Spending watchdog refuses to sign off DfE accounts

The DfE says discussions are under way to resolve the accounting problem

The government's spending watchdog, the National Audit Office (NAO), has refused to sign off last year's Department for Education accounts.

The watchdog said this was partly because the department overspent its budget by £63m.

The watchdog also refused to sign off the accounts of the agency responsible for funding academies for the DfE.

A spokesman for the DfE said it was working with the NAO and the Treasury to resolve the problem.

The NAO said it "qualified" - or refused to sign off the 2011-12 accounts of the Young People's Learning Agency (YPLA) after discovering that a number of the academies it funded had agreed payments which should have been approved by the Treasury.

Unapproved payments

The watchdog found 14 cases at nine academies where severance payments were made outside employees' contracts without prior approval.

These payments were worth more than £227,000.

Until April, the YPLA, which has now closed, was responsible for overseeing academy funding.

In a report, the National Audit Office said: "YPLA were aware of 14 instances at nine academies where severance payments had been made by academies in excess of employers' contractual commitments, and submitted these cases, with an aggregate value of £227,832 to HM Treasury in June 2012 relating to the 2011-12 financial year. All were approved by HM Treasury."

The report says it is "unclear" how many more special payments were made by academies, and warns "the frequency of occurrence of payment requiring HM Treasury approval in this sample suggests that there were a number of other cases of severance payments over and above those submitted for approval".

Amyas Morse, the Comptroller and Auditor General 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."

A spokeswoman for the DfE said: "The Young People's Learning Agency qualification applies to severance payments to staff who have left academies.

"The NAO believes these should have been referred to HM 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 HM Treasury on this.

"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."