GN/EMA/12 - Audit Scotland

Grant noteGN/EMA/12Auditor certification of2011/12 educationmaintenance allowancegrant claimsPrepared by the Technical Services Unit16 April 2012

Audit Scotland is a statutory body set up in April 2000 under the Public Finance and Accountability(Scotland) Act 2000. It provides services to the Auditor General for Scotland and the AccountsCommission. Together they ensure that the Scottish Government and public sector bodies inScotland are held to account for the proper, efficient and effective use of public funds.

ContentsForeword ....................................................................................................................................... 4Overview ........................................................................................................................................ 5Introduction ................................................................................................................................... 6Auditor certification requirement ........................................................................................ 6Nature of programme ........................................................................................................ 6Funding arrangements ...................................................................................................... 6Submission procedures ..................................................................................................... 7Risk areas ...................................................................................................................................... 8General ............................................................................................................................. 8Eligible young people ........................................................................................................ 8Validity of courses/activity ................................................................................................. 9Attendance eligibility ........................................................................................................ 10Auditor action .................................................................................................................. 10Administration costs ........................................................................................................ 11Auditor certification .................................................................................................................... 12Contact point ............................................................................................................................... 13Appendix 1 .................................................................................................................................. 14Auditor action checklist .................................................................................................... 14Appendix 2 .................................................................................................................................. 15Rules for completing claim .............................................................................................. 15Appendix 3 .................................................................................................................................. 16External auditor's certificate............................................................................................. 16Grant note GN/EMA/12 Page 3

OverviewOverviewKey points on this claimDescription of programmeA means tested weekly allowance payable to young people from low income familiesto encourage them to remain in full time education beyond the minimum schoolleaving age.Claim reference Deadline to auditors Auditor submissiondeadlineEMA 11/12 30 April 2012 31 July 2012Risk areas1 Age eligibility. See paragraph 162 Income eligibility. See paragraph 183 Residency eligibility. See paragraph 224 Back payments. See paragraph 245 Learning agreement. See paragraph 276 Attendance eligibility. See paragraph 307 Administration costs. See paragraph 33Address for audited claimScott Gray, Scottish Government, Employability, Skills and Lifelong LearningDirectorate, Youth Employment and Skills Division, 5th Floor Atlantic Quay, 150Brooomielaw, Glasgow, G2 8LUGrant note publication date andrelevant year16 April 2012 for 2011/12 claimsTSU contact pointTim BridleTel 0131 625 1793E-mail: tbridle@audit-scotland.gov.ukGrant note GN/EMA/12 Page 5

IntroductionIntroductionAuditor certification requirement1. The Code of audit practice requires appointed external auditors to examine and report onapproved grant claims and other financial returns submitted to grant-paying bodies by localauthorities. One of the approved claims is in respect of the education maintenance allowance(EMA) programme.2. This grant note has been published by the TSU to provide guidance on auditor certification ofthe 2011/12 EMA claims. The approach set out in this grant note has been agreed with theScottish Government. Auditors should also refer to the general guidance on the certificationof claims provided by Grant note GN/GEN/12 General guidance on the certification ofapproved local authority grant claims and returns.3. Action that auditors are recommended to consider taking in respect of certifying 2011/12 EMAclaims is included throughout this grant note and summarised in Appendix 1. Although thisnote provides a concise summary of the EMA programme, it may still necessary for auditors torefer to the source material listed at Appendix 2 on which this note is based.Nature of programme4. The EMA programme offers means-tested financial support of up to £1,560 each year toencourage eligible young people from low income households to remain in post-compulsoryeducation. The education may be provided in schools, at home, or in the community. From2011/12, this includes young people with an activity agreement who agree to take part in aprogramme of learning and activity which helps them to become ready for formal learning oremployment.5. Eligibility for EMA payments depends on the young person's age, parental/guardian’s income,residency and the validity of the course.6. Local authorities manage the delivery of the EMA programme in respect of schools, homeeducation, and all other learning other than colleges.Funding arrangements7. EMA payments comprise a weekly allowance of £30 and are made by local authorities toeligible young people.8. The Scottish Government reimburses the costs incurred by authorities through payments ofgrant. On a monthly basis, authorities send a claim to the Scottish Government on a standardform, along with certain management information on a spreadsheet, in both paper andelectronic formats.9. An allowance for the costs of administering the programme is also paid by the ScottishGovernment.Page 6Grant note GN/EMA/12

Submission procedures10. The 2011/12 grant offer letter includes a year end statement at annex 4. The statementshould be signed by the director of finance and should be accompanied by evidence of spotchecks carried out by the authority throughout the year.11. Authorities are required to submit the completed year end statement to external audit and theScottish Government by 30 April 2012.Grant note GN/EMA/12 Page 7

