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Chapter 6

FINANCIAL MATTERS

6.5 BANKING

6.5.1Legislative and Policy Framework

ACTS

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

6.5.2Framework for the Development of School Policy on Banking

According to the South African Schools Act, 84 of 1996, Section 37

  1. “The Governing Body of a public school must establish a school fund and administer it in accordance with directions issued by the Head of Department.
  2. Subject to Subsection (3), all money received by a public school including school fees and voluntary contributions must be paid into the school fund.
  3. The Governing Body of a public school must open and maintain one banking account, but a Governing Body of a public school may, with the approval of the Member of the Executive Council, invest surplus money in another account.
  4. Money or other goods donated or bequeathed to or received in trust by a public school must be applied in accordance with the conditions of such donation, bequest or trust.
  5. All assets acquired by a public school on or after the commencement of this Act are the property of the school.
  6. The school fund, all proceeds thereof and any other assets of the public school must be used only for:
    1. educational purposes, at or in connection with such school;
    2. educational purposes, at or in connection with another public school, by agreement with such other public school and with the consent of the Head of Department;
    3. the performance of the functions of the Governing Body; or
    4. another educational purpose agreed between the Governing Body and the Head of Department”.
    1. Receiving Money
      Immediately after receiving money for whatever purposes, a receipt must be issued.

      • The following should appear on the receipt:
        • date of receipt;
        • the amount received;
        • the name of the person from whom the money is received; and
        • the purpose for which it was paid
      • The following procedures should be strictly adhered to:
        • The carbon copy of the receipt must be made out simultaneously.
        • Pre-printed duplicate receipt books can be purchased from any stationer but these must then be stamped with the school stamp.
        • All monies received by the school must be paid into the school fund bank account within 24 hours (where practicable) but always within seven days.
        • Before money is banked, it must always be kept in safe custody on the school premises.
        • The total amount of money deposited must correspond with the total amount in the receipts issued for the same period.
      • Receipt books must:
        • be pre-printed;
        • be sequentially numbered; and
        • have carbon copies.
      • Only one receipt book should be operated at a time.
      • Never issue more than one receipt for a payment.
      • If a receipt must be amended, all copies must be cancelled in writing, a new receipt issued and all copies of the cancelled receipts retained by the school.
      • Receipt books must always be kept in a safe or strong room.
    2. Petty Cash
      • The Financial Committee should appoint (in writing) the person responsible for petty cash. Petty cash is used for payments which are too small to pay by cheque.
      • For each payment from petty cash, there should be at least two items: use a petty cash voucher and a receipt, to prove that the money was paid.
      • All petty cash vouchers should be kept in numerical and date order and in a safe place.
      • To each voucher should be stapled a receipt or document which proves that the money was paid.
      • The SGB must approve the maximum amount of petty cash to be retained by the school and the maximum amount for single payments allowed from petty cash, e.g. 10% of the petty cash float.
      • A cheque may be made out to the responsible person referred to above and the treasurer can make arrangements with the bank for immediate clearance of such cheques.
      • The amount must be reflected as a receipt in the petty cash analysis book.
    3. Bank Deposits
      • In terms of SASA, the school must open and operate a banking account, preferably a cheque account.
      • All money must be deposited into this account on a daily basis.
      • School funds or school fees can be deposited in the following ways:
        • over-the-counter deposits;
        • Automated Teller Machines (ATMs);
        • Electronic Fund Transfers (EFTs);
        • stop orders;
        • debit orders; and
        • direct bank deposits (e.g. parents pay school fees directly into the school’s account)
      • Completion of the deposit slip
        • It is very important that the deposit slip is correctly completed;
        • The flip side of the duplicate deposit slip should reflect the following:
          • a breakdown of the nature of the income deposited with the respective amounts; and
          • the receipt series from which the deposited income was sourced.
      • Safety measures with reference to depositing
        • Don’t establish a pattern when doing the banking, e.g. don’t go on the same day in the week or the same time. Another person should accompany the person who is doing the banking.
        • Control measures should be put in place, e.g. segregate the duties when compiling the deposit, i.e. the person compiling the deposit should not verify the correctness thereof.
        • The person making the deposit should verify the deposit and sign it.
    4. Bank Statements
      • Bank statements are crucial documents for the purpose of reconciling the books and auditing, and should therefore be properly filed, recognising that the bank statement is the only document that contains certain crucial information.
      • Once a month, the cheque book and cash book must be reconciled with the monthly bank statement.
    5. Bank Reconciliation
      • The school is not permitted to go into overdraft, and it is, therefore, vital to manage the account properly.
      • The counterfoil in the cheque book should be completed simultaneously every time that a cheque is written out.
      • Once a month, the cheque book and cash book must be reconciled with the monthly bank statement:
        1. During the month, record all receipts in the Receipts Cash Book.  Also record all cheque payments in the Payments Cash Book.
        2. At the end of the month, compare the Bank Statement with the two Cash Books.
          • Tick the items that agree.
          • Compare the “credits” in the Bank Statement with the deposits in the Receipts Cash Book.
          • Compare the “debits” in the Bank Statement with the cheques in the Payments Cash Book.
        3. The Bank Statement may contain information that is unknown, e.g. bank charges, dishonoured cheques, stop orders, direct deposits.
          • This information must be recorded in the Cash Books.
          • Close the Cash Books and fill in totals.
        4. The Cash Books will show information that is known to the school, but not by the bank, e.g. deposits not yet credited, or cheques not yet presented.
          • This information must be recorded in the Bank Reconciliation Statement.
          • It must be written in the Payments Cash Book.
        5. At the end of the process, the balance in the Cash Books must be “reconciled” with the closing balance in the Bank Statement.
    6. Investments
      • Surplus funds in a school’s current account may be transferred into a savings or fixed deposit account or other sound investment options operated by financial institutions.
      • Section 37 (3) of SASA states that SGBs must obtain the approval of the MEC for such investments into another account.
      • Since the SGB is in a position of trust they may not take undue risks with the money in the school fund account: investments in unit trusts, stocks and shares and the like are, therefore, not permitted.
      • All legal investments must be done in the name of the school and must be done with a registered financial institution.
      • Schools are strongly advised to budget for some reserves to be set aside for expensive medium- to long-term development projects.
    7. Internet Banking
      Internet Banking is the use of a personal computer for making transactions in bank accounts over the Internet.Advantages

