16 to 19 study programmes audit approach
Updated 16 November 2016
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1. Introduction
1 Education Funding Agency (EFA) provides funding to academies, further education (FE) colleges, sixth-form colleges (SFCs), local authorities, specialist post-16 institutions (SPIs), charitable and commercial providers (CCPs) and other providers of education for children and young people in England. EFA is accountable for this funding and therefore carries out a number of assurance activities to ensure the proper use of public funds.
2 This document provides an overview of EFA’s approach to undertaking funding audits for study programmes (including traineeships) for young people.
3 The audit approach set out in paragraphs 10 to 20 of this document applies directly to CCPs. The principles of this approach will also apply to SPIs, academies, local authority schools and colleges. The funding audit programmes for all ILR funded institutions are set out by the Skills Funding Agency (SFA).
4 The responsibilities for leading on assurance for different types of institutions are set out in the Joint Audit Code of Practice (JACoP).
2. Funding guidance
5 EFA issues annual funding guidance for 16 to 19 education institutions which sets out the funding methodology. Institutions are required to comply with the guidance and follow the core evidential and compliance requirements set out therein. This is the basis of the funding audit approach.
6 Traineeships are funded as part of the post-16 funding methodology. EFA’s funding regulations for traineeships and SFA’s framework for delivery of traineeships are available on GOV.UK.
3. Audit scope
7 The overall funding audit approach for study programmes is:
- to gain assurance over the existence and eligibility of students recorded on the institution’s individualised learner record (ILR)
- to confirm that the submitted funding ILR data is supported by documentation held by the institution
- to ensure compliance with funding requirements, including the condition of funding for maths and English
- to form an opinion on funding recorded by the institution (“use of funds”)
8 Auditors completing the study programmes funding audit may also be required to complete a bursary funding and free meals in further education funding audit (if applicable).
9 For sub-contracted provision, auditors will have regard to the required control arrangements set out in the funding guidance.
4. Audit approach
4.1 Selecting institutions for a funding audit
10 The lead assurer will select a sample from each institution type annually for a funding audit:
- CCPs will be audited by the lead assurer – as with JACoP, this will be either EFA or SFA
- SPIs will normally be audited by EFA
- further education colleges will be subject to audit by the SFA
- sixth-form colleges will have their audits commissioned by the SFA on behalf of EFA, which selects the sample
- 16 to 18 funding at academies will be audited if the academy is selected as part of EFA’s programme
- local authorities are expected to have their own arrangements in place for audits of maintained schools with sixth-forms
11 Each academic year, EFA will select a sample for audit of CCPs based on factors including:
- previous funding audit opinions carried out by EFA or its predecessor agencies
- external auditor opinions on financial statements
- latest financial health assessment
- amount of funding received
- other information available, for example, any intervention and investigation
4.2 Audit overview
12 Institutions will receive written notification of the date the funding audit will commence and other relevant details of the visit. Institutions will be required to supply student files and other relevant evidence in time for the auditor’s arrival.
13 For each institution subject to a funding audit, a sample of students will be selected for testing. We will select the main sample on a random basis, and will base the sample size on our assessment of the level of risk. The sample will be generated using the provider data self-assessment toolkit (PDSAT) software. In addition to this, we will analyse the PDSAT reports (which institutions are required to run as per their funding agreement) before the visit, and depending on the outcome we may also request a further sample of student files to carry out additional audit work.
4.3 Audit objectives
14 The objective of the audit testing is to confirm that the submitted funding claims or returns are not overstated and are supported by adequate documentation held by the institution. Auditors will assess the risk of errors occurring, require institutions to correct any errors identified, and make recommendations to improve institutions’ controls to help prevent such errors from occurring again. Onsite testing of documentary evidence will seek to verify learner existence, eligibility and compliance with requirements from the funding regulations, summarised as:
- student existence and eligibility
- student eligibility for full or part time funding
- compliance with the condition of funding for maths and English
- eligible activities for inclusion in the study programme
- student attendance (or achievement)
- whether the correct learning aim has been accurately recorded as the core learning aim (for example, there is a clear rationale to demonstrate why the specific learning aim has been identified)
- whether the student has been provided with relevant information, advice and guidance, an initial assessment, a learning plan and a timetable of activity (if applicable)
- whether any work experience arrangements (if applicable) have been appropriately evidenced
- whether the student is being funded at the appropriate rate based on planned attendance
Discrepancies in the above may lead to a funding error.
4.4 Audit testing and summary
15 Auditors should provide frequent updates on progress to the institution during the audit visit. On completion of the audit fieldwork, the funding auditors are expected to brief the institution with their initial findings at an exit meeting. This will be followed up with a written summary of audit findings. Institutions will have 5 working days following the issuing of the written audit feedback to respond to the findings and provide additional evidence, if required. Institutions can expect the following minimum information to be included within the summary of audit findings:
- any queries or issues that are still outstanding after the fieldwork stage
- any potential corrections that need to be made to the ILR, preferably highlighted via a student number
- any control issues highlighted during the fieldwork and associated recommendation
- an error schedule detailing the sample value and if applicable, the percentage value of any potential corrections highlighted
- details of any further self-testing required of the institution as a result of the error percentage exceeding 5%
- a timetable for any actions to be undertaken
16 If audit testing errors exceed 5% of the value of the sample (after any additional evidence has been given to the auditor), the institution will be required to undertake a 100% self-check as reflected in the summary of audit findings. Evidence of the work carried out and findings should be submitted to the funding auditors within an agreed timescale.
17 Subject to satisfactory review of the findings, these will be amalgamated with those outstanding from the summary of audit findings. The auditor will confirm if further re-testing is required, either by the institution or a through re-testing visit by the auditors to verify the accuracy of the self-checking. The auditor will include agreed timescales.
4.5 Audit reporting
18 We will issue a final audit report providing an opinion on the use of funds, any significant financial control issues highlighted during the assurance visit and, where relevant, details of any ILR adjustments. The final audit report will also be shared with other relevant EFA teams.
4.6 Audit error treatment
19 Institutions must undertake any data adjustments to correct any errors identified within agreed timescales, preferably before the final claim declaration is submitted. EFA must be satisfied that all data adjustments have been made and may, if necessary, request evidence from the institution that the adjustments have been completed.
4.7 Follow-up
20 Depending on the severity of internal controls issues found and/or the level of funding errors, EFA’s risk analysis division may be required to carry out a follow-up visit to evaluate the effectiveness of the agreed actions to be taken and/or the institution may be subject to a further funding audit in the subsequent funding year.