Risk areasRisk areasGeneral13. The year end statement shows the amount of EMA payments made to young people during2011/12 at line 1, and allowances for administration costs at lines 2 and 3.14. Auditors should confirm thatthe authority’s arrangements for the completion of the year end statement appearadequateall relevant parts of the year end statement been completed, including certification by thedirector of financeall arithmetic on the year end statement is correctthe entries on the year end statement agree with the authority’s financial ledger or otherunderlying records.15. EMA payments require to be in accordance with the EMA Scottish business model (Version11), and should only be made to eligible young people for full attendance at valid courses.Eligible young peopleAge eligibility16. EMA is not available to young people still in compulsory education, i.e. under 16. The periodof eligibility for EMA commences onthe first day of the academic year for the autumn intake (i.e. for those pupils who become16 before 30 September) the first day of the term following the winter leaving date for students who become 16between 1 October and the last day in February.17. A young person is normally entitled to EMA for a maximum period of three years up to their20th birthday. Vulnerable young people, including those on activity agreements, are entitledto four years' EMA support.Income eligibility18. Gross taxable income of the young person's parent/guardian governs the eligibility for anaward of EMA. For young people who qualified for EMA since 2009/10, eligibility is restrictedto those from households of incomes up to £20,351 or, where there is more than one child infull-time education, up to £22,403.19. For any young people who received EMAs prior to 2009/10, the weekly payments are £30 to individuals from households of incomes up to £22,403 £20 for income levels from £22,404 to £27,465Page 8Grant note GN/EMA/12

Risk areas £10 for income levels from £27,466 to £33,156.20. The income assessment is normally based on Tax credit award notices (TCAN) supplied byHer Majesty's Revenue and Customs. Applicants who cannot provide a TCAN are required toprovide alternative income evidence, e.g. P60 or self assessment tax calculation form.21. Where income falls, an in-year re-assessment may take place. However, there is no reassessmentif income rises during the year.Residency eligibility22. In order to be eligible for an EMA, a young person must meet the residency criteria set out inThe Education Maintenance Allowances (Scotland) Regulations 2007. Young people who areUK citizens are required to be settled in the UK (within the meaning of the Immigration Act1971), and ordinarily resident on a qualifying date and the three years immediately prior. Thequalifying date depends on when the application for EMA is madeFor the autumn intake, the qualifying date is the first day of the first term of the academicyear.For the winter intake, the qualifying date is the first day of the first term in the newcalendar year.Notice of entitlement23. The application and assessment process by authorities results in either rejection or a Notice ofentitlement (award letter) which tells the applicant they are eligible for EMA as long as theytake a valid course or form of learning at an appropriate learning centre.Back payments24. Applications received after the start of a course may be eligible for a back-payment. For theautumn intake, applications received by 30 September are eligible for back-payment to thestart of the term. Applications from 1 October are eligible for back-payment from the Mondayof the week in which the application was received. For the winter intake, applications receivedby the last day in February may be eligible for back payment to the start of term.25. For applicants on activity agreements, backdating may be to the start of their engagement inthe relevant activity.Validity of courses/activity26. Further validation of an individual’s right to receive EMA will take place when a pupil starts acourse or other recognised form of learning or activity. The school or other learning centre isrequired to confirm that the young person is on a valid full time course. Full time is defined asat least 21 hours guided learning hours each week.27. The school or other learning centre is required to agree a learning agreement with the pupil.The learning agreement has two componentsGrant note GN/EMA/12 Page 9

Risk areasPart 1 should include conditions on attendance linking to receipt of the weekly payment.This should be signed by the pupil and the school or learning centre. It should becompleted as soon as the pupil enrols on the course and notification should be sent tothe local authority. This is the trigger for the payment process, as weekly paymentscannot begin until part 1 is processed, completed and signed.Part 2 is an agreement which is tailored to the individual pupil for agreed learning goalsand should be signed by the pupil, their parent/guardian, and the school or learningcentre. It requires to be completed by 30 November for the August intake, and 31 Marchfor the January intake.28. Where an activity agreement exists, this will identify the relevant programme oflearning/activity, and this does not require to be 21 hours a week.29. Local authorities should not initiate payments until a signed part 1 learning agreement (oractivity agreement) is received. While learning agreements should be sent from the schoolsor other learning centres, activity agreements may come from other sources, usually thetrusted professional involved in setting up the agreement.Attendance eligibility30. For those young people in mainstream education or learning, EMA can only be paid for eachfull week’s attendance within term time, up to a maximum of 42 weeks in any one academicyear. Where relevant learning or activity is in a non-formal community or third sector settingpayments may be made for up to 52 weeks and the local authority is responsible for ensuringthat there are appropriate controls in place over attendance.31. EMA requires full attendance at all timetabled sessions; part payments for part attendance arenot made. Absence authorised by the school or other learning centre where there is goodcause is treated as a day of attendance for EMA purposes (e.g. ill-health). Pupils continue toreceive EMA while on work experience placements during term time and while revising forexams.Auditor action32. Auditors should obtain evidence that in respect of the young people to whom EMA has beenpaidage, income and residency criteria for the young people have been metback payments of EMA were made only where permittedcourse/activities were confirmed as valida learning or activity agreement has been receivedattendance criteria were met.Page 10Grant note GN/EMA/12

