Agenda item

To consider a report by the Head of Internal Audit, which provided details of the recent Internal Audit report on the Management of School Funds that received a ‘Low’ assurance rating (copy enclosed).

 

A report by the Head of Internal Audit (HIA), which informed the Committee of a recent Internal Audit Report on the Management of School Funds which had received a ‘Low’ assurance rating, had been circulated previously.

           

The Committee received an Internal Audit Progress report for each meeting which included details of Internal Audit reports issued, and these were normally ‘High’ or ‘Medium’ assurance reports.  The Committee would receive a report when a ‘Low’ or ‘No’ assurance rating was issued to enable it to discuss improvements to be implemented with the relevant manager.  The full Internal Audit report on the Management of Voluntary School Funds had been included as Appendix 1.

 

The HIA provided a detailed summary of the report and explained that the review had been undertaken to provide assurance on financial controls within the management of voluntary school funds for the Council’s S151 Officer, and the HIA’’s Annual Audit report.  The review had identified weaknesses which could lead to financial loss, error and/or fraud.  It was explained that the issues arising from the review would need to be brought to the attention of all Denbighshire schools.

 

The responsibility for a school’s voluntary school fund rested ultimately with the school’s Governing Body, although in practice operational responsibility would be delegated to the Head Teacher.  Governing Bodies must ensure that funds were utilised appropriately in an open and transparent way, and for the benefit of pupils.

 

The review identified a significant number of weaknesses in the management and administration of school funds.  There was also a lack of clarity around the roles and responsibilities of the school finance managers, Education Support team and Internal Audit with regard to school funds to optimise governance and scrutiny of these funds.  Guidance has previously been provided to all schools, although some have not applied them or were still unaware of them.  Audit will work with Education Support to update and reissue this guidance document to improve schools effective management of funds.  The full list of the weaknesses found had been included in Appendix 1, and a list of causes included in the Action Plan.

 

The HIA made reference to the following salient points:-

 

-               Eight main issues, root causes, had been identified and listed in the report.

-               Root Cause No 3 was highlighted – “Nobody had taken responsibility for making a decision on how schools would be held to account for poor school fund management and made sure that it was included in the Scheme for Financing Schools”.

-               The need to identify responsibility and accountability was highlighted, and the importance and significance of providing Audit Certificates was emphasised.  He confirmed that guidance information detailing how school funds should be managed had been circulated to schools previously, and this had included spreadsheets and a copy of the Audit Certificate for completion.  Councillor M.L. Holland endorsed the view that all Audit Certificates should be completed and submitted accordingly.

 

The following responses were provided to issues raised by Mr P. Whitham:-

 

-               It was agreed that details of the aggregate annual turnover and end of year balances of the schools reviewed could be forwarded to Mr Whitham.

-               Concerns were expressed that Internal Audit had not received final Audit Certificates for any of the schools that had closed or amalgamated in the last five years.  The HIA explained that funds would have transferred to the new school.

-               The Action Plan had been agreed by the HIA and Education Planning and Resources Manager.

-               There having been no clear acceptance of responsibility by the respective parties had been a cause for concern.

 

The WAO Representative (AV) stressed the importance of the need for School Governing Bodies to accept responsibility for the management and administration of school funds, and emphasised the risk element of failing to ensure that there were appropriate arrangements in place to manage these funds.  He felt that there should be clear communication reminding School Governing Bodies of their responsibilities.

 

The HIA highlighted the importance of ensuring that the information circulated to the schools Business Finance Managers was disseminated to the Governing Bodies.  The CFO also referred to the need to refocus on the operation of the School Budget Forum and its priorities.

 

During the ensuing discussion the HIA agreed to liaise with the Education Planning and Resources Manager to agree the most effective process for ensuring that the relevant information was circulated to all Chairs of Governing Bodies.

 

At the request of the Committee it was agreed that a progress report be presented to the Committee in January, 2017, and that the Education Planning and Resources Manager be invited to attend.

 

Following further discussion, it was:-

 

RESOLVED – that the Corporate Governance Committee:-

 

(a)          accepts the assurance that the Action Plan within the report was being implemented effectively and within the agreed timescales.

(b)          requests that the HIA liaise with the Education Planning and Resources Manager to agree the most effective process for ensuring that the relevant information was circulated to all Chairs of Governing Bodies.

(c)          agrees that details of the aggregate annual turnover, and end of year balances of the schools reviewed, be forwarded to Mr Whitham, and

(d)          requests that a progress report be presented to the Committee in January, 2017.

     (IB, IL to Action)