Finance Manual – Financial Management for Schools

Refer to the Resources tab for a link to the Cases21 Portal (under the heading ‘Schools support’).

Policy

This policy sets out requirements for schools and school councils when managing school-related finances.

The Finance Manual is set out in the Guidance tab.

Summary

• Victorian government schools have a devolved decision-making and financial management system. Responsibility for financial management is shared between the school council and the principal.
• School staff responsible for financial management must meet mandatory requirements regarding financial compliance, control and accountability as set out in the Finance Manual.
• This policy reflects the department’s current financial reporting framework, best practice financial management and aligns with applicable Australian accounting standards, the Education and Training Reform Act 2006 (Vic) and the Financial Management Act 1994 (Vic).
• A complete list of all resource documents and tools relating to the Finance Manual is available on the Resources tab, in addition to being available on each relevant Finance Manual section.

Details

Schools and school councils must:

• adhere to all mandatory (must do) policy as outlined in the Finance Manual
• adhere to all prohibited (must not do) policy as outlined in the Finance Manual.

For a complete list of all resources relating to the Finance Manual, refer to the Resource tab.

Definitions

Finance Manual
The Finance Manual means the Finance Manual for Victorian government schools, as specified and defined in Ministerial Order 1174. Each section of the Finance Manual is set out in the Guidance tab on each of the pages listed above.

The following acronyms and definitions are commonly used throughout the sections of the Finance Manual listed above. These acronyms and definitions must be read in conjunction with the definitions contained in the Education and Training Reform Act 2006 (Vic) and the Education and Training Reform Regulations 2017 (Vic).

Other relevant definitions are set out below.

Related policies

• Annual Report to the School Community
• Conflict of Interest
• Community Use of Schools – Hiring and Licensing
• Fraud and Corruption Control
• Gifts, Benefits and Hospitality
• Insurance for Schools
• Occupational Health, Safety and Wellbeing Management in Schools
• Parent Payments
• Parents' Clubs
• Part-time Employment – Teaching Service
• Procurement – Schools
• Records Management – School Records
• Risk Management – Schools
• School Council Employment
• Sponsorship
• Student Resource Package – Overview
• Student Resource Package – School Infrastructure
• Student Resource Package – School Specific Programs
• Student Resource Package – Targeted Initiatives
• Student Resource Package – Core Student Learning Allocation (Student Based Funding)
• Student Resource Package – Equity Funding (Student Based Funding)
• Student Resource Package – Managing the Budget
• Taxation – Employees and Income Tax
• Travel
• Travel and Personal Expenses – Teaching Service
• Workers' Compensation

Relevant Legislation

• A New Tax System (Australian Business Number) Act 1999 (Cth)
• A New Tax System (Goods and Services) Act 1999 (Cth)
• Asset Management Accountability Framework (Vic)
• Audit Act 1994 (Vic)
• Australian Accounting Standards Board (AASB)
  • AASB 7 Financial instruments
  • AASB 13 Fair Value Measurement
  • AASB 101 Presentation of Financial Statements
  • ASSB 107 Statement of Cash Flows
  • AASB 116 Property, Plant and Equipment
  • AASB 117 Leases and AASB
  • AASB 118 Revenue
  • AASB 120 Accounting for Government Grants and Disclosure of Government Assistance
  • AASB 123 Borrowings
  • AASB137 Contingent Liabilities and Contingent Assets
  • AASB 138 Intangible Asset
  • AASB 139 Financial Instruments Recognition and Measurement
  • AASB 1004 Contributions
• Banking Act 1959 (Cth)
• Code of Conduct for Directors of Victorian Public Entities (as applicable to school council members)
• Code of Conduct for Victorian Public Sector Employees
• Constituting School Council Order (PDF) (Model Order)
• Education and Training Reform Act 2006 (Vic) — Part 2.2 — Government Schools
• Education and Training Reform Act 2006 (Vic) — Part 2.3 — Government School Councils
• Education and Training Regulations 2017 (Vic) — Part 4 — Government School Councils and Parent Clubs
• Financial Management Act 1994 (Vic) — Part 3 — Public Ledger and Public
• Financial Reporting Direction 103H Non-Financial Physical Assets
• Fringe Benefits Tax Assessment Act 1986 (Cth)
• Fuel Tax Act 2006 (Cth)
• Income Tax Assessment Act 1936 (Cth)
• Income Tax Assessment Act 1997 (Cth)
• Ministerial Order 1388 (PDF)
• Ministerial Order 1389 (PDF)
• Ministerial Order 1174 (staff login required)
• Public Administration Act 2004 (Vic)
• Standing Directions of the Minister for Finance 2018 under the Financial Management Act 1994 (Vic)
  • Section 2.4.2 — Chief Finance Officer — General responsibilities
  • Section 3.1 — Effective financial governance
  • Section 3.2 — Oversight and assurance
  • Section 3.3 — Financial Authorisations
  • Section 3.4 — Internal Control Systems
  • Section 3.5 — Fraud, corruption and other losses
  • Section 3.6 —Purchasing and Prepaid Debit Cards
  • Section 3.7 — Managing risk
  • Section 3.9 — Managing financial information
  • Section 4.1 — Planning and managing performance
  • Section 5.0 — Compliance and Reporting
  • Section 5.1 — Financial management compliance
  • Section 5.2 — Annual reporting
  • Section 5.3 — External reporting and information provision.
• Statement of Accounting Concepts 4 — Definition and Recognition of the Elements of Financial Statements
• Victorian Managed Insurance Authority Act 1996 (Vic)

Guidance

The Finance Manual is set out in the following sections which are accessible through the right hand menu on this page:

• Section 2 Governance
• Section 3 Risk Management
• Section 4 Internal Controls
• Section 5 School Council Financial Assurance Program
• Section 6 Budget Management
• Section 7 Chart of Accounts
• Section 8 Bank Accounts
• Section 9 Funding Sources
• Section 10 Receivables Management and Cash Handling
• Section 11 Expenditure Management
• Section 12 Trading Operations
• Section 13 Asset and Inventory Management
• Section 14 Liabilities Management
• Section 15 Taxation
• Section 16 Reporting Performance
• Section 17 End of Year (31 December)
• Section 18 End of Financial Year Reporting (30 June)
• Section 19 Financial Handover
• Section 20 Opening, Closing and Merging Schools
• Section 21 Insurance Arrangements

Section 2 Governance

2.1 Overview

The Education and Training Reform Act 2006 (the Act), the Education and Training Reform Regulations 2017 (the Regulations) and the constituting orders of school council stipulate the functions and powers of school councils including financial responsibilities. In addition, the Schedule B of the contract of employment for principal class officers outlines the financial responsibilities of principals.

As school funds are public monies, the management of these funds is subject to the requirements of the Financial Management Act 1994 (Vic), which requires schools to be publicly accountable for the budget planning, allocation and use of those funds. In addition, schools operate in a business environment and their financial practices are subject to various acts and legislation, including but not limited to the A New Tax System (Goods and Services Tax) Act 1999 (Cth), Fringe Benefits Tax Act 1986 (Cth) and Income Tax Assessment Act 1997 (Cth).

The guidelines stipulated in this policy and guidance represent the minimum level of mandatory requirements. Every effort has been made to provide the flexibility needed for the widely varying circumstances of schools, whilst maintaining the level of compliance, control and accountability expected of government establishments.

Where appropriate, authority for financial management has been devolved to provide principals and school councils with more control over the resources available to them. This enables principals and school councils to budget and make effective use of financial resources in accordance with their annual school plan.

2.2 The school council

2.2.1 Mandatory policy (Must do)

2.2.1.1

Comply with the directions set out in this manual.

2.2.1.2

The school council must maintain records in a form that will:

• ensure that all money payable to the council is properly collected
• ensure that all money expended in the council’s name is properly authorised and expended
• ensure that adequate control is maintained over assets held in the name of the council or in the council’s custody
• ensure that all liabilities incurred in the council’s name are properly authorised
• ensure efficiency and economy of operations, avoid waste and extravagance, and
• ensure adherence to prescribed Department and school policies.

2.2.1.3

Any decisions made must be recorded in the meeting minutes.

2.2.1.4

At the start of each year, and whenever subsequently necessary, school council must action the following:

• table, sign and approve end-of-year financial reports
• approve any amendments to the indicative school cash budget for the new year
• nominate and endorse signatories for all school bank accounts
• endorse the list of officers approved to authorise official order forms
• approve any proposed fundraising events for the year
• endorse proposed GST treatment of fundraising events
• endorse the treatment of GST from canteen operations (for example, input-taxed)
• minute whether the subsidised funding of camps or excursions are approved
• minute the profit and loss statement for trading operations (for example, canteen and uniform shop)
• endorse the cash handling policy
• endorse and approve the school’s request for financial contributions for the year (Parent Payments)
• endorse the school electronic funds management policy
• endorse the school purchasing card policy
• endorse the school purchasing card register (of card holders, card limits, cancellations and expiry dates)
• approve the current list of volunteers working in the school and any additions to the register during the year
• set dates for school council meetings — with a minimum of 8 (refer to: Guide to School Council Finance Motions (DOCX)).

2.2.1.5

School councils in Victoria are public entities as defined by the Public Administration Act 2004. School councillors must abide by the Directors’ Code of Conduct, issued by the Public Sector Standards Commissioner.

2.2.1.6

Obtain the permission of the regional director if they wish to purchase a motor vehicle.

2.2.1.7

Obtain the consent of the executive director, Legal Division, before commencing any legal proceedings.

2.2.2 Prohibited policy (Must not do)

2.2.2.1

A school council does not have the power to do any of the following:

• employ a teacher with no fixed date for the termination of that employment
• purchase or acquire for consideration any land or buildings unless authorised by or under the Act, the regulations or a Ministerial Order
• grant any interest in land, including school lands or buildings
• enter into hire purchase agreements
• obtain loan or credit facilities (refer to the credit facilities FAQ (DOCX) for more information)
• form or become a member of a corporation
• provide for any matter or thing outside of Victoria unless it is related to an excursion by students from a school in relation to which the council is constituted or the professional development of staff of that school
• purchase a boat or a plane.

2.3 The principal

The principal is the accountable officer of the school responsible to the Secretary (through the regional director) for financial accounting and reporting, effectiveness of audit and effective use of resources. They are the executive officer of school council and are responsible for implementing school council decisions.

2.3.1.1

Ensure that information about the school’s financial position, including the Student Resource Package (SRP) position, is made available to school council and its committees.

2.3.1.2

The principal must make available for inspection by any person interested in the work of the school, a copy of the financial statements (balance sheet and operating statement) of the school council certified by the principal and the school council president for the most recent year ending on 31 December.

2.3.1.3

The principal is a public sector employee and their role must be performed consistent with the Public Sector Values.
Refer to: Public Sector Values

2.4 Retention of financial records

Schools are responsible for the creation, management and disposal of records (electronic and hardcopy) relating to all aspects of school administration. These records include financial records, among others.

Schools must properly manage records to:

• meet legislative responsibilities
• ensure records are available when needed and destroyed when permissible
• meet administrative responsibilities to staff and students.

Schools that properly manage their records are able to store and retrieve valuable information when needed.

2.4.1 Mandatory policy (Must do)

2.4.1.1

Retain the annual financial statement permanently.

2.4.1.2

Retain other finance records for a minimum of 7 years and taxation records for a minimum of 5 years.

2.4.1.3

Comply with the Records Management — School Records policy.

2.5 Register of accountable documents

Where a school maintains physical documents a register must be maintained to catalogue accountable documents such as order books, cheque books and receipt books.

2.5.1 Mandatory policy (Must do)

2.5.1.1

When accountable documents are received, the date and the first and last serial number of each book must be entered into the register.

2.5.1.2

Accountable documents are to be issued consecutively and, when brought into use, the date of issue and the name of the person to whom issued must be recorded in the register with the receiver acknowledging the issue by initialling the register.

2.5.1.3

When completed, accountable records are to be filed. The date of the last entry in the record is to be entered in the register of accountable documents.

2.5.1.4

The accountable records must be stored securely for the required retention period.

2.5.1.5

Where a school has unused accountable documents, for example, superfluous blank cheques, (when the school has closed a bank account) the unused stationary must be shredded, and the accountable documents register must be updated and authorised with the date and reason for the disposal.

Definitions

Directors Code of Conduct
This Code of Conduct is based on the Victorian public sector values and sets the standard of behaviour expected of Directors of public entities and statutory office holders.

Public Sector Values
The values and the Code of Conduct based on the values provide the foundation of the integrity and accountability framework for all public sector employees.

SRP
Student Resource Package — Main funding mechanism for schools comprising two components. Credit — used for central salaries and Cash — used for school based expenditure.

Section 3 Risk Management

3.1 Overview

Risk management maximises the ability to deliver on departmental objectives, promotes sound decision-making for resource allocation and investment, and works to safeguard student and employee wellbeing. It also contributes towards meeting the Victorian community and government expectations for accountable and responsible use of public finances and resources.

3.2 Risk management framework

3.2.1 Mandatory policy (Must do)

3.2.1.1

Comply with the Risk Management — Schools Policy.

3.3 Fraud and corruption

Fraud is dishonest activity causing actual or potential financial loss to the Department (including theft of money or other property) and where deception is used at the time, immediately before or immediately following the activity. This also includes deliberate falsification, concealment, destruction or use of (or intention to use) falsified documentation and the improper use of information or position for personal financial benefit.

Corruption is a dishonest activity in which an executive, manager, employee or contractor acts contrary to the interests of the Department and abuses his or her position of trust to achieve some personal gain or advantage for themselves or for another person or entity.

The Department has a zero tolerance to fraud and corruption.

3.3.1 Mandatory policy (Must do)

3.3.1.1

Implement the Fraud and Corruption Control Policy.

3.3.1.2

Report fraud or corruption or suspected fraud or corruption by notifying one of the following:

• the principal or Regional Director
• the Fraud and Corruption Control Unit on 03 7022 0121 or email fraud.control@education.vic.gov.au
• the Speak Up service, phone 1800 633 462

3.4 Conflict of interest/declaration of private interest

A conflict of interest arises in circumstances where an employee’s public duty is influenced, or can be seen to be influenced, by a private interest. Private interests can be financial or non-financial and include the interests of family members and close friends.

Employees

All employees, including members of the teaching service and school council employees, have a responsibility to avoid conflict of interest that may affect their public duty.

All employees are bound by the Department’s Conflict of Interest Policy, which requires staff to identify, declare and manage conflicts of interest that arise in their work.

Employees must use the Declaration of Conflict of Interest form in eduPay to declare conflicts of interest.

School Council Members

School council members are bound by the Code of Conduct for Directors of Victorian Public Entities and have a responsibility to avoid conflicts of interest.

School council members must also follow the requirements in regulation 31 of the Education and Training Reform Regulations 2017 to manage conflicts of interest. Regulation 31 prohibits a school council member from being present for the discussion of a subject which raises a direct conflict for the member or their immediate family, unless invited to do so by the person presiding at the meeting. The school council member must not be present when a vote is taken on the member.

Where a conflict is identified, reasonable steps must be taken to address it in order to protect the public interest.

3.4.1 Mandatory policy (Must do)

3.4.1.1

Implement the Department’s Conflict of Interest Policy at school level.

3.4.1.2

All employees must comply with the Conflict of Interest Policy and declare and avoid conflicts of interest. All employees must use the eduPay Conflict of Interest Declaration Form to declare any conflicts of interests.

3.4.1.3

The principal must make a Declaration of Private Interest (DPI) on appointment and annually thereafter. It must be updated whenever required.

If any private interest in the DPI raises a conflict of interest, the principal must complete a Conflict of Interest Declaration in eduPay.

3.4.1.4

School council members must follow the requirements of the Code of Conduct for Directors of Victorian Public Entities, Education and Training Reform Regulations 2017, Part 4, r.31 for identifying, avoiding and managing conflicts of interest.

Definitions

Conflict of Interest (COI)
Conflict of Interest arises in circumstances where an employee’s public duty is influenced, or can be seen to be influenced, by a private interest.

Declaration of private interest (DPI)
Declaration made via Edupay of potential conflicts of interest including, but not limited to, other sources of income, any positions of office held in public or private companies, shareholdings and other business interests, relationships with trusts, holdings of real estate, agreements and contracts, other financial interests and any probity issues.

Section 4 Internal Controls

4.1 Overview

Internal controls are a combination of measures put in place to ensure that the financial and physical assets of the school are safeguarded (the risk of theft and fraud is minimised). This section provides an overview of internal controls and some general examples. Each section of this manual also includes internal control measures specific to that item.

This is to ensure that the accounting information produced is accurate and complete, and the financial information obtained from the schools accounting system can be relied upon and used with confidence by all people involved in financial decision-making. Good internal control protects staff and school resources.

4.2 Preventative controls

These controls are designed to discourage errors or irregularities from occurring. They are proactive actions that help ensure objectives are being met.

4.2.1 Preventative controls including (this is not an exhaustive list)

4.2.1.1

Segregation of duties — this means that no one person is responsible for doing everything. For example, the person who enters the invoice into CASES21 is different from the person who approves the payment of the invoice.

This type of control serves two purposes. It ensures there is oversight and review to detect errors and it helps prevent fraud because it requires at least 2 people to collude in order to hide a transaction.

In the case of single operator schools where segregation of duties is not practicable, compensating safeguards must be established to manage potential risk.

Schools should also consider Conflict of Interest (COI) when implementing this control or compensating safeguards when it is not possible to segregate duties. COI is a particularly relevant risk for consideration in small schools as compensating safeguards are often required.

In very small schools, principals (or nominees) are advised to randomly (minimum of 2 checks a term) verify the cash handling and the recording process has been correctly undertaken. Please keep a signed record of these random checks for audit purposes.

A segregation of duties — cash checklist proforma is available on the Resources tab and can be used to conduct the random check for cash handling and retained for audit.

4.2.1.2

Authorisations — Authorisations may be specific or general. Specific authorisations relate to individual transactions and require formal approval by school personnel who have proper approval authority. A purchase order approval is an example of a 'specific' authorisation. It is important to remember that approving a transaction is assuming responsibility for the authenticity of that transaction or verifying it. An example of a general authorisation is matching of vendor invoices to delivery reports and purchase orders prior to payment to ensure that the school is only paying for items actually received and in accordance with negotiated terms and prices.

4.2.1.3

Electronic security — Electronic security must be designed to prevent unauthorised access to systems, software and data. Secure passwords, security tokens and access roles limit access to transactions and data to those required by individuals and authorised for their use. Schools are to have procedures in place to ensure that passwords and tokens are secure and that access roles are regularly reviewed.

4.2.1.4

Physical security — Physical security must be designed to prevent unauthorised access to school assets and accounting records. Examples of physical security include a safe, vault, locked doors/desk drawers, and card key systems.

4.2.1.5

Employee background checks — this includes the Department’s recruitment checks as well as requiring all teaching staff (including CRTs) to have a current Victorian Institute of Teaching (VIT) registration, all non-teaching staff to have a current Working with Children Check and all employees who handle cash to have undertaken a criminal record check.

4.2.1.6

Employee training and professional development — having a well-trained, competent workforce that allows role rotation of staff will provide opportunities for multiskilling and will enhance the internal control system of the school. For example, specific 'how to' training will support hard controls such as processing accuracy and information quality while values and induction type training will support soft controls as they will set out desirable behaviours and reinforce morale.

4.3 Detective controls

These are designed to find errors or irregularities after they have occurred.

4.3.1 Examples of detective controls (this is not an exhaustive list)

4.3.1.1

Reconciliations — A reconciliation is the process of comparing transactions and activity to supporting documentation to ensure accuracy and validity. It also involves resolving any discrepancies that may be identified and undertaking corrective action within the month that the anomaly or anomalies are discovered. For example, conducting a bank reconciliation at the end of the month to match or explain the difference between the cash at bank figure on CASES21 and the balance shown on the bank statement.

4.3.1.2

Review of financial statements for irregularities — this may identify errors in transaction processing. For example, reviewing the figures on the operating statement to identify any negative year to date balances that may indicate the incorrect posting of a journal.

4.3.1.3

Review of actuals to budget — this allows for the identification of variances between actual performance and what was projected or expected. Variances can be analysed and corrective action taken.

4.3.1.4

Audits — Audits can be formal or informal. Formal audits can provide an objective independent examination of the financial statements, procedures and controls. This can increase the value and credibility of the financial statements and increase user confidence. It can also identify weaknesses that may require attention. Informal audits may include ‘spot checks’ such as an independent person counting the daily banking to verify processes.

4.3.1.5

Stocktakes — must be used to verify the existence of assets and identify any losses that may have occurred.

4.3.1.6

Employee monitoring — this must involve activities such as performance reviews, role rotations, multi-skilling, checking hours of work (employees working outside normal hours when there is less supervision), checking when and if annual leave is taken (reluctance to take leave may indicate some inappropriate activity that an employee does not want discovered), etc.

4.4 Corrective controls

These are designed to correct errors or irregularities that have been detected.

