nderstanding chool overnance anual 5

Transcription

1 U nderstanding chool overnance Basic M S anual 5 Financial Systems G (training manual) for Schools

2 Materials developed by the Media in Education Trust (MiET) for the KwaZulu-Natal Department of Education and Culture, under a subcontract with Aurora Associates International, Inc., Washington, D.C., for the U.S. Agency for International Development. This Manual was compiled and published for the KwaZulu-Natal Department of Education by a team that included: Dr M Lötter, Department of Education; Mr C Waddy, Education Consultant; Mr S Naicker, Education Consultant; and Mr F Goolam, USAID/South Africa. Material may be reproduced if full credit is given. This manual is based on an earlier version produced by the School Governance Unit, KwaZulu-Natal Department of Education and Culture. Edited by: Translated by: Illustrations: Design: DTP: K Jones S Ngubane and L. Makhubu (isizulu) L Venter (Afrikaans) Taken from Account-ability by Jean de la Harpe C vd Merwe & J Nicholson C vd Merwe This publication was made possible through support provided by the U.S. Agency for International Development, under the terms of Contract No. 674-I The opinions expressed herein are those of the author(s) and do not necessarily reflect the views of the U.S. Agency for International Development.

3 CONTENTS Page Introduction Finance Committee Delegations i iv iv Section 1: Banking 1 Section 2: Accounting Records 19 Section 3: Budgets 51 Section 4: Petty Cash 67 Section 5: Stock Control 73 Section 6: Registers 93 Section 7: Annual Financial Statements 113 Section 8: Answers 127 Index for manuals 4 and A comprehensive index can be found at the back of this manual.

4 Introduction INTRODUCTION This manual should be used in conjunction with Manual 4 which contains the instructions of the KwaZulu-Natal Department of Education and Culture regarding school funds. Section 37 of SASA makes it clear that a school s governing body is responsible for the school fund. The governing body, and especially the members of its financial committee, should therefore clearly understand how the finances of a school are administered. This manual will help you to manage the money matters of the school. There are very strict rules for controlling money. You need to know and understand these rules so that your school fund meets legal requirements. These rules will also help you to protect the school s interests and protect yourself by doing the job properly. The financial guidelines given in this training manual are based on several important documents: The main rules are given in the South African Schools Act, More guidelines are given in the Provincial Regulations. Very specific instructions are provided in the School Fund Department Instructions issued by the KwaZulu-Natal Department of Education and Culture. (See Manual 4) It is suggested that, in order to preserve this manual, the exercises should not be completed in the manual itself but rather on copies of the relevant forms. Blank forms suitable for copying have been provided throughout the manual. Answers to all the exercises in this manual can be found in Section 8. i

5 Introduction Throughout this manual you will find additional information in boxes, The boxes for different kinds of information look different from each other. They are explained on this page. Where there is information that is regulated by legislation, you will see a box like this. This box will tell you where to find more information in another manual or part of this manual. eg This box will give examples. This box will give you the definition or meaning of a word or concept. The information in this box is an exception to the rule or a special case. If there is more detailed information about how to do something it will be in a how to box. The information in this box is something that you should take particular note of. ii

6 Introduction Here is a useful diagram to help you to understand financial responsibilities and delegations in a school. SCHOOL GOVERNING BODY (Ultimate responsibility for school s financial matters) Finance Committee, including Treasurer PRINCIPAL Accounting Officer (Legally accountable) DISTRIBUTION REGISTER (Personally controls system of receipt books). For other tasks, should delegate in writing - and check regularly Delegation: FINANCE OFFICER (Record Keeping) SCHOOL FEE REGISTER POSTAGE REGISTER REMITTANCE REGISTER COLLECTION SHEETS Delegation: PETTY CASH Delegation: TELEPHONE REGISTER Delegation: STOCK CONTROL Stock controller Stock-taker (once a year) Board of Survey Delegation: TUCKSHOP Tuckshop Committee Tuckshop Manager Delegation: FUND-RAISING Fund-raising Committee Delegation: PSNP PSNP Committee Chairperson Treasurer Secretary iii

7 Introduction Finance Committee The overall responsibility for the control of school money lies with the governing body of the school. Usually the principal of the school is the accounting officer. That is, s/he is ultimately accountable for the school s money and property. To help the governing body and the principal, the SA Schools Act says that the school should set up a Finance Committee. The head of the finance committee is the treasurer of the governing body. Duties of the Finance Committee The finance committee helps the school by providing a range of high level Functions. The finance committee will: Keep overall control of school money Draw up the budget each year Approve all expenditure (if it fits the budget) Advise on ways of fundraising Assist in drawing up annual financial statements Advise on ways to invest surplus money Check financial records internally Suggest who should be appointed as the auditor Advise the governing body on amount of school fees Advise the governing body on exemptions from schools fees Delegations The finance committee will probably delegate responsibility for money matters to a person who will be available on a day-to-day basis to do the job. The principal and the treasurer may be too busy to look after all the money. In this manual we are assuming that the school has appointed a finance officer. The finance officer may be an administrator (non-educator at the school), an educator or a parent (who is available most of the time). The finance officer records all financial transactions, and keeps the principal, the treasurer, and the finance committee fully informed about financial matters. This delegation of responsibility to the finance officer should be made in writing. There may be other delegated tasks. For some financial jobs, e.g. looking after petty cash, another specific person may be appointed to take responsibility. If money is stolen or lost, that person will be responsible for the missing money. For all these duties, the principal must make sure that responsibility is properly delegated. If delegations are not properly done, then ultimately the responsibility lies with the principal. So the principal should work closely with the finance officer to ensure that all the rules are being followed. iv

