How financial service providers help schools

Making sure that school accounts are reported correctly and that all auditing requirements are met can be stressful and time-consuming.

There are different responsibilities for Boards of Trustees, principals, and proprietors that must be adhered to, and while budgeting and financial planning is a top priority for all schools, it’s something that can quickly become overlooked, resulting in some nasty end-of-year surprises.

At minimum, School Boards should be regularly meeting to review approved governance policies around theft and fraud prevention, cash management, sensitive expenditure, delegations, credit cards, travel, and entertainment. Any conflicts of interest should be updated, and each year should begin with a review and approval of the school’s budget statement of comprehensive income, financial position, and statement of cashflow.

Partnering with a school accounting professional is one way to streamline the process and there are a few ways these partnerships can benefit schools, such as software solutions, guidance on forward planning, budgeting, financial reporting, training, and financial planning assistance. 

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Service providers can prepare monthly financial reports for Boards to review, detailing income, expenditure, and outlines of any variances. Some schools will just want an external provider to put their annual financial statement together, while others will require a quarterly review of in-house systems, or want a provider to pay the schools bills and minimise any risk of fraud or misappropriation.

External service providers can also draft financial statements for review prior to auditing. Enquiring with your auditor can also be a great place to start when choosing a service provider.

Generally, the school executive officer would be the person liaising on a regular basis with any external service provider, and then the school principal and treasurer would be involved in budgeting, and other reporting debriefs as required. 

Once the budget is set and approved by the Board, it cannot be changed, so regular check-ins and accurate reporting are essential for schools to assess needs and re-forecast for the remainder of the year. It is normal for some areas of the budget to have been exceeded and others under-utilised. For instance, emergency repairs, differences in numbers of staff and students, ratios of subject selection, and fluctuations in school events, can change on a dime and impact resourcing. Keeping track of these changes throughout the year is what is crucial to pre-empt and hopefully prevent any future financial troubles.

Industry perspective: common financial mistakes schools make

Given this year is a School Board election year, we asked for some industry expertise on how incoming members might avoid common mistakes boards tend to make around school finances…

Education Services Managing Director, Peter McBreen advised us that “one of the biggest mistakes new board members make is not understanding their role, which is one of Governance rather than of doing”.  

“New members should not fall into the trap of getting involved with the reporting and recording of transactions. By all means, they should ask questions, so they understand how the information was obtained, and perhaps make suggestions or request further reporting to help with governance, but leave the day-to-day stuff to school staff.” 

 Thanks to COVID, finance priorities have shifted for many schools. Heading into 2023, Peter suggests schools focus on specificity in their budgets and accuracy in their reporting.  

He explained: “The same rings true whether times are tough, or not; it is imperative you have access to timely, accurate reporting so you know exactly where you are compared to budget, and you get a full statement of financial position that helps you keep track. 

“It is always best if you have school specific reports because having an off-the-shelf accounting package designed for a small business is not particularly helpful for schools. Further, make sure you have a robust budgeting package and ask for assistance from your service provider if you need it as they see a lot of schools’ financial information and will be able to assist when setting your budget.” 

During the year: “Keep in contact with your provider and get regular updates, so there are no nasty surprises when the end-of-year approaches.” 

“Do remember, in general it is more cost-effective to use a service provider” as “then you have constant access to a school financial expert, which means you can concentrate more on education.”