Finance Committee Handbook 2011-2012: Acknowledgement

Finance Committee Handbook
FINANCE COMMITTEE HANDBOOK 2011-2012

Acknowledgement Phillip Dawson, Chair of Finance at Walker Primary originally developed this handbook for use by the members of the Finance Committee at Walker Primary School. Phillip has kindly agreed that the Authority can use and share his handbook with the Finance Committees in other schools in the borough. We have slightly amended the handbook to make it more generic for use by all Finance Committees. Introduction The Finance Committee has a number of responsibilities but the overarching duty should be to ensure that every pound is devoted to using our resources in the best way possible to provide a high quality teaching and learning environment for all our pupils. This handbook is intended to help members of the committee navigate through the cycle of meetings and provide signposts to sources of background information to help you to work effectively.
Contact If you have any comments or suggestions for this document then please do contact Sangeeta Brown, Resources Development Manager at sangeeta.brown@enfield.gov.uk.
1 April 11
HEALTH WARNING!
Dont know your PLASC1 from your elbow?
You need to go on a finance refresher course. This handbook isnt a replacement for training! Book online at www.enfield.gov.uk/govtrain and select Finance Level 1 or 2. If you pay for this service, then you should use it!
Things you know but are worth revisiting:

The key functions of the Governing body are to: Set the aims and objectives for the school Set the policies for achieving the aims and objectives Monitor and evaluate the progress the school is making Support and challenge The three critical functions of a school governor are: providing a strategic view; acting as a critical friend; and ensuring accountability. The Governing Body is legally liable for all actions taken in its name by individuals or committees to which it has delegated functions. The Governing body should therefore ensure that decisions to delegate specific responsibilities are properly minuted and recorded.
Purpose of this Handbook

The academic year starts in September. The financial year starts in April. Governors are required to ensure arrangements are in place for statutory returns to be made either monthly or quarterly. The Finance committee meets ________ times a year for ________ hour(s) each time. This handbook tries to put each Finance Committee meeting in the context of the financial and academic year setting out whats going on before and after each meeting. Its supposed to be helpful if you think the handbook could be improved or needs to be changed in anyway, then let your Committee Chair and / or Sangeeta Brown, Resources Development Manager know.
* PLASC = Pupil Level Annual Schools Census please see appendix A for other acroymyns.
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House Rules
The quorum for the meeting of the Finance Committee is (add details) members. Please note the minimum requirement is three members The membership of the committee must be reviewed annually. Any governor not a member of the Finance Committee should be welcomed to attend any of the meetings, but they may not take part in a vote. The committee can invite any person it sees fit to assist or advise on a particular issue, although they have no right to vote. Where necessary the Chair of the Committee will have a casting vote in reaching decisions.
Good Practice:
The Chair of the Committee is elected annually or after an agreed time period.
Apologies for absence should be notified in advance to the Chair of the Committee. Only the Chair or Vice Chair can cancel a meeting.
Golden Rules - These are suggestions and should be amended to suit the
arrangements for your committee.
All questions or comments should be directed through the Chair.
There are no silly questions. Ask about anything, related to the work of the Committee, you dont understand. Anyone can add items to the agenda by informing the Clerk it is courteous to inform the Chair of the Committee as well! The Committee will aim to work efficiently and effectively, taking into account the talents and interest of individuals and the time available. At the end of each meeting, there will be a recap on the actions which have been agreed to make sure everyone knows what to do afterwards. Committee Chair: Vice Chair:
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Version 2.0
25 May 2010
The School Financial Cycle

This flow chart is a helpful way to see the key financial events across schools in Enfield. It is reproduced from the Schools Finance Manual.
January/February Finance Committee meet to consider 3rd quarter monitoring position. Planning for new financial year. 3rd quarterly monitoring return sent to Council Prepare for closedown
March School receives budget share from the Council including grants. Following consultation Council issues revised Scheme for Financing Schools School updates 3 year financial plans
April Old financial year closed; CFR returns submitted to the Council Exceptional needs pupils count and Early Years pupils count Data Statement of Internal Controls Risk Assessment Annual tax questionnaire to be completed for previous year and submitted to Payroll.
January Submit PLASC returns to DFE and the Council. Information on pupil numbers used to calculate school budget share Exceptional needs pupil count and
All schools -VAT Return due every month. VA schools - to submit Capital Expenditure Report each month
May 3 year financial plan approved by Governing Body; 3 year financial plan submitted to the Council Use of Balances return submitted to the Council (where balances exceed 5% - Secondary and 8% Prim & Spec, of delegated budget)
Early Years pupils count data

Childrens Centre monitoring return due every month
December Respond to consultation on reviewing the school funding arrangements for the forthcoming year.
June Ratification of 3yr plan if not completed earlier
July/ August Finance Committee meets to consider previous years outturn; 1st quarter monitoring returned to Council. October Finance Committee meet to consider 2nd quarter monitoring position. Review pupil number estimates for use in next 3 year financial plan Review the schools charging policy and the debt management policy 2nd quarterly monitoring return sent to the Council Exceptional needs pupils count and Early Years pupils count Data Updates for Finance Manual issued and put on Fronter
September The Councils benchmarking document produced and published on Fronter SIP Planning for next 3 year financial plan begins
April 2011
Finance Committee Monthly Planner

This table sets out some of the key financial activities taking place each month at a School and when key policies fall due for annual review. The items identified in bold are areas, which the Governing Body would have delegated to the Finance Committee to consider and report back. The other areas are items which the Headteacher and key staff would need to consider and the Finance Committee should be aware procedures are in place to deal with these. Please note the reference to School Business Manager (abbreviated to SBM in the document) relates to the member of staff with the lead responsibility for financial management. Month Jan Activity PLASC Survey Notes A survey undertaken on the third Thursday in January. The data is used as the basis for calculating budget share.
The Headteacher and Senior Management Team continue to develop the working budget for the next financial year. Headteacher, Senior Management Team and SBM
By Whom
Jan
Budget Planning
Jan
3rd Quarterly Return

Income & Expend Summary VAT Return
Summary of income and expenditure from 1st April to 30th December.