8 Introduction Who is responsible for financial tasks in your school? Every school should have a clear understanding of the responsibilities of the treasurer, of the finance officer, of the principal, and other persons delegated for specific jobs. These may differ from school to school. Here are some of the financial tasks to be done in a school. When you have finished this manual, you will have learned about some of the tasks to be done. You should have discussions in your school then add the other tasks to be done. Tick the person responsible for each task. TASK PRINCIPAL TREASURER FINANCE OTHER OFFICER (WRITE NAMES) 1 Receives money and writes receipts 2 Banks money 3 Writes cheques 4 Records Receipts Cash Book and Payments Cash Book 5 Records Petty Cash Book 6 Prepares draft Annual Budget 7 Prepares Annual Statements 8 Presents financial reports at Annual General Meeting 9 Controls fund-raising 10 Checks all financial records regularly 11 Controls stock in the school 12 Collects school fees from learners v

9 1 B A N K I N G This section will cover how to open and use a bank account on behalf of your school s governing body. 1.1 Why do we need a bank account? Every school should have a bank account so that money can be safely stored, and accounted for. You should never leave money lying around in the school. The Schools Act and provincial regulations state that each school should open an account at a bank. You can deposit the school s money there, for safe-keeping and convenience. You can also withdraw money when you need it by writing out a cheque. The governing body (which includes the principal of the school) may open a bank account on behalf of the school. The people involved must be elected adult members of a governing body. Legally, a school financial year starts on 1 January and ends on 31 December. So you should open the bank account well in advance of the first day of school in the new year (if your school does not already have a bank account) Which bank should we use? The governing body should decide on which bank to use. It must be a registered commercial bank. Each member may have a different opinion about which bank would be best, so the whole governing body should agree on the decision. A good way to do this would be to vote. Before voting, the governing body may want to talk to other members of the school community or get advice from more knowledgeable people (for example, the finance committee). After the governing body has agreed on which bank to use, the treasurer or principal will make arrangements with the bank. In deciding, you need to think about issues like: How close is the bank to the school? Will it be convenient to go there daily? How safe is the area where the bank is located? Which bank offers the best rates? Some banks offer a free banking service. Which bank will let your school deposit cash free of charge? There is usually a charge for depositing cash. This is an important question for schools that handle large amounts of cash from school fees. Are electronic banking facilities available? 1

10 Section 1: Banking What type of account should we open? The South African Schools Act says that every school must open a School Fund account. This needs to be a current account. A current account is sometimes also called a cheque account. SASA Section 37(3) A current account is an account where you deposit money and withdraw it as often as you need to. It is called a cheque account because you use cheques to withdraw the money from the account. Most organisations have a cheque account. You can deposit and withdraw money at any time, as often as you like. You can use cheques to pay debts (and avoid carrying large amounts of cash). At the end of each month the bank returns to you all the cheques you have given to your creditors that have been cashed at the bank. These banked cheques can be used as proof of payment. By using cheques you can reduce fraud. Cheque payments are easier to trace than cash payments. If your school has extra money (called surplus funds ), it should keep this money in a bank or Post Office Savings Account, or a Fixed Deposit Account Who should be signatories of the account? The governing body needs to decide which people may sign cheques on behalf of the school. These people are called signatories. The SA Schools Act specifies that there should be three signatories. One of them should be the principal (since s/he is the accounting officer of the school), and you can choose who the other two will be. You can choose any two members of the governing body. Many schools choose the treasurer and the finance officer as these people will know a lot about the school s finances. You should arrange with the bank that any two of these three people may sign a particular cheque. You need to be very careful when choosing the signatories. They need to have a good reputation as honest people. They also need to be easily available. There is no point having a signatory who is a migrant worker and who will be away for months at a time. Be sure that trustworthy people are chosen to be the guardians of your school s funds How do we apply for a bank account? An official of the bank will be available to help you complete the forms when you are applying to open an account. Don t hesitate to ask questions. It is much better to ask questions at this stage than to make mistakes because of ignorance. 2

11 Section 1: Banking Each signatory will need to sign a form, giving specimen signatures, and stating what position he or she holds, e.g. treasurer, secretary, chairperson. The bank will also ask for a deposit to open the account. Some banks require a specific amount as a minimum deposit e.g. R100, before they will open an account for a client. The bank clerk will tell you what the amount is for your governing body. The bank may also ask for copies of the following documents: a copy of your governing body s constitution; a copy of the South African Schools Act; a copy of the Provincial Regulations for school governance; a copy of the identity documents of the signatories How often should the signatories be updated? Each year, after the office bearers of the governing body have been newly elected, the secretary should write to the bank to inform them of the signatories for your school. Most banks will probably also ask you to fill in a form to change the signatories. It would be a good idea to attach a copy of the Minutes of the Meeting when the signatories were changed. You could also get a letter of support from your Circuit (or District) Manager to support the change in signatories. 1.2 How do we receive money and write receipts? The finance officer will receive money in a number of ways: cash (handed over the desk/counter/table) cheque money order or postal order (received by post) banker s draft When receiving cheques, you need take great care that they are correctly completed, otherwise you will not be able to collect the money from the bank. For hints about checking cheques, look at the Department Instructions, Section 6.2. When you receive money, in any form of payment, you always need to write a receipt and hand it to the person who paid the money. The receipt is a source document, that is, as proof of payment. You can buy a Receipt Book from a stationery shop (e.g. CNA) or your school could print special Receipt Books with the school s name on each receipt. 3

