Schools are required to abide by the Authority’s requirements on financial controls and monitoring in the management of their delegated budgets as outlined within this scheme and detailed in the financial regulations, and also those guidelines contained in more detailed publications referred to in the scheme but outside and compatible with it.
Schools are required to provide the Authority with details of actual expenditure and income reconciled to the bank account (I&E Return) on a monthly basis. Schools will also be required to submit outturn statements twice a year – usually in October (monitoring position at month 6) and in January (monitoring position at month 9). The Authority may determine different methods for individual schools and will consult with schools about such requirements, for example schools in financial difficulty may be asked to submit monthly monitoring reports. The submission of such information should so far as possible take account of the Consistent Financial Reporting (CFR) framework. This is in addition to the financial information required as part of schools annual budget plans and year-end predicted outturn processes.
All payments from delegated budgets are to be made in accordance with:
Each school is required to maintain an inventory of its moveable assets, in a form to be agreed by the Authority and establish authorisation procedures for disposal of assets. As a minimum requirement all schools should maintain an inventory which records all plant, machinery and equipment with an estimated life of more than five years and an approximate replacement value of, or historic cost of more than, £1,000. Schools should also keep some form of register of assets worth less than £1,000 but are free to determine their own arrangements (with a suggested minimum of £250). This would be to register anything that is portable and attractive such as a camera.
Schools are required to comply with the procedures, requirements and regulations relating to the accounting policies and end of year financial procedures issued and determined by the Authority as being applicable to schools. Guidance will be published annually on the practical arrangements (e.g. accruals accounting and other end of year financial procedures).
No debt shall be discharged other than by payment in full or being written off. The writing-off of non-recoverable debts is set out in the Financial Regulations and requires the Authority’s approval for sums over £5,000, as well as full Governing Body approval.
End of year reports and accounts completed by schools for submission to the Authority are to be prepared on the same accounting basis as the Authority’s financial accounts, that is on an accruals accounting basis, as detailed in the Authority’s financial regulations and in accordance with a timetable agreed with the Authority. Support will be available from the Authority for schools requiring assistance in this process.
Governing bodies must prepare, formally adopt and submit to the Authority a budget plan which reconciles with their total budget allocation, detailing its budgeted income and expenditure for the current financial year, in a format taking account of the Consistent Financial Reporting framework. The plan should be prepared in accordance with the guidelines issued by the Authority to schools as part of the Authority’s annual budget preparation process, and should take full account of estimated deficits / surpluses at the previous 31 March. Governing bodies should normally submit their formal budget plan to the Authority by no later than 1 st May (for 2019 only this will be 31st May, though all schools are encouraged to submit earlier).
The Authority will supply schools in a timely manner with all income and expenditure data it holds which is necessary to efficient planning by schools, for example indicative budget shares as soon as they are available, usually by the end of January.
The Authority would normally expect the Governing body to review the initial submitted and approved budget plan in September and January of the current financial year and submit current year outturn forecasts to the Authority. Completed budget plans and any current year forecasts need to demonstrate both the assumptions which underpin the financial data reported and what consideration the school has made of other Authority initiatives which have a direct impact on the school’s resources.
Governing bodies must also submit to the Chief Finance Officer a financial forecast covering each year of a three to five year period. The purposes of such forecasts are to ensure schools are planning ahead strategically and to indicate where schools may have financial difficulties. Multi-year forecasts should be submitted no later than the 30th June.
Schools must seek to achieve effective management of resources and value for
money, to optimise the use of their resources, and to invest in teaching and learning.
It is for heads and governors to determine at school level how to optimise the use of resources and maximise value for money.
As a minimum, schools should review their current expenditure, compare it to other schools (such as through use of the DfE’s benchmarking tool), and think about how to make improvements.
Governing bodies are authorised to freely transfer funds between budgets whilst ensuring that the overall budget as approved and submitted to the Authority remains within the cash limit agreed with the Authority. It is for the Governing Body to determine the extent to which it wishes to delegate power to vire between budget heads and to record its decision in the minutes of the Governing body. Proposed virements exceeding the delegated power must be formally adopted by the Governing Body and duly minuted.
In accordance with the Local Government Act 1972 and the Accounts and Audit Regulations 2011, the Chief Finance Officer has a statutory responsibility to ensure that a continuous internal audit and examination of accounting, stores and financial records and internal control systems of the Authority and its officers are carried out.
