Module 5: Financial Management

Section outline

 Unit 1- Sources of PTA Funds

Introduction
For any school to operate effectively it must have funds. In Guyana, education in state-owned
schools is funded by the government but, to a certain extent, schools are heavily dependent on
funds obtained from other sources. In this unit we set out to identify the wide range of sources
of funds available to school leaders.

Individual study time: 3 hours

Learning outcomes

By the end of this unit you should be able to:

 identify different possible sources of school finance

 understand and apply the appropriate knowledge and skills to mobilise

funds for your school

 understand the relationship between effective financial management and

curriculum development.

Sources of funds
Sources of funding for schools are usually classified into four (4) major categories namely:
Government through the Ministry of Education, Town and Regional Democratic Councils (RDCs),
parents and community groups including Non-Governmental Organisations (NGOs).
Headteachers should, at all times include senior members of staff in the decision making
process.

Central government
The vast majority of funding for government schools in Guyana is received through the Ministry
of Education from the state. It is in the form of grants. We will not go into detail here about how
these grants are paid because this is information which changes regularly according to current
circumstances. However, needless to say it is incumbent on the headteacher to maximise any
monies he/she receives by spending it wisely, not wasting it on ill-thought-out projects and
ensuring that it is properly accounted for and all financial regulations are followed. You should
refer, at this point, to current Ministry of Education’s policy on the funding of schools.
Funds will always be administered to schools according to their size and the educational
provision within. The cost of educating a secondary student, who is studying CSEC in a variety of
subjects which require specialist teachers and equipment, will be greater than the more general
education provided in a nursery or primary school. You would be advised to re-read the sections
on timetable in Module 4, if you are not convinced of this. Therefore, the number of students
on role and their age at a given point will usually be the determining factor in the amounts of
grant provided. Some headteachers have been known to falsify these records by leaving
children on role who should have been withdrawn are out of the...

age range. This, needless to say, is dishonest and sanctions will apply to headteachers who
attempt this.

In order to claim grants due to your school, you will be asked, well in advance, to provide data
for the Department of Education. It is important that this data is always kept up-to-date, e.g.
numbers on role, ages of learners, state of the buildings, necessary repairs and maintenance,
building projects required, etc. This is an administrative task which helps the headteacher to
carry out the leadership role in fulfilling the vision of the school. Timely response to such
requests from the REDO or MOE is essential. There are a number of different types of grants.
They generally fall into the following categories:-

 Grants provided “per capita” (number of learners on role and age range)
which are normally given automatically once the data has been
submitted. These are used for the general running of the school — its
core purpose — learning resources, materials, etc.

 Grants for the upkeep and maintenance of the school. These are
provided as and when required and will be determined by a partnership
between the school and the Regional Officer responsible for buildings.
They are generally related to your School Improvement Plan.

 Grants for special projects. These could be given at any time and could
be for a wide range of activities from new furniture to ICT equipment or
literacy provision to replacing latrines.

With all of the grants, it is important to be “ahead of the game”. Timescales are often short and
you may be asked to provide information with little time to spare. You will know your school
and what it needs. This is why it is important to have a fully thought-out School Improvement
Plan (SIP) which not only deals with buildings and premises but also educational provision and
continuous improvement. All of these have a cost to them and you will need to be prepared for
when funds become available.
Consider at present the different financial contributions made to your school by the
government through the Ministry of Education and the Town Council or RDC.

Comments
Government assists schools financially in several different ways. These include:

 paying grants to schools for curriculum materials and resources, etc.

 paying salaries to teachers and other members of staff

 assisting schools to establish money generating projects by providing

technical assistance including materials and equipment

 financing the construction and rehabilitation of school plant.

The government also makes indirect contributions to each school through, for example:

 training teachers – in-service and pre-service through organisations such

as NCERD, University of Guyana and CPCE,

 preparing syllabuses and materials through NCERD and organisations

 providing Inspectors and Senior Education Officers (SEOs) through the

Monitoring, Evaluation, Reporting and Development Unit (MERD)

 the Ministry of Education which, from the centre, provides direction and
leadership for the education system,

 Departments of Education which provide support, guidance, leadership

and direction at the regional level.

Departments of Education

Consider how your Department of Education helps with school finances? Identify different
ways in which it provides financial assistance to your school.

Comments
In Guyana, each Department of Education is given the responsibility for locating and opening
schools and for providing physical structures, classroom facilities and office equipment to
schools. This would also include repairs and maintenance to existing buildings and facilities. It is
done through and in conjunction with the RDC / Town Council. Funds are generated from
central government as well as locally raised revenues and they often face difficulties in ensuring
that all local taxes are paid in full and on time, often because taxpayers may not regard local
government with the same respect as central government.

Parents

Activity 1.1
Explain why parents contribute to the financing of your school and list as many ways as you can
in which they do so.

Comments
Contributions by parents are made under the auspices of the PTA, and go a far way towards
supplementing the funds provided by central government in order to meet a good standard of
educational provision. This however, applies only to state-owned schools. Of course, some
schools in Guyana are privately owned and run. These schools charge fees and would not
survive without full parental contributions. But even in schools where there are good buildings,
qualified teachers and a wide variety of resources, parents may still wish to contribute money
for even more resources, such as transport and computers, and pay for educational visits,
because they want their children to enter adult life having obtained the best possible education.
In rather crude terms, they want them to be at the front of the queue for good jobs.

Your list of ways parents contribute probably included:

 paying official tuition fees in private schools

 paying PTA contributions, e.g. ‘contingency funds’ and through fund

raising

 paying a specific contribution for a building or improvement project

 parents may also give their time and skills to a range of activities from
working on building to coaching at sports

 paying teachers for officially sanctioned additional lessons and coaching,

special duties, general welfare

 paying for improved resources, such as textbooks, exercise books and

writing materials, desks and chairs, library and sports contributions

 providing school uniforms and sports kit

 paying for the children’s welfare, such as transport money, school meals,
etc.
Activity 1.2

24. Are parents in your school generally willing or unwilling to help

financially?

25. Is it always the same group of parents which is supportive? Do some

parents withhold help and, if so, why?

26. What do you do in your school to encourage more parents to help?

Comments
In Guyana, the raising of funds is the responsibility of the Parent Teacher-Association and the
headteacher should encourage parents to be involved in this but should not directly raise funds
him / herself. PTAs would raise funds and even request donations from their members in a
manner that conforms with the economic circumstances of the members and the community.

It is advisable for the headteacher to encourage the PTA executive to plan and execute
programmes that would assist the school to cater for disadvantaged children. This action would
help to remove inequalities among children as they are all exposed to the curricular and co-
curricular activities of the school.

In encouraging parents to contribute, you will need to target your efforts on those who have the
means but may not have the will. To cater for the poorer families, you may need to set up a
special support fund to assist in providing equal access to extra curricular activities for those
children whose parents cannot afford to support them in this area.

Find out the Ministry of Education’s rules on raising funds for the school.

Comments
There are restrictions in Guyana on the funds a school may raise. It is the responsibility of the
Parent-Teacher Association (PTA) to raise funds for the school. This is not an activity that the
headteacher should be involved in as his/her role is to identify the need for resources rather
than raising the funds to meet those needs. Discussions, however, will take place between the
headteacher and the PTA to highlight the areas where funding can be best used. There are, of
course, strict regulations about how monies raised shall be accounted for to ensure that fund-
raisers and fund-holders are held accountable. To facilitate this advisory role, the headteacher is
always, as stated in the constitution, the Vice Chairman of the PTA of the school.

A school may engage in several money generating programmes to help it run more effectively.
Such programmes may include:

 farming

 workshops, such as craft work or carpentry

 creative activities, such as concerts.

There is always a danger of trying to undertake too many money generating activities at the
same time. You should distinguish between:

 regular contributions requested from all parents.

 voluntary collections for special, targeted fund raising activities.

Community groups

As a member of the PTA executive, consider ways you can advise the PTA to cause existing
community groups to contribute to the school financially.

Comments
Community groups are often among the key sources of funds to schools. They are mobilised to
carry out given tasks by leaders in the community, such as local politicians or village captains.
There are many schools in Guyana that have been built by community groups. Your findings
might include:

 mobilising community groups in development projects

 community leaders mobilising the masses to participate more effectively

in school projects
  fund raising for individual schools in an area

 involving community groups and former students in self-help projects for

the purpose of generating funds

 levying education taxes on members of the community.

Within communities there may be individuals who also decide to help one or more schools on a
significant scale. Sometimes, entrepreneurs wish to be seen as philanthropists and may
contribute in the same way as community groups. Such contributions should be welcomed, but
because of the idiosyncrasies of individuals, a system of accountability needs to be enforced
particularly where entrepreneurs operate schools for profit.

In recent years, Guyana has seen a large number of NGOs which have been willing to invest
time, money and resources into schools either directly or through training or sustainable
activities.

Other sources of funds

School facilities

Considering the situation in the school, what measures would you advise the PTA to use for
generating funds.

Comments
Through proper management, school plant may generate substantial funds. Ways of doing this
may include:

 hiring school facilities to the community, for example, halls, ICT facilities,
vehicles, playgrounds

 engaging in money generating projects such as livestock farming, running

a canteen and operating workshops.

Learners

Consider if there are different ways your learners might be involved in generating PTA funds

Comments
Learners may be good sources of PTA funds if they can see the benefit both for themselves and
their school. Developing this resource depends on the good management of the headteacher
and staff. Such fundraising is done through the PTA. The following ways of involving your
learners may be considered:

 generating funds through agricultural activities in rural areas, making craft

items and cake sales
  fund raising activities, for example, concerts, games and sports,
exhibitions, charity walks and jumble sales.

It would only be right to add here that Past Learners/Students and Alumni Associations are
often a great source of extra financial help. They frequently have very positive feelings towards
their “alma mater” and are philanthropic as well. Many schools have been provided with
excellent ICT facilities, for example, especially from those former students who now live abroad.

Private Schools
Schools may be founded by religious or charitable bodies, which are NGOs or simply run as a
private, usually profit-making exercise. There are such schools in Guyana. Most of them are
recognised by the Ministry of Education. Each has specific objectives in opening and operating
the school which often involves the spiritual and moral well-being of the children. These
foundation bodies give financial support to their schools in various forms, such as land and
buildings, equipment and personnel. A trust fund may be established, where money is invested
and the interest generated provides operating funds for the school.

Such schools operate by charging parents for their children’s education. This is usually paid on a
termly basis. Fees vary and are dependent on the educational provision given. These fees are
used to fund the school. If you become headteacher of a private school, you would have to
familiarise yourself with the financial requirements of the laws of Guyana relating to the
operation of a business and how it applies to a school with charitable status, if it falls into that
category. This is beyond the remit of this Programme.

Fund raising

Activity 1.3

41. Make a list of the methods you use, through the PTA, to raise funds in
your school.

42. What additional ways might you introduce?

Comments
You may have included some of the following

Sponsored walks: Where individuals are sponsored to walk certain distances to raise funds for
particular school programmes.

Trusts from charitable organisations: Where materials and funds set aside by individuals or
organisations are donated to run a school programme.

Through fund raising representation: By this method an influential and knowledgeable person
is selected to visit people or organisations that have been selected by the fund raising
committee to seek financial assistance. The representative must be conversant with the purpose
to which the funds will be used.

Fund raising agents: A group of people interested in raising funds for the school, allocate
themselves areas of operation. Then each person approaches individuals for financial
assistance. The group must have a co-ordinator to oversee collections and any other activities
involved.

Minor fund raising: Fund raising in the form of a fête, festival or entertainment organised for
the purpose of raising funds.

Raffles: The school acquires a few valuable articles, ideally through donations. These articles are
then given to the winners of a lottery. If many tickets are sold through this method then quite
large sums may be raised.

Quiz nights: An entry fee is charged and persons form themselves into teams, usually of around
6 to 8. A series of questions are asked by a quiz-master on a variety of topics. The winning team
wins a prize. This is often combined with a raffle and a meal is provided which is included in the
cost of the entrance ticket.

Summary
In this unit we have considered the following major sources of funding for schools: government,
parents and community groups. A headteacher cannot afford to sit back and wait for other
funds to appear. He / she must be proactive in gaining the maximum government grants and
galvanising the efforts of the PTA to support the school. Although fund raising may appear to be
a diversion from the main purpose of schooling, it can be applied in an educative way if learners
are involved in each aspect of an event and topics for Language, Mathematics and other areas
of the curriculum can easily be identified. Fund raising in Guyanese schools is usually done
through the PTA to allow the headteacher to concentrate on the core purpose of the school –
teaching and learning.

