Internal Audit Executive Summary

Devon County Council

West Exe Technology College Leadership and Governance Review

DfE Number: 4014

Spring 2012

Devon Audit Partnership The Devon Audit Partnership has been formed under a joint committee arrangement comprising Plymouth, Torbay and Devon councils. We aim to be recognised as a high quality internal audit service in the public sector. We work with our partners by providing a professional internal audit service that will assist them in meeting their challenges, managing their risks and achieving their goals. In carrying out our work we are required to comply with the CIPFA code of practice for Internal Audit and other best practice and professional standards.

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1 Introduction The Governing Body has responsibility for the management of the College with the aim of

promoting high standards of educational achievement. Operational management is delegated to the Executive Headteacher, who in practice is responsible for the routine finance systems in the College. In addition the County Treasurer of Devon County Council has a statutory responsibility to ensure that all financial systems are secure. This is achieved by maintaining an effective internal control framework and monitored by internal audit, which will report and give an objective opinion to the Governing Body.

The College’s service level agreement for audit provides for a systems and compliance audit once every three years the last of which was in June 2010. The audit provides a systems control overview and sample testing of controls to provide assurance on the operation of those systems. The systems reviewed are mainly financial but some are operational. Reponsibility for both financial and operational management control rests with the College.

This report is separate from the systems audit where the Head of Education and Learning instigated this review following concerns raised:

- initially in June 2011 when the Executive Headteachers salary was disclosed in the Authority’s Accounts;

- in Autumn 2011 by governors for a review of the leadership pay structure and - publicly in spring 2012 there were issues raised relating to the leadership and

governance of the College. Devon Audit Partnership, as internal auditors to the County Council and the College, were instructed to complete a review to provide assurance in the following key areas:

- leadership and governance arrangements are robust;

- statutory and legal responsibilities relating to governance have been carried out;

- the financial decision making process of the leadership and governance is sound;

- governors have fulfilled their role as critical friend by suitably challenging the Headteacher and staff in carrying out their role.

In accordance with these requirements, an audit was completed at the College in Spring 2012. Our opinion is based on the review of documentation, evaluation of related system controls and the results of testing a sample of transactions. Our overall opinion is described below, and the table In Appendix A1 shows the level of assurance we can give in respect of each area reviewed.

2 Audit Opinion Improvements Required - Many of the concerns raised publicly, but not all, have been

found to be substantiated such that there have been inappropriate decisions made, weak governance in key areas and a lack of public transparency and accountability. This has significantly compromised the public reputation of the College where otherwise there is a sound educational reputation and confidence from parents.

There are a number of significant instances where controls and procedures do not adequately mitigate the risks identified. Existing procedures have not operated effectively in key areas and need to be improved in order to ensure that they are fully reliable. Fairly extensive recommendations have been made to ensure that organisational objectives are not put at further risk.

A definition of the different audit assurance opinion levels is given in Appendix B of this report.

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3 Executive Summary The focus of the review was to provide assurance or otherwise on the leadership and

governance arrangements of the College in key areas and consider if there was any substance to allegations being made publicly relating to those areas. The former Executive Headteacher (referred to throughout this report as the Executive Headteacher), Staff and Governors were very open during the review to the Auditors. Chairs of Committee demonstrated great strength of resolve during the review to ensure that all matters are addressed and an open and fair process is able to be demonstrated.

In general there is a sound control framework within the College and the process of governance is generally well demonstrated, although not in all areas, in day to day business. Processes are generally well maintained by a dedicated team of finance staff and previous audit recommendations for improvement have always been well received at the College.

This review, which was much more in depth because of the concerns raised, has however identified that there are key exceptions to this general view and particularly the way that decision making is undertaken. The reports findings highlight issues that have occurred mainly over the last six years. The leadership and governance arrangements are considered to be significantly compromised where the balance is felt to be misplaced between too strong a leadership through the Executive Governors and weakness of the Governing Body to hold the leadership to account. This is very clear where there is insufficient lead through the Governing Body on their core business and the lack of positive challenge from governors during their meetings to hold the College and leadership to account. The result is that the Governing Body has allowed itself to be led too greatly by the Executive Headteacher and the Executive Governors.

The Executive Governors themselves do not have delegated powers yet in practice this appears to be where the decisions are made and presented back to the Governing Body. It is natural and right that the Governing Body should trust the Senior Leadership and Executive Headteacher but they also have a duty to lead and monitor the strategic direction of the College.

Governance arrangements have failed where the minutes of the Executive Governors (prepared by the Executive Headteacher) are not provided to the Governing Body and nor are those of the Salary Review Committee as is legally required. The Executive Headteacher and former Chair of Governors have not ensured due process is followed in this respect.

