The Academy Transformation Trust has expressed concerns that plans to transfer three of its primary schools to a new sponsor could force it into bankruptcy, TES reports.

The concerns were raised in a government report from the Education Funding Agency, which reviewed the finances of ATT last year. The Trust had allegedly mismanaged its finances and breached the Academies Financial Handbook.

The report identified numerous concerns about finances and governance at the trust, which runs 22 schools in Norfolk, Suffolk, Essex and the Midlands.

The EFA’s report published last week, show that three of ATT’s primary schools were due to be transferred to the Abelle Academy Trust following an agreement with ATT.

ATT responded to the proposal during the EFA investigation warning:

“The loss of reserves at these three schools could put the trust into financial difficulties. An option of rebrokering two additional schools with deficits to offset this loss was declined by the trust, on the basis of the income they generated.”

Conflict at the top

Alleged mismanagement by ATT include the decision of chief executive Ian Cleland to remove the chair of the trust, Stephen Tilsley in November.

The previous month, Mr Tilsley had put Mr Cleland on temporary leave “due to significant concerns about his performance and behaviour”, which Mr Cleland disputed.

The report says Mr Cleland was “inherently conflicted during this time”, but the EFA found no evidence that he had managed this conflict.

While on temporary leave Mr Cleland appointed four new directors, one of whom the board appointed as the new chair on November 21. The same meeting then reinstated Mr Cleland, and confirmed its support for the removal of the Mr Tilsley.

‘Significant breaches’

The EFA blames “inadequate financial management” for a forecast fall in ATT’s revenue reserves from £5.01m in 2014 and to £26,000 in 2018.

Four of its schools, its head office and its further education provision had deficits ranging from £164,000 to £1.37m in 2015-16.

The EFA report calls on ATT to “urgently address” the “significant breaches” in governance “to ensure internal control arrangements within the trust are operating effectively and assure proper stewardship over public funds”.