/ Internal Audit
Schools Audit Bulletin
Governance
Background
This is the first bulletin issued by the Orbis Internal Audit partners. For those that don’t know, Orbis is the name given to the joint service partnership incorporating Surrey County Council, East Sussex County Council and Brighton and Hove City Council. The joint partnership has been developed with the aim to integrate and streamline the delivery of back office services.
Objective of the Bulletin
The objective of this bulletin is designed to assist Governors in all types of schools, in meeting the three core strategic functions defined within the Governance Handbook published by the Department for Education in November 2015:
•Ensuring clarity of vision, ethos and strategic direction;
•Holding the headteacher to account for the educational performance of the school and its pupils, and the performance management of staff; and
•Overseeing the financial performance of the school and making sure its money is well spent.
Whilst we will generally focus on the last of these strategic functions, advice and guidance will also cover the other 2 strategic functions.
Governance
This bulletin focuses on governance within schools.
We set out below some key questions and challenges, designed to stimulate discussions within governing body, finance committee or other similar meetings, which in turn will allow governors to assess the effectiveness of governance within the school and seek opportunities for improvement:
Scheme of Delegation
The Scheme of Delegation is a document that sets out how financial tasks that will be delegated from the governing body to the various individual committees, the headteacher, the business manager and other staff in the school. The budget of the school remains the responsibility of the governing body.
  • Has the schools Scheme of Delegation been reviewed and agreed by the governing body in the past 12 months?
  • Do you know whether the Scheme of Delegation reflects actual working practices in the school?
  • Are you satisfied that the delegated responsibilities and accounted financial values are appropriate for your school?
  • Is there adequate financial oversight by governors?
Skills and knowledge
Governing bodies are encouraged to regularly assess their effectiveness.
  • Has the governing body conducted a recent skills audit of its members?
  • Do governors regularly engage with training provided by the LEA?
  • Does sufficient financial expertise exist within the governing body in order to aid ongoing budget monitoring and medium to long term financial planning?
Declaration of Interests
Governors and staff are required to formally declare any matters that could result in a conflict of interest that may bias decision making.
  • Have all governors and appropriate staff submitted a conflict of interest declaration in the past 12 months?
  • Have these all been reviewed by the Headteacherand/or Chair of Governors (and annotated as such)?
  • Where there are declared business interests/potential conflicts, have these been formally acknowledged by the headteacher with any mitigating arrangements detailed?
School Improvement/ Development Plan
The school Improvement/Development Plan is a document that should involve governors at the planning stage and progress should be monitored by governors.
  • Does the School Improvement/Development Plan detail the estimated financial cost of the various suggested improvements?
  • Are these costs included in the school budget and is the school able to demonstrate a clear link between the two?
  • Does the plan cover a period of at least two years? If not, how does the school demonstrate that it has developed long term financial planning?
  • Does the plan contain anticipated premises and ICT costs? If not, perhaps a separate three year plan should be developed.
Budget monitoring
The governing body is responsible for approving the schools budget and should regularly review budget monitoring reports, to ensure the school is not overspent.
  • How do governors know that the financial reports received are a true reflection of the financial position of the school (for example, is a supporting FMS report provided and reconciled)?
  • If there are any large variances in the school budget monitoring report, do governors query why?
  • What percentage of the schools budget is spent on staffing? Is this level sustainable?
  • What are the predictions for pupil numbers in your school? Do governors know whether this will affect funding, staffing, class sizes etc?
  • What are the arrangements to monitor budgets for delegated or ring fenced funds such as pupil premium, sports grants, teaching schools, nursery schools or wrap around care.
Comparison and benchmarking
Governors should be regularly comparing and benchmarking their school against similar schools. The DFE’s top ten planning tips for governors are recorded below:
  • Staff pay as percentage of total expenditure
  • Average teacher cost
  • Pupil to teacher ratio
  • Class sizes
  • Teacher contact ratio
  • Proportion of budget spent on the leadership team
  • 3 to 5 year budget projections
  • Spend per pupil for non-pay expenditure lines compared to similar schools
  • School improvement plan priorities and the relative cost of options
  • List of contracts with costs and renewal dates

Key Contacts and Further Advice
Alex McLaren, Senior Auditor, Brighton and Hove City Council

01273 292573
Mark Winton, Audit Manager, East Sussex County Council

01273 481953
David John, Audit Manager, Surrey County Council

020 8541 7762

Issued: November 2016