The Executive Headteacher has been too closely involved in key decision making processes including the appointment of and remuneration of family members and selective developmental roles of key staff. It is considered that the Executive Headteacher has not provided sufficient information from which governors could make sound decisions on senior leadership performance and pay. This has resulted in the significantly higher than normal pay structure of the senior leadership team and particularly that of the Executive Headteacher at the time of the review.

The review has also identified that on a small number of occasions the Executive Headteacher has not followed normal procedure for absence from the College and claiming of allowances.

The culmination of this decision structure and in some circumstances misuse of position by the Executive Headteacher, has established a culture which ethically is not sound and publicly is unacceptable to the extent that it has compromised professional standards expected of school leaders, trust of the staff and public and brought the reputation of the College into disrepute.

It is clear from the review that the current Governors and staff have the best interests of the College and pupils at heart. The Vice Chair of Governors demonstrated great strength of resolve to ensure a thorough review was made and that there is a will within the Governing Body to ensure that the significant improvements required will be made. There are however, some significant challenges ahead for the current College Leadership and Governing Body.

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The Governing Body and College Leadership will need to quickly develop its own capacity and expertise to be able to address the deep seated issues that underpin the fundamental weaknesses in this report.

4 Issues for the Schools Financial Value Standard The evidence obtained in internal audit reviews can identify issues in respect of risk

management, systems and controls that may be relevant to the Schools Financial Value Standard.

Based on the evidence we have found in this audit that there are four issues arising that warrant inclusion in the Governors Statement as follows:

• the leadership and governance arrangements; • remuneration of the senior leadership; • staff appointments; and • expense payments.

5 Scope and Objectives The audit concentrated on those matters referred to in the introduction and focused on the

records available to corroborate the governance process, pay and remuneration and expenses. The review period has been varied dependent on the nature of the concerns and has ranged from the current audit year for some systems e.g. expenses and back to 2006 for pay and some governance processes. Discussions were held with the Executive Headteacher, staff and governors where appropriate to confirm understanding of the findings of the review and to clarify where possible any missing information.

Effective financial management is essential so that schools’ can make the most of their resources, demonstrating value for money, exercise proper controls over significant amounts of public money delegated to them, and allocate resources effectively to meet priorities for development and improvement. Governors are required to sign off a Statement of Internal Control every year to demonstrate this.

Attached at appendix A are the Assurance opinions. The school is now in the process of responding to the suggested actions and are preparing an action plan to deal with the appropriate recommendations.

6 Inherent Limitations The opinions and recommendations contained within this report are based on our

examination of restricted samples of transactions / records and our discussions with officers responsible for the processes reviewed.

7 Acknowledgements We would like to express our thanks and appreciation to all those who provided support and

assistance during the course of this audit review. Martin Gould

Head of Audit Partnership

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Appendix A1

Assurance Opinion on Specific Sections The following table summarises our assurance opinions on each of the areas covered during the audit. These combine to provide the overall assurance opinion at section 2. Definitions of the opinions can be found in Appendix B.

Areas Covered Level of Assurance

1 Leadership and Governance

- Leadership and Management Fundamental Weaknesses

- Governors Responsibilities Improvements Required

- Governance Processes Improvements Required

- Declarations of Interest Improvements Required

2 Pay and Remuneration - Salary Review Fundamental

Weaknesses - Performance Management Improvements

Required - Recruitment and Appointment

Improvements Required

- Staff Progression Improvements Required

- Staff Absence Good Standard

3 Public Accountability - Management Decisions Improvements

Required - Staff Remuneration Improvements

Required - Procurement Good Standard

- Expenses Good Standard

4 Use of Resources

- General Improvements Required

- Inventory Improvements Required

5 Financial Processes Good Standard

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Leadership and Governance - Leadership and Management

