Appendix 3: Progress with our previous recommendations

Update on 2021 school audits.

In this Appendix, we provide an update on the Ministry’s progress with the recommendations in our report Results of the 2020 school audits. We also refer to some recommendations from earlier reports that we followed up during our 2021 audits.

Recommendation Ministry’s current progress against recommendations Ministry’s progress against recommendations per 2020 report
2020 recommendations:
School payroll processes

We recommend that the Ministry ensure that changes to school payroll processes do not adversely affect the schools’ control environment by working collaboratively with Education Payroll Limited. This includes making sure that controls within schools help prevent fraud and error, and ensure that all transactions are approved within delegations.
Education Payroll Limited (EPL) released updated guidance to the sector on school level internal controls in March 2022, including how reporting from EdPay supported these controls. This guidance was jointly developed by the Ministry and EPL

Schools and kura have been able to re-establish the controls around the “payroll transaction report” that was lost during the transition from Novopay to EdPay.

The Ministry will continue to meet with EPL to understand the impact of any planned developments to EdPay to ensure any issues are addressed prior to implementation.
Cyclical maintenance plans

We recommend that the Ministry ensure that schools are complying with their property planning requirements by having up-to-date cyclical maintenance plans. This includes reviewing those plans to assess whether they are reasonable and consistent with schools’ asset condition assessments and planned capital works.
During 2022, the Ministry released new guidance on its website to assist schools and kura in the development and review of their cyclical maintenance provision calculations, including having appropriate supporting evidence.

During the 2021 audit process, the Ministry has also been actively working with schools and kura where audit challenges have arisen relating to cyclical maintenance.

In our Results of the 2020 school audits report, the Ministry noted three key areas that were being worked on:
  • working with BRANZ on the development of a Maintenance Guide for Schools.

    This work is in progress.

  • a longer-term strategy piece to address assets failing due to inadequate maintenance, and the burden of maintenance responsibilities.

    This work is in progress.

  • Online modules to provide school boards, principals, and staff guidance on their obligations to manage school property.

    These modules have been available since June 2022 and have been well received.
Kiwi Park model financial statements

We recommend that the Ministry simplify the level of financial reporting required in the Kiwi Park model financial statements. This includes reconsidering information the Ministry specifically requires, in addition to that required by financial reporting standards, and whether it can obtain that information from other sources.
During 2022, the Ministry engaged PwC to carry out a full technical review of the Kiwi Park model financial statements. This identified opportunities to make minor changes with significant effects on the reporting and auditing annual process. Two changes included:
  • Reporting of all grants from the Ministry in one disclosure line rather than two; and
  • a shift to functional reporting on the Statement of Comprehensive Revenue and Expenditure.
These changes allow for simplified financial reporting and auditing.

Improvements will continue to be made annually as opportunities are identified.

The Ministry and our Office have recently finalised a Terms of Reference document that sets out our joint commitment to work on the future of school financial reporting. This work will include identifying improvements and efficiencies to school financial reporting to ensure that it is both timely and cost-effective.
2019 recommendations that are still relevant:
Accounting for “other activities”

We recommend that the Ministry provide guidance to schools on accounting for “other activities” (including Resource Teacher: Learning & Behaviour (RTLB) clusters) that they receive funding for.
During 2022, the Ministry engaged PwC to carry out a technical review of the current accounting treatment of RTLB funding for lead schools. This review was shared with us and resulted in updated guidance in the 2022 Kiwi Park Model financial statements.

The Ministry will continue to work with the lead RTLB schools to assist with the correct accounting treatment for this source of funding.

The Ministry will continue to improve its guidance to the sector on accounting for “other activities” as required.
The Ministry has updated its 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 schools’ responsibilities and reporting requirements.

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

Consideration of the future reporting requirements for RTLBs is 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.