The outgoing boss of the Education and Skills Funding Agency has fired a warning shot across the bows to all colleges on the importance of reliable financial and data management.
Peter Lauener (pictured above) reminded college principals– or “accounting officers” – of their responsibilities in this area and the consequences of failing to meet them, in a strongly-worded letter [click to read letter] dated April 13 and seen by FE Week.
“Your responsibilities for the regularity, propriety and value for money of your college’s spending decisions underpin the annual assurance given to Parliament about the public money invested in colleges,” he wrote.
“Often our interventions into colleges result because those accountable have not fully understood their personal responsibilities,” he warned.
The ESFA’s recent review of college financial statements indicated that issues with “weak governance, poor leadership by the principal, or ineffective self-assessment” often “contribute to instances of weak financial management”, the letter said.
Mr Lauener highlighted colleges’ ILR returns as an “area where data could be improved” as “rates of error have been higher than in previous years”.
It was “critical” for colleges to “set their budget accurately” and that “this process is subject to appropriate scrutiny by governors”, he said.
The ESFA’s review showed “more colleges under-forecast than over-forecast their current liabilities”.
Mr Lauener wrote: “Robust and accurate profiling of both long and short-term debt is key to institutions’ ability to deliver a sustainable offer to their students, and achieve the best value for money.”
Those colleges rated ‘inadequate’ for financial health “were the least accurate at predicting their final outcome”, he noted.
He urged the accounting officers to discuss the issues in the letter with their board, and set out a number of steps the colleges should take.
These included improving self-assessment, as “our work with colleges in financial difficulty often finds that weak, un-evidenced self-assessment has contributed to delays in spotting potential failures in financial management”.
Mr Lauener’s letter comes as 54 colleges currently have a notice of concern from the ESFA, according to the most recent list published April 13.
Hull College Group chief executive stepped down in March after a report by the FE Commissioner in February exposed a £10 million deficit over four years.
And leaders at City of Liverpool College were heavily criticised for incurring a £15 million deficit, in a letter from skills and apprenticeship minister Robert Halfon in February.
In the same month the Department for Education closed a number of loopholes in the ESFA’s qualification achievement rates calculation, which it said “artificially” boosted the scores for around a tenth of all providers.