Level of Assurance

Opinion Statement: It is difficult to provide assurance on the soundness and integrity of the leadership and management of the College in the absence, in some circumstances, of adequate documentation and the subjective nature of what constitutes good management. There is a clear process of governance and the framework itself is on the face of it sound; the governance arrangements and related issues are considered in the next two sections of this report. It is clear from our discussions with the Executive Headteacher, members of the Senior Leadership and Governors that the intentions of all are for the sound interests of the College and the pupils. There have been many examples of these positive intentions over the years. There is a need in any organisation of this size for clear strong leadership but this requires balance and particularly so with schools where there is a governance process of volunteer lay people. It is the opinion of Audit, through judgement of these discussions and the evidence available, that this balance has not been successfully achieved and that it is too strongly led by the Executive Headteacher in conjunction with the former Executive Governors. This engagement in itself is unclear where the Executive Governors would be expected to set the direction of operation yet this has been taken as decisions which should rightly come from the Committees or the Governing Body. The absence of good quality minutes of the Executive Governors (prepared by the Headteacher) offers insufficient evidence to demonstrate that accountabilities are appropriately applied. The result of the decisions, perceived to be undertaken at these meetings, undermines the whole governance framework where the Executive Governors meetings are led by the Executive Headteacher and the former Chair of Governors. This is made further evident from discussion with current Executive Governors who were not aware of some of the key decisions apparently drawn from these meetings. During the course of the audit we were given to understand that there was insufficient professional distance between the Executive Headteacher and former Chair of Governors. Viewed from the outside this presents an unhealthy culture where some staff and public perception of power is misplaced. Effective leadership of any school is based on trust and balance of engagement between the Headteacher and Governors. The Executive Headteacher has been a strong leader and held the trust of Governors until the recent issues have become public. We feel from our review that this balance has not been achieved where the Executive Head has too strongly led and Governors have not sufficiently constructively challenged. This has resulted in an unhealthy culture where some staff and public perception of power is misplaced. Examples include business led from the Headteacher’s report for: • approval of the college final budget; • appointment of the school improvement partner; • review of the function of the Governing Body • staff appointments at senior levels • engagement with regional and national bodies including Specialist Schools & Academy Trust, Leadership & Intervention Hub & Exeter for

Learning. Governors do not appear to have been actively encouraged to undertake the training necessary to perform their roles in key complex areas for effectiveness for example: • school staff performance management; • finance; • human resources.

Fundamental Weaknesses

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Leadership and Governance - Governors Responsibilities

Level of Assurance

Opinion Statement: Governors’ minutes are considered of sound quality and record an amount of governor business and decision-making. However, a number of key decisions could not be found, and this reduces the level of assurance that Governors are fulfilling their roles effectively. There is a Governors' annual cycle in existence, however, review of this found it to be incomplete and not relevant for the College. The Governors' annual cycle is a key document that assists with agenda setting and will ensure that all relevant and required business is being undertaken by Governors. The key shortcomings are evident particularly in the staff structure and personnel management business of the governors. The staff structure has not formally been approved for 7 years, few appointments have received prior approval and performance management and salary review has not been properly established, reported or approved. This has exposed the College to significant risk the consequence of which is the main subject of this review. This has been amplified where minutes of the Executive Governors and Salary Review Committees have not been presented to the Governing Body as required by law. It is evident that Governors are presented with much information through the Headteachers report supported by many other useful documents. However, the Governors are not leading the business and adequately challenging (in a constructive manner) the College on this; they appear to be being led. As a consequence there is a clear absence of decision making and approval of key business in line with their terms of reference and delegation. The meetings of the Executive Governors, as described above, may well influence this way of working as do some of the issues raised in the next section on governance procedure. It is clearly evident that the Governors wholeheartedly support the College and have good intentions. This is particularly evident from the Vice Chair and Chair of Management Services (the remaining current Executive Governors) who have been very open and clear in their understanding of the issues, have recently challenged the College and are key to the instigation of this current review. However, in our view Governors have acted with some degree of naivety and without adequate support and training from the College. We feel that although there are significant matters raised there is the will and interest from the current Governors to make the necessary improvements. The Student and Personnel Committee under their terms of reference are required to review the staff structure of the College on an annual basis. There is no evidence that this has been done or approved. The structure and more specifically the responsibilities and pay levels of the Senior Leadership Team have changed over the years, although nominally the same number of posts, but again the approval for changes has not been sought of the Governors. Much of the business discussed by the Governors is led by the Headteacher through his report, e.g. the approval of the final budget and school development plan, and the reporting of decisions relating to appointment of or changes to the College Leadership Team. Whilst much of this information provided is very good these are decisions and business that should be led by the Governors from their business planner.

Improvements Required

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Leadership and Governance - Governance Procedures

Level of Assurance

Opinion Statement: The formal governance framework of the College is clearly established and the procedures followed in most areas. Improvements recommended from previous audits have been implemented by the Clerk to Governors who is clear about their responsibilities. There are a few key exceptions to this particularly in the Governors understanding of their roles and delegation. The terms of reference for the Executive Governors are not correctly established e.g. where they have been delegated responsibility to “form” the salary review committee; this responsibility cannot be delegated from the Governing Body. Additionally, there are no terms of reference for the Salary Review Committee. The minutes of the Executive Governors are inadequate to clearly understand the business and actions discussed and are recorded by the Executive Headteacher which is not recommended practice. There are no minutes of the Salary Review Committee and no records maintained (except those of outcomes in personnel files) of their business or decisions. This is a fundamental weakness where there is no evidence to support the decisions of the Governors. Such Minutes that exist of the Executive Governors Committee have been prepared by the Executive Headteacher, which is not recommended practice, and the recently nominated Clerk has not been invited to meetings. Governors’ ability to be able to ensure effective operation and demonstrate accountability of decisions is compromised in the absence of these key records. This has had a significant impact within this review where publicly made allegations cannot be effectively resolved. There are no terms of reference established for the Salary Review Committee (SRC). The SRC policy provided to the Executive Governors by the Executive Head in May 2011 purports to have been in existence since 2002 yet the Governors had not seen this before and it would appears to have been created in May 2011.

