PAL are pleased to announce that the DfE audit working papers for auditing 2025/26 funding have been released.

PAL’s audit and compliance team are now accepting bookings for conducting mock DfE audits using these working papers. Mock DfE funding audits enable providers to detect, correct and prevent funding errors before an actual DfE funding audit. As such they are an important means to protect a provider’s funding and their reputation. Contact us at info@professionalassessment.co.uk to arrange an audit or if you have any questions.

Whilst it remains a contractual obligation to ensure compliance with the funding rules, the working papers direct DfE auditors’ attention, and are an important source of reference for providers.

PAL’s audit and compliance team have reviewed the working papers and note the following changes of focus.

1) Funding Eligibility

  • Learners on foundation apprenticeships must meet separate eligibility and funding rule requirements.
  • Clearer wording has been introduced around ineligible categories.

Context for providers for compliance: Payroll evidence and training records should clearly demonstrate that apprentices are paid appropriately for both working time and structured active learning.

2) National Minimum Wage

National Minimum Wage requirements now clarify that apprentices must be paid a lawful wage for time spent in work and active learning. This aligns payment expectations more closely with evidenced learning activity.

Context for providers for compliance: Pricing controls and employer agreements should be reviewed to ensure they align precisely with ILR entries and written contractual evidence.

3) Negotiated Price

Providers must:

  • Record the agreed assessment price in TNP2 (no estimates or default 20%),
  • Hold a written agreement with the assessment organisation,
  • Ensure any changes to TNP1 or TNP2 are agreed with the employer and documented.

Context for providers for compliance: Pricing controls and employer agreements should be reviewed to ensure they align precisely with ILR entries and written contractual evidence.

4) English and Maths:

  • Apprentices aged 16–18 must meet mandatory English and maths requirements.
  • Apprentices aged 19+ are eligible where the employer agrees English and maths delivery as part of the training plan.
  • Foundation apprenticeships follow separate English and maths funding rules.

Context for providers for compliance: Providers must update off-the-job calculation tools, training plans, ILR reconciliation processes and completion checks to align with standard-specific minimum hours.

 5) Minimum Duration: 8 or 12 Months

Naturally depending on start date.

Context for providers for compliance: Programme design and prior learning adjustments must be carefully documented to ensure both planned and actual duration remain compliant.

6) Off-the-Job Training: Significant Change for 2025/26 Starts

For new starts in 2025/26:

  • Providers must evidence delivery against the published minimum hours rather than applying a blanket minimum 20% calculation.

Context for providers for compliance: Providers must update off-the-job calculation tools, training plans, ILR reconciliation processes and completion checks to align with standard-specific minimum hours.

 7) Active Learning Requirements

For new starts in 2025/26:

  • Monthly evidence must confirm active off-the-job learning aligned with the training plan.
  • Providers are explicitly responsible for ensuring English and maths active learning is delivered in line with the signed plan.

Context for providers for compliance:  Monthly participation monitoring and evidence collection processes must demonstrate clear alignment between planned and delivered activity.

8) Employer Co-Investment and Payment Evidence

  • Providers must demonstrate proof of employer co-investment payments that match ILR records.
  • Where apprenticeships are exempt (e.g. age-based, EHCP, care leaver), providers must evidence eligibility clearly.
  • Small employer eligibility evidence remains required for prior year starts.

Context for providers for compliance:   Finance and compliance teams should ensure robust audit trails linking ILR data, employer invoices, and payment records.

9) Foundation Apprenticeship Incentive Payments

A new requirement has been introduced to retain evidence of employer incentive payments for foundation apprenticeships within agreed timeframes.

Context for providers for compliance:  Providers delivering foundation apprenticeships should implement clear tracking and documentation processes for incentive payments.

10) Gateway and Completion Evidence

At completion, providers must evidence:

  • Achievement of the assessment,
  • Compliance with minimum duration requirements,
  • Reconciliation of actual off-the-job hours with ILR data and published standard minimums (for new starts),
  • Collection and recording of employer co-investment where applicable.

Context for providers for compliance: Completion checks must be aligned with funding rules and standard-specific requirements.

In summary, the 2025/26 working papers:

      • Shift reliance away from a universal 20% off-the-job model,
      • Increase alignment with published standard requirements,
      • Strengthen evidence expectations for assessment, English and maths, and co-investment,
      • Formalise controls around foundation apprenticeships.
      • Completion checks must be more tightly aligned with both funding rules and standard-specific requirements.

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16-19 Funding, Non-Devolved ASF and Advanced Learner Loans audit working papers have also been amended. Details can be found on PAL’s detailed comparison of the DfE audit working papers.

Providers should now refer to the working papers and confirm documentation, systems, and internal controls ensure audit readiness for the 2025/26 funding year.

You can access PAL’s detailed comparison of the DfE audit working papers of each funding stream here

The 2025/2026 DfE audit working papers can be accessed here

To generate the full suite of audit working papers for your data, use the DfE PDSAT software at pdsat.co.uk

To discuss how the PAL Audit and Compliance team can support your organisation achieve compliance and be ready for DfE audit, with our mock DfE audit service, email us at info@professionalassessment.co.uk