A monthly income and expenditure report for Headteacher. The monthly VAT return to be submitted.
Prepared by the SBM, signed off by Chair of Governors or Finance.

SBM The SBM prepares the monthly VAT return which is signed by the Headteacher.
Jan Jan
Feb
Review Service Agreements/ Bought in Services
Review the requirement to continue with the services provided by Maintenance Contracts and Service Level Agreements and other bought in services prior to contract renewal. Governors are reminded that if the service is to be provided by an external contract and the cost is in excess of 10,000 aggregated over a four year period then comparative quotations should be obtained. In line with the requirements of the Scheme for Financing Schools and LAs Schools Finance manual.
Finance Committee and then Governing body.
April 2011
Feb
Best Value
As part of the review of contracts, confirm any new contracts issued are in line with best value and contract procedural rules. The Schools Lettings Policy falls due for renewal. The Schools Charging Policy falls due for renewal. The Schools Debt falls due for renewal. Hold the Spring meeting at this time
A monthly income and expenditure report for Headteacher. The monthly VAT return to be submitted. The school receives final confirmation of the budget for the next financial year from the Local Authority and the Headteacher and SBM prepare the budget report for the forthcoming year and the three year plan. A monthly income and expenditure report for Headteacher. The monthly VAT return to be submitted.
Feb Feb Feb Spring Term

Feb Feb
Lettings Policy Charging Policy Debt Policy Committee Meeting

Finance Committee and then Governing body. Finance Committee and then Governing body. Finance Committee and then Governing body. Finance Committee
SBM The SBM prepares the monthly VAT return which is signed by the Headteacher. Headteacher, Senior Management Team and SBM
Mar
Budget Share received
Mar Mar
Apr
Scheme for Financing Schools
A revised copy of the Scheme is received from the Local Authority and the school has to ensure procedures and thresholds are in line with the requirements in the Scheme. Governors consider the out-turn from the previous financial year and agree the carry forward.
An income/expenditure account for the previous financial year is prepared according to statutory headings and sent to the LA.
Apr
Out-turn report

SBM
CFR2 Return submitted (the 4th quarterly return)
Apr
School Fund (Private Fund) Account Statement of Internal Control
An annual income / expenditure account for the schools Private Funds are prepared and audited. At the end of each financial year, the Committee needs to consider
Finance Committee and then Governing body. Finance Committee and then Governing body.
Apr
CFR Consistent Financial Reporting see Appendix A

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the Statement of Internal Control. Apr Risk assessment of the Schools Financial Processes & Procedures
The Committee should consider and complete a risk assessment if a financial audit has not been undertaken this year.
Finance Committee
Apr Apr
A monthly income and expenditure report for Headteacher. The monthly VAT return to be submitted.
Summer Term
Committee Meeting Section 251 Statement
Hold the Summer meeting at this time. LA distributes Section 251 Budget Statement which outlines how the funding has been allocated. Governors receive and consider the use of surplus balances. Governors receive and consider the budget for the forthcoming year and the three year financial plan for submission to the LA.
A monthly income and expenditure report for Headteacher. The SBM prepares the monthly VAT return which is signed by the Headteacher.
Finance Committee Finance Committee
May
May May
School Balances 3 year financial plan and Budget Approval

Finance Committee and then Governing body Finance Committee and then Governing body
May May
Jun
Use of Balances return

Submitted to Local Authority (where balances exceed the threshold 5% or 8%)

Finance Committee and then Governing body

Jun Jun
Jul
1st Quarterly Return

Summary of income and expenditure from 1st April to 30th June.

A monthly income and expenditure report for Headteacher. The SBM prepares the monthly VAT return which is signed by the Headteacher. The SBM prepares the monthly VAT return which is signed by the
Prepared by SBM, signed off by Chair of Governors or Chair of Finance.

SBM The SBM prepares the monthly VAT return which is signed by the Headteacher. The SBM prepares the monthly VAT return which is signed by
Jul Jul
Aug
VAT Return
April 2011
Headteacher. Sep School Improvement Plan The School Improvement Plan should be approved by the Full Governing Body. This sets priorities for development over the next three years and resources and cost implications.
the Headteacher. Headteacher
Sep
Finance Committee Handbook Benchmarking Data
Review and update the Finance Committee Manual The school receives annual benchmarking data, comparing spending with other schools. To give time to review the information it is presented at the Spring committee meeting.
Chair of the Finance Committee Finance Committee
Sep
Sep Sep
Oct
Out-turn Budget Statement 2nd Quarterly Return Scheme of Delegation Governors Allowances Policy Terms of Reference
Receive formal confirmation of previous years spending (Section 251 Out-turn Statement) Summary of income and expenditure from 1st April to 30th September. The Schools Scheme of Delegation falls due for renewal. The policy for governors allowances and expenses is renewed as required (every 3-4 years). The Terms of Reference for committee are reviewed annually with recommendations passed to the Full Governing Body. Hold the Autumn meeting at this time Updates to the Register of Business Interests of each governor
Finance Committee
Oct
Finance Committee and then Governing body Finance Committee and then Governing body Finance Committee and then Governing body
Oct Oct
Oct
Oct Oct
Committee Meeting Register of Business Interests

