New subcontracting audits requirement questioned by Association of Colleges

New subcontracting audits requirement questioned by Association of Colleges

A new Skills Funding Agency (SFA) requirement for lead contractors to pay for an external audit of their subcontracting arrangements will “create the need for hundreds of additional reports,” Association of Colleges assistant chief executive Julian Gravatt (pictured) has warned.

He said the requirement, contained in funding agreements for 2015/16 and requesting ‘annual subcontracting assurance,’ was already carried out internally by providers as “good practice”.

A notice has been sent by the SFA to lead providers about the new clause, which requires lead providers that “subcontract more than a defined level of provision to obtain a report from an external auditor that provides assurance on the arrangements in place to manage and control their subcontractors”.

Lead providers must also provide “a certificate confirming that the report provides satisfactory assurance,” according to the notice, which has not been sent to subcontractors but is available on feweek.co.uk.

“It is good practice for college audit committees to get an internal auditor to look at their education and training subcontracts, but it is not necessary for the SFA to be so prescriptive on the issue,” said Mr Gravatt.

He added the new clause would “create the need for hundreds of additional reports for colleges and larger training providers”.

Policy Consortium member and Institute of Education senior research associate Mick Fletcher said: “It seems to me to be another example of passing a job and the associated costs to providers because the SFA no longer has the resources to provide proper oversight of the sector.

“Lead providers will no doubt pass the extra cost to their subcontractors and ultimately it will come out of resources intended for learners — there is nowhere else.

“Meanwhile, the government will continue to claim that cutting ‘back office’ staff at the SFA doesn’t affect the front line.”

And Association of Employment and Learning Providers chief executive Stewart Segal also questioned the need for the new clause.

“The external assurance can be integrated into the existing assurance process, including financial and process audits, and we believe

it should not add significant costs to the process,” he said.

“We will continue to discuss the implementation of these new requirements with the SFA.”

The SFA declin declined to comment on criticism of the new clause. It is understood that information in the notice will be incorporated into future published guidance.