Wiltshire Schools Finance Manual September 2008

Transcription

1 SUMMARY OF CONTENTS 1. Regulaton and Control 1.1 General 1.2 Responsbltes of Chef Fnance Offcer 1.3 Responsbltes of Schools 1.4 Responsbltes of the Local Authorty 1.5 Ths Manual 2. Fnancal Management 2.1 Captal Expendture 2.2 Revenue Expendture 2.3 Accountng Standards 2.4 Budgetng 2.5 Fnancal Reportng 2.6 Fnancng of School Expendture 2.7 Fundng of School Expendture 2.8 Best Value 2.9 Chargng of Schools Budget Shares 2.10 Interest on School Balances 2.11 Cash flow management 3. Purchasng, Tenderng & Contractng Requrements 3.1 Purchasng 3.2 Tenderng 3.3 Contractng 3.4 Constructon Industry Scheme 4. Internal and External Audt 5. Income 6. Bankng Arrangements 7. Stores & Other Assets 7.1 General 7.2 Inventory Regsters 7.3 Dsposal of Assets 8. Value Added Tax 9. Insurance 10. Payroll 10.1 Mnmum Specfcaton of Servce 10.2 Responsbltes of School & Payroll Provder 1 Wltshre County Councl

2 APPENDICES AND SPECIFIC GUIDANCE NOTES Contents Menu In addton to the man secton of ths manual, a number of appendces are attached whch amplfy specfc ssues. Also, n the future, addtonal gudance notes may be requred to assst schools. Appendces Appendx A: Appendx B: Appendx C: Appendx D: Appendx E: Appendx F: Appendx G: Schedule G1: Appendx H: Appendx J: Appendx K: Appendx L: Appendx M: Appendx N: Appendx O: Appendx P: Segregaton of Dutes Bref Summary of EU Provsons Proflng of Cash Advances Formats for LA Reportng Packs and Budget Templates Detals of Accountng Standards Lst of Approved Fnancal Insttutons Chart of Accounts Ledger Code/CFR Lne Mappng LMS Fundng Formula Factors ICT Securty Polcy Prncples of Best Value Dsputes Procedure Tenderng Checklst Form of Tender (example) Tender Return Label (example) Schools Consderng Changng Ther Fnancal Management System Gudance Notes (see notes followng appendces) Operatng the VAT Reclam Procedure Please use the lnk above to access the VAT Electronc Gudance Notes 2 Wltshre County Councl

3 1. REGULATION AND CONTROL Contents Menu 1.1 General 1. These Regulatons shall be compled wth by the governng bodes of all schools operatng under schemes of local management. 2. Both regulatons, whch are mandatory to comply wth the law, and advce on good practce, whch has been adopted by the Councl, and s recommended to governng bodes, are ncluded. 3. Cabnet means the Cabnet or any replacement commttee or sub commttee of Wltshre County Councl, whch s the Local Authorty (LA). 4. No exceptons to these Regulatons or amendments or exceptons to the supples procedure may be authorsed except by the Cabnet. 5. These Regulatons are ssued to provde detaled gudance as provded by paragraphs of the Scheme for Fundng Schools. 6. The proper conduct of affars requres that each party s clear about the nature and extent of the rghts, dutes and responsbltes placed on them. Ths s partcularly mportant gven the large amounts of publc money delegated to the control of school governng bodes. The followng paragraphs descrbe the dvson of responsbltes between the County Councl (as LA) and the school. 1.2 Responsbltes of the Chef Fnance Offcer 1. Under Secton 151 of the Local Government Act 1972 the County Councl has apponted the Chef Fnance Offcer as the offcer wth responsblty for the proper admnstraton of the County Councl s fnancal affars. 2. In order that he/she may fulfl these statutory oblgatons: 2.1 The Chef Fnance Offcer wll ssue such accountng and fnancal system nstructons as he/she consders necessary. 2.2 No fnancal procedure or system shall be vared wthout hs pror agreement. It s expected schools wll deploy fnancal system software to support ther accountng and fnancal management responsbltes. It s further antcpated that schools wll contnue to use the currently nstalled software n the majorty of cases ths s the SIMS fnancal system. If any school wshes to replace ther current fnancal system software, the Chef Fnance Offcer (or any offcer delegated by hm) must gve pror approval. Ths s to ensure that the software s capable of meetng accountng and reportng standards approprate to schools, the LA and external agences. Further gudance on ths s gven n Appendx P 3 Wltshre County Councl

4 2.3 The Chef Fnance Offcer shall be ultmately responsble for the producton and dstrbuton of fnancal management nformaton to the Councl, commttees, sub commttees, panels, workng partes and other smlar bodes of the Councl and therefore wll have the ultmate rght to specfy the accountng and reportng standards to be followed by all parts of the Councl, ncludng all mantaned schools. 2.4 The Chef Fnance Offcer (or any offcer delegated by hm/her) shall have the rght of access to the fnancal records and other relevant documentaton held by any part of the Councl, ncludng all mantaned schools. 3. Where provded n ths manual, the Chef Fnance Offcer wll deal reasonably and promptly wth any requests by schools for specfc permssons or authortes. 1.3 Responsbltes of Schools 1. The responsblty for proper admnstraton of the school s fnancal affars rests wth the governng body. 2. Each governng body s responsble specfcally for: 2.1 The observance of these Regulatons wthn ther establshment and for the complance of ther staff wth accountng and fnancal system nstructons ssued under paragraph of these Regulatons; 2.2 the accountablty of staff, and for the securty of all other resources and assets n ther establshment, n accordance wth procedures agreed wth the Chef Fnance Offcer; 2.3 montorng and controllng the present and projected fnancal performance of ther establshment. 3. Governng bodes must consder delegatng the exercse of ther responsbltes under these Regulatons to a Responsble Offcer typcally the headteacher (or School Manager where so desgnated) or to share ths delegaton between such a Responsble Offcer and a fnance sub commttee of governors, subject to the followng: 3.1 governng bodes must consder the extent to whch ther powers are to be so delegated; 3.2 the decson (and any subsequent varaton) s recorded n the mnutes of the governng body; 3.3 a wrtten Scheme of Delegaton s provded to the Responsble Offcer. Ths scheme must be updated to reflect any subsequent varatons resolved by the governng body. Ths scheme has the status of relevant fnancal documentaton as referred to under paragraph of these Regulatons. 4 Wltshre County Councl

5 3.4 governng bodes cannot delegate away the requrement to consder on a regular bass reports descrbng the fnancal performance of ther establshment. 3.5 In ths manual, where the statement of a responsblty s preceded by the words the school or the headteacher, then ths s a responsblty whch can be delegated by the governng body. If however a statement of responsblty s preceded by the words the governng body then ths s a responsblty whch cannot be delegated typcally these relate to recevng and consderng reports on varous subjects. 3.6 The Responsble Offcer must at least once n every fnancal year report to the governng body on the exercse of the responsbltes delegated to hm/her by the governng body. Ths report should be explctly ncluded n the mnutes of the governng body. 3.7 Where a governng body wshes to appont a person other than the headteacher as the Responsble Offcer, then specfc wrtten permsson must be obtaned from the Chef Fnance Offcer. 4. Where requred, the school wll provde such nformaton statstcal, fnancal or otherwse to the LA as t reasonably requres to fulfl ts functons under the Scheme for Fundng Schools. Such nformaton wll be provded n the form, format and tmetable that the LA requres. Should such nformaton not be forthcomng, the LA wll not accept responsblty for any consequences. 5. The school s requred to establsh a Regster of Busness Interests. The Regster must lst, for every member of the governng body and the headteacher, any busness nterests that they or any member of ther mmedate famly have. The governng body and school staff have a responsblty to avod any conflct between ther busness and personal nterests and affars and nterests of the school. A Regster of Busness Interests must be mantaned for every member of the governng body, the headteacher and any member of staff nvolved wth the procurement and strategc/fnancal management procedures of the school. The Regster must nclude all busness nterests such as drectorshps, shareholdngs and other appontments of nfluence wthn a busness or other organsaton, whch may have dealngs wth the school. The dsclosures should also nclude busness nterests of relatves and other ndvduals who may exert nfluence. The school should ensure the Regster s up to date and complete, ncludes all governors and relevant staff and n ths regard nl returns are also requred. All entres should be sgned and dated by the ndvduals. The Regster must be revewed frequently at least annually. The mnutes of the governng body must offcally note that a revew of the Regster has taken place. 5 Wltshre County Councl

6 The members of the governng body and the headteacher have the duty to notfy any changes to the nformaton held on the Regster. The Regster must be made avalable for nspecton by governors, staff and parents. For admnstratve convenence the school may defne any reasonable means for governors, staff or parents to exercse ther rght to nspect the Regster. The Chef Fnance Offcer may rule defntvely on the reasonableness of any partcular arrangement set up by a school. 1.4 Responsbltes of the LA 1. The LA wll supply schools wth all nformaton statstcal, fnancal or otherwse held at LA level whch s reasonably requred for schools to effcently plan ther fnancal affars. 2. The LA wll publsh the fnancal statements n respect of delegated and centrallyretaned expendture on the Schools Budget coverng: Annual Budget Estmates Outturn Expendture n accordance wth the statutory requrements and tmetable. These statements wll be avalable to every mantaned school and to the publc at the Councl s offces and on the Councl s webste. 3. The LA wll publsh a Statement of the Wltshre Schools Fundng Formula refer to Secton 2.7 and Appendx H of ths manual. 1.5 Ths Manual The LA wll consult Schools Forum before any changes and these wll be reflected n the annual budget statement whch s requred to be publshed under regulatons n force at that tme. 1. Ths manual remans the ntellectual property of the Chef Fnance Offcer. No part of ths manual or ts contents may be used for other purposes wthout hs/her express permsson. 2. Ths manual s provded for the use of schools and LA staff who have dealngs wth schools. One copy s provded free of charge to each school, approprate LA staff and headteacher assocatons. 3. Recpents of ths manual may make copes for use wthn ther establshment only. Further copes may be obtaned from the Chef Fnance Offcer or from the Department for Chldren & Educaton free of charge. 4. In the event of any dspute regardng the contents of the manual, the verson held by: 6 Wltshre County Councl

7 The Manager, Accountng & Budget Support Team Resources, Improvement & Young People Branch Department for Chldren & Educaton County Hall, Trowbrdge wll be deemed to be the defntve verson. 5. Ths manual s ntended to be a lvng document and wll change over tme to reflect current stuatons. The Chef Fnance Offcer welcomes any postve contrbuton to the contents of ths manual and any nput to ts development. Any such comments should, n the frst nstance, be addressed to ether: or or The Manager, Accountng & Budget Support Team The School Fnance & Fundng Manager (both Department for Chldren & Educaton) the Chef Accountant, Resources Department 6. Any updates to the manual wll be sent (one copy) to the headteacher of all mantaned schools, the managers of approprate LA teams and the char of fnance sub commttees of headteacher assocatons. They are then responsble for ensurng that any other copes held n ther establshment are approprately updated. The LA wll not accept any responsblty for any occurrence resultng from the falure of any recpent to update any extant copes of ths manual held wthn ther establshments, or for any falure to take note of the contents of any amendments. 7 Wltshre County Councl

8 2. FINANCIAL MANAGEMENT Contents Menu 2.1 Captal Expendture 1, Ths secton refers to expendture on the followng tems whch are normally ncluded n the captal programme: v acquston of land and buldngs; constructon works, ncludng alteratons or addtons to the buldng fabrc; purchases of plant, equpment, furnture and vehcles; professonal fees n connecton wth any of these tems. 2. The general responsblty for captal expendture s not delegated. Expendture by the LA on captal s specfcally excluded from the Schools Budget quantum by regulatons ssued under Secton 46 of the School Standards & Framework Act However, schools wll receve devolved Formula Captal Standards Funds and these may be spent for purposes prescrbed by DCSF and communcated to schools annually. 3. Under paragraph 2.14 of the Scheme for Fundng Schools, schools are specfcally permtted to apply funds from ther accumulated delegated revenue funds to undertake captal projects. 4. Before commttng captal funds, schools should consult the LA s School Managed Project Gudance, submt an applcaton for approval f necessary and reassure themselves that they wll comply wth statutory requrements and LA gudance. Captal funds must be spent on hgh prorty Asset Management Plan prortes. 5. Where the premses of the school are owned by the LA, the consent of the LA to the proposed works must be sought through the notfcaton process outlned n paragraph above. 6. The captal de mnms value s the level above whch spendng from the revenue budget s classfed as captal. Ths value s currently set at 2, Revenue Expendture 1. Funds are avalable to support expendture by schools under two man categores delegated funds and earmarked devolved funds. 2. Schools may spend delegated funds only for the purposes of the school. Ths s broadly defned n S.46 of the School Standards & Framework Act 1998 as the actvtes under the Indvdual Schools Budget, not countng those actvtes performed by the LA on behalf of all schools or ndvdual pupls. The Chef Fnance Offcer has the rght to decde whether any partcular expendture s properly defnable as for the purposes of the school. 3. Delegated funds are also known as the School s Budget Share. Ths s determned by the applcaton of the LA s Fundng Formula to the Indvdual Schools Budget quantum as defned by S.46 of the Schools Standards & Framework Act Wltshre County Councl

9 4. Schools may spend Earmarked Devolved Funds only for the purpose(s) for whch they are allocated, wthn the tme perod for whch they are allocated. Actual expendture by a school whch s n excess of the funds allocated must be found from delegated funds, whle any surplus of allocated funds over actual expendture must be returned to the LA. 5. Schools have the freedom to use delegated mones to purchase support servces to assst n the management of the school. Funds were delegated from 1 Aprl 1999 for the followng fnancal support servces (whch are avalable, on a tradng bass, from the LA): - Budgetng and Accountng - Fnancal Advce - Fnancal Tranng Certan other fnancal support actvtes wll also be avalable to schools at no charge, beng funded from centrally retaned mones: - Internal Audt - VAT Advce - Fnancal Results Consoldaton and Corporate Reportng 6. If any advce gven by a source external to the County Councl conflcts wth any past, present or future recommendaton/opnon or decson gven by the County Councl, then the school must accept/adopt the latter as beng correct and defntve. 2.3 Accountng Standards 1. Schools wll mantan adequate records whch wll support all fnancal transactons related to Delegated, Earmarked Devolved and Prvate Funds. 2. Where accountng records are mantaned n electronc form: then the software used must be approved by the Chef Fnance Offcer (refer to Secton 1.2 paragraph 2.2 above); schools must have due regard for the requrements of the ICT securty gudance set out n Appendx J; Charts of Accounts must dentfy separately ncome and expendture relatng to Delegated, some Earmarked Devolved*, extended schools and Prvate Funds. * There s no longer a general requrement to dentfy all Standards Funds separately, although schools may keep separate records f they so wsh for nternal purposes. However, schools are requred to dentfy some devolved Standards Funds separately, e.g., Formula Captal Fundng & Expendture whch has to be recorded separately to meet external reportng requrements. Other funds whch must be dentfed separately n schools accounts wll be advsed as and when necessary. 9 Wltshre County Councl

