Good Governance: An Important First Step for Academy Trusts

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An Academy Trust is a charitable company limited by guarantee, with governors who are directors as well as charitable trustees. The organisation and its managers must therefore comply with obligations under company and charity law.

As recent press reports show, these demands are not always easy to meet and can leave trustees vulnerable to heavy criticism. Complex structures make it vital for fiduciaries to implement strong governance policies and stay abreast of the latest regulatory developments.

Trustees Criticised Over Poor Academy Governance

The Academy chain AET has come under fire following the revelation of a series of payments totalling almost £500,000 over the three years to private businesses in which the Academy Trust’s trustees and executives had a beneficial interest.  The payments were for services ranging from project management to HR consultancy.

This comes in the wake of a separate scandal early in 2013 surrounding another academy chain, E-Act.  Responsible for 35 of the government’s flag-ship schools, it was censured in an official government report for endorsing extravagant expenses including first class rail travel and ‘a culture of prestige venues’ for its meetings.  The Academy Trust was also found to have spent thousands of pounds on ‘procedural irregularities’ such as unapproved consultancy fees.

Achieving Good Academy Governance

The demands involved in running an enterprise that has both commercial and charitable traits means it is easy for trustees and directors to be accused of mismanagement if clear policies are not implemented and followed on a consistent basis.

Nonetheless, by acting before problems arise, management can work to achieve and maintain good academy governance.

The Benefits of Implementing a Strong Academy Governance Structure

A strong academy governance structure can help ensure your Academy Trust is considered credible by not only its stakeholders but also its business partners, suppliers and the general public.

Enabling the board of governors to make sound management decisions is a key part of the process.  Ensuring that the governors understand their role, as well as their responsibilities and legal obligations will help reduce potential for errors of judgement.

Finally, allocating a set amount of time to be spent on an assigned tasks and outlining the scope there is to delegate will ensure board members work effectively.

Avoiding Conflicts of Interest

Taking steps to mitigate any conflicts of interest is crucial to good governance.  Academy Trusts have charitable status, meaning that the governors can only be paid for services that are clearly in the interests of the Trust and provide a significant advantage over other options.

Keeping detailed minutes of commercial justifications for such payments will encourage compliance.  Creating a register of the personal interests of each governor and conferring on them an obligation to ensure it remains up-to-date will also support this.

Getting the Right Help for Your Academy Governance

Helping your governors to stay within their prescribed parameters will foster good governance.  You can find these in your Academy Trust’s articles of association and funding agreement.  Hillier Hopkins can help you put into place processes for regular reviews of your academy’s activities to ensure they fall within these strictures.  This should extend to sub-committees and third parties such as accountants and investment fund managers, who also form an important part of your governance model.

Academy governance should be backed up by written policies and procedures particularly for areas not covered by agreements the Academy entered into at the time of its conversion.  Our experts can help ensure you have all areas covered.  For more information, contact Alex Bottom today