12 Section 1: Banking eg Here is an example of a receipt form. The numbers on the form explain the important parts of the receipts: AMANDLA SECONDARY SCHOOL Date 20 2 Received from 3 The sum of Rands 4 and cents For 5 R 6 : CHEQUE CASH with thanks Information on a receipt 1. Serial number of receipt. Each receipt has a different number. 2. Date on which the money was received. 3. Name of person who paid the money. 4. Amount written in words. 5. Reason for the receipt of the money. 6. Amount written in figures. 7. Signature of finance officer who received the money on behalf of the school. 7 Receipt books have many receipts in them, each with a separate number, and each with a self-carbonised duplicate. Write the receipt very clearly. You should give the original to the person who is paying the money and you should keep the duplicate in the receipt book. For more information about receipts, look at the Departmental Instructions, Section 6.5. Here are two examples of receipts, completed by the finance officer. Example 1: Completed receipt form eg On 17 May 2001; Mrs PN Ntuli sent R15 in cash with her daughter, Thandi for school fees. Thandi handed this money to her class educator, Mrs Gumede, who issued her with a receipt from her class receipt book. Mrs Gumede then handed the money, the class receipt book and the school fund register in to the finance officer, who issued the following receipt. 4 RECEIPT KWAZULU-NATAL DEPARTMENT OF EDUCATION AND CULTURE J GWALA PRIMARY SCHOOL Official stamp Date: 17 May 2001 Number: 019 Received from: Mrs PN Gumede The sum of: Fifteen rands only (Cash) R15-00 In payment for: School fees for Thandi Ntuli Grade 2 Allocation: School fees Signature: J Xuma Finance Officer

13 Section 1: Banking eg Example 2: Completed receipt form Mr P Zondi gives the finance officer a cheque for R100 as a donation to the school on 17 May RECEIPT KWAZULU-NATAL DEPARTMENT OF EDUCATION AND CULTURE J GWALA PRIMARY SCHOOL Official stamp Date: 17 May 2001 Number: 020 Received from: Mr P Zondi The sum of: One hundred rands only (Cheque) R In payment for: Allocation: Donation to the school Donations Signature: J Xuma Finance Officer 1.3 How do we deposit money? All money received by the school must be deposited on a daily basis. Banks have specially printed forms to be filled in when you deposit money in your account. You could ask the bank for a deposit book for the school. The advantage of a deposit book is that all deposit slips are bound together so they cannot get lost. They are a permanent record of all money deposited. Each deposit form is printed in triplicate and is self-carbonised. You will need to fill in the information and sign at the bottom of the page. The bank teller will stamp all copies when s/he receives the money you are depositing, and hand back the deposit book to you. For further instructions about depositing, look at the Departmental Instructions, (Section 6.11). Now complete exercises 1.3a and 1.3b. 5

14 Section 1: Banking Exercise 1.3a: Deposit slip Look at this example of a deposit slip, and answer the questions 1.. On what date was the money deposited? 2. Into whose account is the money being deposited? 3. At which branch is the account kept? 4. What is the account number of the school? 5. What type of account is it? 6. Two cheques were deposited. Who wrote the cheques? 7. In addition to the cheques, some cash was deposited. How much cash was in notes? 8. What is the total amount deposited? 9. Who signed the deposit slip? 10. How many copies of the deposit slip are there? What happens to the top copy (original)? ABC BANK Account Deposit/Rekening-deposito Subject to conditions printed overleaf Onderworpe aan voorwaardes op keersy gedruk Date Datum 21 February 2001 Account Name Rekening Naam Boiteko School Branch Tak Pietersburg Branch No. Tak-nr. Account No. Rekening-nr. Reference No. Verwysings-nr Type of Account Tipe Rekening Cheque Tjek Savings Spaar N.B.: List money/postal orders individually under cheques. L.W.: Geld/posorders moet Notes Note afsonderlik onder tjeks aangedui Coins word. Munt Cheques/Tjeks Sub Total Sub-Totaal Drawer s Name/Trekker se Naam A. Sello J. Hlope Paid in by: Inbetaal deur: Signature Handtekening X Total Totaal R Loan Lenings Time deposit Termyn deposito For office use only Slegs vir kantoorgebruik Item No (6/96) PMS Answers to these questions are at the back of this manual. 6

