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Chapter 6

FINANCIAL MATTERS

6.1 FINANCIAL ACCOUNTABILITY AND FINANCIAL RESPONSIBILITY

6.1.1Legislation and Policy Framework

ACTS

  • The South African Constitution Act 108 of 1996 [SAC]
  • South African Schools Act 84 of 1996 [SASA]
    • The Specific Functions of the School Governing Body regarding the Management of Finances at a School are taken up in Sections 36-44 of the South African Schools Act.
    • The Status and Position of the School Principal and the School Governing Body are taken up in Sections 15 and 16 of the South African Schools Act.
  • The Public Service Act, 1994 (act no 103 of 1994), as amended [PSA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]
  • Employment of Educators Act 76 of 1998 [EEA]
  • See Reference A for an Example of a Financial Policy [FP]
  • National norms and standards for school funding, Government Gazette, 12 October 1998 [NR NSSF]
  • National norms and standards for school funding (amended April 2017) [A NNSSF]

 

GUIDELINES

  • Personnel Administration Measures [PAM]

 

REGULATIONS

  • National Norms and Standards for School Funding, Government Gazette, 12 October 1998 [NR NSSF]
  • Amended National Norms and Standards for School Funding (Government Gazette 394 in GN 40818 of 28 April 2017) [NR 40818/2017]

EasternCape

POLICIES

  • Eastern Cape Policy on the Personnel and Salary System (Persal) [Reference B1 EC PERSAL]

FreeState

ACTS

  • Free State School Education Act 2 of 2000 [Reference B2 FS EDACT]

 

GUIDELINES

  • Free State Province: Principles of Financial Administration [Reference B2 FS PFA]
  • Free State Province Provincial Notice No. 154 of 2001: Measures relating to the Minimum Requirements of Financial Records, Statements and School Funds of Public Schools [Reference B2 154/2001]
  • Free State Province:  Financial Administration in Schools – General Guidelines [Reference B2 FS FADMIN]

Gauteng

ACTS

KwaZulu-Natal

CIRCULARS

  • KZN Finance Circular No. 3 of 10 September 2008:  Policy and Procedure to deal with Claims against the State through Acts or Omissions and Recovery of Money due to the State [Reference B4 3/2008]
  • KZN Circular No. 3 of 20 January 2014:  Compensation for School Fee Exemption [Reference B4 3/2014]

Mpumalanga

POLICIES

  • Mpumalanga Education Department: Fraud and Corruption Prevention and Implementation Plan of 2014 [Reference B6 MP FRAUD]
  • Mpumalanga Education Department: Risk Management Strategy of 2014 [Reference B6 MP RISK]

NorthWest

ACTS

  • North West Schools Education Act 3 of 1998 [Reference B2 NW EDACT 3/1998]

WesternCape

GUIDELINES

  • WCED Manual:  Basic Financial System for Schools (Second Edition of 2006) [Reference B9 WC BFS]

 

CIRCULAR

  • Minute No. DBM0002/2004: WCED Submission of Financial Reports and Applications for approval for Loans, Investments, Section 21, Status and Appointment of Auditors [Reference B9 BM0002/2004]

6.1.2Framework for the Development of School Policy on Financial Accountability and Financial Responsibility

