Transcript Document

FINANCE INDUCTION
Jan Powley
Kim George
1
"Although the primary responsibility of a
school is to provide the best education
possible for its pupils, control over a
delegated budget brings with it a
responsibility for financial stewardship"
Audit Commission
2
COURSE OUTLINE







Governors’ Responsibilities inc Budget Planning
The Financial Framework
Schools Financial Value Standard
Value for Money
Monitoring Budgets
Financial Reports
Funding Formula
3
GOVERNORS’ RESPONSIBILITIES
4
GOVERNORS’ RESPONSIBILITIES



Each governing body has a statutory responsibility for the
financial management of the delegated budget in their school.
As a whole, they are accountable for the standards of education
provided and for balancing cost and effectiveness.
Governors also need to ensure that they achieve the best
possible outcomes for their pupils in the most efficient way
5
KEY STANDARDS FOR GOVERNORS






The roles and responsibilities of governing body
should be set out in writing
A finance committee should be set up to consider
strategic financial issues
The governing body should establish the financial
limits of delegated authority
The governing body should agree with the
headteacher the detail and format of financial
information to be provided
Minutes should be taken of all meetings of the
governing body and its committees and include all
decisions and by whom action is to be taken
The governing body should establish a register of
business interests
6
KEY ACTIONS FOR GOVERNORS






Set financial limits of delegated authority
Review last internal audit report
Voluntary funds
Local authority financial regulations and instructions
Setting 3 year budget plan – links to school
improvement plan
Setting timetable budget monitoring and review of
financial plan
7
POSSIBLE DELEGATIONS OF FUNCTIONS
TO HEADTEACHER






Responsibility for notifying LBC of 3 year budget plan
Monitoring and reporting of actual/projected
expenditure and income against budget plan
The maximum value of virement or a single
transaction without recourse to the full governing
body
Responsibility for awarding of contracts
Responsibility for entering into lease or hire
agreements
Responsibility for setting letting scale charges and
extent to which these can be varied/waived
8
SUBMISSION OF BUDGET PLANS

Plan should show total estimated expenditure and
income produced in conjunction with school
improvement plan

Must be agreed by governing body

Submitted to LBC each financial year



Deadline notified to schools each year – 31 May and 31
July
No deficit without consent
If deficit budget likely then contact LMS team in first
instance.
9
SCHOOL EXPENDITURE
Teaching Staff 55%
Education Support Staff
14%
Admin & Clerical Staff
5%
Other Employee
Expenses 6%
Running Expenses 20%
10
BUDGET PLANNING CYCLE
APRIL
- 1 Apr - Start of the financial year
- Close down old financial year
APRILTO MAY
- 31 May provisional
budget plan
- Surplus/deficit from
previous year b/f
MARCH
- Begin to finalise budget plan
- Prepare for year end
JUNE TO JULY
- 31 July submit final budget plan
- Initial monitoring (Quarter 1)
JANUARY TO FEBRUARY
- Quarter 3 monitoring
- Begin work on provisional budget plan
- 28 Feb – final budget allocations issued
SEPTEMBER TO OCTOBER
- Revise budget plan
- Quarter 2 monitoring
NOVEMBER TO DECEMBER
- Review Budget Plan – revise if necessary
11
SUMMARY OF RESPONSIBILITIES
•Governors are responsible for school
delegated budgets
•Governors should ensure school meets
required standards and has effective controls
•Governors may delegate some
responsibilities to headteachers
•Governors must agree and review school
budget plan
12
THE FINANCIAL FRAMEWORK
13
WHAT IS THE FINANCIAL
FRAMEWORK?
•Schools spend large sums of public money
•LBC has duty to account for this
•Hierarchy of financial controls exist within which LBC and
schools must operate
14
HIERARCHY OF CONTROLS
SFF
Contract
Financial Procurement
Regulations Procedures
Financial Schemes
Guidance Notes
Scheme for Financing
Schools
Approved by Schools
Forum
Approved by LBC
Approved by Head
of Finance
Approved by
Service Chief
Officers
Audit & Inspection
15
THE SCHEME FOR FINANCING
Scheme sets out financial relationship between LBC and
maintained schools
•Sets out requirements relating to financial management and
associated issues
•All schools and governors should have access to a copy –
www.learning.luton.gov.uk
•Guiding legislation - School Standards and Framework Act.
Changes to scheme need Schools Forum approval and
consultation with schools. (Some changes are directed by
DFE)
16
FINANCIAL REGULATIONS
Key Areas of financial management and control :
•
Responsibilities
•
Capital Expenditure
•
Delegation
•
Internal Audit
•
Financial Plan
•
Legal Procedures
•
Revision of the Financial
Plan
•
Access to Information
•
Voluntary Funds
•
Trust Funds
•
Accounting Procedures
•
Year-End Balance
CONTRACT PROCUREMENT PROCEDURES
•
Minimum requirements for purchasing, quotations and tendering
•
Promotes good purchasing practice, public accountability, best
value
17
FINANCIAL INSTRUCTIONS
These instructions are issued by the Head of Finance to fill in the detail of the
Financial Regulations: Detailed technical advice is contained in guidance
notes.
•
Expenditure
•
Income
•
Order for Work, Goods and
Services
•
Banking Arrangements
•
Value Added Tax
•
Inventories
•
Insurances
•
Travelling and Subsistence
Allowances
•
Security
•
Information Systems
•
Invoices and Accounts for
Payment
•
Contracts for Building and
Civil Engineering Works
•
Salaries, Wages and Pensions
•
Imprest and Petty Cash
Accounts
18
GOVERNORS’ RESPONSIBILITIES
•
•
•
Governing body should ensure school has written descriptions of all its
financial systems and procedures
The school should maintain proper accounting records and retention of
documents as prescribed by the LA (see schools finance handbook)
Internal controls required:
Internal checks; Separation of duties; System manuals
A system of authorisation; An audit trail
LMS Handbook
Section 13 – School Finance Manual
19

