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Professional Resources

Financial compliance

Financial regulations

Financial regulations form the regulatory framework within which the financial affairs of the council operate.

Scheme for financing schools

The Scheme for financing schools sets out the financial relationship between Leicestershire County Council and the maintained schools we fund.

Scheme for financing schools  Opens new window

It applies to community, nursery, special, voluntary, foundation, and foundation special schools and pupil referral units funded by the council. It doesn't apply to Academies or Multi-academy Trusts who are funded directly from the Education and Skills Funding Agency (ESFA), who funding relationship is managed through their Academy Funding agreement.

The Leicestershire County Council Scheme for financing schools states that schools shouldn't plan for a deficit balance. A deficit balance is where, when considering all income and expenditure, the overall reserves is less than zero (cumulative deficit balance) at the end of the current financial year.

School funding

Budget shares

Leicestershire County Council produces school budget share statements each year for all local authority maintained schools and provide guidance on how variations in the funding formula have affected individual budgets. Also produced are indicative Pupil Premium Grant Statements for each school.

Maintained schools are notified of their budgets via the Leicestershire Traded Services website, on the Finance page.

Schools Forum

The Schools Forum has a significant consultative role in all aspects of the schools budget, including the budgets distributed to schools and also the centrally retained schools budget. The effects of both national and local policy decisions are reported through schools forum and therefore schools are recommended to keep up to date with its outputs to ensure robust financial planning and risk management.

Financial Coding

The Department for Education (DfE) consistent financial reporting framework (CFR) provides a framework as a set of codes that most schools must use when recording their income and expenditure within each financial year.

Financial statements (including budget submissions and year-end financial statements) must follow with the headings within in the Consistent Financial Reporting (England) Regulations 2012 (CFR).  DfE guidance provides definitions for each CFR code set out in the regulations.

Leicestershire’s schools code list is a refined list of general ledger codes and schools should only use these codes when processing transactions within their schools. Maintained schools are notified of the code list within the budget planning spreadsheet issued annually.

Procurement

Maintained Schools are required to abide by the Authority's financial regulations and standing orders in all purchasing, tendering and contracting matters in conjunction with the Scheme for Financing Schools.

Purchasing, tendering and contracting matters

Use of contractors

IR35

Schools are responsible for ensuring the use of contractors is compliant with IR35 (‘off payroll working’). IR35 makes sure that a certain category of contractor pays broadly the same Income Tax and National Insurance contributions as an employee of the school would pay. Schools should ensure the correct assessment of services have been undertaken prior to entering service contracts.

Clerk to governors

Schools are responsible for ensuring their contractual relationship with their Clerk to governors are compliant with HMRC rules. Clerk to governors are considered to be ‘holders of office’ by HMRC and therefore the school is responsible for ensuring correct payment of the Clerk’s Income Tax and National Insurance contributions.

School benchmarking

Adherence to CFR framework supports benchmarking by ensuring school data is compared like for like. The school’s financial benchmarking website enables basic comparisons of school income and expenditure profiles with similar schools. This tool is publicly available.

Schools can also access the View my Financial Insights (VFMI) to undertake a more in-depth analysis of their expenditure compared to other schools. VFMI also allows schools to model future expenditure plans.

Online reporting

The Department for Education (DFE) require schools publish their pupil premium strategy documents by 31 December each year. From 2021 schools must use a template provided by the DFE. Publishing by this deadline and using the correct template forms part of the conditions of grant. DFE will undertake monitoring checks on a sample of schools’ published reports.

School are required to publish details of how they spend the PE and sport premium funding by the end of the summer term or by 31 July 2022 at the latest. Publishing by this deadline forms part of the conditions of grant.

All local authority-maintained schools are required to publish annually on their websites the number of individuals earning over £100k a year. This information is required to be published in bands of £10k.

Schools are required publish a link to the specific page on the Schools Financial Benchmarking dedicated to their school using the unique reference number allocated to the school by the Department for Education.

School Financial value standard (SFVS)

The School Financial Value Standard is a process in which schools self-assess their financial planning, risk management, and provide assurance to the local authority, auditors, and other governmental bodies that they sufficient financial management in place.

Leicestershire County Council maintained schools are required to submit the SFVS annually to the authority by 31 March. The council will use this information to inform their financial assessment and audit plans. Schools should maintain an evidence log to back up their assertions in the SFVS.

Related party transactions

Related party transaction are financial transactions between two parties, where the supplying party has an existing business or close personal relationship with a person(s) in a position of managerial influence at the school. This is likely to be SLT members and/or the governing board members but can include any person who influences budget decisions.

As part of the SFVS schools are required to include a list of related party transactions. You can use this template to record these.

Risk Management

Risk management is a key activity for school leaders.

Schools should identify and record risks within their school through the maintenance of a risk register. This should identify the key risks that may affect the day to day and future running of the school and consider operational, financial, and political risks alongside the mitigating actions to be delivered.

Below is a risk register provided by the Institute of School Business Leaders

School risk register template  Opens new window

Contact

For information about returns and funding please email the Education Finance team.

For information regarding sustainable financial planning please email Michael Lilley, Schools Financial Planner.

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