ESFA subcontracting standard

Following consultation on subcontracting reforms, the Education and Skills Funding Agency (ESFA) introduced the subcontracting standard for ESFA-funded post-16 education and training, starting from the 2022 to 2023 funding year.

The ESFA developed this new framework to ensure a clear and consistent approach for the (contract) management of subcontractors by lead providers. It also aims to ensure robust assurance review arrangements are in place. Specifically, it seeks to mitigate the risk of: 

• inadequate (contract) management of subcontractors
• non-compliance with ESFA funding rules by subcontractors; and
• fraudulent and incorrect funding claims.

Where a provider subcontracts £100k or more of apprenticeship, Adult Education Budget (AEB), European Social Fund (ESF), or 16 to 19 funding (combined and in total), within any funding year, the provider must engage the services of a reporting accountant. The accountant will provide a report that aligns with the requirements of the example template report included within the ESFA’s guidance document. This report must be sent to the ESFA by the provider upon completion of the work and must be submitted by 31 July each year. There is no longer a requirement to provide a certificate. 

The standard only applies to provision directly funded by the ESFA. If any provider subcontracts provision from combined authorities, they will need to conduct additional testing, which is not reflected in this briefing note.

Once the ESFA receives the report, it will determine whether the provider has achieved the standard. The achievement will remain valid for three years unless material changes and/or concerns arise, such as significant changes in the volume of subcontracting or changes in senior management.

How can RSM help?

Our approach was designed in conjunction with the ESFA’s guidance titled ‘Assurance reviews of the subcontracting standard for post-16 providers: Framework and guide for reporting accountants’. The approach contains elements of controls and compliance testing, as well as ILR/learner level testing of subcontracted provision.

Key components of our work include reviewing your completed provider self-assessment questionnaire and validating it against supporting evidence, along with appropriate compliance testing. This process includes using our professional judgement to determine the quality of the evidence provided.

We operate a ‘no surprises’ approach to our work. Any issues or queries will be discussed with you during the fieldwork. Upon conclusion of the fieldwork, we will hold a formal debrief meeting with you to agree any required actions to address any potential areas of weakness.

We will issue you a report that complies with ESFA requirements and provides details of where, in our view, requirements are being met, as well as areas where improvements are needed.

If you would like to receive any more information from the above please contact: