Struggling Gateshead delays annual accounts as auditors conclude investigation

A college has delayed signing off on its 2018/19 accounts as forensic investigators shed light on its unexpected £6 million deficit for the first time.

Independent auditors were drafted into Gateshead College late last year after the shock shortfall was discovered.

Principal Judith Doyle and chair John McCabe have since left their positions.

While full details on the cause of the deficit are still not known, the college has confirmed that the investigation has now concluded.

A spokesperson told FE Week: “The forensic investigation instigated by the board established that the financial position is not as the board understood it to be at the start of July last year because the income position was overstated and the expenditure was substantially understated.

“This meant the college’s projected out-turn and the 19/20 budget were inaccurate.”

They stressed that the report “does not suggest that there has been any misappropriation of college funds”.

FE Commissioner Richard Atkins intervened at Gateshead College when the shortfall was first revealed. His report will be published “in due course”.

In the meantime, the college’s accounts have been delayed. They are expected to be finalised by the end of March or early April, the spokesperson said.

Experienced FE leader Andy Cole was appointed as Gateshead College’s interim principal in February following the resignation of Judith Doyle – who was the highest paid college leader in 2017/18.

He told FE Week: “In the short time I have been here I can see that this is a vibrant college providing excellent education, training and outcomes for its students and fulfilling an important role in the regional economy.

“We need to do all we can to maintain this by implementing a swift and effective recovery plan to restore the college’s financial health in the shortest possible time and I’m working closely with the board, the executive team, wider college staff and the relevant stakeholders to make sure that this happens.”

John Hogg, a former deputy FE commissioner, was drafted in to replace McCabe – who commissioned the independent audit into the deficit – as chair in January.

Shortly before Cole came onboard, Gateshead College launched a redundancy consultation and put 26 jobs at risk to help “address some short-term financial pressures the college is facing at the moment”.

Ofsted then downgraded the college from ‘outstanding’ to ‘requires improvement’.

Inspectors said the information leaders provided to governors about the college’s finances over recent months had “not been sufficiently accurate to enable governors to hold leaders to account for the management of resources and the college’s significant financial deficit”.

Gateshead College received a financial notice to improve from the Education and Skills Funding Agency in January after it had “been assessed as experiencing serious cash flow pressures”. The college is currently in formal intervention.

A new three-year financial plan has since been agreed on, and it is hoped to return Gateshead College to surplus by 2020-2021.

It recorded a surplus of £748,000 in 2017-18, according to its latest accounts.