Given that many schools are seriously short of funds, it is the responsibility of the headteacher
to identify the need and the purpose of fundraising and to stimulate others into doing it.
However, under no circumstances should it be allowed to detract from the instructional time
stipulated for the learners. Raising funds is extra to the curriculum and not a substitute for it.
Headteachers, as leaders, should encourage those around them to explore all the possible and
feasible sources of funds for the benefit of their schools.
  Unit 2- PTA Budgeting

Introduction
After identifying possible sources of funds the PTA could pursue, the headteacher as a financial
planner, can now guide the Executive of the PTA to draw up a plan for securing and expending
the resources. Knowledge and experience in this area can be valuable for the headteacher to
assist the PTA Executive to design and manage its budget. For the plan to be expressed as a PTA
budget a headteacher needs to have some knowledge and experience of designing and
managing a budget.

Individual study time: 4 hours

Learning outcomes
By the end of this unit you should be able to:

 describe the responsibility of the headteacher as a financial planner

 explain the nature and functions of budgeting in a PTA

 assist the PTA body to design and manage its budget.

The headteacher as a financial planner

As a headteacher, you mainly rely on resources that are determined by the government and
assigned to the school. Thus, you may operate under a financial environment with two major
elements at the level of the school and community:-

4. Resources may be received from the government which are usually fixed
for the duration of the financial year.

5. Resources may be received from the region or district directly and from
various community groups or NGOs, which are not fixed and are often far
from certain.

However, as a school planner and finance manager, you should take an active, rather than a
passive, role in determining, mobilising and acquiring financial resources. In such a way, you are
more likely to ensure the effective implementation of your school programmes. Thus, your
major tasks as a planner are to ensure that:

 you fully understand the financial situation in which your planning is to

occur

 your planned resources are available when required and are properly and
effectively utilised to achieve the mission and objectives of the school.

Essential to the accomplishment of the above tasks is effective budgeting.

What is budgeting?
Budgeting is a process of preparing a statement of the anticipated income and the proposed
expenditure. In other words, it is a process for preparing a summary of the programmes of the
school reflecting the expected revenues and expenditures. This statement is the PTA budget
which guides a headteacher through the various school activities, as well as towards achieving
the objectives of the school. It is important to mention here the role of school improvement
planning through the use of the School Improvement Plan (SIP). Funds should always be used
for a purpose. To this end, government does not and cannot provide unlimited financial
resources. The headteacher is the one who leads others in making decisions about what the
school needs and ultimately what it can ask for and what it can afford. A well-articulated SIP
which has been approved by the Department of Education and supported by the PTA will be the
starting point for this decision making process.

Stages in PTA budgeting

Activity 2.1
Reflecting upon the situation in your school:

8. Identify and list activities you want to be carried out in your school this
year.

9. List the resources that will be required and the possible sources.

10. Give an estimated cost of each of these resources.

11. Study the budgetary guidelines issued by the Ministry of Education and
explain how you will present your budget.

12. Using the guidelines write the costs of each activity against the expected
resources.

Comments
In summary, the stages of budgeting which you have just gone through are:
Stage 1: Identification of programmes, projects or activities you wish to accomplish in the
budget period.

Stage 2: Identification of the resources, in terms of personnel requirements, materials and time.

Stage 3: Costing of the resources - this is the most important activity in budgeting since a
budget is basically a financial statement.

Stage 4: Presentation of the budget as per budgetary guidelines formulated by the Ministry of
Education in conjunction with the Ministry of Finance.

Stage 5: Obtaining approval of the budget by the financial provider.

Consider these stages carefully and ask yourself if it is really necessary to go through all of
them? Is budgeting really necessary in your school?

Conclusion
The actions of the headteacher must be guided by the regulations that exist. Funds allocated to
the school from governmental sources, and unsolicited donations to the school, are to be
addressed directly by the headteacher and staff. All Non-governmental or non-budgetary funds
must be raised under the aegis of the PTA, and must be addressed by the PTA Executive of
which the headteacher is a member, and would ensure that body benefits from his/her
knowledge and experience. The SIP is to be addressed by the SIAC, which has the input of the
PTA and must also benefit from the headteacher’s advice.

Let us consider this last question now.

Functions and purposes of budgeting

Major functions
Budgeting is the process of relating the expenditure of funds in a systematic way to the
achievement of the planned mission and objectives of a school. It has three major functions:

13. It provides an operational cost-time framework for the implementation of

school programmes. Along with the Work Plan, the budget is also a
planning instrument in your school.

14. It can serve as an instrument for the delegation of authority. The school
budget is designed to show which particular persons are responsible for
specific programmes or activities. It also indicates monies allocated to
specific programmes or activities.

15. It can be an instrument for controlling and evaluating performance.

(Note: When a budget is approved by the authorities, the delegation of functions is
automatically approved.)

Your budget provisions offer you a simple guide to assessing the rate of expenditure in any given
activity. If your budget is suitably designed, it will also readily provide you with data on three
elements to assist in the control and evaluation function. These are:

 rate of expenditure

 output

 costs.

Purposes
A budget is a forecast of future financial events showing the anticipated revenue, expenses and
the financial resources available to the school.

The purposes of budgeting can probably be categorised into three:

19. To show what the results will be, if present financial plans in relation to
the school are put into effect, the purpose of the budget is to disclose
areas that require attention and action.

20. To evaluate the financial performance of the school: The PTA budget is
used to control the operations, revenues, costs, and the persons
responsible for the operations and related revenues and expenditures. In
effect, your PTA budget is a yardstick against which your financial
performance may be compared. You should always aim at having a
budget that promotes cost effectiveness, that is, a high level of school
output at low levels of expenditure.

21. To determine that the operation of your school provides “value for
money”.

Period of the PTA Budget in support of the school

Generally, the PTA budget should be long enough to show the effects of the financial policies
adopted, and short enough to allow estimates to be made with maximum accuracy. The most
commonly used budgets are:

MASTER BUDGET
This is the overall financial and operating plan for a forthcoming financial period. This is usually
prepared annually.
CAPITAL BUDGET
This interprets the school plans for major expenditure on capital assets such as buildings. It is
often a five-year financial plan and must be linked to the SIP.

SPECIFIC BUDGETS
These are segments of the Master Budget, and relate to specific activities or projects in the
school. They could be prepared termly or annually.

So far we have seen that budgeting by the PTA serves as a:-

 major planning instrument

 means of focusing the contributions of the PTA to the school’s

programme

PTA Budget Designs

Types of design
Budgets can be designed in many different ways. However, in the case of PTA, two basic designs
were proven to be more effective.

THE PERFORMANCE BUDGET OR SCHOOL PROGRAMME BUDGET DESIGN

This is the budget which serves as an instrument for carrying out a school plan. The emphasis in
this budget design is on what is going to be done and on the benefits accruing to the school. In
this budget design, you not only state the income and expenditure, but include also a brief
description of what is to be achieved after each item of expenditure.

THE TRADITIONAL OR LINE-TERM / LINE-ITEM BUDGET DESIGN

In this design, you merely list estimated income and items to be funded. The emphasis is on the
issue of financing rather than on what is to be achieved.

In both cases the budget design should provide extensive and accurate estimates of:

 income or receipts

 expenditure.

Although the latter is the simplest form of budget display, it is inconceivable that one would not
link financial provision and monitoring to performance objectives. Often budgets are displayed
in the traditional way described above and the detail is in an appendix and linked to the SIP.

Income or receipts
The bulk of a school’s income is pre-determined and comes from the Ministry of Education.
However, other income will be generated throughout the year. The school derives this income
mainly from fund raising activities, organised by the PTA, Alumni, etc. and, in the case of a
private school, from supporting agencies and donations from foundations and other charitable
organisations.

Payments of teacher salaries, maintenance, construction and other aspects related to the
material and human resources of the school are made directly by Government with the
assistance of the Departments of Education.

EARMARKED GRANTS
These are grants which come mainly from the Ministry of Education and are clearly assigned for
a specific purpose, for example, teachers’ salaries, maintenance of buildings and construction.
These grants cannot be re-allocated at the school level for any other purposes.

NON-EARMARKED GRANTS
These are grants for use on expenditure items determined as priorities in the school. These
include contributions from Departments of Education and community groups, for example,
NGOs.

Expenditure
Finances expended to keep a school operating fall into two categories:

RECURRENT EXPENDITURE
This constitutes the greatest percentage of expenditure. It includes items such as salaries and
other benefits to administration, supervision, teaching, special services and support staff,
maintenance and other operating costs in travel and communications, and instructional
materials. This is the expenditure on consumables.

Although salaries are paid by the Departments of Education for teachers in the respective
Regions and the Ministry of Education for teachers in Georgetown, it is always helpful for
headteachers to understand the personnel costs of their school – hence, the importance of the
staffing allowance given to you by the Teaching Service Commission which you will interpret to
meet the needs of your school. In many countries, decentralisation of personnel costs has taken
place and staff salaries are paid directly by schools through an agency. The appointment of staff
lies in the hands of the headteacher who must budget accordingly. This is an onerous task but
gives more flexibility to achieve curriculum objectives.

CAPITAL OR DEVELOPMENT EXPENDITURE

This is expenditure on capital assets such as buildings, furniture, equipment and vehicles. They
are investments made at irregular intervals, but they cover a time span of several financial
years.
The amount of recurrent expenditure the school would need is influenced by its grade, physical
structure and facilities, number of teachers, geographic location, and at the Secondary level, its
listing, and programmes offered - the CSEC, CAPE, SCCP, etc.

For ease of management, you can sub-divide capital expenditure by differentiating between
level (primary, secondary and tertiary) and within each of these between ongoing and new
development projects. The purpose of classification is to provide you with a clear picture of the
balance of resource allocation between new and ongoing projects.

Activity 2.2
Obtain a budget statement available to you either for your own or another school.

26. Is the design of your sample traditional or is it a budget design which is

related to school performance?

27. What are the advantages and disadvantages of the design of your sample
budget statement?

28. How might you improve the design of the sample to fit the situation in
your school?

Comments
A budget which is related to school performance is one which presents the purposes and
objectives of the school for which funds are collected, the costs of the school programmes
proposed to achieve the school objectives and the quantitative data measuring the
accomplishments and work performed under each programme. This budget is suitable for long-
term school strategies.

The advantages of such a budget are as follows:

29. It sets out each major school programme and what it is attempting to
achieve.

30. It may be used as a good control mechanism to show value for money.

The disadvantage is that it is complex and costly to put together, usually requiring a computer. It
is only suitable for large schools.

Managing PTA budgets

The budget, prepared by the PTA Executive, to support the achievement of the mission and
objectives of the school, must be taken to the General PTA for acceptance. The next phase
involves the Executive organising to implement, monitor, supervise and control the budget. This
is the most important stage of the budget cycle since a well-managed budget should lead to
more effective levels of achievement of the mission and objectives of your school.

Implementing the PTA budget

Activity 2.3
Considering the situation in your school:

31. What role would you play in the implementation of the budget?

32. What procedures would you follow to access PTA funds?

33. What difficulties do you face in the implementation of the budget

prepared by the school’s PTA?

Comments
Managing the PTA budget, the task of the PTA Executive, includes the management of its
implementation, as it now forms the basis of financial decisions of the Association. Money can
then be expended for the purpose for which it was allocated. The rules of the Association and
good accountability practices must be followed.

It is a pre-requisite that at least simple but adequate records be kept of all monies expended.
Expenditure should be incurred to purchase items as planned in the budget, and every
expenditure should be promptly entered in the Income and Expenditure Ledger. This Ledger
must be drawn up to show all Income received and headings of Expenditure as outlined in the
budget.

In some countries, regular paper accounting has been taken over by computerised systems.
Although this is not the case in Guyanese schools at present, it almost certainly will be some
time in the future. The private sector has already embraced this form of accounting. However,
the principles are much the same and the computer is allowed to do the work.

Using the PTA budget effectively

Budgets are estimates of income and expenditures and there may be changes as your school
financial situation becomes more reliable. Your forecasts may therefore be revised during the
course of the year. However, any decision to change the budget should follow the same
procedure and restrictions as the main budget so that the budget remains a meaningful
document and an effective tool of management and forecasting.

When you receive delivery of goods or services ordered, you should always settle the account
promptly. You should calculate the exact amount involved as indicated on the supplier’s invoice
and compare it with the amount on the order. You can also settle the account by certifying that
service was rendered. This certification makes it possible to issue a signed payment order, by
which you instruct payment by the person responsible.

It is essential to ensure that PTA funds are handled in accordance with the rules, that the
authority of the headteacher, who is the school finance manager, and that of the school
secretary are respected.

