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Chapter 6

FINANCIAL MATTERS

6.1 FINANCIAL ACCOUNTABILITY AND FINANCIAL RESPONSIBILITY

6.1.1Legislation and Policy Framework

ACTS

  • The South African Constitution Act 108 of 1996 [SAC]
  • South African Schools Act 84 of 1996 [SASA]
    • The Specific Functions of the School Governing Body regarding the Management of Finances at a School are taken up in Sections 36-44 of the South African Schools Act.
    • The Status and Position of the School Principal and the School Governing Body are taken up in Sections 15 and 16 of the South African Schools Act.
  • The Public Service Act, 1994 (act no 103 of 1994), as amended [PSA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]
  • Employment of Educators Act 76 of 1998 [EEA]
  • See Reference A for an Example of a Financial Policy [FP]
  • National norms and standards for school funding, Government Gazette, 12 October 1998 [NR NSSF]
  • National norms and standards for school funding (amended April 2017) [A NNSSF]

 

GUIDELINES

  • Personnel Administration Measures [PAM]

 

REGULATIONS

  • National Norms and Standards for School Funding, Government Gazette, 12 October 1998 [NR NSSF]
  • Amended National Norms and Standards for School Funding (Government Gazette 394 in GN 40818 of 28 April 2017) [NR 40818/2017]

EasternCape

POLICIES

  • Eastern Cape Policy on the Personnel and Salary System (Persal) [Reference B1 EC PERSAL]

FreeState

ACTS

  • Free State School Education Act 2 of 2000 [Reference B2 FS EDACT]

 

GUIDELINES

  • Free State Province: Principles of Financial Administration [Reference B2 FS PFA]
  • Free State Province Provincial Notice No. 154 of 2001: Measures relating to the Minimum Requirements of Financial Records, Statements and School Funds of Public Schools [Reference B2 154/2001]
  • Free State Province:  Financial Administration in Schools – General Guidelines [Reference B2 FS FADMIN]

Gauteng

ACTS

KwaZulu-Natal

CIRCULARS

  • KZN Finance Circular No. 3 of 10 September 2008:  Policy and Procedure to deal with Claims against the State through Acts or Omissions and Recovery of Money due to the State [Reference B4 3/2008]
  • KZN Circular No. 3 of 20 January 2014:  Compensation for School Fee Exemption [Reference B4 3/2014]

Mpumalanga

POLICIES

  • Mpumalanga Education Department: Fraud and Corruption Prevention and Implementation Plan of 2014 [Reference B6 MP FRAUD]
  • Mpumalanga Education Department: Risk Management Strategy of 2014 [Reference B6 MP RISK]

NorthWest

ACTS

  • North West Schools Education Act 3 of 1998 [Reference B2 NW EDACT 3/1998]

WesternCape

GUIDELINES

  • WCED Manual:  Basic Financial System for Schools (Second Edition of 2006) [Reference B9 WC BFS]

 

CIRCULAR

  • Minute No. DBM0002/2004: WCED Submission of Financial Reports and Applications for approval for Loans, Investments, Section 21, Status and Appointment of Auditors [Reference B9 BM0002/2004]

6.1.2Framework for the Development of School Policy on Financial Accountability and Financial Responsibility

