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 (AUP), 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 AUP)
• 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

5.2 Scheduling school audits

5.2.1 Overview

Schools are notified of their selection in audits via the School Update or via email.

The Department's contracted external audit firms 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 4 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 (PDF) (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 should be kept on site. For example, if your school outsources its stocktake to an external party, you must ask for a copy of the relevant records and reports completed by the external party.

5.2.2.8

All minutes from the school council and school council finance committee meetings should 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 to confirm the scope of the audit.

School audits will conclude with an exit meeting to discuss preliminary findings.

5.3.2 Mandatory policy (Must do)

5.3.2.1

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

At the meeting, auditors will confirm the scope 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 AUP report or SIA list of findings (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 an audit, schools receive a report (AUP) or a list of findings (SIA) which stipulates school specific findings resulting from the audit.

Findings from individual schools are consolidated and risk rated by the Assurance Branch and schools are categorised into one of the following 4 categories:

• Good
• Acceptable
• Needs improvement
• Unsatisfactory

The consolidated findings are then analysed to identify themes across all schools audited. At the end of the financial year, a State-wide report is prepared summarising results of all school audits. This report is tabled at the Department’s Audit and Risk Committee and Executive Board meetings and is 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 AUP report and/or SIA list of findings (as applicable) and the State-wide report to be tabled and formally minuted at a school council meeting.

5.4.2.2

Put in place an action plan to rectify the findings highlighted in the school audit report and implement it. 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’ should submit their school council approved action plan to the respective Senior Education Improvement Leader, who will upload the action plan to a central SharePoint site managed by Financial Services Division.

5.4.2.4

All schools should report the status of rectifying audit findings in the schools internal certification checklist.

5.4.2.5

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.