11 October 2016
The Education Act 2011 granted new freedoms and flexibilities to colleges. However, within the legislation, boards retain a non-delegable, statutory, responsibility for:
- ‘oversight of its [the college’s] activities’; and
- ‘the effective and efficient use of resources, the solvency of the institution and the body, and the safeguarding of their assets’.
These responsibilities aren't new and all colleges are well aware of what is expected of them in fulfilling these responsibilities at both strategic and operational levels.
Allied to the above, the Joint Audit Code of Practice (JACoP) has also granted additional freedoms to all colleges, including the removal of the mandatory requirement to have an internal audit service.
As a direct consequence of these increased freedoms, the Education and Skills Funding Agency are seeking a more explicit form of accountability from boards. In particular, the accounts direction now requires a formal opinion to be given in the Statement of Corporate Governance and Internal Control in the annual accounts to the effect that:
‘the Corporation is of the opinion that the college [has/ does not have] an adequate and effective framework for governance, risk management and control' and has fulfilled its statutory responsibility for ‘the effective and efficient use of resources, the solvency of the institution and the body, and the safeguarding of their assets’.
Given the nature of the opinion required, one of the audit committee’s key roles for the future is advising the board on the adequacy and effectiveness of the board’s assurance framework such that the board is able to provide the necessary opinion in the accounts. This is a significant shift in emphasis and responsibility from advising the board what it has to do (as it used to be under the previous, prescriptive, Audit Code of Practice), to advising them on what it should do.
We therefore encourage all board members to ask themselves the question: 'Do we really know what we think we know?'
As a firm, we have seen BAF’s implemented in other parts of the public sector, particularly the NHS and housing, and have helped many clients develop frameworks to suit their particular needs. Given our provision of audit and assurance services to a significant number of colleges nationally, we thought it only right and proper that we share our experience with you and provide support to the sector through the provision of this free toolkit.