10 v Charts of Accounts must also be capable of supportng the reportng requrement contaned n these Regulatons (cf Secton 2.5 below). The mnmum subjectve analyss to be used s shown n Appendx G, along wth other Charts of Accounts ssues. v v Each record n the electronc accountng system wll be supported by approprate manual source documents. The software used must support statutory VAT accountng requrements. 3. Schools wll account to the LA for ncome and expendture on an accruals bass. The techncal defnton of ths s contaned n Appendx E, along wth sample transacton formats. Accounts prepared under ths paragraph wll form the defntve statement of the school s fnancal poston at any pont n tme. 4. Any queres related to Charts of Accounts, standard book-keepng entres or accountng standards should be addressed to: 2.4 Budgetng Normal Procedures The Manager, Accountng & Budget Support Team, Department for Chldren & Educaton 1. As a mnmum requrement, each school shall produce a budget for each fnancal year, wthn the lmt of Delegated and Earmarked Devolved Funds. 2. The format of the budget wll be as lad out n Appendx D, and wll requre the separate dentfcaton of net spendng aganst: Delegated Budget Share for the fnancal year Earmarked Devolved Funds for the fnancal year (where requred) Accumulated reserves brought forward from prevous years. 3. Schools wll submt ther budget templates, approved by the governng body or commttee wth delegated authorty, n the requred format by the end of June each year, relatng to the fnancal year startng the precedng Aprl. 4. Notwthstandng the detal contaned n submtted budget templates, schools are free to restate ther plans at any tme by movng between budget heads. Ths s the general power of Vrement. In ther Scheme of Delegaton (refer to Secton above), governng bodes must specfy the value of vrements above whch ther express authorsaton s requred. 10 Wltshre County Councl

11 Such authorsaton must be recorded n the mnutes of the governng body. The school wll ensure that all approved vrements are recorded n ther accountng system so that routne fnancal montorng statements always show correct varances. The general power of vrement s applcable to Delegated Funds, the School Development Grant and the School Standards Grant. Schools may not vre Formula Captal or any other standards funds other than the School Development Standards Fund Grant. 5. It s good practce to ncorporate the costs of school mprovement prortes n the school budget plan, and to revew progress towards delverng those prortes regularly Defct Budgets 1. Schools are requred to set a net expendture budget wthn the total fundng avalable whch s made up as follows: Delegated Budget Share for the fnancal year Earmarked Devolved Funds for the fnancal year Accumulated Reserves brought forward from prevous years 2. Therefore n the normal course of events, spendng above allocated fundng (also known as a defct budget) s not allowed. 3. However, f a school faces an unavodable crcumstance or set of crcumstances, whch makes t mpossble to formulate a net expendture budget wthn avalable fundng, then the school may apply to the LA for permsson to set a defct budget. Such an applcaton must be accompaned by a comprehensve Recovery Plan detalng how the school ntends to reduce net expendture to the level consstent wth aggregate fundng. Ths must be accompaned by budgets, covered by the Recovery plan, untl such tme as the forecast accumulated reserves of the school returns to at least zero. The maxmum defct perod s fve years. 4. Should the LA approve the settng of a defct budget, t may set specal condtons on the school whch wll depend on the ndvdual crcumstances, and may nclude, but not be restrcted to, the followng: that School Standards Grant must be used to offset the defct ncreasng the frequency of routne fnancal reportng by the school to the LA requrng more detaled and/or more extensve forecastng of annual net expendture (ths wll be lmted to the tme span of the approved Recovery Plan) chargng of nterest on any addtonal cash suppled by the LA to support any approved defct budget 11 Wltshre County Councl

12 a representatve of the Chef Fnance Offcer attendng governng body meetngs. 5. Defct Budget Recovery Plans should be formally revewed durng the lfetme of the plan. These revews should take place at least annually f for no other reason than to restate the plan nto the new year prce base. 2.5 Fnancal Reportng It s also recommended that plans should be revewed mmedately f any change s detected n any factor whch s materal to the fulflment of the Recovery Plan and the Manager, Accountng & Budget Support nformed mmedately. 1. Generally schools wll report to the LA on ther fnancal performance on a quarterly bass accordng to the followng tmetable, and usng the formats shown n Appendx D: Fgures as at: (n CFR Format) end September end December end March end October end January end Aprl 2. The quarterly School Fnancal Return pack wll contan the followng element: Income & Expendture Account showng actual results and forecast for the full year 3. Also, a statement detalng the ntended use of accumulated reserves, f these reserves exceed the thresholds set out n the Controls on Surplus Balances Scheme, wll be requred once fnal outturn fgures for the precedng fnancal year have been confrmed. Schools wth reserves lower than the stated thresholds may voluntarly complete ths statement. Ths statement should be submtted wth the annual budget template no later than 30 June. 4. In addton, schools wll also submt, at the end of each quarter along wth the paper reports mentoned n paragraph 2 above, a Tral Balance extracted from the local ledger software. Ths Tral Balance wll consst of the current balance held aganst all accounts (Balance Sheet and Income & Expendture) n the school s ledger. These balances must be the same as are reported n the Actual Year-to-Date porton of the paper reports. Ths data wll be loaded nto the corporate accountng system to allow for consoldaton of school accounts. 5. LA Reportng Packs must be countersgned by the Responsble Offcer (normally the headteacher) and the char of governors (or the char of fnance sub commttee f ths s ncluded n the school s Scheme of Delegaton). 12 Wltshre County Councl

13 2.6 Fnancng of School Expendture Wltshre Schools Fnance 1. Schools can opt for a system of fnancng expendture from the followng lst: 1.1 The optons are: Corporate Integraton Ths opton s not yet avalable. Full Cash Under ths opton, the total fundng avalable to the school from Delegated Fundng (e, budget share) s advanced n cash to the school s account wth an approved bank or buldng socety. The school wll then be responsble for rasng payments for all expendture ncludng payroll. 1.2 Where a school has delegated responsblty for payroll management and opts for a provder of ths servce other than the LA, then t must choose the Full Cash opton. 1.3 The fnancng opton chosen must run for a complete fnancal year; therefore t s not possble to change fnancng optons md-way through a fnancal year. 2. Where a school chooses the cash opton ( per paragraph 1.1 above) the cash wll be advanced monthly. The phasng and tmng of these cash advances wll be determned n accordance wth the consderatons n Appendx C of ths manual. 3. Fnancng of Earmarked Devolved Fundng wll n general follow the pattern of fnancng establshed n paragraph 1 above. Earmarked Devolved Fundng whch s dstrbuted by means of a formula applyng to all schools of any class of schools wll be fnanced n accordance wth the choce each school has made n relaton to Delegated Fundng under paragraph 1 above. Payments wll n general be consoldated wth those coverng delegated funds. All other Earmarked Devolved Funds wll be fnanced by reference to the nature of the funds and the school s preferred fnancng opton. In general payments are made separately from the normal fnancng stream but work s currently underway to unfy varous funds nto one payment. 2.7 Fundng of School Expendture 1. Wltshre schools wll receve fundng for the expendture requred to fulfl ther delegated responsbltes by the operaton of a Formula. 2. The basc shape of ths Formula s to apply a Cost Rate to a Factor Drver to derve a Formula Funded Value. 13 Wltshre County Councl

14 Factor Drvers and Cost Rates are dfferentated to reflect the dfferent phases, characters or levels of delegated responsbltes. 3. The overall formula dentfes a number of Factor Drvers whch attract fundng. The detals of the Factor Drvers are publshed annually and dstrbuted to schools. 4. Fundng for Delegated Responsbltes can only be made by operaton of the Formula no specal cases can be allowed. 5. Over tme the shape of the Formula can be changed by: addng or removng Factors addng or removng phase or character dfferentaton 2.8 Best Value Any such change wll be the subject of open consultaton wth Schools Forum pror to mplementaton. 1. Schools are requred to nclude, when submttng ther annual budget template, a statement settng out the steps they wll be takng to ensure that expendture, partcularly, but not restrcted to, large servce contracts, wll reflect the prncples of the Best Value regme. 2. The current formulaton of Best Value prncples s summarsed n Appendx K. 2.9 Chargng of Schools Budget Shares General Provsons 1. In the normal course of operatons, schools may purchase goods and/or servces from the LA. In all such cases, tradng wll be carred out on an arms length bass. Thus all the normal purchasng procedures outlned elsewhere n ths manual wll apply. Normal County Councl procedures for the management of trade debtors wll also apply. 2. There are a number of specal crcumstances where the LA may also charge schools budget shares. These are dscussed further n paragraph below. 3. Because of the legal relatonshp between the LA and mantaned schools, any tradng dspute s not open to legal resoluton. Therefore a Dsputes Procedure s defned to deal wth any such stuaton. Ths s outlned n paragraph below. 4. The preferred admnstratve method of dealng wth payments by schools to the LA s by drect debt on the school s bank account. 14 Wltshre County Councl

15 2.9.2 Specal Crcumstances Wltshre Schools Fnance 1. The LA may charge a school s budget share n a prescrbed lst of crcumstances. Ths power s granted by Secton 6 of the LA s Scheme for Fundng Schools. 2. The LA wll consult the school on ts ntenton to make such a charge under ths provson and wll formally notfy the school when such a charge s made. 3. The LA cannot act unreasonably n the exercse of the power granted by Secton 6 of the Scheme for Fundng Schools. A charge can only arse where the LA has a statutory responsblty and has ncurred a lablty Dsputes Procedure 1. The steps n the dsputes procedure are outlned n Appendx L attached. 2. The man characterstcs of the procedure are: t s based on facts; t nvolves assessment of the facts by non-actve partes; conclusons are bndng on both partes Interest on School Balances 1. The ssue of payng/chargng nterest on school balances wth the LA s ntmately correlated wth the fnancng opton chosen. For consderaton of ths refer to paragraph 2.6 of ths manual. 2. Corporate Integraton Opton Ths opton s not currently avalable to schools. Consderaton of the nterest poston wll be ncluded n any future consultaton on ths opton. 3. Full Cash Opton In ths opton all cash relatng to school actvtes s held n ts own bank or buldng socety account. Interest on these balances wll be payable by the bank or buldng socety under ts current terms and condtons. Further consderaton s outsde the scope of ths manual Cash flow management 1. Cash flow s the movement of money n and out of the school bank account durng the year 2. Cash flow forecastng s a fnancal tool used to chart the expected flow of ncome and expendture through the school bank account 15 Wltshre County Councl

16 3. The constructon of cash flow forecasts s not a requrement under these Fnancal Regulatons; however t s recommended good practce and s an element of the Fnancal Management Standard n Schools: 3.1 To ensure you have suffcent funds to pay for your operatons; 3.2 To dentfy any sgnfcant cash balances; 3.3 To foresee cash flow dffcultes so that approprate correctve acton can be taken; 3.4 To avod an overdrawn school bank account; whch s n contraventon of Fnancal Regulatons; 3.5 To produce an ntal cash flow forecast alongsde the annual budget plan, and thereafter undertake perodc revews. 16 Wltshre County Councl

17 3. PURCHASING, TENDERING AND CONTRACTING REQUIREMENTS Contents Menu 3.1 Purchasng 1. Introducton 1. Ths secton provdes basc gudance to schools on the procurement of goods and servces. Although the text s dvded up nto specfc procurement processes, e.g., tenderng and contractng, many of the ponts are applcable to other procurement processes. 2. The governng body must have regard to value for money consderatons, that s, of qualty or ftness for purpose and delvery aganst prce, n all purchases of works, equpment, goods and servces. Except where there are good reasons to the contrary, contracts must be placed on a compettve bass, the lowest tender or prce to be accepted; where a dfferent decson s taken the reasons for t must be documented. 2. General Prncples Contracts should also be revewed and renegotated at regular ntervals where approprate. 1, Schools wll award orders for the purchase of goods and servces whch wll be pad for wth publc funds. Therefore schools not only need to mantan the ntegrty of publc funds, they must also be seen to do so. Ths entals three dstnct aspects: Probty demonstrate that all partes are dealt wth on a far and equtable bass and that there s no prvate gan, favourtsm or corrupton nvolved n the contractual relatonshps of the school. Accountablty the school s publcly accountable for ts expendture and the conduct of ts affars. Value for money to demonstrate economy, effcency and effectveness n the use of publc funds. 3. Value for Money 1. There are three man elements to value for money (VFM) economy, effcency and effectveness although the boundares are often not clear cut. Economy s mnmsng the costs of resources used wthn schools, havng regard to the approprate qualty. Effcency s the relatonshp between output, n terms of goods, servces or other results, and the resources used to produce them. 17 Wltshre County Councl

18 Effectveness n the extent to whch objectves have been acheved and the relatonshp between the ntended results and actual results of an actvty. 2. The school must always have regard to value for money consderatons. Ths may not always result n purchase of the cheapest goods or servce. Consderaton must be gven to other factors such as qualty, sutablty, delvery date, credt terms, relablty of a suppler and the fnancal poston of a suppler. 3. The school may wsh to mantan a lst of approved major and regular supplers whch should be revewed at least annually. Ths should ensure that orders are only placed wth supplers who have a proven capacty to provde qualty, quantty and tmely delvery at a compettve prce and also comples wth the governors responsbltes n ths regard. Volume dscounts and credt terms should be taken nto account both when placng orders and when makng payment. 4. Payments shall normally be made aganst orgnal nvoces, not photocopes, delvery notes, statements, faxes or remnders provded by supplers. In the event of the orgnal beng lost, a copy must be obtaned from the suppler, and must be clearly marked as such. There may be nstances where payments have to be made wthout an nvoce havng been receved, e.g., some payments must accompany an order. In such cases, all documents should be attached to the copy order form as supportng nformaton. 5. There may be benefts from buldng relatonshps wth supplers. Ths can manfest tself n hdden advantages such as soft servce, for example, advce and after sales servce beyond the normal contractual relatonshp. There are strong ncentves for supplers to look after customers and schools should bear ths n mnd. 4. Identfcaton of Potental Supplers 1. The followng sources may be useful: v v v v busness drectores (e.g., Yellow Pages) trade journals vsts from sales reps/mal shots supplers catalogues nformaton from other schools nformaton from the LA other procurement meda such as Schoolquote or OPEN 18 Wltshre County Councl

19 5. Orders and Quotatons Wltshre Schools Fnance 1. Orders should be made n wrtng and placed at the tme and on the bass agreed wth the suppler. It should be exceptonal for orders to be made verbally and these must be subsequently confrmed n wrtng. There may be occasons when standng orders are placed and goods and servces are drawn aganst the orgnal order. In these crcumstances the tems drawn must be recorded aganst the orgnal order and records mantaned to montor when that order s completed. 2. Order forms should be pre-numbered. If manual order forms are used, they should be pre-numbered. (If the computersed accountng package used by the school automatcally prnts numbers on the order forms when ssued, order forms cannot be pre-numbered.) Access to order forms should be controlled to ensure that blank forms are restrcted to authorsed staff only. Orders must be sgned by the person requestng the order and then approved by sgnature by an authorsed person wthn the lmts of ther authorty and ther budget. Where value and/or delvery dates are crtcal these should be stated on the order. All copes of spoled orders should be marked as such and retaned for completeness. 3. Orders and requests for quotatons should be clear and as specfc as possble to avod any msunderstandng. The followng are relevant consderatons: v v v detaled specfcaton of requrements; quantty; delvery date and address the address should always be the school s address except n exceptonal crcumstances where specfc authorsaton s gven by the headteacher; terms and condtons t s good practce to have these pre-prnted onto orders as acceptance of the order by the suppler can mply acceptance of the purchasng organsaton s terms and condtons; quotaton reference, authorsaton and date (f an order); method to transmt quotatons, e.g., telephone or letter (f a quotaton). 4. For larger purchases a formal tenderng procedure should be followed. Advce on tenderng s gven n Secton 3.2 below. 5.1 Use of Payment Cards The governng body or delegated commttee s responsble for ensurng that there are adequate controls n place over the use of the school payment cards. These should be revewed regularly. The governors must adhere to the followng fnancal procedural rules: 19 Wltshre County Councl

