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Compliance Audit overview

The annual Compliance Audit programme provides assurance that organisations receiving grant (providers) have met all of Homes England鈥檚 requirements and funding conditions, and have properly fulfilled their responsibilities as set out in the Capital Funding Guide (CFG).

Standard checks are made by provider-appointed independent auditors on an agreed sample of schemes / sites that have received Homes England funding under current and earlier affordable housing programmes.

Compliance Audit does not reduce the responsibility of the provider and Homes England to ensure that the costs in any claim for grant are appropriate and have been properly incurred.

Compliance Audit system

Homes England manages the annual Compliance Audit programme.

The Compliance Audit is submitted online using the Investment Management System (IMS).

The system can be accessed by:

• Homes England staff
• non-Homes England staff such as providers and their appointed independent auditors

It provides a communication platform including alerts to users, tracks programme delivery, and records annual audit findings and outcomes.

IMS access

You must be a registered user to access the system. Access to the system will require a username and password.

Provider access to the Compliance Audit system is managed through the Investment Management System (IMS) security module.

New users should ask their organisation鈥檚 IMS Security Administrator to set up their account.

Independent auditor access must be arranged by the provider鈥檚 nominated Compliance Audit lead.

System requirements

You must use a current version of the Edge, Chrome or Firefox browser to access the system.

You must also install Citrix Workspace. Find out how to install Citrix to access the Investment Management System.

Avoid delays on your audit

Providers are required to complete all set-up steps for the Compliance Audit system at least 5 weeks before the long-stop date set each year by Homes England. The long-stop date will be communicated to providers selected for audit in the notification email.

The deadline provides sufficient time for Homes England to support providers and independent auditors in accessing and updating the system.

If you experience any problems setting up an account on the Compliance Audit system, read the:

• Compliance Audit system guidance
• IMS guidance and training

If you are still experiencing problems, contact Homes England by email.

Audit programme and process

Compliance Audit runs annually.

Scheme sample and notification

Scheme sample selection will take place early in the process. Once complete, Homes England will notify providers of their selection and the number of schemes / sites selected.

Independent auditor appointment and training for providers and independent auditors

Providers must engage an independent auditor in line with published guidance in Chapter 6 of the Capital Funding Guide.

Compliance Audits are expected to be carried out during the notified period and before the long-stop date.

Using the Compliance Audit system, providers must confirm:

• their independent auditor appointment
• audit start date
• contact details

Providers and their appointed independent auditors can access the schemes selected for audit in the Compliance Audit system 4 weeks before the audit is scheduled to start.

Compliance Audit training is arranged for providers and independent auditors each year. This is delivered using training packs, videos and guides. These give providers and appointed independent auditors an overview of the programme, details of any updates, resources, and further information on the audit process.

All providers being audited and their appointed independent auditors must self-certify (using the Compliance Audit system) that they have read and followed the guidance issued.

Independent auditor review and submission

During the audit, the independent auditor considers each selected scheme / site against the questions presented in the Compliance Audit system, which automatically presents the appropriate set of questions for each scheme / site.

The independent auditor reviews scheme / site information contained in the provider鈥檚 files and Homes England鈥檚 Investment Management System (IMS) and is required to complete all the questions presented in the Compliance Audit system, setting out all audit findings against published Homes England policy and procedures.

Independent auditors can also upload documentary evidence in support of their responses to the questions. The independent auditor must not share their findings with the provider before submission, in any form, under any circumstances.

Once all questions have been completed, the independent auditor must submit their findings through the Compliance Audit system. This should take place within 5 weeks of the start of the audit and before the long-stop date. The provider and the Homes England lead auditor will both be notified when the findings are available to view.

Fraudulent behaviour

Compliance Audit is not a first line of defence against fraudulent behaviour, but occasionally this type of behaviour is identified. If an independent auditor becomes aware of potentially fraudulent behaviour during the audit year or while the audit is being undertaken, they should immediately notify the Homes England Compliance Audit team who will notify relevant Homes England contacts.

Provider responds to independent auditor findings

Providers will have 10 working days to respond to the independent auditor鈥檚 findings. It is important that providers use this time as an opportunity to review all findings, even where the independent auditor has submitted a 鈥榶es鈥� response. If providers need to supply additional information or have points to raise, they can include a response comment using the Compliance Audit system. Providers may also upload documentary evidence to the Compliance Audit system if it supports their response.

If the provider does not respond within 10 working days, Homes England will form an opinion based solely on the independent auditor findings and will not be able to take further information into consideration later.

