Finance Policy

Finance Policy

November 2017

Finance policy

R&S committee November 2017

Contents

1 Introduction

2 Organisation

3 Accounting System

4 Financial Planning

5 Payroll

6 Purchasing

7 Income

8 Cash Management

9 Fixed Assets

10Whistle Blowing

11Risk Register

ContinU Plus Academy

Finance Policy & Procedures

The main purpose of this Policy is to set a framework for sound financial management and boundaries within which the Executive Principal, Governors and staff can operate. The school’s financial arrangements comply with the current Academy financial regulations.

Governors agreed this revised policy at a Full Governing Body meeting on 4 December 2017

Signed by: -

Principal

Chair of Governors

Resources and Structures committee will ensure compliance with the requirements of the Academy Financial hand book, funding arrangements and other relevant documents. Good working practices will ensure that:

-Financial planning secures the academy’s short and long term financial health

-Governors and managers are kept well informed of the academy’s current and forecast financial position

-The Academy has in place sound internal controls and risk management over its operations

-Proper and regular use of public funds and that the academy can demonstrate that funds granted by Parliament have been used as intended.

-Governors must ensure that the academy operates in a transparent, ethical and accountable way.

1. Introduction

1.11The purpose of this manual is to ensure that the academy maintains and develops systems of financial control which conform tothe requirements both of propriety and of good financialmanagement.It is essential that these systems operate properly to meet the requirements of our funding agreement with theDepartment for Education (DfE).

1.2 The academy will comply with the principles of financial control outlined in the academies guidance published by the DFE. This manual expands on that and provides detailed information on the academy's accounting procedures and system manual and shall be read by all staff.

2. Organisation

2.1 The academy has defined the responsibilities of each person involved in the administration of academy finances to avoid the duplication or omission of functions and to provide a frameworkof accountability for the GB andstaff. The financial reporting structure is illustrated below:

The Governing Body

2.2 The GB has overall responsibility for the administrationof the academy's finances. The main responsibilities of the GBare prescribed in the Funding Agreement between the academy and the DfE and in the academy's scheme of government. The main responsibilities include:

• Ensuring that grant from the DfE is used only for the purposes intended;

• Ensuring that funds from sponsors are received according to the academy's

Funding Agreement, and are used only for the purposes intended;

• Approval of the annual budget;

• Appointmentof the Principal

The Resource & Structure Committee

2.3The Resource & Structure Committee is a committee of the GB. The Resource and Structure Committee meets at least once a term but more frequent meetings can be arranged ifnecessary.

2.4The main responsibilities of The Resource & Structure Committee are detailed in written terms of reference which have been authorised by the GB. The main responsibilitiesinclude:

• Approval of the annual budget having considered the Academy's

development plan and management plan, for GBapproval.

• To provide guidance to the GB and its Committees on financial matters.

• To monitor the financial affairs of the Academy and to report as

appropriate/termly to the GB.

• To agree financial policies for full GBapproval.

• To consider auditors' reports and arrange for the auditing of any Academy

Funds.

• To monitor finance reporting to the DfE.

• To consider any other financial matters and take appropriate action.

• Ratify and monitor Academy health and safety policy

• Ratify and monitor security policy

• To monitor the work of the Facilities Management arm of the academy

• Ensure that an annual survey of the Academy premises takes place and

reports are received.

• Monitor expenditure and quality, oncontracts

• Ensure the annual accounts are produced in accordance with the

requirements of the Companies Act 1985 and the DFE guidance issued to academies;

• To authorise the award of contracts over £50,000

• To authorise changes to the academy personnel establishment

• Review the reports of the Responsible Officer on the effectiveness of the financial procedures and controls. These reports must also be reported to the GB.

The Head Teacher

2.5Within the framework of the academy development plan as approved by the board the Head Teacher has overallexecutive responsibility for the academy's activities including financial activities. Much of the financial responsibility has been delegated to the Chief Financial Officer under the terms of a Service Level Agreement provided by Severn Academies Educational Trust but the Head Teacher still retains responsibility for:

• approving new staff appointments within the authorised establishment, except for any senior staff posts which the GB have agreed shall be approved by them;

• authorising contracts between £10,000 and £50,000 in conjunction with the R&S Committee.

• signing cheques in conjunction with other authorised signatories.

Chief Financial Officer

2.6The CFOworksin close collaboration with theHead teacher through whom he or she is responsible to the GB. The CFOalso has direct access to the GB members via the Resource and Structure Committee. Themain responsibilities of the CFOare:

• The day to day management of financial issues including the establishment and operation of a suitable accounting system;

• The management of the academy financial position at a strategic and operational level within the framework for financial control determined by the board;

• The maintenance of effective systems of internal control;

• Ensuring that the annual accounts are properly presented and adequately supported by the underlying books and records of the academy;

• The preparation of monthly management accounts;

• Authorising orders below £10,000 in conjunction Head teacher;

• Ensuring forms and returns are sent to the DfE in line with the timetable in the DfE guidance.