20 v v v v v x x x x x Cards must only be ssued n the name of the school. The governng body must nomnate a responsble member of staff to have control over the care and PIN. The card must be kept n a secure place, eg, school safe, at all tmes and should not be taken home at any tme (t s good practce to keep the card n an envelope, whch s sgned and sealed after each use). The card should only be used by nomnated offcers and must not be gven out to members of staff for ther own use. Purchases made usng the card must relate to offcal funds for school actvtes only and all goods and servces must be suppled to the school. The delvery address should always be the school and not home addresses, etc. Personal tems must NOT be purchased usng the card. The card should only be used for low value purchases and the governng body should agree on a maxmum lmt for sngle transactons, daly and total monthly spend. There must be a prudent lmt set on the card (ths could be lnked to the school scheme of delegaton) based on projected suppler spend, and agreed by the governng body. Ths lmt must not be ncreased or exceeded wthout proper authorsaton from the governng body. To restrct mproper use of the card, merchant/retaler types could be restrcted by the card ssuer to prevent expendture on non approved tems. Schools should dscuss ther requrements wth the card provder. Cards must only be used after the correct authorsaton to purchase has been obtaned. Cash must NOT be wthdrawn usng the card. Recepts must be attached to the statements to show a clear audt tral. VAT rules stll apply to purchases made usng the card; therefore VAT recepts must be requested. There should be a clear segregaton of dutes between the requstonng/orderng and card purchasng processes and the reconclaton of the monthly statement and settlement payments made to the card ssuer. Statements must be addressed and sent to the headteacher at the school and not to named ndvduals. 20 Wltshre County Councl

21 xv xv xv xv The FULL balance must be pad off by the due date after all payment transactons lsted have been checked (by a person other than the nomnated card holder) and the statement has been reconcled. A spreadsheet or transacton log can be mantaned to ad reconclaton and ensure that credt lmts are not exceeded. Falure to settle the full balance by the due date wll be construed as borrowng, whch s not permtted. Payments to the card ssung company must be made va cheque or, preferably, drect debt and not usng petty cash. Payments made by drect debt should be processed n SIMS FMS as a cash book journal: VAT can be reclamed provded that a vald VAT recept s obtaned. Schools need to ensure that any suppler refunds are re-credted to the card account correctly. In the event of the card beng lost, stolen or compromsed the card ssuer must be contacted mmedately. 5.2 Internet Purchases v v v v Purchases over the nternet should only be used where the goods or servces cannot be effectvely or economcally obtaned va tradtonal methods and the school consders that best value s beng acheved. The cost of P&P and any returns needs to be taken nto account. If purchasng goods or servces usng the nternet, the school should only purchase from secure stes (those dsplayng https at the start and dsplayng a padlock symbol). Indvduals orderng goods and servces should make t clear that these are beng ordered on behalf of the school. When orders are placed wth the suppler an order confrmaton wll usually be dsplayed or an emal receved together wth the method of payment. Ths must be prnted off and kept wth the authorsaton to purchase (along wth all transacton documentaton and assocated emals). The school should use the same procedures on recept and payment of goods and servces from the nternet as per tradtonal methods, e.g., authorsaton from budget holders. The school should also consder the rsks when usng the nternet, to look at ther card balances, etc, and ensure that the account s password protected and that only a lmted number of personnel know the password. Some smaller traders may use thrd party payment agents (e.g., PayPal) who are unable to ssue VAT recepts or nvoces. Schools 21 Wltshre County Councl

22 must ensure that they obtan a vald nvoce/recept from the suppler drect. v x Schools may wsh to purchase and download software. Payments could be requred n foregn currences ($ and - dollars and euros). Lcence keys wll need to be kept safe. There s a rsk of vruses as well as conflcts wth Wndows or other applcatons. Schools should not clck on lnks to on-lne shops n emals, as they may lnk to fraudulent stes, and addresses should be typed manually. 6. Recept of Goods or Servces 1. All goods and servces should be checked on recept aganst the copy order for qualty and quantty. Ths check should be recorded (sgned for) on the copy order. The carrer/shpper should be notfed promptly of any shortages or rejected tems. For contracts and captal projects ths may nvolve recordng the recept of goods or servces over a long perod of tme aganst one order. In these crcumstances separate systems should be ntated to ensure that the recept of all goods and servces s recorded and that the documentaton s stored n an approprate format. 2. The school should mantan clear polces on returned goods. A goods returned book should be mantaned n order to document the return to the suppler. Ths wll nclude a descrpton of the goods and reason for the return. A procedure wll be requred to ensure that replacements or credts are receved for all returns. 7. Processng Purchase Invoces 1. Invoces for payment should be matched wth a note of the recept of goods or work carred out. The nvoce should be checked and marked off for accuracy of quantty, prce and calculaton aganst the orgnal order. All these checks should be recorded on the nvoce a rubber stamp grd s deal. Payment should only be made n respect of tems whch are properly due and nvoced. The checkng and approval of nvoces should be carred out only by authorsed members of the school staff. 2. Suppler statements should be reconcled regularly to the outstandng nvoces. Where a detaled credtors ledger s mantaned, the suppler statements should be reconcled wth each ndvdual suppler account. 3. Segregaton of dutes should be adequately mantaned wth reference to staff avalable. Segregaton between ncurrng expendture and authorsng payments s essental. The segregaton of dutes relatng to the orderng and recept of goods and between the recept of goods and the authorsaton of payments s hghly desrable. In schools where staff numbers are lmted, compensatng controls can be ntroduced to supplement the segregaton of dutes. Further gudance on segregaton of dutes s gven n Appendx A attached to ths manual. 22 Wltshre County Councl

23 4. An essental part of any purchasng system s a faclty whch enables commtments and credtors to be dentfed. Commtments are where orders have been placed for whch goods or servces have not been receved. Credtors are where goods and servces have been receved but payment has not been made. Ths faclty need not be especally sophstcated (t need not, for example, nvolve the school acqurng an addtonal commtment accountng computer module) but t s necessary to ad budgetary control. 5. Polces and procedures for makng partal payments, takng of cash dscounts and the settlement of dsputed tems should be establshed to ensure the school obtans all savngs due and all outstandng tems are resolved n a approprate manner. 8. Issues for Negotaton 1. Further savngs may be acheved by examnaton of the followng areas: v v A breakdown of the composton of the prce: there may be tems n a contract or agreement that are not essental for the school s needs and could be excluded. Quantty dscounts: schools should enqure as to the quanttes necessary to obtan dscounts and consder makng a larger order and/or a call-off contract, partcularly f the goods or servce s used on an ongong bass. A school should balance the potental benefts aganst the loss of potental nterest earned on cash balances expended and the rsks of holdng stock, such as plferage, obsolescence and damage. Movng delvery dates to sut supplers producton schedules and off peak perods: consderaton should be gven to the costs of holdng stock as outlned above. Varatons n payment and credt terms: schools should, however, be conscous of the dangers of makng payment n advance of recept of all or part of the goods or servce. Frst, f a frm were to go bankrupt the school would rank as an unsecured credtor, effectvely the last n lne to be pad. Secondly, f the goods or servce are unsatsfactory, reclamng payments may prove dffcult and costly. Intally askng for less than the actual requrement as a negotatng tool wth sales staff to obtan more favourable terms: ths approach may be detrmental to a school attemptng to buld a relatonshp wth a suppler resultng for example n the loss of soft servce or preferental treatment. 9. Leasng and Rental of Equpment 1. There are two knds of leases, operatng leases and fnance leases. Fnance leases are n substance borrowng and therefore schools are not empowered to enter nto such leases wthout specfc borrowng approval from the Secretary of State. Operatng leases are n substance rental agreements and are 23 Wltshre County Councl

24 therefore an opton avalable to schools. However, the rules that a LA must use to defne leases changed from 1 Aprl 2004 and are now subject to a strcter test. The defnton of a fnance lease s one that: transfers substantally all the rsks and rewards of ownershp of an asset to the lessee; the present value of the mnmum lease payments amounts to substantally all (>90%) of the far value of the asset; the present rate value should be calculated by usng the nterest rate mplct n the lease. (If ths rate s not determnable t should be estmated by reference to the rate whch a lessee would be expected to pay on a smlar lease.) If a lease meets any of these crtera t s a fnance lease and the school must not enter ths agreement. Leases not meetng any of these crtera can be consdered operatng leases. These new rules wll manly mpact on the leasng of IT equpment. As they deprecate quckly, leasng companes wll not typcally hold large resdual values n them. Therefore, the mnmum lease payments wll usually amount to 90% or greater of ts far value even f the lease s as short as three years. Where schools are ntendng to enter nto any lease agreement approprate advce should be sought from the Chef Fnance Offcer s Corporate Fnance Secton, unless use s made of bulk buyng arrangements establshed by the Chef Fnance Offcer (eg, Investec scheme). Schools should always read the terms and condtons of operatng leases and rental agreements very carefully. Partcular care should be taken over cancellaton clauses whch can be extremely onerous, e.g., some photocoper contracts. 2. The opton of rentng a pece of equpment can be a worthwhle consderaton, partcularly f the need s short term or the equpment may become obsolete quckly. Short term rental may cost a fracton of the purchase prce. Other factors to consder are: the costs of repar and nsurance are usually the responsblty of the hrng company; ths, of course, should be checked and be specfcally stated n the hre contract; equpment that does not lve up to expectaton or s used less frequently than antcpated can be returned. Indeed, equpment can be rented to ascertan whether usage would make purchase or further rental cost effectve; contracts can be termnated n tmes of fnancal constrant as a cost savng measure; 24 Wltshre County Councl

25 v v v the full purchase prce s not payable and nstalments spread the cost thus mprovng cash flow; rental can be the most cost effectve way of procurng equpment that s used nfrequently; long term rental may ultmately be more expensve than outrght purchase. 10. EU Regulatons 1. EU law requres that certan procedures must be followed up wth regard to contracts awarded by publc bodes that exceed certan thresholds. The values of these thresholds are detaled n Appendx B to ths manual together wth a bref summary of the requrements. 2. The basc prncples are as follows: v v v a ban on any dscrmnaton of the grounds of natonalty; transparency of award procedures by the requrement to publsh notce of the contract n the Offcal Journal of the European Communtes; ndcaton of whch type of tender procedure has been adopted: open, restrcted or negotated. The drectves gve specfc gudance as to whch may be adopted. A bref outlne of thee procedures s gven n the secton on tenderng. transparency of the crtera to be used to select contractors; complance wth techncal standards. In ths respect, European standards must take precedence over natonal standards; certan oblgatons at the begnnng of the budgetary year to gve notce of works, supples and servces contracts above the stated thresholds that a body ntends or hopes to award. Ths s not a call to tender but s an ndcatve notce to allow frms to be prepared f and when such a tender nvtaton s publshed. 3. Schools wth a potental contract that may exceed the thresholds should refer to the relevant drectves and statutory nstruments. These are: Councl Drectve 93/36/EC (The Publc Supples Drectve) Councl Drectve 93/37/EC (The Publc Works Drectve) Councl Drectve 92/50/EC (The Publc Servces Drectve) Councl Drectve 89/655/EC (The Publc Remedes Drectve) The Publc Works Contracts Regulatons Wltshre County Councl

26 11. Purchasng Controls Wltshre Schools Fnance (Statutory Instrument 1991 No 2680) The Publc Servces Contracts Regulatons 1993 (Statutory Instrument 1993 No 3228) The Publc Supply Contracts Regulatons 1995 (Statutory Instrument 1995 No 201) Copes of these drectves are avalable n the European Commsson publcaton Publc Procurement n Europe The Drectves and together wth the Statutory Instruments are avalable from The Statonery Offce. The nterpretaton of these detaled requrements s very complex and f approprate schools are advsed to seek expert advce. 1. Governng bodes should set monetary lmts clearly defnng the level of expendture staff can authorse wthout the approval of the governng body. 2. All paperwork and documentaton should be retaned for all quotaton and tenderng exercses. Ths should clearly show the bass upon whch a purchasng decson has been made, especally f the chosen opton s not the lowest ntal cost. 3. Any member of the school staff must dsclose to the governng body and the headteacher any nterest that he or she may have, ncludng that of relatves and frends, n any purchasng decson n whch they may be nvolved. Staff who face such a conflct of nterest should not partcpate n the decson wth whom to place the contract. Ths wll nclude the appontment of staff. The governng body must extend ther regster of busness nterests to nclude all staff nvolved n purchasng decsons. 4. Governng bodes must expressly prohbt dvsble contracts. These arse where one contract whch would exceed a partcular level of authorty s broken down nto two or more smaller contracts. Ths s often done where staff have faled to take account of the longer tmescales that may be nvolved or where the tender process wll be nvoked by the value of the proposed purchase. The need for forward plannng s therefore stressed n the context of purchasng decsons. If the control procedure s avoded value for money may not be acheved and there s a loss of accountablty and a fundamental contraventon of the controls establshed by the governng body. 5. Purchasng and adherence to approved procedures should therefore be revewed on a regular bass by someone ndependent of the purchasng process to ensure complance. 12. Petty Cash 1. Petty cash s useful for makng small purchases wth a mnmum of fuss. However, snce cash s portable and desrable, t s mportant that proper 26 Wltshre County Councl

27 3.2 Tenderng Wltshre Schools Fnance controls are n place to prevent ts abuse or loss. The followng contan petty cash controls coverng authorsaton, documentaton and secure storage of cash. 2. The governng body should set out n wrtng an approprate level for the amount of petty cash to be held. Ths amount should represent a balance between convenence and the rsk of holdng cash on the premses. 3. The headteacher should ensure that the petty cash fund s held securely and that only authorsed staff have access to t. 4. Payments from the petty cash fund should be lmted to mnor tems whch have been approved n advance by an authorsed member of staff. 5. All expendture from the fund must be supported by recepts, dentfyng any VAT pad. It must be sgned for by the recpent and countersgned by an authorsed member of staff. 6. Proper records should be kept of amounts pad nto and taken out of the fund. 7. The amount n the petty cash fund should perodcally be checked aganst the accountng records and revewed by an ndependent member of staff. 8. Personal cheques must not be encashed from the petty cash fund. 9. If the school has an mprest account, perodc checks should be carred out between the petty cash accountng records and the bank statements, and revewed by an ndependent member of staff. 1. Introducton 1. Tenderng s a formal procedure n whch supplers are nvted to submt a sealed bd to a purchaser. Ther bd s then evaluated together wth other bds receved aganst specfed crtera. Ths process s undertaken by a team normally comprsng the user, the purchaser and a techncal expert f approprate. 2. Ths secton sets out what s generally regarded as good practce n tenderng and should be consdered subject to any requrements mposed by EU Regulatons. 2. School Polcy 1. The governng body should establsh a tenderng polcy. Ths entals determnng: the threshold value of goods and servces above whch a tender must be used, and the mnmum number of tenders requred. (Fnancal 27 Wltshre County Councl