SCHOOL FINANCIAL VALUE STANDARD
20
Schools Financial Value Standard





Introduced by DfE July 2011
Requires annual assessment
Primarily aimed at Governors
Self assessment – 23 questions
Can be delegated to finance committee
but must be signed by chair of governors
21
SFVS continued





4 key areas
The Governing Body and School Staff
Setting the Budget
Value for Money
Protecting the Public Purse
22
VALUE FOR MONEY
23
Value for Money




The 3E’s
Audit Commission report – Valuable
Lessons
Growth in school funding has slowed
Plan now for austere times ahead
24
Value for Money
7 areas for governors actions to improve VFM
 Support and challenge school management
 Ensure the school has considered the financial
implications of its plans
 Review school balances
 Ensure that goods and services achieve VFM
 Ensure the school workforce is used to best effect
 Encourage greater collaboration with other schools
 Use financial information when making spending
decisions
25
BUDGET MONITORING
26
MONITORING CYCLE
Budget Versus Actual
•The financial plan should be monitored (checked) to see if expenditure and income
are going according to plan
•If not – corrective action will be required
Plan
Corrective Action
Actual
Compare
27
IMPORTANCE OF BUDGET MONITORING
Central to effective financial management
• Early identification of need for remedial action or revised
spending decisions in light of budget position
• Assess cost effectiveness of individual initiatives against
the criteria set out in the school improvement plan
• Understanding of budget position important for setting
following year’s budget(s)
• Important to demonstrate that financial management is
effective
BOTTOM-LINE:
Bad financial management can undermine good education
28
MONITORING PROCESS
•Monthly reports run from local system and agreed with LA system. (Bursar to raise
queries with LMS Finance Team if it doesn't)
•Bursar prepares monthly summary analysis of income and expenditure identifying
variances from plan and providing written narrative/explanations
•Head (or delegated officers) initially reviews analysis and seeks further clarifications
from Bursar
•Governors provided analysis in advance (ideally at least 1 week) of Finance Committee
meeting
•Head and bursar invited to finance committee meetings to provide further or detailed
explanations.
•Governors able to concentrate on identifying corrective action if needed and future
year’s budget plan (Governor time not spent on transaction details)
29
CORRECTIVE ACTION
MOVE BUDGETS
•Virement - A virement or budget adjustment within the limits of delegated
responsibilities
•Profiles - Can be standard or customised
•Review - The Financial Plan can be reviewed and new targets set
MOVE ACTUALS
•Journal Transfers –
•used to correct mis-codings
•transfer expenditure/income to another code
•to share income/costs between schools
•charge another school/cost centre
REDUCE SPENDING
INCREASE INCOME
•Is income due, or available from other sources? e.g. school fund.
30
AMENDING FINANCIAL PLANS
•Circumstances change during the year. This may make it necessary to submit a
new financial plan
•Revising the financial plan will assist monitoring as information on reports will
reflect the new circumstances
Types of circumstances that might warrant the raising of new plan:
 significant reduction/increase or change in staff
 unexpected major expenditure
 the cancellation of a regular letting
31
AMENDING FINANCIAL PLANS
Points to remember:
Terms of Reference for Finance Committee
Levels of virement delegated to Headteachers or finance committee
New plan must also be reported to the Governing Body
Local system updated
Copy of plan forwarded to LMS Team
Financials updated and Summary Report now matches school system
Retain a copy of the original budget for future financial planning
32
BUDGET MONITORING SUMMARY




