An investigation found nearly £400,000 in work commissioned by a school went to business associates and families of executives.
Essex County Council investigated Wells Park boarding school for primary school-age children with behavior problems following allegations by whistleblowers.
Payments for unnecessary work and a lack of competitive bidding were noted.
The trust, which has since taken over the school at Chigwell, said robust financial systems are now in place.
The state-funded school provides weekday homeschooling for about 40 students ages five to 11 who have social, emotional, and mental health problems, and it also has about 15 non-residential students.
The Council’s audit team opened an investigation in October 2020.
An internal report the following April, released following a Freedom of Information Act request, highlighted transactions involving four companies.
It concluded that the way services were procured was not transparent, value for money was not demonstrated and there was no evidence of bidding.
The school’s contract register was declared “not fit for purpose” and that “the governing body and management team have interests in some of the contracted companies to provide services”.
A company called Kaizen Now Ltd, owned by the brother of the school’s strategy director, Carol Mitchell, was awarded more than £27,000 to provide work on the General Data Protection Regulation (GDPR).
The school was already receiving the same benefits from the council at a fraction of the cost.
The auditors said they could not find any details about the services provided by the company.
John Burke, who owns the company, did not respond when asked for comment.
Carol Mitchell did not provide a formal response to the BBC’s request.
Two other companies, Barker Richmond Ltd and Jell Amalgamation Ltd, provided building maintenance and cleaning services worth more than £370,000 between 2017 and 2020.
They belonged to Stuart Leigh, a business partner of one of the school governors at the time, Jason Cornish.
Mr Cornish only noted this on the declarations of interest forms in February 2021, after the examiners had started their work.
He was no longer governor and told the BBC his links to Mr Leigh were disclosed at “all meetings”.
“I was not involved in any tender selection and needs to be discussed with Wells Park’s finance department,” he said.
The report also found that orders placed with Barker Richmond Ltd were recorded separately in the school’s financial accounting system.
The auditors said this suggests that this was done “to avoid sourcing goods through the correct procurement channel or to avoid reaching the appropriate level of approval for spending”.
The report also listed other irregularities at Wells Park School related to its annual contract registry.
The register did not collect “expected contract information” such as start and end dates, contract value and specifications.
Jell Amalgamation Ltd. was paid £229,000, but his contract did not specify what cleaning work was to be carried out and “there was no evidence of any review, audit or approval by the governor,” according to auditors.
The auditors were unable to find a contract for Barker Richmond, who was paid more than £142,000 for building maintenance during the period in question.
The report said they expected the school to have obtained three offers for the work from different companies, but these were not obtained.
The auditors also highlighted concerns that “a significant portion of the in-kind budget … is used for the procurement of goods and services that are either wholly or partially owned by an individual” as an “important issue.”
This was a reference to Mr Leigh, who made no statement to the BBC.
Michelle Kelly, a former headmistress who left in 2016, said Carol Mitchell was effectively in charge.
Ms Kelly departed after filing a complaint with the governors alleging she had been barred from important decisions.
She said: “When I was appointed Acting Headmistress and then in the main post as Headmistress, Carol Mitchell was responsible for all finances.
“She was responsible for hiring all the workers who provided services. Only with their consent could anyone in the building order work or goods.”
Bills and other documents addressed to Ms Mitchell and verified by the BBC show she signed many of them to authorize payments.
Ms Mitchell also lived in a house on the site at a reduced rent that had been approved by a previous headmaster.
In an email forwarded to the review team, a representative of the council’s estate agents said: “I don’t see how it could be appropriate for tenants under all circumstances [Wells Park School] make your own accusation”.
The school is no longer under the control of the council, having joined the Beckmead Trust’s academy group in June this year.
Ms Mitchell is currently employed by the Trust in an undisclosed capacity.
A spokesman for the local authority said: “Essex County Council has strict systems in place to ensure all schools it maintains are financially sound and to minimize the risk of misappropriation of public funds and assets.
“Following anonymous concerns about financial irregularities … the Council carried out a robust internal audit process.
“Following the completion of this review in April 2021, weaknesses in the governance and decision-making arrangements surrounding procurement processes were identified and recommendations were made to improve the overall transparency of these processes.”
A spokesman for Beckmead said: “We carried out rigorous due diligence and legal processes before taking over the school and this included discussions with Essex Local Authority [the county council]. Our lawyers got the important assurances they needed.
“Beckmead has robust systems in place to ensure that the Trust and all of its schools are financially sound and that there is clear accountability and sound governance.”
A spokesman for the Department of Education said: “Any form of financial mismanagement in schools is totally unacceptable.
“We provide guidance to support local authorities, but ultimately it is their responsibility to oversee the finances of their supported schools.”
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