More than 80 members of the Aptem Higher Education Forum recently benefited from a member-only Special Interest webinar on common themes that are cropping up in the HE sector on ESFA funding compliance.

The information-packed presentation and Q&A was delivered by Karl Bentley, FE Funding and Data specialist at leading auditors RSM UK. Karl has been working with the HE sector since 2018 – a number of universities having brought him in early on apprenticeship delivery to talk about what the ESFA is interested in and to find out what they need to be doing to make sure they are pressing the right buttons ready for when the auditors come knocking on the door.

The feedback, as usual, has been extremely positive, with HE Forum members valuing the session as “incredibly useful for an audit refresher”, delivered in a “customer-friendly format with a huge amount covered”.

The HE Forum is open to all Aptem customers in the sector and continues to be a valued resource for insight, networking and advice. For those in the HE sector who are not yet part of the Aptem HE Forum, here is an overview of what was covered. 

Why are we talking about ESFA reviews?

The first HEI reviews have now taken place, with a number of ESFA funding assurance visits going on at the moment. The rules can seem tricky to navigate and many people worry about making mistakes. It’s about having confidence in the accuracy of your funding claim and being able to back up your decisions with robust evidence.

What is the ESFA interested in (and what is it not looking at)?

The ESFA assurance approach is a review of the data submitted to support the funding claim. The agency is very much interested in the ILR data that you submit on a monthly basis. They are purely interested in your data, the funding, and your evidence to support your funding claim.

ESFA assurance review does not look at the adequacy of the control framework – they are not interested in how you run your business or the quality of your provision. They are not educationalists; they are there to corroborate the funding claim.

What are the common pitfalls?

There are four tricky areas that repeatedly come up in ESFA reviews:

Initial Assessment 

Sometimes called Skills Scan, Score Card.

This looks at the processes you have in place to look at a learner’s prior understanding of the Knowledge, Skills and Behaviours that make up the apprenticeship programme. The questions that the ESFA will pose are as follows.

1. Has an initial assessment taken place? “If we can see the initial assessment is clearly mapped to the standard, we are happy. If we see vague questions, such as ‘can you project manage?’ and ‘can you lead a team?’, that raises question marks over the validity of the initial assessment”, explains Karl.
2. Have the outcomes of the assessment been considered in the negotiated price, content and duration of the apprenticeship? The ESFA is seeing fewer providers who have not conducted an initial assessment – with the exception of some of those who started a programme in 2017/18 when processes weren’t as stringent. The issues tend to be more around contradictory high scoring initial assessment (for example with a Senior Leader apprentice with significant experience), and full funding band claims. Karl advises that you need to record the narrative and explanation of why you have made the funding claim that you have – has the industry moved on? Is a re-teach required? The auditors need to see clear documentation to support why the specific price is being claimed.

Negotiated price

The ESFA often sees:

• Written agreements are not signed, therefore it’s unclear if the negotiated price has actually been agreed.
• The negotiated price on ILR does not reconcile to agreed price on written agreement.
• No reference to a subcontractor in a written agreement (where applicable).
• The negotiated price is not supported by a breakdown, which is now a requirement.
• Prior attainment is not being considered as part of the negotiated price.
• Results of skills scan are not being considered, or work experience and time in post – resulting in 100% of the price for 95% of the content.
• The wrong price is recorded on the ILR, leading to under and over claims.

Off-the-job training requirements

The ESFA is still coming across lots of issues around off-the-job training, and it continues to be an incredibly hot topic. The review is looking for four components:

• Has the 20% requirement been quantified?
• Has the 20% been planned – and can you demonstrate that through the learning plan?
• Is there evidence of progress against the 20% requirement?
• Is there evidence that at least 20% off-the-job activity has been undertaken on completion?

20% does mean 20%. Auditors will not care that they have a first-class degree, if they only completed 18.8% of their off-the-job hours between the start date and end date (i.e. practical period). If the off-the-job hours are not met, the full cost of the programme (not just the audit year) will be clawed back. This is even more significant when looking at higher level apprenticeships that tend to be longer and more expensive. Ensure checks are implemented to confirm 20% has been completed before putting an Apprentice forward for Gateway or a Framework certificate claim.

Factors to consider:

• Can you clearly show that the requirement has been met on completion?
• Have you calculated the requirement correctly?
• Do you have a plan to demonstrate how the requirement will be met?
• Can you clearly evidence participation and progress against the requirement?
• For withdrawn learners, can you evidence how much has been completed up to the point of withdrawal?
• Does the evidence clearly show that the activity is eligible?

Apprenticeship Agreement

This is the additional document that recognises the apprentice in law. That states that they are an apprentice with the guarantees that go with it. There is no requirement for the provider to sign it (just the employer and apprentice). However, it’s a legal requirement that you have it. P27.3 says “If the Apprenticeship Agreement is incomplete and/or does not meet the statutory requirements the individual will not have a valid agreement and will not be eligible to receive funding.” Any missing, incomplete or late signed Apprenticeship Agreements may be treated as funding errors depending on the circumstances. This, in practice, could mean no Apprenticeship Agreement, no money.

How does the ESFA review process work?