15 Section 1: Banking Exercise 1.3b: Deposit slip Imagine that you are the finance officer of the school. Complete the deposit slip using the following information. Sign your own name. Name of school: BOITEKO SCHOOL Date: Today s date Account no: Branch: Pietersburg Branch no: Money being deposited: Coins 12 x 1c coins 10 x 5c 4 x R2 3 x R5 Bank notes 10 x R10 4 x R20 Cheques: Drawer Amount M Bodika R70.00 K Mbaya R35.00 C Mgotsi R35.00 ABC BANK Account Deposit/Rekening-deposito Subject to conditions printed overleaf Onderworpe aan voorwaardes op keersy gedruk Date Datum Account Name Rekening Naam Branch Tak Branch No. Tak-nr. Account No. Rekening-nr. Reference No. Verwysings-nr. Type of Account Tipe Rekening Cheque Tjek Savings Spaar N.B.: List money/postal orders individually under cheques. L.W.: Geld/posorders moet Notes Note afsonderlik onder tjeks aangedui Coins word. Munt Cheques/Tjeks Sub Total Sub-Totaal Drawer s Name/Trekker se Naam Loan Lenings Time deposit Termyn deposito Paid in by: Inbetaal deur: Signature Handtekening For office use only Slegs vir kantoorgebruik Item No (6/96) PMS Total Totaal R Check your deposit slip against the one at the back of this manual. 7

16 Section 1: Banking 1.4 How do we withdraw money from our current account? All payments from the School Fund account must be made by cheque. A cheque is used to draw money out of the current account. The bank will give you a cheque book when you open the bank account. There are three parties to a cheque: the payee (the person or school or business who will receive the money) the drawer ( the account holder - the person or school or business - who writes the cheque) the drawee (the bank on which the cheque drawn) Cheque: A cheque is a written instruction to the bank to take money out of your account and give it to someone else. In this section, you will get more information about cheques and how to use them. For further instructions about making payments from the School Fund, look at the Departmental Instructions, Section 6.19,). eg Example: A cheque Here is an example of a cheque from Amandla Secondary School. The numbers below explain the important parts of the cheque: Date Datum To Aan For Vir Balance brought forward Saldo oorgebring Deposits Inbetaalings Total Totaal This cheque Hierdie tjek Sub total Subtotaal Withdrawals Onttrekkings Balance carried forward Saldo oorgedra ABC BANK (Registered Commercial Bank) 10 HOWICK } Pay Betaal I: I: Cheque counterfoil (also called cheque stub ) 2. Name and branch of bank where the account has been opened 3. Date on which the cheque was written 4. Serial number on the cheque. Each cheque has a different number 5. Name of person who will receive the money 6. Amount of money written in figures 7. Amount of money written in words 8. Signatures of signatories 9. Bank account number 10. Reason for paying 11. The bank s branch code 9 } Date Datum 3 or Bearer of Toonder 6 R AMANDLA SECONDARY SCHOOL P O BOX 361 HOWICK Now complete exercise 1.4a.

17 Section 1: Banking Exercise 1.4a: Cheque Look at this example of a cheque, and answer the following questions: Counterfoil Date: 2001 June 4 To: B. Jabula For: Settlement of debt Amount: R No ABC BANK Yeoville Branch Not Transferable Account Payee Only Cheque Date: 2001 June 4 PAY B. Jabula or bearer THE SUM OF One hundred and ten rand and twenty cents R Cheque no On what date was the cheque written? 2. What is the number of the cheque? 3. To whom was the cheque made out? 4. What is the purpose of the cheque? 5. Who signed the cheque? 6. What is the amount of the cheque? 7. On the cheque, the amount is written twice (in words and in figures). Why do you think this is done? 8. There is a perforation between the counterfoil and the cheque. This helps in tearing out the cheque. What is the purpose of the counterfoil? Answers are given at the back of the manual. 9

18 Section 1: Banking What are the rules for writing cheques? It is very important to use cheques in a responsible and accountable way. There are many cases of cheque fraud, so banks have lots of rules about how cheques should be completed. Here are some of those rules: 1. Always cross your cheques with the words not transferable or nontransferable in bold print across the face, (preferably by using a rubber stamp) in red ink. Delete the words or bearer. A crossed cheque can only be paid into a bank account. This means that the person to whom the cheque is made out must have a bank account into which the cheque can be deposited. This helps to prevent fraud. You will have a claim against a bank that negligently pays the cheque to a wrong person. Once you have marked a cheque with the words not transferable or non-transferable you may not cancel these words and the law requires that any purported cancellation should be ignored. If a person does not have a bank account, then you may issue an uncrossed cheque in the name of the individual. If a cheque is not crossed a person can have payment in cash across the counter. 2. Always use an ink or ballpoint pen, not a pencil. It should be a black or a blue pen.(not red or green, which are used by auditors). 3. Write very clearly. It is important to be able to read the words and the figures. 4. Preferably write the date in this order: year, month, day. (Cheques are valid for six months only, so the date needs to be clear.) eg Write the date like this: 2001 June 04 or 2001/06/04 Always make sure the date is written clearly. These rules are given in more detail in Section 6.20 of the Departmental Instructions Write the amount of money in words and in figures. The amounts must be the same, otherwise the cheque is invalid. 6. The signatures on this cheque should be the same as the signatories used on the bank application form. If the signatures are different, the bank will reject the cheque. 7. The Departmental Instructions and the banks themselves insist that you may not make alterations when writing a cheque. 8. If you make a mistake when writing the cheque, cancel the cheque by drawing a line across it and print the word CANCELLED on the cheque. If you have removed the cheque from the cheque book, pin it back in. Then write a new cheque very carefully. 9. When writing the cheque, write the figures as near as possible to the left-hand side of the space (so that extra figures can t be filled in). In the section with words, draw a line across any blank spaces (so that extra words can t be written).

