Appendix: Update on progress with our previous recommendations

Results of the 2020 school audits.

In this Appendix, we provide an update on the Ministry of Education (the Ministry’s) progress with our recommendations in our report Results of the 2019 school audits. We also refer to some recommendations from earlier reports that we followed up during our 2020 audits.

School payroll reporting

Recommendation The Ministry’s progress Our comment
We recommended that the Ministry:
  • ensure that changes to the Novopay system include adding appropriate controls for schools, where possible, to help prevent fraud and error and ensure that all transactions are approved within the school’s delegations; and
The Ministry is working with Education Payroll Limited (EPL) to develop guidance for schools to help them establish good internal controls. The guidance will also set out the reporting that is available from EdPay to facilitate schools carrying out the expected internal control procedures over the payroll process. This guidance will be released to schools before the end of the school year on the EPL website and through links on the Ministry’s website and in the payroll instructions. We have repeated this recommendation.
  • follow up unusual transactions or anomalies identified as part of the payroll audit so they do not reoccur, including giving boards additional support and guidance on payroll matters if necessary.
The Ministry asked for feedback from schools and auditors on how the exceptions from the payroll exceptions report had been resolved for 2020. Feedback from schools and auditors on only 16% of exceptions was received. Of that feedback, 77% of exceptions were confirmed as valid payments. To be able to identify opportunities for additional support or guidance, we need a higher response rate. Feedback will again be requested for the 2021 audits.

The Ministry is also working with EPL to reduce the number of invalid exceptions identified.
We will support the Ministry to ensure that auditors provide feedback on the exceptions followed up as part of our audits.

Internal controls (also a recommendation in previous years)

Recommendation The Ministry’s progress Our comment
We recommended that the Ministry improve its guidance on what good controls look like. The Ministry has updated guidance on fraud and internal controls for its Financial Information for Schools Handbook (FISH), including added guidance on fraud risk factors, common types of fraud and examples, and board and management responsibilities to prevent fraud and theft.

The Ministry is also preparing two additional tools that can be used by school boards:
  • a checklist of expected responsibilities and controls; and
  • a template to help schools review their segregation of duties in
    key processes and by identifying people involved in each process assessing whether they have enough segregation.
The new guidance and tools should be available on the Ministry’s website by the end of the school 2021 year.
This has been noted.

Accounting for “other activities”

Recommendation The Ministry’s progress Our comment
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. The Ministry has updated the guidance in the 2021 Kiwi Park model on the financial reporting requirements for the 40 Resource Teacher: Learning & Behaviour (RTLB) clusters. Additional guidance is provided to set out the lead school’s responsibilities and reporting requirements.

The disclosure note in the 2021 Kiwi Park model for RTLB is unchanged from 2020.

Future reporting requirements for RTLBs are still being considered.

Further accounting guidance for the treatment of other activities will be considered for the 2022 version of Kiwi Park. Many of these other activities are already captured in existing guidance for funds held in trust, funds held on behalf of third parties, and shared funds.
We will continue to monitor progress.

2018 recommendation: Budgeting

Recommendation The Ministry’s progress Our comment
We recommended that the Ministry prepare additional guidance to schools on how to budget effectively, including how to prepare a budgeted balance sheet and cash flow budget. The Ministry is currently developing budgeting tools to assist school boards and management to prepare their budgets, including income and expenditure, balance sheet, and cash flow budgets.

The tools will factor in considerations for longer-term financial planning by schools to allow for decisions at a strategic level by having a five-year plan. The new budget tools will be available for schools to use for preparing their 2023 budgets.

The Ministry’s school finance advisers continue to work with schools that required support to
prepare their budgets.

Because of Covid-19 restrictions, opportunities for face to face workshops have been limited but budgeting guidance has been presented at first-time principal events and business managers events.
Information collected by auditors on schools not preparing full budgets for 2021 has been passed onto the Ministry.

We will follow this up as part of our 2022 audits.

2017 recommendation: Cyclical maintenance

Recommendation The Ministry’s progress Our comment
We recommend thatthe Ministry ensure that schools arecomplying 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 has prepared a new suite of guidance for cyclical maintenance, which includes updated guidance in FISH, calculators and worked examples. This includes guidance and calculators for those schools that have a painting contract.

The new cyclical maintenance guidance will be available for schools to use for the 2021 reporting cycle. We intend to produce a webinar to support this guidance.

In addition, the Ministry is:
  • working with BRANZ on the development of a Maintenance Guide for Schools. This guide will set expectations and provide guidance on planned, preventative, and reactive maintenance;
  • working towards a longer-term strategy piece to address assets failing due to inadequate maintenance, and the burden of maintenance responsibilities on schools; and
  • preparing online modules to provide school boards, principals, and staff guidance on their obligations to manage school property. These will be available by June 2022.
We have repeated this recommendation.