  1. The Relationship between Governance and Management in managing School Finances
    • Accountability, delegation of powers and assignment of functions:
      • The South African Schools Act 84 of 1996 states that the School Governing Body (SGB) is responsible for the administration and control of the school’s assets and resources.
      • The principal must answer to the SGB in terms of any powers delegated or functions assigned to him by the SGB, but the SGB remains accountable.
      • As an official of the Department of Basic Education, it is the responsibility of the principal to advise the SGB when they issue instructions or act in a manner that contravenes departmental instructions or policy.
    • Financial accountability entails that the Financial Committee must be transparent and must report to the SGB, Parents, Donors, Community, Department of Education and all other stakeholders who are involved or contribute financially to the school.
    • Financial responsibility entails that proper records are kept of all income and expenditure, accounts are paid in time, expenditure is done in accordance with the approved budget and that sound administrative procedures are followed.
  2. Functions and Responsibilities of the School Governing Body
    • Financial Management is governed by the School Governing Body (SGB) and administrated by the Financial Committee with the assistance of the School Management Team which is accountable to the SGB.
    • SASA determines that the SGB and not the school principal has the ultimate responsibility for the financial management of a public school. The principal, however, is a member of the SGB and, therefore, shares this responsibility.  The principal is also responsible for the proper implementation of the related policy.
      According to Section 16A of the SA Schools Act, the principal represents the HOD in the SGB.  The principal has the responsibility to assist the SGB in the performance of its functions and responsibilities without being in conflict with legislation.Section 19 (2) of SASA provides that the Head of the Provincial Education Department must ensure that principals and departmental officials render all necessary assistance to Governing Bodies in the performance of their functions in terms of the Act (See Paragraph 6.1.2(d) for details concerning the duties and responsibilities of principals).It is important to note that while the SGB is collectively responsible and accountable for the management of the school finances the SGB is allowed (Section 19 (2)) to delegate its functions to the principal, school management team, bursar and financial committee.
    • The Specific Functions of the SGB comprise the following (SASA, Section 20, 21, 29 (1), 30 (1) (B) and 34)
      • Establish and govern a school fund in accordance with directions issued by the Department of Basic Education.
      • Establish a Financial Committee (of which the principal must be a member) and of which a member of the SGB is the chairperson. The Finance Committee may be composed as follows:
        • the treasurer (chairperson, who must be a member of the SGB);
        • the principal;
        • educators;
        • parents; and/or
        • co-opted members.
      • Ensure that records are kept of funds received and spent and of its assets, liabilities and financial transactions.
      • Ensure that the school fund is administered in accordance with the regulations and directions issued by the Department.
      • Prepare a budget each year according to guidelines determined by the MEC, which shows the estimated income and expenditure of the school for the following financial year.
      • Submit to the Department by 31 January of each year, a copy of the approved estimate of income and expenditure (budget) of the school.
      • Submit to the Department the name of the auditor, accounting officer or person (approved by the Minister in terms of Section 43 (2) (b) of the South African Schools Act of 1996), appointed by the school to examine and report on the records and financial statements of the school.
      • Open and maintain a current banking account in the name of the school at a registered commercial bank into which all school fund monies must be deposited.
      • Keep separate inventory registers for items:
      • purchased from school funds;
      • donated to the school or purchased from funds donated to the school; and
      • received from the Department of Education.
      • Ensure that all stock items purchased from school funds, provided by the Department or donated to the school are properly maintained and looked after.
      • Have an inventory available at all times so that stock can be audited at least once a year.
    • Special Functions of the SGB at Self-managing Schools (SASA, Section 21)
      According to Section 21 of the South African Schools Act 84 of 1996 the SGB may apply for or be allocated one or more of the following additional functions:

      • maintain and improve the school’s property, and buildings and grounds occupied by the school, including school hostels, if applicable;
      • determine the extra-mural curriculum of the school and the choice of subject options in terms of provincial curriculum policy;
      • purchase textbooks, educational materials or equipment for the school;
      • pay for services to the school;
      • provide an adult basic education and training class or centre subject to any applicable law; or
      • provide any other functions consistent with this Act and any applicable provincial law.
    • Committees of the SGB
      According to Section 30 of SASA a Governing Body may:

      • establish committees, including an executive committee; and
      • appoint persons who are not members of the SGB to such committees on grounds of expertise, but a member of the Governing Body must chair each committee.
      • It is advisable – though not essential – for the SGB to set up a number of committees and sub-committees. Some of the committees may be the:
        • finance committee;
        • management committee;
        • resources committee;
        • fund-raising committee; etc.
  3. Functions and Responsibilities of the Finance Committee
    • Possible duties of the Finance Committee:
      • Administer the school finances in accordance with the responsibilities of the SGB.
      • Ensure that proper financial records of all income and expenditure are kept in accordance with the departmental instructions, e.g. the cash book.
      • Prepare financial records, statements, graphs and statistics concerning the finances of the school and report back to the Department.
      • Compile a Financial Policy for the school in accordance with regulations and requirements.
      • Advise the School Governing Body on the following aspects:
        • monitoring of the budget;
        • controlling of income and expenditure;
        • the adherence to all related policies;
        • the amount of school fees; and
        • exemptions from school fees.
    • At a meeting held each month (if possible) the Finance Committee should:
      • check all expenditure incurred since its previous meeting;
      • inspect supporting vouchers (invoices) to ensure that these are in order and comply with the regulations and departmental instructions;
      • ensure that expenditure is in accordance with the approved budget; and
      • ensure that the expected income correlates with the budget.
    • Advise the SGB on measures to be taken against non-payers of school fees.
    • Keep minutes of all meetings and decisions taken.
    • Draw up the budget each year.
    • Advise on ways of fundraising.
    • Advise on ways to invest surplus money.
    • Suggest who should be appointed as the auditor.
    • Ensure that all procurement is done through correct quotation and tendering procedures.
    • Finance Delegations
    • A very important principle in organising financial controls is the “separation of powers”.  Persons to whom powers are usually delegated are:
    • a financial sub-committee;
    • the school management team; or
    • the principal.
    • Every decision to delegate financial powers must be approved by a majority vote of the SGB and be recorded in the minutes stating clearly:
    • to whom the powers are delegated;
    • for which decisions or types of transactions;
    • to what maximum limit; and
    • for which period.
  4. Functions and Responsibilities of the Principal and School Management Team
    Some of the functions and responsibilities of the principal and school management team regarding finances are listed below.  However, it is advisable that a study be made of the relevant sections in SASA and the specific job descriptions as listed in the Employment of Educators Act.

