Education Maintenance Allowance (EMA) Audit Guidance 2024-25

2. The Scottish Funding Council (SFC) has managed the national EMA programme for Scotland’s colleges on behalf of the Scottish Government since 5 April 2004. For most colleges, payments to students started in Academic Year (AY) 2005-06.
3. The use of EMA funds is governed by the EMA Guidance and Processes which is issued directly to colleges on an annual basis. This document has been developed and is updated regularly by the Scottish Government, with input from SFC and from local authorities, colleges and schools. The AY 2024-25 guidance was circulated to SFC’s EMA contacts on 18 September 2024.

4. The EMA Conditions of Grant for AY 2024-25 are set out as guidance on the SFC website.
5. The high-level audit requirements are set out in the EMA Guidance and Processes. As was set out in the guidance, the way EMA was funded by the Scottish Government changed this year. As a result, there is a minor change to the audit requirements.
6. Colleges will recall that during AY 2024-25, hey were required to carry out spot checks on 5% of all applications in the period August to March and 5% of all applications in the period April to July.
7. Therefore, this audit should include the assessment of evidence that the spot checks took place in both periods. Where the total number of applications is small, a sample size of 5% may not be meaningful; in such cases an appropriate sample size should be applied. To reflect this change and to ensure this change results in no extra audit cost to colleges, the sample certificate has been re-worded this year.
8. Colleges are reminded that they are required to provide SFC with evidence that these spot checks have been carried out during the AY. Where necessary, colleges should put in place procedures to carry out spot checks remotely.
9. Annex A to this guidance summarises colleges’ EMA administrative responsibilities and details the information which should be retained for audit purposes. Annex B provides guidance on the operation of spot-checking procedures during the year. Annex C provides an example of the standard audit certificate required to be submitted to SFC by 31 October 2025 by the college’s independent auditors. In liaison with the Scottish Government, we are considering the nature of assurance required as part of this process.
10. It is the responsibility of individual colleges to ensure that timings, appropriate sampling size reflecting the total number of applications, and quality requirements are met. It is important that auditors provide the certificate by the due date (31 October 2025) to ensure that SFC can send the return to the Scottish Government on time. If it appears that the auditors will be unable to sign the certificate by the due date, SFC should be notified at once.

11. For general EMA enquiries, please contact Ken Johnston, Funding Policy Officer, Finance Directorate, tel: 0131 313 6562, email: EMAReturns@sfc.ac.uk. For audit queries, please contact Wilma MacDonald, Acting Assistant Director, Institutional Financial Health & Governance, tel: 0131 313 6565, email: wmacdonald@sfc.ac.uk.

Tiffany Ritchie

Acting Director of Finance

Guidance for EMA data checking

1. The EMA Guidance and Processes states that: “systems and processes must comply with all relevant legislation and Scottish Government’s internal requirements, with particular regard to audit.” All business processes are required to maintain and provide an audit trail sufficient to satisfy the Scottish Government, Audit Scotland and Education Scotland.
2. The specific requirements for colleges are:

• On confirmation of attendance either stating 100% agreed attendance or accompanied by proof of authorised absence, the college bursary/finance officer will authorise a weekly payment of EMA which will be paid on a fortnightly basis to students.
• On a monthly basis, colleges will make a claim to SFC to draw down funds for payments made to students. These claims will be certified by the college’s chief executive officer or nominated deputy.
• The final summary provided to SFC for the AY (August to July) will be certified by the college’s chief executive officer and submitted to SFC by 31 October 2025.
• An externally audited statement certified by an independent auditor should be returned to SFC by 31 October 2025. This statement will cover the AY from August 2024 to 31 July 2025. A copy of the audit certificate is included at Annex C.

3. The systems in place at colleges should ensure that payments are:

• Made only to eligible students with flexibility in entitlement for vulnerable students.
• Made only to students who have met the attendance criteria in accordance with their EMA learning agreement.
• Accurately recorded on the monthly cash flow forecasts.