The Responsible Officer

2.7The Responsible Officer (RO) is appointed by the board and provides board members with an independent oversight of the academy's financial affairs. The main duties of the RO are to provide the board with independent assurance that:

• The financial responsibilities of the board are beingproperly discharged;

• Resources are being managed in an efficient, 'economical and effective manner;

• Sound systems of internal financial control are being maintained and

• Financial considerations are fully taken into account in reaching decisions.

2.8The Responsible Officerwill undertake a programme of reviews to ensure that financial transactions have been properly processed and that controls are operating as laid down by the GB. A report of the findings from each visit will be presented to the Resource & Structure Committee.

Other Staff

2.9Other members of staff, primarily the Business Manager and budget holders, will have some financial .responsibilities and these are detailed in the following sections of this manual. All staff are responsible for the security of academy property, for avoiding loss or damage, for ensuring economy and efficiency in the use of resources and forconformity with the requirements of the academy's financial procedures.

Register of Interests

2.10It is important for anyone involved in spending public money to demonstrate that they do not benefit personally from the decisions they make. To avoid any misunderstanding that might arise all academy GB members and staff, with significant financial or spending powers, are required to declare any financial interests they have in companies or individuals from whichthe academy may purchase goods or services, The register is open to public inspection.

2.11 The register shall include all business interests such as directorships, share holdings or other appointments of influence within a business or organisation which may have dealings with the academy. The disclosures shall also include business interests of relatives such as a parent or spouse or business partner where influence could be exerted over a board member or amember of staff by that person.

2.12The existence of a register of business interests does not, of course, detract from the duties of board members and staff to declare interests whenever they are relevant to matters beingdiscussed by the GBor a committee. Where an interest has been declared, boardmembers and staff shall not attend that part of any committee or other meeting.

3. Accounting system

3.1 All the financial transactions of the academy must be recorded on the approved accounting system. The system is operated by the SAET Finance Department at Stourport High School & VIth Form College.

System Access

3.2 Entry to the accounting system is password restricted and the CFOis responsible for implementing a system which ensures that passwords are changed as appropriate.

3.3 Access to the component parts of the accounting system can also be restricted and the CFOis responsible for setting access levels for all members ofstaff using the system.

Back-up Procedures

3.4 TheCFOis responsible for ensuring that there are effective back up procedures for the system.Data shallbe copied onto a form of removable medium andthe copies stored in a secure place preferably in a fireproof container. Backup copies shall betaken daily.

3.5The back-ups shall not be recorded on the same removable medium each time as this may result in only one copy being available. In order to provide more protection from the loss of data at least three different removable mediums shall be used in rotation and stored in different locations. At least one copy shall be stored off-site.

3.6CFOshall also prepare a disaster recovery plan in the event of loss of accounting facilities or financial data. This shall link in with the annual assessmentmade by board members of the major risks to which the academy is exposed and the systemsthat have been put in place to mitigate those risks.

Transaction Processing

3.7All transactions input to the accounting system must be authorised in accordance with the procedures specified in this manual. The detailed procedures for the operation of the payroll, the purchase ledger and the sales ledger are included in the following sections of the manual. Bank transactions shall be input by the Finance Assistant and the input shall be checked, and signed to evidence this check, by the Finance Manager.

3.8Detailed information on the operation of the accounting system can be found in the user manuals via the Help Section of PS Financials.

Transaction Reports

3.9CFOwill obtain and review system reports to ensure that only regular transactions are posted to the accounting system. The report obtained and reviewed will include:

• Thefortnightlybank reconcilations during term time;

• Reports for the payroll, purchase ledger and sales ledger;

• Management accounts summarising .expenditure and income against

budget at budget holder level.

Reconciliations

3.10The Finance Manager is responsible for ensuring the following reconciliations are performed each month, and that any reconciling or balancing amounts are cleared:

• Sales ledger control account;

• purchase ledger control account;

• Payroll control account;

• All suspense accounts and

• Bank balance per the nominal ledger to the bank statement.

3.11Any unusual or long outstanding reconciling items must be brought to the attention of theCFOwill review and sign all reconciliations as evidence of his review.

4. Financial planning

4.1 The academy prepares both medium term and short-term financial plans.

4.2 The medium term financial plan is prepared as part of the development planning process. The development plan indicates how the academy's educational and other objectives aregoing to be achieved within the expected level of resources over the next three years.

4.3 The development plan provides the framework for the annual budget. The budget is a detailed statement of the expected resources available to the academy and the planned use of those resources for the following year.