    • Functions and responsibilities of the principal
      • Powers delegated and functions assigned by the SGB:
        • The principal must exercise any powers delegated and functions assigned to him / her by the SGB and must report to the SGB accordingly.
        • The reporting must be done by means of an annual report which includes information on exemptions and other relevant information regarding the school’s finances.
        • The principal must:
          • serve on the SGB and Financial Committee;
          • see to it that the school has a current banking account;
          • ensure that records for the above are kept properly and make the best use of funds for the benefit of the learners in consultation with the appropriate structures;
          • maintain a complete record of statutory provisions, regulations and departmental instructions relating to the financial management of the school;
          • ensure that she / he and staff under her / his control, appointed to assist the Financial Committee in the execution of its duties, are acquainted with all statutory provisions, regulations and departmental instructions enabling her / him to support the Financial Committee in the execution of its functions; and
          • ensure that all statutory provisions, regulations and departmental instructions are observed by her / him and employees under her / his control
        • The principal of a public school represents the Head of Department in the Governing Body when acting in an official capacity as contemplated in Sections 23 (1) (b) and 24 (1) (j) of SASA as well as Section 16 of SASA. Principals must take careful note of Section 16A of SASA as amended by the Basic Education Laws Amendment Act 15 of 2011, “16A” (h)-(k), which determines that she or he must assist the Governing Body with the management of the school’s funds, which assistance must include:
          • the provision of information relating to any conditions imposed or directions issued by the Minister, the Member of the Executive Council or the Head of Department in respect of all financial matters of the school contemplated in Chapter 4;
          • the giving of advice to the Governing Body on the financial implications of decisions relating to the financial matters of the school;
          • taking all reasonable steps to prevent any financial maladministration or mismanagement by any staff member or by the Governing Body of the school;
          • being a member of a Finance Committee or delegation of the Governing Body in order to manage any matter that has financial implications for the school; and
          • reporting any maladministration or mismanagement of financial matters to the Governing Body of the school and to the Head of Department.
    • Functions of the deputy principal or head of department
      • The deputy head and / or head of department must:
        • assist the principal, or if instructed be responsible for school finance and maintenance of services and buildings e.g:
          • plan and control of expenditure;
          • allocation of funds / resources;
          • the general cleanliness and state of repair of the school and its furniture and equipment;
          • supervise the annual stock-taking exercise;
          • manage and supervise school stock, textbooks and equipment for his / her department; and
          • budget for his / her department

6.2 BUDGETING

6.2.1Legislation and Policy Framework

ACTS

  • The South African Schools Act, No. 84 of 1996 [SASA]
    • Section 38
      • A Governing Body of a public school must prepare a budget each year, according to guidelines determined by the Member of the Executive Council (the provincial Minister of Education), which shows the estimated income and expenditure of the school for the following financial year.
      • Before this budget (referred to above) is approved by the Governing Body, it must be presented to a general meeting of parents convened on at least 30 days’ notice, for consideration and approval by a majority of parents present and voting.
    • Section 39
      • Subject to the Act, school fees may be determined and charged at a public school only if a resolution to do so has been adopted by a majority of parents attending the meeting referred to in Section 38 (2).
      • This resolution (referred to above) must provide for:
        • the amount of fees to be charged ;and
        • equitable criteria and procedures for the total, partial or conditional exemption of parents who are unable to pay school fees.
      • The Governing Body must implement a resolution adopted at the meeting contemplated above.

NorthernCape

GUIDELINES

  • NC Monitoring Tool For Draft Budget Process [Reference B7 NC BP]
  • NC Preparations For The Annual Budget Of Public Schools [Reference B7 NC PREP B]

6.2.2Framework for the Development of School Policy on Budgeting

  1. Defining the School Budget, Tunica (1995, p. 90) in his book, Leading the Way, states that “The school budget is an expression of the school plan in fiscal terms.” Phrased differently, the budget is there to support the school plan; it links the plans to the resources and serves as a mechanism for organising the resources.  (See Fig 6.2.1 below)
    In Figure 6.2.1 it will be noticed that strategic planning feeds into operational or action plans that are directly linked to the budget.  Activating the budget makes it possible to implement the action plans, which must be monitored and controlled.  Regular evaluation of the progress made with the implementation of the action plans will lead to mid-stream revision of budgetary targets, and revised action plans to meet emerging contingencies and emergencies.  These revised targets and plans will be monitored and evaluated on a regular basis.  End-of-year evaluation and reporting will feed into the strategic planning and will inform the goals and objectives set for the new financial year.
    It is clear from the above the importance of an annual strategic planning session that precedes the budget planning process.

