Financial Management & Control
Financial Management & Control has a single performance indicator based on audit opinions. The LSC generates periodic opinions on colleges’ and providers’ financial controls, either through the work of its own assurance teams or through contracted out assurance work. The opinion can cover the soundness and effectiveness of colleges’ or providers’ financial management and governance, as well as its control over LSC funds and the application of the funds as intended. In generating its opinions, the LSC takes account of the work of other auditors of colleges and providers.
It is proposed that the assessment of colleges and other providers will be based on existing audit assurance activities; a college’s audit committee will be required to consider the college’s financial control in its annual report.
Financial Management and Control Evaluation
The new FMCE documents that are to be completed by all colleges and providers which are in scope for version 1 of the Framework for Excellence were made available on the LSC website from the 12th September 2008.
The documentation comprises a guidance note plus three annexes targeted at different provider types. Please note that colleges and providers are required to complete the relevant annex and return to the LSC by the 12th December 2008.
FMCE Guidance for All Providers Issue 1.01 September 2008
FMCE Annex A Colleges Issue 1.01 September 2008
FMCE Annex B Non College Providers > 5% LSC Income Issue 1.01 September 2008
FMCE Annex C Non College Providers < 5% LSC Income Issue 1.01 September 2008
In order to assist providers and colleges, worked examples for the new Annexes are available below:
FMCE Annex A Colleges - Worked Example Issue 1.0
FMCE Annex B Non Colleges Providers > 5% LSC Income - Worked Example Issue 1.0
FMCE Annex C Non College Providers < 5% LSC Income - Worked Example Issue 1.0
Deriving the Key Performance Area (KPA) Grade for Financial Management & Control:
The final grade for the Financial Management & Control KPA will be a four-point grade, which will be combined with the grades for Financial Health and Use of Resources KPAs to produce an overall score for the Finance dimension of outstanding, good, satisfactory or inadequate.
The LSC's auditors will assess a provider’s financial managment controls and determine a grade of outstanding, good, satisfactory or inadequate for the purpose of this performance indicator, based on a consistent approach to their reviews of:
• providers’ Financial Management and Governance (FM&G), and
• providers’ use and application of LSC funding streams.
In generating its opinions, the LSC takes account of the work of other auditors of providers.
For colleges:
When undertaking FM&G Reviews, LSC Provider Financial Assurance teams will translate the current FM&G Review five-point rating into a four-point rating (the current ratings of four and five will become a grade four).
For other providers:
The PCRA and BEQ have been condensed into one audit assessment document with the objective of reducing the burden on providers. The LSC's auditors will then use this new audit assessment tool to arrive at a four-point grade along with other audit techniques, such as substantive testing and controls reviews.
