Apprenticeship Funding Rules Compliance: Lessons Learned from ESFA Audit

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1 Apprenticeship Funding Rules Compliance: Lessons Learned from ESFA Audit May

2 Who are SRF? Experts in Education Risk Management, Funding Compliance & Funding Optimisation Identification of not only funding error but where funds have not been claimed or under claimed. Single underclaim found of 152k YTD and identified potential underclaim of 300k by year end. Record of First Class Performance at ESFA Audit Knowledge of Rules and of what works in the field Monitoring, Internal Audit, Strategic Advisory, PDSAT Analysis

3 Which are the key documents? Apprenticeship funding and performance-management rules for training providers May 2017 to March 2018 (V6 March 18) Guidance for returning apprenticeships on the ILR from 1 May 2017 (V2 Jan 17) Apprenticeship technical funding guide for starts from May 2017 (V3 Aug 2017) 2017 to 2018 ILR Funding Reports ( V2 April 18) Where are they found? ESFA Section of the Gov.uk website

4 The Impact of Error Risk Management is of paramount importance for any Provider Impact on individual learner funding but also contractual There must be assurance over the accuracy and compliance of data A single funding error at Agency audit can result in significant action

5 ESFA Audit - Provider Risk and Assurance There have been some monitoring visits to new providers this year (KPMG, PWC, RSM) ESFA conducting their own audits of both new and old providers PDSAT audit sampler is working and providers can access ESFA testing papers and produce own sample

6 Common Issue 1 Confirmation of price The agreed price, as negotiated with the employer must be confirmed within the learner file: P243. The evidence pack must include the following: details of the cost negotiated by the employer and provider. By details we mean that it should be clear that only eligible costs have been included in the price. This is for all Apprenticeships (Frameworks & Standards) and all age groups, including at small employers Actual costs for employer providers (including own staff)

7 Common Issue 2 Analysis of prior learning How prior learning affects the negotiated price (including where ICT transferable skills exist within some frameworks) confirmation that you have accounted for prior learning that affects the learning or the funding of any of the apprenticeship and adjusted the price accordingly. This information could include: information from the individual s personal learning record details of previous qualifications including modules/units undertaken compared to the content of the apprenticeship, demonstrating how they are materially different skills gap analysis, demonstrating the new skills needed by the individual and how the apprenticeship will address these Skills Gap Analysis is key for older learners with sector experience

8 Common Issue 3 20% Off-The-Job Training Requirement Details of how the 20% OTJ training will be quantified and delivered P243. The evidence pack must include the following: details of how the 20% off-the-job training, excluding English and maths, will be quantified and delivered. By details we mean a plan of delivery and evidence of delivery taking place against that plan Must have individualised plan and have this agreed within Commitment Statement. Plan must only include those activities classed as OTJ training. 20% calculation must be based on paid hours and so holidays would need to be accounted for. Systems and processes in place to evidence, monitor and review? How will you evidence this? Learner log book? Employer confirmation Monthly review Electronic evidencing

9 Common Issue 4 Employer Co-Investment Not being in receipt of employer co-investment in line with quarterly reconciliation points Not recording co-investment on the ILR data P191. We may withhold payments including the final completion payment until all the employer co-investment has been collected you will need to invoice employers separately for any employer coinvestment, including any VAT if applicable you may agree a schedule of co-investment payment with the employer which does not match monthly payments made by us, provided the employer has paid a matching 10% at our three monthly data-points. We recommend: Use of the HUB reports to identify those learners requiring coinvestment

10 Common Issue 5 Small employer verification Employers that fit ESFA criteria of small employer are eligible for waiving of co-investment for year olds (and eligible 19-24) Lack of clear confirmation of employer size, in line with ESFA criteria, will raise queries. P106. Before any apprenticeship starts, you must have evidence that the apprentice and employer are eligible for the waiving of the employer contribution. The employer must provide evidence that they employed an average of 49 or fewer employees in the 365 days before the apprentice was recruited (using the calculation set out in paragraph P107) and you must keep this in the evidence pack. ESFA audit testing paper looks for an employer declaration

11 Additional Areas of Risk EPA Costs must be reported separately to training costs in ILR. Monthly instalments made on total price. Must be agreed between employer and EPA organisation. The provider plays no part in these negotiations (V6 rule clarification). Supporting start of learning English and Maths Transferable skills (English Literature) & level targeted Not using funding and funding monitoring reports from HUB. Not utilising PDSAT reports

12 In Summary Providers are adjusting to the funding reforms and new funding rules but you need to ensure that systems are working and you are compliant What else can SRF do? Programme Audit and monitoring / Funding Compliance Health check Data Analysis Over and Under claim identification Additional Seminars available: Changes to the Rules, PDSAT Learning Support Development Consultancy

13 Questions? Note: For SRF s Internal audit services and other products see