Finance Committee Governing Body
Oct Oct
April 2011
Nov
School Funding Consultation
The Local Authority publishes proposal for school funding arrangements for the next financial year and seeks responses
A monthly income and expenditure report for Headteacher. The SBM prepares the monthly VAT return which is signed by the Headteacher. A monthly income and expenditure report for Headteacher. The SBM prepares the monthly VAT return which is signed by the Headteacher.
Nov
Income and Expenditure Summary VAT Return
SBM
Nov
Headteacher / SBM
Dec Dec
The next section of this manual provides a detailed checklist of regular agenda items at each Finance Committee meeting.
April 2011
Spring Term Finance Committee Meeting

This checklist might help to prepare for the Spring Term committee meeting.
Before the meeting:

PRE-MEETING CHECKLIST
Have you been sent a copy of the agenda and minutes of the last meeting? Have you received a copy of the financial statement and accompanying report? If not, request a copy from the clerk. Have you received a copy of the Spring Termly Pack and reviewed items marked for review by the Finance Committee? Have you been on a Finance training course in the last two years? If not book it! Have you been on a training course since the last meeting? If so do you have anything useful to feed back to the finance committee? Have you visited the school or discussed your link subject area with the subject leader since the last meeting? Do you have anything useful to feed back to the finance committee? Have you received a copy of the schools Benchmarking Data and reviewed it? Do you have any personal or prejudicial interests to declare in terms of the agenda items being discussed? (Use the flow chart at the front of the termly pack to decide).
KEY EVENTS SINCE LAST MEETING

Local Authority budget consultation for forthcoming financial year closed. Annual School Profile published PLASC survey undertaken Development of working budget for forthcoming financial year by Headteacher
At the meeting:
The agenda will include the following regular discussion items:
INTRODUCTION/COMMENTARY
The Headteacher and/or SBM will provide a brief commentary on key events since the last Finance Committee meeting (see above) and any urgent actions taken by the Chair or Chair of Governors and an introduction to the current budget position in terms of income and expenditure.
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April 2011
BUDGET (CURRENT YEAR)

Critical Friend : Scrutiny of Reports and Returns Review the 3rd Quarterly Return and the accompanying report. The school prepares reports on a by exception basis. Discuss key variances; identify reasons and any followup actions required by Headteacher/SBM/others. Review future spending and income timescales including non-carry forward items e.g. Standards Fund. Consider effect on retained balances. Review CapEx programme. Discuss surplus/deficit position. Strategic View : Review spending against schools priorities Interrogate and assess effectiveness of spending decisions, including those set out in the School Improvement Plan (see box below for some current year priorities). Are you a subject link governor? Can you see how spending decisions within that subject area have been applied? Complete as Necessary Accountability : Approvals Given i) Outline any approvals given by the Chair or Committee Chair outside of the cycle of meetings (due to timing differences) e.g. 3rd Quarter Return/Tender Acceptance. ii) Important low value contracts (<5,000) entered into by the Headteacher (single quote) should be noted by the committee. Accountability : Approvals Required in line with the Schools Scheme of Delegation consideration should be given to whether there: i) Have any virements been necessary (enter amount) or are any virements needing Committee approval required? ii) Disposal of inventory items > (enter amount)? iii) Spending approvals (especially for works needed over the summer hols) : a) Approval to seek intermediate (10K for goods and services and 20k for works 50K) quotations. Approval to develop tender documents for high value (>50K) b) Approval of criteria for selecting intermediate value contracts (>10K <50K). NB: criteria must be advertised on school / council website. c) Approval of contractor selection following competitive quotes (3 written quotes at intermediate value range) iv) Consider and approve any debt which needs to be written offs
BUDGET (FORTHCOMING YEAR)

Strategic View : Feedback from LA consultation HT provides summary of feedback from local authority budget consultation and progress towards developing working budget. Critical Friend : Feedback/suggestions from parents and school council HT provides summary of responses from parents and the school council in terms of spending priorities for the next year. Do you have anything to feed back as a subject link governor?
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April 2011
POLICY REVIEW
The policies below fall due for annual review. Due to time constraints, it may be decided to discuss any amendments suggested by the Headteacher/SMT at the meeting and to circulate proposed revisions to the committee by email, for review, with the approval of the amended version delegated to the Chair and reported to the Full Governing Body; Lettings Policy Charging Policy Debt Management Policy The committee reviews contracts / bought in services and discusses contract renewal. Governors are reminded that SLAs with a value over 10,000 aggregate over four years must be subject to the contract procedural rules.
BENCHMARKING
Review and discuss implications of the benchmarking report and any commentary provided by the Headteacher/SBM noting any exceptional items of expenditure and key variances. Discuss any further information/analysis required.
REFERRALS
Review and discuss items referred to the committee in the Termly Pack.
TRAINING
Reminder about relevant forthcoming LA training sessions. Consider the need for specific training sessions for the whole committee.
ANY OTHER BUSINESS