4.4 The development planning process and the budgetary process are described in more detail below.

Development Plan

4.5 The development plan is concerned with the future aims and objectives of the academy and how they are to be achieved; that includes matching the academy's objectives and targets to the resources expected to be available. Plans shall be kept relatively simple and flexible. They are the "big picture" within which more detailed plans may be integrated.

4.6 The form and content of the development plan are matters for the academy to decide but due regard should be given to the matters included within the guidance to Academies and any annual guidance issued by the DfE.

4.7 Each year the Head teacher will propose a planning cycle and timetable to the R&S which allows for:

• A review of past activities, aims and objectives

• Definition or redefinition of aims and objectives

• Development of the plan and associated budgets

• Implementation,monitoring and review of the plan

• Feedback into the next planning cycle

4.8The timetable will specify the deadlines for the completion of each of the key stages described above. Lead responsibility for the completion of each of the stages will be assigned by the Head Teacher.

4.9The completed development plan will include detailed objectives for the coming academic year and outline objectives for the following two years. The plan shall also include the estimated resource costs, both capital and revenue, associated with each objective and success criteria against which achievement can be measured.

4.10For each objective the lead responsibility for ensuring progress is made towards the objective. .

Annual Budget

4.11 CFO is responsible for preparing and obtaining approval forthe annual budget. The budget must be approved by the Head teacher,Resources Structures Committeeand the FGB.

4.12 The approved budget must be submitted to the DfE by 31 July each year and CFOis responsible for establishing a timetable which allowssufficient time for the approval process and ensures that the submission date is met.

4.13 The annual budget will reflect the best estimate of the resources available to the academy forthe forthcoming year and will detail how those resources are to be utilised. There shall be aclear link between the development plan objectives and the budgeted utilisation of resources.

4.14 The budgetary planning process will incorporate the following elements:

• Forecasts of the likely number of pupils to estimate the amount of DfE grant receivable;

• Review of other income sources available to .the academy to assess likely level of receipts;

• Review of past performance against budgets to promote an understanding of the academycost base;

• Identification of potential efficiency savings and

• review of the main expenditure headings in light of the development plan objectives and the expected variations in cost e.g. pay increases, inflation and other anticipatedchanges.

Balancing the Budget

4.15 Comparison of estimated income and expenditure will identify any potential surplus or shortfallin funding. If shortfalls are identified, opportunities to increase income shall be explored andexpenditure headings will need to be reviewed for areas where cuts can be made. This mayentail prioritising tasks and deferring projects until more funding is available. Plans andbudgets will need to be revised until a satisfactory surplus of income over expenditure isidentified.

Finalising the Budget

4.16Once the different options and scenarios have been considered, a draft budget shall beprepared by CFOfor approval by the Head Teacher, theResourcesStructure Committee and the FGB. The budget shall be communicated to allstaff with responsibility for budget headings so that everyone is aware of the overall budgetaryconstraints.

4.17 The budget shall be accompanied by a statement of assumptions and hierarchy of prioritiesso that if circumstances change, it is easier for all concerned to take remedial action. Thebudget shall be seen as a working document which may need revising throughout the year ascircumstances change.

Monitoring and Review

4.18 Monthly reports will be prepared by the CFO. The reports will detail actual income and expenditure against budget both for budget holders and at a summary level for the Head Teacher and the Resource & Structure Committee.

4.19 Any potential overspend against the budget must in the first instance be discussed with the CFO. The accounting system will not allow payments to be made against an overspent budget without the approval of the CFO.

4.20 The monitoring process shall be effective and timely in highlighting variances in the budget so that differences can be investigated and action taken where appropriate, If a budget overspend is forecast it may be appropriate to transfer money from another budget or from the contingency.Budget virements may be agreed by the Head Teacher in conjunction with the CFO if there is no changeto the overall position of the budget. All budget adjustments that impact on the overall position of the budget must be authorised bythe ResourcesStructures Committee.

5. Payroll

5.1 The main elements of the payroll system are:

• Staff appointments;

• Payroll administration and

• Payments.

Staff Appointments

5.2 The GB has approved a personnel establishment for the academy. Changes can only be made to this establishment with the express approval, in the first instance of the Head Teacher who must ensure that adequate budgetary provision exists for any establishment changes.

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5.3 The Head Teacher has authority to appoint staff within the authorised establishment except for Deputy and Associate Principal whose appointments mustfollow consultation with the GB members. The Business Managermaintainspersonnel files for all members of staff which include contracts of employment. All personnel changes with a budgetary implication must be notified, in writing, to Finance Officeon a monthly basis.

Payroll Administration

5.4The academy payroll is administered by the Liberata.The reports from Liberata are analysed and approved before the payroll run. Access to the system is password controlled. Password controlprocedures andback-up arrangements are described in section two of this manual.