Friday, March 28, 2008

Some thoughts on audit, governance and regulation in colleges

I have some doubts over the government’s plans to redistribute the role of the Learning and Skills Council among a Young People’s Funding Agency, adult Skills Funding Council, a National Apprenticeships Service and over a hundred local authorities – oops, I almost forgot the sub-regional clusters. What an article in the Guardian dubbed a "quango tango". Camparisons with the fragmentation of British Rail aren't exactly cheery. But let us put to one side issues of joined-up government and managing the transition, what about the implications for the regulation and governance of colleges who deliver so much education and training?

Presumably the “provider assurance” function of the LSC will be split two or more ways. This will be sad as this will be disruptive and risk a fall-out of auditors who do know colleges - even if they can be frustrating at times. Any loss of experience and expertise may result in a nit-picking defensive mentality or a soft-touch approach (as opposed to an effective light-touch). Possibly colleges will get both.

The re-arrangement of agencies might, on a brighter note, lead to a re-think of audit for colleges. (But I doubt it.) I would query whether the smallest colleges – particularly the smaller sixth form colleges – need their own internal audit service. These colleges often have a total income of a few million and limited non-core activities. They are quite different from Newcastle College with its £150 million income.

The smaller colleges are little different from the schools that they compete with for staff and students. They are arguably less exposed to risk than small housing associations who are not obliged to have their own internal audit.

As always there is a need for a cost-benefit analysis.

I am not downplaying the importance of internal control. I certainly think that all colleges should have their own audit committee – which should assess and report to governing bodies how assured they can be that internal control is robust. Whether they get this assurance from internal audit, external audit, healthchecks by consultants, or whatever, should be a matter for them.

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