Department for Education accounts qualified after unauthorised overspend

18 Jul 12
Auditors have qualified the Department for Education’s 2011/12 accounts after finding it overspent by £63m. Problems with the financial statements submitted by one of the DfE’s dependent agencies also meant the National Audit Office could not sign off the accounts
By Vivienne Russell | 17 July 2012


Auditors have qualified the Department for Education’s 2011/12 accounts after finding it overspent by £63m. Problems with the financial statements submitted by one of the DfE’s dependent agencies also meant the National Audit Office could not sign off the accounts.

The NAO said yesterday that the DfE had breached the Annually Managed Resource Expenditure limit agreed by Parliament by £62,627,000. This was caused by annual compensation and pension payments to retired teachers and staff of former non-departmental public bodies.

Adoption of international accounting standards requires future pension and retirement payments to be recorded as liabilities in the Statement of Financial Position. In 2011/12, the department failed to request sufficient resources from Parliament to meet these costs.

On a separate issue, the DfE’s accounts were qualified after the Young People’s Learning Agency made severance payments to some academy staff without first gaining the consent of the Treasury.

The YPLA is responsible for the funding and support of academies, and requires Treasury approval to make certain types of payment. The agency identified 14 cases at 9 academies where extra-contractual severance payments had been made without advance approval from the Treasury, although retrospective approval was secured. These payments had an aggregate value of £227,000.

The NAO said it was ‘unclear’ how many other special payments might have been made because the YPLA’s assurance framework was ‘not capable of identifying and managing all cases’ and therefore the agency was unable to fulfil its responsibility to gain advance Treasury approval.

NAO head Amyas Morse said: ‘I have qualified my audit opinion on the accounts of the Young People’s Learning Agency because the assurance framework was not designed to detect and manage all cases of spending which required approval under Treasury rules.

‘For this reason, and for breaching spending limits set down by Parliament, I have also qualified my audit opinion on the accounts of the Department for Education.’

Responding to the qualification, a DfE spokeswoman said: ‘The National Audit Office has found the financial statements within our accounts to be “true and fair”. The qualification of the accounts simply reflects the fact that the accounting arrangements for payments due in pension liabilities and reimbursement for ex-employees have been captured and clearly flagged as a provision in the financial accounts under Annually Managed Expenditure.

‘The YPLA qualification applies to severance payments to staff who have left academies. The NAO believe these should have been referred to the Treasury for approval. We do not believe that we need approval for these payments as maintained schools are not required to submit them. We are working with the NAO and the Treasury on this.’

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