Is there anything which has been forgotten? Think of the things NOW that you wish you had asked before! Is there anything that has been discussed that needs to be referred to another committee or is an important issue that should be raised in another forum (Commissioning Group / Schools Forum/ Link Governor Forum/ etc)? The Chair of the committee will recap on the agreed actions and dates for any special working groups/meetings will be agreed.
KEY EVENTS AFTER THIS MEETING

Budget share received Budget approved by Full Governing Body (or by Committee Co-Coordinating Group depending on timing). Financial Year End Close. CFR Return (4th Quarter statement) submitted to Local Authority.
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April 2011
Summer Term Finance Committee Meeting

This checklist might help to prepare for the Summer Term committee meeting.
Before the meeting:

Have you been sent a copy of the agenda and minutes of the last meeting? Have you received a copy of the financial statement and accompanying report? If not, request a copy from the clerk. Have you received a copy of the Summer Termly Pack and reviewed items marked for review by the Finance Committee? Have you been on a Finance training course in the last two years? If not book it! Have you been on a training course since the last meeting? If so do you have anything useful to feed back to the finance committee? Have you visited the school or discussed your link subject area with the subject leader since the last meeting? Do you have anything useful to feed back to the finance committee? Have you received and reviewed copy of the schools Scheme of Delegation, Statement of Internal Control and 3 year financial plan? Do you have any personal or prejudicial interests to declare in terms of the agenda items being discussed? (Use the flow chart at the front of the termly pack to decide).

Financial Year End CFR Return agreed and submitted to local authority. Budget share received from Local Authority. Scheme for Financing Schools received from Local Authority. Budget approved by Full Governing Body.
At the meeting:
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April 2011
BUDGET (PREVIOUS YEAR)

Critical Friend : Scrutiny of Reports and Returns Review the CFR Return and the accompanying report. Note that the CFR return is reconciled for the period end. Discuss key variances; identify reasons and any follow-up actions required by Headteacher/SBM/others. Accountability : Use of Balances Return Review balances in conjunction with year end statement and School Improvement Plan priorities. Discuss and approved a Use of Balances return (if necessary).

Strategic View : Note budget share and identify key risks Commentary on budget share and comparison with peer group using Section 251 statement. Identify key risks. Strategic View : Review spending against schools priorities Interrogate and assess effectiveness of spending decisions, including those set out in the School Improvement Plan (see box below for some current year priorities). Are you a subject link governor? Can you see how spending decisions within that subject area have been applied?
Critical Friend : Scrutiny of Reports and Returns Review the Quarter 1 return and any accompanying report. The school prepares reports on a by exception basis. Discuss key variances; identify reasons and any follow-up actions required by Headteacher/SBM/others. Review future spending and income timescales including non-carry forward items e.g. external grants. Consider effect on retained balances. Review CapEx programme and summer works. Discuss surplus/deficit position. Accountability : Approvals Given iii) Outline any approvals given by the Chair or Committee Chair outside of the cycle of meetings (due to timing differences) e.g. CFR Return/Tender Acceptance. iv) Important low value contracts (<10,000) entered into by the Headteacher (single quote) should be noted by the committee. Accountability : Approvals Required in line with the Schools Scheme of Delegation consideration should be given to whether there: i) Have any virements been necessary (enter amount) or do any virements need Committee approval? ii) Disposal of inventory items > (enter amount)? iii) Spending approvals (especially for works needed over the summer hols): a) Approval to seek intermediate (10K for goods and services and 20k for works 50K) quotations. Approval to develop tender documents for high value (>50K) b) Approval of criteria for selecting intermediate value contracts (>10K <50K). NB: criteria must be advertised on school / council website. c) Approval of contractor selection following competitive quotes (3 written quotes at intermediate value range) iv) Consider and approve any debt which needs to be written offs
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April 2011
POLICY REVIEW
The policies below fall due for annual review. Due to time constraints, it may be decided to discuss any amendments suggested by the Headteacher/SMT at the meeting and to circulate proposed revisions to the committee by email, for review, with the approval of the amended version delegated to the Chair and reported to the Full Governing Body; Statement of Internal Control 3 Year Financial Plan
BEST VALUE RETURN

At this meeting, the Governors should discuss Best Value and scrutinise how to maximise time and financial resources to maximise educational opportunities for the school. Review how to follow the four principles of Best Value: Challenge, Compare, Consult and Compete.
REFERRALS
TRAINING
ANY OTHER BUSINESS


Use of Balances Return submitted (if required) School Improvement Plan published.
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April 2011
Autumn Term Finance Committee Meeting

This checklist might help to prepare for the Autumn Term committee meeting.
Before the meeting:

Have you been sent a copy of the agenda and minutes of the last meeting? Have you received a copy of the financial statement and accompanying report? If not, request a copy from the clerk. Have you received a copy of the Autumn Termly Pack and reviewed items marked for review by the Finance Committee? Have you been on a Finance training course in the last two years? If not book it! Have you been on a training course since the last meeting? If so do you have anything useful to feed back to the finance committee? Have you visited the school or discussed your link subject area with the subject leader since the last meeting? Do you have anything useful to feed back to the finance committee? Have you received and reviewed a copy of the Governors Allowances Policy, School Meals Debt Policy, Terms of Reference and School Profile contribution? Do you have any personal or prejudicial interests to declare in terms of the agenda items being discussed? (Use the flow chart at the front of the termly pack to decide).