4.4.1 An example of corrective controls

4.4.1.1

Data backups on U drive — A functioning system can be restored from data backups in the event of a crash or if corrupted or invalid data is identified. As U drive is automatically backed up on a daily basis, schools must ensure they keep all relevant information on this drive.

Definitions

Bank reconciliation
Process whereby differences between bank account balances reported on the bank statement and bank account balances reported in CASES21 are identified and explained.

CASES21
CASES21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian Government Schools to support school administration, finance and central reporting.

Conflict of Interest (COI)
Conflict of Interest arises in circumstances where an employee’s public duty is influenced, or can be seen to be influenced, by a private interest.

Negotiated terms
Terms of payment negotiated with suppliers.

School assets
Resources available to the school including equipment, data and cash.

Security tokens
Device that works in conjunction with a password to provide an additional level of security. Often used with online banking packages.

Section 5 School Council Financial Assurance Program

5.1 Types of school audits

5.1.1 Overview

The School Council Financial Assurance (SCFA) program is managed by the Assurance Branch within the Integrity, Assurance and Executive Services Division. Under the SCFA program, the Assurance Branch conducts Agreed-Upon Procedures (AUPs), Schools Internal Audits (SIA) and Ad-hoc audits for Victorian government schools.

The department uses a range of criteria when selecting schools for audits. Examples of criteria used include:

• random sampling methodology (this is the primary selection method for AUPs)
• previous audit results
• internal departmental consultations
• other factors such as results of data analytics, value/volume of transactions, schools that have not recently been audited through the SCFA program.

The Assurance Branch works with the Operational Policy, School Engagement and Compliance (OPSEC) Division to minimise instances where schools are selected for multiple audits and/or reviews during the same period. Schools can contact the School Audit Support team with queries about scheduling or other concerns relating to school circumstances that impact on audit or review timing at school.audit.support@education.vic.gov.au or 03 7022 0044.

5.2 Scheduling school audits

5.2.1 Overview

Schools are notified of their selection in audits via email.

The department's contracted external audit firm and the Assurance Branch’s school internal auditors directly contact schools to organise a suitable time for fieldwork. Schools have the flexibility to select their preferred fieldwork dates within the period and the auditors will make every effort to accommodate school preferences.

The auditors may spend between 1 and 8 days at a school depending on the type of audit, size of the school and/or volume and complexity of the transactions. However, auditors will only require school staff’s input to the audit process intermittently during the audit.

5.2.2 Mandatory policy (Must do)

5.2.2.1

Discuss and agree on a suitable time for the school audit with the auditors.

5.2.2.2

Assign an appropriate staff member (usually the business manager) who will be responsible for supporting the school audit.

5.2.2.3

Ask and clarify any questions with the auditors or School Financial Liaison Officers if unclear.

5.2.2.4

Complete end-of-year processes, including running all CASES21 reports for both the year-end and the audit period as specified by the auditors. Some of these reports cannot be run once operating in the new year. For more information, refer to the CASES21 Finance Business Process Guide section 11 – End of Year (staff login required).

5.2.2.5

All monthly reconciliations should be up to date. For example, if a visit to your school is scheduled for April, reconciliations up to March must be completed.

5.2.2.6

All registers should be up to date.

5.2.2.7

All financial records covering the audit period must be kept on site. For example, if your school engages a service provider to conduct the asset stocktake, you must ask for a copy of the relevant records and reports completed by the service provider.

5.2.2.8

All minutes from the school council and school council finance committee meetings must be available along with the financial reports presented at these meetings for the period being covered.

5.3 School audit fieldwork

5.3.1 Overview

The auditors will arrive on a scheduled date and time as agreed and hold an entry meeting with the principal and the business manager.

School audits will conclude with an exit meeting. This will help the auditor to discuss preliminary findings with the school principal and the business manager.

5.3.2 Mandatory policy (Must do)

5.3.2.1

Principal and business manager must attend the entry meeting with the auditors.

At the meeting, auditors will confirm the scope and the audit process and agree on appropriate times for obtaining necessary records or explanations.

5.3.2.2

Co-operate and provide auditors with access to all information reasonably required for them to perform the audit.

5.3.2.3

Where requested, support the auditors to meet with the school council president or representative.

5.3.2.4

Be professional and actively engage in the discussion of any identified issues.

5.3.2.5

Provide management comments within the specified timeframe, to be included in the final AUPs report or SIA audit report (as applicable).

5.3.3 Prohibited policy (Must not do)

5.3.3.1

Schools are advised not to obtain any advice or interpretation of the department’s school council financial policies and/or guidelines from the auditors. All such enquiries need to be made with the Financial Services Division.

5.4 Reporting and implementing management actions

5.4.1 Overview

At the end of the audit fieldwork, schools receive their draft audit findings which are discussed during the exit meeting. Based on the number and severity of findings, each school is assigned an overall audit rating as follows:

• Good
• Acceptable
• Needs improvement
• Unsatisfactory.

Schools receive their final school-specific reports that include their audit findings, overall ratings and the next steps. Schools are required to present their audit report and an action plan (where applicable) that addresses the audit findings at the next school council meeting for their noting and/or discussion.

The findings across all the audited schools are then consolidated and analysed to identify themes. At the end of the financial year, a consolidated SIA report and a state-wide report is presented to the department’s Audit and Risk Committee that highlights the thematic audit findings. These reports are also circulated to the regional offices, Financial Services Division and all schools to ensure corrective measures are taken to rectify the findings at the department and school level.

5.4.2 Mandatory policy (Must do)

5.4.2.1

Organise for the school’s audit/AUPs report to be tabled and formally minuted at a school council meeting.

5.4.2.2

All audited schools must rectify the findings highlighted in the school audit report. Schools may contact School Finance Liaison Officers for any clarification or advice on the Finance Manual requirements.

5.4.2.3

Schools rated ‘Unsatisfactory’ and ‘Needs improvement’ are required to:

• review the proposed action plan sent by Internal Audit and suggest any changes
• have the action plan approved by the principal
• send the approved action plan to the Internal Audit
• have the action plan and audit/AUPs report tabled and formally minuted at a school council meeting
• complete/implement audit actions within the agreed timeframe and retain the evidence of the completion for audit purposes
• provide a status update and the evidence of completion of their audit actions, when requested by Internal Audit.

5.4.2.4

If a school independently engages an external audit firm to conduct an audit on the school’s finances and processes and receives an audit report, the school should forward the report to:

Business Monitoring Team, Finance and Compliance Branch, Financial Services Division to the following email address: schools.transactions@education.vic.gov.au

Definitions

Ad-hoc audits
Ad-hoc school audits may occur based on requests from management and the Audit and Risk Committee, or are self-initiated by the Assurance Branch, based on risks. The scope of Ad-hoc audits can include financial and non-financial processes of a school and may cover more than 1 financial/calendar year.

Agreed-Upon Procedures (AUP) approach
The AUP program assesses key financial controls across school procedures mainly relating to school council governance, locally raised funds, expenses, asset management and cash and bank (these focus areas can change to address risks identified).

Schools Internal Audits (SIA)
Each year, the Department identifies several SIA to be undertaken at schools. SIA cover topics such as expenses and payments, revenue collection process, school council governance, school purchasing cards and payroll and leave management.

Section 6 Budget Management

6.1 Overview

An annual budget is a comprehensive financial plan for the school that is calculated from potential revenue and proposed expenditure for the coming year. It is used to plan the course of future events in a school and assists a school council in monitoring actual events against its initial plan and evaluating performance at the end of the year.

The school council has responsibility for the school budget and for seeing that it is developed in a way which ensures that funds expected to be available are put to the best use in terms of the school’s strategic plan and its educational policies and priorities. It is through the school budget that cash resources are directed into activities that enable clearly identified school goals to be met.

Inadequate and ineffective oversight of financial performance and budgets may result in programs and expenses not being appropriately controlled and monitored. Budget variance analysis is required to ensure financial issues are addressed in a timely manner and errors or irregularities detected.

6.2 Budget development

6.2.1 Mandatory policy (Must do):

6.2.1.1

Develop an indicative cash budget (revenue and expenditure) based on the Indicative SRP and estimates of other revenue and expenditure. Include capital if capital projects.

6.2.1.2

Have the indicative cash budget approved and minuted by school council prior to the end of the year preceding the budget year. For example, the budget for the 2019 year to be approved by end of 2018 year.

6.2.1.3

Enter the indicative cash budget (both revenue and expenditure) into CASES21 prior to the first meeting of school council in the budget year.

6.2.1.4

Review and update the indicative cash budget once the Confirmed Student Resource Package (SRP) is released.

6.2.1.5

Have any changes to the budget approved and minuted by school council.

6.2.1.6

Update the budget in CASES21.

6.2.1.7

Ensure that the budget entered into CASES21 reconciles with the budget approved by school council.

6.2.1.8

Develop a cash flow budget for the budget year.

6.2.1.9

Have the cash flow budget approved and minuted by school council.

6.3 Budget monitoring

6.3.1 Mandatory policy (Must do):

6.3.1.1

Each meeting present reports to finance committee/school council to enable review of budget to actual performance.

6.3.1.2

Each meeting review actual performance against budget and identify any variances.

6.3.1.3

Undertake analysis of variances where appropriate.

6.3.1.4

Retain evidence of the review, the results of any analysis and any action undertaken. Minute the discussion at the finance committee and school council meeting.

Definitions

Budget Year
The year that the cash budget is developed for. The period including January — December.

CASES21
CASES21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian Government Schools to support school administration, finance and central reporting.

Indicative budget
Budget based in indicative (predicted) enrolment figures in the Student Resource Package (SRP).

SRP
Student Resource Package — Main funding mechanism for schools comprising two components. Credit — used for central salaries and Cash – used for school based expenditure.

Variance Analysis
Investigating the budget and actual figures to determine why a variance arose.

Section 7 Chart of Accounts

7.1 Overview

Schools are required to record transactions (for example, revenue and expenditure) as per the designated codes in the Chart of Accounts for Victorian Government Schools.

The importance of correct coding prior to CASES21 data entry is critical to the credibility, reliance and accuracy of information. The accuracy of reports for both internal and external users can only be relied upon when data has been correctly entered into the CASES21 system. It has been found that miscoding errors generally relate to a lack of understanding of the Chart of Account for Victorian Government Schools structure and its link to the reporting process.

There is provision in the Chart of Accounts for Victorian Government Schools to accurately code all funds to ensure effective monitoring and reporting for management, the finance committee and school council.

7.2 Chart of Accounts

7.2.1 Overview

The CASES21 Chart of Accounts for Victorian Government Schools is structured into two sections for the entry and recording of financial transactions.

The two sections include:

• General ledger including assets, liabilities, equity, revenue and expenditure
• Programs, Sub Programs and Initiatives of the Department of Education and Training (DET)

7.2.2 Mandatory policy (Must do)

7.2.2.1

All schools must adopt the relevant standard Chart of Accounts for Victorian Government schools as prescribed by the Director, Schools Finance and Resources Branch.

7.2.2.2

General Ledger and Program Chart of Account codes for Victorian Government schools have been defined by the Department and therefore cannot be deleted or modified.

7.2.2.3

Sub Program level Chart of Account codes include the provision for schools to add school defined codes if they are required to meet specific reporting requirements.

7.2.2.4

Schools must develop a consistent approach to the use of school defined Sub Programs in line with their specific needs regarding reporting, monitoring and reconciling activities.

7.2.2.5

Schools must ensure that when they are creating a Sub Program it is coded under the correct Program area.

7.2.2.6

The use of the Department defined codes must be adopted for the identification and recording of transactions where possible. These codes cover the majority of transactions and are necessary for consistency as well as calculating aggregates for ‘whole of government’ reporting. The school defined codes must be used selectively and only when a Department defined code for the item does not exist.

7.2.2.7

Coding of revenue and expenditure for CASES21 data entry must align with the school’s budget approved by school council.

7.2.2.8

All Schools must provide meaningful descriptions when entering data into the CASES21 finance system. Do not use the CASES21 account code as a description in the transaction detail field.

7.2.3 Prohibited policy (Must not do)

7.2.3.1

School defined Sub Program codes must not be created prior to a check being done to ascertain whether a predefined code already exists.

7.2.3.2

Schools must not create a Sub Program code where that code exists at General Ledger level, for example, cash grant, commission, photocopying and electricity etc. unless used as a clearing account.

Case Study

Correct Chart of Account code to be used by Schools for the receipting of the Student Resource Package (SRP) cash funding paid by the Department of Education and Training

A school receives the following funding from the Department which includes the Student Resource Package (SRP) Student-based funding, School-based funding, Establishment grants, Targeted Initiatives, SRP credit to cash transfers, short term leave reimbursement (STLR), and reconciliation funding. This type of funding must be recorded in account code 70001 – Cash Grant.

7.3 Goods and Services Tax (GST) and the Chart of Accounts

7.3.1 Overview

Primary, Secondary and Special Schools have multiple GST tax codes to choose from when receipting revenue or to apply when paying creditor invoices on CASES21.

7.3.2 Mandatory policy (Must do)

7.3.2.1

The GST revenue code to use is determined by the type or source of revenue being receipted. For invoices, the GST code is determined on whether the creditor holds an ABN and/or GST registration.

7.3.2.2

It should be noted also that Special Schools have the ability to treat certain revenue (donations etc.) as out of scope (i.e. NS6) due to their status as a Deductible Gift Recipient (DGR).

7.3.2.3

The liability of accounting for GST correctly falls on ‘the receiver’ of revenue. Therefore, when schools receive revenue, they must be diligent in ensuring that the correct GST treatment is applied. Schools must also ensure that they claim back all GST to which they are entitled when they make purchases.

7.3.2.4

The GST codes for revenue and expenditure that are utilised by schools are listed in the ‘GST codes for schools’ table. Refer to page 8 and 9 in the Chart of Accounts.

7.3.3 Additional resources and support

For further information, see the Tax website at Tax Website.

If you have any questions or enquiries concerning GST, please contact the Department’s Financial Accounting and Reporting Unit on Phone: 7022 2228 or email — Greg Hart at: greg.hart@education.vic.gov.au

Definitions

Accumulated Funds
The net assets of the school which is represented by the equation: Accumulated Funds = Assets (what is owned) – [minus] Liabilities (what is owed).

Chart of Account code range (50001 – 50003)

Assets
Items of value owned or controlled by the school e.g. bank accounts, debtors, plant and equipment (over $5000).Chart of Account code range (10001 – 29102)

CASES21
CASES21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian Government Schools to support school administration, finance and central reporting.

Chart of Accounts
A listing of accounts available in an accounting system in which to record entries. The Chart of Accounts consists of balance sheet accounts (assets, liabilities, equity) and operating statement accounts (revenue and expenditure).

Declaration of private interest (DPI)
Declaration made via Edupay of potential conflicts of interest including, but not limited to, other sources of income, any positions of office held in public or private companies, shareholdings and other business interests, relationships with trusts, holdings of real estate, agreements and contracts, other financial interests and any probity issues.

Expenditure
Expenditure — An outflow of resources/funds in exchange for services or products e.g. Class materials, utilities and telephone expenditure. Operating expenditure produces benefits not extending beyond the accounting period. Capital expenditure provides value extending into future accounting periods (asset purchase such as equipment with a value over $5000).

Chart of Account code range (80052 – 89593)

GST
Goods and Services Tax — Value added tax which taxes final consumption of all goods and services consumed within Australia. Victorian government schools are subject to GST and must ensure that they comply with the GST law on revenue and payments.

Initiatives
Classification layer allowing transactions to be linked across a number of sub programs, e.g. used for multi campus schools

Liabilities
Liabilities — Amounts owing by the school to external parties e.g. Accounts Payable, Co-operative Loan and Revenue received in advance.

Chart of Account code range (33000 – 40001)

Programs
Group of Sub Programs

Program code range (100 – 970)

Revenue
An inflow of resources/funds resulting from the provision of services, trading and investing operations, e.g. grants, locally raised funds or other funds such as bank interest.

Chart of Account code range (70001 – 74580)

Sub Programs
All Sub Programs are linked to Programs in the Chart of Accounts. Included are hard coded Sub Programs along with a provision for schools generate additional Sub Programs at each Program level.

Cost centres, project, e.g. Subject areas, administration.

Sub Program code range (1001 – 9799).

Section 8 Bank Accounts

8.1 Overview

Schools can hold their cash in:

• Official Bank Account
• High Yield Investment Account (HYIA)
• Building and Library Accounts.

8.2 School council responsibilities

8.2.1 Mandatory policy (Must do)

8.2.1.1

All school bank accounts must be in the name of the school council except the HYIA, which is held in the name of the school.

8.2.1.2

All school bank accounts must be held with an approved panel bank under the State Purchasing Contract (SPC). The approved panel bank suppliers are:

• Westpac (WPC)
• Commonwealth Bank of Australia (CBA)
• National Australia Bank (NAB).

Schools that do not bank with a panel bank supplier are required to transition their bank accounts by 31 March 2022.

8.2.1.3

To ensure schools plan effectively, it is essential to prepare a cash flow budget to determine cash requirements in any given period, whilst maintaining the schools’ cash reserve benchmark.

8.2.1.4

Schools must seek approval from the Department by emailing schools.finance.support@education.vic.gov.au to maintain Beneficiary and/or Memorial funds in a separate account.

8.2.2 Prohibited policy (Must not do)

8.2.2.1

School councils must not form or become a member of a corporation. Doing so will contravene the requirements of Section 2.3.6 of the Education and Training Reform Act 2006.

8.2.2.2

Schools must not establish any new investments including term deposits and at call investment accounts outside of the HYIA.

8.2.2.3

Schools must not invest funds or maintain existing investments in shares, financial products, or with financial institutions not listed as an Authorised Deposit-taking Institution (ADI) under the Australian Prudential Regulation Authority (APRA) guidelines.

8.3 Opening and closing bank accounts

8.3.1 Mandatory policy (Must do)

8.3.1.1

The principal and school council must ensure that all school bank accounts will:

• only be opened or closed with the written authority of the school council
• be held with an authorised panel bank under the SPC
• be in the name of the school council, apart from the HYIA
• have the principal (mandatory) and a school council member nominated for this purpose registered as co-signatories
• be maintained regularly and accurately in CASES21
• be managed in accordance with this section, and all other sections, of the Finance Manual for Victorian Government Schools in accordance Financial Management Act 1994 (Vic).

8.3.2 Prohibited policy (Must not do)

8.3.2.1

The business manager, registrar or bursar cannot be a signatory or authoriser to any bank account, even if they are a member of school council.

8.4 Bank accounts

8.4.1 Mandatory policy (Must do)

8.4.1.1

All school bank accounts must be in the name of the school council except the HYIA which is held in the name of the school.

8.4.1.2

All cheques drawn on any account kept under the control of the school council must be signed by the principal as a mandatory signatory, and a school council member nominated by the school council for that purpose.

8.4.1.3

All internet payments must also be authorised by the account signatories (principal and nominated member of the school council).

8.4.1.4

Bank accounts are to be maintained on CASES21 and regular (monthly) financial reports provided to the school council or the finance committee.

8.4.1.5

All bank accounts must be reconciled monthly through the bank reconciliation process.

8.4.1.6

All un-reconciled items identified during the completion of the monthly bank reconciliation process must be investigated and corrective action taken.

8.4.1.7

All stale cheques identified during the completion of the monthly bank reconciliation process must be investigated and corrective action taken.

8.4.1.8

When the department makes requests during the financial year-end (30 June) audit, the following information must be made available:

• a copy of the CASES21 bank reconciliation for all bank accounts (approved by the principal)
• copies of the bank statements, certificates and so on that verify the balance recorded on the bank reconciliation and in CASES21.

The above information may also be requested by the Victorian Auditor-General’s Office as part of the school audit program.

8.5 Official account

The school’s operating account is the School Council official account.

8.5.1 Mandatory policy (Must do)

8.5.1.1

Schools must hold their official account with one of the panel bank suppliers under the SPC (as referenced under 8.2.1.2). Schools can choose from among the 3 SPC banks, differentiated on the basis of best price, functionality and service offerings.

8.5.1.2

The official account must be maintained on CASES21 and regular (monthly) financial reports must be provided to school council or the finance committee.

8.5.1.3

The official account is used for:

• the receipt of money provided from local and Commonwealth government sources
• locally raised funds such as voluntary contributions, donations and fund raising activities.

8.5.1.4

All payments for goods and services must be made from the official account.

8.5.1.5

The account must be reconciled each month to ensure CASES21 reflects the most accurate financial information.

8.5.1.6

All funds transferred between bank accounts must go through the official account.

8.5.1.7

All funds transferred between bank accounts must go through the official account. The transfer of money from one bank account to another must be authorised by the principal and a report detailing transfers presented to school council or finance committee each month.

8.5.2 Prohibited policy (Must not do)

8.5.2.1

The CASES21 official account or the physical official bank account must not be overdrawn.

8.5.2.2

All payments (i.e. direct debit, BPAY and cheques) must not knowingly be drawn on the official account where there are insufficient funds to meet the payment.

