DfE downplays critical comments from National Audit Office

Janet Downs's picture
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'A DfE spokesman said the department was pleased that the NAO had signed off its accounts, but noted their comments. "Consolidating the accounts of more than 2,800 academies has been an enormous task – the only consolidation comparable in terms of size and complexity is the Whole of Government Accounts.”'

The Guardian, 16 January 2014

Yesterday I posted the press release from the National Audit Office (NAO) in full which made it clear the NAO’s head “has qualified his opinion on the accounts of the Department for Education and the Education Funding Agency (EFA) on a number of grounds”.

The DfE spokesman seems to have missed the significance of “qualified”. Signing off accounts merely means the NAO has audited them. But issuing a “qualified” opinion means the NAO had reservations. The NAO would give a “qualified” opinion if, say, a government department spent too much or if the money was used in ways which the Government had not approved*.

The NAO’s criticisms included:

1 “errors and uncertainties” in financial statements;
2 the risks which come from the DfE being “accountable for financial activity over which it has no direct control”;
3 lack of “assurance” that academies spent their funds up to August 2012 in line with Treasury rules for managing taxpayers’ money.

The NAO noted the Education Funding Agency (EFA) has a new assurance framework which should address these issues. Whether this will be successful would become apparent in 2014, the NAO said.

The DfE spokesman also told The Guardian:

"This is the first time it has ever been done and it represents a significant step forward in transparency and open government. The public now have real clarity on the size and scale of the academy sector which is so critically important to the delivery of our educational goals."

Leave aside the argument, well-aired on this site, that academy status is neither a silver bullet nor a guarantee of improvement, the statement about transparency is waffle. As The Guardian reported earlier, millions of pounds of public money have been paid to private businesses connected to academy trusts. And this site has previously asked how many of these charitable trusts are actually “vehicles” by which taxpayers’ money can be channelled to shareholders’ pockets.

The spokesman was right, however, about “the size and scale of the academy sector”. This raises the question about how the DfE can oversee all the school trusts it’s supposed to regulate. It isn’t just academies that are “exempt charities” but also foundation and voluntary aided schools. The Secretary of State for Education is the Principal Regulator for all of these. In September 2012, there were 9000 institutions regulated by the Secretary of State.

Yet the present Secretary of State, Michael Gove, appears to be ducking his responsibilities as Principal Regulator by saying the DfE’s exempt charities are accountable to the Charities Commission. But the Charities Commission, also recently criticised by the NAO, can’t intervene in exempt charities without being asked to do so by the Principal Regulator.

It’s not the first time the DfE’s accounts have been “qualified”. It happened last year as well when the NAO criticised the assurance framework then in place and censured the DfE for breaching spending limits. The NAO was also concerned the required auditing of academies' accounts only need cover whether academies have complied with their funding agreements and doesn't take into account other important considerations such as managing public money properly. Yet Michael Gove says requiring academies to have audited accounts shows academies are more stringently monitored than local authority maintained schools.

In a separate report the NAO also found the DfE had overspent £1billion on the academies programme.

No wonder Gove publicly criticises the NAO – it acts as a brake on his desire to “move further, faster, now.” And no amount of spin from a DfE spokesperson will alter that.

*Thanks to the NAO Press office for explaining the significance of “qualified”.
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