28 Regulatons requre that no fewer that three tenders should be obtaned for any contract wth a value over 50,000 n any one year, unless there are exceptonal crcumstances such as those outlned under Negotated Tender below.) the levels of delegated authorty n decson makng; when such authorty and approval s necessary. 2. The threshold levels for the value of goods and servces above whch the tender process should be used wll vary from school to school, subject to the mnmum requrements at Secton paragraph 1 () above. The levels chosen can depend on a varety of factors such as the overall sze of the school n fnancal terms or the nature of the purchase/supply. Dfferent levels may, for nstance, be approprate for equpment or buldng work. It s not the role of the LA to prescrbe threshold levels but to gve gudance to the school. In ths case, the school s fnancal advsers or audtors wll generally be pleased to advse the governng body on a tenderng polcy, eg, the threshold value for tenderng whch provdes a sutable degree of control wthout beng admnstratvely cumbersome. 3. A careful analyss and comparson of all possble optons s essental to make sure value for money s obtaned. The school must also retan all documentaton supportng tender decsons, partcularly where t s decded to accept other than the lowest tenders. It must ensure that no work commences untl formal letters of approval are ssued. 3. Types of Tenders 1. There are three basc types of tender: Open Tender: ths s where all potental supplers are nvted to tender. It s the preferred type as t s most conducve to competton and the proprety of publc funds. The school must consder ether how best to advertse for supplers, e.g., general press, trade journals, or whether to dentfy all potental supplers and contact drectly f practcal. Restrcted Tender: ths s where certan supplers are specfcally nvted to tender. Restrcted tenders are approprate where ether: v a large number of supplers would come forward; the nature of the goods are such that only specfc supplers can be expected to supply the school s requrements; the costs of publcty and advertsng are lkely to outwegh the potental benefts of open tenderng; or there s a need to mantan a balance between the contract value and admnstratve costs. 28 Wltshre County Councl

29 Negotated Tender: the school may negotate the terms of the contract wth one or more supplers of ther choce. Ths s approprate n specfc crcumstances where ether: v open and restrcted tenderng has resulted n ether no or unacceptable tenders; only one or very few supplers are avalable and therefore drect negotaton wll prove more effectve wth each suppler than attemptng an open or even a restrcted tender; extreme urgency exsts; or addtonal delveres by the exstng suppler are justfed. Instances of negotated tenders should be reported to the next meetng of the governng body where necessary, wth the reasons for decdng to negotate. 2. If usng open or restrcted tenderng, the process wll be facltated f schools: v v v v v do not nvte too few or too many frst to tender; research the market thoroughly; do not ssue unnecessarly bulky tender documents; allow supplers enough tme to prepare submssons; have a systematc evaluaton procedure; advse supplers of selecton and evaluaton crtera; use post tender negotaton for clarfcaton where approprate (fne tunng); use adequately traned staff. 4. Preparaton for Tender 1. Clarty s essental to avod msunderstandng. Intal specfcatons need to be drawn up as precsely as possble and schools need to ensure that all supplers bds are based on exactly the same specfcatons as the orgnal nvtaton to tender. Full consderaton should therefore be gven to: v budgeted funds avalable; objectve of project; overall requrements; techncal sklls requred; 29 Wltshre County Councl

30 v v v after sales servce requrements; form of contract; delvery dates/tmes. 2. Consderaton should also be gven to the shortlstng process (f necessary) and the format of presentatons and/or ntervews. 5. Invtaton to Tender 1. If a restrcted tender s to be used then an nvtaton to tender must be ssued. If an open tender s used, an nvtaton to tender may be ssued n response to an ntal enqury. 2. An nvtaton to tender should nclude the followng: v v v v v a letter of nvtaton wth nstructons to tenderers; a pre-addressed referenced label for tenderers to submt wth ther response; ntroducton/background to the project; scope and objectves of the project; techncal requrements; mplementaton of the project; terms and condtons of tender; form of response. 3. A tenderng checklst s provded n Appendx [M]. Schools may wsh to use ths as a framework aganst whch to draft ther own Invtaton to Tender bearng n mnd the level of nformaton requested should be determned by the value of the tender. 4. Tenders should be submtted as sealed bds and on recept a school should: record the date and tme of recept on the envelope; store safely and securely the unopened tenders untl the specfed date and tme for openng. 30 Wltshre County Councl

31 6. Openng of Tenders 1. Tenders should be opened as soon as possble after the specfed deadlne for recept and ths should only be undertaken by staff authorsed to do so. The followng nformaton should be recorded: v v v date and tme of openng; names and sgnatures of those present; value of each tender; detals of supplers who declned the nvtaton, or faled to submt a tender; any omssons n the submsson, eg, documents, sgnatures, mssng data, etc; any changes made wth correcton flud should be crcled and ntalled. 2. Late tenders should normally be rejected and retanng unopened untl the contract has been awarded and then returned to the tenderer together wth an explanatory note. 7. Crtera for Evaluaton of Tenders 1. It may be useful after all requrements have been establshed to rank requrements (eg, mandatory, desrable and addtonal) and award marks to supplers on fulflment of these requrements to help reach an overall decson. 2. Fnancal ssues to consder should nclude: v v whether lke s beng compared wth lke and that a lower prce does not mean a reduced servce or lower qualty. If ths s the case schools should consder whether the specfcaton wll be met; alternatvely, a hgher specfcaton at a hgher prce may be n excess of the school s requrements and thus may not represent value for money. ensurng that the tender prce s the total prce and that there are no hdden or extra costs; whether there s scope for negotaton; fnancal status of suppler. Supplers n fnancal dffculty may have problems completng contracts and n the provson of after sales servce. Schools may wsh to examne supplers audted accounts. Schools should be aware that credt agences can provde fnancal nformaton on companes for a small charge; the dffculty n changng contractors part way through a contract should ths prove necessary. The fnancal mplcatons may be sgnfcant. 31 Wltshre County Councl

32 3. Techncal ssues to consder should nclude: v v v qualfcatons of the contractor; relevant experence of the contractor; descrptons of techncal and servce facltes; certfcates of qualty/conformty wth standards; qualty control procedures; detals of prevous sales and references from past customers. 4. Other consderatons to be taken nto account are: pre-sales demonstratons; after sales servce. 8. Re-tenderng of Contracts 1. Schools should consder carefully the frequency wth whch ongong contracts are put out to tender. A balance needs to be struck between regularly testng value for money aganst developng a suppler relatonshp and admnstratve costs. For example, f a tender were ssued too frequently, unsuccessful frms may lose nterest n re-tenderng and a good relatonshp may not develop wth the successful suppler. If a tender s ssued too nfrequently, the exstng suppler may become complacent leadng to poor value for money. 9. Evaluaton and Approval of Tenders 1. Tenders should be evaluated aganst the set crtera. Ths wll assst n ensurng value for money s acheved. The evaluaton should be documented fully and the documents retaned. 2. The decson-makng level wll depend on the scheme of delegaton wthn the school. It may, for example, be the headteacher for small contracts, wth a report to the governng body of decsons made, and the governng body, or commttee for larger contracts. In all cases, a formal report should be prepared, summarsng the evaluaton wth a recommended decson. After consderaton, the decson should be recorded fully. All tenderers should be nformed of the decson. 3. The evaluaton process should nvolve at least two people. Those nvolved should dsclose all nterests, busness or personal, that mght mpact upon ther objectvty. If there s a potental conflct of nterest then that person must wthdraw from the tenderng process. Postve confrmaton should be requred from all nvolved n a decson that they have no nterest n the award. Ths should nclude frends and relatves. 32 Wltshre County Councl

33 4. Schools may wsh to engage the assstance of professonal contract managers where tenders or contracts are complex and for sgnfcant sums of money. For example, n the case of the acquston of a major computer system, approprate techncal and evaluatve advce may be avalable from specalsts. Alternatvely the County Councl may be able to provde such servces on a contractual bass. 5. Gfts or excessve hosptalty from potental supplers should not be accepted snce t could compromse or be seen to compromse mpartalty. 10. Notfcaton to Tenderers 3.3 Contractng 1. All organsatons who submtted a tender should be advsed of the outcome of the process as soon as s reasonably possble followng evaluaton of the submssons. Examples of letters to successful and unsuccessful tenderers are gven as Appendces D and E respectvely and should be used by schools as gudance n framng ther own documentaton. 1. Servce Levels 1. When consderng future servce provson the current level of servce should not be regarded as the standard needed. Schools should consder whether the servce s necessary, and the approprate level gven the school s budgetary constrants. The school may decde that a hgher level of servce s approprate. 2. Potental Provders 1. When consderng the provson of servces, schools should consder three optons: provde n-house; local authorty; external contractor. 2. Evaluaton of the value for money of each opton should be made. The nhouse opton may appear n some nstances to be the cheapest. However, factors such as dsrupton of current actvtes, overload of staff, qualty and expertse, cost of management and admnstratve tme, and management rsk should be consdered. 3. Schools should consder a LA as a contractor along wth all other sources before awardng a contract. As wth any exstng contractor schools should consder the qualty of servce receved n the past, qualty of servce expected n the future, together wth cost compared wth that of other provders. 33 Wltshre County Councl

34 3. Servce Contracts 1. Contracts are essentally of three types: pay as you use (hourly rate); fxed enttlement; nsurance (where a suppler covers all crcumstances for a fxed prce) 2. Schools must consder the costs and benefts of each. 3. Pay as you use (hourly rate) contracts are straghtforward but may gve the suppler lttle ncentve to control ther tme as the cost s passed on. If a school needs to use the servce more than antcpated the addtonal costs wll be met by the school. Ths type of contract allows schools to adjust to changng crcumstances by usng less or more of the servce. 4. Fxed enttlement contracts allow the exact cost to be known n advance. Ths ads budgetng and plannng. However, supplers may be tempted to nflate prces n antcpaton of problems and therefore may be more expensve. The school s offered a fxed enttlement to a specfc level of servce at a set prce, eg, a certan number of days advce on currculum. 5. Insurance type contracts are most approprate where usage s dffcult to predct n future perods, eg, legal advce, personnel advce. The school pays a premum to ensure unlmted access to a servce f and when certan condtons are met. Insurance type contracts may have a no clams bonus attached. 6. All contracts should be specfcally drawn up and be as detaled as possble to elmnate any lkelhood of msunderstandng. Key areas to cover are: v v v v v level of servce; scope of work; frequency and tmng; calculaton of charges; crtera for successful delvery of the contract; means of redress f ths s not acheved; any cancellaton costs; due date for payment. 7. Before the governng body enters nto any contract t should consder whether or not to take legal advce. Factors to consder are the sze of the contract, the nature and extent of the labltes to be taken on by the school, the lkely cost of 34 Wltshre County Councl

35 obtanng legal advce and whether there are any specal condtons to be ncorporated n the contract. 4. Montorng of Agreements and Contracts 1. It s essental that schools montor all agreements and contracts closely and on an ongong bass to ensure satsfactory delvery. Issues to consder are: v the governng body should approve all major contracts as set out n ther scheme of delegaton; staff nvolved wth the servce should be nvolved n the purchasng and montorng operaton. The role of negotaton and admnstraton could be delegated accordngly. The responsbltes of staff should be clearly defned and be n lne wth ther capabltes and experence; montorng should be an ongong process and all concerns should be rased wth the contractor. The school should mantan a wrtten record of communcatons related to all such concerns; schools should ensure that the hrer or lessor has arrangements n place for prompt repar of equpment under contract. 2. In accordance wth the County Councl s Fnancal Regulatons, every contract over 500 must be recorded n wrtng, and full supportng documentaton must be kept, ncludng a clear statement of: what the contract s for; what s to be pad for t; when t s to be performed. 3.4 Constructon Industry Scheme 1. The HM Revenue & Customs amended the Constructon Industry Scheme from 6 Aprl Under the new scheme schools that control ther own budgets (all Wltshre County Councl schools) wll be exempt from the scheme. 3. Ths means that schools: can pay supplers n the buldng ndustry drect wthout havng to process nvoces va the Exchequer Secton at County Hall; are no longer requred to send n Constructon Industry Scheme returns, ncludng nl returns, on a termly bass; no longer have to ensure that contractors are regstered under the Constructon Industry Scheme. 35 Wltshre County Councl

36 4. INTERNAL AND EXTERNAL AUDIT Contents Menu 4.1 Why do we need Internal Audt? 1. All money wthn the Indvdual Schools Budget s LA money subject to oversght by the LA s chef fnancal offcer, the Chef Fnance Offcer. One of the ways that the CFO dscharges hs/her dutes under S151 of the Local Government Act 1972 (e, to make arrangements for the proper admnstraton of the LA s fnancal affars) s through the use of Internal Audt. 2. The governng body s responsble for the school s fnancal systems, records and procedures and must comply wth the requrements set out n the Scheme and the Schools Fnance Manual. 3. Internal Audt s needed so that the Chef Fnance Offcer, governors and headteacher can be satsfed that the school s fnancal systems and nternal controls are adequate and suffcent to dscharge the school s responsbltes for the stewardshp of publc funds. 4. Internal Audt s assessment wll dentfy any major weaknesses that could potentally expose the school to fnancal rsk, and where necessary, suggest mprovements that mght be made to mprove a school s control systems. Internal Audt wll also offer constructve advce and assstance wth any suggested mprovements. 5. The audt may also be used by a school to measure exstng fnancal arrangements or n the settng up of new systems and controls. It may therefore be seen not only as a benchmark for measurng current systems and procedures, but also as a tool for selfmprovement by schools. 4.2 Who Montors Internal Audt? 1. The County Councl has delegated to the Chef Fnance Offcer the responsblty for mantanng an adequate and effectve nternal audt servce and he wll ensure that: the servce operates n accordance wth professonal gudelnes; schools receve regular nternal audt reports; Internal Audt and External Audtors work wth maxmum cooperaton. 2. As Internal Audt s part of the County Councl s control envronment, the adequacy of ts work s also assessed by our external audtors. 4.3 What about External Audt? 1. Because schools expendture comes wthn that of the County Councl, schools do not requre a separate external audt and wll not receve a separate external audt report. The External Audtor may wsh to vst a few schools but s lkely to place relance on the work of Internal Audt for the majorty of schools and so mnmse the costs of audt and the dsrupton to schools and the LA. 36 Wltshre County Councl

