FINANCE PROCEDURE MANUAL - Norfolkeficts.norfolk.gov.uk/finance/proceduresmanual/Docs/...4 Version 3.0 Updated Sept 2009 Finance Procedure Manual Introduction On behalf of Children’s

FI NANCEPROCEDURE

MANUAL

2 Version 3.0 Updated Sept 2009

Third Edition published September 2009 Finance Support Service: Children’s Services Finance Room 047 County Hall Martineau Lane Norwich NR1 2DL Telephone: 01603 224273 Fax: 01603 223485 Minicom: 01603 223833 e-mail: [email protected]


Finance Procedure Manual

Preface This manual was produced in order to promote good practice to all Local Authority schools given the current working arrangements and requirements from government agencies. The procedures are written by Children’s Services Finance and reviewed by internal audit before release. The draft of this document was released in the year 2002, with a four-ring binder and the most up to date appendices at the time of printing. The expectation is that school administration staff or headteachers, whichever is appropriate, will keep these procedures maintained by periodically printing updates when notified. This manual can be accessed electronically on the Children’s Services Finance Website (efs.norfolk.gov.uk). Updates will be posted to this website when applicable, as portable document format (.pdf) files. Schools will be informed via e-mail when updates are available and these can then be printed at the school for insertion where appropriate. Each school should build a library of supporting publications that includes:

� VAT Manual � Section 52 � Resource Allocation Pack � Keeping You Balance � School Governors ‘A guide to the law’ � Norfolk Scheme for Financing Schools � Risk & Insurance Manual � Getting the Best from your Budget � Services to Schools Brochure



Introduction

On behalf of Children’s Services Finance I am pleased to be able to launch this revised and comprehensive update of the Finance Procedure Manual. We anticipate that this significant publication will be adopted by all Governing Bodies as a leading management guide providing wide ranging financial directives and information for better accounting in schools. In an effort to provide you with all the information you require, every attempt has been made to draw together within the document all current financial information and guidelines and to set this out in a way that anybody contributing to financial management in the school will find understandable and helpful. What we are trying to do in this manual is to give you a single service for all your financial information and to ensure that it is an up to date reliable source of information for all you need to know. It is important to staff who have financial management responsibility at any level to have access to this working document as it outlines all the requirements placed on schools in terms of financial requirements and duties as well as operational guidelines. It also tells you about the key dates in the financial year. Most importantly, the manual seeks to support your efforts in the school, enabling you to improve financial management performance to meet the ever-increasing challenges of school improvement. Small primary schools will find it hard to apply some of the controls, which may be typical procedures in larger schools, particularly in the separation of duties. In such cases, the standard must be interpreted within the context of the school and the school must assess whether the controls in place are sufficient to meet the principles behind the controls and standards identified in this manual. This manual has been reviewed by some of your colleagues but it is our intention that you get the best out of your use of the information and as always we would appreciate any comments you have to make on content and layout. This updated version will be available on Esinet . It can be found on the Children’s Services website. Please direct any queries to Alison Randall on 01603 224273, e-mail [email protected] in the first instance.

