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Exclusive: Doubts over future of MAT where 90% of schools predicted to be in deficit

Plymouth CAST's auditors flag a 'material uncertainty that may cast significant doubt on the academy trust's ability to continue as a going concern'

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Plymouth CAST's auditors flag a 'material uncertainty that may cast significant doubt on the academy trust's ability to continue as a going concern'

One of the country's biggest multi-academy trusts (MATs) has predicted that nearly all of its schools will be in deficit by 2018-19.

The latest financial accounts for Plymouth CAST, which operates 35 faith schools in the west country, state that 22 of its academies have set a deficit budget for the current academic year.

The accounts add that this is "worsening to over 90 per cent of all schools presenting deficit expectations by 2018-19".

Auditors Bishop Fleming LLP state in the accounts: "A material uncertainty exists that may cast significant doubt on the academy trust's ability to continue as a going concern."

This relates to the fact that the MAT ended the 2016-17 academic year with a £1.54 million revenue deficit, while its reserves were £1.21 million.

The financial problems identified by Plymouth CAST follow a series of other large MATs revealing significant pressures in their 2016-17 accounts, which had to be filed by midnight yesterday.

Plymouth CAST received a financial notice to improve from the Education and Skills Funding Agency last September, requiring it to submit a financial recovery plan and to address its governance and financial management. 

Its efficiency plan should, the ESFA said, set out how the trust will be in surplus by the end of August 2020. This must involve "staffing efficiencies" resulting in no more than 82 per cent of its income being spent on staffing by 2020, with further reductions expected by 2021.

The MAT's accounting officer Kate Griffin, also the interim chief executive officer, reveals in the accounts that, although the trust has met all the ESFA's deadlines regarding the financial notice to improve, a "significant instance of irregularity was uncovered" during 2016-17.

This related to St Boniface's Catholic College, a secondary school in Plymouth, entering into a £360,000 contract with Construction Training South West to provide off-site post-16 vocational education, without completing "sufficient tendering procedures."

Ms Griffin continues: "A number of less significant instances have also been identified during the year where procurement procedures have not been followed, including entering into two finance leases without seeking prior ESFA approval."

Steps have been taken to improve procurement processes, she adds.

The accounts also show that a related party transaction of £58,526 was made during the year, involving payments to KG Educational Consultants Ltd, at which Ms Griffin is a director.

Related-party transactions involve payments from an academy trust to an organisation or person connected to the trust.

They are permitted under the Academies Financial Handbook, provided that open and transparent procurement procedures have been followed, and any potential conflicts of interest are adequately and appropriately managed.

However, MPs on the Public Accounts Committee this week repeatedly raised concerns about related party transactions.

The MAT's accounts acknowledge: "This has been a challenging year financially for the academy trust, with a number of schools and CAST HQ moving into a deficit reserve position at year end."

A new finance system is being brought in, the accounts add, along with a "full review of the financial position of the academy trust". 

In January, the MAT appointed Raymond Friel, the leader of the Catholic Independent Schools’ Conference, as its new chief executive.

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