Improvements Required

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Leadership and Governance - Declaration of Interests

Level of Assurance

Opinion Statement: The public disclosure of interests is undertaken through the “Register of Business Interests”. All governors and the Headteacher are legally required to complete and update their declarations annually and when they change. The College has extended this principle to all staff that complete declarations; this accords with recommended best practice. The process is clearly understood and is generally well maintained with a few minor exceptions as noted bellow.

The main premise of the declaration of interests requires that those with an interest are not only seen to publicly disclose this but that they must act accordingly by ensuring that they do not partake in any discussion, position of influence or approval of college business that would or could be seen to be furthering their interest.

The Executive Headteacher has not always acted in the required manner where he has been involved in the appointment process of family members and also in the performance management and remuneration of his spouse. This cannot be seen to meet public accountability requirements nor expectations of professional standards and has compromised the reputation of the College’s ability to demonstrate sound ethics.

Improvements Required

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Pay and Remuneration - Salary Review

Level of Assurance

Opinion Statement: The College has a clearly established policy and process for performance management and pay progression. Policies are in place and have been over the years for pay, which refer to the Schools Teachers Pay & Conditions (STP&C), performance management which sets the framework to be followed and delegation within the finance policy and list of authorised signatories. Review of personal files and payroll forms shows in the main that the key requirements are followed and that payroll are generally authorised as expected but not in all circumstances.

There is however significant concern where the whole process has been fundamentally flawed where the Executive Headteacher and former Chair of Governors have not ensured that the governors of the Salary Review Committee (SRC) (charged with making decisions on performance management and pay) have been adequately trained in such matters and have not provided them with essential guidance and documentation from which to make informed decisions. There have been no minutes produced of the Salary Review Committee and most of the documentation for their consideration has been shredded following each meeting such that there are no records of decisions made.

Information known to have been provided by the Executive Headteacher at the request of the former Chair of Governors with regard to national pay scales and potential incremental progression is considered to be misleading as they were not nationally recognised and therefore will have contributed to the salary levels being incorrectly established.

The SRC Governors are considered to have been naive in acceptance of the position and of being led by the Chair and Headteacher through the process. It is only in recent times that the current and remaining Governors of the SRC have raised concern and challenged the position, scale and conditions that matters have become known and subject to review. To their credit the remaining SRC Governors have undertaken some benchmarking and instigated a formal review of the leadership structure.

The problems have been compounded where the Governing Body has not ensured that the pay range Individual Salary Range (ISR) and scales have been established as they are required to do and as a consequence of all these matters the pay structure of the whole Leadership Group is flawed. It is clear, from the supporting letters to individual senior staff advising of temporary pay increases, that the Chair of Governors is fully aware of the STP&C. These letters have correctly shown that such temporary increases will revert to the former salary on cessation of the temporary remit but the former Chair of Governors has not ensured that this has happened. Future increases have been made on top of these temporary advances further compounding the problem.

The College has a remit to ensure compliance with policy and procedure yet there has been no evidence shown within the audit that non-compliant events have been challenged by those predominantly involved with compliance over the years.

The SRC has not calculated the “individual salary range” (ISR) range for the College annually as required. The Group & ISR have not been reviewed together for many years. The Group range recorded on payroll forms as Group 7 is correctly stated but is not what the Executive Head nor SLT are paid within. Pay is considerably in excess of this scale and there is little written evidence available to justify why the extended ranges have been chosen and justified. The Governing Body is responsible for approving the Group & ISR range for the College but there has been no evidence found in minutes of this.

Fundamental Weaknesses

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Pay and Remuneration - Salary Review (contd)

Level of Assurance

The Executive Headteacher provides the SRC with a summary guidance note prior to the annual SRC review of the SLT stating the current salary point, possible performance progression points and sometimes the salary scale points band. Governors understood that they had to pay within this guidance. Until recently it is understood from Governors that they had not been provided with the full leadership salary scale. Nor had they a clear indication of what the bands meant nor that there was always an option of not paying a performance increment.