8.5.2.3

Schools must not have funds in excess of their operating reserve in the Official Account unless required for immediate settlement of accounts.

8.6 High Yield Investment Account

The HYIA was established by the Department to assist schools with cash flow planning and, in the event of a surplus being identified, to provide schools with a competitive interest rate on the funds invested, while still retaining an ‘at call’ status for these funds.

8.6.1 Mandatory policy (Must do)

8.6.1.1

Schools can transfer funds from the HYIA into the official account at any time, and vice versa.

8.6.1.2

The interest gained from the HYIA must be paid directly into the HYIA.

8.6.1.3

The HYIA must be reconciled each month to ensure CASES21 reflects the most accurate financial information.

8.6.2 Prohibited policy (Must not do)

8.6.2.1

The CASES21 HYIA or the physical HYIA bank account must not become overdrawn.

8.7 Building and Library accounts

The Building and Library accounts have dedicated bank accounts to hold tax-deductible donations received by the school for specific capital improvements. Schools must hold these accounts with an approved SPC panel bank.

8.7.1 Mandatory policy (Must do)

8.7.1.1

The Australian Taxation Office (ATO) specifies that a separate bank account must be established for Deductible Gift Recipient (DGR) funds operated by a school. The separate bank account must be held with an approved panel bank supplier under the SPC (refer to 8.2.1.2).

Schools are to ensure that all tax deductible receipts received by the school are held in the appropriate DGR account both at the bank and in CASES21.

More detailed information on tax deductible funds is available on the Tax eduGate site (staff login required).

8.8 School bank accounts signatories

8.8.1 Mandatory policy (Must do)

8.8.1.1

The school council must approve signatories on all school bank accounts.

8.8.1.2

Retain a register of signatories to all school bank accounts.

8.8.1.3

The registered mandatory signatory to all school bank accounts must include the principal.

8.8.1.4

The registered co-signatory to all school bank accounts must include an active school council member.

8.8.1.5

School bank account signatories must be reviewed on an annual basis and kept up-to-date with the bank.

8.8.1.6

Inactive school bank account signatories must be removed from the bank account and register in a timely manner.

8.9 Information to be retained by schools

8.9.1 Mandatory policy (Must do)

8.9.1.1

Schools must retain the following information regarding the investment of all funds:

• School council minutes containing the details of changes to account particulars
• Bank statements or certificates
• Relevant CASES21 reports
• Register of signatories to school bank accounts.

8.10 Unclaimed money

Schools may be entitled to unclaimed money that is sitting in a forgotten bank account.

8.10.1 Mandatory policy (Must do)

8.10.1.1

Schools must check (preferably annually) if any unclaimed money is in a forgotten bank account belonging to the school or a committee of the school.

8.10.1.2

Schools must do their own online checking by searching two government websites. These are:

• the State Revenue Office (SRO)
• Money Smart, administered by the Australian Securities Investments Commission (ASIC).

Definitions

Authorised Deposit-Taking Institutions
Authorised Deposit-Taking Institutions (ADIs) are corporations which are authorised under the Banking Act 1959.

ADIs include:

• banks
• building societies and
• credit unions.

All ADIs are subject to the same Prudential Standards but the use of the names 'bank', 'building society' and 'credit union' is subject to corporations meeting certain criteria.

Cash and deposits
Cash and deposits held by a school can be made up of cash on hand and bank accounts. These types of cash and deposits are held to meet short term cash commitments and are readily convertible to cash with an insignificant risk of change in value.

Co-operative bank account
Account used to administer loans raised through a co-operative society for a school infrastructure project. Not to be used to record loan liability.

High Yield Investment Account
All grants from the Department are deposited directly into the Central Banking System linked HYIA.

Official bank account
Known as the school’s operating account.

The official account is used for the receipt of money provided from local and commonwealth government sources and locally raised funds such as voluntary contributions, donations and fund raising activities.

All payments for goods and services must be made from the official account.

Chart of Account code (10002)

Other accounts — Building and Library
Schools may operate other bank accounts such as Deductible Gift Recipient funds (DGR) approved by the ATO for holding tax deductible funds e.g. building and library funds. The Building and Library accounts are used to hold tax-deductible donations received by the school to save towards specific capital improvements.

Chart of Account codes (10003 – Building Fund and 10004 – Library)

Unclaimed money
Money in a forgotten bank account belonging to a school or committee of a school for example, Parents Association, Reunion Account and Sports Association etc.

Section 9 Funding Sources

9.1 Overview

Schools receive funding from a variety of both government and non-government sources. Most school funding is received from the Department.

9.2 Student Resource Package (SRP)

The Student Resource Package (SRP) is the Department’s main funding mechanism for Victorian government schools. It is primarily an enrolment based funding model with a cash component being paid directly to schools in quarterly instalments.

9.2.1 Mandatory policy (Must do)

9.2.1.1

Undertake an annual reconciliation by the due date as specified in the reconciliation process for that year.

9.2.1.2

Enter receipts into CASES21 using the Chart of Accounts for Victorian Government Schools general ledger revenue code 70001 — Cash Grant.

9.3 Other Department funding

Schools may receive funding for other purposes such as Conveyance Allowance, Overseas Fee Paying Students, etc.

9.3.1 Mandatory policy (Must do)

9.3.1.1

Enter receipts into CASES21 using the relevant general ledger revenue code in the range 70004 to 70090. Refer to Chart of Accounts for Victorian Government Schools (CASES21) for a detailed listing.

9.4 Government funding (Commonwealth, State, local)

Schools may receive funding directly from Commonwealth, State or local government departments.

9.4.1 Mandatory policy (Must do)

9.4.1.1

Enter receipts into CASES21 using the relevant general ledger revenue code in the range 71000 to 73541. Refer to Chart of Accounts for Victorian Government Schools for a detailed listing.

9.5 Locally raised funds — Parent payments

The Department allocates funding to schools through the Student Resource Package (SRP). This includes funding for the standard curriculum program, including associated administration, equipment, facilities and operational costs. The Education and Training Act 2006 also empowers school councils to charge parents for items that the school provides or makes available to the student. The items may be categorised as either Curriculum Contributions or Extra-Curricular Items and Activities. School council may also ask parents to make Other Contributions to the school for a stated purpose.

9.5.1 Mandatory policy (Must do)

9.5.1.1

Comply with the Parent Payments Policy.

9.5.1.2

If the school receives other contributions in relation to a building or library fund, the school must have previously obtained Australian Taxation Office Deductible Gift Recipient (DGR) endorsement (refer to Section 15 Taxation).

9.5.1.3

Enter transactions into CASES21 using the relevant Chart of Account general ledger code for Curriculum Contributions (74408), Extra-Curricular Items and Activities (74409) and Other Contributions (74410).

9.5.2 Prohibited policy (Must not do)

9.5.2.1

Enter Curriculum Contributions and Other Contributions into CASES21 until they have been received.

9.6 Locally raised funds — Fundraising

Members of a government school community may undertake fundraising activities, having as their objective the establishment or augmentation of school funds or raising funds for a particular school purpose, if the school council approves these fund raising activities first.

9.6.1 Mandatory policy (Must do)

9.6.1.1

A school council must consider any proposed fundraising activity based on the recommendations of a committee consisting of:

• the president of the school council or the president’s nominee, who must be the chairperson
• 1 other representative of the school council elected for the purpose by the school council
• 2 representatives of the group or body proposing the money-raising activity and
• the principal

9.6.1.2

Unless the Fundraising Act 1998 otherwise provides, all funds raised for a government school by fundraising activities must be held by the school council for the general or particular school purpose for which the funds were raised.

9.7 Locally raised funds — Donations

A school may receive donations from third parties (individuals and businesses other than families and students).

9.7.1 Mandatory policy (Must do)

9.7.1.1

To receive donations from third parties in relation to a building or library funds, the school must have previously obtained Australian Taxation Office (ATO) Deductible Gift Recipient (DGR) endorsement (refer to section 15 Taxation).

9.7.2 Prohibited policy (Must not do)

9.7.2.1

Schools must not enter invoices for donations into CASES21 until they have been received.

9.8 Locally raised funds — Sponsorship

Schools may receive funds through sponsorship. Sponsorship is the act of supporting an event or organisation financially, through the provision of products, services or activities, in exchange for rights (including naming rights) or certain specified benefits (such as logo placement or public acknowledgement). Sponsorship can provide a mutually beneficial and purposeful relationship between organisations/businesses and schools.

9.8.1 Mandatory policy (Must do)

9.8.1.1

Comply with the policy for schools on Sponsorship.

9.9 Locally raised funds — Other

Schools may receive funds through other activities such as trading operations, hire of facilities, school community co-operatives and so on. If a school is considering a school community co-operative loan refer to section 14 Liabilities Management.

9.9.1 Mandatory policy (Must do)

9.9.1.1

For trading operations, comply with the requirements outlined in section 12 Trading Operations.

9.9.1.2

Engage with the Department’s School’s Procurement Unit or Legal Division regarding contracts and/or agreements relating to the licensing and hire of facilities or equipment.

9.10 Financial arrangements for parents’ clubs

Many government schools have a parents’ club. A parents’ club not only benefits students, but also enriches and contributes to the wellbeing of the school community through positive interaction and support.

9.10.1 Mandatory policy (Must do)

9.10.1.1

Adopt a constitution for the club consistent with the model published by the Department’s secretary, and obtain approval of the Minister for the formation of the club under the terms of that constitution.

9.10.1.2

Maintain a separate subprogram in CASES21 for the parents’ club.

9.10.1.3

Comply with the financial management requirements outlined in this manual.

9.11 Targeted funding programs

Schools may receive a budget allocation and advice on types of expenditure from central or regional program areas under the Schools Targeted Funding Governance Model.

9.11.1 Mandatory policy (Must do)

9.11.1.1

Comply with the procedures outlined in the Schools Targeted Funding Governance Model and supporting guidance materials.

9.11.1.2

Ensure procurement is undertaken within the conditions outlined in the initiative agreement and in line with procurement guidelines.

9.11.1.3

Submit reimbursement requests (including sundry debtor invoice and supporting evidence of expenditure) via the Schools Targeted Funding Portal (login required).

9.11.1.4

Enter reimbursement transactions into CASES21 using the Chart of Accounts for Victorian Government Schools general ledger code for Targeted Program Reimbursement (70085).

9.11.2 Prohibited policy (Must not do)

9.11.2.1

Schools must not hold funds on behalf of central or regional offices.

9.12 School shared programs

Schools may choose to pool some resources to provide shared programs such as sports days and professional networks.

9.12.1 Mandatory policy (Must do)

9.12.1.1

The school councils of all schools involved must approve the arrangements relating to the shared program.

9.12.2 Prohibited policy (Must not do)

9.12.2.1

Schools must not hold funds on behalf of central or regional offices.

Definitions

CASES21
CASES21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian government schools to support school administration, finance and central reporting.

Conveyance Allowance
Travel allowance to assist with the costs to and from school for eligible students who are unable to access free school buses in rural and regional Victoria.

Deductible Gift Recipient (DGR)
An entity or fund endorsed by the Australian Tax Office as being able to receive tax deductible gifts (donations).

Overseas fee paying students
International students not funded through the Student Resource Package and required to pay fees.

School community cooperative
A democratic organisation set up by a school community to promote and access funding for a particular purpose relating to a school, usually a building project such as the construction of a multipurpose facility.

Section 10 Receivables Management and Cash Handling

10.1 Overview

Schools can receive revenue from several sources. This may involve invoicing families and sundry debtors as well as the receipt of cash. It is important that schools recognise this revenue appropriately. Cash receipts must be handled in a manner that minimises any associated risks.

10.2 Managing receivables

A receivable is money owing to the school from the provision of services or the sale of goods. It may be owed by families for items such as camps and excursions or third parties (sundry debtors) for items such as hire of school facilities.

10.2.1 Mandatory policy (Must do)

10.2.1.1

Comply with the Parent Payments policy.

10.2.1.2

Enter family and sundry debtor invoices into CASES21 in a timely manner using relevant general ledger and GST codes.

10.2.1.3

Regularly review (preferably monthly) the sundry debtor balances to assess collectability and take any appropriate action.

10.2.1.4

Ensure that any adjustments to receivables (i.e. families or sundry debtors) have been approved by the school council prior to the adjustment being made. Adjustment could include the write-off of invoices where collection is not going to occur. For example, part of End of Year process is to write off charges that are not expected to be received. The reversing of these charges needs to be approved by school council prior to processing.

10.2.1.5

Undertake a balance day adjustment as part of End of Year for any revenue that has been invoiced in advance. For example, camps/excursions and activities for a future year that were invoiced in the current year. Refer to CASES21 Finance Business Process Guide — Section 10 Balance Day Adjustments (login required) to determine if any balance day adjustments are required to be made.

10.2.2 Prohibited policy (Must not do)

10.2.2.1

Enter curriculum contributions, other contributions or donations into CASES21 until the revenue/cash has been physically received by the school. Both voluntary contributions and donations are not considered a receivable. These must not be invoiced and must only be recognised on a cash basis.

10.3 Cash handling

Cash is the most vulnerable asset of the school. It is essential that schools have robust controls in place to minimise the risk of loss. It is recommended that schools investigate non-cash receipt options as a part of their risk minimisation.

10.3.1 Mandatory policy (Must do)

10.3.1.1

Implement a local cash handling policy approved by school council. For example, having 2 people present when handling cash and a safe and secure place to hold the cash until it is banked.

10.3.1.2

If the school council has approved the use of electronic receipting (BPAY, EFTPOS, third party online revenue collection, etc.) the school must have an electronic funds management policy that is reviewed annually and approved by school council.

10.3.1.3

Issue an official receipt immediately for all monies received from all sources (for example, cash, cheques, EFTPOS, etc.) and process through CASES21.

10.3.1.4

The principal or their delegate and one other person must sign all the entries entered in the remittance book. Open cheques must be crossed ‘Not Negotiable’ immediately upon receipt.

10.3.1.5

Prior to banking monies, schools must reconcile total receipts with total monies collected (cash, cheques, credit card transactions to be banked).

10.3.1.6

If the school operates an EFTPOS terminal, they must perform settlement on the EFTPOS terminal at the same time as the CASES21 batch is updated.

10.3.1.7

The segregation of duties between receiving cash and banking activities must be implemented where possible and practical. The method of ensuring this safeguard is to separate those responsibilities for duties which, if combined, would enable an individual person to receive and bank the cash. It can be implemented, by alternating sequential tasks, so that no one person has complete responsibility for the entire transaction.

10.3.1.8

If segregation of duties is not practical (limited number of administrative staff are available for the accounting and finance function in a very small school), the principal or nominee must randomly verify the cash handling and recording process has been correctly undertaken. A minimum of two checks to be carried out per term and a signed record of the checks maintained.

10.3.1.9

If monies are collected away from the office, schools must undertake the following procedure:

• two people count money (where practical — refer to point 10.3.1.8)
• control receipt prepared for total amount
• original control receipt attached to class list/sales book/attendance sheet. Duplicate control receipt retained by the teacher, manager or coordinator
• office staff reconcile list of collections/control receipts with monies handed to office and receipt.

10.3.1.10

All cash, cheques, etc. must be banked intact and in a timely fashion (preferably daily) to avoid having money on school premises overnight.

10.3.1.11

Money kept on school premises must be locked in a secure location.

10.3.1.12

In preparing the banking of funds collected, schools must:

• prepare bank deposit slips in duplicate
• reconcile the total money received with the total amounts recorded in CASES21
• all bank deposit slips must be signed by the depositor.

10.3.1.13

Any refunds must be in line with the school’s parent payment arrangements and must be by cheque or electronic funds transfer payment and never cash.

10.3.1.14

On receipt of advice from the bank that a cheque has been dishonoured, the principal or their delegate must communicate with the drawer of the cheque to correct any irregularities or obtain a fresh remittance.

10.3.2 Prohibited policy (Must not do)

10.3.2.1

Cash personal cheques under any circumstances.

10.3.2.2

Alter any receipt. If an error is made, the receipt must be cancelled, and a new receipt issued. The original of the incorrect receipt must be attached to the copy of the new receipt.

10.3.2.3

Issue any duplicate receipts. If a duplicate receipt is requested the receipt of money can be acknowledged by a typed note on school letterhead for general ledger receipts. For family and sundry debtor receipts, a copy of the family or sundry debtor statement will show the receipt of money.

10.3.2.4

Leave money on school premises during vacation periods.

Definitions

BPAY
Electronic bill payment system that enables payments to be made through a financial institution’s online, mobile or telephone banking facility.

CASES21
CASES 21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian government schools to support school administration, finance and central reporting.

Control receipt
A control receipt is a list of total revenue collected. For example, for a class list/sale for attending an excursion.

Dishonoured cheque
A cheque that has not been paid by the bank due to insufficient funds or some other irregularity.

EFTPOS
An electronic payment system involving electronic funds transfers based on the use of payment cards, such as debit or credit cards, at payment terminals located at points of sale.

Non-cash receipt options
Options that allow for the receipt of monies without using cash or cheques. For example, BPAY, EFTPOS, direct deposit, etc.

Provision for non-recoverables
An estimate of the receivables (money owed to the school) that will not be recovered or paid.

Segregation of duties
The method of separating those responsibilities or duties which, if combined, would enable an individual person to process and record a complete transaction, such as ordering, receiving, approving and paying for goods. This is an internal control intended to prevent fraud and error to ensure that no one person has complete responsibility for the entire transaction. Functions that must be separated include authorisation, payment, custody and recording.

Section 11 Expenditure Management

11.1 Overview

School councils may enter into contracts, agreements or arrangements for the supply of goods, services, facilities, materials, equipment and other matters that are required for the conduct of the school including the provision of pre-school programs. This will involve procuring, ordering, taking delivery, being invoiced and making payment.

11.2 Procuring

11.2.1 Mandatory policy (Must do)

11.2.1.1

Comply with the policy for schools on Procurement – Schools.

11.2.1.2

Comply with the policy for schools on Travel.

11.2.1.3

Comply with the policy for schools on Gifts, Benefits and Hospitality.

11.2.1.4

Comply with the policy for schools on Travel and Personal Expenses – Teaching Service.

11.3 Ordering

11.3.1 Mandatory policy (Must do)

11.3.1.1

School council must authorise and minute the names of people delegated to approve purchases and school expenditure.

11.3.1.2

Use a purchase order and obtain prior permission for all school purchases, except for utilities and petty cash items approved by the principal or delegated officer.

A standing order can be used for items or services associated with the day-to-day running of a school that are of an ongoing nature and are purchased for the current year.

11.3.1.3

Officers authorised to approve orders must check that the order:

• is for school purposes
• is within budget
• is in accordance with the school procurement policy and processes
• meets any conditions placed on funds that will be used for the purchase
• there are available funds to meet the commitment.

11.3.1.4

Comply with GST requirements (refer to Section 15 of the Finance Manual – Taxation).

11.3.2 Prohibited policy (Must not do)

11.3.2.1

Use a school purchase order to obtain goods and services for private use.

11.3.2.2

Issue a duplicate order. Any order issued in replacement of an order not received by a supplier shall state that it is a replacement order.

11.4 Taking delivery

11.4.1 Mandatory policy (Must do)

11.4.1.1

Check that the goods have been delivered and/or the service has been performed and endorse the invoice as such.

11.5 Being invoiced

11.5.1 Mandatory policy (Must do)

11.5.1.1

Check that the goods have been delivered and/or the service has been performed and that the invoice is endorsed as such.

11.5.1.2

Check that the amount on the invoice is no more than 15 per cent more than prices indicated on the purchase order. Where the variation is greater than 15 per cent, specific approval for payment must be obtained from the school council. Where the quantity and price on the invoice is accepted, a notation must be made on the Purchase Order. For example, ’oversupply accepted’ or ‘price increase accepted’.

11.5.1.3

Comply with GST requirements (refer to Finance Manual – section 15 Taxation).

11.6 Payment

11.6.1 Mandatory policy (Must do)

11.6.1.1

All payments (whether cheque or electronic) drawn on any account kept under the control of school council must be authorised by the principal and a nominated school council member.

11.6.1.2

All payments must only be made on receipt of a valid invoice.

11.6.1.3

All purchase orders, invoices and any other supporting documents (quotes, etc.) must be attached to the payment voucher.

11.6.1.4

Mark all vouchers, invoices and supporting documents as 'paid' immediately upon passing accounts for payment.

11.6.1.5

If paying via cheque:

• the cheque must be crossed by having two parallel transverse lines drawn across the face of the cheque. The words ‘not negotiable’ are to be written between those lines unless the cheques are printed in this manner
• the cheque must be drawn to ‘order’ by using any of the following methods:
  • cross out the word ‘bearer’
  • cross out the word ‘bearer’ and write or print above it the word ‘order’
• cheques are to be drawn in numerical sequence
• individual cheques must be attached to the payment voucher and supporting documentation and presented to the authorising Officers for signature.

11.6.1.6

If making electronic payment:

• the Direct deposit listing from CASES21 must be printed and attached to the payment vouchers
• the Direct Credit file must then be uploaded to the bank using the business managers token
• a copy of the payment details from the banking software such as payees and amounts must be printed and attached to the payment vouchers.