Risk areasAdministration costs33. A top-up allowance for administration costs is available for 2011/12. It equates to £15 foreach pupil accepted for the programme who has received at least one EMA payment. Theyare paid in January and July 2012. Top-up administrative allowances should be included inthe year end statement (at line 2) on the basis of one payment for each pupil in eachacademic year.34. Auditors should confirm that the amount of additional administration costs is equal to £15 foreach accepted pupil.35. An allowance of £25,000 was paid to each authority in April 2011 to defray costs incurred inadministering the programme. Although they are included on the return (at line 3), there is noexternal audit involvement in these payments.Grant note GN/EMA/12 Page 11

Auditor certificationAuditor certification36. Auditors are required to state that they have examined the entries in the year end statementand accounts and records of the authority, and have obtained such evidence andexplanations, and carried out such tests, as they considered necessary.37. Auditors should conduct whatever test procedures they consider necessary in order to be ableto answer the questions in the auditor action checklist at Appendix 1. Auditors may have toundertake test procedures in areas not covered by the checklist where they judge that to benecessary.38. Auditors should direct their attention towards the paper version of the year end statement.There is no auditor involvement in the electronic version of the statement, the accompanyingmanagement information, or the authority’s evidence of spot checks.39. Auditors should conclude whether the year end statement isfairly stated in accordance with the EMA Scottish business model (Version 11).40. The grant offer letter contains an auditor’s certificate at annex 5; however, this should not beused. Auditors should instead use the format and wording shown at Appendix 3 to this grantnote.41. Any qualifications to the auditors' conclusion should be set out in a covering letter referred toin the auditor's certificate.42. Auditors should complete the auditor's certificate and any covering letter in accordance withthe guidance provided in GN/GEN/12.43. Auditors should submit the year end statement, completed auditor's certificate, and anycovering letter, by 31 July 2012 toScott GrayScottish GovernmentEmployability, Skills and Lifelong Learning DirectorateYouth Employment and Skills Division5th Floor Atlantic Quay150 BroomielawGlasgowG2 8LUPage 12Grant note GN/EMA/12

Contact pointContact point44. Enquiries concerning this grant note should be directed to Tim Bridle (tbridle@auditscotland.gov.ukor 0131 625 1793) in the TSU.Technical Services UnitAudit Scotland110 George StreetEDINBURGHEH2 4LH 16 April 2012Grant note GN/EMA/12 Page 13

Appendix 1Appendix 1Auditor action checklistYes/No/N/A Initials/dateW/P ref1 Do the authority’s arrangements for thecompletion of the year end statement appearadequate?2 Have all relevant parts of the year end statementbeen completed, including certification by the director offinance?3 Have you checked all arithmetic on the year endstatement?4 Have you agreed the entries on the year endstatement to the authority’s financial ledger or otherunderlying records?5 Have you agreed the amounts on the year endstatement to the total monthly claims?6 Have you obtained evidence that in respect ofthe young people to whom EMA has been paidage, income and residency criteria for theyoung people have been metback payments of EMA were made only wherepermittedcourse/activities were confirmed as valida learning or activity agreement has beenreceivedattendance criteria were met.7 Is the amount of additional administration costsin line 2 equal to £15 for each accepted pupil?Page 14Grant note GN/EMA/12

Appendix 2Appendix 2Rules for completing claimThe following represent key sources of guidance in respect of the year end statement and canbe accessed by following the hyperlinks or downloaded from Audit Scotland's Technicalreference library.2011/12 grant offer letter issued 30 March 2011 and annexes, which set out the grantclaim requirementsScottish business model (version 11) which sets out the eligibility criteria for makingpayments of EMA EMA guidance (version 10)The Education Maintenance Allowances (Scotland) Regulations 2007 which prescribecertain residency criteria for EMA recipients.Grant note GN/EMA/12 Page 15

Appendix 3Appendix 3External auditor's certificateI/we have examined the entries in this education maintenance allowances year end statementfor 2011/12 and the related accounts and records of [insert name of council] in accordancewith Grant note GN/GEN/12 and Grant note GN/EMA/12, and have obtained such evidenceand explanations, and carried out such tests, as I/we have considered necessary.Except for the qualification(s) set out in my/our letter dated…………….., I have concluded thatthe claim/return isfairly stated in accordance with the EMA Scottish business model (Version 11)..Signed…………………………………….. (Appointed external auditor)Date……………………………Page 16Grant note GN/EMA/12