The Executive Headteacher was provided with a car as part of the salary package in 2006 as Executive Headteacher. The STPC provides in exceptional circumstances for additional payments which could be used for the purposes of a car. The SRC, it is understood, approved this provision. This was extended in 2009 when the car lease expired, however, although the STPC provide for extension in exceptional circumstances, it is not considered that the STPC have been interpreted properly and the provision, in Audit and Human Resources opinion, should not have been extended. There is no provision for further extension.

At the same time as the Executive Head was promoted in 2006 the Deputy Headteacher was appointed Acting Headteacher by agreement of the Chairs and SRC. This was on a temporary basis with a salary uplift. When the Acting Head position was resigned in March 2007 the salary was not returned to the former as requested by the SRC. It is understood that the roles and responsibilities were then reviewed and the position re-defined as Senior Deputy Headteacher from March 2007. A letter from the former Chair of Governors confirms the decision of the SRC at their meeting of the 29th March 2007 so to do. There has, however, been no evidence found of this meeting and current SRC members do not have a record of this meeting either. There is little parity between members of the SLT pay scales.

The SRC in July 2011 at an unscheduled meeting agreed the pay uplift of the then developmental Deputy Headteacher and that of the Director of Finance and Personnel. There is no paperwork to support the decision making process of this nor who brought the proposal for discussion. As this was an unscheduled meeting, it is understood from the remaining SRC members that this had not been brought from the SRC as a group.

The level of uplift of the Deputy Headteacher was outside of the provisions within the STPC and it remains unclear against which circumstance of the conditions this was paid. The developmental role had been advertised within the College according to procedure; however, this was advertised without pay uplift. This again exposes the College to claim of inappropriate employment practice (no aspersion is made here against the achievements or ability of the incumbent postholder in this matter).

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Pay and Remuneration - Performance Management

Level of Assurance

Opinion Statement: The College has a formally established policy and process for performance management. Policies are in place and have been over the years for pay, which refer to the Schools Teachers Pay & Conditions (STP&C), performance management which sets the framework to be followed and delegation within the finance policy. Review of personal files shows in the main that the key requirements are followed where performance management meetings have taken place and are supported by documented targets and achievement thereof. These are generally authorised as expected but not in all circumstances.

There is, however, significant concern where the whole process is considered to have been fundamentally flawed where in the opinion of the School Improvement Service of DCC some targets set have not included appropriate measures, therefore enabling opportunity to exceed targets for the achievement of additional pay increases. Comparative analysis of targets, performance achievement in all areas, performance review itself and the subsequent links to pay are beyond the scope of this review. However, we have seen that there have been additional payments and the performance review papers do record that there has been a very good or excellent year to support this. The supporting pay increase is signed by the Chair of Governors. These have all been against performance reviews supported where appropriate by the school improvement partner.

Additional concern is raised where the Executive Headteacher has led the performance appraisal of his spouse the Senior Deputy Headteacher. It is recognised that this process has followed the approach of the Headteachers performance review i.e. it has been completed by the Salary Review Committee which is above normal practice, however it is not considered that the process can be demonstrably seen as transparent in all respects.

Improvements Required

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Pay and Remuneration - Recruitment and Appointment

Level of Assurance

Opinion Statement: The College has a clearly established policy and process for recruitment and delegation is set within the finance policy. Review of personal files and recruitment files shows in the main that the key requirements are followed where the process of advertisement, interview and appointment are clearly documented and approved. Most appointments are made through a panel with appointment made by the appointing officer or Headteacher. These documents are generally authorised as expected and have improved over recent years where policy has tightened; this all accords to policy and best practice. There are key exceptions to the normal process however where casual engagements have, historically, been made for staff members including the Executive Head, Senior Deputy Headteacher and Deputy Headteacher. There are no records available to support how these appointments were made although it is evident that pay forms have been independently authorised. In the absence of any documentation it is difficult to confirm any selection process; however, clearly there must have been an approach to these individuals. There has been no suggestion that alternate avenues open to the College for example DCC Temp. bank were considered.

Improvements Required

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Pay and Remuneration - Staff Progression

Level of Assurance

Opinion Statement: Staff development at the College follows the DCC process for performance management or appraisal depending on whether you are teaching or administrative staff. Additional to this promotion is sought through the recruitment and selection process. In the main this is fully recognised and followed. The Executive Headteacher has explained that as part of the Leading Edge links of the College that alternate and innovative ways are to be supported towards improvement and development. This is taken forwards through staff succession planning as an example. Such arrangements of succession planning and developing staff are to be lauded provided they follow the recognised processes. The review has found instances where this is not the case and the Executive Headteacher has proffered other instances where staff have been slotted into developmental roles without any selection process. This is sometimes with or without pay advancement. Some of these have been temporary arrangements, some of which have subsequently been made permanent. This is not considered to be an acceptable process that would stand scrutiny. It could be open to suggestion of favouritism and possible claim of unfair appointment. This audit makes no aspersion on the individuals who have been developed in this way; in fact our understanding is that they are generally very respected members of staff. However, this process exposes the College’s ethics particularly where this has involved family members and also senior staff positions and increases the risk of employment dispute.

