A “fit and proper person” test must be introduced for school leaders to prevent a repeat of the Kings Science Academy scandal, MPs say today.

The failure to properly check who is running the exploding number of academies and free schools is condemned by the Commons Public Accounts Committee (PAC).

Its hard-hitting report says the glaring weakness was laid bare when the Education Funding Agency (EFA) did not know who was chairman of trustees at the free school in Lidget Green, Bradford.

And it urges Education Secretary Michael Gove to take urgent action that “gets to grips with effective oversight to improve public confidence in the system”.

Margaret Hodge, the PAC’s chairman, said: “The department does not have a process for vetting those appointed as academy trustees or chief executives.

“In the recent high-profile case of Kings Science Academy, the Agency did not even know who the chair of trustees was.

“The department should introduce, at individual academy and academy trust level, a fit-and-proper persons test.”

Today’s report warns the ESA lacks the data to spot poor financial management at free schools and academies, relying instead on whistleblowers.

Worse, it adds: “Even when the Agency is presented with data that should trigger concerns and lead to further investigation, the Agency has not always taken action quickly enough, as in the case of Kings Science Academy in Bradford.”

The report is the latest strong criticism of what happened at Kings Science Academy, where the principal, Sajid Raza, was arrested on fraud allegations, in January.

The school must repay about £77,000 after “fabricated invoices” for rent were submitted to the DfE – something only revealed when a secret report was leaked.

Payments also went towards teachers’ furniture, with more than £600 spent on parties or meals and £169 given to an employee to buy clothes.

West Yorkshire Police said yesterday that Mr Raza remained on bail and that its inquiries were “ongoing”.

The mystery over the chairman of trustees arose when the school told the Department for Education (DfE) that Alan Lewis held the post – which he denied.

A firm run by Mr Lewis, a Conservative party vice-chairman, receives £300,000 a year for lease of the school’s land, despite suggestions to MPs that the market rent is only £100,000.

Today’s report was published amid the controversy over alleged extremism at Muslim-dominated schools in Birmingham, which has highlighted similar lack of oversight.

It also urges the DfE to consider a ban on so-called ‘related-party transactions’, where people have connections to both academy trusts and private companies.

Miss Hodge added: “They are always open to accusations of conflicts of interests, even when supposedly on a not-for-profit basis, and this serves to undermine public confidence.”