19 Section 1: Banking 10. Always fill in the counterfoil, giving the date, the name of the payee (person receiving the money), reason for payment, and amount. Now complete exercise 1.4b. Exercise 1.4b: Writing a cheque Can you find at least three mistakes in the cheque and counterfoil below? Date: To: T. Mbeki For: Deposit on car Amount: R No ABC BANK Yeoville Branch Date: 2001 June 4 PAY T. Mbeki or bearer THE SUM OF Three thousand rand R Cheque no Answers are given at the back of this manual. 1.5 How can we make cheques safer? When you receive the cheque book from the bank, keep it locked away, in a safe place. You should always check that all the pages are in a new cheque book. (There have been cases when one cheque has been torn out and has been used to steal money from the school). The governing body should have a rule about who is responsible for writing cheques. Cheques should be written by one person only, usually the finance officer. Each cheque needs to be signed by two of the signatories. Write the name of a particular person (or school or business) in the PAY line. Cross out the words or bearer. If you don t cross out these words, then anyone who is bearing (holding) the cheque could collect the money. If bearer is crossed out, then only the person or school named may collect the money. Cross the cheque. To do this you draw two parallel lines across the cheque. The cheque then cannot be cashed over the bank counter; it must be paid into a bank account. Write the words Not transferable between the crossed lines. This means that the money can be paid only into the bank account of the person named. (Or, you could use a special Not transferable stamp). An unusual way of making a cheque safer is to write the maximum amount in words at the bottom of the cheque, e.g. Not more than R

20 Section 1: Banking eg Here is a cheque, made as safe as possible: Date: 4 June 2001 To: B. Jabula For: Settlement of debt Amount: R No ABC BANK Yeoville Branch Not Transferable Date: 2001 June 4 PAY B. Jabula or bearer THE SUM OF One hundred and ten rand and twenty cents R not more than R Cheque no Now complete exercise 1.5. Exercise 1.5: Writing a safe cheque We have an account with Sipho s Stores and we owe them R Complete the cheque and counterfoil below (using today s date). Assume that you are one of the school signatories, and that your partner will sign as principal. Make the cheque as safe as possible. Date: To: For: Amount: ABC BANK Yeoville Branch Date: PAY or bearer THE SUM OF Cheque no No Check your example with that at the back of the manual. 12

21 Section 1: Banking 1.6 What are dishonoured cheques? Sometimes cheques are dishonoured. This means that the bank refused to pay money to the person (or school or business) presenting the cheque for payment. There can be many reasons for dishonouring a cheque. Some of them are: The drawer (the person who wrote the cheques) may not have enough money in his or her account to meet the cheque. This is called insufficient funds. You should never write a cheque if you know that there are insufficient funds in your account to meet the cheque. The cheque may be stale. Cheques are usually valid for six months only. If the cheque is stale, it will be dishonoured. The cheque may be post-dated. This means that the date on it is some time in the future. If the cheque is presented for payment before the correct date, then it will be dishonoured. The drawer may have stopped the cheque. For some reason, the drawer may have contacted the bank and asked them not to pay the money. Correcting fluid may have been used on the cheque Torn or mutilated cheques that have been stuck together with sticky-tape. The bank will also dishonour these. For example, you may have bought a computer and paid for it by eg cheque; but the computer was not delivered on the due date. You could then contact the bank and tell them to stop payment of the cheque (if it has not already been cashed). 1.7 What supporting documents should we have for payments? When any kind of payment is made, these rules are usually followed: All payments must be made by cheque. Very small payments are made from Petty Cash. It is important to prepare a Payment Advice Form (also called Cheque Requisition form) when making cheque payments. Each cheque should have its own Payment Advice Form. This form records all the essential information about cheques: Date of cheque Reason for payment Number of cheque Signature of official, and date signed Amount of cheque Approval of principal, and date signed Name of payee (receiver) You should attach the cheque to the bottom of the Payment Advice so that signatories can check everything before signing their names. 13

22 Section 1: Banking eg Example of a payment advice form: (NAME OF SCHOOL) PAYMENT ADVICE SCHOOL STAMP CHEQUE DATE: CHEQUE NO: The Principal PAYMENT FROM SCHOOL FUND Kindly approve the payment of (Amount in words) to (Name of Payee) for (nature of goods supplied or services rendered). PURPOSE: I hereby certify that the payment is a proper charge against school funds, is correct with regard to computation, is fair and reasonable and is duly supported by the attached authorised vouchers. The payment is in accordance with estimates of expenditure and will be met from the amount budgeted for (which budget will be debited) NAME OF OFFICIAL AND DESIGNATION APPROVED: (Principal) DATE DATE AFFIX CHEQUE HERE (Preferably so that the Reverse of the Cheque Leaf is accessible) What should signatories check? If you are a signatory to the school s cheque account, you have a real responsibility to look after the financial interests of the school. Before signing any cheque, always check the following: Was approval obtained for this service, e.g. plumbing repair? Are there proper signatories on the source documents, e.g. Invoice? (That prove that the service was delivered correctly, or that all the goods were received). Do the charges on the invoice match those on the quotation or contract?