Use of Balances Return submitted (if necessary) School Improvement Plan published Benchmarking data released by local authority Schools Finance Manual published by LA 2nd Quarterly Return prepared
At the meeting:
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April 2011

Critical Friend : Scrutiny of Reports and Returns Review the 2nd Quarterly Return and the accompanying report. The school prepares reports on a by exception basis. Discuss key variance; identify reasons and any follow-up actions required by Headteacher/SBM/others. Review future spending and income timescales including non-carry forward items e.g. Standards Fund. Consider effect on retained balances. Review CapEx programme. Discuss surplus/deficit position. Strategic View : Review spending against schools priorities Interrogate and assess effectiveness of spending decisions, including those set out in the SIP (see box below for some current year priorities). Are you a subject link governor? Can you see how spending decisions within that subject area have been applied? Critical Friend : Scrutiny of Summer Works The summer holidays are often a time for large-budget building and improvement works to be undertaken. Review performance and progress in the Autumn term and identify lessons learnt and good ideas for the future. Accountability : Approvals Given v) Outline any approvals given by the Chair or Committee Chair outside of the cycle of meetings (due to timing differences) e.g. 2nd Quarter Return/Tender Acceptance. vi) Important low value contracts (<10,000) entered into by the Headteacher (single quote) should be noted by the committee. Accountability : Approvals Required in line with the Schools Scheme of Delegation consideration should be given to whether there: i) Have any virements been necessary (enter amount) or do any virements need Committee approval? ii) Disposal of inventory items > (enter amount)? iii) Spending approvals (especially for works needed over the summer hols): a) Approval to seek intermediate (10K for goods and services and 20k for works 50K) quotations. Approval to develop tender documents for high value (>50K) b) Approval of criteria for selecting intermediate value contracts (>10K <50K). NB: criteria must be advertised on school / council website. c) Approval of contractor selection following competitive quotes (3 written quotes at intermediate value range) iv) Consider and approve any debt which needs to be written offs
BUDGET (FORTHCOMING YEAR)

Strategic View : LA consultation submission Discuss and agree any feedback to the local authority regarding the school budget, to be sent as part of the annual budget consultation. How will views of parents and students be taken into account (school council/Friends)?
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April 2011
POLICY REVIEW
The policies below fall due for annual review. Due to time constraints, it may be decided to discuss any amendments suggested by the Headteacher/SMT at the meeting and to circulate proposed revisions to the committee by email, for review, with the approval of the amended version delegated to the Chair and reported to the Full Governing Body; Scheme of Delegation Governors Allowances Policy Terms of Reference School Profile (financial contribution) Register of Business Interests (submitted to Full Governing Body Meeting).
REFERRALS
TRAINING
ANY OTHER BUSINESS


Benchmarking Data reviewed for presentation in Spring Asset management plan/R&M database updated following summer works Budget consultation.
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April 2011
Understanding the Financial Reports

At each committee meeting, the Governors review the spending against the agreed budget, either using figures from one of the quarterly returns or from a trial balance print-out straight from the accounting software (depending on when the meeting takes place). In March, the full governing body approves the three year budget. A copy of an example budget and an example quarterly return are enclosed on the following pages. Each form uses the same codes to describe items of income and expenditure. These are the same for all maintained schools across England and Wales. They are called the CFR codes CFR stands for Consistent Financial Reporting. To save time (and therefore costs), only the year end report (the CFR return) is reconciled to adjust for debtors and creditors, accruals and prepayments. This means the monthly trial balances or the quarterly reports are subject to variances due to timing differences. Because time is limited at meetings, the reports prepared by the School are produced on a by exception basis which means the Governors only talk about exceptional variances. Sometimes this means that variances which occur at the same time each year may not be covered. This doesnt mean anything is off limits in terms of asking a question. The table below provides a useful ready reckoner to explain what each of the common CFR codes in use means and the common spending timescales which may help to explain some of the variances that occur seasonally. THIS ISNT A SUBSTITUTE FOR SCRUTINISING THE ACCOUNTS! If you dont understand something please ask. There are no silly questions at your committee!
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April 2011
Example Three Year Budget Plan

Indicative budget for the next two years
Variance between last year actuals and this year proposed budget
Carried forward from previous year This section deals with capital expenditure. This is loosely defined as one-off improvement items or items >10,000. Governors can decide to turn revenue funds into capital I13 (Donations) Walker but cannot do the reverse! rely on donations from the Friends. This income is shown in this column
Actual costs from previous year
School does not have a nursery so there will not be income shown in CI03 (Private Income) these lines This is not Friends money and should not be confused with the Private Account, which Walker buy-in our catering audited separately is service, so there is no and rarely used. CI03 expenditure here (see E28) usually be Zero at will the school.
One page of the budget deals with revenue expenditure, the other with capital.
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April 2011
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April 2011
Example Quarterly Return
The Latest budget shows the effect of any virements transfers between budget headings since the budget was ratified by the Full Governing Body. The Scheme of Delegation allows the Headteacher to vire up to 5,000 between budget headings without committee approval.
This column shows the actual sums spent as a percentage of the Latest budget estimate
This column shows the projected income/expenditure to the year end
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April 2011
The Quarterly Returns follow the same format as the Working Budget, with the capital accounts after the revenue accounts.
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April 2011
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April 2011
CFR Codes Ready Reckoner

