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Have you seen how your school is spending its money?

Posted by Jane Rogers | Governance and accountability | Jul 03, 2018
It’s not just school reports on student achievement that schools have to complete each year.

School playgroundDid you know that every state school in New Zealand has to prepare an annual report each year for its community on its performance? These reports provide information about a school’s activities over the last year and their finances. For the first time this year, all state schools must make their annual reports available on their websites. Have you seen your school’s report?

Each annual report includes:

  • an Analysis of Variance, which details the progress the school has made in achieving the aims and targets in its school charter;
  • financial statements setting out the funds the school has received in the school year, and how it has spent them;
  • an audit report giving an independent opinion on the reliability of those financial statements (I’ll talk about this further below);
  • a list of all the trustees that have served on the school board in the year; and
  • a statement setting out how the school has spent its KiwiSport funding for the year.

What does the Auditor-General audit?

By law, every state school must have its financial statements audited every year by the Auditor-General, who appoints local auditors to audit schools on their behalf. There are more than 2400 state schools in New Zealand so this keeps our auditors very busy!

We only audit the financial statements in the annual report. However, we do look at any other information provided in the report to make sure it is consistent with what has been reported in the financial statements.

When an audit is completed, the auditor gives the school a signed audit report, which the school must publish as part of its annual report. This gives readers of the school’s financial statements assurance about the reliability of the information reported in the financial statements. An auditor cannot give full assurance because they don’t examine every single transaction. Nevertheless, the audit report does provide a high level of comfort that the financial statements fairly reflect the school’s financial transactions and position for the year.

The auditor also sends a letter to the school board setting out our detailed findings from the audit, which includes areas for improvement. This is not a public document.

What does my school’s audit report mean?

Each audit report includes an “opinion” section, which is where the auditor says whether they’re happy with the financial statements or not. These reports are written in technical language, so they can be difficult to understand. Our Kiwi guide to audit reports explains all the different types of opinions in plain English, but we’ll go through some of the more common ones for schools below.

The majority of schools receive a “standard” opinion, which indicates that the financial statements are a fair reflection of the transactions and financial position of the school for the year. However, in some cases, there may be something happening at the school that the auditor decides to draw attention to, because they think it’s important for readers to know about it. You will find this as a separate paragraph in the audit report, referring to a specific matter. These paragraphs usually refer to matters of public interest, such as unusual spending or schools in financial difficulties.

If we issue a “qualified” opinion, it means we either disagree with something the school has reported, or we did not have enough information to say whether or not it was OK. We’ll explain the reason for our qualified opinion in the audit report.

If an auditor identifies serious matters, either an “adverse” opinion or “disclaimer” may be issued. An “adverse” opinion means the auditor believes the financial statements are incorrect and could be misleading to a reader. A ‘disclaimer’ of opinion is where the auditor doesn’t have enough information to give an opinion at all. Both of these are rare.

When will my school’s annual report be available?

By law, schools must provide their annual report, including the audited financial statements, to the Ministry of Education by 31 May. Schools need to make their annual reports available on their websites shortly after this date.

If your school does not have a website, the Ministry will publish their annual report on the Ministry’s Education Counts website.

If you have questions or concerns about a school’s annual report you should speak to the school board. The school office will be able to pass on your questions to the board, or you may want to go along to the board’s next meeting to ask your question in person.

Later this year we will publish a report on the results of the school audits on our website which will let you know the types of audit reports we issued, schools that have not reported on time, and what we have seen happening in the school sector. This report also goes directly to the Secretary of Education. You can read last year's report on our website.

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