The government has lifted its financial warning on E-Act, two years after it instructed the academy chain to get its accounts in order.

The Education Funding Agency has written to the trust, which sponsors 23 schools, informing it that it has removed its “financial notice to improve” (FNtI).

The decision marks a major turning point for the chain, which had been beset by problems after TES exclusively revealed that the chain had blown hundreds of thousands of pounds of public money on unapproved consultancy fees.

Back in 2013 E-Act was investigated by the EFA, which uncovered a culture of “extravagant” expenses, “prestige” venues and first-class travel at what was once one of the country’s biggest academy chains.

Before the chain was investigated, a total of £393,000 was spent on “procedural irregularities” including consultancy fees, breaking E-Act’s own financial rules, all of which took place under the group’s former managing director, Sir Bruce Liddington.

The academy chain was later forced to hand over 10 of its schools to the Department for Education amid concerns around standards.

Since then the chain has improved, leading to the EFA to decide to lift its warning notice as of Wednesday.

In a letter, EFA director Sue Baldwin reveals she still had concerns about the chain as recently as March.

But she adds: “I have now reviewed the position further and I am pleased to inform you that I am content that the FNtI conditions are all met and that I am satisfied that the trust has in place the required financial controls and processes to comply with the requirements of the Funding Agreement and Academies Financial handbook.

“Furthermore, I am grateful for the assurance provided that the trust’s Board is satisfied that the reserves position overall is improving. As a result, the FNtI and the corresponding restrictions will be lifted with effect from the date of this letter.”