    Fig 6.2.1 Overall Planning and Control of an Institution

    A diagrammatical representation of the financial management within the school is illustrated in Fig. 6.2.2  It is clear that the budget is central to the financial management system.  A budget can be regarded as a plan, and there is basically no better description than to say that it is primarily a planning and control system.  It estimates in advance the expenditure (planning) allocated to a project, expressed in terms of expenditure items.  The controlling characteristic entails a continuous comparison of real expenditure to the expected expenditure anticipated in the budget.  The final controlling action requires a comparison between the total estimated cost and the real cost of completing the project.

    Fig 6.2.2 Financial Management of an Institution

     

  2. The Phases of the Budgeting Process
    • Based on the Medium Term Expenditure Framework (MTEF) and the National Norms and Standards for School Funding, the Provincial Education Department will inform each school every year about the amount which will be provided by the State. This amount will be calculated in terms of the school’s rating on the provincial poverty index.
    • Based on the school’s shared vision and mission statement, the SGB will decide how extensively the school will supplement the State’s provision.
    • After consultation within the school, and based on planned activities, the principal and SMT will provide budgetary requirements for:
      • academic activities;
      • extra-curricular activities;
      • administrative activities;
      • maintenance;
      • personnel costs;
      • health and safety etc.
    • Based on all budgetary requirements provided, the SGB will prepare a budget to present to the parents’ meeting and calculate the amount of the school fees. The parents will vote to formally approve the budget and pass a resolution on the amount of the school fees to be charged and also equitable criteria and procedures for the total, partial or conditional exemption of parents who are unable to pay school fees.
  3. Reporting on the Financial Status of the School
    • The finance committee must, at least on scheduled dates of SGB meetings, report back on the income and expenditure of the school fund.
    • The finance committee must check all the school fund account books and documents to verify details of the report.
    • To keep parents and other stakeholders informed about the financial position of the school, it is accepted as a general rule that the SGB should send a summary of the school’s financial position to the parents at least once a term.
  4. Auditing Books
    • In Terms of Section 43 (1) of the South African Schools Act, the SGB must appoint a person registered as an accountant and auditor to audit the records and financial statements of the school.
    • If such an audit is not possible, then the SGB can appoint a person qualified to perform the duties of an accounting officer.
    • This appointment must be approved by the MEC for Education in the province.
    • No person with a financial interest in the affairs of the school may be appointed for this duty.
    • The SGB must submit to the HOD of the province within six months after the end of the financial year a copy of the annual statements, audited or examined as described above.

6.3 FUNDS AND INCOME

6.3.1Legislative and Policy Framework

ACTS

  • Auditor-General’s Act 12 of 1995 [AGA]
  • The National Education Policy Act, 1996 (Act No. 27 of 1996) [NEPA]
  • The Constitution of the Republic of South Africa (Act 108 of 1996) [SAC]
  • Employment of Educators Act 76 of 1998 [EEA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]
  • The South African Schools Act, No. 84 of 1996 [SASA]

REGULATIONS

  • Exemption of Parents from the Payment of School Fees Regulations: Government Notice 1293 (Government Gazette 19347) of 12 October 1998 [NR 19347/1998]
  • Regulations relating to the exemption of parents from payment of school fees in public schools, Government Gazette No. 29311 published on 18 October 2006 [NR 29311/2006]
  • Amended National Norms and Standards for School Funding (Government Gazette 394 in GN 40818 of 28 April 2017) [NR 40818/2017]
  • Transfer of Funds and other Movable Assets of the State to Public Schools: General Notice 1423 (Government Gazette 20669) of 26 November 1999 [NR 1423/1999]
  • National Norms and Standards for Grade R Funding (GG 30679) of January 2008 (NSF-Grade R) [NR 30679/2008]
  • National Norms and Standards for School Funding as amended, Government Gazette Vol. 400, No. 19347, 12 October 1998 [NR NSSF]
  • Salary adjustment: ‘Improvement in Conditions of Service: Annual Cost-of-Living Adjustment for Educators Employed in terms the Employment of Educators Act, 1998 with effect from 1 April 2017 (GN 386 in GN 40815 of 28 April 2017) [NR 40815/2017]

OTHER

Generally accepted accounting principles (a term used to refer to the standard framework of guidelines for financial accounting used in any given jurisdiction which are generally known as accounting standards.  GAAP includes the standards, conventions, and rules accountants follow in recording and summarising transactions and in the preparation of financial statements).