11.6.1.7

Before authorising a payment, an officer is obliged to ensure that:

• the payment voucher is certified by the business manager/bursar
• the invoice is certified as a receipt of goods or services
• the relevant authorised purchase orders, certified invoices and correctly endorsed delivery dockets (if available, as they may be electronic) are attached to the payment voucher and marked as paid to prevent duplicate payment
• the payment is correctly drawn to the payee, as shown on the authorised payment voucher and invoice
• any cheque issued has been crossed ‘not negotiable’ and drawn to order by crossing out ‘bearer’
• the amount of the payment agrees with the payment authorised on the payment voucher and invoice
• funds are available to meet the payment.

11.6.2 Prohibited policy (Must not do)

11.6.2.1

The business manager, registrar or bursar cannot be a signatory or authoriser to any school bank account, even if they are a member of school council.

11.6.2.2

Payment must never be made based on supplier statement alone.

11.7 Purchasing and Virtual Cards

A school council may enter into an agreement with a whole of government purchasing card supplier to access a purchasing card facility.

11.7.1 Mandatory policy (Must do)

11.7.1.1

Use the whole of government purchasing card supplier.

11.7.1.2

Comply with the Schools Purchasing Card Department Guidelines and Procedures (in Resources).

11.7.1.3

Develop and document a policy for the use of the purchasing card.

11.7.1.4

Each physical cardholder must complete and sign an Undertaking by the Cardholder form (DOC).

11.7.1.5

The Purchasing Card Register in CASES21 must be kept up to date.

11.7.1.6

Apply the principles outlined in 11.2, 11.3, 11.4, 11.5 and 11.6 to purchasing card expenditure.

11.7.1.7

School Purchasing card monthly statements, associated documentation and payments, must be approved by the principal.

11.7.1.8

The school council president must approve the principal’s purchasing card expenditure.

11.7.1.9

The school purchasing card monthly statement and associated documentation must be presented to the finance committee for review, approval and to make a recommendation to the school council for ratification of payments. If the school does not have a finance committee, these documents must be provided to school council for review and approval.

11.7.2 Prohibited policy (Must not do)

11.7.2.1

A school purchasing card must not be used for non-school purchases.

11.7.2.2

A school must not use a financial institution other than the government purchasing supplier.

11.8 Utilities

Under Ministerial Direction, all schools must purchase their electricity from a supplier that the Department has an approved contract with.

Under Ministerial Direction, all schools must purchase their natural gas from the natural gas supplier selected as the Whole of Victorian Government (WoVG) contractor.

11.8.1 Mandatory policy (Must do)

11.8.1.1

Use the whole of government natural gas and electricity suppliers. For further information refer to the information on whole of Victorian government energy contracts at: Student Resources Package — School Infrastructure.

11.9 School local payroll

School councils are empowered under Part 2.3 of the Education and Training Reform Act 2006 to employ school council staff.

11.9.1 Mandatory policy (Must do)

11.9.1.1

Comply with the policy and procedures relating to school council employees.

11.9.1.2

Maintain a register of Victorian Institute of Teaching (VIT) registration as per Victorian Registration and Qualifications Authority (VRQA) requirements, including each teachers name, registration number, VIT category of registration, expiry and renewal dates of registration.

11.9.1.3

Maintain a register of Working with Children Checks as per VRQA requirements.

11.9.1.4

Must meet superannuation guarantee obligations.

11.9.1.5

Must meet workers compensation obligations.

11.9.1.6

Must have a process in place to authorise hours worked and certify all payroll obligations.

11.10 Petty cash

The purpose of petty cash is to meet minor payments for school related purposes other than salary and wages.

11.10.1 Mandatory policy (Must do)

11.10.1.1

The school council must approve and minute the approval of the petty cash advance amount.

11.10.1.2

The school must have a petty cash policy in place.

11.10.1.3

Any petty cash advance must be maintained under an imprest system.

11.10.1.4

The limit on any one payment must only be $200.

11.10.1.5

Only one officer must be the custodian of a petty cash advance and accountable for it.

11.10.1.6

Cash on hand must be kept in a secure location at all times.

11.10.1.7

The principal, or an officer appointed by the principal, must carry out checks (at least two per year) where they monitor the petty cash balances without having given advance notice of the check.

Definitions

CASES21
(Computerised Administrative System Environment in Schools) is the software package provided to Victorian government schools to support school administration, finance and central reporting.

Conflict of Interest (COI)
Conflict of Interest arises in circumstances where an employee’s public duty is influenced, or can be seen to be influenced, by a private interest.

Imprest System
A petty cash system whereby a fixed amount is held (the petty cash advance) and replenished at the end of a period or whenever the cash on hand falls below a specified amount.

Procurement
A term used to describe the collective group of activities undertaken to obtain goods and/or services from third parties.

Purchasing Card
A method of payment utilising a corporate charge card to buy goods or services on behalf of the school.

Purchase Order
A document that authorises a purchase transaction.

Schools Certification Checklist
The Schools Certification Checklist regarding appropriate school purchasing card usage, is initiated by the Department of Education and Training. The Schools Certification Checklist will be distributed by DET Financial Services Division for reporting as at 30 June each Financial Year.

Undertaking by Cardholder
The Formal document completed and signed by cardholder and principal prior to card issue, which outlines the conditions, terms and obligations that the cardholder agrees to in relation to his/her usage of the purchasing card.

Section 12 Trading Operations

12.1 Overview

A school may engage in various trading operations as a service to the school community and/or to supplement school funding. The more common types of trading operations include canteen, out of school hours’ care and kindergartens.

12.2 Trading Operations

12.2.1 Mandatory policy (Must do)

12.2.1.1

School councils must approve all school trading operations and all approvals must be recorded in the school council minutes.

12.2.1.2

If a trading operation is to be outsourced (for example, out of school hours’ care and canteen licence), the school council must contact Legal Services Division to determine the most appropriate outsourcing agreement. Legal Services can be contacted at legal.services@education.vic.gov.au or on 9637 3146.

12.2.1.3

School council must nominate and minute annually the taxation treatment for each trading operation. The taxation treatment (taxable or input taxed) applies to all transactions for that trading activity, revenue, expenditure and asset acquisition.

12.2.1.4

The school council or the finance committee must review the viability of trading operations on a regular basis.

12.2.1.5

A decision to subsidise a loss-making operation must be recorded in school council minutes.

12.2.1.6

For each trading operation, an annual budget (both revenue and expenditure) must be prepared, presented and reviewed by the finance committee (or by the school council if the school doesn’t have a finance committee) and approved by the school council.

12.2.1.7

For each trading activity, budgets must be monitored and reviewed regularly by the school council or finance committee. Variances identified must be investigated and reported with corrective action taken if required.

12.2.1.8

For each trading activity, a profit and loss statement must be prepared and presented to school council or finance committee at least annually.

12.2.1.9

Cash handling requirements as outlined in this manual are complied with (Refer to section 10 Receivables Management and Cash Handling).

12.2.1.10

Schools operating a cash float within a trading operation must adopt the following procedures:

• the amount of the float must be determined by the school council and must be adequate in terms of the size of the trading operation
• the amount of the float must remain constant from day-to-day
• the float must be locked overnight and during weekends
• the float balance must always be clearly recorded on the schedule of daily takings

At the end of the day’s trading, all collections, including the cash change float, are where practicable to be counted by two people. The set change float for the following day is then to be extracted and the remaining cash on hand is to be processed as follows:

• the amount must be entered in a daily sales book or register, which is to be maintained to record collections, and must be signed by 2 people where possible
• the amount must be recorded on the bank deposit slip
• the bank deposit slip and collections must be forwarded to the administration office for banking by close of the school day
• the business manager must issue a receipt for the collections and the original is to be affixed to the back of the daily sales book
• the amount collected must be banked, and entered on CASES21

12.2.1.11

All cash, cheques and so on must be banked intact and where possible, banking carried out daily to avoid having money on the school premises overnight.

12.2.1.12

Money kept on the premises overnight must be locked in a secure location and checked regularly by more than one person (where practical).

12.2.1.13

Routinely review and reconcile receivable and billing adjustments (credit notes) for trading operations that run subsidiary systems.

12.2.1.14

Total of receipts issued must be reconciled with total monies collected.

12.2.1.15

Money collected away from the school office must be counted by 2 people (where possible) and a control receipt issued.

12.2.1.16

The collectability of trading operations receivables must be monitored regularly and appropriate action taken.

12.2.1.17

Attendance lists must be regularly reconciled with takings where appropriate.

12.2.1.18

All adjustments to receivables (i.e. families or sundry debtors) must be approved by the school council prior to any adjustments being made in CASES21. Adjustment could include the write off-of invoices where the collectability is not going to occur. For example, an invoice processed for an excursion and the student is no longer attending. This invoice entered into CASES21 must be reversed.

12.2.1.19

Schools must comply with expenditure management requirements as outlined in this manual (refer to section 11 Expenditure Management).

12.2.1.20

Schools must comply with the policy for schools on Procurement.

12.2.1.21

Schools must engage with Legal Services Division with regards any contracts, licences or agreements.

12.2.1.22

To comprehensively depict the financial position of a trading operation schools must, where practical and possible, apportion other expenditure such as utilities, telephone and cleaning costs to the trading operation.

12.2.1.23

Schools must comply with the requirements of school local payroll for employees as outlined in section 11.9 of Expenditure Management.

12.2.2 Prohibited policy (Must not do)

12.2.2.1

Schools must not pay expenses directly from cash takings.

Definitions

CASES21
Computerised Administrative System Environment in Schools is the software package provided to Victorian government schools to support school administration, finance and central reporting.

Receivables
Monies owing to the school for the sale of goods or provision of services.

Subsidiary systems
System external to CASES21 used for financial and/or student management. For example, Kids Wizz and QikKids.

Taxation treatment
The way transactions of a trading operation will be treated for Goods and Services Tax (GST) purposes. Taxable — GST is paid and reclaimed for applicable transactions. Input Taxed — no GST is paid or claimed for any transactions.

Section 13 Asset and Inventory Management

13.1 Overview

Schools have substantial investments in stores, equipment, furniture, books and other learning materials. Although most items are covered by insurance administered within the department, proper asset management procedures must be followed on purchases, custody, loss or disposal of these items to ensure accurate and up-to-date information is maintained.

This policy is aimed to guide schools in accounting for assets in accordance with relevant accounting standards and legislation.

By keeping appropriate records and identifying valuable items of school equipment and furniture, losses can be minimised and the value of the assets can be used to deliver educational services for the school.

It is crucial that schools strictly follow asset management policy and guidelines to ensure accurate reporting and accountability of assets are recorded in CASES21 Finance system.

13.2 Asset acquisition, recognition and recording

An asset is a resource that, according to the Framework for the Preparation and Presentation of Financial Statements, is controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. This is the minimum dollar value of an item as determined under the Financial Management Act 1994 (Vic), Part 5 Financial Responsibility.

13.2.1 Mandatory policy (Must do)

13.2.1.1

Purchases must be made in compliance with the policy for schools on Procurement — Schools.

Depending on the value of the goods purchased, oral or written quotations or tenders are required when acquisitions are being made.

13.2.1.2

School councils have authority to enter into construction contracts for building structure improvements for up to $100,000.

13.2.1.3

If a school is considering building structure improvements greater than $100,000, the school must discuss this with the Victorian Schools Building Authority first through an email request to vsba.school.funded@education.vic.gov.au

13.2.1.4

Apply the following recognition criteria as per Australian Accounting Standard AASB 116 Property, Plant and Equipment to items purchased to determine if they are to be recognised as assets:

• the school must benefit from the asset item
• the item has a useful life of 12 months or more
• the cost of the item can be measured
• the item has a GST exclusive purchase cost greater than or equal to $5,000 (the purchase cost must include any delivery and installation costs. Where the delivery and installation charge covers multiple items, the costs must be apportioned to each item).

13.2.1.5

Items determined to be assets must be entered into the CASES21 Finance Asset Register.

13.2.1.6

Items that meet the asset recognition criteria are capital acquisitions and must be recorded with the appropriate GST code.

13.2.1.7

New assets must be added to the CASES21 Finance Asset Register within 30 days of acquisition.

13.2.1.8

Portable and attractive items, which may be subject to risk of loss/theft that fall under the asset recognition threshold of greater than or equal to $5,000 must also be recorded. These items are recorded as expenses with a GST code of G11 and recorded in the asset register using the 'AA' categories. For example, computers, audio-visual and photographic equipment.

13.3 Identification of assets

Identification of an asset or asset tagging is vital for schools. A good asset labelling system with ID numbers enable clear identification of assets, which facilitates the process of asset verification and loss prevention. A standard and consistent approach must be adopted across all schools.

13.3.1 Mandatory policy (Must do)

13.3.1.1

The identification of assets must form part of the start to end process of asset creation. Schools must tag an asset as soon as it has been created in CASES21 Finance Asset register and assigned a CASES21 asset code number.

13.3.1.2

Where appropriate, every asset must be bar coded with stickers (preferable method), engraved or stamped with the name of the school and asset number at the earliest practical date.

13.4 Repairs and maintenance

During the school year, various works will be performed around the school’s premises which would generally be classified under repairs and maintenance. It is crucial that schools understand the nature of these transactions. Repairs and maintenance is necessary to allow the continued use of existing assets.

Repairs and maintenance works merely maintain assets in their original state. The works do not enhance the use of the asset, nor do they extend the expected useful life of the asset.

13.4.1 Mandatory policy (Must do)

13.4.1.1

A repairs and maintenance related work is not capital in nature, as it does not provide future economic benefits. Therefore, all repairs and maintenance costs are to be expensed (i.e. using GL Chart of Account codes 86XXX other than asset codes beginning with 26XXX).

13.4.2 Examples that differentiate between capital assets and operating expenses

Capital assets

• Individual cost of an item that meets the asset definition and recognition criteria, and the department’s capital threshold of greater than or equal to $5,000
• Fit out costs for affixed items greater than or equal to $5,000, for example, converting a small room to a theatre
• Major classroom, canteen, hall refurbishments greater than or equal to $5,000
• Complete replacement of carpet greater than or equal to $5,000
• Replacing a roof that incorporates new materials, or new technology (for example, more durable or weather-resistant materials are used) greater than or equal to $5,000

Operating expenses

• Individual cost of an item that does not meet the department’s capital threshold of greater than or equal to $5,000
• Training cost – relates to training of team member which does not contribute to the asset directly
• Painting (internal and external)
• Cost of replacing tables and chairs for a room if individually less than $5,000
• Purchase of information technology equipment less than $5,000
• Replacement of a section of carpet
• Repairs for any damage to a section of a roof

13.4.3 Examples of common repairs and maintenance expenses

Operating expenses

• Patchwork for leaking roofs, damaged sections of walls, worn sections of walkways, potholes and bike tracks
• Maintenance for blocked drains
• Replacing broken sections of pipes
• Chemical treatment of pipes for tree root intrusion
• Grinding footpath trip hazards
• Gutter cleaning
• Maintenance of electrical hazards
• Maintenance of water leaks from taps, toilets and student drinking fountains (bubblers)
• Water testing
• Street cleaning
• Annual cleaning
• Scheduled and ongoing preventative maintenance

13.5 Asset renewals and upgrades

Asset renewals relate to the complete replacement that restores the asset to a ‘like new’ condition. Asset upgrades relate to expenditure that enhances an existing asset and increases the life of the asset beyond its original life.

Asset renewals and upgrades occur after the initial asset acquisition. It must be treated as capital as these activities enhance the use of the asset, its service potential, extend its expected useful life (beyond 12 months) and provide future economic benefits. Asset renewals are distinguished from general repairs relating to reactive/planned maintenance that merely restore the assets through ‘wear and tear’.

13.5.1 Mandatory policy (Must do)

13.5.1.1

Asset renewals and upgrades are to be capitalised if the item has a useful life of 12 months or more and has a GST exclusive purchase cost greater than or equal to $5,000. It is also essential that the replaced/renewed asset is derecognised (disposed).

13.5.2 Examples that differentiate between capital assets and operating expenses for asset renewals

Capital assets

• Carpet, tiling and linoleum replacement for entire area (complete renewal) greater than or equal to $5,000
• Landscape development renewals for entire area (complete renewal) greater than or equal to $5,000, including:
  • complete wall replacement
  • re-pavement of entire area
  • re-sewing/re-sodding of entire area
  • asphalt resurfacing of entire area
• Oval/court and pitch resurfacing (complete renewal) greater than or equal to $5,000:
  • resurfacing for entire oval (renewing old synthetic grass with new synthetic grass)
  • resurfacing for entire court/pitch area
• Replacement of entire roof greater than or equal to $5,000
• Replacement of performing arts room equipment where individual equipment is greater than or equal to $5,000
• Resealing for the entire road surface greater than or equal to $5,000
• Gravel re-sheeting for entire road length greater than or equal to $5,000

Operating expenses

• Carpet, tiling and linoleum replacement for part of area (part renewal)
• Landscape maintenance (section/part of repair):
  • section of wall replacement
  • re-pavement of section
  • re-sewing/re-sodding of section
  • asphalt resurfacing of section
• Oval/court and pitch maintenance (section/part of repair)
• Resurfacing or part repair of a section of the oval/court/pitch area
• Maintenance of roof — replacement of a section of the roof
• Resealing for part or short section of the road
• Gravel re-sheeting for part of or short sections of the road length

13.5.3 Examples of common asset upgrades

Capital assets

• Electrical system upgrade greater than or equal to $5,000
• Drainage and grounds upgrades greater than or equal to $5,000
• Building/structural extensions or enhancements greater than or equal to $5,000 (for example, changing domestic kitchen to a commercial kitchen)
• Car park extensions greater than or equal to $5,000
• Oval/court and pitch resurfacing greater than or equal to $5,000:
  • changing from natural grass to synthetic grass
  • changing from asphalt to rubber
• Replacing pumps with greater capacity greater than or equal to $5,000
• Replacing timber with concrete greater than or equal to $5,000
• Sprinkler system upgrades greater than or equal to $5,000
• Widening footpaths greater than or equal to $5,000
• Pavement upgrade — higher standard greater than or equal to $5,000 (for example, upgrading from gravel surface to concrete)
• Enlarging a grandstand at a sporting facility greater than or equal to $5,000

13.6 Fit out costs

The purchase price and installation of fit out items (for example, office partitioning) are capitalised as their own separately identifiable fit out if has a GST exclusive purchase cost greater than or equal to $5,000. Installations are capitalised as they are ‘directly attributable’ in bringing the fit-out items to the condition and location ready for use.

Only items that are ‘affixed’ (for example, carpet, blackboard (if fixed to the wall), blinds and curtains) are to form part of the initial fit out. All moveable items (such as tables, chairs, desks, shelves and moveable whiteboards) are capitalised separately if they individually meet the department’s threshold of greater than or equal to $5,000.

13.6.1 Examples that differentiate between assets that are part of initial fit out cost and separately identifiable plant and equipment

Initial fit out

• Partitions
• Affixed cabinets
• Blinds and curtains
• Affixed projectors
• Affixed digital boards
• Carpet for entire room
• Affixed shelves

Separate asset

• Portable projectors greater than or equal to $5,000
• Portable digital boards greater than or equal to $5,000
• Tables and chairs individually greater than or equal to $5,000
• Moveable shelves individually greater than or equal to $5,000

13.6.2 Case studies of initial fit out of a school classroom

Case Study – initial fit out of a school classroom

As an example, if you had a classroom that has:

• 18 tables at $118 each
• 24 chairs at $23 each
• a desk and chair for the teacher at $249 and $68
• two sets of book shelves at $350
• a blackboard at $450
• a whiteboard (mobile) at $250
• carpet at $3,750
• blinds or curtains at $1,534

The total dollar value of the furniture and fittings in this room would be $5,734, as the only items that are capitalised in the initial fit out are ‘affixed’ items such as the carpet, blackboard (if fixed to the wall), blinds and curtains. All moveable items such as tables, chairs, desks, shelves and the moveable whiteboard are capitalised separately if they individually meet the department’s threshold of $5,000. If the individual items are less than $5,000 then the item must be expensed to the most appropriate CASES21 chart of account code.

13.7 Asset stocktake guidelines

The accuracy and completeness of appropriate records is an essential basis for adequate asset verification.

13.7.1 Mandatory policy (Must do)

Stocktake

13.7.1.1

A physical stocktake of all assets must be conducted every 2 years. Each item must be sighted at least once every 2 years.

An asset stocktake:

• can be performed in stages throughout the year
• must minimise interference to educational programs.

An asset stocktake could be conducted on:

• certain asset categories or groups of assets each month or in particular months
• during each term, or
• during vacation periods.

13.7.1.2

For attractive items or shared items (for example, cameras), it would be prudent to sight these items at least once a term.

