Auditors at the Skills Funding Agency have been assigned to help A4e carry out a review of some of its government contracts.

The internal audit, led by law firm White & Case LLP, will investigate all contracts A4e has with the Agency.

According to 2011/12 allocations data on the Agency’s website, A4e has contracts totalling more than £16 million with them.

The audit also follows news that A4e has been selected by the Agency as a preferred bidder for two prison education contracts – in London and East of England.

A4e has been in the public eye over the last month following allegations of fraud. Its owner, Emma Harrison, stepped down from the firm and her position as ‘families tsar’ for David Cameron last month.

A statement from the Agency read: “The Agency takes allegations of financial irregularity very seriously.

“The Agency, as part of their standard processes, continues to receive assurances from A4e to ensure that public funding is being used and protected appropriately both for current contracting arrangements or any future contracts.”

It also added: “The Agency has decided that Agency auditors will work alongside A4e’s auditors to complete this exercise and provide additional assurance to the Agency that contracts are being delivered in accordance with our requirements.

“In the current context the Skills Funding Agency is vigilant and continues to monitor the situation very closely.”

The Department for Work and Pensions (DWP), which pays millions of pounds to A4e to deliver work programme contracts, has launched its own investigation.

A spokesperson for the DWP said: “We have made it absolutely clear to A4e that we take this matter very seriously, and that if at any point during the audit or thereafter we find evidence of systemic fraud in DWP’s contracts with A4e we will not hesitate to immediately terminate our commercial relationship.”

The A4e board said: “The Board has made consistently clear in all previous statements that we take any allegations of fraudulent or otherwise illegal activity extremely seriously. There is absolutely no place for this type of misconduct at A4e.

“We obviously acknowledge concerns raised by DWP and we welcome and will cooperate fully with their planned investigations.”

The preferred bidders for prison education were revealed by the Agency last week. It comes after an “open and competitive procurement process” by the Agency with the National Offender Management Service (NOMS) to re-procure Offender Learning and Skills Services (OLASS) from August 1.

As well as A4e, preferred bidders include Milton Keynes College (East Midlands and South Central), Manchester College (North-East and North-West, and Yorkshire and Humber) and Weston College (South-West). Preferred bidders for Kent and Suffolk are yet to be decided.

The Agency expect to finalise contractual agreements by early summer.

“During the next stage, we will work with preferred bidders to ensure that the information provided during the procurement process remains valid and that their organisations are able to meet all the requirements of the service, prior to concluding the procurement,” said the Agency statement

Once contracts are signed, the Agency will apply “robust contract management processes” which will enable “continued assurance” public funding is used and protected appropriately.

The Agency are prioritising “quality of provision” and “local responsiveness” by giving offenders basic English and maths and support to help them back into employment once released.