Homes England assesses audit findings and prepares the audit report

Once the 10 working day period for providers to comment on independent auditor findings has ended, the Homes England lead auditor reviews the independent auditor findings and any provider responses that have been submitted. Queries can be raised if more information is required or an independent auditor or provider response is not clear. A query does not inform the provider whether or not non-conformities have been identified.

The Homes England lead auditor assigns breaches for any non-compliance identified from the audit findings using the Homes England breach list.

Breaches have an assigned severity:

• low
• medium
• high

Not all breaches apply to all funding programmes. The Compliance Audit system uses the severity of any breaches as the basis for assigning grades to providers.

The Homes England lead auditor will review assigned grades and decide, on behalf of Homes England, whether public funds have been used for the intended purposes and in line with contractual requirements, policies and procedures. The number of breaches and their severity will be taken into consideration along with the information and evidence available at the time of review.

The Homes England lead auditor will draft a judgment summary for inclusion in the audit report. This will record the number of breaches identified, the reasons and their severity. If remedial action is required, a recommendation will also be given.

Homes England moderates audits to ensure consistency

Homes England moderates all audit gradings to ensure consistency of breaches and final grades across the programme before Compliance Audit reports are issued.

Compliance Audit report issued to provider

When the report is available, the Compliance Audit system will generate an email to notify people that the report is ready to download.

The email will be sent to the provider鈥檚:

• Compliance Audit lead
• development director
• chief executive officer

The Compliance Audit system will notify the provider鈥檚 board chair (or equivalent) 5 days later.

The report is confidential between Homes England and the provider. The report itself, and any information contained within it, should not be shared with any third party or published in paper or online form, including on social media.

Provider grading

The Compliance Audit report assigns providers a green, amber or red grade based on the number and severity of breaches recorded.

Provider grades defined here may also be accompanied by further contextual comments and recommendations. Grades should be read in the context of comments.

Sanctions / reclaiming grant

As set out in the Capital Funding Guide, Homes England has the power to reclaim grant (in part or in whole) and / or apply interest.

Report and recommendations are acknowledged by the provider鈥檚 board

Providers must ensure Compliance Audit reports and any recommendations are brought to the attention of:

• their board chair (housing associations)
• cabinet members (local authorities)
• chief executive / directors (developers)

After boards / committees have met, and within 3 calendar months of receipt of the report, the provider must sign into the Compliance Audit system to:

• verify the date that the board or committee met
• certify that their board / committee has given their acknowledgement to the report and recommendations
• certify that their board / committee has given their agreement to the action plan to address any breaches

It is the provider鈥檚 responsibility to note and act on any audit report breaches and recommendations.

For all breaches, providers will be required to agree with their organisation鈥檚 board /committee any actions that will be undertaken in response to the recommendations raised by Homes England.

Policy, procedures and guidance

All Homes England funding requirements for providers are set out in the Capital Funding Guide together with the relevant contract or agreement, funding conditions and prospectus. Depending on the funding programme, the following documents may also apply.

Contracts

• Affordable Housing Programme 2021 to 2026 contract 鈥� examples of the grant agreements for the most common providers and delivery models receiving grant funding under the Affordable Homes Programme 2021 to 2026
• Shared Ownership and Affordable Homes Programme 2016 to 2021 standard form contract
• Affordable Housing Programme contract agreement (2015 to 2018)
• Care and Support 鈥� refer to provider鈥檚 specific contract
• Move On Fund 鈥� refer to provider鈥檚 specific contract
• Strategic Partnerships 鈥� refer to provider鈥檚 specific grant agreement
• Single Homelessness Accommodation Programme 鈥� refer to provider鈥檚 specific grant agreement

Prospectuses

• Affordable Housing Programme 2021 to 2026 funding guidance
• Shared Ownership and Affordable Homes Programme 2016 to 2021 prospectus
• Affordable Housing Programme 2015 to 2018 prospectus
• Shared Ownership and Affordable Homes Programme bidding documents
• Care and Support Specialised Housing Fund Phase 2 prospectus
• Move On Fund prospectus
• Single Homelessness Accommodation Programme

Programme guidance

Policies and procedures may change depending on the funding programme; therefore, providers and independent auditors must satisfy themselves that they are referring to the policy and procedures current at the time. Where providers are delivering schemes funded under more than one programme, they will need to follow the procedures of the relevant programme for each scheme.

Find out more about Homes England鈥檚 funding programmes.

Compliance Audit guidance

The Compliance Audit procedural requirements are set out in the Capital Funding Guide, Chapter 6, Programme Management. Section 7 of this chapter covers the current reporting and audit requirements for all programmes, including standard terms of engagement for independent auditors.

Compliance Audit checklists and system guidance (including video guides).