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 fair and transparent
- 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 2 audits carried out by the local authority:
- funding claim audit - this audit enables us to support providers with the accuracy of their funding submissions on the Provider Portal
- compliance audit - this audit will include checks being undertaken with further documentation, for example a setting's register/ arrival departure records, invoices, fee structure / admissions policy / information for parents
13.3 For funding claim audits, providers should collect and retain the following documents:
- completed copies of FE1 parent/carer declaration forms
- copy of Disability Living Allowance (DLA) letter for children in receipt of this as evidence of eligibility for Disability Access Funding (DAF)
For compliance audits, providers are usually requested to collect and retain the following documents:
- compliance audit form - issued by the local authority, completed and signed by the provider
- copies of FE1 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 absences logs for the same children.
- copy of a DLA letter for children in receipt of this
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 Following the completion of funding claim audits or compliance audits, the provider will be sent a letter or report identifying actions to be undertaken to ensure the requirements of the provider agreement continue to be met.
13.5 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 6 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 5 years, plus the current financial year).
13.6 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.
13.7 Providers who fail to comply with the requirements of the provider agreement and have not remedied the situation within the specified timeframe, 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.