Chapter 6



6.4.1Legislative and Policy Framework


  • Employment of Educators Act 76 of 1998 [EEA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]
  • The South African Schools Act, No. 84 of 1996 [SASA]



  • National Norms and Standards for School Funding, Part 2: The Public Funding of Public Schools, Sections 104-112 [NR NSSF]
  • Amended National Norms and Standards for School Funding (Government Gazette 394 in GN 40818 of 28 April 2017) [NR 40818/2017]
  • Regulations relating to the Prohibition of the Payment of Unauthorised Remuneration or the giving of Financial Benefit or Benefit in kind to Certain State Employees (Government Gazette No. 34840 of 15 December 2011) [NR 34840/2011]



  • Medium Term Expenditure Framework (MTEF) Technical Guidelines. These Guidelines provide Essential Information for Preparation of Expenditure Estimates for the 2017 Medium-term Expenditure Framework (MTEF).  They apply to National and Provincial Departments, Entities and Constitutional Institutions.  Closely following the Guidelines will help to improve the Efficacy of Public Spending [MTEF]
  • Generally Accepted Accounting Principles [GAAP]

6.4.2Guidelines for the Development of School Policy on Managing Costs And Expenditure

    1. Procurement
      Self-managing schools (schools on the Section 21 list) will receive a lump-sum, per-learner transfer for the payments for which they have responsibility, in accordance with the Resource Targeting Table. Such transfers will be smaller for better-off schools than for poorer schools.  If a school’s bills for these services or items are lower than the lump-sum transfer, the SGB may allocate the transferred amount to the purchase of other education-related items.  In general, however, SGBs may not vary the proportion of the funding devoted to such goods and services according to their own perception of education needs, and any variations may have to be accounted for to the Department.
      School Governing Bodies that are on the Section 21 list may deal directly with suppliers and contractors for the relevant budgeted items in accordance with standard procurement procedures.  They must keep documents as evidence of correct dealing with such suppliers and contractors, and records of how the materials and services were used, and produce such documents or records at the request of officials from the PED and for audit purposes.
      Schools that are not on the Section 21 list, and have, therefore, not been granted approval to procure their own goods and services, must procure their goods and services according to existing departmental arrangements.  In addition, the PED will exercise administrative controls to ensure that the cost per-learner is maintained at a level consistent with these norms, the Resource Targeting Table and the budgeted allocation for each applicable item.  Such schools must be informed of their school’s budget by the PED, even though it is a “paper’’ budget.  This will prepare them to understand actual costs of running their school, and improve their capacity to join the Section 21 list in due course.
    2. Inventory Control
      The designated staff member for inventory control should carefully monitor all inventory levels at the school as maintained in the inventory, consumables and asset registers.  For a high level of effectiveness of the school, it is recommended that optimum levels of inventory be determined by the SGB and also timeous inventory replenishment planning undertaken.  If proper inventory control is in place, the designated staff member will get the necessary quotations in line with the budget requirements.
    3. Quotes and Tenders
      Before making a purchase or acquiring the services of an entity, the principal must satisfy himself that available suppliers have been compared.  It is always good practice to obtain at least three written quotations based on the same specifications.  Once the quotations have been received, approval of the quotation that represents the best value for money should be decided upon in accordance with the school’s financial policy.  After approval has been granted, the order form for the acquisition of the goods can be processed or issued.
      Large purchases or contracts should be advertised for tender.  A tender is an offer to do specified work or deliver specified goods at an agreed price.  The tender process is designed to rule out any favouritism and to promote transparency; it enhances competitiveness, combats corruption and enhances efficient and effective procurement practices.  Once a tender has been accepted, it is binding on both parties.  This means that the person or company that won the tender has to provide the goods or service in the manner agreed to and at the price offered and the school must pay the agreed price at the agreed time.
    4. Order Forms
      Order forms are to be printed at least in duplicate and are to be numbered and entered into the register for face value forms.