13.7.1.3

When carrying out stocktakes or asset verifications, regardless of the method used, the following procedures must be observed:

• The principal must nominate the date or period of time for the stocktake to take place.
• A stocktaking officer must be appointed by the principal to conduct and supervise the stocktake. This person will be independent and must not have custody of any asset to be counted. Assistant stocktaking officers (i.e. business manager), being persons who have knowledge of the location and identity of the items in particular areas, must also be appointed. An assistant stocktaking officer can be someone who has the responsibility for, or custody of, assets.
• Stocktake sheets listing all assets held by the school, by name and location, must be prepared from the asset register.
• The stocktake sheets must list the serial numbers or other unique identifying reference against each asset to assist with the asset recognition.
• On the appointed date, the areas designated for the stocktake must be systematically checked for assets listed on the appropriate stocktake sheet by the stocktaking officer and one other person. The quantity of each item must be recorded on the stocktake sheet. The serial numbers or unique identifiers must also be confirmed on the stocktake sheet.
• If a third party is engaged to conduct the stocktake, the use of electronic equipment may be used rather than stocktake sheets. The information that is to be provided in the stocktake sheets must be the same as what is entered into the electronic equipment used to conduct the stocktake.
• Items encountered that match the definition of an asset that is not on the stocktake sheet/report issued by the third party conducting the stocktake must be recorded for checking on the asset register.
• On completion of the physical check of each stocktake sheet/report from the third party in the stocktake, the stocktaking officer must reconcile the count on the stocktake sheet/report from third party engaged to conduct stocktake against the asset register.
• Where discrepancies are disclosed the items involved are subject to a recount.
• All stocktake sheets or reports produced by the third party must be signed off by the officers who conducted the count and all discrepancies notified in writing to the principal.

13.7.1.4

The stocktake results must accurately reconcile the physical assets to the assets recorded in the CASES21 Finance Asset register.

13.7.1.5

All adjustments identified by the stocktake must be approved by the school council before an adjustment is recorded in CASES21 Asset register.

Discrepancies in stocktake or loss of assets

If a stocktake reveals a substantial discrepancy (for example items of equipment/furniture located that are not recorded in the asset register and/or loss of equipment recorded in the equipment register), the following action must be taken.

13.7.1.6

In the case of items not being recorded in the asset register, the matter must be drawn to the attention of the principal.

13.7.1.7

An investigation must be undertaken to identify how the items were acquired. Only then will it be possible to determine whether the items are owned by the school and is in its custody, the value (cost) of the items and whether they should be treated as school assets.

13.7.1.8

In the case of asset additions because of stocktaking activities, the school must:

• determine the fair value of the asset and advise the Schools Financial Management Support team, if the value of the asset is greater than or equal to $5,000. Email schools.finance.support@education.vic.gov.au
• the Schools Financial Management Support team will liaise with Financial Services Division (FSD) to assess the asset and verify the value. If the value of the asset is found to be less than $5,000 then the school must create the asset in CASES21 using ‘PY’ as the asset type and assign a value of zero. If the asset is found to be greater than or equal to $5,000 then the school will be advised of the appropriate asset type by FSD, process an asset additions journal to adjust the quantity and price for the asset, process a subsequent General Ledger journal to reflect the value added in the additions journal and send supporting documentation to det.assets.accounting@education.vic.gov.au

13.7.1.9

In the case of loss of equipment, an officer must be appointed by the principal to investigate. The principal must be provided with a written report of discrepancies stating what action has been taken to locate the missing items.

13.7.1.10

The principal must then recommend to the school council the appropriate action/s that must be taken.

Regulations require that all cases of suspected or actual theft, wilful damage, arson, irregularity or fraud in receipt or disposal of money or other property of any kind is to be reported to the regional director and relevant department personnel. Refer to Section 3 Risk Management.

13.7.1.11

A police report must be filed if the value of the stolen/lost asset is above the department’s capitalisation threshold (greater than or equal to $5,000).

13.7.1.12

If the school council is satisfied that any missing item cannot be recovered and appropriate action has been taken as above, the next action is to write off the item and adjust the asset register in CASES21.

13.7.2 Stocktake of library materials

The increasing importance of library resources in the educational programs of schools and the number, variety and monetary value of these resources make the effectiveness of the library’s stock control methods central to the safeguarding of assets and the efficient operation of the library.

13.7.3 Mandatory policy (Must do)

13.7.3.1

A full stocktake of library books and publications is to be carried out once every 2 years.

13.7.3.2

While educational evaluations of libraries such as culling, updating the catalogue and reorganising records can be conducted at any time, the stocktake provides a good opportunity to carry out these tasks.

13.7.3.3

Stocktakes are to be conducted in liaison with the library manager at such times as the principal considers best to achieve the aims of effective stock and education management of the library resource. This is to be achieved with a minimum of interference to the school’s educational program.

13.7.3.4

The most desirable method of conducting the stocktake will be to carry out a complete stocktake of all library resources at the one time. The advantage of this is that it provides a comprehensive review of the effectiveness of stock-control methods at a particular time.

13.7.3.5

Other options include:

• a half stocktake annually or
• a progressive stocktake of the library covering each area at convenient intervals over 2 years or a shorter period.

13.7.3.6

Irrespective of the method and frequency of the stocktake, it is recognised that staff involved can normally only effectively perform a stocktake if entry by pupils and other non-involved staff to the stocktaking area is prevented or very strictly controlled. The degree to which access to the library is to be limited or prevented is clearly one which must be clarified by the principal in discussion with the library manager prior to the commencement of the stocktaking exercise.

13.7.3.7

The library manager is responsible for the initiation and maintenance of effective stock-control methods within the library.

13.7.3.8

As a result of a stocktake, the library’s records must accurately show for the area covered:

• accession of items available for use
• accession of items missing
• accession of items written off as unsuitable for continued inclusion in the library
• the total net stock at the end of the period covered by the stocktake.

13.7.3.9

At the conclusion of the stocktake, whether full or progressive, a stocktake statement must be prepared.

13.7.3.10

After the stocktake is completed the library manager:

• presents the stocktake statement to the principal and discusses appropriate follow-up action
• with the approval of the principal, writes off items that have been culled from the collection or lost, damaged or missing for more than 2 years and makes appropriate notations in the accession or card register
• removes the shelf-list cards for written-off items.

13.7.3.11

Where schools suffer loss or damage to library materials as a result of vandalism, theft, fire, flood, rain etc. the library manager must discuss with the principal what action must be taken to assess and quantity the loss or damage and whether a full or partial stocktake is required.

Adjusting for duplicate entries in asset register

13.7.4 Mandatory policy (Must do)

13.7.4.1

Complete a write-off transaction – refer to CASES21 Finance Business Process Guide Section 4 – Assets (PDF) (login required) for guidance on disposals.

13.7.4.2

Complete Asset Status Change Request form (DOCX).

13.8 Receipt of donated property, equipment or materials

13.8.1 Mandatory policy (Must do)

13.8.1.1

The receipt of donated equipment or materials must be reported by the principal at the next school council meeting and minuted.

13.8.1.2

The school must perform the following:

• determine the fair value of the asset and advise the Schools Financial Management Support team. Email schools.finance.support@education.vic.gov.au if the value of the asset is greater than or equal to $5,000
• the Schools Financial Management Support team will liaise with Financial Services Division (FSD) to assess the asset and verify the value. If the value of the asset is found to be less than $5,000 then the school should create the asset in CASES21 using ‘DO’ as the asset type and assign a value of zero. If the asset is found to be greater than or equal to $5,000 then the school will be advised of the appropriate asset type by FSD, process an asset additions journal to adjust the quantity and price for the asset, process a subsequent General Ledger journal to reflect the value added in the additions journal and send supporting documentation to det.assets.accounting@education.vic.gov.au

13.8.1.3

Schools must inform the department if they have received a donated parcel of land and or a building. Email the Schools Financial Management Support team at schools.finance.support@education.vic.gov.au

13.8.1.4

Schools are also required to contact the Victorian Schools Building Authority with all the relevant details regarding the donation of land and or a building, as either of these assets must be recorded onto the department’s asset register at fair value.

Please send an email to the school asset account det.assets.accounting@education.vic.gov.au describing the asset. A Victorian Schools Building Authority team member will then be in contact with you.

13.9 Hire/leasing of equipment

School councils have the necessary authority to enter into hire/lease of equipment agreements provided the conditions stipulated in part 2.3 division 3 section 2.3.6 (3) of the Education and Training Reform Act 2006 and must be strictly adhered to.

13.9.1 Mandatory policy (Must do)

13.9.1.1

A school may enter into an operating lease agreement. For example, a school may lease a photocopier for a period of 3 years.

13.9.1.2

Equipment leased via an operating lease must be included in the CASES21 Asset module (Asset Register) with a purchase cost of $0.00, quantity, lease start and end date and monthly lease cost.

13.9.1.3

Leased assets are not covered under school equipment coverage scheme (SECS) for insurance and schools must obtain their own insurance for leased items.

13.9.2 Prohibited policy (Must not do)

13.9.2.1

School councils do not have the authority to borrow money so therefore are unable to enter into finance leases (as opposed to operating leases).

13.10 Insurance on stores

13.10.1 Overview

The department’s School Equipment Coverage Scheme (SECS) applies to school equipment and stores.

13.10.2 Prohibited policy (Must not)

13.10.2.1

Leased assets are not covered under School Equipment Coverage Scheme (SECS) for insurance and schools must obtain their own insurance for leased items.

13.10.3 Additional resources

Refer to SECS guidelines.

13.11 Library materials

13.11.1 Mandatory policy (Must do)

Identification and recording library materials

13.11.1.1

The library manager is responsible for maintaining methods of stock control that accounts for all library books, textbooks, and other non-accountable items and materials.

13.11.1.2

Where there is no library manager, the direct responsibility is assigned to the principal.

13.11.1.3

All library materials received from any source, except materials having a low value or short life, are to be actioned as soon as practical after receipt. The following are typical items that are to be recorded: books, maps, audio materials, projected visual materials, video materials, pictures, charts, microfilms and computer materials.

The accession of library materials

13.11.1.4

Alternative methods of the accession of library materials are:

• a library register/book
• a card register (cards filed in ascending number order) and/or order slip
• a periodical card register (for newspapers, magazines and other periodicals)
• electronic tracking, for example, bar coding.

Library loan records

13.11.1.5

A record of items on loan must be maintained. School councils may implement a library fine system to encourage the return of borrowed materials.

13.12 Other assets and textbooks

Schools are required to operate effective stock control over all equipment, textbooks, class sets etc.

13.12.1 Mandatory policy (Must do)

13.12.1.2

Works of art with a value in excess of $200 must be recorded in the CASES21 Finance asset register.

13.12.1.3

Assets won as prizes, must be added to the CASES21 Finance asset register at their fair value at the time they were acquired.

13.13 Inventory control

Inventory may be divided into two types:

• trade (canteen stock, school uniforms, stationery and office equipment such as calculators that are sold to pupils and staff)
• consumable items used in the day-to-day running of the school.

They are items that must be monitored and managed for the efficient running of the school and for insurance purposes.

13.13.1 Mandatory policy (Must do)

13.13.1.1

Inventory items must be recorded separately.

13.13.2 Prohibited policy (Must not do)

13.13.2.1

Inventory items must not be recorded on the CASES21 Finance asset register.

13.13.3 Hazardous substances

All chemicals must be considered dangerous. Effective stock control of chemicals is therefore essential.

13.13.4 Mandatory policy (Must do)

13.13.4.1

Schools must base their control of chemical stocks on the use of secure areas for the storage of dangerous or bulk reserve supplies, and stock cards that note receipt and issue of chemicals.

13.13.4.2

Schools must comply with the Dangerous Goods (Storage and Handling) Regulations 2022 (Vic) and the Occupational Health and Safety Regulations 2017 (Vic) by maintaining a chemicals/hazardous substances/dangerous goods register together with material safety data sheets (MSDs) obtained from the supplier.

13.13.5 Additional resources

For further information refer to Employee Health, Safety and Wellbeing – OHS Management System (OHSMS) and Workers’ Compensation.

13.13.6 Class and library materials

Effective stock control over class and library materials is essential.

13.13.7 Mandatory policy (Must do)

13.13.7.1

When textbooks and similar learning materials are issued on loan to students, a record of the issue must be maintained to facilitate their return.

13.13.7.2

In cases of low-value or short-duration loans, the principal must implement an alternative system of control. Schools must develop systems appropriate to their circumstances.

13.14 Loan of Equipment to Community Groups or Individuals

13.14.1 Mandatory policy (Must do)

13.14.1.1

A principal may make loans of specified items of school equipment to individual students.

13.14.1.2

The officer who is designated this authority is responsible for ensuring that records, including the signature of the student borrowing the article, are maintained to allow for the recovery of the article.

13.14.1.3

When equipment is lent by the school principal, a receipt signed by the borrower must be obtained and a record of the loan must be maintained to facilitate its return.

13.14.1.4

If library materials or textbooks are lent to students, teachers or other school-based staff, a record of the loan must be maintained to facilitate their return.

13.14.1.5

Items borrowed for personal use must be insured by the borrower.

13.15 Transfer of assets between schools

13.15.1 Mandatory policy (Must do)

13.15.1.1

When a school transfers an asset, the receiving school must enter the asset at the same value as the transferring school has written off the asset.

13.15.1.2

The items must be at current net book value (NBV).

13.15.1.3

Schools must ensure that an Asset Status Change Request form (DOCX) is completed and approved by the principal before any physical items are transferred.

For further guidance contact the Schools Financial Management Support team. Email: schools.finance.support@education.vic.gov.au

13.16 Transfer of materials or equipment

When materials or equipment are transferred between government schools or to an office of the department without a change being made to their value, a transfer advice giving full details, must be completed in triplicate by the dispatching schools.

13.16.1 Mandatory policy (Must do)

13.16.1.1

Schools must ensure that an Asset Status Change Request form (DOCX) is completed and approved by the principal before any physical items are transferred out.

13.17 Disposal of surplus or unserviceable assets of materials

School councils, under Part 2.3, Division 5, Section 2.3.18 of the Education and Training Reform Act 2006 (Vic), can sell equipment, goods or other similar personal property acquired for use in the school. The main purpose of this section of the Act is to enable school councils to sell obsolete and surplus goods and equipment.

13.17.1 Mandatory policy (Must do)

General policy

13.17.1.1

All surplus, obsolete or unserviceable stores or assets must be assessed by a board of survey prior to any decision being made about disposal.

13.17.1.2

A school council can retain the proceeds of the sale of the asset if the amount is less than $10,000. (Less than $10,000 threshold is determined by the Minister).

13.17.1.3

If the proceeds of the sale of an asset exceeds $10,000, the school council must seek approval in writing from their local regional director (login required) to retain the proceeds of sale.

13.17.1.4

All money raised by the disposal of goods must be re-used to the benefit of the educational program of the school.

Board of survey

13.17.1.5

In the normal course of events, 3 people constitute a board of survey. The board will consist of the principal, a school council representative and a third nominee.

13.17.1.6

The board’s role is to:

• identify obsolete or unserviceable equipment
• recommend to school council a course of disposal action, for example, wreck, convert to a training aid or sell
• in the case of asset sales, advertise locally that the asset is available for purchase and request bids from any interested person and
• arrange for any proceeds of sale to be paid to the school or the local regional finance manager, in accordance with the above

13.17.1.7

Asset Status Change Request form (DOCX) must be completed in a timely manner.

13.18 Delegated authority for disposal of buildings

School councils have the delegated authority to dispose of school assets (Buildings) with a residual value of up to $100,000. School land is owned in the name of the Minister for Education. Schools do not have authority to dispose of land owned by the Minister for Education.

13.18.1 Mandatory policy (Must do)

13.18.1.1

Schools must seek advice on the value of an asset prior to taking local action.

13.18.1.2

This is required regardless of whether the asset was originally funded by the department or by the school.

13.18.1.3

Schools are required, regardless of whether the asset was originally funded by the department or by the school, to provide the following:

• Send an email to the school asset account vsba.school.funded@education.vic.gov.au describing the demolition work you want to undertake, with a marked-up school plan clearly identifying the asset that is to be removed.
• A Victorian Schools Building Authority team member will respond with a current asset value and the guidance for the principal to authorise the demolition.
• Once the school has received the asset value, the school will need to provide an email authorising the demolition work with a marked-up (shaded or outlined in red) school plan showing the asset that has been disposed, the date of the disposal and how the asset was disposed (demolition, sale and removal).
• A Victorian Schools Building Authority team member will remove the asset from the department’s asset register.
• If the asset value is greater than $100,000, the school must discuss the disposal of the asset with the Victorian Schools Building Authority first through an email request to vsba.school.funded@education.vic.gov.au

13.19 Delegated authority for disposal of assets (plant and equipment and intangibles)

13.19.1 Mandatory policy (Must do)

13.19.1.1

Schools must ensure that the standard form is completed for asset disposals.

13.19.1.2

All Plant and Equipment asset disposals must be completed via the Asset Status Change Request form (DOCX) in a timely manner.

13.19.1.3

All surplus, obsolete or unserviceable stores or assets must be assessed by a board of survey prior to any decision being made about disposal.

13.19.1.4

All money raised by the disposal of goods must be re-used to the benefit of the educational program of the school.

13.19.1.5

In the normal course of events, three people constitute a board of survey. The board must consist of the principal, a school council representative and a third nominee.

13.19.1.6

The board’s role is to:

• identify obsolete or unserviceable equipment
• recommend to school council a course of disposal action, for example, wreck, convert to a training aid or sell

13.19.1.7

Schools councils have the authorisation to dispose of assets with net book value (NBV) up to $50,000 and any asset with a NBV higher than $50,000 must be approved by the department.

13.19.1.8

Schools must first identify the asset through the asset register to be disposed, and then contact an asset team member by emailing det.assets.accounting@education.vic.gov.au to obtain the NBV of the asset. This is to determine if approval is needed for the asset disposal from the department.

13.19.1.9

The school must get the completed approval for the disposal of the asset before proceeding with the disposal in the CASES21 Asset module system.

13.19.1.10

The physical disposal of the asset must be initiated soon after CASES21 disposal.

13.19.1.11

All disposals must be signed off prior to the disposal of asset.

13.19.1.12

Disposal in CASES21 Asset module system will flow onto the department’s asset management system.

13.19.1.13

It is critical that schools file all disposal forms and supporting documentation, as this information needs to be available upon request by the department.

Definitions

Asset
An asset is, according to the Framework for the Preparation and Presentation of Financial Statements, a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

The definition assumes:

• the asset will generate a positive contribution for the entity — i.e. the service potential will be realised
• the entity has capacity to control the asset
• the asset possesses a value that can be measured reliably, and
• the estimated value is above the minimum amount specified in a recognition threshold (greater than or equal to $5,000 department’s threshold)

Asset clearing account
This is a holding account where transactions/amounts are recorded temporarily and that are to be transferred to specific asset accounts once the purchase is complete.

Asset disposal
This is the act of selling an item (usually a long-term asset) that has been depreciated over its useful life or is no longer required by the school.

Asset recognition threshold (capitalisation threshold)
This is the minimum dollar amount below which expenditure is recorded, even if it associated with an activity that is typically capital in nature. The department’s capitalisation threshold is greater than or equal to $5,000.

Asset register
A comprehensive list of items and equipment that shows what the school owns. An asset register is used to track and manage school assets.

Control of an asset
Asset control is usually evidenced by a school’s:

• ability to use the asset to achieve its objectives
• ability to restrict or change access to the asset
• ability to surrender the asset to another entity
• ability to dispose of the asset, and
• obligation to bear the risks associated with holding the asset

Fair value
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Finance lease
This effectively transfers ownership of the leased property from the company to the school at the end of the lease term, usually at a cost to the school (residual).

Characteristics of a finance lease are:

• the lease is not able to be cancelled, or cancelled without the imposition of a large penalty
• ownership of the object leased is transferred at the end of the lease
• the lease contains a nominal purchase option
• the lease term is for 76 per cent or more than the useful life of the leased item
• the present value of the minimum lease payments is equal or greater than 90% of the fair value of the leased item

Importantly, school councils do not have the authority to borrow money so therefore are unable to enter into finance leases (as opposed to operating leases).

Net book value
The net value of an asset. Equal to its original cost (its book value) minus depreciation and amortisation.

Non-current physical asset
These assets are items that are tangible — i.e they have a physical nature and a useful life beyond the current accounting period, typically one year.

Non-current physical assets differ from inventory items as inventory items are ‘consumable’ (used up, expended, have a limited life, are on sold), or under the recognition threshold for the category.

Operating lease
This is like a rental agreement where the goods are eventually returned to the lesser (company). For example, a school leases a photocopier for a period of three years. At the end of the 3 years, the school returns the photocopier to the company without further obligation.

Residual value
The estimated amount that a school would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Stocktake
Verification of the physical existence, location and condition of assets and inventories on a regular basis.

Useful life
Is the period over which an asset is expected to be available for use by the school.

Section 14 Liabilities Management

14.1 Overview

Liabilities are amounts owed to lenders and suppliers. Liabilities can also include amounts received in advance for future costs or for a future service. For schools, the most common liabilities are accounts payable, revenue in advance and co-operative loans.

