The DfES has produced an extensive toolkit to support financial management in schools.

It builds on the earlier work done by the Audit Commission when it produced the series of booklets starting with Keeping Your Balance. The expanded toolkit covers strategic management and all financial processes; the Financial Management Standard is a brief (one page) summary of good practice. 

As part of the consultation on changes to the funding system undertaken last year, the question was posed, ‘Should meeting the Standard be mandatory?’ Schools that had accessed the toolkit and found it useful were generally happy with external, mandatory accreditation. Schools that had missed the toolkit in all the welter of initiatives were more ambiguous in their responses. The outcome was a somewhat vague regulation that falls short of mandatory accreditation. By March 2007, the chief finance officer in a local authority has to be satisfied that all their secondary schools meet the Standard. There will be further consultation as to when primary and special schools will also be included.

It is worth leaving the problem of accreditation to later and concentrating first on the use of the toolkit and the school self evaluation; it is meeting the Standard that is important, not the certificate that goes with it. The process and the support available are just as relevant to primary and special schools as secondary schools.

The Standard for Financial Management in schools
The easiest way to use the toolkit is on-line. Go to and select Financial Benchmarking from the right hand menu on the home page. The next screen will give you a direct link to Financial Management Standard & Toolkit: Self-evaluation Tool. It is very easy for a school to download any part of the toolkit to provide printed copies for staff and governors but would be very onerous to print it all. It is easier to use the website and print anything that is relevant for your school. There is a CD-ROM version available (details below) but it is not as easy to navigate as the site.

The Standard: a one page summary of good practice Start by looking at the Standard itself because it will give you an idea of the scope of activities covered. At times all the supporting material can be quite wordy – but persevere and cut through all the verbiage; underneath it is good sensible stuff! The Standard is in five sections:

  • Leadership and Governance
  • People Management
  • Policy and Strategy
  • Partnership and Resources
  • Processes

Section 5 on Processes is the largest and covers all the essential good practices for keeping proper accounts of public money and obtaining value for money (see panel above). The remaining four sections cover how the school plans and manages its resources. Are the governors able to provide strategic leadership and effective monitoring? Is everyone clear about their roles and responsibilities and do they have the appropriate skills and professional development? Are resources managed well and do they meet the planned needs of the school? Is the school working effectively with partners, particularly the local authority, to ensure good value for money?

The Guide to achieving the Financial Management Standard and the Toolkit Now look at the Guide to achieving the Financial Management Standard. The Guide is the core document; it explains what is required to meet the Standard and has clear links to the different levels of guidance available in the toolkit. It is laid out with three sections to each page, as in the following extract:

Start by considering the different ways in which you might want to use some of the vast array of material collected together on this site. Two possible scenarios to illustrate how it could be used can be found in the panels on this page.

Self Assessment Tool Once you have explored the toolkit and accessed appropriate resources, it is time to review how your school is doing. The self assessment tool covers each element of the Standard and indicates the kind of evidence you should be looking for. Initially it will probably be helpful for those involved in any aspect of the financial management (bursar, governors, senior staff) to complete the section relevant to their role and then work together as a group to ensure everyone agrees with the final evaluation.

The first completion of the self evaluation exercise looks daunting but the advantage of subsequent school self assessments is that they do not have to be done as a one-off exercise; they can be planned into the regular cycle of activities. It will be less indigestible and more effective if the self assessment is undertaken at the appropriate time. So, for example, the section on governance that deals with the governors’ finance committee and schemes of delegation can be reviewed at the beginning of each school year when committees are set up and working practices reviewed. Some of the aspects in Section 5 could be considered at a governors’ finance committee in the late summer term. Do the governors understand and agree with the school procedures? After a local authority audit, the governors and senior staff could sit down with the audit report and section five of their school evaluation and check that their assessment concurs with that of the external auditors.

It is surprising how many aspects of a school’s financial management change in a year. New governors join the finance committee, administrative staff and the senior leadership team change. All these are opportunities to undertake a part of the regular evaluation of the processes. Do we have clear roles and responsibilities? Does everyone have the skills they need? Do governors understand their role? Do we provide clear information for governors?

Formal external accreditation The real value of the Standard is in the continuous school evaluation and the resources in the toolkit. However there will be opportunities for all schools to have external accreditation that they meet the Standard. The external assessor will need to consider all the evidence supporting the school’s self evaluation and any audit reports. As part of the toolkit there is a section on external assessment. If you look at the panel on the right it shows the extract from the self evaluation and the corresponding extract from the external assessment toolkit.

Secondary schools have to meet the Standard by March 2007 but do not need to have external accreditation. It would be possible for a local authority to use some other method of satisfying itself that the school meets the Standard. However, certainly the simplest solution for the school is to go for external assessment.

Primary and special schools are not yet covered by the regulations, but will still find the Standard and the toolkit of immense value and can also apply for external accreditation as soon as they want to. The local authority has to offer its secondary schools a variety of ways of obtaining external accreditation. These include:

  • The local authority includes assessment of the full Standard as part of the usual audit at no extra cost to the school. At least two authorities are offering this.
  • The local authority offers assessment as part of the local authority audit but with an extra cost to the Service Level Agreement.
  • The local authority accredits local firms to carry out assessments.