Improvements Required

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Pay and Remuneration - Staff Absence

Level of Assurance

Opinion Statement: The College has a recognised process for staff absence specific to either teaching or non-teaching staff. Staff absence for teaching staff is only normally accepted in exceptional circumstances e.g. bereavement or care for a family relative and at this time also a decision has to be made on whether it is paid or unpaid leave. Examples of this have shown the system to be working where requests are formally authorised by the line manager.

There have been exceptions to this process where the absence of the Executive Head Teacher and Senior Deputy are not supported by signed forms; the former Chair of Governors has stated that he gave verbal approval for a recent absence of the Executive Head and Senior Deputy Head. We remain concerned over this absence within term time because the teaching commitments of both on this day were not recorded in the “cover absence” records for teaching cover to be made. It is understood that two of the SLT agreed informally to cover these lessons.

This exposes the College to the risk of allegation of a two tier process and will have compromised attendance records albeit in a slight way.

The Executive Headteacher confirmed that he and the Senior Deputy Headteacher were absent from College for the two days prior to the February half term 2012. The Colleges formal process of request for approval of absence was not followed although the former Chair of Governors stated that he would have given verbal approval for this. Permission may only be provided in exceptional circumstances for absence during term time and the decision has to be made as to whether this is with or without pay. This decision was not made.

It is understood that there have been other occasions when both the Executive Head and Senior Deputy have been absent (e.g. start of term Sept. 2011). Both these occasions were for family holiday and raise question as to being “exceptional circumstances”.

It is evident that staff generally were not aware of these circumstances. The diaries of each of the Executive Head and Senior Deputy do not show their absences.

Both the Executive Headteacher and Senior Deputy had teaching commitments for Thursday 10th Feb. 2012 yet the cover rota for that day does not show their absence nor that their lessons were covered. It is understood that two of the SLT were approached independently of the normal process and requested to cover these lessons. This cover arrangement coupled with the omission of recording of absence does not follow protocol or practice expected of other staff.

Good Standard

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Public Accountability - Management Decisions

Level of Assurance

Opinion Statement: The College openly states in its finance policy, through the expectations of Governance and through the delegation it sets and professional expectations that there is openness and transparency of operation and integrity of staff and processes. There is also statute that covers these requirements where together they all provide a framework and an ethos of what forms acceptable conduct. Within the Schools Code of Conduct it states that “it is important that governors (this will include the Headteacher) are scrupulous in distancing themselves from transactions where they have a pecuniary interest or a potential conflict of interest”.

It is considered that these requirements have been compromised and brought the reputation of Senior Management and the College into question and raised public concern. The ethics of the Senior Leadership may have been seen to be compromised through peer pressure and the lack of professional distance between the Executive Headteacher, Senior Deputy Headteacher and former Chair of Governors, particularly where there is a family relationship at the most senior levels. It can be seen that opportunity to raise debate or concern over process or issue could be compromised where one might normally seek resolution at a higher level but that opportunity is not as open because of these relationships. There is no specific evidence of this but this is a feeling that has been mooted from some of those we interviewed.

The consequences are wider reaching because even when made in good faith and for the correct reasons, as have been the case on the majority of occasions, the mere fact of an association compromises the decision. This is seen in several areas within the report including staff appointment, performance management and procurement.

The Executive Headteacher formerly ran a small computer support company; this was declared, as required, on the register of business interests. There has been no evidence forthcoming that the Executive Headteacher benefited from use of College resources in support of this company, although a small number of schools in the wider community and some College staff are known to have made a small level of purchase from the company. However, the Colleges public reputation has suffered by association with this activity.

Improvements Required

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Public Accountability - Staff Appointment and Remuneration

Level of Assurance

Opinion Statement: The requirements of public accountability are no more clearly required than in appointment and remuneration. These requirements as seen in the section above are very clear and specific particularly within the guidance and regulation on the requirements to disclose any interest and for withdrawal from any decision making process where transparency could be compromised. It is clear from discussion with staff that the appointment of the Senior Deputy Headteachers daughter as MAT Manager in 2009 was a very good appointment and that she is well respected within the College at all levels particularly with the students. It is unfortunate that the success of this appointment has been brought into question by the inappropriate involvement of the Executive Headteacher through the recruitment process. This has in part resulted in the public allegations being made, quite understandably so, and have brought the College’s reputation and ethics into question. The Executive Headteacher has indirectly led and been closely involved with performance management, remuneration and appointment of family members with no apparent regard to the requirements of disclosure of interests. This has resulted in the loss of trust with staff and the public of a fair process and resulted in public concerns suggesting corruption. Staff selection by the Executive Headteacher for advancement without open competition for the position has added to the suggestion of favouritism where, although the intentions of succession planning and staff development are to be lauded, the absence of open selection in some cases has again compromised transparency (there is no negative suggestion to any of the staff involved or their ability in this observation).