14.2 Accounts Payable

These are the amounts owed to creditors for the supply of goods and services.

14.2.1 Mandatory policy (Must do)

14.2.1.1

When entering creditor details check the validity of the ABN provided.

14.2.1.2

Where a creditor does not have an ABN, select the most appropriate code to be entered into the ABN field. Refer to: CASES21 Finance Business Process Guide Section 3 — Creditors (staff login required).

14.2.1.3

Regularly review invoices awaiting payment and outstanding orders and take appropriate action. (For example, pay overdue invoices, cancel invalid invoices and orders).

14.2.1.4

Regularly review unallocated creditor items and take appropriate action. (For example, allocate payments to relevant invoices.)

14.2.1.5

Enter invoices on a regular basis into CASES21 in the period to which they apply.

14.2.1.6

Undertake balance day adjustments for prepaid expenses where appropriate. (For example, deposit paid for next year’s camp.) Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments (staff login required).

14.3 Revenue in Advance

Amounts received in advance for future costs or future services yet to be performed.

14.3.1 Mandatory policy (Must do)

14.3.1.1

Undertake any balance day adjustments for revenue in advance. Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments (staff login required).

14.3.1.2

Regularly review the balance of revenue in advance to ensure validity and take appropriate action if required.

14.4 Co-operative loans

A school council does not have the power to engage in any form of borrowing. A school community may choose to raise funds for new capital works initiatives by forming a school community co-operative and taking out a government guaranteed co-operative loan.

14.4.1 Mandatory policy (Must do)

14.4.1.1

If a school is considering a co-operative loan arrangement, please contact Schools Financial Management Support at email: schools.finance.support@education.vic.gov.au and enquire about an application.

14.4.1.2

In contacting School Financial Management Support, further guidelines will be provided. (A flow chart for applying for Co-operative loans is available upon request.)

14.4.1.3

Co-operative loans require approval from the Department of Treasury and Finance (DTF) and applications are lodged through the Department.

14.4.1.4

A co-operative loan must only be taken out with Treasury Corporation Victoria (TCV) for a maximum of fifteen years.

14.4.1.5

Government school co-operatives are established under the co-operative as non-trading, incorporated entities with limited liability. Membership is voluntary and open to any person (parent, staff and/or supporter).

14.4.1.6

Where a school does not have sufficient funds available to construct or undertake improvements in relation to capital works, a business case must be prepared by the school to assess the feasibility of the loan request in consultation with the Department.

14.4.1.7

Co-operative loans are only considered for capital works (either a new building or extension) that can generate future income to meet loan repayments.

14.4.1.8

A school co-operative must only borrow for one purpose and obtain one loan. Schools are required to be aware that if the:

• total project cost is under or equal to $200,000 the loan amount cannot be more than 70% of the total project cost
• total project cost is greater than $200,000, the loan amount cannot be more than 50% of the total project cost

14.4.1.9

If successful in the application process and a loan is obtained:

• enter the loan amount as a non-current liability in CASES21 using the relevant Chart of Account code 40001
• enter the co-operative bank account associated with the loan

14.4.1.10

Ensure that loan repayments are recorded in CASES21. The interest component is to be entered into CASES21 using the Chart of Account code 86805 and the principal component is to be entered into CASES21 using the Chart of Account code 40001.

14.4.1.11

Schools must perform regular checks to ensure that the balance of the co-operative loan in Chart of Account code 40001 reconciles with the outstanding loan balance as per the loan statement.

14.4.1.12

Ensure compliance with the co-operative reporting requirements of Consumer Affairs Victoria.

14.4.2 Prohibited policy (Must not do)

14.4.2.1

A school cannot enter into a loan agreement with third party organisations i.e. bank and/or financial institution.

14.4.3 Year-end requirements (30 June)

14.4.3.1

The following information must be made available upon request by the Department for end of financial year (30 June) requirements for co-operative loans entered into by a school:

• initial co-operative loan agreement held with Treasury Corporation Victoria
• loan bank statement stating the balance that is still outstanding at the 30 June
• confirmation of the balance held in CASES21 in chart of account code 40001 – Co-operative loan

Definitions

ABN
An Australian Business Number (ABN) is a unique 11-digit number that identifies a business to the government and community. It is used for tax and various other business purposes. A school can only obtain an ABN through the Department, as the ATO requires proof of identity for schools from the Department.

Accounts Payable
Accounts payable is money owed to suppliers and is shown as a liability on the balance sheet. These are recorded in the Account Payable sub-ledger of CASES21 at the time an invoice is produced for payment. (CASES21 Chart of Account code 37000).

CASES21
CASES21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian Government schools to support school administration, finance and central reporting.

Co-operative bank account
Account Account used to administer loans raised through a co-operative society for a school infrastructure project. (CASES21 Chart of Account code 10005).

Co-operative loan account
Loans raised through a co-operative Society for school projects. The monthly payment of principal is processed against the CASES21 Chart of Accounts code 40001.

Revenue received in advance
Funds received prior to the period they relate too. The revenue belongs to a future accounting period (generally the next one); however, the payment of revenue is received in the current accounting period.

School Community Co-operative
A democratic organisation set up by a school community to promote and access funding for a particular purpose relating to a school. Usually a building project such as the construction of a multipurpose facility.

Unallocated creditor items
Creditor payments and credit notes that have not been allocated to an invoice.

Section 15 Taxation

15.1 Income tax

15.1.1 Overview

Schools do not pay Income Tax pursuant to Section 24AK of the Income Tax Assessment Act 1936. Schools meet the definition of a State/Territory Body and are therefore exempt from income tax.

There is no income tax exemption certificate as such, but if schools need to quote that they are exempt from income tax, they should quote the section above.

15.2 Good and Services Tax (GST)

15.2.1 Overview

All schools are registered with an Australian Business Number (ABN) and are registered for GST. Schools must comply with the GST law in every respect.

As well as the mandatory policies below, schools should refer to the Tax EduGate page for extensive support and assistance in complying with the school’s GST obligations. Refer to Tax pages on the department website.

Schools can check their own, and their suppliers’ ABN details at ABR Business Search.

15.2.2 Mandatory policy (Must do)

15.2.2.1

The principal of each school must approve and ensure lodgement of a Business Activity Statement (BAS) with the Australian Taxation Office (ATO) each month within the required timeframe, and as early as possible when in a GST refund position. The business manager of the school can be the preparer of the Business Activity Statement (BAS).

15.2.2.2

Schools must lodge the Business Activity Statement (BAS) electronically through the ATO’s Business Portal.

15.2.2.3

Relevant school staff must have an up to date myGovID. For further details about schools and the myGovID, refer to myGovID website.

15.2.2.4

Schools must keep their ATO contact details up to date (minimum of two ATO registered contacts for each school) and where possible must maintain two up to date myGovIDs (refer to the myGovID website).

15.2.2.5

Schools must ensure their key staff (business manager or alternative staff member) are adequately trained to ensure the school complies with its tax obligations. This requires that staff participate in tax training module (Finance Matters training programs provided by the department) at least every three years.

15.2.2.6

Schools must ensure they have adequate processes and policies in place to process the GST implications of:

• school payments, including and ensuring they obtain a valid tax invoice for all purchases wherever necessary, and
• school revenue, ensuring they remit GST to the ATO where necessary

15.2.2.7

Regularly check the balance of the ATO Account Details – Integrated Client Account through the ATO’s Business Portal. If the balance is not zero, take appropriate action to reconcile the balance.

15.2.3 Prohibited policy (Must not do)

15.2.3.1

School personnel must not link their personal myGov account to the School’s BAS. Mygov is different to myGovID, and myGov should remain personal.

15.2.4 Tax invoices

The department’s policy is that schools should only deal with suppliers that are registered with an ABN. Click on this link to access the tax fact sheet on Tax Invoices.

15.2.5 Mandatory policy (Must do)

15.2.5.1

Schools must only deal with suppliers that are registered with an ABN.

Creditors GST registration can be checked at ABN Business Search.

15.2.6 Additional resources

• Schools should contact the Financial Accounting and Reporting unit of DET for help, support and training opportunities for tax greg.hart@education.vic.gov.au
• There are extensive GST fact sheets, GST examples and case studies contained at the following link: Tax Pages.

15.3 Fringe Benefits Tax (FBT)

15.3.1 Overview

Fringe Benefit Tax (FBT) is a tax on the employer, and as such, the department lodges the FBT return with the ATO, in respect of all central employees (i.e. those that work in Head and regional offices, and all departmental employees in schools (not including school council employees)).

The department has its own software system called FBT Tracker to collect and report FBT information. All schools have access to FBT Tracker and are expected to record their FBT activities in FBT Tracker. Click this link to access FBT Tracker. New Business Managers will need to apply for access to FBT Tracker from greg.hart@education.vic.gov.au

As well as the mandatory policies below, schools should refer to the department’s eduGate Tax homepage for extensive support and assistance in complying with the school’s FBT obligations.

15.3.2 Mandatory policy (Must do)

15.3.2.1

Comply with FBT requirements pursuant to the Commonwealth FBT law.

15.3.2.2

Record in FBT Tracker all activities on which FBT is payable, particularly the provision of food and drink in social situations.

15.3.2.3

The Principal of each school must approve and lodge an FBT declaration within FBT Tracker each year, at the required time advised by the department. The business manager can be the preparer of the information in the FBT declaration within FBT Tracker. New Business Managers will need to apply for access to FBT Tracker from greg.hart@education.vic.gov.au

Complete FBT declaration within FBT Tracker if the schools have:

• provided fringe benefits to any central payroll employee, then these details must be included in FBT tracker, or
• not provided any fringe benefits, then a nil return is required

15.3.2.4

After the FBT return is lodged, the department will issue an invoice to those schools that caused an FBT liability, based on the information in FBT Tracker. In this invoice, the department seeks reimbursement from the school for the FBT, which the department has paid on the school’s behalf to the ATO.

15.3.2.5

Schools must complete the School Hospitality Expenses Approval Form for all expenditure, which involves staff consuming food and/or drink. This form is available from: School Hospitality Expense Approval Form.

15.3.2.6

The form must be completed and signed off by the Principal before storing it. The form must be stored with the payment voucher. The form must document/justify the reason why FBT has been paid or not paid.

15.3.2.7

Schools must be aware of the department's Gifts, Benefits and Hospitality policy, particularly when they are considering providing benefits to staff.

15.3.3 Prohibited policy (Must not do)

15.3.3.1

Schools must not avoid FBT by not declaring any activities which would be subject to FBT (especially the provision of food and drinks in social situations).

15.3.4 Examples of school types of fringe benefits

These include:

• car fringe benefit (school car)
• expense payment (school council contributes towards gift)
• housing fringe benefit (teacher relocation etc.)
• entertainment type fringe benefits including
  • school pays for staff to consume alcohol
  • school pays for staff at School Council dinners (offsite, more than sustenance)
  • school pays for staff at Social functions (e.g. Christmas party)
• minor fringe benefits (i.e. less than $300) are exempt from FBT, but this exemption does not apply to Entertainment type fringe benefits (i.e. food and drink).

15.3.5 Additional resources

Further FBT examples and case studies are available from:

• Further FBT examples and case studies
• Tax Pages
• FBT Tracker

15.4 Donations to schools — Deductible Gift Recipient (DGR)

15.4.1 Overview

Schools can establish a School Building Fund DGR or School Library DGR. The department has established a formal process, which meets all ATO requirements in order to obtain ATO DGR endorsement. The process involves establishing a separate bank account for donated funds and restrictions on spending donated funds. Finally, the school must complete an ATO application form, which is submitted through the department. The departmental guidelines are available at this link Deductible Gift Recipient Funds (staff login required).

15.4.2 Mandatory policy (Must do)

15.4.2.1

A school must complete an ATO application form to become a Deductible Gift Recipient (DGR), which is submitted through the department.

15.4.2.2

If a school operates a School Building Fund or Library account, it must meet all ATO requirements, including:

• being endorsed by the ATO as a DGR
• issuing tax deductible receipts to donors
• maintain a separate DGR bank account, to which all donations are deposited
• payments must only be made for ATO approved purposes

15.4.2.3

Schools are only entitled to issue tax deductible receipts if they

• maintain a School Building Fund endorsed by the ATO
• maintain a School Library account endorsed by the ATO, or
• are a Government Special School endorsed by the ATO

15.4.2.4

If a school does not meet one of these conditions as listed in 15.4.2.2 then the school cannot accept tax-deductible donations – donors to the school and will not be entitled to a tax deduction for their donation.

15.4.3 Prohibited policy (Must not do)

15.4.3.1

Receive tax-deductible donations and issue tax deductible receipts, if the school does not operate a School Building Fund, School Library or Special School.

15.5 Fuel Tax Credits (FTC)

15.5.1 Overview

Schools are entitled to claim Fuel Tax Credits from the ATO if they use fuel for eligible purposes. Amongst other things, an eligible purpose is fuel used in vehicles, which have a Gross Vehicle Mass (GMV) of greater than 4.5 tonnes. Eligible fuel is diesel or unleaded, as well as aviation fuel and certain biodiesel blends.

Generally, a school bus, which is more than 22 seats, will have a GVM of greater than 4.5 tonnes. Note: Vic Roads registration details will state the GVM of the registered vehicle, so a school, which is unsure if the bus is eligible, must check the registration details or vehicle technical specifications.

15.5.2 Mandatory policy (Must do)

15.5.2.1

A school will be entitled to claim Fuel Tax Credits for all fuel used on the Bus if the:

• school owns/leases a bus which is greater than 4.5 tonne GVM
• pays for fuel for use in an eligible vehicle (vehicle that travels on public roads that has a GVM greater than 4.5 tonnes
• pays for fuel for use in eligible machinery (mowers, tractors, brushcutters etc.)

15.5.2.2

A school wishing to claim Fuel Tax Credits need to register with the ATO. Once registered, the school can claim its FTC via the BAS. Schools registered for FTC will have a new box 7D on their BAS.

15.5.3 Prohibited policy (Must not do)

15.5.3.1

A school will not be eligible for FTC for fuel used in a light vehicle travelling on a public road (i.e. passenger cars).

15.5.4 Additional resources

• Fuel tax fact sheet (DOCX)

Definitions

ABN
An Australian Business Number (ABN) is a unique 11-digit number that identifies a business to the Government and community. It is used for tax and various other business purposes. A school can only obtain an ABN through department, as the ATO requires proof of identity for schools from department.

ABR
Australian Business Register — Register of all entities and their ABN details. Used for confirming ABN details of schools’ creditors, as well as confirming DGR endorsement of schools.

ATO
Australian Tax Office — Commonwealth Government entity responsible for collection and administration of the tax system.

ATO Account Details — Integrated Client Account
Online record of the school’s transactions (debits and credits) with the ATO.

BAS
Business Activity Statement — ATO tax form that must be completed monthly by all Government schools and which includes GST, FTC. Note FBT is not included on the BAS for schools (see FBT Tracker) and PAYG is not included on the BAS for schools.

DGR
Deductible Gift Recipient — Category of entity, endorsed by the ATO, which is entitled to receive tax-deductible donations.

FBT
Fringe Benefits Tax — Tax paid on the value of fringe benefits provided to employees, in relation to their employment. Victorian Government schools must comply with the FBT requirements for any fringe befits they provide to their staff.

FTC
Fuel Tax Credits — Credits or refunds of the tax paid on fuels used for eligible purposes. Victorian Government schools are entitled to claim FTCs for eligible fuel used in buses, trucks they own.

GST
Goods and Services Tax — Value added tax which taxes final consumption of all goods and services consumed within Australia. Victorian Government schools are subject to GST and must ensure that they comply with the GST law on revenue and payments.

GVM
Gross Vehicle Mass — School vehicles with a GVM greater than 4.5 tonnes are eligible for Fuel Tax Credits. The GVM is listed in the vehicle registration certificate or vehicle technical specifications.

myGovID
MyGovID is the ATO’s new electronic commerce system and is the only way a school can lodge its BAS online via the ATOs Business Portal. A myGovID is specific to a school ABN and to an individual. It is recommended that a school try to maintain 2 valid, up to date myGovIDs.

Section 16 Reporting Performance

16.1 Overview

The general purpose of the financial statements is to provide information about the results of operations, financial position, and cash flows of an organisation. This information is used to make decisions regarding the allocation of resources and provide governance over business operations.

16.2 Management reports

16.2.1 Mandatory policy (Must do)

16.2.1.1

Undertake a bank reconciliation and prepare a report for each active bank account at the end of each month.

16.2.1.2

Provide a written explanation of any differences on the bank reconciliation report.

16.2.1.3

Have the bank reconciliation report certified by the principal.

16.2.1.4

Ensure that bank accounts do not show a negative balance (are overdrawn) either at the bank or in CASES21.

16.2.1.5

Regularly review the sundry debtor balances to assess collectability and take any appropriate action.

16.2.1.6

Regularly review creditor invoices awaiting payment and orders to assess validity and take any appropriate action.

16.2.1.7

Regularly review any prepaid expense balance and take any appropriate action.

16.3 Reporting to school council

16.3.1 Mandatory policy (Must do)

16.3.1.1

Present the following reports to finance committee each month for review (if the school does not have a finance committee the reports must be presented to the school council):

• Balance Sheet Specific Period (GL21161) – this report must be certified by the principal and the school council president
• Operating Statement (detailed) (GL21150) – this report must be certified by the principal and the school council president
• Creditor Direct Deposit Changes report verified and signed by the principal and school council president and kept for audit purposes
• Cash Flow Statement (GL21151)
• Bank Account Movements Detailed (GL21152)
• Cash Receipts Report (GL21152)
• Cash Payments Report (GL21002)
• Cancelled Receipts Report (GL21004) – this report must be certified by the principal
• Cancelled Payments Report (GL21005) – this report must be certified by the principal
• Invoices Awaiting Payment Detailed (GL21118)
• Annual Subprogram Budget Report (GL21157)
• Journal Report (GL21006) – this report must be certified by the principal
• Family Credit Notes Report (DF21309) – this report must be certified by the principal
• Sundry Debtor Credit Notes Report (DR21309) – this report must be certified by the principal
• Bank Reconciliation Reports
• A report that informs school council of the overall Student Resource Package (SRP) position of the school

16.3.1.2

Present the following reports to school council each month for review:

• Balance Sheet Specific Period (GL21161) – this report must be certified by the principal and the school council president
• Operating Statement (detailed) (GL21150) – this report must be certified by the principal and the school council president
• Creditor Direct Deposit Changes report certified and signed by the principal and school council president

16.3.1.3

Inform school council of the overall Student Resource Package (SRP) position of the school.

16.3.1.4

As required, provide school council with reports on trading operations. (Refer to section 12 Trading Operations).

16.3.1.5

Provide school council with a report outlining the financial outcome of all camps, excursions and fundraising.

16.3.1.6

Record in the minutes of school council that the reports have been presented and reviewed and retain copies of the reports for audit purposes.

16.4 School annual report

The purpose of the annual report is to inform parents and the wider school community of the school's performance outcomes, its efforts to progress improved student achievement, and to meet legislative and regulatory requirements under the Education and Training Reform Act 2006 (Vic).

Schools are required to submit a school annual report to the Department by 30 April each year.

Annual reports are made available to the school community at a public meeting organised by the school principal, and on the VRQA State Register.

Further information can be accessed from the Annual Report to the School Community website.

16.4.1 Mandatory policy (Must do)

16.4.1.1

Complete end of year procedures (31 December) by the due date set for school annual report data collection.

16.5 Financial Commitment Summary

The Financial Commitment Summary assists with identifying the end use of funds held by a school at the close of the year. The pre-populated total bank account balance amount, less the operating reserve amount, is the amount of funds that are to be committed by way of the Financial Commitment Summary. A Financial Commitment Worksheet is available to assist schools with the breakdown of available funds and how to allocate them into the various commitment categories.

16.5.1 Mandatory policy (Must do)

16.5.1.1

Complete the Financial Commitment Summary as part of CASES21 end of year procedures.

16.5.1.2

Complete and retain the Financial Commitment Summary Worksheet as part of end of year procedures.

16.5.1.3

Have the Financial Commitment Summary reviewed and signed by the principal and school council president and tabled at school council.

16.5.2 Prohibited policy (Must not do)

16.5.2.1

Increase the cash reserve benchmark in the Financial Commitment Summary beyond the system calculated amount.

Definitions

Bank reconciliation
Process whereby differences between bank account balances reported on the bank statement and bank account balances reported on CASES21 are identified and explained.

CASES21
CASES21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian government schools to support school administration, finance and central reporting.

Operating Reserve
Safety net of available funds that schools must keep uncommitted to meet their day-to-day financial obligations. This amount is calculated by obtaining the average of 2 months school calendar year recurrent expenditure (from a school’s Operating Statement GL21150) adjusted for expenditure on Building Works (86504), Ground Works (86505) and non-cash expenditure items such as Asset Write Downs (89591).

VRQA
Victorian Registration and Qualifications Authority – A statutory authority of the Department responsible for the registration of schools to ensure they meet expected quality standards.

