ABCSCHOOL FINANCIAL PROCEDURES MANUAL
SECTION 2 – INTERNAL FINANCIAL CONTROL
2.1Separation of Duties
ABCSchool maintains this detailed procedures manual that reflects the day-to-day management of financial administration. As far as possible, the allocation of duties has been made to ensure that the same person is not responsible for a process from start to finish in order to reduce the risk of error or intentional manipulation. Where this is not possible, the Headteacher or [NAME, e.g. Finance Manager, Bursar, secretary, etc] undertakes some form of internal check, e.g. review the bank reconciliations, signing of trip reconciliations, review of paying-in slips, etc. As far as is possible, the following functions are separated:
- Authorisation
- Execution
(E.g. the authorisation of orders and invoices is separated from the placing of orders and raising of cheques, etc)
- Custody
- Recording
(E.g. the responsibility for managing assets is separated from the recording of items on the inventory and again from the annual checking process, etc.)
- The responsibility for system development from the operation of the system
- Access profiles
(E.g. the development of the computer-based packages is separated from the day-to-day users and profiles are set within the system to restrict access to specific areas only.)
For expenses incurred by the Headteacher, approval is obtained from either the Chair of Finance or Chair of Governors and the other two authorised signatories sign cheque reimbursements.
In the event of long-term absence of any of the post holders, their responsibilities should be delegated upwards until alternative arrangements can be made.
2.2Approved Signatories
Authorisation on an action, transaction, etc is a key internal control. Staff are expected to exercise authority only where they have been delegated the power to do so. In any event, authorisation should be clearly recorded by the individual’s signature and printed name. The finance office will maintain specimen signature schedules. External agencies, notably the payroll provider, will be notified of changes to authorised personnel promptly.
All orders and invoices are authorised for payment by the delegated Budget Holder. Details of all Budget Holders are held within the accounting package and the [NAME, e.g. Finance Manager, Bursar, secretary, etc] holds a separate list detailing the name of the budget holder, their signature and any restrictions to their signing limits (refer to Appendix B). This record is retained securely.
2.3Maintenance of Complete and Permanent Records
ABCSchool ensures that complete financial records are maintained at all times so that transactions are traceable from the original documentation to the accounting records and vice versa. Where amendments are required, the person making the change initials the alteration. All manual records are completed in ink and correcting fluid is not used. All records are authorised or approved independently from the person completing them, e.g. approval of the costing for a residential journey or day visit, bank reconciliations, etc and the records are signed to reflect this. Records are retained for the length of time reflected in the HCC Financial Handbook for Schools, Section 4.
Security arrangements regarding IT security, access, backup procedures, etc are covered in Section 21 to this manual.
2.4Review and Assessment of Procedures
On an annual basis, the [NAME, e.g. Chair of Governors, Chair of Finance, Headteacher, etc] undertakes a self-assessment of each of its financial systems to ensure that effective controls are in place. The results of this assessment is discussed with the Finance Committee and then used by the Headteacher and Chair of Governors as supporting documentation for the signing of the annual Statement of Internal Control (SIC). The SIC is designed to give reasonable assurance that all the funds managed by a school have been properly controlled and accounted for (refer also to Section 5).
2.5Audit Arrangements
The governors of ABCSchool will ensure that access to financial records will be given to internal and external auditors, Registered Inspectors or their inspection teams and Her Majesty’s Taxation Authorities for the purposes of audit inspection.
2.6Internal Audit (by the Local Authority)
All aspects of the school’s financial operation are subject to audit by the Local Authority.
The Chair of Governors and the Headteacherareordinarily advised in advance of when an audit is to take place. At the close of the audit a verbal report is made to the Headteacher and financial administrator and to any governors who wish to attend. This gives the opportunity for clarification of issues or queries. Following this verbal report, a written report is issued to the Headteacher. The Headteacherreviews the factual accuracy of the report and the recommendations set out in it, and produces an action plan within three weeks of the issue date, which is returned to Internal Audit.
A copy of this response will be sent by Internal Audit to the Chair of Governors recommending it is placed on the next agenda of the Governing Body.
Should any financial irregularity be suspected, the Governing Body will notify the Chief Internal Audit immediately.
2.7Risk Management
ABC School undertakes a regular review of the areas of risk within the school both in terms of people and premises, taking into consideration the guidance set out in the Local Authority ‘Property Matters’ document, including the following areas:
- identifying and assessing risks
- determining appropriate actions
- implementing the actions
- monitoring the results
- providing feedback
The Headteacher of ABC School leads on the assessment process and determines the possibility of an event occurring. The findings of the risk assessment exercise / update are formally reported back to governors and reflected in the minutes of their meetings.
The assessment of risks faced by the school and the arrangements for managing these may be recorded on a risk register, such as illustrated at Appendix A.
Page 1