SCHOOLS may be putting themselves at financial risk by converting into independent academies, a report by MPs warns today.

Financial checks on schools that opt to break away from their local authority are “not fit for purpose”, the powerful Commons public accounts committee (PAC) has concluded.

Its report found that Whitehall was “overstretched” and lacked the staff to properly scrutinise the 400 schools that have lodged applications to make the switch.

They include five secondaries in the North-East – including Hurworth Comprehensive School, near Darlington – and a further two in North Yorkshire.

Meanwhile, many of the 407 existing academies have “inadequate financial controls and governance to assure the proper use of public money”, because Government guidance is being flouted.

One in 20 were forecasting a budget deficit last year – and more than one in four will need “additional financial or managerial support to secure their longerterm financial health”.

Margaret Hodge, the PAC’s Labour chairman, said: “Simply issuing guidance on basic standards of accountability and financial management is not enough. A clear mandatory framework, with strong measures to deal with non-compliance, is needed.”

But Eamonn Farrar, the chief executive of Hurworth School, last night refuted the claims made by the report. “I have no idea why the coalition Government did not come up with a new name for the new academies,” said Mr Farrar.

“The old academies were, more often than not, set up as a solution for schools which already had big problems.

“We want the financial freedom and the freedom from the local authority that academy status can bring.

“There will be no need for us to get a sponsor. The school offers excellent value for money and is in no financial difficulty whatsoever.

I’m not surprised to hear that these once struggling schools have become struggling academies, but we are not in that position.”

The PAC has investigated the “light-touch regulation” of academies proposed by the Department for Education (Dfe) – and found it badly wanting.

Each academy is required to file audited annual accounts to the Dfe, but there were serious concerns that the monitoring process was “not fit for purpose”.

Roles were not properly separated at some academies – allowing the chairman of governors to also chair the finance committee, for example – while some finance directors were not properly qualified.

But a Dfe spokesman said it had already announced plans for a new Education Funding Agency (EFA) to ensure the proper use of public funds, adding: “The Government recognises the issues that the PAC report has raised.”

And James Wharton, the Conservative MP for Stockton South, who sits on the PAC, said any school that believed it would benefit from becoming an academy should still apply.

He added: “Academies have raised standards and been successful.

But it is my committee’s job to flag up to the Government any potential concerns that come with independence.”

APPLICATIONS TO BE INDEPENDENT ACADEMIES:

King James I Community Arts College, Bishop Auckland; Hurworth Comprehensive School, Darlington; Dyke House Sports and Technology College, Hartlepool; Eston Park School, Eston, Middlesbrough; Bexhill Primary School, Sunderland; Norton College, Malton, North Yorkshire; Skipton Girls High School, North Yorkshire.

EXISTING ACADEMIES (with date of opening):

Unity City Academy, Middlesbrough (September 2002); The King’s Academy School, Middlesbrough (September 2003); Macmillan Academy, Middlesbrough (September 2005); Academy 360, Sunderland (September 2008); Castle View Enterprise Academy, Sunderland (September 2009); Red House Academy, Sunderland (September 2009); Freebrough Academy, Brotton, east Cleveland (September 2010); North Shore Health Academy, Stockton (September 2010); Thornaby Academy, Stockton (September 2010); Whitburn Church of England Academy, South Tyneside (January 2011).