  1. The Relationship between Governance and Management in managing School Finances
    • Accountability, delegation of powers and assignment of functions:
      • The South African Schools Act 84 of 1996 states that the School Governing Body (SGB) is responsible for the administration and control of the school’s assets and resources.
      • The principal must answer to the SGB in terms of any powers delegated or functions assigned to him by the SGB, but the SGB remains accountable.
      • As an official of the Department of Basic Education, it is the responsibility of the principal to advise the SGB when they issue instructions or act in a manner that contravenes departmental instructions or policy.
    • Financial accountability entails that the Financial Committee must be transparent and must report to the SGB, Parents, Donors, Community, Department of Education and all other stakeholders who are involved or contribute financially to the school.
    • Financial responsibility entails that proper records are kept of all income and expenditure, accounts are paid in time, expenditure is done in accordance with the approved budget and that sound administrative procedures are followed.
  2. Functions and Responsibilities of the School Governing Body
    • Financial Management is governed by the School Governing Body (SGB) and administrated by the Financial Committee with the assistance of the School Management Team which is accountable to the SGB.
    • SASA determines that the SGB and not the school principal has the ultimate responsibility for the financial management of a public school. The principal, however, is a member of the SGB and, therefore, shares this responsibility.  The principal is also responsible for the proper implementation of the related policy.
      According to Section 16A of the SA Schools Act, the principal represents the HOD in the SGB.  The principal has the responsibility to assist the SGB in the performance of its functions and responsibilities without being in conflict with legislation.Section 19 (2) of SASA provides that the Head of the Provincial Education Department must ensure that principals and departmental officials render all necessary assistance to Governing Bodies in the performance of their functions in terms of the Act (See Paragraph 6.1.2(d) for details concerning the duties and responsibilities of principals).It is important to note that while the SGB is collectively responsible and accountable for the management of the school finances the SGB is allowed (Section 19 (2)) to delegate its functions to the principal, school management team, bursar and financial committee.
    • The Specific Functions of the SGB comprise the following (SASA, Section 20, 21, 29 (1), 30 (1) (B) and 34)
      • Establish and govern a school fund in accordance with directions issued by the Department of Basic Education.
      • Establish a Financial Committee (of which the principal must be a member) and of which a member of the SGB is the chairperson. The Finance Committee may be composed as follows:
        • the treasurer (chairperson, who must be a member of the SGB);
        • the principal;
        • educators;
        • parents; and/or
        • co-opted members.
      • Ensure that records are kept of funds received and spent and of its assets, liabilities and financial transactions.
      • Ensure that the school fund is administered in accordance with the regulations and directions issued by the Department.
      • Prepare a budget each year according to guidelines determined by the MEC, which shows the estimated income and expenditure of the school for the following financial year.
      • Submit to the Department by 31 January of each year, a copy of the approved estimate of income and expenditure (budget) of the school.
      • Submit to the Department the name of the auditor, accounting officer or person (approved by the Minister in terms of Section 43 (2) (b) of the South African Schools Act of 1996), appointed by the school to examine and report on the records and financial statements of the school.
      • Open and maintain a current banking account in the name of the school at a registered commercial bank into which all school fund monies must be deposited.
      • Keep separate inventory registers for items:
      • purchased from school funds;
      • donated to the school or purchased from funds donated to the school; and
      • received from the Department of Education.
      • Ensure that all stock items purchased from school funds, provided by the Department or donated to the school are properly maintained and looked after.
      • Have an inventory available at all times so that stock can be audited at least once a year.
    • Special Functions of the SGB at Self-managing Schools (SASA, Section 21)
      According to Section 21 of the South African Schools Act 84 of 1996 the SGB may apply for or be allocated one or more of the following additional functions:

      • maintain and improve the school’s property, and buildings and grounds occupied by the school, including school hostels, if applicable;
      • determine the extra-mural curriculum of the school and the choice of subject options in terms of provincial curriculum policy;
      • purchase textbooks, educational materials or equipment for the school;
      • pay for services to the school;
      • provide an adult basic education and training class or centre subject to any applicable law; or
      • provide any other functions consistent with this Act and any applicable provincial law.
    • Committees of the SGB
      According to Section 30 of SASA a Governing Body may:

