Finance induction training presentation

FINANCE INDUCTION

Jan Powley
Kim George

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"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

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COURSE OUTLINE

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Governors’ Responsibilities inc Budget Planning
The Financial Framework
Schools Financial Value Standard
Value for Money

Monitoring Budgets
Financial Reports
Funding Formula

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GOVERNORS’ RESPONSIBILITIES

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GOVERNORS’ RESPONSIBILITIES

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Each governing body has a statutory responsibility for the financial
management of the delegated budget in their school.

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As a whole, they are accountable for the standards of education
provided and for balancing cost and effectiveness.

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Governors also need to ensure that they achieve the best possible
outcomes for their pupils in the most efficient way

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KEY STANDARDS FOR GOVERNORS
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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
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KEY ACTIONS FOR GOVERNORS
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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

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POSSIBLE DELEGATIONS OF FUNCTIONS
TO HEADTEACHER
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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

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SUBMISSION OF BUDGET PLANS
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Plan should show total estimated expenditure and income
produced in conjunction with school improvement plan

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Must be agreed by governing body

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Submitted to LBC each financial year

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Deadline notified to schools each year – 31 May and 31 July

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No deficit without consent

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If deficit budget likely then contact LMS team in first instance.

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SCHOOL EXPENDITURE

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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

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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

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THE FINANCIAL FRAMEWORK

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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

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HIERARCHY OF CONTROLS
SFF

Contract
Procurement
Financial
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

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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)

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FINANCIAL REGULATIONS
Key Areas of financial management and control :
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Responsibilities

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Capital Expenditure

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Delegation

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Internal Audit

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Financial Plan

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Legal Procedures

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Revision of the Financial Plan

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Access to Information

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Accounting Procedures

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Voluntary Funds

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Year-End Balance

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Trust Funds

CONTRACT PROCUREMENT PROCEDURES
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Minimum requirements for purchasing, quotations and tendering

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Promotes good purchasing practice, public accountability, best value
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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.
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Expenditure

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Income

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Order for Work, Goods and
Services

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Banking Arrangements

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Value Added Tax

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Inventories

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Insurances

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Travelling and Subsistence
Allowances

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Security

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Information Systems

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Invoices and Accounts for
Payment

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Contracts for Building and Civil
Engineering Works

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Salaries, Wages and Pensions

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Imprest and Petty Cash Accounts

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GOVERNORS’ RESPONSIBILITIES
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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

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SCHOOL FINANCIAL VALUE STANDARD

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Schools Financial Value Standard
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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
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SFVS continued
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4 key areas
The Governing Body and School Staff
Setting the Budget
Value for Money

Protecting the Public Purse

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VALUE FOR MONEY

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Value for Money
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The 3E’s
Audit Commission report – Valuable
Lessons
Growth in school funding has slowed
Plan now for austere times ahead

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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
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