37 4.4 What s the Audt Approach? Wltshre Schools Fnance 1. Internal Audt approaches the audt of schools through the use of strategc plans, annual plans and audt programmes. These are flexble and wll change wth changng prortes. The plans wll seek to mnmse the rsk of poor nternal controls, loss of assets and fraud and corrupton. 2. In summary: 1. The strategc plan covers three years and s prepared on a rsk assessment bass, whereby schools are ranked aganst varous rsk factors (eg, sze of budget, date last audted, etc). As a result, schools wll receve an audt ether annually (generally the bgger schools), every two years, or every three years. The rsk assessment process s subject to annual revew, so frequences may change. 2. The annual plan shows schools due for a full audt n the year and also contans a provson for addtonal audts whch wll be undertaken f an audt s requested, for example, where any of the followng trgger factors apply: concerns about the fnancal arrangements at schools or suspected rregulartes; a new member of staff n a key post nvolved n fnancal procedures; a new school or where a school experences sgnfcant change. 3. Audt programmes detal the areas to be covered by the audtor as part of the revew. 4. The cost of ths audt work wll not be met from schools delegated funds, but wll nstead be part of Strategc Management, whch s pad for centrally by the LA. 4.5 What f fraud or other rregulartes are suspected? 1. The governors must take reasonable steps to prevent and detect fraud. These nclude: provdng reasonable assurance that actvtes are conducted honestly and assets safeguarded; establshng arrangements to deter fraudulent conduct and detect any that occurs; ensurng that fnancal nformaton reported s relable to the best of knowledge and belef. 2. If fraud or other fnancal rregulartes occur, or are suspected, the governng body must report the matter to Internal Audt mmedately, gvng full detals of the crcumstances. Internal Audt wll provde advce and may nvestgate and report to the governng body. The governng body must take approprate legal and/or dscplnary 37 Wltshre County Councl

38 acton and effect any necessary changes to systems and procedures to mnmse the rsk of smlar matters arsng agan. 4.6 How should the School prepare for Audt? 1. Internal Audt wll usually arrange the date and tme of the audt wth the school, as t s mportant to be able to speak to staff nvolved n fnancal procedures. When the vst s arranged, Internal Audt wll provde a lst of reports to be run off the school s local ledger system n readness for the audt and despatch an audt questonnare for completon pror to the audt. Occasonally, a short, unannounced vst may be made to a school as part of the antfraud work that Internal Audt must complete for the County Councl. Schools wll be selected at random to take part n ths programme. Also, Internal Audt may carry out county-wde system audt revews and select a sample of schools to check the adequacy of procedures. 2. If the school contracts out fnancal servces such as payroll or accountancy, the governng body must retan records for detaled checkng to be carred out at the school and arrange access for the audtors to the school s papers, records and systems held by the provder. Such access should be ncluded n the agreement governng the relatonshp between the school and the provder. 3. Internal audtors must have full access at all tmes to all papers and records, assets and premses used by the school, and governors and staff must provde explanatons that the audtors consder necessary to complete ther work. The governng body must pass on to the audtors any nformaton whch the audtors should be aware of to carry out the audt. 4.7 What f a School wants to purchase an addtonal Audt? 1. Schools may use delegated funds to purchase an external audt certfcaton of ts accounts, whch may nclude a hgh level revew of fnancal systems. Ths would be regarded as n addton to and separate from the nternal and external audt work descrbed above. 2. A school may purchase addtonal nternal audt work f desred and should contact the Internal Audt Secton to dscuss requrements. Such addtonal work would agan be pad for out of schools delegated funds, snce t would be outsde the scope of the audt plans referred to above. 4.8 Audt of Voluntary and Prvate Funds 1. It s mportant for schools to demonstrate proper accountablty for the use of all mones held n voluntary and prvate funds, and any tradng organsatons whch they run. Schools must therefore prepare annual accounts for each fund and/or organsaton, and arrange for an annual audt of each fund to be carred out by an ndependent and sutably qualfed person. The audt should be completed as soon as practcable after the end of the fund s fnancal year. 38 Wltshre County Councl

39 2. In practce t s not necessary to employ a qualfed accountant for ths purpose. However, any person undertakng the audt should be competent and should not have any role n managng the fund. It s mportant to ensure that the audtor s able to reconcle the balances shown n the annual accounts of the fund, and that all ncome and expendture of the fund can be supported by approprate vouchers. 3. On completon of the audt, the audtor should sgn and date an audt certfcate as follows: I have examned the recepts and payments statement wth the books and vouchers relatng thereto, and have obtaned all the nformaton and explanatons requred. In my opnon the recepts and payments statement presents a true and far vew of the fund s actvtes for the year ended The certfcate should be entered on or attached to the accounts of the fund. 4. The audted accounts should then be presented to the next meetng of the governng body for approval. The char of governors should sgn and date a certfcate as follows: The fund accounts and audt certfcate for the year ended have been presented to the governors at ther meetng on (date). 5. The Chef Fnance Offcer s Internal Audt Secton has an overall nterest n ensurng that the audt requrements for voluntary and prvate funds are beng properly observed. Schools should therefore provde Internal Audt wth a summary of the accounts of each fund, ncorporatng the audtor s sgned certfcate and the char of governors certfcate approvng the audted accounts, not later than 31 December followng the fund s fnancal year end. 39 Wltshre County Councl

40 5. INCOME Contents Menu 5.1 General 1. The arrangements for the collecton of all money due to the County Councl shall be under the supervson of the Chef Fnance Offcer, who shall consult wth the Solctor for the Councl where approprate. 2. Heads shall promptly render accounts for the recovery of ncome due. 3. No debt shall be dscharged, other than by payment n full or beng wrtten-off: refer to Secton 5.2 for nformaton on Debt Wrte-Off. 4. Offcers authorsed to collect County Councl mones shall, where approprate, gve an offcal recept. Unless the pror authorsaton of the Chef Fnance Offcer s obtaned, all collectons shall be pad, ntact, nto the County Councl s bankng account, or Grobank account, or drect to the Chef Fnance Offcer, at such ntervals as the Chef Fnance Offcer may prescrbe. Where the ncome relates to the delegated budget, smlar arrangements shall apply except that t wll be pad nto the local bank account for the school, rather than the County Councl s account. 5. Each offcer who receves money on behalf of the County Councl shall keep an accurate and chronologcal account of all mones receved and thereafter pad to the Chef Fnance Offcer and County Councl s bankers, or the local bank account, and such other records as may be approved by the Chef Fnance Offcer. 6. No thrd party or personal cheques shall be cashed out of any offcal mones of the County Councl, expect wth the pror wrtten approval of the Chef Fnance Offcer. 7. Before the varatons n scales of charges for goods suppled, work done, or servces rendered by the establshment are consdered by the governng body, the headteacher should report on the cost of the actvty for whch the charge s beng made. Charges, goods suppled, work done or servces rendered by the establshment, are codfed n an offcal Scale of Charges. Varatons to ths can be consdered by the governng body only after consderaton of a report by the headteacher of the true cost of undertakng the actvty for whch the charge s beng made. Governng bodes are remnded of the requrement, when settng scale charges, that delegated budgets may not subsdse non-school actvtes. 5.2 Wrtng-Off Debts 1. Governng bodes are able to wrte-off debts up to the value of 500. The mnutes of meetngs of the governng body must record the decson to wrte-off any partcular debt, along wth the detals as requred by paragraph 2 below. 2. The wrte-off of debts above the value of 500 can only be actoned followng the pror approval of the Chef Fnance Offcer. Requests must be made n wrtng and show: the reason why the ncome s due; 40 Wltshre County Councl

41 the steps taken to collect the mones due; the reason for requestng the wrte-off. 3. A wrtten record of all debts wrtten-off must be mantaned and retaned for nspecton. 4. When a debt s wrtten-off, schools should take care to remove the value from ther forecasts of future ncome as reported to governors and the LA. 41 Wltshre County Councl

42 6. BANKING ARRANGEMENTS Contents Menu 6.1 Bank Accounts 1. All schools can have external bank accounts. 2. Schools can use any of the fnancal nsttutons lsted n Appendx F. 3, Investment may only be made drectly n accounts of the approved bank whch are clearly shown to provde no rsk to the captal sum. Investment must not be arranged through any ntermedares. 4. The nvestment must be n any current or depost account (ncludng sngle deposts) placed wth a bank on the approved lst or a local authorty. Depost accounts nclude managed money market accounts, provdng that the bank provdes a wrtten agreement ncorporatng a guarantee of the captal sum nvested. 6.2 Interest/Overdrafts 1. Schools wll retan all nterest payable on the accounts and bear any charges made by ther bank. 2. Because of the tax status of the County Councl, nterest should be pad gross, wthout deducton of tax. 3. Schools must not themselves offer any securty to the bank. If requested the County Councl may guarantee ndvdual accounts. Applcatons should be made to the Chef Fnance Offcer. 4. Schools must not make arrangements for overdrafts, loans or any other forms of credt or deferred purchases. 6.3 Cheques 1. Schools wll order from ther own banks ther own cheques. They can be avalable n contnuous statonery n whch case they should be desgned to match the prntng format of the computersed accountng package n use. 2. The cheques must dentfy the school name somewhere n the account name. The school must ensure that the name on ther bank account and pre-prnted on ther cheques are n the requred format. 3. Cheques must be sgned n manuscrpt by two members of staff. Where possble, they should not be the same staff who authorse orders or certfy accounts for payment. The school may appont a governor as an addtonal thrd sgnatory, for nstance, for cheques over a certan value or for a certan purpose. Ths governor s sgnature must be n addton to those two members of staff. 4. Any alteratons to a cheque must be ntalled by an authorsed sgnatory. Blank cheques must not be pre-sgned and they must be kept n a secure place. Payments must not be made aganst any bank account unless properly authorsed. 42 Wltshre County Councl

43 6.4 Reconclaton 1. Schools must reconcle the balance on ther bank or buldng socety statement wth the balance on ther ledger bank account. 2. Ths reconclaton must be done regularly at least monthly. The reconclaton should be sgned by the Responsble Offcer to sgnfy that t s complete and accurate. 3. A full audt tral of the explanaton of the dfferences between the bank statement and the ledger bank account must be retaned. 4. The man elements wthn a dfference between the bank statement and the ledger bank account are: 1. Items n the Ledger Bank Account not n the Bank Statement (unreconcled tems) unpresented cheques uncleared pay-ns No acton s requred by the school. 2. Items n the Bank Statement not n the Ledger Bank Account sundry credts (e, cash recepts) e.g., bank nterest sundry debts (.e., cash payments) e.g., returned cheques The school must create approprate ledger (journal) transactons to recognse these payments and recepts n the ledger. It s recommended that these are actoned pror to the next bank reconclaton. 3. To complete the reconclaton, the unreconcled tems report must be prnted. The balance should be added/subtracted from the bank statement balance to reconcle to the current ledger balance. The unreconcled tems report must nclude all tems up to the date of prntng. 43 Wltshre County Councl

44 7. STORES AND OTHER ASSETS Contents Menu 7.1 General 1. Headteachers shall be responsble for the custody and physcal control of the stocks and stores n ther establshment and for ensurng that these do not exceed reasonable requrements. 2. Adjustments to stores records arsng from stocktakng shall be agreed by head teachers. If the value of such adjustments for any tem exceeds 250, t should be reported to the governng body, who shall record t n the mnutes of ther meetngs. 3. No surplus stores or other property of the County Councl shall be sold to any member of the staff of the County Councl wthout the specfc approval n each partcular case of the Chef Fnance Offcer. 7.2 Inventory Regsters 1. Each school wll mantan an nventory of ts moveable non-captal assets wth a value exceedng 1,000. Schools are free to determne ther own arrangements for keepng a regster of assets worth less than 1, No specfc format for ths wll be specfed except that t s requred that, as a mnmum, the followng data s held aganst each asset dentfed: v v v v dentfcaton number; descrpton; manufacturer s seral number; locaton (e, where t s n the school); estmated value (preferably the cost at purchase); date of last check (e, when the asset s presence was last vsually establshed); source of fundng. The school must regularly verfy that all assets on the lst are stll physcally n the stated locaton. Each school can establsh ts own methods but, at least, each asset must be checked at least once per fnancal year. On completng each checkng epsode, the nventory must be updated to reflect: the new date of last check ; any change n locaton of the asset. 44 Wltshre County Councl

45 The person undertakng the checks should ntal/sgn and record the date of the check n the nventory. 3. All nventores should be made avalable for nspecton at all tmes. 4. All nventores, or hard copes of the nventory where a computer system s used, should be kept n a safe or freproof cabnet. 5. All tems entered n the nventory should be securty marked. 6. To enhance the physcal checkng process t s advsable to fx the dentfcaton number to the asset. 7. The names of staff who are responsble for each secton of an nventory, or f the school mantans more than one nventory, should be dentfed and recorded. 8. Computersed nventory lsts used for checkng tems should be ntalled, dated and retaned as confrmaton, or tcked and each page sgned and dated. 9. Where tems are taken off ste a record should be kept and sgned and dated by the person removng the tem. 10. A regster of laptop computers allocated to teachers should be mantaned and recpents should sgn to confrm they are takng care of the equpment whlst t s on loan to them. 11. If a new nventory system s to be ntroduced, all prevous nventores must be retaned and entres n the new nventory cross-referenced to those n the old nventory/es. 12. If n the course of the nventory check t becomes apparent that an asset s mssng, then the record must be deleted from the nventory and approprate nvestgatons undertaken to determne the fate of the asset. A record of the results of the nvestgaton must be kept along wth the data record deleted from the nventory. 13. If any asset s scrapped or otherwse dsposed of (n accordance wth any regulatons contaned n ths manual), then the nventory regster should be adjusted accordngly. 14. The governng body must regularly (at least once n each fnancal year) receve a report on the results of nventory checks and the value of any assets lost/dsposed of. Ths report should also hghlght any securty or control ssues arsng from nvestgaton of nventory losses. The mnutes of the governng body must record any acton resolved by the governng body on consderaton of such reports. 45 Wltshre County Councl

46 7.3 Dsposal of Assets 1. General The decson as to whether an tem s surplus to current requrement and of no contnung or future value rests wth the headteacher. Once assets are dentfed as surplus, obsolete or beyond repar, ther sale or dsposal can be authorsed by the headteacher and the school nventory updated accordngly and retrospectvely reported to the full governng body. As a result of decdng an tem s surplus an alternatve use should be consdered. Whlst the tem may be of no contnued or future use to the school t may well be of some value to other parts of the Councl. In the frst nstance, due consderaton should be gven to advertsng surplus assets, ncludng mnbuses, to other schools or educaton establshments. If an offer s not receved, or the tems are consdered to have no value, tems may be dsposed of safely, n accordance wth the followng procedures. When assets are sold to employees, the transacton should be recorded n the Regster of Pecunary Interests the headteacher must be able to demonstrate the tem has been advertsed, sold at market prce and value for money obtaned. 2. Valuaton of Assets for Dsposal It s mportant pror to dsposal of an asset to ascertan an outlne value of the tem n order to ensure that value for money s obtaned on the sale and so the approprate procedures can be appled. An estmated value should be recorded n the nventory and agreed by the headteacher pror to dsposal. 3. Non-Valuable Items under 50 Where tems are adjudged to be of low value t s reasonable for the school to dspose of tems va nternal advertsng or sellng the tem n a school fete. 4. Valuable Items more than 50 To ensure value for money s obtaned and to protect members of staff from crtcsm, goods should be advertsed to the publc and parents as well as employees. Advertsements can be placed n the school or PTA newsletter and n local newspapers. 46 Wltshre County Councl