      • establish committees, including an executive committee; and
      • appoint persons who are not members of the SGB to such committees on grounds of expertise, but a member of the Governing Body must chair each committee.
      • It is advisable – though not essential – for the SGB to set up a number of committees and sub-committees. Some of the committees may be the:
        • finance committee;
        • management committee;
        • resources committee;
        • fund-raising committee; etc.
  3. Functions and Responsibilities of the Finance Committee
    • Possible duties of the Finance Committee:
      • Administer the school finances in accordance with the responsibilities of the SGB.
      • Ensure that proper financial records of all income and expenditure are kept in accordance with the departmental instructions, e.g. the cash book.
      • Prepare financial records, statements, graphs and statistics concerning the finances of the school and report back to the Department.
      • Compile a Financial Policy for the school in accordance with regulations and requirements.
      • Advise the School Governing Body on the following aspects:
        • monitoring of the budget;
        • controlling of income and expenditure;
        • the adherence to all related policies;
        • the amount of school fees; and
        • exemptions from school fees.
    • At a meeting held each month (if possible) the Finance Committee should:
      • check all expenditure incurred since its previous meeting;
      • inspect supporting vouchers (invoices) to ensure that these are in order and comply with the regulations and departmental instructions;
      • ensure that expenditure is in accordance with the approved budget; and
      • ensure that the expected income correlates with the budget.
    • Advise the SGB on measures to be taken against non-payers of school fees.
    • Keep minutes of all meetings and decisions taken.
    • Draw up the budget each year.
    • Advise on ways of fundraising.
    • Advise on ways to invest surplus money.
    • Suggest who should be appointed as the auditor.
    • Ensure that all procurement is done through correct quotation and tendering procedures.
    • Finance Delegations
    • A very important principle in organising financial controls is the “separation of powers”.  Persons to whom powers are usually delegated are:
    • a financial sub-committee;
    • the school management team; or
    • the principal.
    • Every decision to delegate financial powers must be approved by a majority vote of the SGB and be recorded in the minutes stating clearly:
    • to whom the powers are delegated;
    • for which decisions or types of transactions;
    • to what maximum limit; and
    • for which period.
  4. Functions and Responsibilities of the Principal and School Management Team
    Some of the functions and responsibilities of the principal and school management team regarding finances are listed below.  However, it is advisable that a study be made of the relevant sections in SASA and the specific job descriptions as listed in the Employment of Educators Act.

    • Functions and responsibilities of the principal
      • Powers delegated and functions assigned by the SGB:
        • The principal must exercise any powers delegated and functions assigned to him / her by the SGB and must report to the SGB accordingly.
        • The reporting must be done by means of an annual report which includes information on exemptions and other relevant information regarding the school’s finances.
        • The principal must:
          • serve on the SGB and Financial Committee;
          • see to it that the school has a current banking account;
          • ensure that records for the above are kept properly and make the best use of funds for the benefit of the learners in consultation with the appropriate structures;
          • maintain a complete record of statutory provisions, regulations and departmental instructions relating to the financial management of the school;
          • ensure that she / he and staff under her / his control, appointed to assist the Financial Committee in the execution of its duties, are acquainted with all statutory provisions, regulations and departmental instructions enabling her / him to support the Financial Committee in the execution of its functions; and
          • ensure that all statutory provisions, regulations and departmental instructions are observed by her / him and employees under her / his control
        • The principal of a public school represents the Head of Department in the Governing Body when acting in an official capacity as contemplated in Sections 23 (1) (b) and 24 (1) (j) of SASA as well as Section 16 of SASA. Principals must take careful note of Section 16A of SASA as amended by the Basic Education Laws Amendment Act 15 of 2011, “16A” (h)-(k), which determines that she or he must assist the Governing Body with the management of the school’s funds, which assistance must include:
          • the provision of information relating to any conditions imposed or directions issued by the Minister, the Member of the Executive Council or the Head of Department in respect of all financial matters of the school contemplated in Chapter 4;
          • the giving of advice to the Governing Body on the financial implications of decisions relating to the financial matters of the school;
          • taking all reasonable steps to prevent any financial maladministration or mismanagement by any staff member or by the Governing Body of the school;
          • being a member of a Finance Committee or delegation of the Governing Body in order to manage any matter that has financial implications for the school; and
          • reporting any maladministration or mismanagement of financial matters to the Governing Body of the school and to the Head of Department.
    • Functions of the deputy principal or head of department
      • The deputy head and / or head of department must:
        • assist the principal, or if instructed be responsible for school finance and maintenance of services and buildings e.g:
          • plan and control of expenditure;
          • allocation of funds / resources;
          • the general cleanliness and state of repair of the school and its furniture and equipment;
          • supervise the annual stock-taking exercise;
          • manage and supervise school stock, textbooks and equipment for his / her department; and
          • budget for his / her department

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