Responding to COVID-19: insight, support and guidance
Over the course of this year, high profile fraud cases in the academy and free schools sector have continued to be in the news. In August, two members of staff and the founder of the Kings Science Academy in Bradford were convicted of making payments into their bank accounts from Department for Education grants allocated to help establish the academy in 2011. In June this year, the accounts manager who stole more than £4m from Haberdashers' Aske's Federation, in a case described as the "biggest ever educational fraud", was sentenced to nine years in prison.
Such cases are a reminder that the sector must take appropriate actions to help mitigate against fraud risks. Fraud, bribery and corruption in academies are all becoming more common including examples such as embezzling petty cash or money for trips, and wages and overtime being falsely claimed. Where schools are undergoing restructuring through, for example, mergers between single academy trusts, a single academy trust joining an existing muti-academy trust (MAT), or through a maintained school converting to a new MAT, fraud risks may increase in the short term as a result of changing systems and processes.
Academies need to be able to spot fraudulent activity and to ensure that they have sound oversight and regular monitoring processes in place. Recognising a fraud is only part of the problem, a bigger challenge comes when academies need to address the issue – academies have limited resources and many lack the skills to tackle fraud properly once it is in the system. It is crucial therefore that robust anti-fraud and corruption policies and procedures are developed and maintained for all new and existing trusts, as it is preferable to be in a good position to prevent fraud happening in the first place than to deal with its consequences. Summarised below are some key actions for academies to take to help protect themselves from fraud and deter those that might take advantage of opportunities.
Employing someone who does not have the necessary qualifications and experience can lead to both reputational and financial damage. It is essential that original documents and proper references on headed paper are provided by potential employees and that potential employers scrutinise what they are given – qualifications, references and employment history should all be checked thoroughly.
The fraud at Haberdashers’ Aske’s Federation had been going on for at least seven years unnoticed. Whatever lies and barriers to viewing the accounts were put in the way, they should not have been allowed to prevent those responsible for governance from gaining a true picture of the finances. It seems that the accounts manager had a level of delegated authority that allowed him to commit fraud.
It is essential that those charged with governance carry out their financial responsibilities effectively. They must ensure that they receive the information necessary to allow them to do so and that they ask challenging questions and receive satisfactory answers.
Academies must ensure that they have in place sound internal controls in accordance with the Academies Financial Handbook. There are a number of different types of internal, including financial, control. Some examples are set out below.
Failing to act in any of these areas can result in staff feeling that they should not report their concerns.