Tax Exemption Guide for Public Benefit Organisations in South Africa (Issue 5) [Reference C TAX ISSUE 5]

Limpopo

POLICY

  • Limpopo of 2016, Academic Year Norms and Standard Allocation for Quintile 4 & 5 [Reference B5 73/2016]

NorthernCape

GUIDELINES

  • Indicative Resource Allocations to Public Ordinary Schools for the 2016/2017 Departmental Financial Year [Reference B7 INDICATIVE]

 

CIRCULAR

  • NC SGB Associations [Reference B7 SGB ASSOC]

Gauteng

CIRCULAR

  • Directive to schools regarding the application for approval for Tax deductible status in respect to donations received [Reference B3 7/2017]

6.3.2Framework for the Development of School Policy on Funds and Income

  1. The School Fund Account
    The South African Schools Act states that:

    • Section 1
      • A loan means any financial obligation based on agreement, which obligation renders a school liable for making payment in one or more instalments, in favour of any person, but does not include the payment of staff appointment by the Governing Body in terms of Section 20 (4) or (5).
    • Section 36
      • A Governing Body of a public school must take all reasonable measures within its means to supplement the resources supplied by the State in order to improve the quality of education provided by the school to all learners at the school.
      • A Governing Body may not enter into any loan or overdraft agreement so as to supplement the school fund, without the written approval of the Member of the Executive Council.
      • If a person lends money or grants an overdraft to a public school without the written approval of the member of the Executive Council, the State and the public school will not be bound by the contract of lending money or an overdraft agreement.
    • Section 37
      • The Governing Body of a public school must establish a school fund and administer it in accordance with directions issued by the Head of Department.
      • Subject to Subsection (3), all money received by a public school including school fees and voluntary contributions must be paid into the school fund.
      • The Governing Body of a public school must open and maintain one banking account, but a Governing Body of a public school may, with the approval of the Member of the Executive Council, invest surplus money in another account.
      • Money or other goods donated or bequeathed to or received in trust by a public school must be applied in accordance with the conditions of such donation, bequest or trust.
      • All assets acquired by a public school on or after the commencement of this Act are the property of the school.
      • The school fund, all proceeds thereof and any other assets of the public school must be used only for:
        • educational purposes, at or in connection with such school;
        • educational purposes, at or in connection with another public school, by agreement with such other public school and with the consent of the Head of Department;
        • the performance of the functions of the Governing Body; or
        • another educational purpose agreed between the Governing Body and the Head of Department.
      • Money from the school fund of a public school may not be paid into a trust or be used to establish a trust.
      • If a trust was established from a school fund of a public school or if such money was paid into a trust prior to 1 January 2002, such trust or payment is invalid and the money must be paid back into the school fund.
      • A Governing Body of a public school may not collect any money or contributions from parents to circumvent or manipulate the payment of compulsory school fees and to use such money or contributions to establish or fund a trust, and if such money or contributions of parents were paid into a trust prior to 1 January 2002, the trust must pay such money or contributions into the school fund.
  2. Sources of Income for the School Fund Account
    • Allocated funds by the State:
      • In terms of Sections 12 (1) and 34 (1) of the South African Schools Act, Provincial Departments of Education must provide public schools for learners out of funds appropriated for this purpose.
      • The funding of these schools must be on an equitable basis in order to ensure that the rights of learners to education are properly exercised and that past inequalities in the provision of education are redressed.
      • In redressing inequalities, the Norms and Standards for school funding were promulgated in 1998 and amended in 2006.
        • The intention of the Norms and Standards for school funding is to determine equitable criteria according to which schools will receive additional funds for redress purposes.
        • The Norms and Standards provide for a sliding scale to be used in allocating additional funds to schools.
        • SASA also states that provincial legislatures must annually provide sufficient information to schools about the additional funds to enable the schools to prepare their budgets for the following year.
      • SASA as amended by the Basic Education Laws Amendment Act 15 of 2011 in Section 12 (3) determines as follows:
        • A public school may be:
          • an ordinary public school;
          • a public school for learners with special education needs; or
          • a public school that provides education with a specialised focus on talent, including sport, performing arts or creative arts
      • Subject to the relevant provisions of this Act, the Minister must determine Norms and Standards for school funding and Norms and Standards for governance and educator provisioning for public schools contemplated in paragraph (a) (iii).
      • Funds to schools are allocated according to the condition of the school, the relative poverty of the school community and the previous year’s enrolment as indicated in the 10th day return. Schools in very poor communities and which are placed in the lower quintiles may apply to be declared no-fee schools.
        SCHEDULE
        In terms of Paragraph 110 of the NNSSF, the National Targets Table published in Government Notice No. 394, Government Gazette No. 40818 of 28 April 2017 is hereby updated to include 2019 target amounts. The no fee threshold will be R1,243 in 2017:
        National table of targets for the school allocation (2017 – 2019)
        2017 2018* 2019*
        NQ1 R1,243 R1,316 R1,394
        NQ2 R1,243 R1,316 R1,394
        NQ3 R1,243 R1,316 R1,394
        NQ4 R623 R660 R699
        NQ5 R215 R228 R241
        No fee threshold R1,243 R1,316 R1,394
        Small schools:
        National fixed
        amount
        R28,791 R30,490 R32,289
        *2018 and 2019* figures inflation adjusted – CPI projected inflation rate adjusted
      • The criteria for determining the poverty level of a school are:
        • average per capita income of the community;
        • dependency ratio (average number of dependants per bread winner in the community);
        • functional literacy level in the community;
        • proportion of households in the community with water supply; and
        • learner to classroom ratio
      • The allocated funds to self-managing (Section 21) schools will be paid into their bank accounts and must first be used for the following categories of expenditure:
        • purchase of Learning and Teaching Support Material (LTSM);
        • payment of municipal services; and
        • day-to-day maintenance of school buildings, grounds and equipment
      • Section 20-schools will receive a paper budget. This means that the funds will be held by the district office and all expenditure has to be requested by means of requisitions.
    • School fees
      • According to SASA, school fees may be determined and charged at a public school only if a resolution to do so has been adopted by a majority of parents attending a meeting (AGM) for the consideration and approval of the budget. [See NC Form to Parents: Resolution to Charge School Fees [See Reference C NC FEES].
      • Resolutions must be adopted to provide for the amount of fees to be charged and equitable criteria and procedures for the total, partial or conditional exemption of parents who are unable to pay school fees.
      • Subject to the approval of the parents at the AGM, the SGB has the right to charge school fees and the parent or guardian of a learner is liable for the school fees of a learner.
      • The Governing Body of a public school may by process of law enforce the payment of school fees by parents who are liable to pay in terms of section 40 of SASA. The SGB or school, however, may not disadvantage or discriminate against a learner whose school fees are in arrears.