All maintained schools in England and Wales are required to publish their accounts to common standards. Items of income and expenditure are reported using CFR codes this stands for Consistent Financial Reporting. The guide below might help you to navigate through the financial reports presented to the committee:
Code OB01 OB02 Name Pupil Focussed Revenue Funding Community Focussed Revenue Funds Delegated by the LEA SEN Funding Notes This is the balance of the revenue account brought forward from the previous year Consider what needs to be brought forward.
Revenue Account Opening Balances (Codes Beginning OB)
Revenue Income Codes (Codes Beginning I) I01 I03 The revenue account is calculated according to an agreed formula. These funds arrive in equal monthly instalments. Arrives in equal monthly instalments. The school only receives funds for students with support needs above a certain level (below that level the support must be paid for from delegated funds (I01) Money delegated to the school from the government, via the LA, to support the raising of attainment for pupils from deprived backgrounds. The money is allocated on free school meal eligibility. As above Receipts from lettings or other activities (not donations, which are shown in I13) This will always be zero if catering management has been contracted out. Each year, the school pays into a scheme which allows it to recover part of the costs of hiring supply staff, due to unplanned staff absence. Any receipts from the scheme are shown in this line. The cost (premium) is shown in the expenditure section (See Code E10) The number and timing of school visits (and the annual outing) is often difficult to predict. The income and expenditure (shown in E19A) should balance (or be in credit) at the end of the year, but throughout the year the timing of payments are subject to variances, depending on whether a deposit was due in advance etc. This is where the income from the Friends group is recorded.
I05
Pupil Premium
I06 I08 I09 I10
Other Government Grants Income from Facilities/Services Income from Catering Receipts from supply teacher insurance claims
I12
Income from contributions to visits etc
I13 I14 I15
Donations and/or private funds OBSOLETE Community Focussed Extended Schools Funding
Income from breakfast clubs/after school clubs.
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April 2011
or grants I16/17 Community Focussed Extended Schools Facilities income Supply Teachers Agency Teachers Education Support Staff Cost of Other Staff Indirect Employee Expenses Supply Teacher Insurance Staff Related Insurance Cleaning & caretaking Other Occupation Costs Catering Supplies Bought in ServicesCurriculum Bought in Services-Other Direct Revenue Financing Income from community focussed activities including Childrens centres.
Revenue Expenditure Codes (Beginning E) E02 E26 E03 E07 E08 E10 E11 E14 E18 E25 E27 E28 E30 Supply from the Local Authority Supply from bought-in agencies Teaching Assistants/Learning Mentor Lunchtime Supervisory/After School Clubs Personnel related costs (i.e. recruitment) Premium for insurance/indemnity scheme (see I10 above) Employers & Public Liability premiums Cost of cleaning contract & consumables Necessities and fundamentals (loo rolls etc!) Cost of bought-in Catering Services Cost of School Improvement Partner, School Library Service etc usually paid annually in advance (April) Cost of other SLAs e.g. SBM, personnel The Governing Body can decide to transfer funds from the revenue account to the capital account perhaps to part-fund a major improvement. Any such transfers would be recorded in this line. The staffing costs for community focussed activity. The running and general costs for community focussed activity. The remaining contingency within the revenue account is shown here. The sum of all expenditure items (including the contingency) should total the sum of all income items plus any opening balance in the revenue account. Capital balance brought forward from previous year. Capital Income delegated by the local authority This is not money from the Friends group (which should be shown in the revenue account, within I13) nor should it be confused with the schools Private Account, which is outside of the budget and quarterly returns and audited separately. Any contributions to the capital account from revenue funds will be shown here (with the balancing figure shown in the revenue account in E30) Retained capital carried forward to next financial year.
E31 E32 E99
Community Focussed Extended Schools staff Community Focussed Extended Schools income Contingencies
Capital Account Opening Balances (Codes Beginning OB) OB03 CI01 CI03 Opening Capital Balance Capital Income Private Income Capital Income (Codes beginning CI)
CI04
Direct revenue financing
Capital Expenditure (Codes Beginning CE) CE05 Future Capital Developments
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April 2011
Finance Committee Handbook Appendix A
Terms that might crop up in discussions on school finance

