1704 Operations Policy Review: Finance - 13 April 2017

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 policies 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 2015 financial year (Note: The audit for the 2016 year has yet to be completed).

  • The auditor's Management Letter for the 2015 year noted that.

The Day-to-Day Accounting System

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.”

“Our Sincere Thanks

We would like to take this opportunity to thank the Principal and Financial Administrator for their assistance and co-operation during our audit. The assistance from the school team greatly influences the efficiency of the whole audit process.

We would also like to thank the trustees for selecting Bennett & Associates as your auditors. We appreciate our relationship with your School and look forward to continuing to provide a valuable service to you.”

  • The auditor made several recommendations to improve our financial practice:

Auditor’s Management Letter Recommendations


Order Books

We understand it is the school's policy to use order forms for all purchases. While we commend this policy we noted during our testing of supplier invoices that order forms were not always used.

HWe suggest that the school’s policy on order formas be consistently applied. We recommend that the person who orders the goods or services puts the account code, (to which the goods or services are to be posted), on the order form as this helps reduce errors in ledger keeping. A copy of the order should also be attached to the invoice to ensure that only invoices authorised for purchase by budget holder's are actually paid.

All staff have been reminded that order forms must be used for all purchases.

We do not have an additional copy of the Order to be attached to the Invoice.

The administration officer reconciles invoices with the book copy of the order.

Authorisation of Invoices

During our testing of the control environment we noted that some creditor's invoices had not been authorised for payment, The approval of invoices prior to their payment helps ensure that they are valid and correct and is an essential internal control in any business,

We recommend that all invoices be authorised by the delegated person prior to their payment.

This is as per our procedures. We need to ensure that we follow the agreed procedures.

Prompt Banking

When testing bank we noted that cash on hand was $6,070. In our view, where warranted, banking should be completed at least once a month or when cash on hand totals $500 or more.

It is recommended that banking be done at least once a month, depending on funds held

This has been implemented.

Novopay Transaction Report

During our testing of payroll we noted that the transaction report did not appear to have been reviewed by an independent person.

The Novopay transaction report records all changes processed by the School into Novopay each fortnight. As such it is a control of the processing done by the School. In our view, as it is a control report, it should be printed and it should include evidence of review that an independent check of the report has taken place.

We recommend that the transaction report be reviewed and signed by someone independent of Νονομιαν processing.

Novapay processing is done by the administration officer. Checking is done by the principal.

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

Chicky Rudkin