The Public Accounts Committee today published a report on academy trust finances, which says the Department for Education (DfE) is often “too slow to react” on academy failings.

Here are recommendations the committee has made in its report to address six DfE failings:

1. Introduce tighter controls over related-party transactions

The report says the rules around related-party transactions, which involve payments from an academy trust to an organisation or person connected to the trust, are “not robust enough”.

Under the current rules, academy trusts should only pay enough to related parties to cover the cost of providing the service. But working out what constitutes this cost “can be complex and open to manipulation”, says the report.

In most cases, the Education Skills and Funding Agency (ESFA) only becomes aware of potential issues when it receives a trust’s accounts at the end of the year, making the rules “difficult to police”, the MPs add.

The committee wants the DfE to tighten the rules in the next version of the Academies Financial Handbook, expected in July 2018, to prevent academies from entering into related party transactions without approval from the ESFA.

2. Produce more detailed academy accounts

The academy school sector consolidated accounts 2015-16 provided an overview of the sector, but did not compare the performance of trusts of different sizes or geographical locations, the report says.

It says: “The information that is currently available on the relative performance of academy trusts is not sufficient to enable parents and local communities to hold academy trusts fully accountable for how they spend taxpayers’ money.”

The 2016-17 sector report will not be published until October 2018. The committee says these accounts should be more detailed, including a comparison of the performance of academy trusts of different sizes and geographical areas. 

3. Challenge academies paying high salaries

The report states: “The department should extend its work to challenge all academy trusts that are paying excessive salaries and take action where these cannot be justified. The department should write to the committee and update us on the results of this work.”

4. Explain how academy trusts facing financial risks are identified

The committee was concerned that the DfE could not state how many trusts were currently in deficit, and did not expect to have this information until October 2018.  

It has called on the DfE to write to the committee, by June, “with details of its progress in improving how it identifies, and intervenes with, academy trusts at risk of financial difficulty”.

5. Explain what happens to school funds when an academy trust fails

The MPs asked whether schools that had transferred a surplus to multi-academy trust upon becoming an academy would get their money back if the trust were to fail, but - the report says - the DfE was unable to explain “on what basis funds and assets were allocated between schools when a trust failed”.

The committee, therefore, wants the DfE to write to it, by the end of June, with this information.

The DfE also “needs to develop a risk strategy for how to tackle multi-academy trust failure”, it adds.

6. Publish and collect more information on asbestos in schools

The DfE is carrying out a property data survey that will provide more information on the presence and management of asbestos in school buildings.

However, existing information is not always being made available to local communities, the report says.

The committee says the DfE should publish the results of its ongoing exercise to collect data on asbestos, and make clear to local authorities and academy trusts that information should be made available by the end of June.