23 Section 1: Banking Is the calculation on the invoice correct? Are the source documents attached to the cheque? (That is, invoice and payment advice). Now complete exercise 1.7. Exercise 1.7: Payment advice form (NAME OF SCHOOL) PAYMENT ADVICE SCHOOL STAMP CHEQUE DATE: CHEQUE NO: 632 The Principal PAYMENT FROM SCHOOL FUND Kindly approve the payment of R (One hundred rand) (Amount in words) to S Dlamini (Name of Payee) for plumbing services (nature of goods supplied or services rendered). PURPOSE: Leaking tap in staffroom Fix toilet flushing mechanism I hereby certify that the payment is a proper charge against school funds, is correct with regard to computation, is fair and reasonable and is duly supported by the attached authorised vouchers. The payment is in accordance with estimates of expenditure and will be met from the amount budgeted for Repairs (which budget will be debited) Finance Officer NAME OF OFFICIAL AND DESIGNATION APPROVED: (Principal) DATE DATE AFFIX CHEQUE HERE (Preferably so that the Reverse of the Cheque Leaf is accessible). Questions: 1. On what date was the cheque written? 2. What is the number of the cheque? 3. What is the amount of the cheque? 4. Who is the payee (receiver) of the cheque? 5. Why is this person receiving payment? 6. Which two officials are the signatories here? 7. Did the principal approve this payment? Check your answers against those at the back of the manual. 15

24 Section 1: Banking 1.8 What is a BANK STATEMENT? Each time you issue a cheque and give it to another person, that person will deposit the cheque into his or her bank account. That person s bank will claim the money from your bank. When the cheque is presented at your school s bank, the bank will check that the cheque is correct in every way. If everything is in order your bank will pay the money. They will take the money out of your account, and debit your account. This will decrease your balance in the bank. Similarly, when you deposit cash or cheques into your account, the bank will credit your account - thereby increasing your bank balance. Once a month, the bank will send you a bank statement. You should ask the bank to issue your statement on the last day of every month. They usually send the cheques that have been presented for payment during the month along with your statement. The bank statement is a copy of your account in their records. Bank statements usually have the following information: Opening balance. If there is a favourable balance, it is called a credit balance; that is why the letters CR are shown next to the balance. If the balance is an overdraft, it is a debit balance, and the letter DR will be shown. Debit column When one of your cheques is presented at the bank, the money will be taken out of your account and given to the person presenting the cheque. The amount will be written in the debit column, and the balance will be reduced. Credit column When money is deposited into your account, the amount is written in the credit column, and the balance will be increased. Bank charges The bank has the right to take money out of your account for bank charges. These are the bank s administrative expenses. These will reduce the balance further. Bank orders This is an instruction by you to the bank to pay a certain amount to a third party at the same time of every month. Debit orders The school may have arranged for regular monthly payments (eg electricity) to be deducted from the account. Now complete exercise

25 Section 1: Banking Exercise 1.8 AFRICA BANK YEOVILLE BRANCH Account of: People s Co-op Account no Statement No. 16 DATE PARTICULARS DR CR BALANCE July 1 Balance CR 2 Deposit Service Charge Cheque no Dishonoured cheque DR 10 Deposit CR Cheque no Ledger fees Deposit Cheque book Cheque no Deposit CR 1. What is the balance in our bank account on 1 July? 2. When we deposited money, did this increase or decrease the bank balance? 3. On 6 July, the bank debited our account with R410. We are told that this is a dishonoured cheque. When we deposited the cheque last month, the bank would have credited our account (and increased our balance). Now that the cheque has been dishonoured, the earlier entry is being reversed. Is the entry increasing or decreasing our bank balance? 4. How many times did we deposit during the month? 5. How many cheques that we issued were presented to the bank during the month? 6. When cheques were presented for payment, did they increase or decrease the balance in the bank? 7. What is the balance on the last day of the month? Check your answers against those at the back of the manual. 17

26 Section 1: Banking The Bank Statement is a very important document. It should be filed for safekeeping. The Statement is important for the following reasons: There is information on the Statement that you can only get from this document. At the end of each month, you will need the Statement to reconcile the school s records with the bank s records. When the auditor checks your school s financial records, s/he will ask for all the Bank Statements. 18

27 2 A C C O U N T I N G R E C O R D S In this section you will learn about three sets of financial records kept in a school: Receipts Cash Book Payments Cash Book Bank Reconciliation Statements The accounting system you are going to learn in this section is a very basic one. It is a very simple adaptation of the double entry system. This section will teach you how to keep careful and accurate records without having to learn the complications of double entry accounting! Some schools keep their financial records by using special accounting programmes on a computer. Computer systems are a version of double entry accounting. Basically, the accounting system used in a computer programme is the same as the system you are going to learn about in this section. 2.1 What is the Receipts Cash Book? The easiest way to keep a record of all money received is to use a columnar Receipts Cash Book. As you know, you issue a receipt each time you receive money (cash in the office, or through the post). Receipts should be recorded on a daily basis. Look at the example of a Receipts Cash Book in Exercise 2.1a. There is a main heading (RECEIPTS CASH BOOK) and the month (June 2001) Then there are many columns: Date (Year, month and date) Name of payer Receipt number Many money columns The first money column is called the Control column, and then there are several specialised money columns. Your school can change these specialised columns to suit its activities. For more details on how to complete the Receipts Cash Book, look at the Departmental Instructions, Section Now complete exercise 2.1a. 19