The Chief Finance Officer or a nominated and authorised representative, including the Authority’s external auditor, shall have the authority to:
Wherever possible auditors will agree an appointment in advance with the school and ensure that they carry out their duties with the minimum disruption to the school.
This internal audit shall be carried out in accordance with the audit regime adopted by the Authority and as detailed in the Authority’s Financial Regulations. Schools must co-operate with the Chief Finance Officer or his / her representative in all aspects related to the internal and external audit process including responding promptly and where appropriate confidentially to requests for information necessary to carry out the audit.
Head teachers and/or governing bodies shall notify the Director of Education, who shall in-turn inform the Chief Finance Officer of any irregularities or suspected irregularities concerning cash, stores or other property of the Authority or school, or the exercise of any of the Authority’s or school’s functions.
Governing bodies are authorised to spend funds from their budget share to obtain external audit certification of its accounts, separate from any Authority internal or external audit process. Any external audit commissioned by the school must take into account the status of the school as being a spender of the Authority’s funds. Copies of external audit reports commissioned by the school should be made available to the Authority.
Charity Commission registration requirements should be followed, these differ between voluntary, foundation and community schools. Schools must consider their own specific needs should the annual gross income of these funds exceed £5,000. This includes donations, fund raising receipts as well as interest payments. Where the fund (or part of the fund) is used as a holding account, where money is being collected for a specific purpose, e.g. school trips, photographs, uniforms, this can be netted off and be exempt from the £5,000 (other than any surplus). If a school is in any doubt about whether or not it needs to register, it should seek advice from the Charity Commission.
The Governing body must advise the Chief Finance Officer of all voluntary and private funds held by the school including any trading organisations controlled by the school. In addition to details of any such funds, schools are required to provide annual audit certificates of all such funds. The governing body must choose either independent examination by a suitably qualified person or arrange for an independent audit by a registered auditor that provides the level of assurance deemed suitable and this should be documented in the school’s own finance procedures manual.
Any other requirements concerning the audit of such funds are a matter for those making the funds available and, where registered as a charity, any Charity Commission requirements.
Governors and staff have a responsibility to avoid any conflict between their business and personal interests and the interests of the school. This is essential for effective and accountable financial management of the school. Interest should be declared that could result in a conflict of interest.
Examples of potential conflicts of interest include:
The governing body of each school is required to establish a register which lists for each member of the governing body and management team (including the head teacher and School Business Manager/Bursar), any business interests they or any member of their immediate family have; details of any other educational establishments that they govern; and any relationship between school staff and members of the governing body. The register must be kept up to date with notification of changes and through annual review of entries, and to make the register available for inspection by governors, staff and parents, and the authority and to publish the register on a publicly accessible website.
Schools must abide by the Authority’s financial regulations and standing orders in purchasing, tendering and contracting matters (including leases). Schools are required to assess in advance, where relevant, the health and safety competence of contractors, taking account of the Authority’s policies and procedures. In accordance with DfE requirements, schools are exempt from any provisions in the Authority’s Financial Regulations which would require them to:
a. do anything incompatible with the provisions of the Scheme, or any statutory provision, or any EU Procurement Directive;
b. seek an Authority officer countersignature for any contracts for goods or services for a value below £60,000 in any one year;
c. select suppliers only from an approved list; d. permit schools to seek fewer than three quotes or tenders in respect of any contract with a value exceeding £10,000 in any one year, subject to specific listed exceptions.
The fact that an authority contract has been let in accordance with EU procurement procedures does not in itself make it possible to bind a school into being part of that contract. For the purposes of the procurement directives schools are viewed as discrete contracting authorities. Schools may seek advice on a range of compliant deals via Buying for schools.
Schools are free to elect to opt out of contracts arranged by the Authority.
Whilst governing bodies are empowered under paragraph 3 of schedule 1 to the Education Act 2002 to enter into contracts, in most cases they do so on behalf of the Authority as maintainer of the school and the owner of the funds in the budget share. For this reason the Authority will require all contracts exceeding £100,000 entered into by the school to be countersigned by the Authority. Other contracts may be made solely on behalf of the governing body, when the governing body has clear statutory obligations – for example, contracts made by aided or foundation schools for the employment of staff. VA and Foundation school governing bodies are legally separate entities and do not require counter-signature from the Authority. However, as the Authority is providing the funds, any school which places a contract that will be funded by more than £60,000 from delegated funds, should advise the Authority. In practice this notification will normally happen in the ordinary course of events.