The ESFA reviews on a sample basis as well as wider data review of Provider Data Self-Assessment Toolkit (PDSATs). They also consider other areas of compliance such as sub-contracting requirements. Karl explains, “We review the relevant PDSAT reports and either sample off that or we may raise direct queries with you where specific learner data doesn’t make sense, or it looks wrong. We will query and challenge. If we find a confirmed error in the sample, we follow that error. We do not go scattergun about this. We try to ringfence the error that we have identified. For example, it could relate to a particular sub-contractor, employer, programme. In some cases, it has been every completer.”

The ESFA reports on non-compliance only. “We don’t do gold stars or stroke egos – we literally only report on areas that don’t fulfil the funding requirements. The fewer management recommendations we make, the better you are doing. As a guide, 2-3 means you are doing well, 10-20 is reasonable. 20+ means some serious problems.”

At the end of the review, the ESFA issues a management letter where they detail the issues identified. Within that letter, they include a conclusion. An error rate of 5% or more from the sample equates to an ‘unsatisfactory’ rating. That means you are further up the risk ladder from the agency. You could also be audited again the following year.

What does the review cover?

• Learner eligibility
• National minimum wage
• Redundancy
• Contracted hours
• Negotiated price
• English and maths requirements
• Initial assessment and prior learning
• Delivery location (50% of time in England)
• Off-the-job calculation
• Off-the-job planning
• Off-the-job delivery and completion
• Learning Support – assessment and delivery
• ILR data and core documentation
• Apprenticeship Agreement
• Commitment statement
• Start date
• Learning activity
• End date
• Co-investment and payment over funding band maximum
• Additional payments
• Small employer waiver
• EPAO contracts, payments and Gateway assessment

What did the ESFA find in 2020/2021?

During the session, Karl shared some specific examples of where HE organisations went wrong. Here are a few.

• 20% not calculated or calculated incorrectly or not clearly documented on the learner file.
• Incorrect planned hours recorded on ILR.
• No plan on how off-the-job requirement will be met.
• Poor record-keeping on progress against 20% requirement.
• Data dumps on Eportfolio systems – e.g. 15,000 minutes in a day!
• Recording planned activity in Eportfolio as actual – e.g. activity recorded in March 2020 covers April to July.
• Lack of participation over periods of lockdown – furloughed and not on a Break-in-Learning.
• Completed apprentices who have not met the off-the-job requirement.

How should universities prepare for their ESFA audit?

RSM View

Karl recommends that institutions have a dry run ahead of the actual audit. This could involve organisations such as RSM UK. You could form your own internal audit team to cast a critical eye and help you prepare. More broadly, this is about continuous best practice.

RSM offer a comprehensive service of funding assurance reviews for HE Apprenticeship providers.  Being one of the four appointed audit firms completing reviews for the ESFA, including reviews of HE providers, RSM are perfectly positioned to support HE Apprenticeship providers. They’ll help check if documentation and systems and processes are compliant with ESFA funding rules. The assurance review mirrors the ESFA approach utilising the same sampling methodology and testing schedules.  RSM will provide comprehensive feedback on issues identified as well as potential risks to income and recommendations to rectify and improve systems.

The usage of the Provider Data Self-Assessment Toolkit also plays a large part of the ESFA assurance approach. The toolkit analyses the ILR data and identifies possible errors that can lead to recovery of funds. One of the key services RSM offers is training on how to interpret PDSAT reports and how they are reviewed by auditors.  RSM utilise the HE provider’s own data to demonstrate this. They also help manage risks and empower staff working with ILR data to better understand data requirements and identify potential errors.

Case studies from HE clients, providing some additional background on the services RSM can provide:

York St John University

University of Exeter

Aptem View

HE Forum members all use Aptem and therefore have Aptem’s assurance that the platform is built specifically to support compliance requirements. Some of the ways in which Aptem helps:

• Skills Scans and RPL Calculator – to capture, confirm, analyse and translate the initial needs assessment into required price and duration adjustments.
• Eligibility Review Prior Learning Section – to record and sign off the initial assessment rationale and outcomes which then flow into the Commitment Statement.
• Apprenticeship and Commitment Statement Templates – to populate consistent compliance data, acquire the required signatures in a logical and timely way, and store in the system.
• Break in Learning/Return to Learning Trackers – to capture and manage breaks in learning, updating the ILR automatically with an audit history of changes.
• Learning Plan and Dashboards – to set planned hours against activities enabling planned and minimum hours to be calculated and recorded at enrolment. Record hours for each learner on programme and monitor progress against planned through performance dashboards.

Keen to find out more?

If you are an Aptem customer and you missed the session, please contact your Customer Success Manager to request a copy of the recording and slides. If you are not yet an Aptem customer, we are still happy to talk through your compliance processes and challenges to see if Aptem would be a good solution for your organisation. Contact hello@aptem.co.uk to book a call and demo of the platform.

If you require more information on RSM’s funding assurance services, please contact Karl Bentley at karl.bentley@rsmuk.com or on 07800 617220.

Thank you again to Karl for such an informative session into ESFA funding compliance. The real-life examples and answers to the Q&A really benefited participants. And thank you to all those who participated, shared scenarios and asked questions. We look forward to welcoming you to the next Aptem HE Forum event.