A school could be stripped of its ability to manage its finances after it overspent its budget by more than £250,000 and its books being at “high risk of being open to error and/or abuse”.

An audit by Merton Council last year revealed Raynes Park High School was overspending its budget by £253,000, nearly half of which comprised of over-budget cleaning and caretaking bills.

The school was highlighted in a Merton standards committee meeting last month for having “no assurance” that proper financial control was in place.

The council has threatened to take away the school’s financial delegation from the headteacher and governors who did not challenge and investigate areas of concern highlighted.

Merton’s internal audit team found that “the financial control at the school was weak and this has resulted in cashflow problems, causing the bank account to be overdrawn by more than £9,000”.

Cash was also being kept in an office drawer which, if stolen, would not be covered by the school’s insurance.

It went on to say: “Cash is not being kept in the safe when not in use and, at the time of audit, a total of £5,661 was being held in a drawer with a maximum insurance limit of £150.”

The school’s management was also criticised by auditors after the school’s governors were told in March 2010 that the books showed a surplus of £152,476, only for the actual surplus given a month later to be £50,244 – a discrepancy of more than £100,000.

The headteacher, Philip Wheatley, confirmed that the error was due to “double counting”.

His response to the audit team said: “It is evident that there was an error in the year end projection spreadsheet that caused the school’s reserve of £93,225 to be double counted in the projection.

“The projection should have been a year end surplus of £31,114. It is noted that the reason for this discrepancy should have been formally documented and explained to govenors at the time.”

Merton Council’s cabinet member for finance, Councillor Mark Allison, said: “Our job is to try to ensure taxpayers’ money is used carefully, even when it is being spent by outside bodies such as schools, and that approach is helping us keep council tax and spending low.

“When there are weaknesses, we work to put them right. In this case, with the school and its new headteacher, we have drawn up a detailed action plan which is being implemented and is regularly monitored.”

In response to this article, which was published in the Wimbledon Guardian (July 5), Mr Wheatley has sent the following letter:

"I would like to reassure Merton’s tax payers and parents and carers of young people at Raynes Park High School that the school finances are fully in order.

"I would like to point out that the main headline is misleading. The statement that the school overspent by £253,000 is factually incorrect. The school was at no time in debt and in fact ended the financial year with a surplus.

"The apparent overspend was an issue of allocations within two ledger codes within cost centres. At no point was this cost centre overspent.

"The deficit in one of the ledger codes was offset by an equivalent surplus within another ledger code. At no point was the school overspent.

"We have implemented a number of recommendations made to us by the council and can confirm that all cash in the school’s possession is secure.

"Merton Council has confirmed with us that they are confident we have taken all the appropriate measures, and I am confident that we are in a strong financial position to ensure the school's successful future."

Got a story for us? Call 020 8722 6333, tweet @WimbledonNews or email: newsdesk@wimbledonguardian.co.uk.