Overview of Further Education colleges (PDF | 262 ... - Audit Scotland

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Contents Executive summary 1 Part 1: Introduction 9 Part 2: Roles and responsibilities 12 in the further education sector in Scotland Part 3: Audit results 18 Part 4: Financial health of the 25 further education sector Part 5: Recent developments 34 Appendices 37 Overview of further education colleges in Scotland 1999/2000 A report to the Scottish Parliament by the Auditor General for Scotland Auditor General for Scotland The Auditor General for Scotland is the Parliament’s watchdog for ensuring propriety and value for money in the spending of public funds. He is responsible for investigating whether public spending bodies achieve the best possible value for money and adhere to the highest standards of financial management. He is independent and not subject to the control of any member of the Scottish Executive or the Parliament. The Auditor General is responsible for securing the audit of the Scottish Executive and most other public sector bodies except local authorities and fire and police boards. The following bodies fall within the remit of the Auditor General: " departments of the Scottish Executive eg the Department of Health " executive agencies eg the Prison Service, Historic Scotland " NHS boards and trusts " further education colleges " water authorities " NDPBs and others eg Scottish Enterprise. Audit Scotland Audit Scotland is a statutory body set up in April 2000, under the Public Finance and Accountability (Scotland) Act 2000. It provides services to both the Auditor General for Scotland and the Accounts Commission. Together they ensure that the Scottish Executive and public sector bodies in Scotland are held to account for the proper, efficient and effective use of public funds. AGS/2001/8
Executive summary Introduction 1. Under the Further and Higher Education (Scotland) Act 1992 (the 1992 Act), most further education colleges in Scotland were transferred from local education authority control on 1 April 1993. Forty-three colleges were incorporated as independent corporate bodies, each governed by a board of management, and assumed ownership and control of all their assets and liabilities at the date of transfer. They have a combined income of around £550 million per annum about three-quarters of which is grant-in-aid payments provided by the Scottish Executive Enterprise and Lifelong Learning Department (the Department) via the Scottish Further Education Funding Council (SFEFC). Roles and responsibilities in the further education sector in Scotland are shown at Exhibit 1. 2. Under the terms of the Public Finance and Accountability (Scotland) Act 2000 (the 2000 Act) responsibility for securing the audit of the 43 incorporated further education colleges in Scotland transferred from the college boards to the Auditor General for Scotland with effect from 1 April 2000. Transitional arrangements applied to the audit of 1999/2000 accounts. The audits of further education colleges, which had been commissioned in advance by the colleges themselves, and carried out in accordance with guidance first issued in 1996 by the Scottish Office Education and Industry Department, were reported to the Auditor General after their completion. The colleges appointed commercial accountancy firms to conduct the 1999/2000 audits. Auditors also reported to and agreed findings with individual colleges and provided copies of their management letters to SFEFC. 3. This report, which I present under section 23 of the 2000 Act, is my first overview report on the further education sector. The report has been prepared principally from information contained in reports prepared by the colleges’ appointed auditors at the conclusion of their audits. Where appropriate, I have supplemented this with other relevant, contextual information including SFEFC’s own work in monitoring the financial health of the sector. My report covers all the significant issues arising out of the 1999/2000 audits of incorporated further education colleges. 4. Overall, auditors’ reports provide assurance of sound financial stewardship in the FE sector in Scotland. However, my report on governance and financial management at Moray College shows how a failure to maintain the highest standards can result in serious difficulties. 5. The audit results also highlight the extent to which colleges are experiencing severe financial difficulties. Audited accounts for the period to 31 July 2000 showed that a total of 34 colleges reported an operating deficit for the accounting period and auditors’ opinions on the financial statements of five colleges noted that the colleges only remained going concerns on the understanding that financial support from SFEFC or the college’s bankers would continue. Furthermore SFEFC have required 12 colleges to prepare financial recovery plans to address deficits accumulated over a number of years. My report therefore comments on continuing risks to financial health and on SFEFC’s considerable efforts to improve the financial health of the sector. FE colleges overview 1
Page 1: OVERVIEW REPORT Overview of further
Page 5 and 6: Audit results Completion of account
Page 7 and 8: Financial health of the further edu
Page 9 and 10: Recent developments 23. In addition
Page 11 and 12: Part 1: Introduction Further educat
Page 13 and 14: 1.6 Overall, colleges are experienc
Page 15 and 16: Duties of the Scottish Ministers 2.
Page 17 and 18: Exhibit 5: SFEFC responsibilities S
Page 19 and 20: 2.12 Under the 1992 Act boards of m
Page 21 and 22: Exhibit 8: Reasons for delays in th
Page 23 and 24: Audit Committees 3.13 An effective
Page 25 and 26: and ERDF grants. Under the new prog
Page 27 and 28: Part 4: Financial health of the fur
Page 29 and 30: Exhibit 11: Consolidated college in
Page 31 and 32: Exhibit 13: College accumulated his
Page 33 and 34: Indicative results for 2000/01 4.16
Page 35 and 36: Financial recovery plans 4.25 SFEFC
Page 37 and 38: area and of key industrial sectors,
Page 39 and 40: Appendix 1: Statement of recommende
Page 41 and 42: continue to monitor progress of the
Page 43 and 44: Appendix 3 Colleges where financial
Page 45 and 46: FE colleges overview 43
Page 47: 110 GEORGE STREET EDINBURGH EH2 4LH

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