28 RECEIPTS CASH BOOK MONTH:... June YEAR: MONTH DAY DETAILS RECEIPT CONTROL SCHOOL DONATIONS TUCKSHOP INTEREST PSNP SUNDRIES SUNDRIES BANK YY-MM DD NO. TOTAL FEES RECEIVED DETAILS M Moosa (Tuckshop) Deposit EN Gumede (Educ.) P Zondi R Patel CC D Smith Deposit D Jones (Principal) R c R c R c R c R c R c R c R c Brochure Brochure Section 2: Accounting Records Exercise 2.1a: The Receipts Cash Book 1. How many receipts were issued on 15 June? 2. To whom did we issue receipt no.019? 3. Why did this person pay? 4. How much did P Zondi pay? 5. Why did P Zondi give the money? 6. R Patel CC (a business) gave R This amount was given for two reasons. What were they? 7. Once a day, all money received must be deposited in the bank. Notice that a line is drawn under the amounts in the Control column, and the total is written in the Bank column. What was the amount deposited on 15 June 2001? 8. When money is deposited in the bank what is the source document to prove that the bank received the money? Check your answers against those at the back of the manual. 20

29 Section 2: Accounting Records How do we receipt direct deposits? Sometimes parents do not hand in money at the school. They go straight to the bank and deposit the money directly into the School Fund account. This is called a direct deposit. These days, many schools are encouraging parents to pay School Fees by direct deposit. If a direct deposit has been made, the parents should complete the Deposit Slip in triplicate: The bank will stamp and keep the top copy. The bank will stamp and give the second and third copies to the parent. A parent who has made a direct deposit may send the second copy (via the child) to the school, and keep the third copy as proof of payment. (Deposit slips are source documents that prove that the money has been deposited into the school s account at the bank.) The officer responsible for the keeping of the cash books shall implement a register wherein all details of these direct deposits are recorded. The proof copies of the deposit slips must be maintained and recorded in the register in date order. The finance officer must identify these direct deposits in the bank statement on a monthly basis. The proof copy of the deposit slips recorded in the register must be reconciled with the direct deposits appearing in the bank statement. The total amount received through the direct deposits, which is recorded in the register on a daily basis, must be brought into account in the Receipts Cash Book by issuing a School Fund receipt in the name of the principal in his/her official capacity. Any other direct deposits not accounted for in the register must be identified and an entry must be made in the Receipts Cash Book as an adjustment, as well as in the register. This procedure must be done prior to the bank reconciliation statement being prepared. This rule is stated in the Departmental Instructions, Section Look again at the Receipts Cash Book. On 17 June, a direct deposit has been recorded. Notice the following: The receipt is made out to D Jones, Principal The receipt No. is 023. R50.00 was deposited for School Fees. There is a line under the amount in the CONTROL column. The amount is then repeated in the School Fees column and the Bank column. This shows that it was a direct deposit. It will not be included in the next Bank deposit. 21

30 Section 2: Accounting Records Here is a useful table, to show an example of how the receipts process could work. PARENTS PAY RECEIPTS ISSUED PROCEDURE IN SCHOOL Day 1: Parent A pays R15 Educator issues receipt 1. Educator gives R30 to 1 for R15 Finance Officer Parent B pays R15 Educator issues receipt 2 for R15 2. Finance Officer writes receipt A for R30 using Educator s name Educator records both Learners fees in School Fee Register Day 2: Parent C pays R15 Educator issues receipt 1. Educator gives R30 + Deposit 3 for R15 Slip to Finance Officer Parent D pays R15 Educator issues receipt 4 for R15 Parent E sends Educator gives no receipt 2. Finance Officer writes two Deposit Slip for R15 for Deposit Slip receipts: (i) Receipt B in Educator s name for R30 (ii) Receipt C in Principal s name for R15 Educator records all three Learners fees in School Fee Register Now complete exercise 2.1b and 2.1c. 22

31 Section 2: Accounting Records AMANDLA SECONDARY SCHOOL Exercise 2.1b: Writing receipts As the finance officer of the school, it is your job to prepare receipts for money received in the office. Use the four blank receipt forms on the right. Note: All money received was in cash, unless another form of payment is stated. Amounts received were as follows: Feb 8 Mr Chauke, an educator, handed in R78,00 for his class s school fees. Feb 8 Coca Cola Company has sent us a cheque for R as a donation towards our fund-raising concert. Feb 9 The tuckshop manager, Ms Moloi, handed over R for sales that day. Feb 9 Mrs Sapi, an educator, handed in R45.00 for school fees collected from her class. Answers are given at the back of this manual Date 20 Received from The sum of Rands and cents For R : CHEQUE CASH AMANDLA SECONDARY SCHOOL with thanks Date 20 Received from The sum of Rands and cents For R : CHEQUE CASH AMANDLA SECONDARY SCHOOL with thanks Date 20 Received from The sum of Rands and cents For R : CHEQUE CASH AMANDLA SECONDARY SCHOOL with thanks Date 20 Received from The sum of Rands and cents For R : CHEQUE CASH with thanks 23

