"Financial pressures are growing on local authority
maintained schools and the need to reduce costs is becoming
greater. At the same time, the capacity of local authorities to
monitor and support financial management in schools is itself under
pressure. There must be early warning systems in place to alert the
Department for Education to emerging issues requiring action and
intervention."
Amyas Morse, head of the National Audit Office,
19 October 2011
The National Audit Office has today underlined
the importance of effective financial management in schools. It is
essential that the financial management framework for schools is
capable of alerting the Department for Education to any systemic
issues that may require action or intervention.
Today’s report to Parliament notes that weak
financial management and weak academic performance often go hand in
hand. The Department has a limited role in relation to the
financial management of schools. It sets standards but
responsibility for financial management and cost reductions lies
with schools themselves, with local authorities responsible for
exercising effective oversight.
The NAO acknowledges that schools’ financial
management capability has improved - for example, as more schools
have employed or have access to a school business manager. In the
current financial environment, however, more schools are having to
manage with reduced funding, and strong financial management is
more important than ever. Many headteachers have no personal
experience of leading a school during a period of financial
constraint. Many schools consider that they need to reduce staff
costs and that they need guidance on how to do so while maintaining
high-quality education.
The Department now requires less detailed
assessment of financial management, to reduce the administrative
burden on schools and local authorities. Local authorities do not
publish systematic data to demonstrate how they are monitoring
schools’ financial management and that they are intervening where
necessary. At a time when some schools may need support most, many
local authorities are set to devote fewer resources to monitoring
and supporting schools’ financial management. Forty per cent of
authorities responding to an NAO survey do not believe they have
sufficient resources to provide effective support to schools and
almost half of those authorities are planning to reduce the amount
of staff time spent on support.
The report recommends that the Department
should make clear how it is going to review the working of the
financial management arrangements.
Publication details:
HC: 1517, 2010-2012
ISBN: 9780102976717