47 If an tem s consdered to be of exceptonal value and s worth more than 1,000 the proposed sale should be dscussed wth the school s fnance offcer to obtan specfc advce and gudance and referred to the governng body. 5. Electrcal and Mechancal Equpment ncludng computers Care should be taken n the dsposal of electrcal and mechancal equpment especally f tems are offered for sale. Accdents caused by faulty equpment prevously owned and mantaned by the authorty may result n a fnancal lablty. In vew of ths, t s recommended these tems are checked for safety by a competent professonal, such as an electrcan or engneer, and a certfcate ssued dentfyng the tem and verfyng ts safety. The cost of obtanng a certfcate wll nevtably determne whether such tems are placed for sale or are dsposed of as scrap. IT and computer equpment has the addtonal requrement of secure dsposal, both from an electrcal safety pont of vew and securty of the school s data. The hard dscs have to be wped clean before beng sold or dsposed of. A certfcate should be produced to evdence that the computer has been wped/de-gauged to the approprate standard. Once the hard dsc has been wped, f the equpment s not to be sold on and re-used, t should be dsposed of approprately,.e. dsmantled and put n a hazardous landfll ste or recycled. It s mportant to be aware that re-usng a computer requres the nstallaton of an operatng system whch requres a lcence for t to be used legally, evdenced by an authentc certfcate. Schools can not sell on operatng system lcences. 6. Proceeds Proceeds from the sale of assets purchased wth delegated funds should be credted n the school budget. Further advce regardng codng of ncome s avalable from the school s fnance offcer. Income should not be banked nto the unoffcal school fund. 47 Wltshre County Councl

48 7. Donated Assets Wltshre Schools Fnance Where tems to be dsposed of have prevously been donated to the school, such as from the PTA, t s consdered prudent to consult the orgnal provder. 48 Wltshre County Councl

49 8. VALUE ADDED TAX Contents Menu 8.1 Schools, n respect of delegated and devolved funds, are able to utlse the County Councl s ablty to reclam VAT on expendture relatng to non-busness actvty. Amounts reclamed wll be passed back to schools on an ndvdual bass. For nformaton on how to operate ths reclam system refer to Gudance Note 1 attached to ths manual. 8.2 Due to the complextes of VAT, the Resources Department has produced a separate VAT manual for schools. It s strongly recommended that all schools hold a copy of the manual and nomnate someone to have responsblty for ths mportant area of work. 8.3 The Resources Department offers regular tranng programmes on VAT, and also operates a VAT hotlne to deal wth queres. Schools are requested, however, to only use ths faclty as a last resort as the answer to most queres can be found n the VAT manual. The telephone number s For further nformaton contact Khadja Tahar, Treasury & VAT Offcer, Resources Department, County Hall (telephone ). 49 Wltshre County Councl

50 9. INSURANCES Contents Menu 9.1 Introducton 1. Insurance arrangements were delegated to all schools wth effect from Aprl Ths secton of the manual: lays out the mnmum specfcaton of nsurance cover requred n the event that schools wsh to purchase nsurance from an external provder; sets out detals of the nsurance arrangements that are provded by the County Councl. 2. For all County Councl establshments other than schools, exstng nsurance arrangements, contnued post 1 Aprl Ths s a centrally funded actvty wth the County Councl self-nsurng a proporton of ts rsks. Both of these factors allow the costs of nsurances that are borne by servce commttees to be kept to a mnmum. Schools can choose to reman party to these arrangements f they wsh. The more schools that choose to do so, the lower nsurance costs can be kept for the mutual beneft of partcpatng schools and all other County Councl servces. 9.2 Mnmum Insurance Requrements 1. Insurance cover s requred to be mantaned n respect of the followng rsks: Materal damage (buldngs) ncludng all rsks polcy The followng perls must be covered: fre, lghtnng, arcraft mpact, other mpact, exploson, rot, cvl commoton, storm flood, burst ppe damage, earthquake, subterranean fre, subsdence and malcous damage; a polcy for terrorsm should also be obtaned. Employer s Lablty Ths must be covered to a mnmum of 5 mllon. Publc Lablty Ths must be covered to a mnmum of 5 mllon. v Motor Ths must be covered mnmum thrd party. v Fdelty Guarantee 50 Wltshre County Councl

51 Ths must be covered to a mnmum of 1 mllon, subject to ndvdual school sze. v Offcal/Professonal Indemnty Ths must be covered to a mnmum of 2 mllon and should also provde ndemnty aganst lbel and slander. 2. The level of premum charged by the Insurance Market wll depend on a large number of factors, many of whch are outsde the control of ndvdual schools. Those that a school can nfluence nclude the level of Excess t s prepared to stand (a form of selfnsurance) from ts own delegated budget. It can also, over the longer term, reduce ts premums by demonstratng an ablty to manage down ts own rsks, through varous forms of preventatve measures. 9.3 Provson by the County Councl 1. The Insurance Team wthn the Treasury & Pensons Secton of the Resources Department s able to provde a range of nsurance servces. Detals of these, ncludng the cover provded aganst ndvdual rsks, are set out n the publcaton A Gude to County Councl Insurances. 2, Cover s arranged for each fnancal year, and all-nclusve premums wll be nvoced through the Rght choce procedures to schools on an ndvdual bass. 3. For further nformaton, contact Mrs Judy Nevlle ( ) or Julan Goacher ( ). A 24 hour answer phone servce s also avalable. 9.4 Supply Cover Insurance 1. The LA operates a scheme provdng supply cover nsurance for schools. Ths s open to all schools. 2. For further nformaton contact the Accountng & Budget Support Team on Wltshre County Councl

52 10. PAYROLL Contents Menu 10.1 Mnmum Specfcaton for Payroll Servce When decdng on a suppler to provde a comprehensve payroll servce to an educaton establshment a number of factors must be consdered. Any school seekng a payroll servce from an alternatve provder must be aware that there are certan elements of a payroll servce that must be provded for wthn the software to comply wth legslaton; these are desgnated below as essental. Other elements of a payroll servce can be catered for outsde the software to comply wth legslaton and condtons of servce and these are desgnated below as desrable. Ether the school or the payroll provder must perform these tasks. 1. Calculaton, payment and costng: Essental 1 Elements of gross pay for multple jobs, on multple NI tables, and n multple penson schemes 2 Natonal Insurance lablty on rembursng mleage costs 2, Deductons on behalf of thrd partes: Desrable Overtme, lettngs and bonuses Occupatonal and statutory pay Occupatonal and statutory maternty/paternty pay Taxable benefts assocated wth travellng expenses Pay awards Retrospectve awards Increments Manual payments Calculate pensonable numeraton for LG penson fund Essental PAYE Income Tax, Natonal Insurance, student loans and tax credts Penson Fund contrbutons Addtonal Voluntary Contrbutons (AVCs) GAYE Attachment of Earnngs Orders (AEOs) Voluntary deductons, ncludng unon subscrptons Car loans Rent Desrable 3. Payroll Admnstraton: 52 Wltshre County Councl

53 Essental 1 Producton of P35, P Desrable All other HMIT forms, ncludng P45, P46, P11d Thrd party accdent clams Updatng Local Government Penson Fund ((LGPF) and Teachers Pensons (TP) records Calculaton and payment of redundancy enttlements Calculaton and recovery of overpayments Work assocated wth AEOs Reconclaton of payroll accounts Reconclaton of bank accounts Despatch of pay slps and related documents Deal wth enqures from: Employees Other LAs LGPF, TP Inland Revenue, DSS Buldng socetes, banks Mortgage companes 4. Record Mantenance: Essental Desrable Sckness enttlement Unpad leave Salary hstory Tax code hstory Pay slp and costng hstory Informaton for statstcal returns to central and local government 5. Related Servces: Essental Desrable Ad hoc reports Advce on legslaton Advce on budget estmates for salary costs Advce on condtons of servce Provson of statonery 53 Wltshre County Councl

54 10.2 Responsbltes of School and Payroll Provder Snce Aprl 2002 all schools have receved ther full delegated budget n cash. It s transferred nto ther own bank accounts and they have the choce of purchasng a payroll servce from the Chef Fnance Offcer, or fndng an external provder. Any school opton to use an alternatve payroll suppler must ensure that the provder, and the school, delvers a smlar servce to that of County Councl. Wltshre County Councl Payroll Servce The Chef Fnance Offcer offers a fully audted payroll servce suffcent to dscharge hs responsbltes and the schools, and comply wth legslaton. Ths servce s avalable at two levels, Complete and Partal. 1. If a school chooses the County Councl s Complete payroll servce: a) the school must regster as a BACS user wth ther bank or buldng socety. Ths faclty allows net pay to be deducted from the school s account and credted to employees accounts on pay day; b) the Payroll Secton at County Hall wll be responsble for provdng an accurate and tmely servce based on nformaton receved from the school; c) f the school chooses not to purchase a Personnel Admnstraton servce from WCC, the work of the Payroll Secton wll be more extensve and, therefore, more expensve; d) the Payroll Secton wll be responsble for creatng a BACS transacton to take from the school bank account payment for penson contrbutons to be pad to Teachers and the Local Government Penson Schemes on the last workng day of the month; e) the Payroll Secton wll be responsble for payng over all other payroll deducton and labltes, eg, PAYE, NI, Court Orders by due dates; f) the Payroll Secton offers a help/advce lne on payroll related ssues. 2. If a school chooses the County Councl s Partal payroll servce: a) the school must regster as a BACS user wth ther bank or buldng socety. Ths faclty allows net pay to be deducted from the school s account and credted to the employee s account on pay day; b) the Payroll Secton at County Hall wll be responsble for provdng an accurate and tmely servce based on nformaton receved from the school; c) f the school chooses not to purchase a Personnel Admnstraton servce from WCC, the work of the Payroll Secton wll be more extensve and, therefore, more expensve; 54 Wltshre County Councl

55 d) the Payroll Secton wll be responsble for creatng a BACS transacton to take from the school bank account payment for penson contrbutons to be pad to Teachers Pensons on the last workng day of the month, alternatvely the school wll rase a cheque and send t to the Payroll Secton at County Hall before the last workng day; e) the school wll be responsble for payng over all other payroll deductons and labltes, e.g., PAYE, NI, Court Orders and Local Government Penson Scheme by due dates; f) the Payroll Secton offers a help/advce lne on payroll related ssues. Any school choosng to receve a Partal Payroll Servce wll be responsble for payng over all deductons from pay to thrd partes excludng Teachers Pensons, as they deem Wltshre County Councl accountable for submttng all contrbutons deducted n respect of teachers pensons. 3. If a school chooses the payroll servce to be provded by an alternatve suppler: a) the school s responsble for ensurng the suppler provdes an accurate and tmely servce based on nformaton receved from the school; b) the school s responsble for ensurng that the Chldren & Educaton Department s nformed of relevant changes; c) the school wll be responsble for supplyng a cheque for penson contrbutons to Teachers Penson to the Payroll Secton at County Hall by the last workng day of the month, together wth audt assurance that the contrbutons are correct; d) the school wll be responsble for payng over all other payroll deductons and labltes, e.g., PAYE, NI, Court Orders by due dates; e) the school wll be responsble for provdng change detals to Local Government Penson Scheme. At year end full contrbuton detals wll be requred to update the Local Government Penson Scheme. 55 Wltshre County Councl

56 APPENDIX A Appendx Menu SEGREGATION OF DUTIES A.1 Prncples of Segregaton 1. Dutes should be properly segregated between ndvduals. One of the prme means of control s the separaton of those responsbltes or dutes whch would, f combned, enable one ndvdual to record and process a complete transacton. Segregaton of dutes reduces the rsk of error or ntentonal manpulaton through checks bult nto the routne. 2. Functons whch should be separated nclude those of: v v authorsaton (the authorsaton of a transacton such as a purchase order or a payment); executon (the placng of an order, recevng of goods and servces or chargng and recept of a fee); custody (the holdng of the goods or servces); recordng (the completon of the accountng records); n the case of a computersed accountng system, systems development and operaton (the determnaton of operatng procedures and the carryng out of those procedures). A.2 Segregaton n Practce 1. The segregaton of dutes wll need to be addressed n relaton to the staff avalable and ther levels of responsblty n the fnancal organsaton of the school. It wll not be possble n many schools to allocate all the functons n paragraph 2 to dfferent staff. In most cases t s not necessary to separate the functons between more than two or three staff. 2. Internal Audt wll revew segregaton of dutes as part of ther audt procedures and wll advse schools accordngly f alteratons to the fnancal systems are requred. 3. Segregaton of dutes can be smplfed f t s possble to centralse the executon and recordng functons to be carred out by a person wth no authorty to authorse transactons. The person authorsng a transacton can therefore never execute or record the transacton and f payments are authorsed by a thrd person there should be adequate segregaton of dutes. A.3 Role of Governng Body 1. In some schools the fnance functon s only a small part of the school s overall actvtes. Nevertheless, many schools are funded at a level comparable wth the ncome of the medumszed busness and especally gven ther use of publc money, must mplement sound fnancal controls. Therefore, even where t s not possble to have full separaton of all responsbltes, the governng body must satsfy tself that there are adequate checks and segregaton to ensure that the rsk of error or fraud s mnmsed. 56 Wltshre County Councl

57 APPENDIX B Appendx Menu BRIEF SUMMARY OF EU PROVISIONS B.1 Scope of the Regulatons 1. Estmated contract thresholds as at 31 January 2006 for ncluson n the Offcal Journal of the European Communtes (OJEC) are: ECU Approx Servces and Supples 206, ,893 Works 5,150,000 3,497,313 (ECU = European Currency Unt) 2. For regular, ongong contracts the estmated value shall be establshed on the bass of: ether the actual aggregate value of smlar contracts concluded over the prevous fscal year or 12 months adjusted, where possble, for antcpated changes n quantty or value over the followng 12 months; the estmated aggregate value durng the 12 months followng frst delvery or durng the term of the contract where ths s greater than 12 months; for works contracts, f the contract s dvded nto lots then the total value of the lots must be consdered. 3. The term Servces refers to the procurement of a wde range of servces ncludng travel, accountng and audtng, market research and management consultancy, property management servces, refuse dsposal, and fnancal and computer servces. Supples refers to the purchase, hre, lease or hre purchase of goods and Works refers to the procurement of cvl engneerng and buldng works and the award of works concessons contracts. 4 The drectves are explct that no procurement requrement for a gven quantty of supples may be splt up wth the ntenton of avodng the applcaton of ths drectve Artcle 5 paragraph 6 of Publc Supples Drectve 93/36/EC. The Works Drectve contans a smlar clause n Artcle 6 paragraph 4 and the Servces Drectve Artcle 7 paragraph 3. B.2 General Requrements B.2.1. Prescrbed Tenderng Procedures 1. Contracts fallng wthn the relevant fnancal threshold must be tendered under one of the three procedures outlned n the secton on Tenderng above. Addtonally, a procedure known as Accelerated Procedure may be appled where urgency arsng from outsde the control of the school renders t mpractcal to use the mnmum tme lmts lad down n the standard open, restrcted and negotated procedures. 57 Wltshre County Councl

