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National Audit Office Press Notice

Department of Employment: Financial Controls in Training and Enterprise Councils in England

Report by the Comptroller and Auditor General
HC 361 1994/95
21 April 1995
ISBN: 0102361959
Price: £7.40

Sir John Bourn, head of the National Audit Office, reported to Parliament today that the priority given by the Department of Employment to improving financial control has been effective in substantially reducing the incorrect and uncertain payments made by Training and Enterprise Councils (TECs)* to providers of training and in their claims on the Department in respect of these payments. In 1993-94 TECs received more than £1.4 billion from the Department. His report follows two years, 1992-93 and 1993-94, in which he has been able to certify the Department's Accounts without qualification.

Sir John Bourn had qualified the Department's Accounts for 1989-90, 1990-91 and 1991-92 because significant amounts of payments to training providers and TECs were incorrect or lacking adequate supporting documentation. In July 1992, in response to concerns expressed by the Committee of Public Accounts, the Department adopted the target of securing fully effective financial control systems in all TECs by the end of March 1993.

By 31 March 1993, although this target was not met, the TECs had made notable progress towards it: at that time the Department assessed 18 TECs as high risk (inadequate financial controls), 45 as medium risk (some deficiencies in financial controls), and 12 as low risk (satisfactory financial controls).

The standards of financial control exercised by TECs improved further during 1993-94, but not as quickly as the Department had intended. By 31 March 1994 the Department assessed two TECs as high risk, 28 as medium risk and 45 as low risk.

By the end of September 1994, South Thames TEC was the only TEC assessed by the Department as in the high risk category. In October the Department issued South Thames TEC with a breach of contract notice informing them that, if the breaches were not remedied by the end of January 1995, the Department might terminate the TEC's contract. In December 1994, at the invitation of the Board of Directors of South Thames TEC, the Department appointed an administrative receiver to take over the affairs of the TEC.

The National Audit Office conclude that:

• notwithstanding the substantial progress that has been made, the Department need to maintain pressure to ensure that TECs continue to give priority to their financial monitoring and control systems, while keeping the burden on TECs at a reasonable level;
• the requirement for TECs to achieve a low risk assessment for financial controls as an integral part of future licensing arrangements should provide TECs with an additional incentive to maintain effective financial controls.

Notes for Editors

The Committee of Public Accounts are expected to take evidence on this report on 15 May.

Training and Enterprise Councils operate under contracts with the Department of Employment and other Government Departments to manage the local provision of training and support for new businesses. The Comptroller and Auditor General is not the external auditor of TECs. He does, however, have access to the books and records of TECs and training providers for the purpose of his audit of the Department's Appropriation Account.

The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office employing some 800 staff. He, and the NAO, are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

Press Notice 28/95
All enquiries to NAO Press Office: + 44 (0) 20 7798 7400