Paul Fisher

Head of Service



Chapters

1. Governance

2. Financial Planning

3. Budget Monitoring

4. Financial Controls

5. Purchasing

6. Assets

7. Payments

8. Petty Cash

9. Income

10. Banking

11. Payroll

12. Insurance & Risk Assessment

13. Data Security

14. Tax

15. Devolved Capital Allocations

16. Standards Fund

17. Licensed Deficits

18. Voluntary Funds

19. Financial Management Standards in Schools (FMSiS)

20. Extended Schools

21. Children’s Centres

22. Reorganisation Funding



Contents

1. Governance 1.1 Scope 1.2 Responsibilities

1.2.1 Governing Body 1.2.2 Finance Committee 1.2.3 Headteacher 1.2.4 Other Staff

1.3 Process Requirements 1.3.1 Self Evaluation Tools 1.3.2 Register Of Business Interests

1.4 Best Value 1.5 Financial Benchmarking

1.5.1 Scope 1.5.2 Responsibilities

1.5.2.1 Local Authority (LA) 1.5.3 Process Requirements 1.5.4 Further Information

1.6 Whistleblowing

2. Financial Planning 2.1 Scope 2.2 Responsibilities 2.3 Overview 2.4 General 2.5 Budgetary Process

2.5.1 General 2.5.2 Staffing Requirements

2.6 Budget Preparation 2.6.1 Estimating Income & Expenditure 2.6.2 Finalising the Budget

2.7 Coding 2.7.1 Cost Centre 2.7.2 Subjective (Analysis) Code 2.7.3 Project Code

3. Budget Monitoring 3.1 Scope 3.2 Responsibilities

3.2.1 Governing Body 3.2.2 Headteacher 3.2.3 Summary



Contents

4. Financial Controls 4.1 Scope

4.1.1 Financial Controls 4.1.2 Internal Controls

4.2 Responsibilities 4.3 Overview 4.4 Process

4.4.1 Organisation and Responsibilities 4.4.1.1 Governing Body 4.4.1.2 Finance Committee 4.4.1.3 Headteacher 4.4.1.4 Business Manager/Bursar/Finance Officer/School

Secretary 4.4.1.5 Budget Managers 4.4.1.6 Other Staff 4.4.1.7 Formal Allocation of Responsibilities

4.4.2 Personnel 4.4.2.1 Financial Expertise

4.4.3 Separation of Duties 4.4.4 Authorisation & Supervision

4.4.4.1 Delegation of Budgets 4.4.4.2 Post Authorisation Amendments 4.4.4.3 Payroll Authorisation

4.4.5 Documentation 4.4.5.1 Financial Policy 4.4.5.2 Retention of Financial Records

4.5 The Provision of Financial Support Services 4.6 Audit

5. Purchasing 5.1 General 5.2 General Guidance 5.3 Purchasing & Credit Cards 5.4 Reward Cards

6. Assets 6.1 Scope 6.2 Responsibilities 6.3 Overview



Contents

6.4 Assets 6.4.1 General 6.4.2 Purchase of Assets 6.4.3 Asset Register 6.4.4 Security of Assets 6.4.5 Disposals 6.4.6 Gift Register

6.5 Other Issues 6.5.1 Removal of Assets from School Premises 6.5.2 Leasing of Assets 6.5.3 LA Loan Scheme

7. Payments 7.1 Travel Expenses

7.1.1 Scope 7.1.2 Responsibilities 7.1.3 Overview 7.1.4 Process Requirements 7.1.5 Further Information

7.2 Payments 7.2.1 Scope 7.2.2 Responsibilities 7.2.3 Overview 7.2.4 Process Requirements

7.2.4.1 Delivery Procedures 7.2.4.2 Submission of Invoices by Suppliers 7.2.4.3 Certification of Invoices for Payment 7.2.4.4 Stale Cheques

7.2.5 Further Information 7.3 Interview Expenses/Advertising/Medical Fees

7.3.1 Scope 7.3.2 Responsibilities 7.3.3 Overview 7.3.4 Process Requirements 7.3.5 Further Information

8. Petty Cash 8.1 Scope 8.2 Responsibilities 8.3 Overview 8.4 Process Requirements 8.5 Further Information



Contents

9. Income 9.1 Scope 9.2 Responsibilities

9.2.1 School Governors 9.2.2 Headteacher

9.3 Process Requirements 9.3.1 Completeness of Income 9.3.2 Administration of Receipts & Income 9.3.3 Banking of Income 9.3.4 Adult Education (Cultural Services) Shared Use 9.3.5 Other Shared Use & Lettings 9.3.6 Debtors 9.3.7 Writing off Bad Debt 9.3.8 Cash Handling 9.3.9 PTA/Friends Associations

10. Banking 10.1 Scope 10.2 Responsibilities

10.2.1 Cheque Signatories 10.2.2 Formal Approval of Banking Policy 10.2.3 Opening or Changing Bank Accounts 10.2.4 Payments and Cash Withdrawals 10.2.5 Bank Charges 10.2.6 Investments and Loans 10.2.7 Bank Reconciliation 10.2.8 Use of School Monies for Private Purposes 10.2.9 Administration

11. Payroll 11.1 Scope 11.2 Responsibilities

11.2.1 The Governing Body 11.2.2 Payroll Administration

11.3 Process Requirements 11.4 Overtime Claims 11.5 Contributions (Pension & AVC)

12. Insurance and Risk Assessment 12.1 Scope 12.2 Responsibilities 12.3 Overview 12.4 General



Contents 13. Data Security

13.1 Scope 13.2 Responsibilities 13.3 Information Technology (IT) Security

13.3.1 Stand Alone Computers 13.3.2 Networked Computers (Peer to Peer) 13.3.3 Networked Computers (Server) 13.3.4 Security of Hardware