(if there is one), or the Treasurer who is responsible for collecting the PTA funds and paying
expenses, are kept separate. Having two people working independently of one another on the
spending process leads to greater security in the choice of expenditure and the use of funds. It
also protects both parties from any allegation of fraudulent practice.

The school secretary verifies the payment orders signed by the headteacher. After checking that
PTA funds exist on the budget headings or votes from which the orders must be paid and that
the envisaged expenditures follow the rules, the school secretary pays the creditor and records
that fact in the books which have to be kept in accordance with the school ledger. In the case of
some schools, the headteacher works both as Finance Manager and Secretary. This is
unavoidable if the school has not been allocated the staff to separate the two roles. In this case,
it is strongly advised that another person or persons is/are involved in order to protect the
integrity of the system.
The recording of expenses and income is done by making a note of payments made on a series
of documents:

A log or journal: This lists in chronological order the payments made per day.

A vote book: This lists the orders paid out of any one vote or budget heading.

You should always draw up summary documents periodically, as follows:

A statement of expenditure: This allows you to see to what extent PTA funds for various
headings have been used.

A balance sheet: This allows you to check that there are no discrepancies between the various
budget headings and to know the status of the school financial account at any one time. This is
done on two levels as follows:-

 The balance in any one budget heading – this is the expenditure on the
income received, e.g. $200,000 dollars is allocated for the purchase of
exercise books. Half way through the year, only $100,000 has been spent
and there are still books in stock. These consumable items in stock should
be taken into account before ordering more. One might assume that you
have over-budgeted in this area.
  The balance for the whole budget – this is the school’s income from
government (excluding salaries) against the total expenditure for the year
to date at a given time. Although one might think that the school’s
budget, which is essentially a forecast of spending, would be on target if
33% had been spent after one term, it is not quite so simple. Some
expenses might be seasonal and may not occur until the final term. The
reverse also applies, where one buys in bulk at the beginning of the year
and 50% of the budget has been spent after one term.

Surplus Balances
All of this will convince you, we are sure, that meticulous record keeping and forward planning
are essential to ensure that you neither overspend nor find yourself with surplus balances which
you may lose, if not spent. Often organisations rush to use all of the available unspent balances
before the end of the financial year in case they lose them. This is poor planning as funds must
be used in schools for specific purposes and be linked to the overall curriculum plan. Such a
spending pattern should be avoided at all costs.

Nevertheless, part way through the year, one may discover after completing a statement of
expenditure and a trial balance that excess funds are available in one budget heading and there
is a likely overspending in another. It is normal practice for funds to be moved from one area to

another. This is called virement and requires authorisation from the relevant authorities who
have approved the initial budget. Once an approved virement has been made, it forms part of
the main budget and expenditure can be placed against that subject heading.

It sounds complicated but it is just like a person who has three purses – one for gas, one for
food and another for spending money. He / she simply moves money from one purse to the
other when one purse has too much money in it. The only differences are that records need to
be kept and it requires approval because it is public money. This is applicable to schools that are
in receipt of unsolicited sizeable donations. While the principles can be applied to PTA funds, it
must be applied within the rules that govern that body. The authority for all financial decisions,
transactions and plans is the PTA Executive and must be reflected in the minutes. Alternatively,
a document outlining the issue can be circulated by the Chairman to other Executive members
(round Robin) to indicate their approval or disapproval. This document becomes the written
authority, as the majority decision must be followed. The headteacher must use his/her
knowledge and position as Vice Chairman to advise the other members of the Executive.

Activity 2.4
Comment on the draft budget shown below

36. Is this a line-term budget or a programme budget?

 37. How useful do you think it is?

38. How could it be improved?

Comments
In essence, this is a very simple budget which serves its purpose as a planning tool to ensure
funds are available for each of the specified areas. However, it is not a Programme Budget
because it does not relate expenditure to teaching and learning and school effectiveness. It is
very general in nature and lacks detail.

A budget which was clearly linked to the SIP which stated the following, for example:

“To improve the provision of resource materials for CSEC Social Studies with a view to increasing
examination passes by a minimum of 20% in the next two years”

would link expenditure with overall school performance and use the funds to meet those
objectives. One would be able to measure the strategy in the following year once the books had
been purchased, thus showing value for money. Many headteachers purchase books which
remain in locked cupboards. They are meant to be in the hands of learners and to make a
difference to their lives.

Activity 2.5
Think of three curriculum goals which would improve school effectiveness and cost them as part
of your overall budget.

Comments
Your three objectives should have the following essentials:-

 A statement of improved performance in terms of school effectiveness

 Measurable criteria against which to determine the performance

 A time frame – when the improvement will happen.

This will all be stated in your SIP which will be carefully costed to spread expenditure over a few
years, as and when it becomes available. When considering your budget against your school
objectives, always ask yourself what you want to do, why, how and by when?.

Monitoring and supervising the PTA budget for the school

Monitoring and supervising the PTA budget goes on throughout the year. However, at the end of
the year, the total amount of income and expenditure is consolidated in a yearly financial
account which is drawn up according to a strict procedure. This makes it impossible to
camouflage operations in the books and makes it possible for the Ministry of Education and
other bodies to check the accounts.

Monitoring the Budget of the school’s PTA requires the Executive to meet regularly and do the
following:

 Check that expenditures are made in compliance with the budget

authorisations.

 Note, at regular intervals throughout the year, whether the budget is on

target and/or whether virements need to be made.

 Note whether there is a surplus or a deficit at the end of the year and
whether there is the possibility of building reserves.

 Assess the implementation of the budget with a view to preparing

subsequent budgets more accurately.

 Provide continuity in the school’s accounting system, in as much as a

financial account is established on the basis of the balance sheet of the
previous year, and leads to the balance sheet of the following year.

The supervision of the PTA school’s budget can be more or less extensive. It requires you to
check whether the PTA school’s budget is really balanced and that all compulsory expenditures
required by law are included and fulfilled.

Controlling PTA budgets for the school

Controlling a PTA budget requires you to understand the financial status of your school and its
priorities for expenditure. Controlling the budget means controlling the budget headings, that
is, ensuring they are not overspent, and that money received is put under the appropriate
headings. Before you agree to any expenditure, first check the heading to ensure there is
enough money to cater for the expenditure. If there is no money, then you should either
abandon the expenditure or seek permission from the appropriate authorities to re-allocate
funds on the heading.

Income throughout the year

You will have estimated the income you hope to receive and will have included it in your original
budget. However, PTAs are sometimes fortunate enough to receive funds for which they did not
budget which are not earmarked, e.g. extra fund raising activities, charitable contributions, etc.
Such money, when it arrives, will be accounted for in income and will either:

 offset other income which you budgeted for but did not receive, e.g.
reduction in enrolment causing a shortfall of government funds or;

 will be used to increase a budget heading where an additional need has

been identified or;

 will form part of the reserves so that new purposes can be found.

Summary
In this unit you have learned that:

 budgets serve as a plan designed to achieve a set of the school objectives

 budgets serve as indicators of areas of the school that require action and
should be clearly be linked to the SIP

 PTA budgets become the collective financial responsibility of the

Executive, with specific tasks being assigned to individual members

 budgets are used as a means of evaluating performance of the Executive

 a major responsibility of the Executive is to design, manage, monitor and

control the PTA budget

 the PTA budget must be linked to school effectiveness

 the school must provide “value for money”

A headteacher who is a good financial manager can assist the PTA to maximise opportunities in
order to ensure an excellent educational provision for the school.
  Unit 3- Mobilising Financial Resources

Introduction
In the implementation of any educational plan, programme or project, it is important that the
necessary resources are available. There are four main types of resources which can be
mobilised. These are human, material, time and financial resources. This unit will deal
specifically with financial resources and how they can be mobilised.

Once the needs for human and material resources have been identified, estimates of the
amount of financing required to deploy and use these resources effectively should be worked
out. In Unit 1 sources of funding for schools were identified. They include government, PTA and
the wider community. Mobilisation of any of these sources involves sensitisation, education,
justification for the activities to be done and a plan for achieving the objectives. This unit
considers the availability of finance, budgetary prioritisation in a school, the distribution and
use of financial resources and possible extra-budgetary sources of financing.

However, when considering the issues in this unit, remember that you must measure gains
against the efforts made to achieve them. One must also ensure that the core purpose of the
school – teaching and learning – is not devalued by our efforts to mobilise funds. It is a fine
balance but essential to be aware of it. It is therefore useful to be mindful of the regulations
which state that fund raising is a PTA activity.

Individual study time: 4 hours

Learning outcomes
By the end of this unit you should be able to:

 cause the PTA to mobilise available finance

 cause the PTA to organise financial resources based on the budgetary

priorities set within the school

 demonstrate skills of distribution and the use of available financial

resources by budget items

 cause the PTA to describe how to make provisions for additional sources
of finance for school projects and programmes.

Financing availability
Financing availability may be described as the percentage of public expenditure given to
education. In the case of an individual school, financing availability can be considered as a
percentage of education expenditure on the appropriate sector. Although it is not essential that
a headteacher is fully conversant with overall government spending policy, it helps if he/she has
a broad idea of “the big picture” to locate the school within it. The examples below illustrate
how financing availability can be determined.

Therefore, the financing availability for education is the percentage of government expenditure
allocated to education. The financial availability for an individual school is the percentage of the
total education budget that is allocated to that individual school.

In order to calculate this, work out the total amount of money available to the individual school
by multiplying the enrolment by the capitation grant for each learner. Then find what
percentage this amount is of the total expenditure on schools generally. This calculation can be
done as a percentage of the following:-

 The total government expenditure

 The government expenditure on education

 The expenditure on a particular level – secondary, primary or nursery

 The expenditure on a region.

Although increasing steadily, Guyana still has low financing availability and because of this,
government and communities need to mobilise additional financial resources. It should be
noted that mobilisation of financial resources for education is strongly affected by changes at
both the national government level and education sector level. Readjustments in expenditure
from,

for example, defence spending might be diverted to education. Often, priorities are directed to
providing the infrastructure (such as roads, electricity and water) to support economic
development. However, the balance of argument in the early 21st century is now back in favour
of additional funding for education, particularly for basic education (literacy and numeracy) and
for disadvantaged groups, such as those living in rural areas, and children with special
educational needs. Since the year 2000, countries, including Guyana, have concerned
themselves, often with the help of other nations, with achieving the Millennium Development
Goals. Guyana is well advanced in the educational area of “Universal Primary Education”.
Schools should take note of this and, as far as possible, adjust their plans or projects
accordingly. Headteachers should try to ensure that they are receiving a fair allocation of funds,
particularly those from government sources. This is why it is important to keep an eye on your
school’s financial availability, both within the sector and the region.

Budgetary prioritisation in a school

Because an institution’s financing availability might not meet all its educational requirements,
priorities have to be set. Educational planners, including headteachers, seek to channel
resources to the educational activities which will have the greatest impact and are likely to be
able to solve educational problems. Prioritisation involves putting first things first, that is,
deciding on the activities that must be done before others are carried out. When a country
defines its priorities in accordance with an overall development policy it has more chances for
mobilising resources for education.

Likewise the headteacher should arrange developmental activities in order of importance, so

that funds may then be allocated.

Activity 3.1

9. List all the activities or items on which you would like to spend money in
the next financial year. Set yourself a limit of ten items and make sure the
items are realistic!

10. Rearrange them in order of priority.

Comments
There is a wide range of activities or items which you might have identified, for example,
purchase of teaching materials, stationery, furniture, practical and extra curricular equipment;
construction of a classroom block, a library, repair of a leaking roof, painting of a dormitory,
purchasing a jeep for school transport; installation of internet, purchase of audio visual
equipment, etc. Considering the importance of each item, you should be able individually or in a
group to prioritise the items.

Prioritising may mean having to make hard choices. Clearly the leaking roof must come before a
library, since it is necessary to stop more damage being done. Some decisions relate to direct
improvements in the teaching and learning environment, whilst others are more to do with
personnel and welfare matters. Thus would money spent on school transport be more beneficial
than building a library room? How about balancing say, four less expensive things against one
more expensive item? Perhaps you suggested in your answer that you might concentrate on
different types of things from one year to the next; so this year, you could target one more
expensive item and next year, give something to each area.

In all of this, however, it is important that your priorities form part of the School Improvement
Plan (SIP) and that everything can be traced either directly or indirectly to an improvement in
the quality of education and a more effective school in terms of teaching and learning.

Activity 3.2
As the headteacher of a new primary school, you plan is to establish a computer laboratory in
order to expose the children to 21st century technology.

11. List the hardware and software that will be required (you need not go
into too much technical detail)

12. Outline the estimated costs for building or refurbishment

13. Identify the costs for technical support

14. Arrange the activities in order of priority to facilitate the mobilisation of

resources.

