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From the experience of recently completing over 150 school annual audits it is good to be able to make some general observations and provide feedback to schools. Especially as regards the general state of school accounting and the challenge areas that are common across many schools.

Firstly it has to be said that the general level of accounting systems and internal controls appear broadly appropriate - this is a great achievement!

Reliance on one or two key people

Most schools have some operational risk in being heavily reliant on just one or two people with the detailed knowledge of their accounting systems.  This risk can however be mitigated by:

• cross training of other personnel
• good systems documentation and operating instructions
• timely oversight by senior management and/or the board
• use of an external accounting service provider

Capital works projects

Continue to be a challenging area to keep on top of the accounting.  They require close focus and timely reconciliations.

Cyclical maintenance plans

Quite a few schools need to update their cyclical maintenance plans.  This helps ensure that the plan is a useful tool for planning and monitoring your school's cyclical maintenance obligations as well as ensuring the cyclical maintenance provision in your financial statements is accurate.  These plans need to reflect the expected maintenance at your school and be updated, especially when the actual maintenance differs from that which was originally planned.  An annual update by the school is expected with a review by an experienced professional recommended at least 3 yearly. We appreciate many of you are updating the calculation for the provision for cycle maintenance calculation, which is great.  However, you do need to also update the maintenance plan as this is technically what derives the liability.  We do appreciate the Ministry may only require an equal annual sum, but in order for you to actually manage the plan and update it with changes in property and timing of work you will need to have the supporting details broken down by building or item of property.

Cluster funding

There is some inconsistency in the method of accounting for cluster funds.  The MOE has a document on their website called "accounting for shared funds" which shows their expectations of the accounting treatment for these funds, which outlines that no amounts should go through your statement of financial performance, only through the statements of financial position (Balance Sheet).  While this might seem unusual, we presume the Ministry is doing its own accounting for these funds.  This following document shows the accounting treatment for both the fund holder school and schools that are members of clusters. Click here for more information.

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