58 B.2.2 Prescrbed Tmescales 1. Each procedure has mnmum tmescales for the perods between specfc actvtes startng from the date that the notce was sent to the OJEC. The mnmum tmescale under the restrcted procedure s 78 days and the accelerated procedure s 31 days. These procedures make t dffcult to award contracts quckly and therefore forward plannng by schools s essental. B.2.3 Advertsng n OJEC 1. Contractng authortes are requred to advertse ther major requrements through Indcatve/Pror Informaton Contract Notces for ndvdual requrements and Contract Award Notces. The regulatons supply model layouts from the structure and mnmum content of the notces and standard forms are avalable from The Statonery Offce. When a Contractng Authorty ntends to award a contract whch falls wthn the scope of the Regulatons, t must be advertsed (subject to lmted exemptons) n the OJEC through a Contract Notce. Detals of contract award must also be publshed n the OJEC. Regulatons specfy the nformaton whch must be publshed and dvulged to unsuccessful tenderers, and that whch must be kept confdental. Advertsng s free of charge. 58 Wltshre County Councl

59 APPENDIX C Appendx Menu PROFILING OF CASH ADVANCES C.1 FULL CASH OPTION 1. Annual Totals The annual total wll be determned ntally by the publshed Delegated Budget share. Subject to further more defntve nformaton becomng avalable, the annual totals to be advanced wll be redetermned no less frequently than quarterly for advances n July, October or January as requred. Redetermnaton of advances wll operate retrospectvely wth future advances stated at correct redetermned levels. 2. Monthly Amounts Monthly amounts wll adhere to the followng pattern: Aprl May February March 4/36 of current annual total 3/36 of current annual total 2/36 of current annual total Instalments wll be rounded to the nearest, wth any cumulatve roundng effect shown n March. 3. Varaton n Proflng In general the presumpton s that schools wll plan ther affars to match the profle of cash recepts outlned n paragraph 2 above. If, however, for reasons outsde the control of the school, forecast cash outflows cannot be accommodated wthn the above profle, then the school may request a talored proflng of ther cash advances. Ths should be done n wrtng explanng the crcumstances and ncluded wth the budget template submtted to the LA a cash flow forecast. 4. Tmng of Advances In general, cash advances wll be tmed to arrve n schools bank accounts three days before the date of the LA s man teachers pay date. Ths relatonshp wll be mantaned should there be any future change n the dates of relevant payroll runs. 59 Wltshre County Councl

60 5. Coverage The arrangements for determnaton, redetermnaton, proflng and tmng of cash advances wll be the same for all prmary, mddle, secondary and specal schools declarng for Full Cash Opton. 6. Accountng The book-keepng requred n the school ledger s outlned n Appendx E. 60 Wltshre County Councl

61 APPENDIX D Appendx Menu REPORT FORMATS D.1 Introducton Ths appendx descrbes the formats of the documents whch schools must use when reportng to the LA on: 1. Quarterly Actual and Forecast Income & Expendture & Tral Balance. 2. Annual Budget Template. 3. Statement of Intended Use of Reserves D2 Income & Expendture return & Tral Balance The format for the Income & Expendture return s attached as Schedule D1. In addton, schools wll also submt electroncally at the end of each quarter a Tral Balance, extracted from the school fnancal software n the format requred for automatc consoldaton wth the LAs ledger. D3 Annual Budget Template The formats for ths are attached as Schedule D2. D4 Statement of Intended Use of Reserves The formats for ths are attached as Schedule D3. 61 Wltshre County Councl

62 APPENDIX E Appendx Menu ACCOUNTING STANDARDS E1 Defnton of Accrual Accountng 1. Income s recognsed at the pont when t s due to the school. 2. Expendture s recognsed at the pont that the goods or servces are suppled. 3. Accrual types are as follows: v Credtors goods or servces receved but payment not made Recepts n advance ncome receved relatng to goods or servces not yet suppled Debtors ncome due but not yet receved Payments n advance payments made relatng to goods and servces not yet suppled 4. Accruals can be actoned monthly or quarterly but must be actoned before the accounts are closed at the year end. 5. It s good fnancal practce to acton accruals before producng fnancal reports that forecast the year end poston. E2 Delegated Budget Share & Earmarked Devolved Funds 1. These wll be accounted for as Income. E3 Balance Sheets 1. Each school s ledger must be self-balancng, therefore each school wll have a balance sheet. 2. The accounts requred n the balance sheet wll be as follows: Debtor accounts: Credtor accounts: Bank account VAT settlement account Accumulated reserves account Payroll deducton accounts 3. Schools wth an approved defct budget wll also have, n addton to the above: Credtor account: LA loan account E4 Sample Accountng Entres Full Cash Schools 1. Delegated Budget Share and Earmarked Devolved Funds 62 Wltshre County Councl

63 DR CR Bank account Income 2. Payroll (Schools should note the requrement to sometmes account separately for ncome from Earmarked Devolved Funds probably by use of specfc cost centres wthn the Income & Expendture Account.) DR CR CR Expendture Payroll deductons Bank account 3. Purchases DR DR CR Expendture VAT settlement account Bank account 4. Other Income CR CR DR Income VAT settlement account Bank account 5. Rembursement of VAT DR CR Bank account VAT Settlement account (Assumng nput tax pad exceeds output tax charged the lkely poston) 6. Year End Close Down DR CR CR/DR Income accounts Expendture accounts (ths effectvely reduces the balances on all these accounts to zero) Accumulated reserves account If total expendture exceeds total ncome, then the balance on accumulated reserves wll reduce (.e., a debt postng). If total expendture s less than total ncome, then the balance on accumulated reserves wll ncrease (.e., a credt postng). 63 Wltshre County Councl

64 APPENDIX F Appendx Menu APPROVED FINANCIAL INSTITUTIONS F.1 Introducton Schools may hold cash advanced for fnancng of expendture aganst delegated and devolved fundng n any bank or buldng socety on the County Councl s current approved lendng lst. Ths s shown n para. F.2 below. It s recognsed that certan of the organsatons on the lst may not currently have branches n Wltshre. F.2 Lst of Approved Organsatons Bank Abbey Natonal Allance & Lecester Alled Irsh Bank Barclays Bank of Scotland Bank of Ireland Clydesdale HSBC (Mdland) Buldng Socetes Chelsea Coventry EBS (Ere) Leeds Natonwde Newcastle Skpton Yorkshre Lloyds TSB MBNA Europe Natonal Westmnster Royal Bank of Scotland Standard Chartered Ulster F.3 It should be noted that new bankng arrangements may only be made wth effect from the begnnng of a new fnancal year (Aprl 1 st ). Ths wll also apply n a stuaton where a school s requred to change ts account because the relevant bank or buldng socety has been removed from the County Councl s approved lendng lst. 64 Wltshre County Councl

65 APPENDIX G Appendx Menu CHART OF ACCOUNTS G1 Introducton The Chart of Accounts s smply the means by whch some order and regularty s mposed on the actvty of collectng accountng transactons. Schools are requred to follow the Charts as outlned n ths Appendx so that consoldaton of all school results are meanngful and fnancal benchmarkng data s relable. G2 Categores of Income & Expendture The frst stage s the allocaton of normal tems of Income & Expendture to Categores. These follow the DCSF s Consstent Fnancal Reportng framework. G3 Codes allocated to Items of Income & Expendture Snce all accountng actvty s performed usng approprate software, t s necessary to attach a unque numercal code to each tem of Income & Expendture. It s also necessary to defne an approprate unque numercal code to each balance sheet tem. All reputable accountng software allows the creaton of unque codes by the combnaton (wth varyng degrees of complexty) of bascally two elements: 1. the COST CENTRE 2. the ACCOUNT NUMBER It s Wltshre County Councl polcy to enforce the use of standard ACCOUNT NUMBERS across all accountng applcatons. Schedule G lays out these as relatng to the tems of Income & Expendture and balance sheet whch affect schools. The use of the account numbers s mandatory n schools. It s also Wltshre County Councl polcy that the choce of cost centre structure s left to local decson. Therefore schools can defne the structure of cost centres as they requre. The only ssues whch schools have to take nto account s the requrement to collect and report ncome and expendture on some Earmarked Devolved Funds separately. Ths can be acheved by defnng and usng separate cost centres for these funds. Schedule G1 (Please double clck the below fle to access the Ledger Code/CFR Lne Mappng) Ledger Code/CFR Lne Mappng 65 Wltshre County Councl

66 APPENDIX H Appendx Menu LMS FUNDING AND FORMULA FACTORS The schools fundng formula and fundng values are publshed annually n the Secton 52 Budget Statement whch s made avalable to all schools. 66 Wltshre County Councl

67 APPENDIX J Appendx Menu ICT Securty Polcy The followng sets out best practce relatng to the management of IT n schools. 1. Physcal Securty I. Servers and other network equpment should be located n dedcated rooms whch are ar-condtoned and kept locked when not n use. II. Access to server rooms should be restrcted to as few staff as practcable. III. Server rooms should be protected by an ntruder alarm system. IV. Server rooms should not be used for other purposes, such as statonery stores etc V. Server rooms should be ftted wth smoke/fre detectors, whch should be nspected or servced n accordance wth the manufacturers recommendatons. VI. Servers should be protected by unnterruptble power supples (UPS) wth suffcent capacty to allow servers to be powered down n a controlled fashon n the event of a mans power falure VII. Classrooms and offces contanng IT equpment should be kept locked when unoccuped. VIII. Moveable IT equpment, especally laptops, should be locked away whenever not n use, deally n locked laptop trolleys. IX. Valuable tems of IT equpment (desktops, laptops and montors) should be securty marked. X. Inventores of both hardware and software should be mantaned and perodcally verfed. XI. Pror to dsposal, hard dsks should be securely wped to ensure data removed and software lcences are compled wth. Commercal software, some of t freeware, s readly avalable for ths purpose. Alternatvely, specalst frms can provde ths servce. In ether case, documentaton should be retaned as evdence that wpng has taken place. XII. DCE should lase wth ESD (Waste) to develop a strategy for dealng wth redundant school hardware n the lght of the WEEE regulatons. 2. Support Arrangements I. Schools n the same geographcal area should consder combnng to make a consortum-type arrangement for the provson of hardware and software support. Larger support frms can provde better contnuty, and would reduce relance on very small numbers of key support engneers. II. Schools should ensure that adequate formal agreements are n place, whch document the levels of servce to be provded and the charges. III. Schools should ensure that all support engneers who have access ether to chldren or to chld-related data are CRB-checked. 3. Frewalls and Ant-Vrus Protecton etc I. Schools should regularly sample check PCs, laptops and servers to ensure that ant- 67 Wltshre County Councl

68 vrus software (as well as Mcrosoft patches) are up to date. II. Where used, wreless networks should be encrypted, and the securty of ths should be perodcally tested. 4. Backup and Dsaster Recovery I. Schools should rsk-assess the data held on both currculum and admn servers, and adopt an approprate backup regme. The hghest rsk servers should be fully backed up each day, and tapes for a two week perod should be mantaned. In addton, the two precedng Frday tapes should also be retaned (a total of four weekly tapes. Tapes for each term and/or fnancal year should also be retaned. II. Backup meda should be stored away from the servers they are backng up (deally n a separate buldng) n secure storage (e.g. a freproof safe). III. Dsaster recovery plans should be drawn up. Responsblty for ths should be formally allocated, and the plans should be approved by the board of governors. The plan should be revewed at least annually. Network and server confguratons should be fully documented, to enable replacement equpment to be nstalled wth the mnmum of delay. Supplers of such equpment should be dentfed and ther contact detals recorded, along wth those of key school and support staff who would be requred to assst. IV. Busness contnuty plans should be developed for key actvtes, to ensure the school can stll functon as much as possble n the absence of IT facltes. 5. User Account Management 6. Internet and E-mal I. Polces and procedures should be drawn up for user account management. II. Utltes should be used to analyse doman user accounts, so that nconsstences can be elmnated, such as dormant accounts or accounts wth unnecessary prvleges. III. User account passwords should be at least 8 characters long and should nclude upper case, lower case and non-alpha characters (numbers or punctuaton characters). IV. Passwords should be changed regularly, ether each term or each month. V. System admnstrator and equvalent accounts should have longer and more complex passwords. At least one of these passwords (for the Admnstrator account) should be wrtten down and kept by the Head or Char of Governors n a sealed envelope. Ths account should only be used for emergences, and system admnstrators should use ther own accounts for day to day systems work. I. Parental consent forms or staff acceptance forms should be sgned n all cases. II. Internet and e-mal usage polces should be revewed annually. When changes are made to polces users should formally acknowledge ths. 68 Wltshre County Councl

69 APPENDIX K Appendx Menu PRINCIPLES OF BEST VALUE The twelve prncples of Best Value are lsted below. These have been sourced from the Department of the Envronment, Transport and the Regons. 1. The duty of Best Value s one that local authortes wll owe to local people, both as taxpayers and the customers of local authorty servces. Performance plans should support the process of local accountablty to the electorate. 2. Achevng Best Value s not just about economy and effcency, but also about effectveness and the qualty of local servces the settng of targets and performance aganst these should therefore underpn the new regme. 3. The duty wll apply to a wder range of servces than those covered by CCT. 4. There s no presumpton that servces must be prvatsed and once the regme s n place there wll be no compulson for councls to put ther servces out to tender, but there s no reason why servces should be delvered drectly f other more effcent means are avalable. What matters s what works. 5. Competton wll contnue to be an mportant management tool, a test of Best Value and an mportant feature n performance plans. But t wll not be the only management tool and s not n tself enough to demonstrate that Best Value s beng acheved. 6. Central government wll contnue to set the basc framework for servce provson, whch wll n some areas, as now, nclude natonal standards. 7. Detaled local targets should have regard to any natonal targets, and specfed ndcators to support comparsons between authortes. 8. Both natonal and local targets should be bult on the performance nformaton that s n any case needed by good managers. 9. Audt processes should confrm the ntegrty and comparablty of performance ndcators. 10. Audtors wll report publcly on whether Best Value has been acheved and should contrbute constructvely to plans for remedal acton. Ths wll nclude agreeng measurable targets for mprovement and reportng on progress aganst an agreed plan. 11. There should be provson for nterventon at the drector of the Secretary of State on the advce of Audt Commsson when an authorty has faled to delver Best Value. 12. The form of the nterventon should be approprate to the nature of falure. 69 Wltshre County Councl

70 APPENDIX L Appendx Menu DISPUTES PROCEDURE 1. The scope of the Dsputes Procedure can be summarsed as follows: the Actve Partes to the dspute wll be: the school recevng the goods/servces or havng an exceptonal charge leved on t under Secton of ths manual. The LA department or unt provdng the goods/servces or exercsng the rght to make an exceptonal charge under Secton of ths manual. only Actve Partes can nstgate the dsputes procedure. n layng out the steps n the procedure, for clarty of exposton t wll be assumed that the dsputes procedure s nstgated by the school. Ths s regarded as the most lkely scenaro. It s lkely that the other actve party wll only nstgate a dsputes procedure n the event of a school not settlng nvoces or other notfcatons submtted to them. The steps as lad out wll however be the same whoever nstgates the procedure. v In any dspute, the only matters of fact whch can be brought nto consderaton relate to the transacton tself. 2. The steps n the procedure are: Step 1: In the frst nstance the school should contact the other party drect to resolve any ssues. Both actve partes are expected to deal wth the matter promptly and reasonably. If Step 1 fals to acheve resoluton, ether actve party may escalate to Step 2. Step 2: The frst acton under Step 2 s for the actve party nstgatng the dspute to declare formally n wrtng that the dspute exsts. Ths should be addressed to the other actve party wth copes to: the Exchequer Secton of Chef Fnance Offcer s Department [Resources Department]. Ths wll halt any further debt recovery procedural actvtes. The Drector, Department for Chldren & Educaton The Drector, Department for Chldren & Educaton wll call for wrtten poston statements from each of the actve partes detalng the facts of the case, and havng consdered these (and any other relevant detals) wll make a recommendaton based on the facts. Ths recommendaton wll be communcated n wrtng to both actve partners wthn 15 workng days of recept of the poston statements. Non-recept of requested poston statements wll be construed accordngly. 70 Wltshre County Councl