Do not concern yourself too much with exact prices but identify the process that you will have
to follow to achieve your goals.

Comments
Unless you are well versed and trained in Information technology, we assume that you will have
sought help in this answer. We cannot expect to know everything ourselves but accept that
many persons have different skills. However, you have tackled this, you should have identified a
logical progression of activities from original costings to implementation with learners in the ICT
laboratory. You will have reached a total cost which will enable you to make decisions about
how you will raise the funds and whether the activity will need to be spread over several years.

Distribution and use of school financial resources

In general, financial resources are scarce and this scarcity can be made worse by the
inappropriate distribution or misuse of such resources. It is, therefore, necessary to rationalise
all expenditures. This can be achieved by drawing up proper criteria for resource distribution
and thus to reduce imbalances. Inequalities frequently exist in the sharing of resources
committed for education. One such inequality is the way that resources are distributed between
urban and rural schools. Normally the urban schools are advantaged while the rural schools
become marginal in matters of education and other social services. Another inequality occurs
when the resources allocated have high administrative costs which limit implementation of
projects. In Guyana, the cost of distribution and the sheer difficulty of some of the terrain often
mean that rural and hinterland areas are the least served with resources in material, personnel
and financial terms. Even when there is a political will of equality as in Guyana, sometimes
these difficulties can seem overwhelming.

From the national point of view, the distribution of financial resources for the education sector
is affected by pressure from other sectors for which there seems to be greater justification
regarding the distribution of funds. It is true that in the education sector, significant results are
reached only in the medium or long-term, while in other sectors they are realised in the short
term and often with greater efficiency.

It is important to note that often the good use of financial resources is limited by administrative
problems. Utilisation is satisfactory when:

 the allocation of funds takes account of the activities to be carried out

 there is the capacity to use the funds committed

 resources are provided in time

 expenditure is properly accounted for and is according to priorities.

For example, an issue in Guyana is the availability of qualified personnel at all levels because of
the migration of Guyanese residents, sometimes known as the “brain drain”. The government
may allocate, for example, GY$60 million for curriculum specialists but, if they are not available,
progress will not be made. Hence, the need for capacity building.

Consider two factors that cause inequality in the distribution of financial resources.

Comments
You may have listed the inequalities mentioned in the first paragraph of this section or others.
Inequalities may arise when more importance is given to preferred levels of education, e.g.
primary rather than secondary or between residential and non-residential or within a given
school when more importance is given to examination classes than to lower classes.

Activity 3.3

19. Why financial resources for education are limited?

20. What are the conditions that can ensure the satisfactory use of financial
resources?

Comments
Considering the number of sectors sharing the national revenue, education gets a relatively
large share in countries where learning is a priority for national development. Guyana would be
included in this group of countries. However, the overall Gross Domestic Product (GDP) is
relatively small due to Guyana’s small population and large land mass covered in untouched
rainforest. GDP is the total production of goods and services producing revenue in a country. As
such, the overall government budget is small and the education budget is small pro rata.
Among the necessary conditions for the satisfactory use of resources can be included:

 the capacity to use available funds

 the provision of funds in time

 the proper accounting for expenditure based on priorities.

Possible extra-budgetary sources of finance

Most of the financial resources for the different levels and types of education are provided by
the public sector. In Guyana, while government contributes most of the educational
requirements, there has to be a constant search for other sources of finance. Parents have
played a big role in meeting the largest part of education costs.

In education systems, the most important component is personnel since the sector makes
intensive use of human resources. In other words, the running or recurrent costs reach much
higher levels than investments. Among extra-budgetary sources, the contributions which the
parents and the community can make constitute an important supplementary way of mobilising
financial resources allocated to education.

This particularly applies to those parents who choose to have their children educated privately.
They pay twice for education in that they pay fees and also local and government taxes to pay
for state-controlled schools. They only benefit indirectly from this in others’ education providing
them with services. At present, if all of the children in the country were educated in state-
controlled schools the education budget and financial availability would have to be much larger,
putting a severe strain on the system. This situation also applies in many other countries and is
not unique to Guyana.

Resources mobilisation strategy

In order to gain extra resources for education, a strategy is needed, which may involve the
following aspects:

 To increase financial resources for education, account should be taken of

the fact that it is important to improve the lot of disadvantaged groups in
the population since they provide continuing examples of social
inequalities.

 Additional resources need to be sought to supplement the normal budget

coming from the Ministry of Education, taking into account each school’s
characteristics.

 It can sometimes be difficult to convince the providers of such sources of

funding that they should invest in education because the economic gains
are not immediate.

 Extra resources should be sought to reduce unit costs and improve the
implementation of plans or projects.

 It is often staffing costs which increase the burden of any project or plan.

It is difficult to find additional sources of financing, given the great variety of sources already
used in Guyana. Currently the country benefits from many financial and charitable sources from
NGOs such as VSO, Peace Corps, Every Child Guyana and Educare amongst many to
international organisations such as UNESCO and UNICEF. Many resources derive from other
countries where there are particular good relations such as Canada and the Canadian
International Development Agency (CIDA). This Education Management Programme is funded
through GBET which means “Guyana Basic Education Teacher Training Project.” It is funded by
CIDA which is sponsored by the Canadian Government. On the other hand, long-term loans for
major projects with favourable rates are often used. There are many partnerships such as
BEAMS which was funded by the Inter-American Development Bank. IDB was established in
1959 to support Latin American and Caribbean economic and social developmental regional
integration by lending mainly to governments and government agencies, including state
corporations. Its headquarters is in Washington, D.C., United States.

At school level, here are a variety of ways of mobilising financial resources which are commonly
used. Some of these have already been mentioned in Unit 1. They include the following:

 Fund raising functions: these may involve activities like raffles, drama,
concerts, charity walks, collecting various items and auctioning them,
cash donations.

 Contributions or donations by private companies.

 Special grants by government for specific activities.

 Sales of school products.

Activity 3.4

33. Examine the various ways of mobilising financial resources and determine
which one of them gives the best returns.

34. What are the risks for each of them?

35. Can you mention any other ways you consider important but which have
been omitted?

Summary

In this unit you have been able to learn a number of concepts or ideas concerning mobilisation
of financial resources. These can be summarised as follows:

 The main types of resources are human, material, time and financial.
These need to be mobilised to facilitate implementation of school plans,
programmes or projects.

 To mobilise financial resources, one must consider the financing

availability, which is the percentage of the public expenditure given to
education or, in case of a school, it is the percentage of the education
sector expenditure given to that school.

 Budgetary prioritisation is the arrangement of items or activities in order

of importance and allocating money which will facilitate their execution.
Often there are inequalities which arise in the distribution of financial
resources nationally as well as at the school level. Great care must be
taken in distribution of the available funds.
  All budgetary plans must be related to your School Improvement Plan
which will identify needs, express developments in teaching and learning
strategies and be the overall school document which identifies priorities
for improved school effectiveness.

 As the financing availability is extremely small, a search for extra

budgetary sources of financing educational activities has to be carried
out.

 Various mobilisation strategies should be used to obtain the necessary

funds in order to implement the school plans.

 Unit 4- Basic Framework & Mechanism of Financial Management

Introduction

In the first three units, you have learnt how to identify sources of funding for schools, budget
for and secure the funds through the PTA. Financial management, amongst other things,
involves recognising and respecting authorities, regulations and practices governing the
receiving, keeping and spending of funds. In this unit you will learn about the basic framework
and mechanisms of financial management and gain experience in applying appropriate financial
management practices and skills.

Individual study time: 4 hours

Learning outcomes
By the end of this unit you should be able to:

 describe the basic framework of financial management

 state the authorities, rules and regulations governing PTA funds and the
receiving and banking of PTA funds

 assist in planning the PTA budget and understand the system of

monitoring it throughout the year

 describe the practices for book-keeping in schools and the use of

inventories

 outline safeguards for the security of PTA funds.

Basic framework of finance management

Activity 4.1
Before you proceed to look at Unit 4 in detail, please revise Units 2 and 3 by looking back on the
sources of funds for your school and answering the following questions.
If you are not currently a headteacher, please discuss with your own headteacher or one from
another school.

6. How much funding did you secure from each source?

7. Which source was most reliable? Why?

8. Over what period did the funds come into the school?

9. Is the amount collected more or less than expected?

10. If less, how and when do you envisage filling the gap or achieving your
planned target?

11. Are your priorities still the same?

Comments
You will realise that funds coming into a school are not entirely certain and are often not
adequate. They do not arrive all in one go but are spread throughout the year and often have to
be claimed. If you do not do this you will not receive the funds. To manage these limited funds,
the headteacher, as a public employee and the accounting officer, must be guided by the basic
framework and mechanisms of financial management.

Framework for managing PTA funds

Activity 4.2
 12. Considering the school you have chosen or your own school, identify and
describe the framework in which you or the headteacher manages the
available funds.

13. How flexible are you or the headteacher in deciding what to spend funds
on and under what circumstances?

14. How free are you to make purchases?

15. What are the national as well as PTA financial policies within which you or
the headteacher operate?

16. How do you or the headteacher allocate funds and operate budget
headings (votes)?

Comments
Your answers in the above activities are likely to bring out and include the issues outlined in the
following paragraphs.

KEEPING ACCURATE FINANCIAL INFORMATION

You are expected to keep complete and accurate financial information and to present this
information properly. This information should include sources of revenue and accurate entry of
expenditure, avoiding all errors with no omissions. Proper presentation further demands that
you always put any required financial information under the correct heading and in the correct
place.

The information should be arranged under broad headings, both in an Income Account and an
Expenditure Account. We have provided for you an example layout which you may wish to use.
However, you will not need all of the budget headings and you should choose only those that
are appropriate for your situation. The Ministry of Education will have a format for you to use,
so this is just an illustration. This will enable you to compare costs of the range of services
offered by the school within a year and from year to year.

It must be noted that the headteacher, as Vice Chairman of the PTA, can advise the PTA
Executive whether to factor on funds directly allocated to the school, into the PTA budget, or
whether the school would treat with these funds separately, while the PTA budgets for those
needs not covered.

Activity 4.3
Below you will find an example of a budget plan laid out as income and expenditure accounts. It
contains most of the headings (votes) which one might need to use in a school and many more.
Select from these headings the ones which you feel might be appropriate for your school. If you
do not see the ones you need, add your own ones to the bottom of the list in each section.

Draw up a budget structure for your own school or a fictitious one if you wish. For the sake of
this exercise, assume a total income of GY$25 Million. Allocate the funds to the various
headings. The accuracy of the funds you allocate to each heading is not essential. However, you
must ensure that the budget balances and that the totals for the income and expenditure
accounts are the same. Remember that this is not actual income and expenditure at this stage,
but merely a forecast.

You will not need to complete the first section of the expenditure account “Staff Costs” as this
will be dealt with by the Ministry of Education and the Teaching Service Commission. However,
if you wish to do the exercise as headteacher of a Private School which pays its own staff costs,
you will need to increase the income account allocation considerably to cover these costs.

Comments
Although the above format may be different and more complex than you may be required to do
with the Ministry of Education, it provides a good overview of the expenses incurred in
Guyanese schools. Some of these will only apply to large primary or secondary schools and
some may be needed only for the future as accounting systems and financial accountability
become more and more complex on a yearly basis.

Whatever the case, it is essential that the budget balances and, where the provision of the
income is uncertain, that there is flexibility within the expenditure account if the income is not
received. For example, we can only estimate the fundraising power of the PTA and a change of
chairperson could easily mean a loss of considerable revenue. Flexibility to make changes,
knowledge of costings and understanding of basic accounting procedures are the important
requirements of any budget preparation.

Flexibility and Freedom with Responsibility

In managing PTA funds, the Executive should enjoy some financial freedom and flexibility to
enable you to consider a range of options. This demands a high sense of responsibility in order
to use the freedom and flexibility effectively.
Virement (Switching Expenditure)
In a PTA with a well-managed financial system, funds can be moved from one area or heading to
another when priorities change, or when there is an excess of funds in one head. There must be
agreement among the members of the Executive.

This depends on how you have prioritised the school services.

Purchasing Freedom
The headteacher and Treasurer should be given the freedom to purchase in order to get the
best value for money. However, good financial practices and all regulations of the PTA must be
followed to avoid fraudulent transactions.

Financial Policies
The Executive members of the PTA must be guided by the PTA Constitution, where the rules are
spelt out under the heading Finance.