In line with Section 2.16 and the requirement on schools to have regard to good tendering procedures, schools should:
The Authority is authorised to make sums available to schools from central funds, in the form of allocations which are additional to and separate from the schools’ budget shares. All such allocations may be subject to conditions setting out the purpose or purposes for which the funds may be used; and while these conditions need not preclude virement (except, where the funding is supported by a specific grant which does not permit virement), this should not be carried to the point of assimilating the allocations into the school’s budget share.
Such earmarked funding from centrally retained funds is only to be spent on the purposes for which it is given, or on other budget heads for which earmarked funding is given, and is not transferred into the budget share. Schools are not permitted to authorise expenditure in excess of the amount allocated without the prior agreement and approval of the Director of Education. Furthermore, unless previously agreed with the Director of Education, any earmarked funds not spent in the current financial year are to be returned to the Authority. The Authority will not make any deduction, in respect of interest costs to the Authority, from payments to schools of devolved specific special grant. Schools shall comply with the audit requirements as outlined within financial regulations. Details of earmarked funds as well as the purposes of such funds will be included with the budget statements for each school year.
Schools must be managed in accordance with their budget allocation for each financial year. They may use their budget allocation to meet, subject to the requirements as outlined in the scheme, all expenditure for the purposes of the school.
They may not however use this resource to meet the cost of:
Schools are allowed to spend their budgets on pupils who are on the roll of other maintained schools or academies.
Income received and/or reflected in the schools general accounts must come from the following sources only:
Governing bodies may use their budget shares to meet the cost of capital expenditure on the school premises. This includes expenditure by the governing body of a voluntary aided school on work which is their responsibility under paragraph 3 of Schedule 3 of the SSAF Act 1998.
Schools must notify the Authority of all proposed capital spending from their budget share. It is recommended that schools discuss their proposals with the Authority prior to the final authorisation of such proposals and in particular that they ensure that the proposed works do not already form part of the Authority’s approved capital programme. If the expected capital expenditure from the budget share in any one year will exceed £25,000, the governing body must notify the Authority and take into account any advice from the Director Education and the Chief Finance Officer as to the merits of the proposed expenditure. If the Authority owns the premises or the school has voluntary controlled status, then the governing body should seek the consent of the Authority to the proposed works, but consent will only normally be withheld on health and safety grounds.
The reasons for these provisions is to help meet responsibilities with the School Premises (England) Regulations 2012, the Workplace (Health, Safety and Welfare) Regulations 1992, the Regulatory Reform (Fire Safety) Order 2005, the Equality Act 2010, and the Building Regulations 2010.
These provisions do not affect expenditure from any capital allocation made available by the authority outside the delegated budget share.
The Authority may issue a notice of concern to the governing body of any school it maintains where, in the opinion of the Chief Finance Officer and the Director of Education, the school has failed to comply with any provisions of the scheme, or where actions need to be taken to safeguard the financial position of the Authority or the school.
Such a notice will set out the reasons and evidence for it being made and may place on the governing body restrictions, limitations or prohibitions in relation to the management of funds delegated to it. These may include:
The notice will clearly state what these requirements are and the way in which and the time by which such requirements must be complied with in order for the notice to be withdrawn. It will also state the actions that the Authority may take where the governing body does not comply with the notice.
All local authority maintained schools (including nursery schools and Pupil Referral Units (PRUs) that have a delegated budget) must demonstrate compliance with the Schools Financial Value Standard (SFVS) and complete the assessment form on an annual basis. It is for the school to determine at what time in the year they wish to complete the form, but this must be before the end of the financial year.
Governors must demonstrate compliance through the submission of the SFVS assessment form signed by the Chair of Governors. The form must include a summary of remedial action with a clear timetable, ensuring that each action has a specified deadline and an agreed owner. Governors must monitor the progress of these actions to ensure that all actions are cleared within specified deadlines.
All maintained schools with a delegated budget must submit the form to the Authority before the 31st March.
All schools must have a robust system of controls to safeguard themselves against fraudulent or improper use of public money and assets.
The governing body and head teacher must inform all staff of school policies and procedures related to fraud and theft, the controls in place to prevent them; and the consequences of breaching these controls. This information must also be included in induction for new school staff and governors.