1409 Operations Policy Review - Finance - 24 September 2014

Financial Policies

  • The Kaikohe East Board's Financial Policies are part of the board's Operations Policy and are published on the school website.
  • The polices are restated here for board members' convenience:

Financial Planning

Budgeting shall not fail to reflect the school’s strategic results, risk financial jeopardy nor fail to show a generally acceptable level of foresight. Thus financial processes must: 
  • Reflect the results sought by the school
  • Reflect the priorities as established by the board
  • Comply with the requirement for a balanced budget
  • Ensure adequate working capital
  • Demonstrate an appropriate degree of conservatism in all estimates

Financial Condition

The financial viability of the organisation must be protected at all times. Therefore, the principal shall not:
  • Incur unauthorised debt
  • Violate generally accepted accounting practices or principles
  • Use tagged funds for purposes other than those approved
  • Spend more funds than have been allocated in the fiscal year
  • Fail to ensure all money owed to the school is collected in a timely manner
  • Fail to make timely payment to staff and other creditors
  • Sell or purchase unauthorised property
  • Fail to ensure that all relevant government returns are completed on time
  • Fail to ensure that no one person has complete authority over the school’s financial transactions
  • Make any purchases or financial commitment of over $1,000 without obtaining competitive process and quality information
  • Make any purchases or financial commitment of over $1,000 without an adequate review of ongoing cost, value and reliability

Asset Management

Assets may not be unprotected, inadequately maintained or unnecessarily risked. Accordingly, the principal may not:
  • Fail to insure assets
  • Allow unauthorised personnel to handle funds or school property
  • Subject plant and equipment to improper wear and tear or insufficient maintenance or inappropriate use
  • Fail to protect intellectual property, information and files from loss or significant damage or unauthorised access or duplication
  • Receive, process or disburse funds under controls that are insufficient to meet the auditor’s standards
  • Invest or hold operating capital in insecure accounts, or in non-interest bearing accounts except where necessary to facilitate ease in operational transactions

Principal's Interpretation

  • My interpretation of the board's requirements in this area is that the board wants to be assured that:
    • Its assets are protected,
    • Financial procedures are monitored and there is no possibility of fraud or inappropriate financial practices,
    • The reports the board receive fairly reflect the school's financial position and financial performance.

Data to Verify that the Policy Interpretation is Being Fulfilled

  • The board receives regular Financial Reports from Education Services that show income and expenditure against budgets and highlight any areas of concern.
  • The board received an unqualified audit (i.e. no major concerns) for the 2013 financial year.
  • The auditor's Management Letter for the 2013 year noted that.
 "Overall, based on our knowledge of your school and the results of our audit procedures, we again found that the financial control environment at your school to be good. The attitude towards controls and ensuring your school is being governed effectively is very positive. We were also impressed that your board appears concerned about planning and performance monitoring."
  • The auditor made several recommendations to improve our financial practice:


Auditor’s Management Letter

Action/Comment

"...that the fortnightly transactions and expenditure reports [Novopay] are scrutinised thoroughly by people independent of the routine payroll processing, if necessary by board members."

The routine payroll processing is carried out by the office administrator and scrutinised by the principal

"...that the school establish an interests register that records all BOT members, close relatives and their associated business interests".

A Register of Board Members' Business Interests has been established

"...that purchases of classroom furniture should be capitalised as classroom lots and then depreciated over their useful lives."

This has been implemented by our financial services provider

"Whilst deficit budgeting may appear to be warranted when preparing the budget, we urge caution in the use of this approach. In our view it is vital for the board to remain diligent over ways in which to improve the actual results against the budgeted deficit during the upcoming School year and to ensure that spending does not exceed those amounts approved by the board."

The board and senior staff are well aware of the school's overall financial position

"...that the principal is not involved with the authorisation of credit card payments."

This has been implemented

"...that the number of tickets sold (at the Gala) is used to prove the amount of income received and the reconciliation is retained as part of the Schools records."

Numbered tickets will be used at the next Gala.

  • As part of my review in preparation for this report I have reviewed the board's financial policy statements point by point (below).

Chicky Rudkin
Principal


Financial Planning

Budgeting shall not fail to reflect the school’s strategic results, risk financial jeopardy nor fail to show a generally acceptable level of foresight. Thus financial processes must:
1. Reflect the results sought by the school
Not okay
Okay
1 -
Not okay
00%
200%
300%
400%
5 -
Okay
1100%
2. Reflect the priorities as established by the board
Not okay
Okay
1 -
Not okay
00%
200%
300%
400%
5 -
Okay
1100%
3. Comply with the requirement for a balanced budget
Not okay
Okay
1 -
Not okay
00%
200%
300%
400%
5 -
Okay
1100%
4. Ensure adequate working capital
Not okay
Okay
1 -
Not okay
00%
200%
300%
400%
5 -
Okay
1100%
5. Demonstrate an appropriate degree of conservatism in all estimates
Not okay
Okay
1 -
Not okay
00%
200%
300%
400%
5 -
Okay
1100%
Comment/Evidence
We continue to finish the year with a strong working capital and although we have a plan for a deficeit budget for 2014 we will still finish the year with a positive working capital

Financial Condition

The financial viability of the organisation must be protected at all times. Therefore, the principal shall not:
1. Incur unauthorised debt
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
2. Violate generally accepted accounting practices or principles
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
3. Use tagged funds for purposes other than those approved
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
4. Spend more funds than have been allocated in the fiscal year
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
5. Fail to ensure all money owed to the school is collected in a timely manner
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
Comment/Evidence
no comment
6. Fail to make timely payment to staff and other creditors
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
7. Sell or purchase unauthorised property
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
8. Fail to ensure that all relevant government returns are completed on time
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
9. Fail to ensure that no one person has complete authority over the school’s financial transactions
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
10. Make any purchases or financial commitment of over $1,000 without obtaining competitive process and quality information
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
11. Make any purchases or financial commitment of over $1,000 without an adequate review of ongoing cost, value and reliability
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
Comment/Evidence
no comment

Asset Management

Assets may not be unprotected, inadequately maintained or unnecessarily risked. Accordingly, the principal may not:
1. Fail to insure assets
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
2. Allow unauthorised personnel to handle funds or school property
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
3. Subject plant and equipment to improper wear and tear or insufficient maintenance or inappropriate use
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
4. Fail to protect intellectual property, information and files from loss or significant damage or unauthorised access or duplication
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
5. Receive, process or disburse funds under controls that are insufficient to meet the auditor’s standards
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
6. Invest or hold operating capital in insecure accounts, or in non-interest bearing accounts except where necessary to facilitate ease in operational transactions
Not Okay
Okay
1 -
Not Okay
00%
200%
300%
400%
5 -
Okay
1100%
Comment/Evidence
no comment