Appendix 2: Progress with our recommendations

Results of the 2018 school audits.

In this Appendix, we provide the Ministry’s progress on responding to our recommendations in our report Results of the 2017 school audits. We also refer to some recommendations from earlier reports that have not yet been addressed.

Recommendation The Ministry’s progress Our comment
Quality of school financial statements

We recommended that the Ministry provide further guidance and consider providing training to schools on preparing a statement of cash flows.		 The update of the Kiwi Park model will include some enhancements to the cash flow calculation worksheet and additional guidance.

The regional Annual Reporting Workshops will include information on the purpose and preparation of the cash flow statement.		 Addressed.
School payroll reporting

We recommended that the Ministry, for the 2018 audit of the school payroll:
  • make resources available to meet the agreed timetable, including enough time for the Ministry’s internal quality assurance processes;
  • keep a record of actions agreed at payroll stakeholder meetings: and
  • continue to encourage schools to prepare draft financial statements when they receive the payroll information, and provide those draft financial statements to auditors as soon as possible.
 The Ministry led a project team that included representatives from Education Payroll Limited, the Office of the Auditor-General, and Ernst & Young (the Ministry’s appointed auditor) that successfully delivered payroll reports and guidance to schools by the agreed time frame. Addressed – a similar approach and time frame will be followed for the 2019 school audits.
School annual reports

We recommended that the Ministry reinforce its guidance to schools on publishing their annual report, and consider how it can confirm that schools are reporting to their communities by publishing their annual reports online, in a timely manner.		 The Ministry has again included the requirement for schools to publish their annual report online in all annual reporting communications for 2018. The Ministry has also added a reminder when schools submit their financial statements to the Ministry’s portal on completion of their audit.

The School Financial Advisors team will monitor schools’ compliance. The Ministry is also considering whether it can publish all schools’ annual reports on their behalf, given not all schools have the capability to do so.		 We will follow up as part of our 2019 school audits.
Cyclical maintenance

We recommended that the Ministry ensure that schools are complying with its property planning requirements by having an up-to-date cyclical maintenance plan. The Ministry’s review of a school’s 10-year property plan should include a review of the cyclical maintenance plan, to ensure that it is reasonable and consistent with the school’s condition assessment and any planned capital works.		 The Ministry’s property team has implemented improvements to processes and guidance from 1 June 2019. This includes school property advisors talking to schools about their maintenance obligations during school visits and a requirement for them to review the school’s maintenance plans at that visit. We will follow up as part of our 2019 school audits.
Kura Kaupapa Māori

We recommended that the Ministry support kura by:
  • monitoring how effectively kura follow its guidance and, if necessary, provide more targeted guidance; and
  • continuing to work with those kura that have audits outstanding to help facilitate the completion of those audits.
 The Ministry is working with Te Runanga Nui to address these issues. To date the Ministry has had initial discussions with Te Runanga Nui.

A small number of the outstanding audits have been completed, but progress is slow.		 See paragraph 4.22. The recommendation has been repeated.
Sensitive payments

We recommended that the Ministry consider providing guidance to schools on the suitability of funding transport services for students who live outside the immediate area of the school.		 To be included in the regional Annual Reporting workshops. Addressed.
Leasing school equipment

We recommended that the Ministry provide guidance to schools to help them:
  • decide whether to lease or buy equipment: and
  • ensure that they get value for money if they decide to lease, including how to access all-of-government contracts.
 A “Lease vs Buy” model has been developed to help schools with purchasing decisions. The Ministry have told us that this is in the final stages of development and should be released by January 2020. We will follow up as part of our 2019 school audits.
Schools leasing IT equipment to students

We recommended that the Ministry consider the adequacy of the guidance available to schools on managing laptop schemes for their students, including through a third party.		 We have agreed to share examples of this with the Ministry from the 2018 school audits, to help it develop the guidance.

The risks of this will be covered in the regional Annual Reporting Workshops.		 We will provide information to the Ministry.
Principal’s remuneration – concurrence

We recommended that the Ministry give schools practical guidance on how to assess the extent of private benefit for a sensitive payment to a Principal, and how it evidences this assessment, so the school complies with the Ministry’s circular.		 The circular on Principal’s Concurrence is to be updated by December 2019.

This will also be covered at the regional 2020 Annual Reporting workshops.		 We will follow up as part of our 2019 school audits.
Accounting for “other activities”

We recommended that the Ministry:
  • provide guidance to schools on accounting for “other activities” (including Resource Teacher: Learning & Behaviour clusters) 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 (RTLB) clusters, and is preparing a scoping paper for discussion with the OAG in early 2020.

As an interim measure additional disclosure has been incorporated into the Kiwi Park model financial statements to ensure that the activities of the RTLB clusters are disclosed in the host schools’ financial statements.		 We will follow up as part of our 2019 school audits.
Internal controls

In our report Results of the 2016 school audits, we recommended 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 in 2018. This has not been done yet.

The Ministry has been actively working alongside schools who have reported instances of suspected fraud to ensure effective internal controls are put in place.		 We have repeated the recommendation.