Academies A new type of school that bring a distinctive approach to school leadership drawing on the skills of sponsors and other supporters. They give Principals and staff new opportunities to develop educational strategies to raise standards and contribute to diversity in areas of disadvantage. Academies operate under a separate audit and accountability framework so are not required to meet the Standard Funding based on costing the number of staff etc needed to run particular activities in schools. AWPUs are funding attached to pupils and can vary according to the pupils age (see also KSWPUs) See Support Staff. The knowledge; skills and understanding which pupils of differing ability and maturity are expected to have by the end of each Key Stage of the National Curriculum, i.e. assessed at ages 7, 11, 14 and 16. Independent body set up by Government to monitor the use of funds by local authorities and certain other bodies. A set of principles to promote value for money and service efficiency. Budget for books and equipment received by schools prior to LMS based on pupils' ages and numbers. Spending on building projects and equipment above a designated value. Area from which a school takes its pupils. Facilities run by Childrens Trusts which offer a one stop shop for services for children and young people including local education, social care and some health services run by PCTs. These integrate local education, social care and some health services run by PCTs for children and young people. The person appointed to carry out administrative duties for the Governing Body, e.g. preparing an agenda, Body minuting meetings and dealing with correspondence. Advises the Governing Body on legal and procedural matters. Consistent Financial Reporting, the requirement for all schools to report their income and expenditure against a standard set of headings, which was introduced in 2002-03. Money set aside for unexpected costs. Staff who pay a higher rate of national insurance as they are not in a pension scheme. Staff who pay a lower rate of national insurance as they are in a pension scheme. A ring-fenced grant for schools paid by the DfE to each local authority. The White Paper Importance of Teaching includes proposals to review the national funding formula and this may include changes to this grant for 2012/13. Maintained schools have a budget share calculated on the basis of a formula, and the right to spend this budget share is normally delegated to the schools Governing Body, to be spent for any purpose of the school or carried forward into subsequent financial years. Funding that has been allocated for a specific purpose and can only be spent on that purpose. There are no powers of carry forward for this funding and unspent balances revert to the LA at the close of the relevant period. Funding that can only be spent on the purpose for which it was allocated and cannot be allocated elsewhere using virement or subsumed into the delegated budget. The Every Child Matters Green Paper was published in response to Victoria
Activity Led Funding Age Weighted Pupil Units Ancillary Staff Attainment targets
Audit Commission Best Value Capitation Capital Expenditure Catchment Area Childrens Centres
Childrens Trusts Clerk to the Governing Body CFR
Contingency Contracted In Contracted Out Dedicated Schools Grant Delegated Budget
Devolved Funding
Earmarked Funding
Every Child Matters
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April 2011
Climbie and other cases in September 2003 and is available from: http://www.dfes.gov.uk/everychildmatters/. It aims to safeguard children. The 5 Key Outcomes of Every Child Matters: Being healthy Staying safe Enjoying and achieving Making a positive contribution Achieving economic well-being Extended School Fair Funding Feeder School Formula/Formula funding Formula Spending Share Foundation schools A school which provides a range of services and activities often beyond the school day to help meet the needs of its pupils, their families and the wider community. The term that describes the system of funding for schools introduced in April 1999 which sets the framework for the financial relationship between schools and LAs. A school which transfers pupils to another school, e.g. a Junior school "feeding" a Secondary school. Schools receive their funding by means of a formula to ensure equal treatment of all schools. The basis of the formula is laid out in the annual section 52 budget statement. 75% of the funding has to be delivered on a pupil led basis. Successor to SSA as the amount used by Government as an indicator for the distribution of revenue support grant, which was replaced by the Dedicated Schools Grant. A type of state school introduced in 1999 by the School Standards and Framework Act 1998, which has more freedom than community schools to manage their school and decide on their own admissions. At foundation schools the governing body is the employer and the admissions authority. The schools land and buildings are either owned by the governing body or by a charitable foundation. Funding comes from the LA which also pays for any building work. Process by which individuals move through their salary scale until they reach top of scale. The total amount budgeted by an LA for the delegated budgets of all the schools it maintains. An internal control system encompasses the policies, processes, tasks, behaviours and other aspects of an organisation that, taken together: facilitate its effective and efficient operation by enabling it to respond appropriately to significant operational, financial, compliance and other risks to achieving its objectives. This includes the safeguarding of assets from inappropriate use or from loss and fraud, and ensuring that liabilities are identified and managed; help ensure the quality of internal and external reporting. This requires the maintenance of proper records and processes that generate a flow of timely, relevant and reliable information from within and outside the organisation; help ensure compliance with applicable laws and regulations, and also with internal policies with respect to the conduct of business. An organisation's system of internal control will reflect its control environment which encompasses its organisational structure. The system will include: control activities; information and communications processes; and processes for monitoring the continuing effectiveness of the system of internal control. The system of internal control should: be embedded in the operations of the organisation and form part of its culture; be capable of responding quickly to evolving risks to the business arising from factors within the organisation and to changes in the operational environment; and include procedures for reporting immediately to appropriate levels of management any significant control failings or weaknesses that are identified together with details of corrective action being undertaken.
28 April 2011
Increments Individual Schools Budget Internal control
January Count Key Stages