13.4 Data Integrity 13.4.1 Backing–up Data 13.4.2 Virus Protection 13.4.3 Password Protection

13.5 Secure & Effective Systems 13.5.1 Access to Programs 13.5.2 Audit Trail 13.5.3 System Specification

14. Tax 14.1 Scope 14.2 Types of Taxes

14.2.1 Income Tax 14.2.2 Corporation Tax 14.2.3 Capital Gains Tax 14.2.4 Value Added Tax 14.2.5 Climate Change Levy 14.2.6 Construction Industry Scheme

14.3 Specific Issues 14.3.1 Unofficial Funds (School Fund Account)

14.3.1.1 VAT 14.3.1.2 Other Taxes

14.3.2 Possible Sources of Taxable Income 14.3.2.1 Trading Income 14.3.2.2 Interest received on deposits

14.3.3 Tax Planning Issues 14.3.3.1 Trading Income 14.3.3.2 Expressing charitable intentions



Contents

14.3.4 Charitable Status 14.3.4.1 Schools 14.3.4.2 Specialist Schools 14.3.4.3 Restrictions

14.4 Tax Effective Giving 14.4.1 Donations & Gifts 14.4.2 Payroll Giving Scheme

14.5 Employing Staff 14.5.1 Employment 14.5.2 Self Employment

15. Devolved Capital Allocations

15.1 Scope 15.2 Responsibilities 15.3 Overview 15.4 Process

15.4.1 Devolved Formula Capital Grant (DFCG) 15.4.2 Seed Challenge Grant 15.4.3 Specialist Schools: Capital

15.5 Project Management

16. Pupil Premium 16.1 Scope 16.2 Responsibilities 16.3 Overview 16.4 Process Requirements 16.5 Further Information

17. Licensed Deficits 17.1 General



Contents

18. Voluntary Funds 18.1 Scope

18.1.1 PTA Accounts/Friends of School, etc 18.2 Responsibilities

18.2.1 Governing Body 18.2.2 Headteacher 18.2.3 Fund Treasurer 18.2.4 Fund Auditor 18.2.5 Local Authority

18.3 Overview 18.4 Process Requirements

18.4.1 Accounting Arrangements 18.4.2 Forms of Account

18.4.2.1 Cashbook 18.4.2.2 Trading Account 18.4.2.3 Activities Account

18.4.3 Use of Petty Cash 18.4.4 Vouchers

18.4.4.1 Payments 18.4.4.2 Receipts

18.4.5 Cash Advances 18.4.6 Cheques

18.5 Banking Arrangements 18.6 Frequency of Audit 18.7 End of Year Arrangements 18.8 Availability of Audited Accounts 18.9 Retention of Records 18.10 VAT 18.11 Tax

19. FMSiS 19.1 Scope 19.2 Responsibilities 19.3 Overview 19.4 Process

19.4.1 Information 19.4.2 Self-Evaluation 19.4.3 Action Plan 19.4.4 Provide Evidence 19.4.5 Gaining Accreditation

19.5 General



Contents

20. Extended Schools 20.1 Scope 20.2 Personnel 20.3 Education Act 2002 20.4 Childcare Act 2006 20.5 Education & Inspections Act 20.6 How LAs can help schools 20.7 Setting Up Extended Services 20.8 Accounting for Income & Expenditure

20.8.1 Income 20.8.2 Expenditure

21. Children’s Centres 21.1 Background 21.2 Centre Development & Support

21.2.1 Lead Partner 21.2.2 Early Years, Childcare & Extended Schools Team 21.2.3 Finance 21.2.4 Other

21.3 Income 21.3.1 Revenue Allocation 21.3.2 Other

21.3.2.1 Fees from Central Activities 21.3.2.2 Capital

21.4 Recording Financial Transactions 21.5 Financial Controls & Monitoring

21.5.1 Revenue Financial Returns 21.5.2 Asset Registers

21.5.2.1 Revenue 21.5.2.2 Capital

21.5.3 Purchasing Cards 21.5.4 Reimbursement of Expenses 21.5.5 Extended School Activities

22. Reorganisation Funding 22.1 Scheme Entitlement 22.2 Transitional Funding on Reorganisation 22.3 Summary of Reorganisation Entitlement

Documents

FINANCE PROCEDURE MANUAL - Norfolkeficts.norfolk.gov.uk/finance/proceduresmanual/Docs/...4 Version 3.0 Updated Sept 2009 Finance Procedure Manual Introduction On behalf of Children’s