The Learning and Skills Councils Annual Report and Accounts for ...

Provider Financial
Assurance
38. As Accounting Officer I was
required to be satisfied that those
organisations that the LSC funded
also operated in an appropriately
controlled environment. The LSC
had a Provider Financial Assurance
(PFA) function, with responsibility
for co-ordinating and carrying out
a programme of visits designed to
gain assurances over the systems
of control operated by providers
and also providers’ use of LSC
funds. The level of assurance work
carried out by PFA teams, or by
others on which PFA teams relied,
was commensurate with the level
of associated risks. I received from
each of my regional directors their
personal assurance that providers
maintained and operated adequate
controls. They based this assurance
on a number of things, foremost of
which were:
• PFA reports
•
receipt and examination of
FE college accounts and audit
reports
• contract managers’ reports
• performance reviews
•
•
Audit Committee scrutiny, and
third-party assurance (from
Ofsted and the Higher
Education Funding Council
for England).
Responsibility
for the review of
the effectiveness
of the system of
internal control
39. As Accounting Officer I had
responsibility for reviewing the
effectiveness of the system of
internal control. My review was
informed by the work of our
internal auditors; the Management
Group within the LSC, who had
responsibility for the development
and maintenance of the internal
control framework; the LSC’s audit
team, which reviews the records
and claims of providers; the
external auditors of our providers;
and comments made by the
National Audit Office as the LSC’s
external auditor in its reports.
I was advised on the implications
of the result of my review of
the effectiveness of the system
of internal control by the Audit
Committee, the Management
Group and Internal Audit. I also
evaluated the Statements on
Internal control from regional and
national office directors in support
of the review of effectiveness.
Internal control
issues
40. As Accounting Officer I was
satisfied, with the exception of
risk management in the initial
part of the year, that the LSC’s
governance and internal control
were consistent with the principles
of Managing Public Money during
2009–10.
41. Where control weaknesses have
been identified, action has been
taken to manage risks and improve
internal control. The following
sections describe some of the
key issues.
Risk management
42. The Chief Internal Auditor’s
report was qualified in recent
years based on assessments that
risk management was not fully
embedded within the organisation.
43. A new risk management process
was developed to address these
issues following the appointment
of a new Chief Executive. In May
2009, a new Performance and
Risk Report was introduced that
formed a key part of the new
process. Internal Audit was wholly
supportive of its introduction.
The report provided a means of
monitoring key business activity,
reporting progress and risk and
holding Senior Responsible Owners
(SROs) to account.
44. Other structural changes
were made to provide better
co-ordination of the receipt of risk
templates and their subsequent
analysis and inclusion in the
Performance and Risk Report.
45. Internal Audit had previously
recommended that focus needed
to be directed towards the early
identification of emerging risks.
A horizon-scanning process was
introduced in mid-2009 to address
this issue. All regional and national
directors and other senior staff
submitted a horizon scan covering
their area of responsibility
on a fortnightly basis. To aid
consistency, responses were
co-ordinated by the same team
that produced the Performance
and Risk Report and any relevant
Leadership and Governance
LSC Annual Report and Accounts 2009–10 37