The Financial Administration of Community and Comprehensive Schools
Guidelines for ASTI Members Serving on Boards of Management in Community and Comprehensive Schools
The establishment of Boards of Management in schools represents an important step towards a collaborative management of the school system. Among the many responsibilities placed on the Board of Management is that of the financial administration of the school. Boards of Management should therefore put in place adequate systems of control, delegation and accountability to ensure the efficient operation of school services and administration. Article 3 - Finance of the Articles of Management for Community Schools - details the financial responsibilities of Boards of Management.
These duties include:
(a) the preparation of an income and expenditure estimate required for the school during the following financial year;
(b) the submission of a monthly report on expenditure from the school's fund to the Department of Education and Science;
(c) the opening of a bank account in the name of the school;
(d) ensuring that expenditure does not exceed income approved by the Minister under any head of the estimates for any year without the previous consent of the Minister;
(e) the keeping of accounts of financial records and statements;
(f) creation of adequate systems of control, delegation and accountability regarding use of school's finances.
These guidelines are designed to provide protection for ASTI members involved in the administration of schools' finances.
Controls Over School Finances
Controls Over Expenditure
(a) Petty Cash:
The school may maintain a petty cash float for the purposes of making petty cash disbursements in respect of minor items as the Board may wish to delegate to the Principal. The float should be replenished by way of a cheque cashed once the balance falls below a level agreed by the Board. A petty cash book should be maintained showing details of the expenditure over a small number of categories, e.g. postage, stationery, etc. together with the date and the amount. IOUs should not be allowed. The petty cash book should be totalled off monthly and signed by the Principal.
(b) Orders / Requisitions:
The Board is advised to agree a Purchasing Policy which complies with the terms of the Administrative and Financial Guidelines, sections 10 and 11.
All purchases, over a certain monetary amount, should be initiated by an order or requisition. The order itself will need to be authorised by the Principal by way of a signature on the face of the order. There is no need to actually forward the order form to the supplier. Orders can be made over the phone provided that the duly authorised order or requisition is held for future reference.
The Board can authorise the Principal to approve purchases up to an agreed limit and without the approval of the Board. Purchases in excess of the agreed limit require the approval of the Board.
A competitive tendering process is required where the total value of the annual purchases exceeds a certain figure.
(c) Invoice Authorisation:
When invoices arrive for payment they must be matched with the signed order/requisition. This can be done by whoever holds the order forms. The individual must ensure that the details of what was ordered exactly matches with what is being charged for on the invoice. The matched invoice can then be authorised for payment. The Board of Management is the appropriate body to authorise payment. Under no circumstances can the authoriser for payment be the same individual who authorised the order. This segregation of duties is an important financial control and is in line with best practice.
All invoices, orders and requisitions should be retained by the Board for a period of seven years.
(d) Cheque Payments Book:
Article 3 (vii) of the Articles of Management states: "The Board shall, as required by the Minister, make a return to him supported by the necessary vouchers of all disbursements made out of the school fund and shall comply with any directions which may from time to time be given by the Minister relating to accounts of financial records or statements." This account should include a record of the cheques written showing details of the cheque number, the payee, the amount and an analysis of the expenditure over a small number of categories, e.g. wages, cleaning, stationery, etc.
(e) Cheque Signatories:
The cheque signatory requirement is governed by article 3 (ii). It is vital that two signatories sign each cheque. The bank should be made aware of this and a panel of signatories maintained to cover for unavailability of the main signatories. The bank must receive specimen signatures in each case. The signatories can be the same individuals as signed the order / requisition but cannot be the same as authorised the invoice for payment.
Controls Over Income
(a) Cash Receipts Book:
Article 3 (vii) of the Articles of Management states: "The Board shall, as required by the Minister, make a return to him supported by the necessary vouchers of all disbursements made out of the school fund and shall comply with any directions which may from time to time be given by the Minister relating to accounts of financial records or statements." This must include a record of the cash receipts of the school. A cash receipts book will need to note details of the date of the receipt, a brief description of the source and the amount. It will also need to keep a record of the makeup of the lodgement to the school bank account.
(b) Records Kept on Computer:
The Board must ensure that there are procedures in place which guarantee the completeness and accuracy of the accounting records and the validity of the entries. Back-up arrangements and security strategies must also be put in place including record access security, i.e. passwords and anti-virus software. Back-up discs should be used to minimise data loss and disruption in the event of a systems' failure, or disc crash. Secure and fire proof storage of discs should also be used.
(c) Approval over Income from use of School Property or Assets:
Article 6(c) of the Articles of Management states: "The Board shall determine the uses for Community purposes of the school buildings or grounds at times which will not affect schoolwork. Regulations and conditions governing the use of the premises for Community purposes shall be prepared by the Board for approval of the Minister and shall be subject to alteration from time to time with the approval of the Minister." The approval and a note of the property or asset involved together with the charges must be minuted even if the use is granted free of charge.
(a) Bank Reconciliation:
One of the strongest controls over income and expenditure is the bank reconciliation. This should be performed monthly. The total expenditure per the cheque payments book should be deducted from the total income per the cash receipts book. The result should be added to the previous month's closing balance and then compared to the balance on the same date per the bank statement. Any difference should be explained either as cheques drawn but not yet presented to the bank, any bank interest or charges or any lodgements which have not yet cleared the bank. The person preparing the bank reconciliation should not be the same person as maintains the books and records of the school. The bank reconciliation should be signed by the Principal and presented to the Board.
(b) Budget Variance Explanation:
An explanation of any variances plus or minus 10% on each line item of the forward budget previously submitted to the Minister should be submitted to the Board. (Provided the line item represents at least 10% of the total budget).
(c) School Financial Records:
Since the Board of Management is responsible for all income and expenditure and all monies raised in the name of the school, records of all financial transactions involving e.g. games, library, canteen, Transition Year Programme, fund raising, tours, Home/School liaison, examinations, etc. should be presented to the Board for examination and approval.
(d) Capital Budget:
A separate capital budget should be drawn up by the Board and details given to Board members when transactions occur.
(e) Voluntary Subscriptions:
A detailed account of voluntary subscriptions should be available to Board members. Where the school is the beneficiary, the Board should satisfy itself that the fundraising body is properly constituted and has adequate internal accountability arrangements.