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Colleges concern at audit proposals


Plans to take audit arrangements for FE colleges under the wing of the Further Education Funding Council (FEFC) are causing widespread concern among colleges who see it as an attack on their autonomy, says the Association of Colleges.

Arrangements are already in place for the FEFC to appoint external auditors to carry out audits of the Individualised Student Records (ISR) which are submitted by colleges three times a year to receive funding, following a critical report on the running of Halton college last year, which showed it had massively over-claimed the amount it was due from government funds. Last April Baroness Blackstone announced that ISR audit work would be contracted to a number of audit firms who have agreed to use a standard set down by the FEFC. This approach has already been used in a pilot project involving 14 colleges and will apply to all institutions from August this year. The FEFC will hand over responsibility for the arrangements to the Learning and Skills Council in April next year.

Colleges were consulted by the FEFC about the proposed changes earlier this year, and had to submit any comments by the beginning of this week. The Association of Colleges, which represents the 485 colleges in England and Wales says that colleges have been unhappy about the speed at which the proposals are being introduced and the consequences for their autonomy in financial matters. The FEFC has put forward a proposal to give external auditors additional responsibility for the auditing of colleges' financial statements, something which some colleges are currently seeking legal advice on because they don't accept the FEFC has the right to do this.

Speaking to TrainingZONE today, John Brennan, Director of Further Education Development at the Association of Colleges said: "There is widespread concern over the proposals. We have put in our own response (to the proposals), together with a letter from the Chair of the AoC board. Of particular concern are the timescales involved, but the issues involved are fundamental to the autonomy of the organisations. Option 1 (for the FEFC to take over both audits) will undermine colleges' autonomy by giving the Learning and Skills Council more control - we are firmly opposed to any moves of that kind. We are also questioning the legal basis for the proposals - neither the FEFC nor the LSC have explicit power to take on college audits. This being the case, it's difficult to see on what basis the council could take on responsibility for one and not the other.

Brennan was keen to stress that the AoC "had no objections in principle" to the changes to the ISR audit process, because it was understood that after the report on Halton college last year, the FEFC had been told by the government that it must take over responsibility for ISR. However, Brennan added that the AoC's understanding was that there was no government position on the issue of financial statements, and that this had been added by the FEFC for the purposes of making administration easier.

When asked when he thought the FEFC would respond to the comments colleges had made, Brennan said that the FEFC would be under some pressure to get the contracts for the ISR audits awarded and would need to move quickly on this, but that the AoC would like more time to be devoted to the issue of auditing financial statements: "There's no great hurry for (the audits for) 2001-2002, the issue needs an extended debate. We hope the Council will be responsive and will recognise the importance of the issues being raised - no private company would expect to be audited by a public organisation, and it's not just an issue for colleges. It's unclear whether the same arrangements are going to apply to other organisations such as training providers The LSC should take its time."


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