Skills Funding Agency accounts qualified as £50m paid in advance to FE Colleges

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The 2014-15 accounts of the Skills Funding Agency have been qualified by the head of the National Audit Office, Comptroller and Auditor General Amyas Morse, on the ground of irregularity of expenditure.

During the audit of the accounts, it emerged that payments totalling £49.9 million had been made by the Agency to 17 Further Education (FE) colleges in advance of need.

The payments were part of a distribution by the Agency of £143 million of remaining capital funds to FE colleges by the end of March 2015. After that date, responsibility for public funding of capital projects at FE colleges passed to local enterprise partnerships. Evidence of slippage in the capital programme had already been evident in December 2014. However, the Agency did not challenge the revised expenditure profiles submitted by colleges sufficiently before deciding to make the remaining capital grant payments in February and March 2015.

The Agency did not seek prior approval from HM Treasury for the payments in advance of need, as required by the Treasury’s Managing Public Money. The Agency then sought retrospective approval from the Treasury for making the payments which the latter refused on the grounds that the Agency had not sufficiently demonstrated the benefit or value for money from making these payments.

As a consequence of the £49.9 million being paid in advance of need and the Treasury’s refusal to provide retrospective approval, the grant expenditure will score against the 2015-16 capital budget rather than 2014-15.  Consequently, the Agency will have to secure resources equivalent to this amount for 2015-16.

The Agency’s Chief Executive will be commissioning a review by the Government Internal Audit Service of the financial management and control arrangements relating to the College Capital Investment Fund (CCIF).  The Chief Executive is also commissioning his programme assurance team to review the compliance by colleges with the financial programme management arrangements for the CCIF.  If this review identifies that colleges claimed funds in advance inappropriately, the Agency will seek to recover those funds.

20 July 2015


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