Independent schools are leaving themselves wide open to legal suits over scholarships and other concessions, a study of their financial affairs claims.

The report, by independent chartered surveyors Baker Tilly, urges private schools to adopt more transparent methods of financial management.

Their study - based on responses from 413 independent schools - found that, in over a quarter of cases, scholarships and bursaries were awarded with no documented reasons as to why.

Less than one third of schools use suitable qualified persons to prepare plans on a cyclical basis

Baker Tilly

"We live in a fairly litigious world these days and if there isn't transparency over the awarding of a grant to one pupils and not to another, a disgruntled parent could come back to the school on that," said head of charity and education at Baker Tilly, James Aston.

The report also raises concerns about the training of trustees in financial affairs.

It says only 5% of schools set aside funding to train governors in finance.

And only 12% of bursars, who can be responsible for budgets and assets worth millions of pounds, are qualified accountants and just 6% chose the job as a career, the report says.

The biggest proportion, 42% came from the armed forces, while only 2% held a common qualification relevant to their work.

Estate management

The Baker Tilly report urges schools to give greater consideration to the upkeep of their buildings and land.

With 65% of private schools being responsible for listed buildings on their sites, vast amounts of money can be used in this area.

"Schools must plan for their estate costs, as expenditure will invariably come out of reserves," the report warns.

"Less than one third of schools use suitable qualified persons to prepare plans on a cyclical basis, yet two thirds of schools have listed buildings and the inherent high risk of large costs.

"We are concerned that bursars and trustees are not working with sufficient, robust information."

With a recession possible in the next few years, some fee-paying schools could be forced to close if they did not give their trustees enough information to plan ahead.

Out to tender

Independent schools are also encouraged to consider tendering for professional services.

A large number of schools have retained the same professional advisors for over 10 years: bankers 45%, solicitors 43%, auditors 32% and investment advisers 29%.

Mr Aston said the findings of the report had been broadly well received by bursars.

"The majority of schools have taken it on board and are looking at their own practices."

Criticisms rejected

The Independent Schools' Bursars Association said in a statement that the report's narrow focus on the financial administration of schools - and the implication that the majority of bursars were unqualified - created a "seriously misleading impression" of the true role of bursars in independent schools.

"The demanding job of bursar is often undertaken as a second career. Schools benefit greatly from the experience of mature people with financial and management skills acquired in their first career," it said.

"For example, those recruited from the armed forces possess just that kind of experience, often as a result of having commanded large units with substantial budgets."

Figures released by the Independent Schools Council earlier this year showed the popularity of private education was at an all-time high, with half a million pupils now being taught outside the state sector.

Fees rose by 7.5% this year, around three times the rate of inflation, with similar rises expected for 2003-4.