Additionally, the Ministry of Education has issued a correspondence dated January 31, 2008,
captioned Instructions in relation to Parent Teacher Associations and other Allied Bodies and
circulars:

 REF. NO ED 5/25 dated January 9, 2008 – Subject: Parent Teachers

Associations

 REF. NO ED 28/1/8, dated May 20, 2008 – Subject: Procedures in relation

to the acquisition and expenditure of non-budgetary funds (including
Contingency Funds and donations)

Proper Allocation of Funds

To manage the school finances, you should be conversant with what each department has and
what it needs. Involving teachers, Heads of Department, and level heads in this process is very
important.

Authorities, Rules and Regulations Governing PTA Funds

It is important that you are equally conversant with the authorities, rules, and regulations that
should guide you in the effective handling of PTA funds. You will be provided with the latest
versions of these on your appointment as a headteacher.

Grants

Activity 4.4
Grants are funds that government or other non-government organisations give to run schools.
Reflecting on your school situation:

19. List the various sources of grants you receive in your school.
 20. What activities or items are financed from grants in your school, whether
from the Ministry of Education or other sources?

21. Who decides how to spend the grants?

Comments
Guidelines on the management of grants are contained in the rules and regulations of the
Ministry of Education. Schools with governing bodies or private schools will have their own
regulations which will fit in with standard accounting practices. Relevant government
authorities will determine the level of grants and their purposes.

You will certainly be required to provide the relevant authorities in good time with information
that will allow them to determine the level of the grants for your school.

It may be, also, that you will have less flexibility than you would like in how you spend the
money allocated to you. However, all good accountants are flexible and creative and can be so
as long as they operate within the regulations.

PTA or Community Group Funds

Activity 4.5

22. Does your school receive Parent-Teacher Association funds?

23. If so, how are PTA charges levied and controlled?

24. What items are financed from PTA funds in your school?

25. What other community groups contribute funds to your school?

Comments
Your answers might have included the following:

 PTA funds are not controlled or allocated by the Ministry of Education or

the school.

 They include funds that are voluntarily paid by parents as decided in the
general meeting of the PTA.

 The funds are levied for the purpose agreed upon by the members of the
association but approved by the school management committee or
governing board.

Since you are the day-to-day manager of the school, the responsibility for collecting and banking
this money rests upon you, and you are accountable to the executive of the committee and the
electorate. The parent teacher management committee controls the PTA funds by ensuring that
the money is expended in the manner and for the purpose agreed upon by the members of the
PTA and approved by the leadership team or the governing body of the school.

Other Funds

Activity 4.6

29. List other sources of funds for your school.

30. Do you declare funds from extra sources to school authorities?

31. Who decides on their use?

32. Do you include them in your budget?

Comments
All funds obtained from other sources are controlled by the school authorities from the moment
you receive them. You are the accounting officer of the school for these funds. In fact, the funds
are accounted for twice. Firstly, by the organisation which donates them, following their own
internal regulations, and secondly, once you have received them, by the school accounting
system following the regulations of the Ministry of Education. All such funds must be declared,
whatever their source.

The use of the funds would normally be decided upon in partnership between the donor and
the recipient school as both have an interest in the future development of the school. It may
not be possible to include them in your original budget as you may not know about them or you
may only have an estimate. However, budgets are revised and updated throughout the year as
funds become available; such donations must be included in the income account and an
allocation made in expenditure account or the school’s contingency fund. However, excessive
use of the latter would not be good practice as it may lead to an under-use of PTA funds.

Please Note: In the following pages you will find a number of examples of forms which are
commonly used in accounting procedures. They serve only as examples and, although the
principles will be the same, they may differ from those you are currently required to use in the
Ministry of Education.

Receiving and Banking of PTA Funds

It is clear that funds coming into the school must be received according to set procedures and
kept safely. A receipt book is one of the commonest books of account. It is used in the process
of receiving funds into a school.
Receiving Funds
Consider how you officially receive money in your school and the kind of information you record
about the funds received.

One copy would be issued to the person making payment. Typically, in a school, funds are
received in cash, cheques, or drafts. These monies must be received properly and kept safely. A
receipt book is designed for receiving cash or cheques. A receipt must be made or written out
immediately on receiving the cash or cheque, the original should be sent or given to the
person(s) who has/have made the payment and another would be retained by the school.

A receipt is used in a school to:

 acknowledge receipt of cash or cheque in settlement of any payment,

including school fees in a private school.

 provide proof to the school that payment has been made for whatever
purpose.

 provide information for the cash book.

It bears the following basic information:

 the name of the person who paid the funds

 the name of the person who received the funds

 date received

 purpose of the funds

 type of funds (cash, cheque, etc.)

If money has to be kept before banking, it must be under lock and key or in a safe to avoid theft
or damage by fire, etc.

Banking
The headteacher must organise that all PTA funds should first be banked and then withdrawn as
and when necessary. You should avoid using cash before it is banked as much as possible. This
leads to confusing accounting procedures which are difficult to follow, both for the school and
auditors.

There are strict regulations on the use of school bank accounts; you should refer to these
alongside this unit. The school can hold as many accounts as found necessary by the financial
authority or the governing body. It is always advisable for a school to deposit its excess revenue
on fixed deposit accounts which generate higher interest. Each account usually has two or three
authorised signatories, two of whom must sign a cheque before the bank can honour it. It is
common practice that the headteacher or Chairman of the Board of Governors or management
committee in a private school are signatories. These signatories are usually introduced to the
bank by the responsible officer.

The following are some of the bank accounts that can be opened and used by schools:

41. Current accounts (of various types) which have deposit books both for
cash and for cheques. Cheque books are used for withdrawals or transfer
of deposits. It is rare that interest is paid on this kind of account.

42. Savings accounts on which regular interest will be paid. This will vary
according to national and international markets.

43. Fixed deposit accounts, where the customer is only allowed to withdraw
the money after a fixed period.

Withdrawing funds
Funds are withdrawn using a withdrawal form or a cheque book. A typical withdrawal form and
a typical cheque are shown below.

Book-keeping
To facilitate accountability, keep records and to enhance planning and overall financial
performance, the school must keep clear and accurate information of all its financial
transactions. This is called book-keeping.
Activity 4.7

44. List all books of accounts which you should be using in your school.

45. Which of these are used in handling

 the receiving of funds;

 the withdrawing of funds;

 expenditure;

 balances?

Comments
Your list of books should have included those in the list below. In many countries, financial
accounting systems have been computerised. However, the principles and procedures are much
the same. The advantages are that the system will produce at the touch of a few keys, many
financial reports which will assist you in managing your funds.

Vote Books
This is a book in which records of items and amounts of money approved to be expended from
any budget heading, e.g. fuel or educational consumables, are kept. This book should be
consulted before spending is undertaken, as it is a safeguard against overspending in any one
area. You will check if funds are available before agreeing new expenditure. It is also important
to remember any commitments for future months that you may have agreed to but have not
recorded (e.g. future fuel bills). When using a computerised system, the Software will not allow
you to spend money if the funds are not available and will record commitments, thus not
allowing you to overspend.

Vouchers
Before payments are made, vouchers have to be written. A voucher explains the reasons and
authority for the expenditure. A school should have and keep vouchers showing the details of
financial transactions in the school.

Local Purchase Order (LPO)

The LPO is used for identifying and authorising local purchases agreed for in the school. This is
an agreement made between the school and a supplier that the school is ready to purchase the
item at an agreed price. The LPO book should always be kept in a very secure place to avoid
fraudulent activity. However, it is not acceptable to use only one supplier (unless there is no
other).
A system of competitive tendering should be in place especially when purchasing large items or
expensive services. In other words, suppliers will be allowed to submit estimates of their costs
for certain goods or services. Taking into account quality, you will select the one which provides
the best value for money. It is also essential that you or anyone involved in the finances of your
school declare any interest in local businesses that may be school suppliers.

Cash Book
This is the book where all cash transactions are recorded each day.

Green Book / Petty Cash

Money which is paid out for official purposes is recorded in the green book or petty cash book.
Receipts for all purchases must be supplied by the purchaser claiming the money.

Cheque Book
A cheque is a written order directing the bank or bankers to pay money as stated on the
cheque. One should insist on obtaining receipts for any payments made by the school. Where
official receipts are not available, it is advisable to use petty cash vouchers to serve as written
statements supporting the expenditure.

Journal
It is very important for a headteacher to record all financial transactions in the journal. The
journal has to be written every day. This is the first step of the accounting cycle of the school.

Financial Ledgers
These are the books where the headteacher posts the information provided in the journals. The
purpose of ledgers is for recording the financial transactions of a school as they occur. See
details in Unit 5.

Trial Balance
This is the list of all the accounts used by the school. It is used to summarise the effect of all
transactions on the school accounts and show how each account is being used. Trial balances
help headteachers know the balances of each budget heading and whether the school’s records
match those of the bank. They also help check whether budgets are being adhered to,
especially if they are being operated by others in the school. It is the overview of the state of
finances at any given point of time.

Financial Statements
These are the regular statements made by the headteacher to convey information on the
financial position of the school at a particular time. Often they are presented for discussion to
the Ministry of Education or the trustees in a private school or the Board of Governors in a
board school.

Balance Sheet
This is the financial statement produced at the end of the school year which shows the financial
position of the school. The normal practice is that the headteacher of the school submits the
balance sheets to the authority that approved the PTA budget or the board of governors where
there is one.

Income Statement
The income statement summarises the extent to which profits or losses in an account are
occurring. In it, receipts (revenues) and expenditures are compared in order to project the
profits or losses. It is also prepared at the end of the financial year. In a school, needless to say,
losses are unacceptable unless an over-expenditure has been approved by the financial
authority.

Debtors Book
This is a record of the outstanding debts of the school by individuals or companies.
Considerable effort must be made to ensure that these debts are paid.

General Stores Inventory Book

This is a book where records of consumable items, equipment, and tools are kept. The purpose
of this inventory book is to enable the school administration to keep track of school property
and plan for the future supply of such property whenever needed. The items should be clearly
arranged. Provision should be made to record both acquisitions and disposals of items. The
headteacher has to ensure that no items are stolen or sold and that an item which should last
one month does in fact do so.

In this book, acquisitions and disposals resulting from deployments in equipment are posted
from books of inventories. This is often called the asset register and generally records capital
equipment in the school, e.g. computers, TVs, furniture, CD players.

Security of Funds
Care must be taken to ensure that monies received into the school are safely handled and
expended only by authorised persons as officially planned.

Receiving Funds
Reflect for a moment on how you keep your cash within the school and what safety precautions
you have. Are there any financial risks that occur?
Comments
Cash or sensitive books of accounts must be kept under lock and key and, if possible, in a strong
safe to guard against fire, theft, burglary, forgery, and pests.

During Banking
Ensure that you carefully fill in banking forms and retain and file copies of the deposit forms.

Also note:

Bank Statements / Bank Reconciliation

These must be received on a monthly basis and compared with what is in the ledger; these
must agree. In other words, the account of the bank and your own accounts must be the same.

The same and must balance. This is called a bank reconciliation — reconciling your own
accounts with the bank statements. Any discrepancies which you consider to be the fault of the
bank must be reported to the bank manager immediately.

Bank Staff
The school secretary should avoid getting used to one bank staff member doing everything as
this encourages forgery or complicity.

Stop Payments
Once a cheque book is misplaced or has some pages missing, an immediate report should be
made to the bank to stop payment; otherwise, the money can be used fraudulently.

Withdrawal of Funds and Prevention of Forgery

It is essential that you protect yourself and other staff in the school from accusations of fraud.
This is done by following procedures to the letter. It is very easy to ignore certain rules when
operating an account within a busy school. This would be foolhardy. You will be advised,
therefore, to follow the procedures below to avoid this.

Cheques
Ensure that you adhere to the following procedures when writing cheques:

 When you write the figures in words on a cheque, there should be no

space in between the words. Any space left at the end of the word ‘only’
should be covered with one ruled line. Computerised systems will write
the cheques for you on your own pre-designed stationery.

 The amount in figures and all parts of the cheque must be clearly written.
  The following figures should be watched carefully as they can easily be

forged: 9, nine(ty) 8, eight 7, seven(ty) 6, six(ty) 4, four(ty).

 Change of signatories should be communicated to the bank immediately.

 Any alteration on the cheque must be countersigned by both signatories.

However, where the alteration involves altering both the amount in words
and in figures, a fresh cheque should be written and the wrong one
cancelled.

 The counterfoil must be countersigned by both signatories and the

amount on the cheque must agree with the amount on the counterfoil.

 It is important to write the reason for the withdrawal at the back of the
counterfoil.

 The cheque book and all important accounting documents and banking
documents must be kept under lock and key by the responsible officer.

 Under no circumstances must any cheque be signed when blank as this

can be stolen and used in forgery.

 Every time a cheque is written, the remaining cheques should be checked

and refused also be used in their serial order. Watch out for cheques
taken from the back of the book!

