MAKING THE GRADE? Financial Management of Schools

Report No 10 - November 2005

What the examination is about…

This examination reviewed how well schools are managing the $560 million in assets and transactions they are responsible for as well as the effectiveness of the Department of Education and Training (DET’s) support for, and monitoring of, schools.

The Director General of DET is responsible for the overall management of the department. However, since 1987, the 777 schools have become responsible for making day-today decisions on purchases of their educational goods and services, some revenues and assets, and their cash reserves.

DET provides support to the schools for their fi nancial management and monitors and reviews their performance in this area through both central and district offices.

What the examination found...

While schools have improved their fi nancial management since they were given responsibility for day-to-day fi nancial management decisions in 1987, they are still not managing their fi nances adequately. There are ongoing problems with them ensuring that purchases, payments and assets are well managed and achieve value for money as required by legislation, government policies and DET’s internal guidelines.

DET is aware of these problems as they have been identifi ed by its internal audit area for some years. It has implemented initiatives to improve financial management in schools, but has not taken a co-ordinated approach with clear objectives, targets and timelines to resolve the problems. DET’s support to, and monitoring of, schools’ fi nancial management warrant further attention as follows:

• Central and district offi ce support – at present, support provided to schools is largely reactive and not tailored to the differing circumstances and needs of small and large schools
• Financial management training for school staff – lacks a systematic approach with no assessment of overall training needs to drive training priorities and programs
• Financial information systems – schools, particularly small schools, find these complex to use and this is limiting their contribution to better financial management
• Monitoring and review of school finances – are presently being hampered by lack of effective follow-up of internal audit recommendations and only limited analysis of financial data to assess common trends across schools and anomalies at individual schools.

What the examination recommended...

DET should develop and implement a coordinated program with clear objectives, targets and timelines to raise the quality of fi nancial management of schools to an adequate standard.

• It should include a combination of:
  • developing tailored approaches to boost the financial management capabilities of larger schools and simplify financial management tasks at smaller schools. It should consider the potential of a bureau approach for smaller schools at district office or cluster levels; development of templates, tailored for small and large schools for tasks such as school plans and reports; and training being aimed at identified system-wide needs of school Principals and Registrars
  • further development of fi nancial information systems so that they are easier to use
  • improving monitoring and review of schools’ financial management practices and capabilities by doing more extensive analysis of schools’ financial and other data and more effectively following-up identifi ed weaknesses at schools.

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