Section 17 End of Year (31 December)

17.1 Overview

The End of Year financial policy described in this section must be implemented to enable the completion of End of Year (31 December) and the start of the New Year in CASES21.

17.2 Timing of CASES21 finance end of year (31 December)

17.2.1 Mandatory policy (Must do)

17.2.1.1

The review and clean-up of the Families (Receivables module) must be done for exiting students prior to running CASES21 Administration End of Year.

17.2.2 Prohibited policy (Must not do)

17.2.2.1

The End of Year (31 December) CASES21 Finance rollover must not be done until 1 January of the New Year.

17.3 End of year (31 December) process in CASES21

17.3.1 Mandatory policy (Must do)

17.3.1.1

Schools must read CASES21 Finance Business Process Guide Section 11 — End of Year and follow the guidelines to complete the End of Year (31 December) process.

17.4 Finalise data entry for end of year (31 December)

17.4.1 Mandatory policy (Must do)

17.4.1.1

Data entry in CASES21 against the new period must not commence until all entries for the current year have been entered and the End of Year (EOY) processes are completed.

17.4.1.2

Schools must create a folder on the P:\ Drive to store CASES21 FINANCE EOY files. For example: Name of file CASES21 FINANCE EOY YYYY files (as per CASES21 Finance Business Process Guide Section 11 – End of Year) (login required).

17.5 End of year process

Creditors (Accounts Payable)

As part of best practice financial management, schools must review regularly (preferably monthly) all creditor balances. This includes reviewing invoices processed in creditors (accounts payable) to ensure the most accurate and up-to-date information is available.

17.5.1 Mandatory policy (Must do)

Creditor balances (Accounts Payable)

17.5.1.1

All unpaid invoices as at 31 December must be entered into the month of December in CASES21 creditors (accounts payable module). This does not mean that the payment must be made from the bank, only that the invoices received are entered into CASES21. Payments against the bank are still made within the terms of the purchase.

17.5.1.2

All outstanding creditor balances, orders, invoices and credit notes must be reviewed (preferably monthly) to ensure accuracy of CASES21 data.

17.5.1.3

Any unallocated creditor items identified must be investigated and any rectifying transactions required processed before the End of Year rollover is completed.

17.5.1.4

All invoices entered on CASES21 that relate to the new school year must have a balance day adjustment processed to reflect the expense in the correct year.

For example, the deposit for a camp being paid in the current year when the camp is to be held in the new school year. The balance day adjustment will reflect this as a Prepaid Expense.

Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance.

17.5.1.5

Refer to CASES21 Finance Business Process Guide Section 11 — End of Year for further guidance.

Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance.

17.6 Accounts receivable

As part of best practice financial management, schools must regularly (preferably monthly) review all accounts receivables (families and sundry debtors) balances. This includes reviewing invoices processed in accounts receivables to ensure the most accurate and up-to-date information is available.

17.6.1 Mandatory policy (Must do)

17.6.1.1

Ensure invoices relating to the month of December are entered by 31 December into CASES21 Receivables module.

17.6.1.2

All account receivable balances must be reviewed (preferably monthly) to ensure accurate balances are recognised in CASES21 Receivables module.

Families

17.6.2 Mandatory policy (Must do)

17.6.2.1

All Family Invoices must be reviewed prior to completing the End of Year process and only those that are collectable and align with the Parent Payments Policy must remain in CASES21.

Refer to the Parent Payments Policy for further guidance.

17.6.2.2

The validity of unallocated Family Receipts and Family Credit Notes must be checked. Any unallocated items identified must be investigated and transactions allocated before the End of Year rollover is completed. Only valid transactions must be transferred into the New Year.

17.6.2.3

If any invoices for the new school year are raised in the current school year, the school must perform a balance day adjustment. Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance. This is to ensure the revenue is recognised in the correct year.

Sundry Debtors

17.6.3 Mandatory policy (Must do)

17.6.3.1

Only valid invoices must be transferred to the New Year. (All outstanding sundry debtor invoices will transfer to the New Year).

17.6.3.2

All outstanding invoices, credit notes and unallocated receipts must be reviewed, and appropriate action taken if necessary prior to End of Year rollover.

17.6.3.3

Sundry Debtor invoices entered in the current year that relate to the new year will require a balance day adjustment.

Refer to CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments for further guidance.

Doubtful Debts

17.6.4 Mandatory policy (Must do)

17.6.4.1

The End of Year procedures for Doubtful Debts must be completed if the school has transacted journal entries earlier in the year to adjust for doubtful debts. Failure to do so may result in negative revenue on Sub Programs in the next year.

17.6.4.2

If a school has adjusted for doubtful debts, they must refer to CASES21 Finance Business Process Guide Section 2 — Sundry Debtors to establish the correct steps to take to either recover or write off the debt.

17.7 Balance day adjustments

The recording of transactions under an accrual system may result in revenue and expense items being recognised in the current period when they actually relate to a future period.

A common example of this may be the invoicing of Extra-Curricular Items and Activities for the next school year in December of the current year.

17.7.1 Mandatory policy (Must do)

17.7.1.1

School must carefully read CASES21 Finance Business Process Guide Section 10 — Balance Day Adjustments to determine if they need to make any of these type of adjustments.

17.7.1.2

Schools must process journal entries to adjust the accounting records to recognise the revenue or expenses in the correct period.

17.8 Prepaid expenses

17.8.1 Mandatory policy (Must do)

17.8.1.1

Review all prepaid expense balances to ensure that only current balances are recognised in CASES21 in the relevant Chart of Account code 12005 Prepaid Expense as at 31 December.

17.9 Revenue in advance

This involves amounts received in advance for future costs or future services yet to be performed.

17.9.1 Mandatory policy (Must do)

17.9.1.1

Undertake any balance day adjustments for revenue in advance. See CASES21 Finance Business Process Guide Section 10 Balance Day Adjustments for further guidance.

17.9.1.2

Regularly review the balance of revenue in advance to ensure its validity and take appropriate action if required.

17.10 Bank reconciliation and petty cash

17.10.1 Mandatory policy (Must do)

17.10.1.1

All monies, including the petty cash float, must be receipted and banked by 31 December.

17.11 Financial Commitment Summary

The Department’s policy requires schools to identify the intended purpose of any accumulated funds, including identification of an appropriate School Operating Reserve. Refer to the School Cash Reserve Benchmark Policy and Guidelines and the Financial Commitment Summary Guidelines (found under the Resources tab in the Finance Manual).

17.11.1 Mandatory policy (Must do)

17.11.1.1

Schools must complete a Financial Commitment Summary report before running End of Year processes.

The Financial Commitment Summary Guidelines are available on the Resources tab.

17.11.1.2

The Financial Commitment Summary Report must be:

• saved to the schools CASES21 Finance EOY folder for future reference
• the report must be printed (hardcopy) and saved as a PDF during the final end of year process. It must be signed by the principal and school council president and tabled at school council
• the data will be sent electronically to the Department as part of running the End of Year process.

17.12 Preliminary GST/Business Activity Statement Reports

17.12.1 Mandatory policy (Must do)

17.12.1.1

The Financial Highlight report must be checked before any transactions are entered for the New Year.

17.13 Long service leave provision

17.13.1 Mandatory policy (Must do)

17.13.1.1

School councils must manage the provision for Long Service Leave (LSL) for all eligible employees who are paid on eduPay school level payroll.

17.13.1.2

A journal for the provision of LSL must be completed annually from the first anniversary of school council employment to recognize the possible long service leave entitlement and subsequent future debt for the relevant locally paid staff. This will ensure the expenditure incurred by the school is recognized annually and includes future obligations even if not yet paid.

17.13.1.3

Schools must ensure that the LSL provision is included in the Annual Master Budget.

17.14 End of Year Reports (31 December)

17.14.1 Mandatory policy (Must do)

17.14.1.1

End of Year reports must be printed (hardcopy) or saved as PDFs.

School must be able to make available reports at the Departments or auditor’s request.

17.14.1.2

Certification from the School Principal and School Council President are required at year end (31 December) for the following reports:

• Operating Statement
• Balance Sheet.

17.15 Finance Committee/school council reports

17.15.1 Mandatory policy (Must do)

17.15.1.1

The reports as listed below must be printed (hardcopy) or saved as PDF’s for the December End of Year period and must be presented to the Finance Committee. In absence of the Finance Committee, all reports listed below are to be tabled at the school council meeting.

A list of Finance Committee/school council reports to be run from CASES21:

17.15.1.2

Bank Reconciliations

17.15.1.3

Balance Sheet Specific Period (GL21161)

17.15.1.4

Operating Statement Detailed (GL21150)

17.15.1.5

Cash Flow Statement (GL21151)

17.15.1.6

Bank Account Movements Detailed (GL21152)

17.15.1.7

Annual Sub Program Budget Report (GL21157)

17.15.1.8

Cash Receipts Report (GL21002)

17.15.1.9

Cash Payments Report (GL21003)

17.15.1.10

Cancelled Receipts Report (GL21004)

17.15.1.11

Cancelled Payments Report (GL21005)

17.15.1.12

Journal Report Certification (GL21006)

17.15.1.13

Invoices Awaiting Payment - Detailed (CR21118)

17.15.1.14

Family Credit Notes Report Certification (DF21309)

17.15.1.15

Sundry Debtors Credit Notes Report (DR21309)

17.15.1.16

Creditor Direct Deposit Changes report (CR21905)

17.15.1.17

SRP Budget Management Report – Summary Page 1 showing Surplus/(Deficit) (Student Resource Package Website)

17.15.1.18

Present the following reports to school council each month for review:

• Balance Sheet Specific Period (GL21161) – this report must be certified by the principal and the school council president
• Operating Statement (detailed) (GL21150) – this report must be certified by the principal and the school council president
• Creditor Direct Deposit Changes report (CR21905) – this report must be certified by the principal and school council president.

17.16 Run end of year task

17.16.1 Mandatory policy (Must do)

17.16.1.1

Schools must complete the tasks for the December period and run the End of Year processes.

17.16.1.2

Bank reconciliations and Financial Commitments Summary must be completed before starting the End of Year tasks.

17.16.1.3

Refer to CASES21 Finance Business Process Guide Section 11 — End of Year for instructions on how to run End of Year tasks.

17.17 Start of year processes

17.17.1 Mandatory policy (Must do)

17.17.1.1

Schools must refer to CASES21 Finance Business Process Guide Section 11 — End of Year for further guidance on how to start the New Year Processes.

Definitions

Balance Day Adjustment
The recording of transactions under an accrual system may result in revenue and expense items being recognised in a particular period when they actually relate to a future period.

Journal entries may be required to adjust accounting records to recognise revenue or expenditure in the correct period.

Balance Integrity Report
This report will identify whether any anomalies occur between the balances recorded against the creditor and the transactions data recorded against the creditor (CR21160).

The Balance Integrity Report (DR21902) will indicate whether there are any anomalies between the balances recorded against the sundry debtor and the transaction data recorded against the sundry debtor.

Capital commitments
A capital commitment will arise when a school enters into a legally binding non-cancellable agreement/contract for the acquisition of equipment or capital works.

A capital commitment does not include maintenance contracts associated with assets held (these are usually an operating commitment). Capital commitments are not recognised in CASES21 finance system, as they are to occur in the future.

A capital commitment will arise when there is a signed contract for a tangible asset i.e. building, gymnasium, playground or toilet block.

Contingent assets
A potential asset that may arise depending on the outcome of a future event. For example, the school has taken legal action against a third party for a breach of contract, and the likely outcome will result in receiving compensation from a third party.

Contingent liabilities
A potential obligation that may be incurred depending on the outcome of a future event. A contingent liability is one where the outcome of an existing situation is uncertain, and that uncertainty will be resolved by a future event.

An example of a contingent liability is where there is an outstanding legal action against the school, but not enough certainty to place the settlement value on the balance sheet.

Where a contingent liability may exist, the matter must be referred to the Legal Division of the Department.

Long Service Leave Provision
Long service leave entitlements represent a future obligation for the school and as such must be recognized as a liability on the Balance Sheet.

Operating commitments — contracts for goods and/or services
An operating commitment will arise when the school enters into a legally binding non-cancellable agreement/contract for the future provision of a good and/or service. In most cases, where there is a legal contract, there is a penalty and financial obligation upon rendering the contact void and not continuing with the purchase/service. Operating commitments are not recognised in CASES21 Finance system, as they are to occur in the future.

Examples of an operating commitment include, but are not limited to, provision of services by contractors, IT services, labour hire, maintenance and annual facility charges.

Operating Leases
A lease for which the lessee acquires the property for only a small portion of its useful life. An operating lease is commonly used to acquire equipment on a short-term basis. An example of an operating lease is the rental of a photocopier machine or other office equipment. Any lease that is not a capital lease is an operating lease.

Prepaid expenses
Recognised when a payment has been made to a supplier for goods or services to be received in a future accounting period. Examples of these are rent paid in advance or license fees paid in advance.

Prepayments must be recorded by way of a journal into the CASES21 Finance system. These journals must be reversed in the relevant future period thus bringing the expense to account in the correct period. (CASES21 chart of account code 12005).

Revenues paid in Advance
Recognised when revenues are received in advance of them being earned. (CASES21 chart of account code 38002).

Section 18 End of Financial Year Reporting (30 June)

18.1 Overview

Previously, End of Financial Year (30 June) procedures have predominately been based around the processing of payment summaries. However, as schools’ financial transactions forms part of the Department’s Annual Report and Whole of Government Financial reporting, to increase best practice financial management in schools, additional financial information is now required to be completed.

18.2 Prepaid expenses

18.2.1 Mandatory policy (Must do)

18.2.1.1

Regularly review all prepaid expense balances to ensure that only current balances are recognised in CASES21 using the relevant Chart of Account code 12005 Prepaid expenses.

18.3 Accounts receivable and payable balances (ageing balances)

18.3.1 Overview

As part of best practice financial management, schools are required to review all accounts receivable and accounts payable balances on a regular basis. This includes reviewing invoices processed in accounts receivable (families and sundry debtors) and accounts payable (creditors) to ensure the most accurate and up-to-date information is available. This practice will ensure that financial reports do not include revenue that will not be collected.

18.3.2 Mandatory policy (Must do)

Account Receivable balances

18.3.2.1

Must ensure that invoices relating to the month of June are entered by the 30 June into CASES21 Accounts Receivable module.

18.3.2.2

All account receivable balances must be reviewed to ensure only current balances are recognised in CASES21 Accounts Receivable module.

18.3.2.3

As part of the end of financial year (30 June) schools must review all outstanding invoices, especially old invoices in families and sundry debtor charges (ageing balances). This review is undertaken to determine why they have not been collected and why they remain outstanding.

18.3.2.4

Write off any invoices that are unlikely to be collected and deemed unrecoverable. For example, students who did not attend an excursion or camp will have outstanding invoices that will not be paid by these families.

Accounts Payable balances

18.3.2.5

Must ensure that all unpaid invoices as at the 30 June have been entered into the month of June in CASES21 Accounts Payable module. This does not mean that the payment needs to be made from the bank, only that the invoices received are entered into CASES21. Payments are still made within the terms of the purchase.

18.3.2.6

It is recommended that all account payable balances be reviewed to ensure only current balances are recognised in CASES21.

18.3.2.7

The review of old invoices must be undertaken to determine why they remain outstanding or have not been paid within payment terms. Review balances in the aged balances 30-60 days through to 120+ days.

18.3.2.8

Schools must print (hardcopy) or save as PDF the following reports as listed below after the close off for June month-end. These reports and information must be made available upon request by the Department for end of financial year (30 June):

• CASE21 Accounts Payable Trial Balance (CR21101) as at 30 June
• CASE21 Accounts Payable Trial Balance (CR21101) as at 31 July
• CASES21 Invoice awaiting payment – detailed report (CR21118) as at 30 June
• CASES21 Invoice awaiting payment – detailed report (CR21118) as at 31 July
• Invoices
• Credit voucher payment approved/signed off by the principal.

Refer to: CASES21 Finance Business Process Guide Section 8 — End of Period (under Resources tab)

18.4 Operating Leases

18.4.1 Mandatory policy (Must do)

18.4.1.1

Schools must review and keep up-to-date details for operating leases entered into the CASES21 asset module (asset register).

18.4.1.2

Accurate information in relation to the type of asset, the quantity, the monthly lease payment, and the lease term must be recorded in CASES21.

18.5 Schools Certification checklist

18.5.1 Overview

The schools certification checklist has been developed so schools can undertake a self-assessment for key internal controls, which must be present in each area of governance, finance and assets.

This document is to provide the Department with reasonable assurance that schools have robust and efficient systems in place for monitoring, recording and reporting the school’s financial transactions.

The questions included in the self-assessment checklist covers a broad range of categories and will assist with ensuring financial policy compliance, further reducing the risk of non-compliance by schools.

18.5.2 Mandatory policy (Must do)

18.5.2.1

Either the Principal or Acting Principal will be required to complete and authorise the schools certification checklist for the end of financial year period ending 30 June.

18.5.2.2

Spot checks will be performed over a sample of returned attestations and schools will be contacted to provide evidence to verify their attestations. Selected schools will be contacted to provide supporting documentation for the following information:

• operating contracts not entered into CASES21 (operating commitments — goods and services)
• capital contracts not entered into CASES21 (capital commitments such as capital works and acquisitions)
• receiving compensation from a third party from a legal action (contingent assets)
• any legal action/outstanding law suits (contingent liabilities).

Refer to the definitions table for a more detailed explanation on the above types of supporting documentation that maybe be requested by the Department for the end of financial year period ending 30 June.

Definitions

Capital commitments
A capital commitment will arise when a school enters into a legally binding non-cancellable agreement/contract for the acquisition of equipment or capital works. A capital commitment does not include maintenance contracts associated with assets held (these are usually an operating commitment). Capital commitments are not recognised in the CASES21 as they occur in the future.

Contingent assets
A potential asset that may arise depending on the outcome of a future event. For example, the school has taken legal action against a third party for a breach of contract, and the likely outcome will result in receiving compensation from that third party.

Contingent liabilities
A potential obligation that may be incurred depending on the outcome of a future event. A contingent liability is one where the outcome of an existing situation is uncertain, and that uncertainty will be resolved by a future event. For example, where there is an outstanding legal action against the school, but not enough certainty to place the settlement value on the balance sheet. Where a contingent liability may exist, the matter must be referred to the Legal Division of Department.

Operating commitments — contracts for goods and/or services
An operating commitment will arise when the school enters into a legally binding non-cancellable agreement/contract for the future provision of a good and/or service. In most cases where there is a legal contract, there is a penalty and financial obligation upon rendering the contact void and not continuing with the purchase/service. Operating commitments are not recognised in the CASES21 as they generally occur in the future.

Examples of an operating commitment include, but are not limited to, provision of services by contractors, IT services, labour hire, maintenance and annual facility charges.

Operating leases
A lease for which the lessee acquires the property for only a small portion of its useful life. An operating lease is commonly used to acquire equipment on a short-term basis.

An example of an operating lease is the rental of a photocopier machine or other office equipment. Any lease that is not a capital lease is an operating lease.

Prepaid expenses
Expenses recognised when a payment has been made to a supplier for goods or services that will be received in a future accounting period. Examples of this are rent paid in advance or license fees paid in advance. Prepayments are recorded by way of a journal into the CASES21 Finance system. These journals are reversed in the relevant future period thus bringing the expense to account in the correct period. (Chart of account code 12005).

Revenues paid in Advance
Revenue recognised as having been received in advance of them being earned. (Chart of Account code 38002).

Section 19 Financial Handover

19.1 Overview

A principal who is leaving a school for longer than two terms is required to prepare a financial handover statement. This is to ensure that the incoming principal and the departing principal have a clear understanding of the school’s financial position at the time of handover.

19.2 The outgoing principal

19.2.1 Mandatory policy (Must do)

19.2.1.1

Prepare a financial handover statement (DOCX) as near and as practical to the last day of duty.

19.2.1.2

Ensure that all CASES21 records, including the asset register, are up to date and reflect the handover statement as near as practical to the outgoing principal’s last day of duty.

19.3 The incoming principal

19.3.1 Mandatory policy (Must do)

19.3.1.1

Verify the correctness of the items in the financial handover statement (DOCX).

19.3.1.2

Carry out a stocktake of the major accountable items a soon as practicable to test the accuracy of the stocktake record prepared by the departing principal.

19.3.1.3

File the financial handover statement.

Definitions

CASES21
CASES21 (Computerised Administrative System Environment in Schools) is the software package provided to Victorian Government schools to support school administration, finance and central reporting.

SRP
Student Resource Package — Main funding mechanism for schools comprising two components. Credit — used for central salaries and Cash — used for school based expenditure.

Workforce Bridging
Support program provided by the Department to assist schools with a Student Resource Package credit deficit to return the school to a sustainable position.

Section 20 Opening, Closing and Merging Schools

20.1 Overview

School reorganisations may involve opening, closing or merging of schools. A merger may result in creating a new school where a new school number is issued or renaming an existing school where one of the merging school numbers is retained.