 For cash cheques, both the face and the back must be signed by both
signatories and must bear the title of the account on both sides. The
person receiving the cash must have his/her name and identity written by
him/her and signed at the back of the cheque.

 A school cheque should normally require at least two signatories — either

the Headteacher or deputy and the person concerned with school
bookkeeping, in other words, the school secretary.

Using Carbon Paper

All financial papers should be signed directly and not on a carbon copy, as an unscrupulous clerk
can put some blank vouchers in and the officer will sign.

Signing Without Security

No voucher or cheque should be signed without first scrutinising it. Signing when one is too
busy or too tired can encourage lack of security.
Signatures
Signatures should not be so simple that they can easily be forged. Many people keep two
signatures — one for bank purposes and one for other duties.

Saving Accounts
The person depositing should ensure that the balance written in the passbook is accurate, as
sometimes the passbook may be posted when actually the deposit slip has been destroyed and
money taken. Periodically, the balance in the passbook should be compared with that on the
bank’s ledger card. However, this is becoming less necessary as computerised systems in banks
are increasingly being operated.

Summary

We hope that, having worked through this unit, you will be much more familiar with the
procedures of financial management within a school and the responsibilities of the headteacher
to ensure sound financial systems which not only keep track of all funds going in and out of the
school’s account but also enable the headteacher to plan effectively for the best use of those
funds.

Some of the principles are:

 PTA funds are managed within specific guidelines from the Ministry of
Education and a framework which you must be familiar with and follow
meticulously.

 The use of PTA funds must be clearly linked to the School Improvement
Plan (SIP), which drives improvement in the school.

 Headteachers must be able to receive and bank PTA funds properly.

 An accurate projection of spending in the form of a budget must be

drawn up at the beginning of the year.

 Regular monitoring of that budget must take place and necessary

adjustments made.

 All possible care should be taken to ensure the security of funds.

 Headteachers should seek to protect themselves and those for whom

they are responsible from any accusation of malpractice or fraud by
ensuring open and transparent accounting which follows the guidelines.
  Unit 5- Expending & Accounting for PTA Funds

Introduction
The effectiveness and efficiency of the education system largely depend on the quantity and
quality of the teaching and learning materials available. The purchase of such materials is a
skilled task and requires large sums of money. It is vital, therefore, that headteachers know how
to select appropriate materials, manage PTA funds, and ensure value for money. Although, in
Guyana, most materials are provided centrally through the Book Distribution Unit (BDU), there
are many situations when heads and their staff will purchase materials themselves. Proper care
must be taken to ensure that the materials are appropriate and used for the purpose they were
intended.

Individual study time: 4 hours

Learning outcomes
By the end of this unit you should be able to:

 define expenditure

 define finance

 identify the procedure of expending PTA funds

 explain accounting procedures in the management of PTA funds

 display some knowledge of management and controlling of PTA funds

 practise proper accountability procedures for PTA funds

Financial resources and management in schools

This unit does not comment on the various sources of PTA funds nor on the need for proper
budgeting in schools. These have already been discussed in Units 1 and 2. The present unit will
therefore deal with:

 the procedure for expending PTA funds

 the processes of controlling school expenditure

 accountability of PTA funds

Before we do so, remind yourself of what was covered in Units 1–4 by answering the following
briefly:

Activity 5.1
 10. Explain what is meant by preparing and monitoring a budget.

11. How are income and expenditure dealt with in a PTA budget?

12. Differentiate between line item and programme budgets and evaluate
their use in schools.

Comments
The following are useful additions to the answers you may have given:

 Budgeting is a process of preparing estimates or the statement of

expected income and proposed expenditure.

 Budgets need to be monitored throughout the year to ensure that

spending is in line with them and to ensure that the available funds are
not exhausted or used unwisely.

 Income refers to amounts of money made available to the school and

where it comes from.

 Expenditure is the amount that was/will be allocated to be spent on

various functions.

 Programme budgets are benefit-oriented, based on set goals, while line

item budgets are cost-oriented. A programme budget is more likely to
assist you in meeting your educational goals linked to your SIP, whereas a
line item budget will merely keep you informed of the cost of items and
services purchased without reference to school improvement or
effectiveness.

Good financial management is the disbursement of money and other resources which assist the
school in achieving its objectives.

The proper management of PTA funds is an important component of good school management.
Funds constitute the nerve centre of the school. They must therefore be properly dealt with for
the school to achieve its objectives.

Procedure for expending PTA funds

This is referred to as the implementation stage of the budget or budget administration. In
practice, this is the execution of planned school programmes with proper expenditure of funds
as shown in the approved budget. The budget becomes a very important document for
managing the finances of the school. Before beginning to implement it, you need to explore its
structure so that you understand its basic requirements, as well as the opportunities and
threats it may present.
Reflect on your experience as a school leader
At whatever level you lead, consider how the financial regulations and practices you have to
follow assist you in performing your function—or whether they create difficulties for you.

Comments
No doubt you will have concluded that structures and regulations are necessary to enable you
to carry out your task as the finance officer for the school. However, this will sometimes come
with its own frustrations if, for example, your priorities are different from those who provide the
finance, e.g., the Ministry of Education. It could also be that funds provided by the PTA for
computer equipment may not fit in with your own thinking that sports facilities need to be
developed in the school to channel the excess energies of the children.

Regulations
The Ministry of Education issues specific instructions with regard to the spending of and
accounting for funds. For example:
• Funds released by the Ministry of Education for one purpose may not be diverted for another
purpose. If the need for expenditure arises, contrary to the approved budget, written authority
should be sought from the MOE, the governing body, PTA or trustees of a private school.
• Guidance is given on how much you can spend on a particular item.
• It compels you to obtain approved authority for spending on an item.
• All expenditures incurred should be recorded in an acceptable manner according to the
Standard Accounting Practice (SAP).

Consider for a moment any problems which may have arisen recently for you in following the
Ministry of Education’s financial regulations.

Procurement procedures
It is essential that spending at all times provides value for money. It would be irregular practice,
therefore, to purchase items from the same supplier all of the time without checking that the
goods or services supplied are the best value. This does not necessarily always mean the
cheapest as you would wish to take into account quality and the speed and efficiency of
delivery.

Where large items and services are being ordered, they should be put to tender. That is, three
reliable suppliers should be asked to give a price for the same service. A tender board in the
school or governing body would make a decision on the one which best met the needs of the
school. If there is any bidding, a finance committee should be set up to deal with this. In schools
where there is a board of governors or trustees, such matters would often be out of the hands
of the headteacher.
Interested parties are not allowed to supply goods and services to the institution. Anyone
dealing with finance must declare an interest if they have a friend or relative who is a supplier
to the school. One must always protect oneself from this last issue.

Pro-forma invoice
A pro-forma invoice is issued when payment is made before goods are delivered. When one
cannot be obtained, an officer responsible for implementing a task raises a claim in respect of
the task and submits it to the head for approval. At this stage the approved funds can be
released.

Order forms
The purchase of goods, furniture, materials, services or maintenance works must be done by
using an order form which clearly states your requirements and is clear to the supplier.

This will be used in any dispute about the quality or quantity of goods and services received. It
also serves as a record when checking off goods received against the delivery and the delivery
note, as you will only pay for items which have been delivered. Any discrepancy must be noted
and adjustments made when making payment especially if the supplier has not noted these on
the invoice for payment.

Delivery notes
All goods and services should be accompanied by a delivery note which lists the contents of the
package or services received. It is your responsibility to ensure that the delivered goods and the
note match and that any differences are noted. You must ensure that goods and services
ordered are delivered before signing the delivery notes. Ideally, this process should be carried
out by two persons to avoid fraudulent practice. All items of a capital nature (e.g. DVD players,
computers, furniture etc.) should be entered in the school’s asset register, and indelibly marked
with the school name and reference number, before delivery to the department. This is a
further check against theft.

Payment
Payment is normally made by cheque to ensure that the order to pay is legal. It is a written
record that payment has been made. In addition, the supplier must issue you with a receipt,
especially in the rare occurrence of a cash payment. You should check if the payment claimed
was correct; that goods/services paid for were delivered; and that the transaction was properly
recorded. It would be normal practice, especially in a large school with complex financial needs,
that payment via the writing of a cheque would be done by a different person from the one who
approved the order and received the delivery. This further ensures that fraudulent practice
cannot take place.
As stated before, cheques must always bear two signatures, usually out of a group of three or
four possible signatories (those eligible to sign). Choice of these signatories should be made
wisely to ensure collusion in bad practice cannot take place. We cannot express more strongly
that it would be improper for you, your staff or a member of the governing body where there is
one, to sign a blank cheque or for a cheque to bear only the signatures of yourself and the
school secretary.

Financial flexibility
In certain circumstances flexibility is possible. This will depend on the current regulations of the
Ministry of Education. The total amount of money available to the school must be used for the
benefit of the current children in the school for whom it is provided. If, therefore, in your
budget monitoring it becomes clear that you have over budgeted in one area and under
budgeted in another, action must be taken. Furthermore, sometimes long term projects require
careful financial planning and better value is gained by making savings in one year which can be
used alongside the allowances of the following financial year. It can be done in two ways:

Borrowing of funds from one budget heading (vote) to another:

Internal borrowing is justifiable because under-spent accounts can compensate for over-spent
accounts. For example, maintenance of buildings (very expensive items) may lead to virements
(movement of funds) from general or contingency accounts. Internal virements also help to
counteract uncontrolled prices and inflation. However, such adjustment must be done with the
approval of the authority approving the budget.

Carrying balances forward:

It may be possible to carry forward unspent capitation allowances (the grant received based on
the number of your learners on roll) from one year to another for specific approved projects.
Over-spending is carried forward as a deficit to be paid off in the following financial year. This
should be avoided at all costs as it becomes increasingly difficult to cater for those children who
are currently on roll and they must not be disadvantaged. Institutions should only plan their
expenditure outside the limits of one financial year if the carry-over of funds or the deficit has
been approved for a special purpose. There may also be a risk of losing unspent funds or funds
being used for other purposes in the MOE if you are unable to spend your year’s allocation. We
could only conceive that this would happen, in these times of tight budgetary control, if you
have managed your funds badly.

Activity 5.2
Recollect what you have read and thought about in this section of the unit and write answers to
the following:

18. List some of the items on which your school spends money.
 19. Give reasons why you may need to be flexible in financial management.

20. Name two ways of effecting financial flexibility.

21. Explain 'capital' and 'recurrent' expenditure.

22. Group the items you buy for your school into the above categories.

Comments
The expenditure of most schools will be very similar. Larger schools will break up their ordering
into the needs of individual departments, although there is an economy of scale by buying in
bulk. You may have divided your list into areas such as:–
• capital expenditure (furniture, electrical goods etc),
• services (electricians, plumbers, carpenters etc),
• learning resources (goods and materials which will eventually need replacement but have a
reasonable life span),
• consumable items (those which are expendable and have a fixed life span such as cleaning
materials, chalk and exercise books).

All but the first on the list are recurrent expenditure in that they are generally smaller, less
valuable items in themselves and will need to be replaced. Capital goods will also need to be
replaced but there is also the possibility of repair and a longer life span.

Accountability of school finance

Definitions
Accounting: This involves checking to ensure that the order to pay is legal, that payment is
effected and recorded in the general financial account covering all money spent in accordance
with the budget.

Accountability: This refers to budget control. It is the evaluation and guidance of budget
administration activities through careful monitoring throughout the school's financial year.

Budget control: This acts as a device for assuming accountability to prevent misappropriation,
embezzlement and illegal spending of funds. It deals with monetary records which keep account
of how money is spent and therefore helps planning for the future.

Activity 5.3
In view of the definitions of terms above

23. Name some of the finance records you use when accounting for PTA
funds.

24. Give reasons to justify the use of such records.

 25. Describe the accounting principles involved while making financial
records.

Comments
It is important that you would have included the following in your points:
• Financial records are the account of day-to-day financial operations in a normal situation in
school management.
• These records are important because they are the basis for decision-making on any financial
matters.
• There will be clear links between your financial records and the SIP.
• They provide a means of tracking the growth or decline of the school's assets or liabilities.
• They form the basis for determining the value (appreciation or depreciation) of school
property.
• They are guidelines to indicate the financial position of the school.

Budgetary records
They are systematic ways of accounting for budget implementation by keeping basic records.
The following documents are essential in a school for the effective handling of funds:

RECEIPT BOOKS
All payments and receipts should be presented with the proper evidence. You should have
receipt books where the pages are numbered to enable the detection of lost receipts. Receipts
should be issued at least in duplicate for money received, for example, payment for a school
trip. They must also be receipt for money paid out. The receipt is the first evidence of cash
spent or received.

