Impact of OfS registration
Corporations that are registered with the Office for Students (OfS) are obliged to follow the audit requirements of the extant OfS Accounts Direction as well as those set out in Post-16 Code. The OfS requirement to provide an audit opinion on use of funds as set out in paragraph 42 (c) and (d) of the OfS Accounts Direction does not remove the requirement for the reporting accountant to provide a report on regularity as set out in Annex E of the Post-16 Code.
ESFA requirements update
The scope of the audit and regularity assurance engagement remains unchanged– it should cover, at least, income and expenditure, including any Covid-19 funding, as well as the authorities which govern them. The ESFA is not seeking any additional assurance.
It is recognised that the audit process itself may be significantly affected by the COVID-19 related measures in place prior to and at the time of the audit.
Additionally, internal audit work may have been prevented from proceeding as planned. In these circumstances the corporation may have had to put alternative measures in place, such as remote audit or alternative procedures, to allow the audit committee to report to the board on its activities and conclusions.
Corporations are encouraged to contact the ESFA if issues arise which mean they are unable to meeting the submission deadline.
Regularity self-assessment questionnaire
To aid corporations in their assessment of regularity relating to COVID-19 issues, and to clarify the key considerations in this regard and an additional Annex to the Regularity Self Assessment Questionnaire (RSAQ) has been issued by the ESFA that sets out further matters for corporations to consider.
A copy of this completed Annex must be signed by the accounting officer and chair of governors and provided to the reporting accountant, alongside the standard RSAQ.
The implications for the audit of the impacts of COVID-19 are a matter of the professional judgement of each auditor and reporting accountant. The Financial Reporting Council has provided guidance for auditors on the impact of Covid-19.
When considering the corporation’s activities factors may include:
Capacity: To what extent were the governance and control arrangements, staffing levels and operations of the corporation affected by COVID-19? If alternative arrangements were considered necessary, was there anything to suggest the approach taken was not reasonable and practical under the circumstances at the time?
Proactivity: At what point were the financial control and regularity issues faced, for example difficulty in segregating duties as a result of staffing shortages, identified by the corporation? If appropriate, did it seek ESFA or DfE guidance on particular matters? Did it consult with other corporations in similar situations?
Reaction: Did the corporation attempt to take retrospective or redressive action after the event (if appropriate)?
Evidence: Has the corporation retained a documented trail of its decision-making process, including the rationale for the decision and details of those employees or corporation leaders involved?
Value for money
In March 2020 the Cabinet Office provided information on how entities may support their suppliers in certain circumstances and the regulatory implications of this.
The purpose of the guidance is to ensure service continuity during and after the COVID-19 outbreak. It effectively allows in-scope entities to take a longer-term approach to obtaining value for money when procuring goods and services. Such purchases, where they meet the conditions of the guidance, are not considered to be regularity breaches.
In particular, corporations should note that whilst Managing Public Money prohibits payment in advance of need in absence of Treasury consent, Treasury has granted consent for such payments (with limits) where the corporation’s accounting officer is satisfied that a value for money case is made by virtue of securing continuity of supply of critical services in the medium and long term. Examples of such costs for corporations could include exam board fees.
DfE has also published guidance on the application of the notices, which includes information to determine whether a corporation is within scope.
Reporting accountants would take account of the requirements of this guidance so that they can decide whether its application has any implications for their report on regularity.
Accounting officers must reflect cases where the guidance has been applied in the governance statement. They should also explain any situations where COVID-19 has adversely impacted on value for money, if applicable