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Appendix 4: Update on previous recommendations and issues raised

Results of the 2017 school audits

Our letter to the Secretary for Education on the results of the 2016 school audits included several recommendations. In this appendix, we provide an update on our recommendations. We comment further on some of the recommendations in the report.

RecommendationUpdate
We recommend that the Ministry provide further guidance and training to schools on preparing a statement of cash flows. The Ministry told us that it would update its guidance and provide further training to schools.
We would appreciate an update on how this is progressing.
For the 2017 school audits, we recommend that the Ministry:
  • make resources available to meet the set time frames for school payroll reporting, including enough time for the Ministry's internal quality assurance processes;
  • ensure that it has the capability and capacity to prepare the school payroll reports for distribution to the schools and auditors within those time frames; and
  • continue to encourage schools to prepare draft financial statements when they receive the SAAR, and provide those draft financial statements to the auditor.
The lessons learnt from the 2016 school payroll work were incorporated into the 2017 process. As noted in the body of the report, the audit approach to the school payroll work was altered for the 2017 audits, which allowed the payroll reports to be provided to schools earlier (by 5 February 2018). However, some delays were experienced in the testing of the data analytics exceptions.
We are working closely with the Ministry to improve this area for the 2018 audits. Further recommendations have been made in the report.
We recommend that the Ministry:
  • provide guidance to schools on accounting for "other activities" that they receive funding for; and
  • consider whether the funding schools receive for Communities of Learning should be disclosed separately in school financial statements.
The Ministry is still considering the financial reporting requirements for the 40 Resource Teacher: Learning & Behaviour clusters.
We have repeated our recommendations in this report.
We recommend that the Ministry provide guidance to schools on preparing their Annual Report, including:
  • what the Annual Report should contain and how it should be presented;
  • that schools should provide the version of the Annual Report they intend to publish to their auditor before the audit is completed; and
  • how they can publish the Annual Report on their website.
The Ministry has provided a range of guidance on its website about publishing school Annual Reports, and also in the Schools Bulletin. The Ministry has also run a series of workshops to assists schools and service providers with using the KiwiPark model. As noted in the report, some schools were not aware of the new requirements.
We have recommended that the Ministry consider how it ensures that schools are meeting the requirement to report publicly to their communities.
We recommend that the Ministry:
  • improve its guidance to schools on giving gifts; and
  • provide schools with more guidance on employment matters, including how to settle employment disputes.
The Ministry told us it would update its guidance in this area. The Ministry provided a reminder to schools about gifting in its School Bulletin (30 July 2018).
The Ministry told us that The New Zealand School Trustees Association (NZSTA) has made a number of resources available to schools to assist with managing employment matters. NZSTA's Advisory and Support Centre gives advice on gift giving.
We recommend that the Ministry:
  • improve its guidance on what good controls look like;
  • continue to encourage schools to have fraud policies; and
  • encourage schools to report suspected fraud.
The Ministry told us that it would update guidance on internal controls in its Financial Information for Schools Handbook (FISH) in 2018, and ask NZSTA to ensure that boards have sound employment processes in place, including reference checks for staff.
We would appreciate an update on how this is progressing.
We recommend that the Ministry:
  • provide guidance to schools to help them decide about leasing rather than buying equipment and how to ensure that they get value for money if they decide to lease, including how to access All-of-Government contracts; and
  • consider the adequacy of the guidance available to schools on schools managing laptop schemes for their students, including through a third party.
The Ministry told us that it is promoting All-of-Government contracts to schools.
We have continued to see issues in this area and, as noted in the report, will be asking our auditors to collect some information during the 2018 audits. We have repeated our recommendations.
We recommend that the Ministry consider providing guidance about conflicts of interests, in consultation with the Association of State Integrated Schools. The Ministry has been working with schools that have been identified as having issues in this area. Guidance on conflicts of interest was included in the Ministry's School Bulletin (30 July 2018).
We have not identified similar issues during our 2017 audits.
We recommend that the Ministry provide further practical guidance on calculating cyclical maintenance provisions and put the template for calculating the provision back on the Ministry's website. The Ministry has updated its guidance in the Kiwi Park model financial statements and provided schools with a template. However, we continue to see issues with the quality of school property plans. We have referred to this in the report and have made some further recommendations.
We recommend that the Ministry:
  • update its guidance on the financial reporting requirements for board contributions to Ministry capital works projects; and
  • consider including the financial reporting requirements as part of the project agreement between the board and the Ministry.
Guidance on the financial reporting requirements for board contributions to Ministry capital works projects was updated in FISH in October 2017. FISH was again updated in 2018 to give guidance on how to account for the transfer of assets from schools to the Ministry, and schools making significant cash contributions to Ministry assets (where the school does not retain an ownership interest in the asset).
We recommend that the Ministry provide updated guidance on financial reporting for closed and merging schools for Residual Managers. The Ministry has provided us with a draft of its updated school closure desk file for Residual Managers. We have been told that guidance on voluntary closures has been published and guidance on mergers will be available in December 2018.
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CoverResults of the 2017 school audits