Nip fraud in the bud

What strategies are in place to prevent or limit the fraudulent use of school monies?

Although one would like to think of schools as places of integrity and trust, they are not immune to the risk of theft and fraud. What can schools do to prevent the loss or fraudulent use of school funds?

School finance is primarily a school governing body (SGB) responsibility. It is up to the SGB to establish a system of sound policies that clearly sets out who is responsible for handling school money and how financial transactions are managed and recorded.

The SGB must establish a monitoring system to ensure that those responsible for handling the school’s finances adhere strictly to the policies and procedures that are in place.

An example of a policy for handling school money:

  • Receipts must be issued for all money collected when it is received. The receipt must include the following information: the date, the name of the person who paid the money; the name of the person who received the money; and a description of the goods or services for which the money was paid, for example school fees.
  • All money received must be handed to the school business manager not later than the following school day, but preferably on the day on which it was received. The school business manager must issue a receipt for any money received from a member of staff and must confirm that the amount received reconciles with the amount receipted by the teacher.
  • No staff members may use cash received to reimburse individuals or themselves for costs incurred. For example, cash paid for tickets for a concert may not be used to refund the tuck-shop for the cost of goods purchased for sale at the concert.
  • For events such as concerts, numbered tickets should be issued and the cash for ticket sales must be reconciled with the number of tickets sold.
  • Claims for expenses must be submitted to the school business manager on a claims requisition form, obtainable from the school business manager.

Documentary evidence of expenses (till slips and so on) must be attached to the claims requisition form. Refunds for small amounts will be paid in cash. Larger refunds will be paid either by cheque or by direct deposit into the staff member’s bank account.

Teachers will be required to sign an acknowledgement slip as confirmation that the money or cheque was received by them.
Policies of this kind help to limit the likelihood of fraud, provided they are strictly adhered to.

The following checklist of internal controls, based on the publication Keeping Your Balance, provides some guidelines for those responsible for monitoring the management of the school’s finances:

  • Involvement of at least two people in the daily management of the school’s finances (to check each other’s work).
  • Internal checks: one person checks the work of another to see that it is accurate and correct.
  • Separation of duties: key tasks are assigned to different members of staff, for example the person responsible for the collection and counting of cash is not the same person responsible for the banking of that cash.
  • Clear, readable descriptions of how systems work and who is responsible for which tasks — and staff adherence to these systems.
  • System of authorisations: each transaction is approved as correct and permitted in terms of agreed procedures.
  • Audit trail: a physical record of all stages of any transaction. This means that records need to be clear and well organised; financial records held on computer are backed up daily and weekly and the backups are secured separately from the computer.
  • No alteration of records using correcting fluids or other chemicals or mechanical means.
  • Proper authorisation of any payments made to staff.
  • A>pproval by the SGB of all changes to the conditions of service of staff, including salary reviews.
  • Regular banking of income.
  • Reconciliation of amounts banked with those recorded in cash-books and supported by receipts.
  • Checking of bank records to ensure income is secure.

    Keeping Your Balances: Standards for Financial Management In Schools, jointly produced by the Audit Commission and the Office for Standards in Education, Crown Â

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