4. Each college will have set up its own systems and procedures for administering EMAs. However, as a guide to maintaining an appropriate audit trail, the college should as a minimum have the following:
   • Copy of procedures manual or equivalent, clearly indicating the individual responsibilities of staff, system access rights and authorisation procedures. This should encompass controls in place to ensure duplicate applications or payments cannot be processed.
   • Log of all applications received, including those rejected.
   • Copies of application forms for each student, supported by documentary evidence of student age, nationality and residence.
   • Documentary evidence of income details of parent/guardian and their partners.
   • Documentary evidence to support approval and rejection decisions.
   • Copy of the Notice of Entitlement should be held on file.
   • Evidence of any re-assessment as a result of detrimental changes in financial circumstances.
   • The relevant information and a record of the decision made where an appeal has taken place.
   • Copies of individual learning agreements signed by the student.
   • Copies of attendance records for each individual or proof of authorised absence.
   • A summary form showing the individual payments making up the total monthly claim to SFC.
   • Copies of monthly claims to SFC.
   • A reconciliation of the year-end EMA claim to both the nominal ledger and the individual monthly claims.
   • Working papers detailing the internal spot checks which have been carried out during the year.
5. The above items may be electronic documents and electronic signatures can be used where a signature is required.
6. Colleges should ensure that the collection, transfer, processing and sharing of EMA data is carried out in accordance with Data Protection and Freedom of Information legislation.
7. Colleges should also ensure full compliance with disability legislation.

Spot-check procedures

1. A suggested programme to perform a check on individual applications and payments is set out below. Colleges will obviously tailor the tests to suit their individual systems and methods.
2. It is a requirement that the testing be carried out by staff who are independent of the student support administration and that there is a clear line to report findings to college management.
3. The business model requires 5% spot-checking to be carried out during the period August 2024 to March 2025 and a further 5% between April and July 2025. Where the total number of applications is small, a sample size of 5% may not be meaningful; in such cases an appropriate sample size should be applied.
4. The testing should be carried out throughout the year to give regular and timely updates on the operation of the systems. This should also ensure that any problem areas will be identified early in the year.
5. The checking carried out must be clearly documented to enable a review by the auditor.
6. A sample of a working paper is shown below.

Example work programme for spot-checks

• Obtain a copy of the EMA Guidance and Processes, and a copy of the college’s procedures for the operation of EMAs.
• Select a sample of students and obtain the student record file. (Sample should be selected partly from the application list and partly from actual payments made. Sample should cover 5% of applications and payments for each period with a sample size appropriate to the total number of applications).
• Agree the student personal details to the supporting documentation on file (this may be photocopies of documents or a statement by the member of staff who vouched the original birth certificates or other documents). Confirm the student’s age, residence and bank account details.
• Confirm that appropriate income records were obtained.
• If the student was rejected, review the reasons for the decision and ensure this was in accordance with national policy. Confirm that no payments were made.
• If the student was accepted, confirm that checks were carried out to ensure no prior application had been received for that student.
• Ensure that decisions made were properly authorised by the appropriate member of staff.
• Agree details to the Notice of Entitlement.
• Ensure that student bank details were correctly recorded on the system. If possible, confirm that no other applications contain that bank account reference or, if there is a second student with those details, obtain an explanation (for example, they may be a married couple).
• Check the award of EMA and ensure the student was eligible based on income level. Review any re-assessments in-year.
• Select the most recent payment period for the student and confirm that they had 100% attendance (as defined by college policy and individual learning agreement) for the relevant period. If the student had sickness absences, confirm they have been covered by self-certification forms or doctor’s notes.  For any other authorised absences, ensure there is an acceptable explanation which accords with the EMA Guidance.
• Trace the payment to the student to the BACS payments summary ensuring bank details are in agreement.
• Trace the individual payment to the summary invoice claim to SFC.
• Summarise any errors noted and consider whether overpayments or underpayments have occurred. Identify and document any areas where the procedures and controls should be amended to prevent similar errors in future.
• Follow up with EMA staff any errors noted, and note any actions required and agreed upon to prevent similar errors in the future. Follow up any outstanding points raised from previous spot-checks, ensuring that the agreed course of action or response has been implemented.  Where outstanding points remain unresolved, discuss with the appropriate member of staff and agree a way forward.
• If there are significant problems noted in the operation of the EMAs ensure that this is reported to the Board of Management and SFC.

Note: The above is only intended as a guide to the type of working paper which should be retained. This model does not cover all the tests which will be necessary and colleges should produce individually tailored working papers which indicate all the tests carried out. For accessible version download Education Maintenance Allowance Audit Guidance 2024-25.