Wirral school in £558k debt hid its cash problems

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A Wirral school which got into a deficit of more than half a million pounds “concealed” its money problems, according to a council report.

Last night, Wirral Council’s audit and risk management committee discussed the huge financial problems at Woodchurch Road Primary School in Oxton.

The report presented to councillors showed that on December 31, 2018, the school’s projected deficit for the year ending March 31, 2019, was £32,754.

But the actual deficit at year-end was £442,901, more than £400,000 higher than the earlier estimation.

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For legal reasons, the council document does not identify the role of specific individuals in the budget fiasco.

The report said the main reason for the deficit was that since 2014/15 the school had inflated the amount of income it was actually receiving in its books, as the report put it “debtor and payment in advance accruals at the year-end had been inflated”.

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Detailing the huge impact of the error, the report read: “This resulted in falsely increasing the level of income and reducing the level of expenditure in the current year, thus concealing the true financial position in school financial reports.

“This practice, and therefore the true financial position, became evident in March 2019.”

One issue was that the school seemed to have overestimated the amount of budget control and checks a standard service level agreement (SLA) with Wirral Council’s Local Management of Schools (LMS) finance team provided.

This meant the school did not put additional checks in place itself.

There was a further rise in the school’s deficit from £442,901 to £558,492 by the end of the 2019/20 financial year.

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The report states that one key cause of this was addressing issues from the 2018/19 financial year, which included "the identification of commitments not accrued, and reduced income due to falling rolls [pupil numbers]; which together exceeded savings made by the school in-year".

The phrase "identification of commitments not accrued", effectively means bills not taken into account in one financial year that need to be accounted for in the next year.

The council document added that the school did act quickly to strengthen controls once the true deficit became apparent in March 2019.

A number of steps including more checks and balances and governors attending finance training provided by the council were taken.

Cllr Stuart Kelly, who represents Oxton, said: "It's not been the fault of the professionals, it's not been the fault of the governors. There are errors in processes.

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"If someone is determined to cover something up over a period of years, it could have happened to any one of our community schools or any one of the academies."

The Lib Dem member added that there might have to be staffing restructures because of falling pupil numbers in any school, but this was not the main reason that job cuts were a possibility at Woodchurch Road Primary.

Cllr Kelly continued: “This school has a particular problem which is not to do with falling rolls, the bulk of the deficit is because of accrual cover up frankly.”

Shaer Halewood, Wirral Council’s director of resources, said many areas were not scrutinised properly by the school and that if any one of them had been looked at more closely the problem would have been picked up earlier.

Now that the problem has been found a number of improvements have been made, with the checks and balances referred to previously including the school buying the premium finance SLA from the LMS and reviewing its procedures to make sure they are fit for purpose.

On the issue of possible staff cuts at the school, Labour councillor Stuart Whittingham said it was “blatantly unfair” that people could lose their jobs and asked the council to work with the school to minimise any staff cuts and the impact they would have on children’s education.

Cllr Whittingham’s motion asking for the protection of education standards at the school was passed by assent at last night’s committee.

The ECHO approached the school for comment, but was directed to Wirral Council who did not wish to comment further.