ESFA funding assurance reviews

The Education and Skills Funding Agency (ESFA) has a varied annual assurance programme which includes elements such as desktop reviews of provider data through the Funding Rules Monitoring (FRM) reports and funding assurance reviews of funding claims and associated Individualised Learner Record (ILR) data for a sample of further education colleges, Independent Training Providers (ITPs) and Higher Education Institutions (HEI’s).

The funding assurance reviews incorporate a random and risk-based selection of providers on an annual basis, with work typically being undertaken on the random providers prior to the final ILR submission in October, and the risk-based providers being reviewed shortly thereafter. Providers typically fall into the risk-based category where the ESFA has concerns in relation to data quality or issues have been identified from previous funding assurance related activity. The approach encompasses a combination of a detailed review of individual learner files (based on a sample of 30 learners for each funding stream), along with a detailed review of the Provider Data Self-Assessment Toolkit Reports (PDSATs).

As the timing for these reviews is when many providers are in the midst of enrolment, and considering the volume of information that the funding assurance auditor needs to see, providers should not underestimate the impact that these reviews can have on business-as-usual activities. 

The potential impact of these reviews where areas of non-compliance with the ESFA funding rules are identified can be significant, with some providers facing significant clawback of funding. This is not only relating to the current year but also prior years, especially in relation to apprenticeships.

We note that the ESFA has recently released their common issues briefing based on 2021/22 funding assurance reviews. Below we summarise some of the common issues identified from the ESFA funding assurance reviews that RSM has undertaken either for the ESFA or our wider client base on 2022/23 ILR data.

16-19 study programmes

The overarching testing relates to whether the evidence and information retained on the learner file supports the data recorded on the ILR. This includes the planned hours, the aims recorded and learning activity undertaken. Most issues identified related to data quality concerns such as:

• aims recorded in the ILR when there is no evidence of learning activity taking place;
• the number of planned hours recorded in the ILR incorrectly split across qualification and Employability, Enrichment and Pastoral (EEP) activity; and
• industry placements recorded as either ‘completed and achieved’ or ‘completed and failed’ when the evidence confirmed that the learner had undertaken insufficient hours of activity and should be recorded therefore as ‘withdrawn’.

However, we continue also to identify funding errors in relation to the following:

• planned hours not being correctly reduced where learners have either withdrawn, transferred, or completed within the first 42 days of the programme, especially for learners who are enrolled on short courses; 
• planned hours not being adjusted for second year continuing students who withdraw within the first 42 days of actual attendance in the second year; and
• planned hours not amended to reflect what was actually delivered up to the point of transfer for study programme learners who have transferred onto an apprenticeship. 

Adult education budget (AEB)

Similar to 16-19 study programmes, the overarching testing relates to whether the evidence in the learner file is consistent with the data recorded in the ILR. This is including whether the learner is eligible for funding and whether there is evidence of participation. Whilst the funding rules for AEB have remained largely unchanged for 2022/23, we continue to see a number of issues which have a funding impact, including:

• learners enrolled onto non-regulated English and/or maths aims which follow the same curriculum as the regulated functional skills aims, but for whom there is no assessment to confirm why the provider considers the learner to be unable to follow the regulated curriculum. We also continue to find instances where learners have been enrolled onto English and/or maths aims at a level which is not consistent with the results of the initial assessment;
• lack of evidence to confirm that learning activity has taken place, especially in relation to distance learning provision;
• lack of evidence to support claims for additional learning support, either because there is no assessment of need, or the assessment is not sufficiently robust, or because there is no evidence to support the delivery of the learning support claimed; and
• provider’s claiming co-funding where the evidence on the learner file indicates that they are eligible to be fully funded.

Apprenticeships

Apprenticeship funding is the most complex of all the funding streams in scope of an ESFA funding assurance review. The testing approach mirrors that complexity, covering all aspects of the learner journey from initial assessment of knowledge, skills and behaviours to off-the-job training planning and delivery, through to completion. This is also the funding stream where the majority of funding errors are identified with the main issues relating to:

• initial assessments for learners who started after 1 August 2022 not clearly assessing the number of off-the-job training hours that would not be needed due to the learner’s prior experience. This in turn impacts on the validity of the negotiated price charged to the employer as the two are intrinsically linked;
• lack of robust off-the-job training plans to confirm how the provider has planned to deliver the off-the-job training requirement over the duration of the apprenticeship
• over reliance being placed on learners to record activity, which has resulted in off-the-job training logs not containing sufficient detail to demonstrate that all activity meets the four basic requirements, ie the off-the-job activity:
  • directly relates to the apprenticeship;
  • develops new knowledge, skills and behaviours;
  • does not relate to English and/or maths; and
  • is undertaken during the learner’s normal working hours.

In addition, evidence was lacking to demonstrate that active learning had taken place at least every four weeks for learners who started after 1 August 2022, which meant that the learner should have been placed on a break in learning in compliance with the 2022/23 funding rules.

• Off-the-job training logs for completed learners indicating that the learner had not actually met the 20% requirement on completion. In these instances, the full funding claimed for the learner is subject to clawback by the ESFA.
• Providers either not recording the co-investment received from the employer, or not being able to evidence that the employer had been invoiced and chased for payment in a timely manner. The impact of this is that the provider will not attract the 20% completion payment where the co-investment is not received and recorded in the ILR.

Advanced learner loans

The testing in relation to advanced learner loans takes the form of a triangulation of data recorded on the ILR, the Student Loans Company (SLC) portal and the learner file. Funding errors have been minimal, however we have identified the following data quality issues:

• inconsistencies between the start and end dates recorded on the ILR and the SLC portal, including learners who were recorded as withdrawn on the ILR but continuing on the SLC portal;
• learners being funded via a loan when there was no evidence to confirm that the learner had waived their legal entitlement to be funded for a first level 3 qualification; and
• the learning and funding information letter issued to the learner either not being retained or not being the correct version.

Many of the issues identified in relation to 2022/23 ILR data are similar to those reported in previous years. However, ongoing clarifications on apprenticeship funding and compliance pose new challenges in areas such as initial assessments and the need to demonstrate active learning every four weeks.