THE VOUCHER
This can be in book form or in loose sheets which can be filed. It is a document detailing the
following:–
• purpose of any payment made
• the date of the payment
• the amount
• the budget heading or vote or item within which the expense is being incurred
• the authority that has sanctioned the payment. An example of a payment voucher is given
below.

Note that:

26. The voucher has to be written and signed first before money is released.

27. It must bear a number that can be quoted.

 28. Receipts obtained after purchases must be attached to the voucher.

29. This document informs one as to how public money has been used.

THE CASH BOOK

This is a book into which information is entered on a daily basis, giving details of money
received, such as parental contributions and payments; and money paid out, such as for
purchasing learning resources. This book has to be balanced daily so that cash received that day
must be balanced against cash spent on the same day. That way, you are immediately aware of
the day's collections and spending.
Cheques received or paid out all form part of the day's income and expenditure respectively.

A LOG BOOK OR JOURNAL

As financial controller you should open a log book in which all financial transactions are
recorded each day. This book can be referred to as a journal, that is, a record of financial
transactions done on a daily basis.

FINANCIAL LEDGERS
For records of account to be meaningful, information from the journal should be posted in
ledgers. These account books record the income and money spent by the school on particular
days. The record emphasises the items in the income and expenditure sides and the net balance
for that date.

Computer accounting software

In schools in many countries, much of the private sector in Guyana and in central ministries,
accounts are kept by the use of computer software. However, at the time of writing, this has not
reached the majority of schools in the country. It will, though, become an inevitable progression
in this country as computers become available and accounts become more complex.

The principles of computer accounting are much the same as those on the paper equivalent but
the software makes the calculations for you and adds additional levels of security. Where
computers are used, care must be taken to make regular back-ups of work and to print records
on paper on a regular basis to ensure data is not lost.

The following are the types of ledger operated in schools

The General Ledger:

This is a book that contains all major items of the budget, for example food, lighting, stationery.
A few pages are allocated to each budget item and on these pages are recorded the daily
expenses made under the particular item. An example is given below.
Note that all information in receipt books, vouchers and cash books have ended up in the
ledger. It offers a clear picture as to which items are frequently purchased.

The Fees Ledger (private schools only):

This ledger records all information on each student's fees payment, that is, date, amount, total
paid to date and balance outstanding, or carried forward. At a glance it is easy to assess the
extent of fee collection, to obtain a list of fees defaulters and to know accurately how much fee
money is still outstanding. The information has to be recorded as soon as the fees are paid in
order to avoid problems caused by the loss or misplacement of receipts and receipt books or
accumulation of work.

Such a ledger is often used where there are subscriptions to be paid to the PTA.

Credit Ledger:
This is a book that contains the list of the school's debtors, the amount owed to the school by
each, dates when settlement was made and the outstanding amount still to be paid. It is
necessary to keep checking this book to ensure that your school has recovered what is due to it.
You ensure this by keeping the entries in the book up-to-date.

Vote Book:
This is a book which essentially shows how much is left of the vote for an item. It records the
total amount voted for the item as per the budget, the daily purchases made under that item
and the balance left after these purchases. It makes it easy for you to see whether you are
overspending or not and is a particularly useful check on high spending. It is therefore essential
that you maintain a vote book. You will find an example below.

The Green Book:

This is a book that lists all those who have been given money for purchasing, the amount given
and all the details related to it.

Asset Registers:
It is essential that you keep track of capital items and learning materials. This is done by
maintaining an asset register (sometimes known as an inventory book). You will enter details of
items purchased, date purchased, where they are stored and who is responsible for them.
Equipment like DVD players, computers, printers etc. are recorded in this book. You would also
record furniture, gardening implements, cookers etc. The purpose of these asset registers is to
enable the school management to keep track of school property, to hold named persons
responsible for its safety and to make replacements accordingly. Regular checks (at least
annually) must be made on random items in the asset register and the register signed. This task
is often delegated to heads of departments and level heads but overall control must be
maintained by a member of the Senior Leadership Team.

Items may be grouped together, such as sets of textbooks and DVDs, cricket bats and balls and
other learning and sports materials. However, checks must be made to minimise theft and loss.
When an item is deemed no longer serviceable, it must be inspected and officially deleted from
the register with notes and a signature. This should preferably be done by two persons.

Consumable items are much more difficult to keep track of – bales of toilet tissue, chalk, pencils,
exercise books, cleaning materials. Although a certain amount of trust must be placed in the
hands of those responsible, such items often disappear especially when they have a use in the
home. Checks should be made on excessive use and time spans given to users before new
materials may be ordered. For example, a teacher is given an allocation of materials which must
last until more is ordered the following term.

Consider for a moment whether the procedures you use in your own school differ from those
described here. If they do, how are they different?

Basic accounting processes

Once you know how to keep the account books properly, you can turn your attention to thinking
about how to analyse the financial data now available. To do this, you should know the basic
accounting processes. These are:

• preparation of financial statements such as: income statements, balance sheets, reconciliation
statements and flow of funds statements, etc.
• analysis and preparation of financial statements and drawing corresponding conclusions
• preparation of comprehensive financial reports
• rendering of financial advice on decisions to be made in the light of the conclusions reached.

In practice, to be able to perform the above functions, as the accounting officer of the school,
your duty is to initiate financial plans for the Ministry of Education, Department of Education,
RDC or PTA to adopt, dependant on the purpose of the finance. You are at the centre of the
school's financial plan and therefore you need to help those with whom you work to formulate
proper plans. If that is achieved, then your job of mobilising funds becomes relatively easy.
Remember, the Ministry or PTA will not contribute more money to the school if the plans are
not well defined.

Note that knowledge of accounting will assist you in the day-to-day management of the funds of
the school. It is important so that you have some insight into the financial planning and
organisation of your school's finances.

Trial Balance
We first look at the Trial Balance which is an important tool in accounting and gives a list of all
the accounts used by the school at the appropriate value and time. Its main purpose is to
enable you to know precisely the balance in each account at, say, fortnightly or weekly intervals.
This enables you to know at any point of the financial year which items are taking up most of
the school’s funds. It helps you to put a brake on if you are spending too fast on one item.

The School Balance Sheet

This is the most important financial document for the school. It is a financial statement of the
school at a given date. It must reveal all the assets and liabilities of the school at a particular
time, for instance, at the end of an accounting period or the financial year. Before you proceed,
ensure that three of the accounting terms used in the Balance Sheet are clear.

Consider for a moment what you understand by the terms financial

statements, assets and liabilities.

The importance of a school's Balance Sheet lies in the revelation of all the assets and liabilities
of the school at the date in question. The terms financial
statements, assets and liabilities should therefore be understood in the context of the Balance
Sheet to mean the following:

Financial statements: These show at a glance the amount spent on various items. They convey
the financial status of the school at a particular time.

Assets:
These are the properties or belongings of the school which appear in the Balance Sheet. They
may be classified as long or short-term assets, namely fixed or current assets. Assets can be in
the form of money or property. In terms of the Balance Sheet it normally refers to money.
However, when making a valuation of the school, say for insurance purposes, property is taken
into account.
Liabilities:
These are the debts or claims of outsiders against the belongings of the school as at the date
when the Balance Sheet is drawn up. They too can be long term or short term in nature, namely
fixed or current liabilities. For example, a fuel or telephone bill is an example of a liability. The
goods or services have been received but not yet paid for. Such liabilities should be recorded as
commitments when drawing up the Balance Sheet.

You may wish to make a quarterly Balance Sheet. Some heads make it monthly. However, an
annual one is essential. Annual accounts and Balance Sheets have to be prepared and a copy
sent to the MOE at the end of every financial year.

Balance Sheets should be the main financial concern of a new headteacher. It is essential that
he/she knows the financial position of the school and has complete control over it.

If you look at a school Balance Sheet, you should be able to see:

• the total value of fixed assets
• the total value of current assets
• the sources of funds
• the debts to which you would give immediate attention
• debts which require payment – but not in the near future
• the total value of assets possessed by the school and how much of this is claimed by
outsiders.

Note that:
• Changes in your financial plan will cause changes in the school Balance Sheet.
• Such changes should be recorded systematically in the record books already referred to.
• The Balance Sheet requires the proper keeping of all records of account such as receipts,
vouchers, inventories, ledgers, etc.

Avoiding fraudulent practice

Even if you trust yourself to keep accounts which are above reproach, you must be mindful of
the fact that not all others will do the same. Especially in times of poor remuneration,
temptation to commit fraud, to steal or behave in a corrupt manner is rife. You must set up
checks and balances that avoid this at all costs.

Never allow only one person, especially yourself, to deal with all aspects of the financial
processes – tendering, ordering, receiving goods and payment. There must always be others in
the process. Use the available staff such as the school secretary, SMs, HODs and level heads.
This is a safer practice for you. However, it is more difficult in small schools. Perhaps a parent or
a teacher can check on a regular basis what you are doing with the school accounts. The DEO
could be involved.
Activity 5.4
You can now look back at the whole of Unit 5. Recollect what you have learnt and answer the
following questions:

30. Explain the procedures for expending PTA funds.

31. Show, using specific examples, how failure in conforming to book-keeping

and accounting functions may lead to the mismanagement of PTA funds.

32. How can you employ the basic accounting concepts in maintaining
financial records in the school?

Summary
In this unit you have learnt about:
• expending and accounting for school money
• the procedure for expending PTA funds
• the financial regulations of the Ministry of Education
• the need to exercise flexibility in the management of funds
• the importance of maintaining proper financial records
• the operation of proper and regular school balance sheets
• the need for a good financial plan.

 Unit 6- Auditing School Account Books

Introduction
The earlier units covered five major areas within the general subject of management of PTA
funds. These included the identification of sources of PTA funds, concepts and skills in budgeting
for school income and expenditure, the mobilisation of financial resources, the management
and control of school expenditure and good practices in school book keeping.

In this unit, we will analyse the objectives and types of school accounts auditing and discuss the
stages in the process involved.

Individual study time: 5 hours

Learning outcomes
By the end of this unit you should be able to:
• explain the reasons and purposes for auditing accounts
• describe your expectations of the school accounts auditor
• list the types of school auditing, the records and books of accounts used for audit purposes
• respond to audit queries
• read an audit report.

Reasons and purposes of auditing school accounts

Auditing school accounts is the final stage in the process of managing PTA funds. At the end of
each financial year or budget period, the headteacher has a statutory responsibility to prepare
and present to the financial authority (MOE or Governing Body) an audited financial report.

This should give a true and fair view of the financial position of the school.

Activity 6.1
Acquire and study the relevant financial regulations, principles and practices of the Ministry of
Education.

Comments
Financial accountability is one of the major responsibilities of the headteacher in conjunction
with the governors / trustees where they exist. Government statutes include sections outlining
the financial principles and practices which headteachers must follow to achieve accountability
for the funds they collect and receive to manage their schools.

The Ministry of Education also issues financial regulations from time to time whereby audited
accounts of a given financial period must be submitted to facilitate financial decisions on, for
example, allocation of grants, issuing of loans, etc.

The main objective of auditing is to enable the auditor to form an opinion on the accuracy of
the financial statements prepared by the school for a given period. Auditing also helps the
headteacher to improve the school's accounting system. The secondary objective of auditing is
to detect or prevent errors. Auditing therefore enhances the headteacher’s skills in financial
management and evaluates his/her performance.

Activity 6.2
Without looking at Units 3–5, write simple definitions of the following common terms in
accounting:
Accounts Journal
Account Books
Financial Statement
Bank Reconciliation
Receipt Book
Balance Sheet
Store Ledger
Budget
Voucher
Cash Book
Ledger
Cheque
Vote Book
Invoice
Asset Register

Now return to the appropriate sections and check on your answers.

Auditing is a process whereby all accounts of the school are examined and evaluated in detail by
a competent auditor in order to determine and report on the financial standing of the school for
the period under review. A school audit of financial statements also establishes the credibility of
the accounting records as specified in the statutory accounting principles and practices. To
understand the audit process, you should know the common books in accounts which are the
key records used in auditing.

Reflect for a while on why auditing of school accounts is necessary and consider which accounts
books and records are relevant for audit purposes.

The auditor officially examines and verifies the books of accounts and writes a final report
which gives a true and fair view of the financial status of the school. Once the books of accounts
have been examined and verified, the findings reflect the fact that the financial transactions
were made and recorded according to accepted principles and practices.

Qualified auditors are the only ones authorised to examine and verify the books of accounts of
any formal organisation. They are skilled in the techniques of auditing and they are governed by
international professional ethics.

