Small academy trust pays the equivalent of six-figure annual sum for accounting officer

An academy trust which is under financial strain appears to have paid �50,000 for the services of one of its trustees as its accounting officer, on a recommendation that he work only 2.5 days a week for six months last academic year.

The payment, by Chapel Street Community Schools Trust which runs seven schools including five free schools, would be the equivalent, on a pro-rata basis, of paying someone £200,000 a year if they were working five days a week throughout the year.

Chapel Street, which has been operating under a “financial notice to improve” from the Department for Education and which has said it is depending on extra government cash for survival, also employed a chief executive at the time. The accounting officer stood down as a trustee while serving in the former role.

A Chapel Street document setting out the arrangements for taking on the accountable officer seems to acknowledge that doing so in this way contradicted the requirements of the Academies Financial Handbook, which sets out the responsibilities of trusts.

An accounting officer is responsible for ensuring the propriety of spending at the academy trust, as well as keeping financial records and accounts. Usually, an academy trust’s chief executive takes on the accounting officer role as part of his or her duties.

The suggested accounting officer appointment is set out as a recommendation in a paper presented to an extraordinary meeting of the south London-based trust, dated 19^th October 2016. It was released to a member of the public under freedom of information, and passed to Education Uncovered.

The paper sets out how, up until that point, the accounting officer role had been undertaken by Russell Rook as the then chief executive of the group of charities which includes the academy trust, as the trust’s chief executive, David Brown, worked part-time.*

The paper therefore recommended taking on one of its trustees at the time, William Brooks, to act as interim accounting officer, with the expectation that a future, full-time chief executive take on the role after a six-month period. Brooks would stand down as a trustee while serving as accountable officer.

The recommendation also says that the trust would notify the secretary of state for education about the decision.

Under “background”, the paper says: “In June and July 2016 the Board resolved to make a number of changes to the Trust’s governance, accounting and budgeting arrangements. These changes are very important.

“The Trust needs a long-term CEO; and without these changes the Trust would not be an attractive opportunity for a prospective CEO with the required ability or ambition.

“Speaking frankly, the Trust’s situation carries many problems and challenges, but few opportunities for career advancement, not least because it is unable to expand [as it is and was under a ‘financial notice to improve’ from the government].”

The document notes that the appointment would be against the terms of the Academies Financial Handbook of 2016, which stated that the accounting officer “should be the senior executive leader of the trust…in multi-academy trusts it should be the chief executive or equivalent”.

Yet Brooks was at the time a trustee of Chapel Street who ran a management consultancy called Eximus Capital, based in the City of London.  

The October 2016 document went on: “Whilst [the Academies Financial Handbook] indicates that the roles of Accounting Officer and CEO ought to be with the same person, in our case the CEO, being part time, is unable to take this duty; and so we are required to appoint a fit person in his stead.”

The arrangement for contracting Brooks is then set out. He would work for 2.5 days a week, for six months, and would not profit personally from the arrangement, in that his employer, Eximus Capital – the firm where he is managing director and, as of 2016, held two thirds of the shares – would be reimbursed for his time.

A letter sent to the trust by Eximus, dated September 22^nd 2016, sets out terms including that Brooks’ time be billed at £770 per day for 2.5 days per week, equating to £8,340 per month. This equates to £50,040 for the six month period.
 

The documents set out only recommendations to Chapel Street’s board. But the trust’s just-published accounts for 2016-17 state that Brooks was indeed taken on for a six-month period, from October 2016 to April 2017, that he stood down as a trustee during this period and that the charge to the trust was £50,040.

Education Uncovered has been unable to confirm from the trust that the terms were 2.5 days a week; if Brooks had been,instead, full-time for the six months despite the arrangement as set out in the document, then the equivalent annual figure would have been £100,000.

James Royal became the full-time and permanent chief executive from March 10^th, 2017, the accounts show. Brooks returned to his position as a trustee just before his role of accounting officer finished.

It is unclear exactly how much the trust paid for the separate chief executive role  during the 2016-17 financial year; the accounts say that £30,993 was paid to Deran Consulting, of which the former CEO Brown was a director, while the highest-paid employees for the period received £70-£80,000 (there were five staff members in this pay bracket).

Fees of £200,000 a year are attracting controversy even when paid by large multi-academy trusts for a chief executive officer to conduct all of his or her responsibilities. So it seems likely that paying the equivalent of this figure for an accounting officer – or even £100,000 - will also be contentious

Chapel Street’s latest accounts say its schools had a total of 1,677 pupils as of the DfE’s October 2017 census, which makes it the size of one of England’s larger secondary schools.

The trust has been approached for comment.

*I wrote about Brown’s position at the trust here and here.