      • The name of the school is to be entered on the original and on the duplicate.
      • All purchases are to be specified in full.
      • Only persons authorised by the financial committee may issue an order form.
      • Measures should be taken to ensure that payments are only made for purchases and that only authorised purchases are invoiced.
    5. Procedure to be followed on Receipt of Goods or Services
      • When goods (or services) are delivered, they must be checked against a copy of the order form to make sure that the correct goods / services have been delivered before “signing-of”.
      • Details of stock received must be entered into the relevant registers immediately on the receipt of the stock.
      • Page numbers of the register must be entered on the payment copies of the order forms next to the relevant item.
      • Payment copies must be certified and forwarded to the District Controller of Payment on receipt in the case of non-Section 21 schools.
      • The above are specifically applicable to the receipt of reading books and textbooks which are supplied directly by the publishers.
      • As soon as textbooks or readers have been received the inventory controller must complete the prescribed form in duplicate and the principal must send it to the Controller of Supplies in the local District Office, together with the packing slip.
      • Copies of all forms must be kept for record purposes.
      • All school property must be marked as soon as possible.
    6. Cheque Authorisation
      Before a cheque can be issued, it must be authorised by means of a preceding “Advice of Payment” or a cheque requisition form and accompanied by a properly specified account or invoice.
    7. Cheque Payments
      • All payments, including petty cash payments, are to be made by persons authorised to do so by the SGB.
      • At least three persons, who are always readily available, should be authorised by the SGB to sign for any transaction. Every written cheque should contain at least two signatures of which one is preferably the principal’s.
      • Cheques must be crossed and the words “or bearer” must be deleted.
      • The signatories are not allowed to sign blank cheques.
      • Expenditures for which provision has not been made in the budget are first to be approved by the Governing Body.
      • Payments for a particular item in the budget should also first be checked against the budget and cleared, and cheques are to be signed only on submission of a completed Advice of Payment form (see sample below) and are to be accompanied by:
        • authorisation for the purchase in the form of a copy of the order form; and
        • a specified invoice on which a signature for receipt of the goods / services has been written.
          As a safety precaution, it is essential for the official who approved the purchase to certify the invoice as correct.
      • Documentary evidence of the payment mentioned in the two sub-paragraphs above is to be kept in the same sequence as the cheque numbers and must be bound together with the bank statements and kept for control and audit purposes.
      • When cashed cheques are received from the bank, they are to be attached to the above documents.
      • An alteration on a cheque has to be signed by both officials.
      • A cheque is cancelled by using a rubber stamp or ink to write “CANCELLED” in large letters across both the front of the cheque and the counterfoil. The cheque is to remain in the book or it may be kept with the cashed cheques in numerical order for audit purposes.
      • Purchases on credit are to be paid for monthly or at least before the end of the financial year.
      • Only one cheque book at a time may be in use.
        Example of an Advice of Payment
        NAME OF SCHOOL: (Letterhead)
        Invoice numbers: ______________
        Cheque numbers: ______________
        Date: ______________
        Amount: R_____________
        For: _______________________________________________________________
        Particulars of estimate:
        Amount available for the item in the budget R_____________
        Amount cleared fro the item in the budget R_____________
         ________________  ________________   ________________
          ________________   ________________   ________________
          ________________   ________________   ________________
        Total amount of cheque  _____________________
        Requested / Compiled by:
        ___________________________ Date: _____________________
        Checked and approved for payment by:
        ___________________________ Date: _____________________
    8. Additional Remuneration to Government Employed Staff
      Section 38A (2) of the South African Schools Act makes provision for a SGB to apply to the employer for approval to pay a state employee any payment contemplated in Subsection (1) of the same section (remuneration, other financial benefit or benefit in kind). Subsections (3) to (10) of Section 38A elaborate on this provision as follows:
      (3)       Such application must be lodged in writing in the office of the employer and must state:
      (a)     full details of the nature and extent of the payment;
      (b)     the process and resources that will be used to compensate or remunerate the state employee; and
      (c)     the extent of compliance with section 20 (5) to (9).
      (4)       The Governing Body must make the application contemplated in Subsection (2) at least four months prior to the finalisation of the school’s budget.
      (5)       Despite Subsection (1), a Governing Body may pay travel and subsistence expenses relating to official school activities but such expenses may not be greater than those that would be payable to a public servant in similar circumstances.
      (6)       An employer must not unreasonably refuse an application contemplated in Subsection (2).
      (7)       In considering the application, the employer must take into account:
      (a)     the implications for the employer in terms of the employment contract and labour law;
      (b)     whether the service concerned in the application will interfere with the normal service delivery of the employee;
      (c)     whether the service concerned in the application has already been paid for by the employer; and
      (d)     whether the additional remuneration, other benefits or benefits in kind support the core activities and functions of the school.
      (8)       The payment contemplated in Subsection (1) must be reflected in the school’s budget, as presented to the general meeting of parents as contemplated in Section 38 (2).
      (9)       If a Governing Body pays remuneration or gives any financial benefit or benefit in kind contemplated in Subsection (1) to an employee without prior approval of the employer, the amount of money paid or benefit given must be recovered by the employer on behalf of the school from members of the Governing Body who took that decision, excluding a member of the Governing Body who is a minor.
      (10)     A Governing Body may appeal to the Member of the Executive Council against the:
      (a)     refusal by the employer of an application contemplated in Subsection (2); or
      (b)     failure of the employer to provide a decision on an application contemplated in Subsection (2) within three months after the lodging of the application in the office of the employer.

In December 2011
amended Regulations were announced in Government Gazette No. 34840:  Regulations relating to the Prohibition of the Payment of Unauthorised Remuneration or the giving of Financial Benefit or Benefit in kind to Certain State Employees.  Note that these Regulations were subsequently withdrawn.




 1. With regard to applying for permission to pay additional remuneration, financial benefit or benefit in kind:

1.1 On or before 31 May in the year in which the school budget is finalised in terms of Section 38 of the Act, Governing Bodies must submit their applications to the Head of the Provincial Education Department for approval.

1.2 On or before 31 August in the year referred to in Item 1.1, the Head of the Provincial Education Department must communicate to the Governing Bodies his or her decision regarding the application referred to in Item 1.1.

1.3    On or before 30 September in the year referred to in Item 1.1, Governing Bodies may appeal to the Member of the Executive Council against the Head of the Provincial Education Department’s failure to provide a response to, or against his or her refusal to grant permission in respect of, the application made in terms of Section 38(A) of the Act.


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