      • Exemption from payment of school fees
    • Fundraising
      • Section 36 of SASA states that it is the responsibility of the SGB to acquire additional funds to improve the quality of education at the school.
      • All fundraising events should reflect the following characteristics:
        • Every fundraising event should complement the educational purpose of the school.
        • A sensitivity not to exploit learners, sending learners from door-to-door with sponsorship forms is not acceptable.
        • Fundraising should not interfere with teaching and learning.
        • Fundraising events should comply with the law (with reference to safety issues, liquor licensing, lotteries, noise levels, etc.)
        • Be sensitive to community values.
    • Investments
      It is a worthwhile strategy for SGBs to budget for money to be set aside for medium- or long-term projects at the school.  Since SGBs stand in a position of trust to the school, investments should be made in low risk accounts.
    • Trusts
      • SASA Section 37 (7) clearly states that money from the school fund of a public school may not be paid into a trust or be used to establish a trust. Parents may also not be required to make any form of compulsory donation to such a trust.
      • It is permissible, however, for a group of school supporters to voluntarily form an organisation to support the school by means of donated services, funds or material assets. The school may receive any unconditional donations and may even assist such an organisation in publicising its activities provided that the organisation serves the community in a non-discriminatory manner.
    • Sponsorships
      • Funds raised through sponsorships and advertisements
        • The private sector may be given the opportunity to support schools financially through sponsorship and advertisements and, thus, show their involvement in education in real terms.
        • Sponsorship and advertisements at a school may be seen as the granting of money or a means to make a particular activity possible to a school by an enterprise or an individual. This could help to cover expenses for sports meetings, sports tours or any other fundraising projects, such as a school fete which has been arranged to raise school funds, and for establishing, improving or maintaining sports and other facilities at the school or providing funds for other needs.  In turn, the school could give some recognition in favour of the enterprise or individual.
      • Educational requirements for sponsorships and advertisements at schools
        • The primary requirement for accepting sponsorships and advertisements, and the conditions attached, must be reconcilable with the educational nature and the aim of the educational institution.
      • Concluding agreements for sponsorship / advertisements
        • The SGB, in conjunction with the principal and staff, is to deal with the matter of sponsors and funds which are obtained from these sponsors and as a result of advertising on a local level as this is in the interest of both the school and the community.
        • An agreement should be entered into by the SGB for the duration of the function, sports meeting or sports season in question.
        • The tenure of such agreement should not exceed 36 months.
      • Dealing with funds obtained from sponsors and / or through advertisements
        • Funds obtained from sponsors and / or through advertisements are school funds and are to be paid into the school fund account or into a marked school fund account and administered in the school fund books of account in the normal way.
      • Acknowledgement of sponsors
        • Acknowledgement may be given to sponsors for contributions towards the erection of buildings and / or structures by naming these structures after them, for example, the BTV Computer Centre, the Hewlett Pavilion, etc.  Approval must, however, first be obtained from the Department.
      • Schools may also acknowledge sponsors and advertisers in one of the following ways:
        • Space may be provided in the school’s annual magazine or on sports programmes or an acknowledgement that a page has been sponsored may appear at the bottom of the page.
        • Mention may be made of the fact that a function or sports meeting has been made possible by the generosity of a particular firm or organisation.
        • Flags, banners, umbrellas and loose boards may be used during the meeting / function to acknowledge the sponsors. These banners, flags, boards and umbrellas are to be removed immediately after the meeting.
        • Mention may be made in the school’s newsletter that a certain firm or person is going to sponsor or has sponsored a particular activity.
        • No permanent link between the name of the school and that of a firm or sponsor concerned is permitted.
    • Tuckshop sales, school uniform sales, etc.
      • The proceeds of these must go into the school fund account to the benefit of the school and its learners.
      • It can be considered to outsource and run these ventures independently. A percentage of its profits or a fixed rental can be paid to the school on a monthly basis.
  3. Receiving Money
    • Issuing of receipts
      • A receipt is to be issued immediately for every amount received, including a cash surplus and regardless of the sum involved.
      • Receipts are to be issued in numerical sequence (Receipts must be pre-numbered).
      • The receipt is to be completed in duplicate.
      • Particulars are to be written in blue or black indelible ink (Ballpoint pen) in clear, legible handwriting.
      • The copy (copies) should also be clear and legible.
      • The receipt should differentiate between cheques or cash received.
      • Should a receipt be incorrectly completed, such receipt must be cancelled and a new receipt issued.
      • No alteration or erasure may be made on a receipt.
      • The following particulars are to be given:
        • name of payee (all initials and surname or full name of firm) and the name of the pupil for whom the payment is being made;
        • amount in words and figures (words and figures must agree);
        • nature of payment, e.g. cheque, postal order, cash;
        • date stamp or date and name of institution / office (the official must check that the date is stamped on all copies);
        • the official’s signature in full; and
        • the purpose of the payment (this must be clearly analysed and specified).
      • A receipt may not be issued when a cheque which has been dishonoured by a bank is redeposited, or cash or a new cheque is received in place of it.
      • The official responsible is to ensure that only one receipt is issued for a payment received to check that where provisional receipts are used there is a cumulative receipt on which the numbers of the provisional receipts are also written.
      • A receipt is to be cancelled by using a rubber stamp or ink to write “CANCELLED” in large letters right across the original, as well as all the carbon copies. Both the original and the copies are to remain in the book.
      • Where a firm or person other than the debtor makes a payment on behalf of a debtor, the receipt is to be made out to the payee and the name of the person for whom the payment is made is to be entered directly after the payee’s name.
      • Receipts are to be written up individually in numerical order, but where necessary receipts which are issued on the same day for the same category of money received may be grouped into one entry as long as the relevant serial numbers are entered on it.
      • Cancelled receipts are to be written up individually.
      • The receipt book is to be closed (preferably in red) when money is banked.
      • The date, series of receipt numbers and the amount banked are to be stated.
    • Issuing of 18A receipts for financial donations
      • 18A receipts are issued towards financial donations received by the school for which the donor requires tax exemption.
      • The school must apply to SARS to get permission to issue a 18A receipt.
      • It is recommended to first contact the District Office to find out if they have issued a circular addressing this matter.The following link refers to a Basic Guide to Tax-Deductible Donations (Issue 2) [Reference C TAX ISSUE 2].
    • Credit cards
      Where the SGB decides that parents may use credit cards to settle accounts, credit card payments should be accepted according to the following guidelines:

