Guidance

16 to 19 education: financial management and assurance

Information about financial assurance and financial management of 16 to 19 institutions funded by Education Funding Agency (EFA).

Overview

Part of the Education Funding Agency’s (EFA) remit is to obtain financial assurance and support good financial management of those institutions it funds. You can read more about the funding EFA provides in our detailed guide to 16 to 19 funding.

This guide helps local authorities, colleges and other 16 to 19 education providers understand their financial assurance and financial management responsibilities. Academies that provide 16 to 19 education are covered separately in the academies financial assurance detailed guide.

The EFA business cycle sets out important information to help institutions and local authorities plan ahead.

Joint Audit Code of Practice

The Joint Audit Code of Practice (JACOP) describes the framework through which EFA and the Skills Funding Agency (SFA) ensure 16 to 19 education providers are accountable and have robust audit arrangements. It explains governance, audit and assurance responsibilities for further education colleges, sixth-form colleges, non-college providers, funding bodies, local authorities and auditors. It does not apply to academies.

SFA and EFA developed the JACOP jointly, with consultation taking place through the Association of Colleges and Sixth Form Colleges Association. It came into effect on 1 August 2013.

JACOP is split into two parts. Part 1 describes the framework between the funding bodies (EFA and SFA), and part 2 provides more detail on specific assurance requirements for colleges.

What college providers need to know

JACOP - part 2

Part 2 of JACOP is specifically for further education (FE) and sixth-form colleges. It requires colleges to have an annual regularity audit based on a framework set by the funding bodies. In accordance with JACOP part 1, SFA oversees the outcomes for FE colleges and EFA oversees the outcomes for sixth-form colleges. The regularity audit framework forms part of JACOP part 2 and sets out the context, responsibilities and requirements for college regularity audits.

Financial planning handbook and template

Published jointly by SFA, EFA and the Association of Colleges (AoC), the financial planning handbook sets out the requirement to prepare a two-year financial plan annually by 31 July, using the template published alongside the handbook. The handbook establishes the approach used by EFA and SFA to monitor and assess the financial health of colleges. The detailed guide 16 to 19 education: accountability provides more information on how EFA assesses colleges’ financial health and financial control.

Accounts direction and accounts direction handbook

SFA and EFA jointly publish an annual accounts direction for sixth-form colleges and further education colleges.

Sixth-form colleges must return their audited financial statements, auditor’s management letter and finance record for the year ending 31 July to EFA by 31 December annually. There are different arrangements in place between further education colleges and the SFA.

The supporting handbook which gives technical advice to colleges on the application of the accounts direction is published separately by the Association of Colleges (AoC).

The AoC publishes other guidance on accounting and governance for colleges on its website.

College accounts

SFA and EFA publish college accounts data that allows further education colleges to compare their financial data with national totals and other colleges and organisations. The information is taken from the combined SFA and EFA database of college finance records. This data includes previous academic years going back to 2007 to 2008.

Benchmarking package

The benchmarking package was developed jointly by SFA, EFA and AoC. This software lets colleges compare their financial performance and ratios for different years against other colleges.

What non-college providers need to know

As well as sixth-form colleges, EFA funds other 16 to 19 providers including non-maintained special schools (NMSSs), special post-16 institutions (SPIs) and commercial and charitable providers (CCPs), and the following assurance information may be of interest to these organisations.

Financial health assessment of 16 to 19 non-college providers

EFA assesses a provider’s financial health to understand the degree of risk in contracting with those organisations, and to establish the recommended value of contracts appropriate to the financial resources of those organisations.

The document financial health assessment of 16 to 19 non college providers sets out EFA’s approach to this assessment of 16 to 19 non-college providers.

Assurance framework for high needs funding

NMSSs, SPIs and CCPs may also wish to familiarise themselves with the assurance framework for high needs funding.

What local authorities need to know

Local authorities need to gain financial assurance over the 16-19 funding provided to the institutions in their areas. The assurance framework includes the items set out below. Local authorities may also find part 1 of JACOP useful.

Financial assurance on local authority-maintained institutions with sixth-form funding

EFA has published a guide for local authorities on gaining assurance over the funding provided for local authority-maintained institutions with sixth forms.

It is not mandatory for local authorities to follow these guidelines, but is the responsibility of local authority chief financial officers to determine the extent of the work, if any, which is necessary to enable them to make their grant returns to EFA.

Requirement for local authorities to submit grant returns to EFA

For learners over 16, local authority chief financial officers are required to make a 2-stage grant return and use of funds statement on funds received from EFA, and a use of funds statement on funds received from the Skills Funding Agency (SFA). These grant returns are due annually on 30 April and 31 October.

Assurance framework for high needs funding

The assurance framework for high needs funding provides information for local authorities and 16 to 19 education providers on the assurance arrangements for the funding of high needs students. It sets out that EFA will take the lead for financial health assessments for NMSSs and SPIs, and that it will share the results with local authorities. EFA shares the information with local authorities four times a year in February, May, July and November. Local authorities can also contact EFA to request further information if they have any concerns regarding the financial health of institutions in their authority.

Local authorities can use this information when considering future commissions with NMSSs for element 3 high needs funding. The information should not be used for any other purpose or passed onto a third party.

You can find more information in EFA’s detailed guide to high needs funding for 16 to 19 education.

Assurance for funding relating to the 16 to 19 Bursary Fund

EFA also publishes information to support local authorities to gain assurance that institutions are administering the 16 to 19 Bursary Fund correctly. It is not mandatory.