20.2 School opening

When a new school is to open, a School Finance Liaison Officer (SFLO) will be assigned to assist the new principal and business manager with the financial set up of the school.

20.2.1 Mandatory policy (Must do)

20.2.1.2

The school is required to open a High Yield Investment account with Westpac Bank and an Official account for transactional purposes at a banking provider under the SPC. Schools can contact schools.finance.support@education.vic.gov.au for support.

20.2.1.3

Any procurement activity prior to the school opening will be managed through the local region (login required). Contact your Regional Finance Officer for further information.

20.2.1.4

Liaise with the local school systems training team (login required) to have CASES21 set up for the school.

20.2.2 Prohibited policy (Must not do)

20.2.2.1

Cannot transact using ABN or school bank accounts until after the opening date of the school.

20.3 School closing

From a financial point of view, a school closure will involve finalising contracts, clearing commitments, redistributing assets and closing financial operations.

When a school is scheduled to close, a School Finance Liaison Officer (SFLO) will be assigned to assist the principal and business manager with the financial closure of the school.

20.3.1 Mandatory policy (Must do)

20.3.1.2

Undertake a stocktake of assets.

20.3.1.3

Convene a board of survey to:

• identify obsolete or unserviceable equipment
• recommend a course of disposal action to school council, for example, relocating items to a neighbouring school, sale of particular items, etc.
• in the case of asset sales, advertise locally that the asset is available for purchase and request bids from interested parties
• arrange for any proceeds of sale to be paid into the school council official account.

20.3.1.4

Enter the disposal of assets into CASES21.

20.3.1.5

Close off school level payroll.

20.3.1.6

All current contracts need to be reviewed and cancelled. This includes but is not limited to leasing arrangements and cleaning contracts as well as any direct debit arrangements.

20.3.1.7

Ensure all outstanding accounts have been reviewed and either paid or adjusted.

20.3.1.8

Write off all uncollected family and sundry debtor debts.

20.3.1.9

Collect and cancel any school purchasing cards.

20.3.1.10

Conduct a search for unclaimed monies in the name of the school at both the State Revenue Office and the Australian Securities and Investments Commission.

20.3.1.11

Close the HYIA and transfer balances to the School Council Official account.

20.3.1.12

Complete appropriate bank forms for changing signatories to the school council official account. The Area Executive Director and the Regional Finance Manager are to be made signatories of the school council official account.

20.3.1.13

All funds unexpended after the payment of all outstanding accounts shall be dispersed by the regional director in the following priority:

• to the department for the repayment of any SRP debt that may exist
• to government schools receiving the students from the closed school.

20.3.1.14

Check the balance of the ATO Running Balance account through the ATO’s Business Portal. If the balance is not zero, take appropriate action to reconcile the balance.

20.3.1.15

Cancel ABN. The Schools Financial Management Support team will assist with this process. Email schools.finance.support@education.vic.gov.au

20.3.1.16

Close bank accounts. The Schools Financial Management Support team will assist with this process. Email schools.finance.support@education.vic.gov.au

20.4 School de-staffed

From a financial point of view, a de-staffed school will involve:

• finalising contracts
• clearing commitments
• redistributing assets
• closing financial operations.

When a school is scheduled to be de-staffed, a School Finance Liaison Officer (SFLO) will be assigned to assist the principal and business manager with the financial closure of the school.

20.4.1 Mandatory policy (Must do)

20.4.1.2

Undertake a stocktake of assets.

20.4.1.3

Convene a board of survey to:

• identify obsolete or unserviceable equipment
• recommend a course of disposal action to school council, for example, relocating items to a neighbouring school, sale of particular items and so on
• in the case of asset sales, advertise locally that the asset is available for purchase and request bids from interested parties
• arrange for any proceeds of sale to be paid into the school council official account

20.4.1.4

Enter the disposal of assets into CASES21.

20.4.1.5

Close off school level payroll.

20.4.1.6

All current contracts need to be reviewed and cancelled. This includes but is not limited to leasing arrangements and cleaning contracts as well as any direct debit arrangements.

20.4.1.7

Ensure all outstanding accounts have been reviewed and either paid or adjusted.

20.4.1.8

Write off all uncollected family and sundry debtor debts.

20.4.1.9

Collect and cancel any school purchasing cards.

20.4.1.10

Conduct a search for unclaimed monies in the name of the school at both the State Revenue Office and the Australian Securities and Investments Commission.

20.4.1.11

Close the HYIA and transfer balances to the school council official account.

20.4.1.12

Complete appropriate bank forms for changing signatories to the school council official account. The Area Executive Director and the Regional Finance Manager are to be made signatories of the account.

20.5 School merging

A school merger involves the closure of individual schools and the opening of a new merged entity.

When schools are to merge, a School Finance Liaison Officer (SFLO) will be assigned to assist the principals and business managers with the financial merger of the schools.

20.5.1 Mandatory policy (Must do) for schools closing as part of the merger

20.5.1.2

Undertake a stocktake of assets.

20.5.1.3

Convene a board of survey to:

• identify obsolete or unserviceable equipment
• recommend a course of disposal action to school council, for example, transfer items to the new merged entity, relocating items to a neighbouring school, sale of duplicate items, etc.
• in the case of asset sales, advertise locally that the asset is available for purchase and request bids from interested parties
• arrange for any proceeds of sale to be paid into the school council official account.

20.5.1.4

Enter the disposal of assets into CASES21.

20.5.1.5

Close off school level payroll.

20.5.1.6

All current contracts need to be reviewed and cancelled or moved to the new merged entity. This includes, but is not limited to, leasing arrangements and cleaning contracts as well as any direct debit arrangements.

20.5.1.7

Ensure all outstanding accounts have been reviewed and either paid or adjusted.

20.5.1.8

Write off all uncollected family and sundry debtor debts.

20.5.1.9

Collect and cancel any school purchasing cards.

20.5.1.10

Conduct a search for unclaimed monies in the name of the school at both the State Revenue Office and the Australian Securities and Investments Commission.

20.5.1.11

Close the HYIA and transfer balances to the School Council Official account.

20.5.1.12

Complete appropriate bank forms for changing signatories to the school council official account.

20.5.1.13

Cancel ABN. The Schools Financial Management Support team will assist with this process. Email schools.finance.support@education.vic.gov.au

20.5.1.14

Check the balance of the ATO Running Balance account through the ATO’s Business Portal. If the balance is not zero, take appropriate action to reconcile the balance.

20.5.1.15

Transfer funds to the new school.

20.5.1.16

Close bank accounts. The Schools Financial Management Support team will assist with this process. Email schools.finance.support@education.vic.gov.au

20.5.2 Mandatory policy (must do) for the new school (new school number) created from the merger

20.5.2.2

The school is required to open a High Yield Investment account with Westpac Bank and an Official account for transactional purposes at the financial institution of their choice. The SFLO will assist with this process.

20.5.2.3

Liaise with the local school systems training team (login required) to have CASES21 set up for the school.

20.5.2.4

Enter transferred data from old schools into CASES21.

20.6 School name change

A school name change can result from a merger where a new school number is not issued and one of the existing school numbers is retained, or through some other reorganisational change.

20.6.1 Mandatory policy (Must do)

20.6.1.2

Contact the Schools Financial Management Support team. Email schools.finance.support@education.vic.gov.au for assistance with changing the name of the school’s High Yield Investment account with Westpac Bank and any other bank accounts held by the school council.

20.6.1.3

Liaise with the local school systems training team (login required) to have CASES21 reconfigured with the new name for the school.

Definitions

ATO Running Balance account
Online record of the school’s transactions (debits and credits) with the ATO.

ABN
Australian Business Number — Unique identifying number, which indicates that, a school is registered and listed on the Australian Business Register. A school can only obtain an ABN through Department, as ATO requires proof of identity for schools from Department.

Board of Survey
Group convened to provide advice on status of assets. In the normal course of events, the board will consist of the principal, a school council representative and a third nominee.

CASES21
CASES21 is the software component of CASES (Computerised Administrative System Environment in Schools) which is the package provided to Victorian Government schools to support school administration, finance and central reporting.

School purchasing card
A method of payment utilising a corporate charge card.

School Finance Liaison Officer (SFLO)
Departmental officer who provides financial management support to schools.

Section 21 Insurance Arrangements

21.1 Overview

The Department arranges all insurance policies through the Victorian Managed Insurance Authority (VMIA). All policies expire on 30 June each year.

21.1.1 Mandatory policy (Must do)

21.1.1.1

School councils requiring insurance that is additional to the coverage provided by the Department must contact the Victorian Managed Insurance Authority to arrange cover. This does not apply to WorkCover.

21.2 Property insurance

21.2.1 Overview

The Industrial Special Risks (ISR) policy protects the Department against the cost of loss, destruction or damage to property owned by the State of Victoria or the Minister. Examples of insured perils include fire, storm and tempest, explosion, water damage, earthquake, burglary, boiler explosion and flood. This policy has a limit of $3.625 billion for any one loss, or series of losses arising out of one event, with the cost of claims under $3 million being self-insured and borne by the Department.

21.2.2 Building fixtures and fittings

The Department meets the cost of incidents in schools costing less than $3 million, effectively self-insuring most incidents and minimizing the risk. Facilities that are over entitlement (i.e. - locally funded or originally provided by the Department when the school had a larger student population) will not necessarily be reinstated by the Department. At the time of loss, an assessment will be made of the school’s needs in line with the Department’s Asset Management policies. The Department will not provide schools with funding to replace contents that are not covered by its Reinstatement Fund or the School Equipment Coverage Scheme (SECS).

Fixtures and fittings that are permanently fixed to the buildings are covered under the Department insurance policy. Depending on the amount of the loss and the type of fixture/fitting, the cost of incidents may be borne by the school or by the Department.

If a School Council wants any over entitlement facilities to be replaced when they are damaged or destroyed, they can obtain separate insurance cover for these facilities from the Victorian Managed Insurance Authority (VMIA). Facilities constructed under the Building Education Revolution (BER) program are covered under the Department’s insurance arrangements - separate insurance is not required. If BER facilities result in other facilities becoming over-entitled, the Department will work with individual schools to assess re-building requirements in accordance with the Reinstatement and Preventative Maintenance Procedures.

21.2.3 School Equipment Coverage Scheme (SECS)

The School Equipment Coverage Scheme (SECS) is a self-coverage scheme of the Department and is managed by Victorian School Building Authority (VSBA). This scheme covers specified contents in schools that are below the Department’s $3 million excess. VMIA is contracted to administer these claims on behalf of the Department under the direction of the VSBA.

However, the SECS does not cover leased or hired equipment. Most lease or hire agreements require the lessee (the School Council) to take out insurance to cover replacement or repair of the leased/hired equipment.

21.2.4 Mandatory policy (Must do)

21.2.4.1

Schools must arrange their additional property insurance requirements with the VMIA as mandated by the VMIA Act 1996. The VMIA School Council Insurance Guide should be referred to for assistance.

21.3 Public liability

21.3.1 Overview

The Department, as an agency of the State Government, holds Public & Products Liability insurance with total cover of $1 billion for any one claim, and in the annual aggregate for all claims.

This policy protects the Department and schools against:

• claims for Personal Injury (including death) suffered by third parties — i.e. people who are not employees (employees are covered by Work Cover), and
• claims for loss, damage to or destruction of other people’s property

The policy has a $5 million self-insured retention (SIR), with the cost of claims within that figure borne by the Department. These claims are managed by the Legal Division.

21.3.2 Mandatory policy (Must do)

21.3.2.1

The Department and/or its employees must be legally liable for the policy to respond. For example, if a student is injured at school and lodges a claim against the school, the student and/or their parents must establish that the school staff failed to take reasonable care to protect the student from an injury that was reasonably foreseeable.

21.3.3 Use or hire of non-school facilities

Schools regularly use municipal/shire council facilities, shopping centers or other facilities to conduct educational programs, fund raising activities and functions for the benefit of students and the local school community.

Schools may be required to provide evidence of Public Liability insurance cover for the use of Non-School facilities. This evidence takes the form of a Public & Products Liability Certificate of Currency. Refer to Certificates of Currency for more detailed information.

21.3.4 Use of school facilities by third parties

Schools regularly make their facilities available for use by third parties and this is encouraged by both the Victorian and Commonwealth governments. The activities that school premises can be used for falls into two categories:

• activities for community benefit such as specific interest clubs, book reading societies or foreign language tuition, all of which are not-for-profit
• activities carried out for private use such as birthday parties and barbeques and for-profit organisations

The Department has removed the requirement for not-for-profit community groups engaged in low risk activities to provide evidence that they have $10 million Public Liability insurance when hiring school facilities. Groups whose activities pose a significant risk to school property, personnel, students or other members of the public, or for-profit organisations must provide proof that they have $10 million Public Liability insurance.

School Councils will continue to be covered through the Department’s Public Liability insurance with the VMIA. However, insurance coverage is not extended to third parties hiring school facilities.

Groups that will be required to provide evidence that they have $10 million Public Liability insurance include those:

• conducting high risk activities
• required to have insurance by their association (e.g. sporting clubs)
• required to have insurance for regulatory purposes, or
• commercial entities.

Examples of high risk activities would include fireworks displays, bouncing castles, horse riding and fun fair activities involving machinery.

21.3.5 Mandatory policy (Must do)

21.3.5.1

Schools must arrange their additional Public Liability insurance requirements with the VMIA as mandated by the VMIA Act 1996 (Vic). This may be in respect of hall hirers, community use liability and/or market stall holders. The VMIA School Council Insurance Guide must be referred to for assistance.

21.3.5.2

Schools must obtain evidence of Public Liability from third parties.

21.4 Construction insurance

The Department has arranged a Principal Controlled Contract Works Insurance Policy with the VMIA.

The Policy covers:

• contract works up to $100,000,000 – loss or damage to property which is to be used during the construction period from various causes. This includes portable classrooms including fixtures, fittings and contents supplied by the Department whilst the works are in progress to a limit of $2 million, and
• Public Liability $300,000,000 – legal liability for personal injury and damage to other property arising from the construction works

The Department, School Councils, the builder, the builder’s sub-contractors together with construction and project managers are all covered by the policy. Construction plant and equipment is not covered by the policy.

The policy is subject to the following deductibles which the builder is responsible for paying in the event of a claim:

• Section 1 Contract Works $10,000 for each, and every, claim
• Section 2 Public Liability
  • $50,000 in respect of worker to worker liability claims
  • NIL for all other injury claims
  • $10,000 in respect of any other claim – e.g. damage to another person’s property

21.5 Travel insurance

The Department has two Travel Insurance arrangements. Any travel arranged and funded through Procurement for the business of the Department, automatically includes Business Travel Insurance with the VMIA.

The Department has also arranged a Travel Insurance facility with the VMIA to provide coverage to schools that arrange Study Tours (and the like) for students and accompanying teachers, where the cost of the travel is borne by the students and their families.

The travel insurance cost per person for international travel is $50 inclusive of charges and the cost per person for interstate travel is $3.00 inclusive of charges.

The policy generally provides broader cover than that available through commercial insurers and in most cases the actual benefits payable to travelers is significantly higher. It is not mandatory for schools to use this insurance facility.

Further details of the cover can be accessed through the Insurance for Schools Guidance.

Definitions

Principal Controlled
This means a contract of Construction Insurance for works that is arranged and controlled by the Department or the school, not the builder.

VMIA
Victorian Managed Insurance Authority — provides risk advice and insurance services for the Victorian Government. Victorian Government schools must insure through the VMIA.

Resources

Including resources for business managers and administrators

Downloadable version of the Finance Manual

The Finance Manual – Financial Management for Schools (PDF) is a complete version of all digital content contained in the Policy and Guidance tabs of this topic. Whilst this version has been made available temporarily for your convenience, to ensure you are accessing the most up-to-date information, please refer to the digital version of this information in the Policy and Guidance.

Banking

• Amendment of schools official account (DOCX)
• Cardholder activity report (XLSX)
• Direct debit request form – Westpac (editable PDF)
• High yield investment account (HYIA) portal
• High yield investment account (HYIA) interest rates (staff login required)
• School Banking (staff login required) — this site includes the following resources:
  • HYIA Amendment of Signatories — September 2020
  • HYIA Funds Transfer — September 2020
  • Intellilink Quick Guide — September 2020
  • Maintaining a School Purchasing Card Facility — September 2020
  • Merchant Facility — September 2020
  • Online Banking — September 2020
  • Westpac Contacts and FAQ’s — June 2020
• Ministerial guidelines and directions (PDF)
• Schools purchasing card guidelines and procedures (DOCX)
• Undertaking by the cardholder (DOCX)
• Westpac administrator guide (PDF)
• Westpac live guides

CASES21

• A guide to budget management in Victorian government schools (DOCX)
• A guide to budget management in Victorian government schools (PDF)
• Annual master budget summary with monthly cashflow template (XLSM)
• Cash budget spreadsheet user guide (PDF)
• Asset status change request form (DOCX)
• Budget submission proforma (XLSX)
• CASES21 Budget import-export technical guidelines (DOCX)
• CASES21 Budget import-export technical guidelines (PDF)
• CASES21 Emailing guidelines and management instructions (DOCX)
• CASES21 Emailing guidelines and management instructions (PDF)
• CASES21 Family invoice import/export technical guidelines (DOCX)
• CASES21 Family invoice import/export technical guidelines (PDF)
• Financial commitment summary guidelines (DOCX)
• Monthly cash flow template (XLSX)
• Operating statement — a practical example and explanation (DOCX)
• Operating statement — a practical example and explanation (PDF)
• The balance sheet — a practical example and explanation (DOCX)
• The balance sheet — a practical example and explanation (PDF)
• Tracked balance tool — monthly version (XLSM)
• Tracking subprogram balances (DOCX)
• Tracking subprogram balances (PDF)

General

• Accounting concepts for CASES21 finance (DOCX)
• Cash handling best practice controls (DOCX)
• Cash handling authorised form fundraising collection (DOCX)
• Cash handling authorised form sale of items (DOCX)
• Cash handling authorised form ticket sales not at office (DOCX)
• Chart of accounts for Victorian government schools (DOCX)
• Chart of accounts for Victorian government schools (PDF)
• Credit facilities – FAQs (DOCX)
• Electronic authorisation of payments (PDF)
• Financial handover statement (DOCX)
• Financial reporting for schools (DOC)
• Financial reporting for schools (PDF)
• Float collection authorisation form (DOCX)
• Guide to school council and finance motions (PDF)
• GST and FBT information (staff login required)
• GST calculator (XLS)
• Information for new business managers — this document is currently under review and will be updated shortly
• Information for new business managers — this document is currently under review and will be updated shortly
• Journal generator (XLSM)
• myGovID website
• Reimbursement request form (DOCX)
• School activities reconciliation (DOCX)
• School activities costing (DOCX)
• School certification checklist (staff login required)
• School electronic funds management guidelines (DOCX)
• School cash reserve benchmark policy and guidelines (DOCX)
• Segregation of duties — cash checklist (DOCX)
• Star 6 instructions for reimbursement (DOCX)
• Star 6 instructions for reimbursement (PDF)
• Trading profit and loss (examples and proforma)

Processing guides

• CASES21 Finance business process guides (staff login required) — refer here for all guides as follows:
  • Section 01 — Families
  • Section 02 — Sundry Debtors
  • Section 03 — Creditors
  • Section 04 — Assets
  • Section 05 — General Ledger
  • Section 06 — Budgets
  • Section 08 — End of Period
  • Section 10 — Balance Day Adjustments
  • Section 11 — End of Year
  • Section 12 — Batches
  • Section 13 — Handy Hints and Useful Websites
  • Section 14 — Calendar
  • Section 15 — Purchase Requisitions

School finance policies and templates

In addition to following the Department’s Finance Manual schools must develop and maintain the following local school finance policies. Templates for all policies are available on the School Policy Templates Portal (staff login required) for schools to customise to suit their local arrangements:

• Cash handling — policy template (in portal — staff login required)
• Electronic funds management — policy template (in portal — staff login required)
• Petty cash — template policy (in portal — staff login required)
• School purchasing card — template policy (in portal — staff login required)

Schools support

• eCases — CASES21 administration and support (staff login required)
• CASES21 Portal — administration and support (staff login required)
• CASES21 Training
• Financial support and strategic management for schools (staff login required)
• For all School Purchasing Card enquiries — schoolspurchasingcard@education.vic.gov.au
• For all Westpac general enquires — wibce@westpac.com.au
• For all Schools Financial Management enquiries — schools.finance.support@education.vic.gov.au
• For all Taxation enquiries — tax@education.vic.gov.au
• Tax resources (staff login required)
• For all Insurance enquiries — michael.roleff@education.vic.gov.au
• Professional development in financial management (staff login required)
• Services Portal — CASES21 Support (staff login required)
• Schools targeted funding portal (staff login required)
• The School Administration Support Hub (SASH) (staff login required) is a centralised support service for small schools with up to 200 students enrolled. SASH provides support with financial and payroll administration processes to reduce administrative workload for small school principals