Central to effective financial
management
Finance Committee Members’ role
should be more strategic, less
transactional
Bursar/Finance Officer and Head
critical in providing relevant
information to Finance Committee
Identifies problems whilst you can
still take action.
33
FINANCIAL REPORTS
34
FINANCIAL REPORTS AVAILABLE
Different reports are available:
Local Finance System Reports:
SIMS FMS6
Chart of Accounts Review - Ledger Codes/Cost
Centres
Income and Expenditure CFR Report
Cumulative Expense Analysis Report
Financials (LBC) Reports:
Monthly Summary I&E
Transaction and payroll transaction
Electronic Reconciliation File
Capital I&E and transactions
35
OTHER REPORTS AVAILABLE
Section 251 Statement (Budgets and outturn)
•Required of all LAs
•Format prescribed by DFE
School Profile (Parent/Governor report)
•Schools financial position summarised in a format suitable for presentation to
parents
Comparative data - benchmarking
•Local benchmarking data(LA)
•CFR return
•Schools Financial Benchmarking (DFE/Audit Commission/OFSTED)
36

FUNDING FORMULA
37
Where does the funding come
from?




Formula Funding
Pupil Premium
Other allocations
School generated income – facilities, bank
interest etc
38
ISB 2011-12





Early Years
Primary
Secondary
Special
Total





£8.9m
£85.2m
£47.1m
£6.3m
£147.7m
39
INDIVIDUAL SCHOOLS BUDGETS
Complex formulae, broadly summarised as follows
Individual schools budgets =
Age weighted pupil unit allocation +
Lump sum allocation +
Premises allocations +
Other pupil-led allocations +
Other special factor allocations
40
AWPU
•By far the largest component of school budget shares
•Irrespective of the type of school, pupils of the same age will receive exactly the
same AWPU funding.
•Similar system in special/nursery schools - use planned places rather than pupil
numbers
•Current AWPU rates per key stage – primary and secondary schools
Key Stage
Age Group
2011-12 AWPU
Pre KS1
KS1
KS2
KS3
KS4
4+ full time
5+ / 6+
7+ / 8+ / 9+ / 10+
11+ / 12+ / 13+
14+ / 15+
£2,906
£2,466
£2,482
£3,033
£3,530
41
OTHER ALLOCATIONS
Lump Sum allocation
Each school in a specific sector receives an equal allocation, irrespective of size or
type
Premises allocations
Based on physical areas for caretaking, cleaning, grounds maintenance, building
maintenance, energy and swimming pools, rent and rates
Other pupil-led allocations
Includes sen factors and free school meals allocations
Other special factors
Includes small school allowances, KS1 ghost pupils
42
OTHER FUNDING
YPLA (post 16)

Determined by YPLA on their own
formula basis. Only applies to 1
secondary school

43
OTHER FUNDING
Pupil Premium
Service Children £200
LAC £488
Free School Meals £488
Maternity recompense

44
FUNDING FORMULA SUMMARY



Complex
Every school is unique.
Formula tries to reflect this
Subject to annual review
45
Further Training
Setting and Monitoring the School Budget
12 January 2012
7-9pm at LLRC
School Financial Value Standard
Spring term 2012
46
LMS Finance Team
Jan Powley
Group Accountant
Schools
548070
Liz Burden
Senior School Financial
Adviser
548071
Amina Begum
Finance Assistant
548194
Kim George
School Financial Adviser
548076
Lynne Knapton
School Financial Adviser
548074
Keena Kunvarji
School Financial Adviser
548075
Ruth Stryczko
School Financial Adviser
548073
Lorraine Byrne
School Funding
Co-ordinator
548072
Barbara Wightman
Finance Assistant
548077
47