71 If Step 2 fals to acheve resoluton, ether actve partner may escalate to Step 3. Step 3: The actve party whch does not accept the recommendaton of the Drector, Department for Chldren & Educaton must notfy ths s wrtng to the other actve party and to the Drector, Department for Chldren & Educaton, wthn seven days. The papers relatng to the dspute wll be passed to the Chef Fnance Offcer who wll consder the facts and make a recommendaton based upon them (and any other nformaton he/she deems relevant). The recommendaton wll be fnal and bndng on both actve partners. 71 Wltshre County Councl

72 APPENDIX M Appendx Menu TENDERING CHECKLIST 1. Form of Tender An example s ncluded n Appendx N. You should note the specfc requrements placed upon tenderers. 2. Instructons to Tenderers There should be clear and precse nstructons on how to go about completng and submttng a tender. Ths may cover a whole range of thngs, but as a smple gude, put yourself n the place of the tenderer recevng the documents what nformaton wll the tenderer need to know to gve you what you want? (These are not the Condtons of Contract.) 3. Closng Date Ths s a specfc date and tme, whch you decde on. You should gve tenderers a reasonable tme to prepare the bd, and yourself suffcent tme before the start of the proposed contract, to fully analyse the results and gan authorsaton. 4. Award Crtera Ths s a statement of how you ntend to award the contract. The crtera to be used for awardng the contract must be set out n the tender documents and, for contracts tendered under EC Drectves, ncluded n the advertsement. Well-defned award crtera wll help you lay out the tender documentaton and assst at the evaluaton stage. They wll be splt between prce and qualty but must lay down specfc measurable crtera. You should determne the whole lft cost of the contract, by ncludng all factors, e.g., runnng costs, mantenance, and fnal dsposal costs, etc. You must also state f you ntend to splt the contract n any way. 5. Sze and Scope Ths has been manly covered n earler references but remember that nformed tenderers make better bds. It s not just the overall sze but the patterns, varatons and trends that are also vtal nformaton. 6. Specfcaton Earler references gve ponters to the constructon of a clear, precse specfcaton you may wsh to consder whether further background nformaton and an overvew of the requrements would enable the contractor to make a more nformed judgement of what you need. 72 Wltshre County Councl

73 7. Contract Perod You must know the tme perod wthn whch you want your contractor to perform. The length of contract may have a great nfluence on the fnal prce but you cannot afford to allow openended commtments. Contracts for fnte requrements should be for an approprate perod, whch s relevant to the market. 8. Condtons of Contract These are the condtons that the contractor wll have to observe durng the contract perod. Beware of confusng Instructons to Tenderers wth Condtons of Contract. In the fnal analyss, you wll only get what s n the contract. Contract condtons are desgned to manage our exposure to rsk a contractor s condtons of sale may take the opposte vew! 9. Performance Crtera You must ensure the tenderer knows what performance you wsh to acheve and what wll happen f t s not acheved. Consder specfyng the requred results rather than the detaled method by whch they are to be acheved. The contractors methods can always be made subject to approval. It s clearly better to specfy the requred outcome and say: The grass should be kept between ¼ and 1 hgh at all tmes, usng an approved method ; rather than: The grass shall be cut 16 tmes every day usng a pnk petrol drven mower of no more than 502cc capacty. Ths s obvously absurd but serves to llustrate a common fault. The preference should always be for an output or outcome-based specfcaton, but there may be crcumstances where for practcal or economc reasons, a method specfcaton may be used. The golden rule s: say what you want not how to do t. 10. Method Statement Wth an output or outcome based specfcaton, you may wsh to ask the tenderer to submt method statements or busness plans to demonstrate ther understandng of the requrement and ther ablty to delver. 11. Change Controls Change may be approprate or necessary durng your contract. For example, n a servce delvery contract stes may open or close, usage or requrements may change, experence or developng technologes may dentfy a better way of dong ths. Your contract needs to have clauses that cope wth all eventualtes, ncludng: 73 Wltshre County Councl

74 11.1 Varatons The contractor, the end user and the contract manager may all dentfy potental varatons. Issues of servce and performance wll nevtably be reduced to costs that may decrease, ncrease or be wthheld Contnuous Improvement 12. Termnaton Clause In the search for Best Value t may be approprate to nclude ncentves and develop workng practces that delver process mprovements and cost reducton n partnershp wth the successful contractor. There can be many reasons why we mght want to termnate a contract. These could nclude the changes n the contractor s status (bankruptcy, take-over, etc), behavour (brbery, corrupton, etc), or performance. Or our needs may have sgnfcantly changed. 13: Format for Reply You should nclude wthn the document a format prepared for the tenderers to complete so that you can easly evaluate ther offerngs. Ths wll be derved from your Award Crtera (see 4 above). It should nclude temsed headngs for all the nformaton you requre (ncludng prces, costs and optons and any other nformaton). Ths should enable you to do an accurate assessment of the tenders wthout havng to seek clarfcaton. 14. Instructons for Return These should be covered wthn the formal nvtaton. It s standard practce to enclose a return address label wth the requred wordng (an example s gven at Appendx O). All organsatons nvted to tender should be lsted on a Tender Acceptance Form. Ths form s used to record detals of all tenders receved and opened. Followng evaluaton, the recommended tender s ndcated on the form and approved by the approprate manager pror to the award of contract. 15. Prcng Document It s confusng and msleadng f tenderers are not quotng on a smlar bass. Your earler dscussons wth the market wll have dentfed the method by whch the prcng operates and you may need to establsh how VAT s to be treated. It s common msconcepton that VAT does not affect the Councl. If we do not pay t or charge t on the supples or servces that t s appled to, our omssons can have sgnfcant fnancal consequences. If you are not absolutely clear about the applcaton of VAT to the arrangements you are makng please contract the Councl s VAT helplne. Unless you have decded to place a contract at a fxed prce, you must also nclude a statement of the method through whch you see prces beng adjusted. 74 Wltshre County Councl

75 Prce escalaton formulae may be used, but n specfyng them, make sure they are relevant. Remember market prces can fall as well as rse and your document should provde for ths through a condton, whch ensures a compettve level s mantaned throughout the contract perod. Ths may well not be acheved by smply relyng on a formula. It s often better to allow a seres of optons so that you can dentfy the best opton for the authorty. 16. Other Prescrbed Informaton Ths could be a checklst or proforma detalng any addtonal nformaton you requre n support of the tender. Ths nformaton wll be relevant to your Award Crtera (see above). 75 Wltshre County Councl

76 APPENDIX N Appendx Menu FORM OF TENDER (Undertakng to be produced on the Tenderer s headed notepaper) Havng examned the Specfcaton, the Appendces to the Specfcaton (f any ), the Schedules, the Condtons of Contract wth Annexes (f any), the Prcng Document and ths form of Tender (the Tender Document ), we offer to provde the Servce specfed n the Tender Documents at the prces stated n the Prcng Document. We undertake to perform the contract n accordance wth the Tender Documents. We agree that ths Tender shall reman open for acceptance by the employer for three months from the date stpulated for the return of tenders. Unless and untl a formal Agreement s prepared and executed, ths tender, together wth your wrtten acceptance thereof, shall consttute a bndng contract between us. We understand that you are not bound to accept the lowest or any tender you may receve. We certfy that ths s a bona fde tender, ntended to be compettve, and that we have not fxed or adjusted the amount of the tender by or under or n accordance wth any agreement or arrangement wth any other person. We also certfy that we have not done and we undertake that we wll not do at any tme before the hour and date specfed for the return of the tender any of the followng acts: (a) (b) (c) communcaton to a person other than the person callng for these tenders the amount or approxmate amount of the proposed tender, except where the dsclosure, n confdence, of the approxmate amount of the tender was necessary to obtan nsurance premum or performance bond quotatons requred for the preparaton of the tender; enterng nto any agreement or arrangement wth any other person that he shall refran from tenderng or as to the amount of any tender to be submtted; offerng or payng or gvng or agreeng to pay or gve any sum of money or valuable consderaton drectly or ndrectly to any person for dong or havng done or causng or havng caused to be done n relaton to any other tender or proposed tender for the sad system any act of thng of the sort descrbed above. In ths certfcate, the word person ncludes any person or any body or assocaton, corporate or unncorporated; and any agreement or arrangement ncludes any such transacton, formal or nformal, and whether legally bndng or not. Yours fathfully Sgnature Full name of sgnatory and poston n company Name and address Date: 76 Wltshre County Councl

77 APPENDIX O Appendx Menu EXAMPLE TENDER RETURN LABEL Tender for: Ref: Enter School Name here: To be delvered on or before: (tme) On (date) 77 Wltshre County Councl

78 Appendx P Appendx menu Appendx Menu Gudance Note For Schools Consderng Changng Ther Fnancal Management System. 1. Introducton. There are a number of key requrements whch you should take nto account when consderng changng your Fnancal Management System (FMS). These are set out below. Although the lst s not exhaustve t hghlghts the most crtcal areas and s amed at ensurng that, f you do choose to move to a new FMS, the mgraton progresses smoothly. Your mplementaton project plan should ensure that all of these ponts are consdered fully. You should also be aware that Wltshre School s Fnancal Regulatons requre schools to seek approval of The Chef Fnance Offcer before takng on a new FMS and follow approprate procurement requrements. We would therefore strongly advse you to nvolve LA offcers at the ntaton stage to avod delays. 2. Key Requrements. The move should be subject to a detaled project plan; Internal audt s rght to vst and revew progress must be recognsed; The system must comply wth Wltshre Schools Fnance Manual; All external fnancal reports must be n WCC s requred format; Implementaton must not delay any statutory reportng deadlnes; All VAT requrements must be met; WCC reserve the rght to charge for any costs ncurred caused by a schools decson to change ther system. More detaled gudance on the above ponts s gven below. 3. Project Plannng. A change of fnancal system s a major undertakng and t s therefore recommended that schools do not proceed to change ther current system untl a project plan has been constructed. There should also be a clear lnk to the School Development/Improvement Plan. You may fnd t helpful to follow these steps before embarkng on the project: Be clear about what you are hopng to acheve by changng your FMS Consder dfferent ways n whch the change could be acheved Assess the costs and benefts of alternatve arrangements Consder any rsks and have a contngency plan Consder what system represents the best value Please note that the Local Authorty may ask to see a project plannng document pror to decdng whether to approve the school s move to another fnancal system. 78 Wltshre County Councl

79 4. Internal Audt s Role. Internal audt provde an assurance functon so the Chef Fnance Offcer, school governors and head teacher can be satsfed that the school fnancal systems and nternal controls are adequate and suffcent to dscharge the school s responsbltes for the stewardshp of publc funds. Internal Audt wll also offer constructve advce and wll, f necessary, extend ts remt to the overall control envronment and consder wder rsks (.e. not just fnancal) One of the ways the Chef Fnance Offcer dscharges hs statutory S151 responsbltes s through the use of Internal Audt who wll advse hm as to whether the FMS satsfes the LA s requrements. It s therefore essental that you notfy Internal Audt of your ntenton to change your FMS and routnely keep them nformed of progress towards mplementng the change. Other audt requrements: Schools must satsfy the Chef Fnance Offcer that the system can produce specfc reports, n the format requred, before the go lve date. These reports are requred to be avalable n electronc as well as hard copy format. Make sure that balances can be captured n the new system. Make sure that schools admnstratve staff are capable of producng the necessary reports. Provde a named person who s deemed to take ownershp of the system.e. the person who wll be responsble for system securty and legslatve complance e.g. Data Protecton, Freedom of Informaton. Notfy Internal Audt before the school sends nvtatons to tender for a replacement FMS. Invtatons should be made to the exstng FMS suppler and at least two other potental supplers. Provde Internal Audt wth the name of the system manager e.g. the person who controls system permssons. Advse Internal Audt of any system project developments as and when they occur. When specfyng the new system schools should ensure the system has e-procurement capablty. 5. Complance wth Wltshre Schools Fnance Manual See chapter 2, secton 2.3 of the School s Fnance Manual whch sets out the accountng standards requred of accountng records mantaned n electronc format. 79 Wltshre County Councl

80 6. External reports The system must be able to produce the followng reports and be capable of beng sent electroncally, n the requred format, to the LA by the tmescales notfed to schools from tme to tme. Quarterly Tral Balance Consstent Fnancal Reportng Report Quarterly Income & Expendture Report Monthly VAT reports (see Secton 8) Schools must ensure that the suppler of the chosen FMS s made aware of these reportng needs and that they confrm before the system goes lve that t has the capablty to comply wth these requrements. 7. Statutory reportng deadlnes 8. VAT It s essental that mplementng the new system does not delay any statutory reportng deadlnes. For nstance, due consderaton must be gven to ensurng that the County Councl s year end reportng deadlnes are adhered to and that the DCSF s deadlne for provdng the annual CFR report s met. Please therefore consult wth us and we wll work wth you and your chosen provder to arrange a sutable go-lve date that wll be the most convenent and approprate for all partes. The system must be able to use the WCC schools VAT category codes (alpha) aganst ndvdual transactons or parts of an nvoce where there are dfferent rates of VAT for one transacton. The system must be able to produce reports that show the entres lne by lne wthn each VAT category. The system must be able to produce summary reports for VAT values n each category of VAT for both nput and output tax separately. The system must be able to produce a summary report of statstcs of the (net of VAT) turnover for each category of VAT for nput and output tax separately. If possble the system should show a comparson of the amount of VAT calculated automatcally by the system and the actual amount of VAT entered, aganst each lne of transacton. All nformaton from the system must be avalable n electronc data format as well as hard copy prnt. 80 Wltshre County Councl

81 9. General. It would be advsable to dscuss your proposed move to a new FMS wth the Local Authorty at the earlest possble tme. The contact ntally should be the Schools Accountng & Budget Support Manager. You should ensure that you are lcensed to operate your current system for a perod beyond the mplementaton of any new FMS. For advce on ths ssue you should contact your current FMS suppler. If you decde to move to a new FMS you should ensure that pror to go-lve the new and old FMS s are run n parallel (the Chef Fnance Offcer s Offce wll gve gudance on ths f requred). Ths wll provde reassurance to The Chef Fnance Offcer and the school that the new FMS s sound and avod problems at a later stage of ts mplementaton. Reference has been made on a number of occasons n ths gudance note about ensurng that your chosen FMS can produce reports n the requred format. For an up to date copy of these reports please contact the Manager, Schools Accountng & Budget Support Team. It s lkely that a change to your MIS would affect other general management nformaton for nternal school use but could also affect data requred externally, by the Local Authorty for nstance. We would therefore advse you to contact the LEAs ICT/E-Learnng Advsor at an early stage so that other relevant offcers can be nvolved early n the process. 81 Wltshre County Councl