32 RECEIPTS CASH BOOK MONTH:... YEAR:... MONTH DAY DETAILS RECEIPT CONTROL SCHOOL DONATIONS TUCKSHOP INTEREST PSNP SUNDRIES SUNDRIES BANK TOTAL YY-MM DD FEES DETAILS NO. RECEIVED R c R c R c R c R c R c R c R c Section 2: Accounting Records Exercise 2.1c: Recording receipts in the cash receipts book You are now going to record the four receipts in the Receipts Cash Book. Note these important rules: 1. Write on the first open line. Do not leave a line open. This would leave room for fraud 2. If you make a mistake, rule a line across the mistake line. Re-write the whole line. In accounting, we never use correcting fluids. This could also lead to fraud. Start by filling in the month and year. Then record the first two receipts and show the deposit in the bank for 8 February. Record the second two receipts and show the deposit in the bank for 9 February. After you have recorded the four receipts, record the following direct deposit: On 10 February, Jabu Mabundla, a learner, brought a deposit slip from his parents to show that fees have been paid, R15.00 Receipt no (Note: The name of the principal is D Jones.) Check your page against that at the back of the manual. 24

33 Section 2: Accounting Records How do we fill in deposit slips? Here are two deposit slips, showing that we deposited the money that was received. (in Exercise 2.1b) The first deposit slip shows the money that was received on 8 February. Cash Rec no R78.00 Cheque Rec no R ABC BANK Account Deposit/Rekening-deposito Subject to conditions printed overleaf Onderworpe aan voorwaardes op keersy gedruk Date Datum 9 Feb 2001 Account Name Rekening Naam Amandla Sec. School Branch Tak Howick Branch No. Tak-nr. Account No Rekening-nr. 9 Reference No. Verwysings-nr. Type of Account Tipe Rekening N.B.: List money/postal orders individually under cheques. L.W.: Geld/posorders moet afsonderlik onder tjeks aangedui word. Cheques/Tjeks Cheque Tjek Drawer s Name/Trekker se Naam X Savings Spaar Notes Note Coins Munt Sub Total Sub-Totaal Loan Lenings Time deposit Termyn deposito ABC BANK Account Deposit/Rekening-deposito Subject to conditions printed overleaf Onderworpe aan voorwaardes op keersy gedruk Date Datum 8 Feb 2001 Account Name Rekening Naam Amandla Sec. School Branch Tak Howick Branch No. Tak-nr. Account No Rekening-nr. Reference No. Verwysings-nr. Type of Account Tipe Rekening N.B.: List money/postal orders individually under cheques. L.W.: Geld/posorders moet afsonderlik onder tjeks aangedui word. Cheques/Tjeks Cheque Tjek Drawer s Name/Trekker se Naam Paid in by: Inbetaal deur: Signature Handtekening X Coca Cola J. Twala For office use only Slegs vir kantoorgebruik Item No (6/96) PMS Savings Spaar Notes Note Coins Munt Sub Total Sub-Totaal Total Totaal R Loan Lenings Time deposit Termyn deposito The second deposit slip shows the money that was received on 9 February Paid in by: Inbetaal deur: Signature Handtekening J. Twala Total Totaal R Cash Rec no R Cash Rec no R45.00 For office use only Slegs vir kantoorgebruik Item No (6/96) PMS 25

34 Section 2: Accounting Records 2.2 What is the Payments Cash Book? The Payments Cash Book is the book where you will record all payments that are made by cheque. Detailed instructions for making cheque payments are given in the Departmental Instructions, Section What supporting documents are required? Before writing a cheque, the finance officer must ensure that s/he has the following: 1. An authorisation docket (also called Payments Advice or Cheque Requisition ). This form must be signed by the principal. 2. An invoice giving full details of the purchase. 3. A signature on the invoice to indicate that the goods were actually delivered (or the service actually received). Note that if for some reason a supporting document (example, an invoice) is not available, a certificate for the non-availability of the document must be completed. An example of a supporting document is the transport claim form shown on page 28. An invoice is a document that shows that you owe money because you have bought goods or you have received a service. Our sample school, Amandla Secondary School, will issue four cheques to pay the following four invoices which it has received. Invoice 1 Invoice 2 Invoice 3 Invoice 4 Buses for the soccer team, R (from J. Dube Transport) New soccer balls, R (from Hlubi Sports) Paper for the photocopier, R (from Beju Stationers) Repairs to the windows of classroom, R80.00 (from J Khoza) Now complete exercise 2.2a. 26

35 Section 2: Accounting Records eg (NAME OF SCHOOL) CERTIFICATE FOR THE NON AVAILABILITY OF VOUCHERS SCHOOL STAMP I, hereby certify that I have actual knowledge of the services or supplies rendered to the school and thus acknowledge that the goods supplied/services rendered were in fact required for school educational purposes, were correct and in good condition; that the goods have been entered in the records; that the rates were fair and reasonable; and that the supplier is entitled to payment. SIGNATURE OF OFFICER DATE DESIGNATION APPROVED/NOT APPROVED REMARKS: SIGNATURE OF PRINCIPAL DATE 27

36 Section 2: Accounting Records eg (NAME OF SCHOOL) CLAIM FOR TRANSPORT NAME: CHEQUE NO: PERSAL/REFERENCE NO.: AMOUNT : REASONS FOR UNDERTAKING JOURNEY: DATE POINT TO POINT NO. OF ODOMETER READING DESCRIPTIONS KILOMETERS BEGINNING END TOTAL NO. OF KILOMETERS R MAKE OF VEHICLE : ENGINE CAPACITY: SIGNATURE OF CLAIMANT DATE APPROVED BY: NAME: RANK: SIGNATURE: DATE: AUTHORISED BY: NAME: RANK: SIGNATURE: DATE: 28