Another name for PLASC. The four stages of pupils' progress in acquiring knowledge and skills as set out in the National Curriculum. Pupils are tested at the end of each stage. Key Stage 1 where the majority of pupils are aged 5 to 7, Key Stage 2 where the majority of pupils are aged 8 to 11, Key Stage 3 where the majority of children are aged 12 to 14, and Key Stage 4 where the majority of pupils are aged 15 to 16. Every age group has a particular weighting e.g. KS1 = 1.000 that is built into the local formula to deliver a level of resource related to that age group's needs. So KSWPUs are the total result of multiplying the number of pupils in each age group by the appropriate Key Stage weighting. Some LAs use different weightings within the key stages (AWPUs). This is a term created by Edward de Bono, a Maltese psychologist, physician and writer who defined it as a method of thinking that was concerned with changing concepts and perception. Lateral thinking is about reasoning that is not immediately obvious and about ideas that may not be obtainable by using only traditional step-by-step logic. A term often used for similar processes is "thinking outside the box". In a school context, this would tend to lead to creative or innovative solutions to problems such as funding or use of space. The amount budgeted by the LA for administration and support services, as opposed to pupil provision. A school can apply to the Local Authority for a licensed deficit, which can only be approved in exceptional circumstances where the school can genuinely demonstrate that it cannot balance its budget without significant impact on the delivery of education. LA guidance will include the need for a recovery plan. An additional sum of money paid as a supplement to a teacher's basic salary, generally in recognition of additional duties or special responsibilities within the school. Materiality is a concept or convention that originates within auditing and accounting and relates to the importance of an amount, transaction, or discrepancy. However, it is now used more generally to mean focusing on those matters which are most significant. In the school context this might mean concentrating on the biggest items or those that have changed most when looking at a draft budget, or looking at the largest variations when looking at an in year monitoring report. In the original accounting sense, information is material if its omission or misstatement could influence the economic decision of users taken on the basis of the financial statements. Materiality depends on the size of the item or error judged in the particular circumstances of its omission or misstatement. Thus, materiality provides a threshold or cut-off point rather than being a primary qualitative characteristic which information must have if it is to be useful. (International Accounting Standards Boards "Framework for the Preparation and Presentation of Financial Statements"). The programmes of study laid down by law for all pupils aged from 5 to 16 in state maintained schools. The National Curriculum provides a balanced education for a child covering 11 subjects overall, and is divided into four Key Stages according to age. Parental choice of school. Option appraisal is a decision making tool for use in defining objectives, identifying the different ways in which they can be achieved and examining all the important factors before taking a decision on implementing a project. An effective option appraisal will help you to answer three questions: Have you taken into account all relevant factors in deciding what the project should be? Should you go ahead with the project? What is the best way to carry out the project? In the school context this would most often be applied to new building work (e.g. new build or extension/refurbishment) but could equally be applied to staffing arrangements in terms of the size of classes and the mix of teachers and LSAs used to look after them. (See also S3.2).
29 April 2011
Key Stage Weighted Pupil Units
Lateral thinking
LA Budget Licensed deficit recovery
Management Allowance Materiality
National Curriculum
Open Enrolment Option Appraisal
PESTLE
This acronym relates to an analysis tool or approach that organisations can use as part of strategic planning, to help them to understand the external environment in which they are operating, both now and in the future. PESTLE stands for: - Political - Economic - Social - Technological - Legal - Environmental Alternative to AWPUs/KSWPUs in Special schools: the bulk of each special schools funding is normally determined by the numbers and type of places which it is planned should be available at the school that year, whether or not these places are occupied. The Pupil Level Annual Schools Census, a census return of numbers of pupils and their ages and other characteristics from all schools to the DCSF, completed on the third Thursday in January. See also September Count. Document drawn up by LA in consultation with schools and approved by The Schools Forum setting out conditions under which schools manage their budgets and their financial relationship with the LA. The total amount budgeted by the LA for direct provision for pupils, including the ISB and other provision, mostly for under fives and pupils with SEN. Section 251 of the Apprenticeships, Skills, Children and Learning Act 2009 requires LAs to provide all schools with a full account of their Schools Budget and LA Budget and how the funding is derived for each school. Section 151 of the Local Government Act 1972 requires local authorities to ensure the probity of the use of public funds. Ofsteds School Self Evaluation Form (SEF) an online form which schools have been statutorily obliged to complete from September 2005 to November 2010. A return completed on the third Thursday in September stating the number of pupils and other key statistics in secondary schools. The pay and conditions of service for an individual. This acronym refers to targets that an organisation sets. It has a number of slightly different variations, but the main ones are summarised below: S - specific, significant, stretching M - measurable, meaningful, motivational A - agreed upon, attainable, achievable, acceptable, action-oriented R - realistic, relevant, reasonable, rewarding, results-oriented T - time-based, timely, tangible, trackable Scheme run by LAs to cushion schools against the effects of long-term sickness. Every organisation has people or groups of people who have an interest in what it does and these are referred to as 'stakeholders'. It matters to them what happens with an organisation and what it does - but often for very different reasons. For a school there will be a wide range of stakeholders who might include: pupils and their families staff the parent local authority DfE Diocese and other linked organisations (where relevant) financial institutions (where schools have loans) communities within which the school operates various pressure groups (e.g. PTA etc.). Stakeholders should not be confused with shareholders in a commercial organisation. A shareholder is a part owner of a business, as he or she has bought
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Planned Places
PLASC (January)
Scheme for Financing Schools Schools Schools Budget Section 251
Section 151 SEF September Count Service Conditions SMART
Staff Cover Scheme Stakeholders
a part of its value. Shareholders can have a say in what the business does. They share in risks as well as successes. As a result, they are stakeholders but not the only stakeholders. Standard Spending Standards Fund Assessment Annual amount used by Central Government to determine the distribution of revenue support grant (replaced by FSS and DSG). These grants are no longer available and have been merged with the DSG. They were a programme of specific grants supporting national initiatives such as the Primary and Key Stage 3 strategies. Schools were free to vire (see Virement) between most Standards Fund grants in support of their improvement agenda, with the exception of EMAG and capital grants. Schools have until 31 August of the following financial year to spend their allocation. Orders made by a LA for the regulation of their proceedings and business. Statement of SEN, a written description of a child's educational needs made by an LA. Clerical, welfare, technical, caretaking or supervisory staff employed in schools. Sometimes used to refer exclusively to Teaching Assistants. Classes formed with children of different ages. A transfer of money from one budget head to another The agreement represents consensus on the principles relating to tackling teacher workload whilst raising standards in schools.
Standing Orders Statement Support Staff Vertical Grouping Virement Workforce agreement
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Finance Committee Handbook 2011-2012: Acknowledgement

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Finance Committee Handbook 2011-2012: Acknowledgement

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Finance Committee Handbook