Achieving clean financial administration in every public school is critical if the school wishes to achieve the goals set in its improvement plan. The following are 5 ways in which a public school can improve financial management and accountability.
1. Establish a functional finance committee
A finance committee should be established as a sub-committee of the School Governing Body. Section 30(1)(b) of the South African Schools Act (SASA) requires that all committees of the SGB be chaired by a member of the SGB. In terms of Section 16A (2)(j) of SASA the principal must be a member of a finance committee or delegation of the governing body in order to manage any matters that have a financial implication for the school. In order to ensure that the finance committee, collectively, has the necessary skills and competence to manage the finances of the school as delegated to them by the SGB, consideration should be given to co-opting a qualified finance professional from the community to bring his/her skills and expertise to the committee.
2. Develop a financial delegation of authority document
A financial delegation of authority document (DOA) will determine the thresholds for approval of financial transactions and ensure that the school does not get exposed to large transactions without the approval of the key role players. The DOA will provide the threshold for approval by the principal, finance committee and the SGB. For example the principal could have the delegation to approve all transactions below R 10 000 while the finance committee could approve transactions between R10 000 and R50 000 and the SGB could approve transactions above R 50 000. The DOA can also address the level of authority required for signing supplier contracts, financial statements and other agreements.
3. Develop a finance committee key deliverables tracking schedule
A finance committee key deliverables tracking schedule is important to ensure that all key activities of the finance committees are carried out and deadlines are not missed. Some of the key activities that should be included on the schedule are:
- Approval of financial statements for submission to the Auditor/Examiner by 31 March each year
- Submission of audited/examined financial statements to the provincial education department – By 30 June each year
- Preparation of the budget for the next year by end of October each year
- Presentation of the budget at the AGM for approval by parents – By end of November each year
- Appointment/Re-appointment of Auditor/Examiner – By end of November each year
- Submit approved budget to provincial education department – By 01 December each year
4. Review of management accounts by the finance committee
The Income statement, budget variance report, cash flow forecast, creditors ageing and bank reconciliation are some of the key records that the finance committee must review at least quarterly to ensure that key financial risks and matters are addressed timely.
5. Have documented standard operating procedures for each critical finance process
Developing standard operating procedures ensures consistency, compliance with laws and regulations and provides the finance committee with an opportunity to evaluate the sufficiency of the controls in each process. The standard operation procedures for a typical finance process will include the following:
- What steps are involved in the process (E.g. For supplier payments the steps would include receiving the invoice, confirming receipt of the goods or services in the correct quantity and quality per the purchase order, checking the payment details agree to the supplier database, etc. )
- What documents will be used at each step of the process.
- Who will be responsible for each step in the process
- Which steps cannot be performed by the same person
- What controls will be applied to ensure that each steps in the process is followed as required. (E.g. For confirming that goods or services are received before payments is made, the recipient may be required to stamp/sign the invoice as confirmation that the goods or services were received in the correct quantity and quality.)
- Any other matters that the finance committee deems necessary.
Some of the key processes that the finance committee must develop standard operation procedures for are:
- Petty cash management
- Payment of suppliers
- Fixed asset disposal
- Granting of exemptions for school fees
- Purchase of goods or services
- Inventory management
- Fixed asset maintenance