The TES, which first revealed the Audit Commission's investigation into finances at Whalley Range high school for girls, understands that Jean Else, who was made a dame in 2001, should learn her fate by the end of the summer.
Dame Jean, who enjoyed a good relationship with Estelle Morris, the former education secretary and a former pupil at the school, was suspended at the end of November after the public sector watchdog sent Manchester council its draft findings.
The council said that because of the grave issues raised it was taking over the school's management and budget.
It appointed Barry Morrison, deputy chief education officer, as the school's acting head, and began its own investigation.
The authority also suspended Maureen Ratchford, Dame Jean's sister who was the school's finance manager, and Stewart Scott, its director of governance.
David Hart, general secretary of Dame Jean's union, the National Association of Head Teachers, said: "Considering what an enormous success and the fantastic results Dame Jean achieved she feels very frustrated that she can't go back and continue the good work.
"This investigation has taken far too long and we want her back in school next term."
The investigation began at the end of 2002.
In September 2003, when the story broke, it was reported that the school had reached confidential settlements with three former members of staff within nine months, after they made unfair dismissal claims. There was no suggestion the school admitted liability in any of the cases.
At the time Dame Jean, credited with a remarkable turnaround in the fortunes of the school she took over in 1994, said she would press the commission to speed up its investigation so the school could be cleared as quickly as possible.
But in March 2004, The TES learned that the investigation had been delayed by at least three months because the school had failed to answer questions put by the auditors.