Expectations of the school accounts auditor

A headteacher has a statutory responsibility to prepare and submit financial statements which
give a true and fair view of the financial standing of the school. As you have already learnt, that
can only be achieved through auditing the school accounts.

In this section you will learn about:

• the professional and personal qualifications of an auditor
• the process involved in engaging a school accounts auditor
• the relationship between an auditor and the school
• the information required for audit purposes.
Activity 6.3
What do you understand by the phrase 'a true and fair view' of the financial standing of the
school? Give examples.

In Guyana, auditing of school finances is carried out by the audit sections of the Ministry of
Education and Regional Democratic Councils. Auditing of school accounts must be done with
care and skill. The auditor must be professionally trained and qualified with an independent
mental attitude about the school. He/she must have reputable and known personal qualities
which would support his/her opinion about the school financial statements.

If you are asked to engage an auditor, say in a board school, the contract must state clearly the
tasks expected, the terms of payment and the date when the report must be completed and
submitted to the school or the board where there is one. The auditor should not have any
vested interest in the school.

After signing the contract, the headteacher must submit to the auditor all accounts, records and
books to facilitate his/her work. In addition, he/she should include all relevant evidence to
enable the auditor to draw conclusions on the state of the school accounts. He/she should also
be ready to give oral evidence and to allow any inspection of assets which the auditor may
consider necessary. A thorough knowledge of the school's financial environment, for example,
regulations, principles and practices, mechanisms of control and the school budget, on the part
of the headteacher will greatly enhance the work of the auditor. Auditors are in a highly
privileged position and have statutory rights to demand such information and explanations as
they consider necessary for the purpose of auditing.

Activity 6.4
Do some additional research on auditing practices by doing one or more of the following:–
• Pay a visit to one of the auditing firms or audit section of the Ministry of Education and find
out about the routine functions of the staff in the section or firm.
• Study the general procedures used in auditing a small company's accounts. This will give you
some general knowledge on the subject of auditing.
• Research the topic of auditing company and school accounts on the internet.
• Study a leaflet issued by an auditing firm.
• Discuss the matter with your headteacher or District Education Officer (if you are a Head).

Types of auditing
There are two types of auditing.
Internal auditing
Internal auditing is usually a management activity and is a service intended to ensure regular
and frequent checking on a school's financial transactions and records. An internal auditor is
normally an employee of the school, for example a deputy headteacher, whose main role is to
supervise the accounts staff to ensure efficiency in the day-to-day management of the school
finances. It also serves to check whether all financial transactions have taken place according to
budget, to set procedures, and following management policies. The objectives of internal
auditing may differ from school to school, but the general aim is to promote efficiency in the
school's financial control and management.

Some schools are small and internal auditing may be more difficult due to lack of personnel. In
any case, the headteacher is directly involved in authorising and approving expenses and signing
cheques and therefore it is essential that someone oversees this process.

External auditing
This gives an independent report on the financial performance of the school in accordance with
the terms of the contract agreed with the school. The focus of external auditing is on
establishing the truth and fairness of the accounts. It gives added credibility to unaudited
financial statements and records of the school's financial transactions and confirms their
compliance to the statutes.

Consider the nature of your own financial transactions in your current sphere of responsibility
and reflect on the advantages and disadvantages of an official audit.

Comments
It has been noted already that internal auditing is to ensure regular and frequent checking of
the financial transactions of the school. A schedule for internal auditing should indicate and
outline the objectives, the procedures to be followed, the frequency and the methods of
communicating or reporting the information to management.

An internal audit report should point out areas of weakness and strength in the accounts
records and books and draw the attention of management to any irregularities in the
transactions. Information from internal auditing must be reliable, complete and available on call
to enable the headteacher and the board to make quick decisions where necessary.

The functions of internal auditing and external auditing may seem to overlap but it should be
noted that the former is a management measure to ensure daily efficiency in managing PTA
funds, while the latter evaluates the adherence to the accepted principles, practices and
statutory provisions of management in financial transactions. However, internal auditing, if
properly done, will cut down on the cost of external auditing and greatly enhance the process.

Records and books of accounts for external auditing

The headteacher depends on financial statements as a basis for financial decision making.
Accounts and records are therefore very significant to the auditor who reviews the school’s
systems of accounting to give his/her professional opinion about the state of the accounts of
the school.

Although many auditing procedures are designed to test accuracy in accounting and to reveal
manipulations which would conceal the true financial situation, the main aim in applying such
procedures is to prove that the accounts are acceptable and to give a true and fair view of the
school's financial standing, not to find faults.

The auditor's report is reached by a process of examining and evaluating all documents or
evidence pertaining to the financial transactions of the school. In a school, books of accounts
are usually written and kept by the headteacher or the school Secretary.

A primary record in the school's financial statements is the general ledger. This consists of
figures and records from various journals which give the daily records of the financial
transactions in the school.

A cash book, where the daily cash income and expenditure is recorded, forms one of the
primary sources of evidence that the auditor examines in the process of auditing. It states the
date, the cash received or spent, a full description of what is bought and the actual cost of the
items bought, details of the payment voucher and number of the cheque. A petty cash voucher
may also be used along with the cash book. Almost all assets, liabilities, income and expenses
clear through the cash account and the auditors will spend time carefully examining the cash
book to establish the validity and reliability of other financial statements.

Payment vouchers, purchase invoices, receipts books, asset registers and cheque books are
primary documents which must be submitted to the auditor for verification, inspection and
evaluation, before a report is written and an opinion is given on the school's accounts.

Bank reconciliations and bank statements, which compare the balance in the bank with that
shown in the school's records, can reveal bookkeeping errors either by the bank or by the
school Secretary as well as unauthorised withdrawals. These should be submitted along with
other documents for auditing.

Activity 6.5
 1. Study a sample of a cash book and list all the information that is found or
recorded in it.

2. Give reasons for keeping a petty cash voucher book in your school.

3. Read the case study below and trace the steps to be taken to record all
the transactions. Explain why each step is important.

Case study
Mr Mercurius, Head of the Science Department in EBB Multilateral School, submitted a
requisition to the headteacher to buy chemicals for the end-of-term examinations. He contacted
three suppliers in Georgetown and New Amsterdam to ascertain the best price and made the
order on the school’s local purchase order form No. 7865. He obtained a supplier's invoice No.
0658 indicating the quantity of the items:

4. 10 tins of sulphur costing $5,000 each

5. 10 tins of potassium costing $7,000 each.

The invoice was submitted to the school Accounts Clerk who checked vote No. 031 on
educational materials and has confirmed that there is a balance of $200,000 which is sufficient
to cover the cost of the chemicals.

The suppliers delivered the chemicals in the quantities indicated on the order. The materials
were accompanied with a supplier's invoice dated 29th February, indicating the details of the
materials and the cost of each item.

Mr Ali, the storekeeper, and Mr Mercurius checked and found the materials in order as per the
local purchase order, the delivery note and the supplier's invoice. The chemicals bought were
recorded in the Science Store Ledger on folio No. S/10/009.

All invoices were received and recorded by the accounts clerk in the journal or ledger. The
headteacher authorised payment for the chemicals and payment instructions were given to the
school Secretary. A payment voucher No. 5465 dated 31st March was made out and the
headteacher endorsed it. The voucher gave quantities of what had been purchased and gave
the total cost as $120,000 (one hundred and twenty thousand dollars) only. A cheque No. 02568
for that amount was written on 6th April, payable to ACPY, the suppliers. A cash receipt No. 136
dated 9th April was issued by the suppliers on 13th April.

Comments
You have already learnt that a cash book is a very important book of accounts because all cash
income and expenditure go through it. The auditor therefore spends quite a lot of time and care
in examining the cash book. Wrong or inadequate entries, plus omissions made in a cash book,
will greatly affect the auditor's opinion on the state of the school books.

You should also note that before any entries are made in the cash book, all other documentary
evidence of the transactions like vouchers, invoices, and receipts must be checked and certified
to ensure that all procedures and regulations were followed and no errors were made.

A thorough knowledge of how a cash book is written will enhance your internal financial control
and it will enable you to understand and appreciate the purpose of auditing school accounts.

Reading an audit report

Activity 6.6
Try to obtain a recent audit report: from your school or any other small organisation. There are
many examples on the internet if you cannot find one.

6. List the main features in its format (schedule).

7. Analyse its contents briefly.

8. Point out its weaknesses, if any.

An audit report should be clear, constructive and concise. The auditor will point out in writing to
the authorities:

• any weaknesses/strengths in the accounting system of the school

• deficiencies in the financial control system
• inadequacies in the financial policies and practices
• non-compliance with accounting standards and legislation.

The report also explains any implications of the above points and gives advice or
recommendations for improvement. The auditor should give in clear terms his/her professional
opinion on the state of the accounts. One of the main schedules in an audited report is the
balance sheet. This is a summary statement of all assets and liabilities of the school by the date
of the report in reference.

However, an audit report should also have the following components:

• a title, that is, Auditors Report
• a statement as to whom addressed, for example, The School Senior Leadership Team, The
Board of Governors, The Regional Education Department or The Ministry of Education
• a description of the scope of the audit, showing the books examined and the tasks executed
by the auditor according to the contract and audit standards
• the auditor's opinion on the state of the school accounts
• the auditor's address
• the date of the report.

The auditor's opinion can be unqualified, qualified, or adverse, depending on the state of the
books of accounts and any other evidence the auditor may have examined and evaluated.

An unqualified opinion is positive and satisfactory, and a qualified opinion indicates that the
auditor has some reservations about the state of the school's accounts. An adverse
opinion might, for example, be that regulations have not been followed, that security of cash is
lax, that receipts have not been issued, or perhaps that the cash book has only been completed
once a week. Such issues will all impact on the auditor’s opinion of the state of financial
management in the school. Generally, the report will list recommendations for improvement
which the headteacher must put in place before the next report.

Responding to audit queries

If you have already been involved in the auditing of your school accounts, consider what queries
the auditors may have raised about your books of accounts and about any other submissions
you made.

You have already learnt that the primary objective of an audit is to enable the auditor to
determine the accuracy of the school's financial accounts. You have also learnt that the auditor
gives his/her opinion on whether or not the accounts give a true and fair view of the financial
standing of the school.

A secondary objective of the audit is to detect errors in the accounts and advise the
headteacher or the board on how to improve the book-keeping standards.

Audit queries
Audit queries can be raised where errors have been made in the records. These can be due to a
wrong entry or an omission of some vital information. When an error is located by the auditor,
he/she raises a query to the headteacher seeking an explanation. For example, he/she may raise
a query where the trial balance does not agree with the statements of accounts.

In response, the headteacher can take any of the following steps:

• submit further information to the auditor on the queried items
• let the auditor inspect the assets and stores
• go over the trial balance with the auditor checking:
✓ the totals
✓ lists of debtors and creditors
✓ transfer or entry of all the accounts books to the trial balance
✓ all figures in the trial balance.
• go over the cash book and all other financial documents and statements to locate errors,
omissions or any evidence of fraudulent payments that may have been made in the
transactions.
• consider making adjustments by reviewing assets against liabilities.
• consider writing off bad debts.

A trial balance summarises the effect of all financial transactions on the school accounts and it
helps you and the auditor to get a preliminary view of the accounts before a balance sheet is
written and an audit report is finalised.

Where you, as the school's financial manager, fail to answer all the queries satisfactorily, the
auditor will present what is termed as a qualified audit report. This is a report where the
auditor has been unable to obtain all the information and explanation he or she considers
necessary for the audit.

Summary
The questions below give you a brief summary of the various stages involved in the auditing of
school financial statements. These correspond generally with the topics which you have covered
in this unit. The summary diagram is also based on questions which you may pose to yourself to
make a checklist of what you have learnt from the unit.

THE HEADTEACHER AS FINANCIAL MANAGER

9. Do I have the relevant financial statements for auditing?

• Always keep accounts books
• Follow statutes and financial regulations strictly

10. What accounts books do I submit for auditing?

• Budget statements
• Book of accounts
• All financial statements

11. What will the auditor expect?

• Full knowledge of financial regulations and accounting procedures
• Full submission of accounts books
• Co-operation

12. What type of audit will the auditor present?

• An unqualified report, a qualified report or an adverse report

13. What are the auditor’s recommendations?

• Will give a “true and fair view”
 • Need for observing accounting principles and practices in future
• Need for better internal mechanisms to ensure efficiency

14. What queries are raised and how should I respond?

• Cash on accounts does not balance with cash at bank
• Carry out a check of assets, bank statements and cash books
• Discuss with auditors the balance sheet and whole report

15. What action can I or the board, if there is one, take?

• Correct the accounts
• Send copies to authorities
• Keep copy of report