The introduction of new regulations, outlined in the latest Education and Skills Funding Agency (ESFA) handbook, means that independent training providers (ITPs) receiving either ESFA or Department of Education (DfE) funding, must comply with new requirements around the submission of annual accounts from 1 August 2024.
New guidance forms part of a wider push by the agency to protect learners and public funds from ITPs at risk of failure.
The aim of this most recent handbook is to allow ESFA to identify financial or operational risk more effectively among ITPs and take action before the situation escalates.
Is my business affected?
Effective 1 August 2024 with a transition period lasting until 2026, guidance outlined in the handbook applies to all ITPs which have a contract of service with either ESFA or DfE.
This can include:
- Apprenticeship centres and providers
- Higher Education centres
- Specialist education centres
ITPs should abide by the requirements set out in the handbook for the duration of this contract.
ESFA’s guidance includes both required and recommended activity designed to enhance governance, operational efficiency and financial health.
What’s changing?
From a compliance perspective, one of the most significant changes is the requirement for contracted ITPs to submit annual accounts earlier than in previous years.
Current filing deadlines align with statutory requirements of Companies House and the Charity Commission. However, ESFA and DfE feel that this does not provide adequate time to promptly identify poor financial health in ITPs receiving public money.
As part of a transitional period, between 1 August 2024 and 31 July 2025, ITPs will be required to submit within the following time frames following year-end:
- In receipt of more than £8 million in funding – Within seven months
- In receipt of up to £8 million – Within nine months
A second transition year will see this period shrink again to:
- In receipt of more than £8 million in funding – Within five months
- In receipt of between £100,001 and £8 million – Within seven months
- In receipt of up to £100,000 – Within nine months
From 1 August 2026, all contracted ITPs will be required to submit their annual accounts to ESFA within five months, with the exception of those in receipt of £100,000 or less of funding, which will remain at nine months.
Auditing requirements
In addition to new account submission deadlines, contracted ITPs now face an enhanced requirement to undergo auditing.
Those in funding group one with funding of over £8 million and those in funding group two, with funding of between £1 million and £8 million, are required to appoint an external auditor to assess the accuracy and fairness of annual accounts – even when not a statutory requirement.
New guidelines also recommend that those with funding of less than £1 million do the same, but this is discretionary.
ITPs face a number of complex as we head into this important transition period, and so consulting with a team of expert chartered accountants and auditors could help you to ensure you start with your best foot forward.
As experienced external auditors working with many clients in the education sector, we can advise on the latest regulations for ITPs and help you to ensure that you are compliant.
To talk to one of our experts about the new requirements, please contact our team today.
