Audits and risks: the new Funding Agreement for sixth form colleges

The Education Funding Agency’s new Funding Agreement for sixth form colleges is a strange beast. It is clearly a slimmed down version of the 2006 Learning and Skills Council’s variant. But in slopping parts off, there seem to be some strange and perhaps unintended consequences.
In the 2006 Financial Memorandum colleges were instructed:

The College must ensure that it has an effective policy of risk management (including appropriate insurance arrangements). The College’s risk management arrangements should consider the key principles given in LSC guidance.

In a far more uncertain and hazardous environment, the 2012 Agreement does not utter a word to sixth form colleges on risk management. As established and largely mature organisations, I would hope they will carry on managing risks and enhance their arrangements.

While the words on risk management are omitted from the 2012 Agreement, oddly the wording on internal remains unchanged. So where the 2006 Memorandum states:

The governing body shall appoint an audit committee and arrange to provide for internal and financial statements audit, including regularity audit, in accordance with the LSC’s Audit Code of Practice and any other directions drawn up and published by the LSC in consultation with colleges. Any mandatory requirements under the LSC Audit Code of Practice shall be a condition of funding under this financial memorandum.

The 2012 Agreement states:

The Governing Body shall appoint an audit committee and arrange to provide for internal and financial statements audit, including regularity audit, in accordance with the Joint Audit Code of Practice and any other directions drawn up and published by the EFA in consultation with SFC. Any mandatory requirements under the Joint Audit Code of Practice shall be a condition of funding under this Funding Agreement.

Some mistake surely?

Only today, the Education Funding Agency reminded sixth form colleges that they did not have to make provisions for internal audit from August 2012. (Of course, any sensible college will await the Agency’s guidance before making use of this new flexibility.)