a number of high risk issues came to their attention, including high value income streams involving cash transactions, deleted electronic data and missing personnel records.
As these presented an increased risk of financial irregularity or fraud, these areas were added to the scope of the EFA’s work.
The audit also revealed six contracts had inadequate evidence of quotations/tendering and with two exceptions, available tender documents failed to adequately demonstrate the rationale for selection of a preferred supplier.
Four out of eight contracts did not have a signed copy of the contract available and the Trust was unable to provide an up to date and detailed register of all contracts / leases it has entered into.
During the period September 2012 to July 2013 there were three credit cards held by senior members of Trust staff. A review of credit card records during that period highlighted four key issues: The Trust did not have a formal credit card policy for staff to follow and each of the three cardholders had signed “debit” card agreement forms.
Four purchases of alcohol were identified – this expenditure could be deemed to be improper use of public funds, or expose the Trust to criticism.
Chair of Governors Kieran Walshe said: “Lymm High School welcomes the Education Funding Agency’s publication of its audit report on the school, which relates to circumstances a year ago.
“The school invited the visit from the team from the Education Funding Agency in September 2013, and the report found a number of issues that had already been identified and acted upon by the school’s auditors.
Mr Walshe added: “We hope this report will help people to understand some of the issues that the governing body dealt with robustly in 2013, and provide useful learning for other schools in Warrington.
“The two senior staff who had responsibility for school finances and audit at this time are no longer employed by the school.
“Robust arrangements for audit and financial oversight by governors are now in place.”
Former principal Angela Walsh (pictured right) and vice-principal Jamie Shiels resigned earlier this year after being suspended last year.
A full copy of the report which is now in the public domain can be downloaded by CLICKING HERE