      • The facility is to be available only for receiving money.
      • The credit card machine is to be obtained through the bank where the school has a current account.
      • The bank is to provide training in the use of the machine.
      • The original slip is to be handed to the payee and the duplicate slip is to be retained by the school for record purposes. The triplicate slip is to be used to request the bank to transfer the money.
      • An official school fund receipt is to be issued for money received by credit card.
    • Safekeeping of money on hand
      • Money received (collected) after hours is to be counted and a written acknowledgement of it is to be made out by the official responsible for the strong room key to whoever hands over the money.
      • The duplicate of the written acknowledgement is to be placed in the strong room with the money.
      • On the following working day, the principal / person in control and the official responsible are to count the money and account for it in the receipt book.
      • Bearing in mind the possibility of theft, it is advisable to keep the amount of cash in the strong room to the absolute minimum.
    • Depositing and withdrawing money
      • This matter is to be dealt with in accordance with International Financial Reporting Standards (IFRS)
      • Deposit slips are to be completed in duplicate by means of carbon paper. The particulars are to be legibly written in blue or black indelible ink (ballpoint pen) and the copies must be clear.
      • Writing the following particulars next to the last receipt for which a deposit is to be made, is recommended:
      • series of receipts representing the deposit, e.g. 1303 to 1362;
      • number of cheques and the total amount according to the receipt book;
      • number of money orders and postal orders and their total;
      • cash account according to the receipt book; and
      • total sum of the deposit
      • For purposes of control, it is essential to complete the deposit slip according to the receipts and to check the cash against the deposit slip.
      • It is further recommended that the receipt number also be written on the back of a cheque before the cheque is deposited. (This is useful for subsequent reference, where necessary.)
      • Re-depositing a cheque which has been dishonoured by a bank, or depositing cash or a new cheque to replace it, is to be done on a separate deposit slip which is to be clearly marked ‘re-deposit’ and on which the number of the receipt is to be written.
    • Statement of daily income and deposits:
      Date:  __________________
      Cash on hand carried over:  __________________
      Received and acknowledged on receipts no. ___ to ___
      Cash on hand carried over  __________________
      Cheques returned
      Receipt no. _______  __________________
      Receipt no. _______  __________________
       

