Richard Ewen returned to work as head of Islington arts and media school last Friday. He was suspended on September 23 during an investigation into the school's pound;800,000 budget deficit.
CEA@Islington, the private company running education in the London borough, said it could not comment on the investigation, conducted by Michael Madden, an HMI.
The report had not been published as The TES went to press. But we understand that parents and governors were told at a meeting last week that Mr Ewen will be cleared to continue as head of the school.
A statement released by CEA@Islington and its parent company, Cambridge Education, said they were "delighted that Dick Ewen will return to his excellent work as headteacher at IAMS".
Mr Ewen's suspension came just six months after the Office for Standards in Education praised his "inspirational leadership" and the school's good financial mangement.
When he became head in 2000, the school had been labelled as one of the worst in the country after a BBC television documentary laid bare its discipline problems. The fly-on-the-wall documentary portrayed the diastrous relaunch of the school under "superhead" Torsten Friedag, who later resigned.
Since Mr Ewen has been head of the school, exam results have improved dramatically. This summer 47 per cent of pupils achieved five or more A* to C grade GCSEs, up from 7 per cent four years ago.
His return to work was welcomed by parents, pupils and the school's governors after a campaign to overturn his suspension.
The school's governing body issued a statement describing the suspension as "unreasonable and an apparent act of malicious victimisation".
The dispute centred on whether Mr Ewen had provided financial information requested by CEA@Islington and the size of the school's deficit.
Bill Clark, director of school services at CEA@Islington, had accused Mr Ewen of breaking an agreement to cut the school's deficit from pound;682,000 last year and instead allowing it to increase to pound;800,000.
Mr Ewen declined to speak to The TES ahead of the publication of Mr Madden's report. But a statement issued on his behalf said: "The school is on target with its budget deficit recovery plan".
Mr Ewen, former head of Teddington school in Richmond-upon-Thames, has also been advising Telegraph Hill, another Fresh Start school in Lewisham, south-east London.