Schools' Finance - Time for Change

The experience of the Victorian Independent Broad-based Anti-corruption Commission’s Operation Ord investigation has exposed a glaring vulnerability for schools, particularly principals and the staff responsible for managing the school’s finances and procurement.

The alleged manipulation of procurement processes and the lack of capacity within the system to identify inappropriate expenditure, provided the perfect environment for large scale fraud to be perpetrated.

To their credit, the Victorian government and the Department of Education and Training are now well on the way to putting in place significant controls, as recommended by the IBAC. They have also initiated investment with a view to more rigorous recruitment processes and better targeted professional development for critical staff.

In her testimony in the IBAC on 6 May 2015, Ms Mary Hannett, Business Manager, Chandler Park Primary School, was asked by Counsel Assisting, Ian Hill, “Can we ask what qualifications you have in respect to bookkeeping or accountancy?”

Ms Hannett responded that she had no formal qualifications. She was not alone, as similar responses were obtained from each of the other business managers.

In 2015, Chandler Park Primary School had net recurrent income of just over $4.9m, $4.6m of which was from state and federal government funding sources. This compares with Cherrybrook Technology High School in New South Wales which had net recurrent income in 2015 of $23.6m, while one of the smallest schools in New South Wales, Louth Public School, had net recurrent income of $0.365m.

With increased responsibility for financial management and procurement in schools, school administrative staffing structures do not appear to have kept pace with the changing demands.

It could reasonably be assumed that a business with net annual income of the quantum of most schools, and the complexity of GST and ASIC reporting requirements, would employ staff with formal accounting qualifications or access a CPA on a regular basis.

While schools do not have to deal with ASIC, there is certainly a strong argument to provide an administrative structure which features professional accounting experience and qualifications or accesses those services through a shared services environment.

We are long past the time when schools, not just New South Wales or Victorian schools but all schools, can rely on well-meaning, committed but unqualified staff to carry out such vital functions.

There will be a premium through increased salary levels. The trade-off, a significant return to the system and to schools, and more time for principals and key teaching staff to concentrate on their core purpose … education.

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