Sheffield City Council – Private Fund Accounting Procedures


Sheffield City Council – Private Fund Accounting Procedures

This page contains a list of brief points provided by Sheffield City Council to its schools for them to consider when auditing the school private fund. How many of these do you follow? Let us know at info@talktopebble.co.uk

General

  • Private funds should operate with accounting procedures which reflect the standards for accounting for public money.
  • There should be a proper separation of private funds and related records from school delegated funds.
  • It is suggested that it would be good practice to have a model constitution approved by the Governors stating, amongst other things, the purpose of the fund and the type of expenditure permitted to be incurred through it.
  • Proper books of account should be maintained and kept up-to-date, and regular bank reconciliations should be undertaken (appropriate computerised records are permitted).
  • The bank mandate should be such that two signatories should be required on every cheque. Under no circumstances should cheques be pre-signed.
  • Accounts should be drawn up on an annual basis. The format of the accounts will depend greatly on the size and complexity of the fund. For example, for a small fund, a simple receipts and payments account (prepared on a cash accounting basis) is appropriate, whereas for a larger fund both an income and expenditure account (prepared on an accruals basis) and a balance sheet should be produced as a minimum.
  • It is not acceptable under any circumstances for a school fund not to be audited.
  • The accounts drawn up should be sufficiently detailed to enable the Governors to derive clear financial information from them. For example, income and expenditure should be detailed in the accounts by type (eg donations, tuck shop, sweatshirts etc.).

Income

  • Income collected from external sources should be receipted using a duplicate receipt book where appropriate and practical to do so.
  • Income collected should be banked in its entirety and at the earliest possible opportunity.

Expenditure

  • Expenditure should be incurred in accordance with the school’s constitutional document.
  • All expenditure should be supported by an invoice or receipt. Where, in exceptional circumstances, this is not possible, a simple document certified by the Head Teacher will suffice to authorise the expenditure.
  • It is recommended that the use of petty cash is minimised and that expenditure is incurred by cheque wherever possible.

Appointment of Auditors

The person(s) appointed as auditor(s) should be someone not involved in the production of or daily administration of the fund and should be selected on the basis that they appear to the governing body to be competent to examine records and to form a view as to their completeness and accuracy.

If your school Private Fund is a registered charity and income or expenditure exceeds £100,000 in any one year, then the person auditing the accounts should be qualified to do so under the Charities Accounting Act 1993 (section 43). For more details please visit the Office of Public Sector Information.

Conduct of the Audit

Obtain details of the arrangements for authorising expenditure, and details of the accounting records and procedures, in order to plan your audit.
Record the examination procedures carried out and information supporting the conclusions reached. The working papers should include:

  • The governors’ minutes detailing responsibilities and type of expenditure to be undertaken
  • Procedures carried out, including any concerns
  • Note on how any concerns were resolved
  • Schedules showing breakdown of any aggregated items
  • Copies of accounts and any annual report.

Compare the accounts produced with the accounting records. This should include:

  • Comparison of receipts and payments accounts with cash and bank records
  • Test checks of book entries to the final accounts
  • Check book entries against source documents (e.g. invoices)
  • Check bank statements to bank reconciliation’s

Review the accounting records:

  • Are the records up to date, readily available, and do they clearly show the financial position of the fund?
  • Accounting records must include details of all money received and spent; do they?
  • A file must be kept for any unpaid bills and amounts owed to the fund; is there one?
  • A list of fixed assets (e.g. equipment) – if any – must be kept; is there one?

Identify any unusual items, fluctuations and inconsistencies. Compare the accounts with those of the previous period; consider whether the money spent and received is consistent with known fund-raising activities. Seek explanations if necessary.

If the fund is a charity, do the accounts comply with the regulations on the form of charity accounts?

Review the accounts for consistency; if there have been significant changes from the previous period – e.g. a change of year-end date – this should be stated.
Produce an examiner’s report. Any substantial problems, in any area, need to be stated in the report e.g.

  • Have accounts been kept to a proper standard?
  • Do the receipts and payments accounts agree with the records kept?
  • Has money been spent in line with the governors/trustees instructions?
  • Does anything else need to be said, and have full answers been provided to all queries?

There is an obligation to report any deliberate or reckless misconduct, such as evidence of:

  • Theft, doubts as to the honesty of any person involved, improper payments
  • Gross failure to keep accounting records
  • Evasion of tax
  • Evidence of indifference or recklessness on the part of any responsible person.
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