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What are the recent warning signs for schools boards' governance?

on Friday, 03 November 2023.

How can schools position themselves to ensure they carry out their fundamental governance responsibilities?

Our charities team has pulled together the key trends in Charity Commission regulation over the last few years. These trends reflect the themes flagged by the Charity Commission in its recent reports and published statements on formal inquiries and other regulatory interventions. In other words, these trends are the bad report cards published by the Charity Commission where trustees have been found to be in default of their fundamental governance responsibilities, often leading to Charity Commission intervention. Some breaches are deliberate, some ignorant and some accidental; and the ignorant and accidental cases reveal some common themes, which are an important consideration for any school.

Here are the top 6 warning signs for your board to look out for this coming year:

1. Lack of diversity on the board

By 'diversity' in this context, the Commission means skills, experience (age, gender, sector), and length of term. Is it time for you to carry out a skills audit of your board, or carry out a governance review?

2. Poor decision-making

There are several examples in the Commission's reports of processes led unquestioningly by one individual or a habitual practice which carries on unchallenged; decisions made which are unrelated to the school's overall aims; decisions made without proper consideration of risks; and decisions made by unengaged trustees/governors. What are the blind-spots or gaps in your governance that hamper good decision-making? It's an oldie, but a goodie - has your board read the Charity Commission's guidance on decision-making? Click here to find it.

3. Lack of financial controls

Another common theme is around financial controls: projects or activities which are risk-blind, governors who don't ask probing questions about financial activity, where conflicts of interest and loyalty are not managed and where poor financial recording practices are accepted. If you need help, our schools advisor, Nikki Miller has 15 years' experience as a COO/bursar in the Independent Schools sector and can share practical, school specific insight on ways to present financial information to the board to reduce this risk.

4. Governance and regulatory ignorance

Perhaps it is not surprising that some of the charities that were picked up by the Commission for regulatory issues often had no awareness of their governing document, what was contained within their policies and were not up-to-date on their legal duties or regulatory requirements. Hopefully this isn't you, but it is an easy fix! It may flag that your governing document or policies are due a refresh.

5. Poor record keeping or regulatory filings

Not an exciting one, but the Commission often uses late filing of documents as a red flag for other governance failings and carries out regulatory checks on repeat-offenders. It is worth ensuring your regulatory filings are made in good time.

6. Unengaged professionals

Finally, there was a trend that mistakes were made because of a lack of involvement of professionals, and this can be a flag of governors' poor awareness or willingness to know and adhere to legal requirements. Whilst it is self-serving of us to say so, it is good governance to take advice when you need to, particularly when where the school or its property may be at risk or if the governors could act in breach of their duties.

How to heed the warnings

Most cases of failure through ignorance or accident could be avoided by conscientiously undertaking the role of trustee: read your governing document, The Essential Trustee and The Charity Governance Code; ask questions; be risk aware; seek advice.

The Charity Commission will work with those who feel they are a 'lone voice' in terms of compliance, and those who accidentally find themselves in default but then want to put things right.

An annual check-in on legal duties and charity-specific requirements is also healthy risk management and reassurance for governors, the school community, regulators and public.

If you have a question or want more information, our education  and charities teams will be happy to help. Please contact Chris Knight on 01923 919 307 or Kenji Batchelor on 07483 251 898.


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