Press Release - Financial management in
the Department for Children, Schools and
Families
30 April 2009
The Department for Children, Schools and
Families has made progress in improving its financial management,
with strong commitment at senior management and board level,
according to a National Audit Office report today. The
Department’s ability to reach a high standard of financial
management depends partly on successful working with local
authorities, other partner organisations, and the schools
themselves. It does, however, face specific challenges, including
the need for better strategic management of its large capital
programme, and to encourage better financial management in
schools.
The Department has built up a large capital
underspend, which increased from £1.9 billion at 31 March 2008 to
around £2.4 billion at the end of March 2009. Its capital
expenditure programme will need to be carefully managed given the
history of underspending and the challenge of bringing forward £924
million of expenditure from 2010–11 to 2009–10 as part of the
Government’s fiscal stimulus.
At March 2008, schools in England had a net
cumulative surplus of £1.9 billion. Only 1 in 5 local
authorities reduced their total net school surplus in
2007–08. Local authorities are accountable for school
spending and the Department should encourage them to
redistribute excessive uncommitted surpluses in line with
local needs.
The Department was, in 2007, one of three
departments which had not implemented in-year accruals accounting
systems, which would help to improve the accuracy of financial
forecasting and reporting. It has introduced a system to
identify monthly accruals which is fully in place for the start of
the financial year 2009-10. The planned introduction of a
shared services arrangement for finance with procurement and
personnel support should also help improve financial management and
lead to efficiencies, though implementation has been delayed
because of slippage in another Shared Service implementation
programme.
Tim Burr, head of the National Audit Office, said
today:
"The Department has made progress in
integrating financial management with its strategic and corporate
planning. There is room for a better understanding of costs
attributable to each of the Department’s strategic
objectives. The Department could usefully consult further
with delivery organisations such as local authorities to see what
might be done here. It also needs to improve its management of
financial risks, and to use the introduction of new finance systems
to improve financial reporting and
forecasting."
Notes for Editors
-
In 2007-08 the Department’s expenditure
totalled £48.9 billion and around £40 billion (82 per cent of the
Department’s spending) was spent on schools or services to support
schools.
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The Department has built up a large capital
underspend, which is around £2.4 billion at the end of March 2009.
In 2007-08 the balance increased by £654 million to £1.9 billion
and 2008-09 figures will show that this increased to around £2.4
billion by the end of March 2009.
-
Schools build up surpluses when they do not
spend their full budgets and carry over the balances to future
years. An excessive surplus is defined by the Department as being
greater than five per cent of annual budget for secondary schools
and greater than eight per cent for nursery, primary and special
schools. At 31 March 2008 nearly 40 per cent of schools had
excessive cumulative surpluses and 22 per cent had held an
excessive cumulative surplus for at least the last three
years.
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Accruals accounting is an accounting
convention under which transactions are recognised as the
underlying economic events occur, irrespective of the timing of
cash receipts and payments related to these transactions. Under
accruals accounting, expenditure incurred or income earned, but not
yet paid or received, are included in the accounts in the period
when they were incurred or earned. This differs from cash
accounting where income and expenditure are recognised when the
cash is received or paid respectively.
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Press notices and reports are available from
the date of publication on the NAO website, which is at http://www.nao.org.uk/.
Hard copies can be obtained from The Stationery Office on 0845 702
3474.
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The Comptroller and Auditor General, Tim Burr,
is the head of the National Audit Office which employs some 850
staff. He and the NAO are totally independent of
Government. He certifies the accounts of all Government
departments and a wide range of other public sector bodies; and he
has statutory authority to report to Parliament on the economy,
efficiency and effectiveness with which departments and other
bodies have used their resources.
Press Notice 26/09
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