The school makes the choice. In addition the DfES will accredit some firms to carry out assessments – either in regional areas or nationally. The suggested costs for these assessments will vary but certainly provide a benchmark for local authorities offering it as an additional cost to the Service Level Agreement. Clearly the least bureaucratic option for a school that uses the local authority financial services is to have assessment as part of the usual audit. Since external assessment of the Standard has to be renewed every three years, this would require audits in the same timescale, which would be no bad thing.

If your school does not use the local authority financial services and you have a good relationship with a local accountancy firm you may want the third option. The least bureaucratic for you would be to have the local firm accredited by your local authority carry out the full assessment. Finally there is always the option of going for one of the firms accredited by the DfES. Whichever option you choose, it will be more reassuring to the school than some kind of informal assessment by the local authority. It is the process of continuous self evaluation that is of value to the school; the formal external assessment every three years will not be too burdensome if the self evaluation is kept up to date and is a valuable validation of your own internal assessments.

Further support and training The DfES is providing tailored training for local authority and school staff; governors are most welcome to attend these sessions (which can be run in the evenings). Your local authority should be able to tell you what is available in your area – or you can suggest they get something organised. The DfES also provides a CD-ROM free of charge. To order phone 0845 60 222 60, quoting reference: DfES 1587-2005 CDO-EN.

The CD-ROM is not quite as easy to navigate and use as the website but may be useful for governors without easy access to the internet.

Lindsey Wharmby was, until recently, a headteacher in Leeds. She is now the Association of School and College Lecturers’ Funding Consultant, working on national and local funding issues and supporting schools in financial planning.

Extract from the Financial Management Standard

5. Processes

5.1 The financial management information provided to governors and staff meets their needs by being:

  • Relevant
  • Accurate
  • Timely
  • User friendly

5.2 The school provides the LEA with accurate and up to date information in accordance with the LEA’s needs 5.3 The school complies with Consistent Financial Reporting requirements on a timely basis 5.4 The school has up to date, documented and approved financial regulations that are implemented consistently 5.5 The school has up to date, documented and approved detailed financial procedures that are tailored to the school’s need and implemented consistently in practice 5.6 The school maintains proper accounting records throughout the year 5.7 The governors and staff have evidence that there is effective control over:

  • Financial management system
  • Income received
  • Payroll
  • Purchasing
  • The banking system
  • Petty cash holdings and payments
  • Taxation system
  • Voluntary funds
  • The school’s assets

Appointing a school bursar

You are considering reorganising the administrative staff in the school. Go to the Guide and section 1 of the Standard: 1.1 The staff and governors have a shared understanding of their own financial roles and responsibilities and those of others. In the “if you need more help” box you will find a link to the Role of the Bursar. The job description given there (and summarised below) is quite daunting – but study it carefully. Obviously you do not need to follow this exactly. How you allocate the roles within your school is for you to decide – but someone has to cover all those responsibilities. Do you know who does them in your school? Summary role of bursar:

  • Finance
  • Human Resources
  • Premises
  • ICT
  • Pupil Services

Once you have decided on the role for your bursar/finance officer/business manager, then the links from the Guide to the toolkit provide a summary of the skills and attributes required. You make the decisions on the roles and the responsibilities in your school, the Guide and toolkit provide the support you need to ensure that everything is covered or help you identify any further training needed.

Induction of a new member of the finance team in a school

You are a new governor (headteacher, member of the senior leadership) in the school. Go to the Guide, page 16, and look at Section 5.5: 5.5 The school has up to date documented and approved detailed financial procedures that are tailored to the school’s need and implemented consistently in practice. If you click on S5.2 in the “if you need more help” box, you will go through to more detail. You can now select from the right hand menu again to obtain a series of checklists on financial procedures and choose the one appropriate to a primary or a secondary school.

Now sit down with the school’s finance officer, or whoever is responsible for this aspect of school management, and go through the checklist with them until you understand the processes the school uses – and you are happy with them. Most teachers and governors do not have any formal training in managing accounts properly. It is not rocket science and not beyond the understanding of teachers and governors – but it is important, and much easier to support the administrative staff in ensuring that all staff follow school procedures, if you understand the rationale behind them.

Extracts from self assessment and external assessment tools

The Standard

1. Leadership and Governance
1.1 The staff and governors have a shared understanding of their own financial management roles and responsibilities and those of others.

Evidence for assessment

Self assessment tool You will have seen the written statement of roles and responsibilities and found it to be clear, with no gaps or overlaps in responsibilities. You will be aware that the governing body has approved the scheme of delegation to the head teacher, bursar and finance committee and that these are appropriate given their roles. You will be aware that their responsibilities are brought to the attention of new governors, eg through an induction pack.

You will have received annual financial update training, regular newsletters/bulletins or annual information packs provided to all governors.

External assessment tool See a written statement of roles and responsibilities and check it is clear, with no gaps or overlaps in responsibilities. Check that the governing body has approved the scheme of delegation covering the head teacher, bursar and finance committee. Check that the allocation of responsibility to the finance committee, head teacher and bursar is reasonable given their roles. See evidence that the responsibilities are brought to the attention of new governors, eg through an induction pack.

See evidence of annual financial update training, regular newsletters/bulletins or annual information packs provided to all governors. Check that the content covers the relevant issues.