Jane Askew opens a new series to help heads with a greater financial understanding of their school

In the challenging economic climate that we find ourselves in, it’s more important than ever that headteachers have a good grasp of their school’s financial position, performance and projections. This can be a daunting prospect for heads with limited formal training in financial management and so in this series of articles we will be providing guidance on the basics of financial management for heads. We start the series with advice about the head’s responsibilities in terms of financial oversight.

Why financial oversight is important

The past few years have been full of upheaval and change. Schools have had to deal with the impact of Covid-19 on both their operations and finances, and the economic environment has been unstable and challenging with the rising cost of living affecting both your cost base and your parents. The upcoming general election adds a further layer of financial complexity with Labour’s pledge to implement VAT on school fees. It’s vital for schools to be able to react quickly and decisively to the financial impact of external changes, and to do this the head, senior management team and board of governors all need to have a good understanding of the school’s financial position.

The school’s bursar is normally responsible for managing the school’s finances, and it can be an isolated role if support and oversight is not provided by the head and other members of the senior management team. As auditors, we often speak to clients about the importance of segregation of duties within financial processes as this reduces the risk of fraud and error. Most bursary departments have good segregation within their daily financial processes, such as processing payments, however it is often the bursar alone who is preparing termly management accounts and other financial management reporting. It’s important that you as head feel comfortable reviewing financial reports so that you can identify where errors or omissions may have been made.

Accurate and timely information

There are two key elements to financial reporting: the school’s financial position and performance for the year to date, and the budgets and forecasts for the months and year(s) to come. It’s rare that good financial decisions are made in haste and so receiving both elements of financial reporting in a regular and timely fashion is very important. Financial reporting is normally prepared in advance of termly committee and board meetings, however do ensure that you as head have sufficient time to review this information before it is circulated, and that you discuss it with the bursar so that you can ensure the information being presented reflects your understanding of the school’s activities and future plans.

Although financial information is generally provided to school governors on a termly basis, I recommend that monthly management accounts are provided to the senior leadership team for review. The lack of stability in the economy at the moment can mean that costs and income can change at short notice, and monthly reporting will mean that you can react quickly to any unforeseen developments.

The confidence to challenge and question

Don’t be afraid to question and challenge the information that you’re provided with. The bursar is often deeply involved in the detail and sometimes it can take someone standing back and seeing the ‘big picture’ to realise that something has been missed. Key areas to review in your budgets and forecasts are:

• Pupil numbers.
• Staff costs.
• Upcoming repairs, maintenance and capital works to the school premises.

For financial performance, ensure that you have access to timely information on overdue school fee debts, as these can quickly spiral out of control if they are not regularly monitored and chased.

Meet regularly with your bursar

And finally, many of the decisions that you make as head will have a financial impact on the school and for that reason I recommend that you have regular informal and formal meetings throughout the year with your bursar to ensure that your decisions and plans can be factored into their budgets and projections. This will help you to work together to deliver the school’s objectives in the most cost-efficient and impactful way.

Jane Askew is a partner with accountancy firm haysmacintyre.

Jane Askew