As part of the statutory requirements, local authorities must carry out compliance audits with all providers delivering the early years entitlements.
Providers must deliver the funded entitlements to all eligible children in accordance with the requirements set out in this agreement, and other statutory requirements.
13.1 The local authority carries out regular funding compliance audits of providers, either in the setting or remotely, to ensure compliance with the requirements of delivering the early years’ entitlements.
13.2 Funding compliance audits are to assist providers to develop systems to ensure that:
- Funding is claimed in accordance with the terms of this Provider Agreement.
- Disability Access Funding is claimed correctly.
- Fee/Charging policy for parents/carers is clear and transparent, and any chargeable extras are in line with the DfE Statutory Guidance.
- Parents/carers receive their child’s early years entitlement in the form of a free place.
- Parents/carers invoices are clear, transparent, and itemised.
- Insurance cover meets the minimum requirement as specified by the local authority.
- Funded children attend for their claimed hours/session.
- All childminders have a separate bank account for their childminding business.
- Absence records are completed, maintained, and authorised by parents/carers.
- Admissions policy is clear for parents/carers.
There are two audits carried out by the local authority:
- Funding Claim Audit - This audit enables us to support providers with the accuracy of their funding submissions in accordance with the parental declaration and attendance registers / absence logs.
- Compliance Audit - This audit will include checks being undertaken with further documentation e.g., a attendance registers / arrival departure records, invoices, fee structure / admissions policy / information for parents.
13.3 Documents that will be requested as part of the funding claim audit can include but are not limited to:
- completed copies of signed Parent/Carer Declaration forms
- attendance registers / absence logs
- copy of Disability Living Allowance (DLA) letter for children in receipt of this as evidence of eligibility for Disability Access Funding (DAF)
Documents that will be requested as part of the compliance audit can include but are not limited to:
- compliance audit form – issued by the local authority; completed and signed by the provider.
- copies of signed Parent/Carer Declaration forms for children accessing fee paid hours in addition to the funded hours.
- copies of invoices for the same children.
- a copy of the setting’s fee structure / admissions policy / information for parents.
- copies of register / arrival departure records for the same children, along with copies of any absence logs for the same children.
- copy of a DLA letter for children in receipt of this.
- Any other documents the Local Authority deems relevant for the provision of entitlements.
The provider will be contacted and asked to either send copies of the required documents by email or ensure documentation is available at the setting for the officer undertaking the checks.
The provider may be asked to submit additional documents or further information as required.
13.4 Where the local authority identifies a discrepancy between funded hours claimed and those requested on the parent/carer declaration form each case will be considered on its individual merits, including how and why these differences have arisen and whether they are deemed different to the planned number of hours delivered.
13.5 The local authority reserves the right to contact parents/carers to verify details of their claim, to confirm they have received the early years’ entitlement in the form of a free place and that invoices are clear, transparent, and itemised.
13.6 Following the completion of a funding claim audit or compliance audit, the provider will be sent a letter or report identifying actions to be undertaken to ensure the requirements of both the DfE Statutory Guidance and Provider Agreement continue to be met.
13.7 Providers who fail to comply with the requirements of the Provider Agreement and have not remedied the situation within the specified timeframe, may be referred to an early years Panel and are likely to have funding payments withheld by the local authority or be removed from the Directory of Providers.
13.8 Providers required to repay an overclaim of funding must either repay in full or agree a payment plan with the local authority and cannot pass on this cost to the parent.
13.9 The provider may be referred to Audit Services or the Police should there be concerns over potentially fraudulent activities.
13.10 To comply with HMRC and local authority financial regulations, the provider must adhere to the retention periods recommended within the Companies Act, which states documents relating to income should be kept for six years, plus the current financial year (any provider acting as a sole trader, for example, childminders, must adhere to the retention periods recommended within the Public Records Act, of five years, plus the current financial year).