Improvements

Required

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Public Accountability - Procurement

Level of Assurance

Opinion Statement: There is no material evidence or suggestion from audit that there has been loss or wrongdoing in the procurement process. The College at,the direction of the Executive Headteacher, has had many positive initiatives over several years to assist pupils through assisted purchase schemes where the College has bought and sold on computer equipment and Kindles to pupils to assist in their education at the College.

There have been odd instances of procurement though where normal procedure has not been operated where recommendations on purchase have been discarded or where the Executive Headteacher has intervened (which he is able to do) but to little apparent benefit to the College. It is wholly recognised that this is a technology college and the propensity for such purchases and involvement may be higher. However, through such engagement the control is weakened to a small extent and transparency again is compromised.

Good Standard

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Public Accountability - Expenses

Level of Assurance

Opinion Statement: The College has a recognised system and process for expenses and this is seen to have been followed in most cases. Expenditure is authorised in all cases at an appropriate level either by the former Chair of Governors for the Executive Headteacher, the Executive Head for senior staff and department heads for other staff.

The process in itself is satisfactory; it is the judgement of the person making the expenditure and that of the authorising officer that is questionable. It is recognised that on occasion for rail travel that it is possible to travel first class less expensively than standard rail fares available at the time of booking. There are some instances where this is proven and considered satisfactory; others are not where there is no evidence retained of other fares; this tends to be for senior staff. This is similarly so for overnight accommodation.

The occasions of overseas business travel reviewed were found to be satisfactory in that expenditure was authorised and only expenditure relating to the costs of the conference have been met from the college budget. It is understood that the two particular trips for China and South Africa were supported by the Specialist Schools and Academy Trust and therefore were not at the cost of normal school budget. The attendance of non-school staff on these two trips was fully recompensed at the time with no cost to the school budget.

It is acknowledged that these trips were an accepted way to enhance educational practice, broaden cultural awareness and facilitate international networking. Such trips were undertaken by many schools and encouraged by SSAT with benefits for both staff and students however, there has been a lack of openness and transparency in the need and approval of these trips, whom should attend and the benefits that might have accrued. Retrospectively, some of the benefits have been reported to governors and are known to staff however the absence of transparency in approval has exposed the College’s reputation to allegation and does not demonstrate sound ethical behaviour. Review of expenses has revealed a small level of first class travel, or instances of higher cost accommodation, which have not all been supported by explanation of the need or demonstration that on these occasions that this represented best value. This expenditure has been for a variety of senior staff although it is recognised that it is not common. Public sensitivity to such expenses is high and as such these purchases may not be considered acceptable. Review has found several instances (attended by the Executive Headteacher and on occasion other staff and governors) of inappropriate expenditure associated to conference attendance, particularly that of alcohol purchase with meals. On one of these occasions representatives from other schools were included at the table. Whilst alcohol purchase has not been excessive this does not present a good appearance. Termly extended senior leadership meetings are held outside of the College premises at a local hostelry in, it is understood, a private room. Some of the discussions believed to have been held at these meetings may be inappropriate in a public place. The cost of these, although not excessive, are notable, however, the cost is met by the College and is felt by some not to reflect a good public image. There have been several instances of overseas business travel by the Executive Headteacher, Senior Deputy Head, Chair of Governors and other members of the senior leadership team and staff. Though not frequent they are significant by their nature. These trips have been reported to Governors through the Headteachers report but are not wholly transparent where we have not seen evidence that they have been formally approved with a business case for the benefits nor whom should attend.

Good Standard

19

Use of Resources - Generally

Level of Assurance

Opinion Statement: The opinion of the report relates to the matters identified and not the whole context of the College’s use of resources which is beyond the scope of this audit. Use of resources in the wider context is directed through the College development plan and reviewed through its budget monitoring process. Neither of these were the subject of concerns raised and have not been reviewed in detail. Both these documents are reviewed and monitored by the Governors. Previous audits have shown this process to be well established and followed.

