DfE perm sec Chris Wormald apologises to MPs for "disappointing" delay in department's accounts
"We fully appreciate that we will need to do better in the future," says DfE perm sec Chris Wormald, as switch to new accounting method delays parliamentary scrutiny of his department's finances
Department for Education permanent secretary Chris Wormald has apologised to MPs, after the publication of his department's yearly accounts had to be delayed because of the "sheer scale" of the changes required by the academies programme.
Departments must report back to parliament every year on their actual spending compared with the estimates they have agreed with the Treasury, allowing Commons select committees and the National Audit Office spending watchdog to interrogate the figures.
The DfE was expected to present its 2014-15 accounts for parliamentary scrutiny by the end of January, but it has had to ask the NAO for a three-month extension.
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Writing to the education select committee to explain the delay, Wormald – who will soon move on from the DfE to become perm sec at the Department of Health – said changes to the way the department prepares its accounts to take account of academy schools had contributed to the hold-up.
"First, the documentation supporting our capital programme was complex, and took more time than expected to get into a clear and organised state as we introduced new systems to improve our management information on this aspect of our work," he said.
"Secondly, the sheer scale of the accounting challenge has increased year by year and now involves 2,823 academy trusts. This is one of the largest consolidation exercises undertaken in the UK and the process is now so complex that it is only possible to understand the overall picture very late in the process."
Under the academies programme, more than 4,500 academy schools are now funded directly through central government, rather than through a local authority, and must produce full, audited accounts for scrutiny by the DfE.
Moves to overhaul the department's accounting practices to better handle its responsibility for academy finances began in 2015, after the NAO said the DfE was "not meeting the accountability requirements of parliament".
But, as Wormald explained when appearing before the education committee on Wednesday, consolidating the figures provided by academies with the DfE's own accounts is complicated by the fact that the schools operate on the basis of the academic year rather than the financial one.
Wormald told the committee: "At one level, there would be a very simple solution, which would be to make all academies account for themselves on a financial year rather than an academic year.
But he added: "Very bluntly we took the view that if there was pain to be taken, we ought to take that at national level rather than individual school level. So we left the problem of how we do this with us rather than shipping it on to schools."
Wormald's letter to MPs says the department's new approach – drawn up alongside the Treasury and expected to be in place for the 2016-17 year – will "allow much improved quality and timeliness in reporting to parliament of spending by academy trusts" while ensuring "that the burden of preparing academy data [...] is concentrated within the department".
Peter Lauener, chief executive of the Education Funding Agency which is responsible for funding state schools, sought to explain the challenge facing the department as it changes its methodology.
"It is very unusual in accounting terms to have a gap of seven months between one year and the other," he said.
"Take the academy account for the [DfE] accounts that we're preparing now – it was for the year ending August 2014. And then we're reading that into the department's financial year position at the end of March 2015. That's a gap of seven months and that's quite a challenge by any normal accounting standards."
The department has agreed to publish its latest accounts by the end of April. Apologising to the committee for that hold-up on Wednesday, Wormald said: "It is obviously disappointing that we weren't able to lay our accounts on time and we are sorry for the delay. While we think the delay was the right decision and explicable, it's clearly not a satisfactory position and the process has not worked in the way we planned and we fully appreciate that we will need to do better in the future."
Neil Carmichael, the Conservative MP who chairs the education committee, said it had been "clear for some time that the Department for Education’s financial management has not kept pace with education reforms over recent years".
"The fact the DfE had to extend the statutory deadline for publishing their own financial accounts hardly shows a Department in firm control of its own financial matters."
He added: "At a time when public spending continues to be under pressure, robust financial scrutiny is an ever more vital part of a select committee’s work."
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