"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
Each governing board has a statutory responsibility for the financial management of the delegated budget in their school. As a whole, they are accountable for the standards of education provided and for balancing cost and effectiveness. Above all, governors need to ensure that they achieve the best possible outcomes for their pupils in the most efficient way.
Ofsted Inspectors are required to establish the governing board's application of Best Value principles as part of their inspection. The Schools Financial Value Standard (SFVS) began in September 2011. It was been designed in conjuction with schools to assist them in managing their finances and to give assurance that they have secure financial management in place. Governing boards have formal responsibility for the financial management of their schools, and so the standard is primarily aimed at governors. Maintained schools are required to complete the SFVS once a year. SFVS is not externally assessed but Local Authorities may use schools' SFVS returns to inform their programme of financial assessment and audit.
The whole governing board decides how to spend the budget and must approve the school budget plan submitted to the LEA at the beginning of the financial year. The governing board should also approve any changes to the budget plan during the year, unless it delegates this function to the Finance Committee.
Most governing boards would find it difficult to manage their financial responsibilities without a Finance Committee. The Finance Committee acts on behalf of the governing board, and reports back to them on decisions taken. Good Governing boards will have sound structures for managing these responsibilities through the Finance Committee, with all governors understanding clear terms of reference and delegated powers.
The Finance Committee links the priorities in the School Improvement Plan to the budget, and evaluates the effect in the school of investing in these priorities. It monitors expenditure and income and takes action to revise the budget plan if the budget position is not in line with the set budget plan.
The Committee also plans ahead (preferably for three years) by reviewing the priorities in the School Improvement Plan and factors such as pupil projections, condition of the school and realistic lifespan of equipment/resources to determine potential pressures on the budget.
Governors on the Finance Committee need to build up their expertise in this particular area, and to share that expertise with new members of the Committee. A Finance Governor does not need a financial background, but does need an interest in the best use of resources. Governors have no authority as an individual, only as a corporate body. The authority must be properly agreed and delegated to the Finance Committee by the whole governing board. This means that governors on the Committee need to know the limitations of their powers and act accordingly, including reporting back to the governing body on the decisions they have undertaken on their behalf.boardAll Governors
All governors should have a clear understanding of the following:
The statutory responsibility for oversight of financial management within the school lies with the whole governing board. Therefore, all governors should ensure that they have access to sufficient information to judge whether the budget is being used effectively, and should raise questions at the governing board meeting to clarify any areas of uncertainty or concern.
Information the Committee needs
It is for each governing board to determine their own requirements but we would recommend the information described below as a minimum.
We would recommend the information described below as a minimum:
Other Matters to Consider
The Committee should plan ahead, preferably for three years, by determining potential pressures on the budget, for example:
Voluntary Funds and Private Funds
The Committee should know the requirements for audit or independent examination, and whether the fund needs to be registered under the Charities Act 1993. At the time of printing, it was likely to be beneficial to register if this type of income exceeded £1000 per year. For the latest information contact the Charities Commission or call 0870 3330123. The governing body should also receive audited/examined accounts annually.
Links with other Committees
Governors' Annual Report
It is a statutory requirement that a financial statement is included in the annual report. The governing board should:
For more information on indicative budgets for future years, finacial modelling, information on the LMS Handbook Financial Regulations and Instructions, School Cost Comparisons or school financial audits, and support to staff and governors on all aspects of financial management training, contact the Finance Service Centre on 01296 382222 or email@example.com.
For more information on pupil number projections, comparative performance data and financial school profiles, contact the School Management Support Team on 01296 382599 or firstname.lastname@example.org
DfE Schools Financial Management - includes benchmarking and Spending Data