Observations made here relate to instances of poor use of resources of which several in particular relating to expenses are not considered appropriate when paid for by the public purse. There have been concerns in recent years of pressure on the budget which has resulted in the withholding of some expenditure and appointments, the use of resources in the issues identified below, mainly relating to expenses, have not been demonstrated in the review to have added value nor are they considered to be acceptable use of public funds in most cases. These issues have originated at the most senior level and set poor ethical and professional standards.

Expenditure on expenses in support of conferences of the Executive Headteacher and Senior Leadership e.g. meals have on occasion been notably above normal subsistence rates. It is recognised that the nature and location of conference events and the networking opportunities do not conspire to “eating on a budget”. The cost of these although not excessive are notable, and again have included alcohol. This cannot be considered to be good use of public resources.

The College has provided a car to the Executive Headteacher for work purposes. This was initially in support of the extended role of Headship at other Colleges. This is no longer the case and there has been no argument presented as to the added value of this vehicle to the College subsequently.

Computer equipment of the College held and used at the home of the Executive Headteacher for business use has been used for private purposes by himself and other family members. There is also some evidence that these have been used to support activity of the Executive Head's former computer company. This has compromised the security of the College assets and is contrary to policy promoted by the Executive Headteacher that College equipment should not be used for private purposes.

Improvements

required

20

Use of Resources - Inventory

Level of Assurance

Opinion Statement: Review of a small sample of inventory items identified inconsistencies in the quality of completion of the inventory, where the computer inventory has not been completed in accordance with minimum standards, evidence of annual check and evidence of approval of asset disposals and of when they were disposed of.

The inventory is a key primary document and should provide a complete and accurate record of assets held, and its maintenance therefore, is a key control in ensuring that the objective is being fulfilled. The inventory system has been the subject of previous audit recommendations and whilst it is recognised that there have been some improvements they are still not adequate and have not identified the absence of a sample of missing / not located equipment.

The inventory control has therefore not been effective and does not provide the assurance that the College requires for asset management.

Improvement

Required

21

Financial Processes Level of Assurance

Opinion Statement: Financial processes and procedures are well established at the College and been the subject of internal audit review and subsequent improvement over many years. Controls are suitable and in the main, from previous audit review, are followed. This review has been limited in its extent relating mainly to concerns raised and related to other matters identified within this review. Finance staff are very diligent in their operation of the control framework and have followed process well. Guidance from previous audit reports has been accepted and instigated through the Executive Headteacher in building a generally sound system and control framework.

There were a small number of exceptions where the Executive Headteacher, it is felt, has become too closely involved in the procurement arrangements (reported above) and these exceptions have compromised his position. This has increased the exposure to risk of the College of inappropriate procurement and the albeit small but possible question of corruption and a lack of transparency of operation and poor example to staff.

Good Standard

22

Appendix B

Definitions of Audit Assurance Opinion Levels

Assurance Definition

High Standard. The system and controls in place adequately mitigate exposure to the risks identified. The system is being adhered to and substantial reliance can be placed upon the procedures in place. We have made only minor recommendations aimed at further enhancing already sound procedures.

Good Standard. The systems and controls generally mitigate the risk identified but a few

weaknesses have been identified and / or mitigating controls may not be fully applied. There are no significant matters arising from the audit and the recommendations made serve to strengthen what are mainly reliable procedures.

Improvements

required. In our opinion there are a number of instances where controls and procedures do not adequately mitigate the risks identified. Existing procedures need to be improved in order to ensure that they are fully reliable. Recommendations have been made to ensure that organisational objectives are not put at risk.

Fundamental

Weaknesses Identified.

The risks identified are not being controlled and there is an increased likelihood that risks could occur. The matters arising from the audit are sufficiently significant to place doubt on the reliability of the procedures reviewed, to an extent that the objectives and / or resources of the Council may be at risk, and the ability to deliver the service may be adversely affected. Implementation of the recommendations made is a priority.

23

Appendix C

Summary of allegations not founded

Allegation Comment

The Executive Headteacher and the Senior Deputy Headteacher have had holidays paid for from the College budget.

There has been no evidence found to support this allegation. Attendance at foreign conferences has been extended for holiday purposes but not at the expense of the College.

The former Chair of Governors and spouse have had holidays paid for from the College budget.

There has been no evidence presented to support this allegation. Attendance at foreign conferences only has been paid for the Chair of Governors, other expenses for his spouse have been fully reimbursed at the time.

The Executive Head has used the College resources to further his private computer business.

There has been no evidence presented to support this allegation. The College has supported other schools with the provision of technical computer support but not his private business.

The College holds corporate membership at the Woodbury Park Golf Club.

The College has used the conference facilities at Woodbury in the course of its business but does not hold corporate membership.

One of the Governors is the Stockbroker of the Executive Headteacher.

Assurance has been provided that this is not the case.