      • It is obviously time-saving.
      • By registering for electronic banking one can access various important services and facilities.
      • It is possible to request statements, to review the history of the account’s transactions, transfer funds from one account to another, pay bills, settle school fees, etc.
      • Internet banking makes banking much more hands-on and it is much easier to monitor the account on a daily basis.
      • Discrepancies are noticed more quickly and can be dealt with more swiftly.
      • The hassle of paperwork is also eliminated to a great extent and transaction records are accessible online whenever you need them.

Security

    • Internet banking user interfaces are secure sites (generally employing the https protocol) and traffic of all information – including the password – is encrypted, making it next to impossible to obtain or modify information after it is sent. Encryption alone, however, does not rule out the possibility of hackers gaining access and intercepting the password as it is typed in (key logging).  Many electronic banking services impose a second layer of security.  Strategies vary but a common method is the use of transaction numbers, or TAN, which is essentially a single password.  Another strategy is the use of two passwords, only random parts of which are entered at the start of every banking session.  This is, however, slightly less secure than the TAN alternative and more inconvenient for the user.
    • As with the required two signatures for a cheque, rules and options should also be in place for Electronic Fund Transfers (EFTs) at school. Every internet payment must also be authorised by the same persons appointed by the SGB to sign cheques by means of individually allocated passwords.  The same rules must also apply as with cheque requisitions (e-payment requisition).
    • Passwords must be protected. Never write them down or share them with anybody else.  If you suspect that your password is compromised, change it immediately.
    • Ensure that there is an up-to-date anti-virus package on-board the computer.
  1. Writing Cheques
    • Use a non-erasable ballpoint pen.
    • Use the full names of the payee.
    • Don’t leave spaces between words.
    • Draw a line through unused space.
    • Write the amount immediately after “The sum of”.
    • Write the amount in figures as close to the “R” as possible.
    • Alterations to a cheque are not allowed.
    • Fill in the date correctly.
    • Remember to sign the cheque.