Finance Manual – Financial Management for Schools

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.