      _______________________________

      SIGNATURE OF OFFICIAL RESPONSIBLE

  4. Grade R National Funding Norms and Standards
    • The National Norms and Standards for Grade R Funding (NSF-Grade R) require the Department of Education (DoE) to provide Provincial Education Departments (PEDs) with the guidelines for basic minimum package of Grade R inputs.
    • Paragraph 208 of the NSF-Grade R states that “the per learner cost determined by the PED must cover the full cost of a basic package of inputs. This basic package of inputs must include the cost of an educator working as an ECD practitioner, teaching a class of a size deemed reasonable by the PED, as well as non-personnel recurrent inputs required by the Grade R learners such as learner support materials, minor building repairs, utilities such as electricity and water, administrative support, copying of materials and media collections.”  In order for schools and community-based sites to deliver a quality Grade R curriculum, they require the basic minimum educational resources.
    • Key elements to consider:
      • Paragraph 207 states that:
        “… Education White Paper 5 recommends that the total per learner cost for Grade R should be equal to 70% of the total per learner cost for Grade 1.  This recommendation should apply, though it is subject to future assessments by the Department of Education relating to the cost of delivering Grade R, based on research…..”
      • Par 209 further says that:
        “In order to cover a larger number of schools in the early years of the roll-out process, PEDs may determine a per learner expenditure 3 level down to a minimum of 50% of the Grade 1 per learner expenditure figure…”
      • An example explaining the above is as follows:
        • If it costs R 9 000 to fund a Grade 1 learner in a public ordinary school and a PED estimates the per capita cost for Grade R [i.e. 50%-70%] at 60% of the Grade 1 per capita cost then:
          60% of R 9 000 = R 5 400
        • If the total number of Grade R learners in a province is 100 000, then the province could make a rough estimate of:
          100 000 x R 5 400 = R 540, 000,000*
      • Par 214 says that: “…it is recommended that if expenditure on learners in the middle quintile (quintile 3) is indexed to 100, then learners in the poorest quintile (quintile 1) should be funded at a level of 120, learners in (quintile 2) should be funded at a level of 110 and learners in the least poor quintiles (quintile 4) should be funded at a level of 80, while those in (quintile 5) should be funded at a level of 20.
        The following table provides a detailed example explaining the above, using the R 5 400 estimated per learner cost in Grade R
        :

        National
        Quintiles
        Number of Grade
        R learners in a
        province
        Level of funding
        (%) at a per
        learner costs of
        R5400
        Per learner cost (R)
        per quintile
        Estimated provincial total
        budget for Grade R per
        quintile
        Q1 35 000 120 (R5 400 x 120%) 
        = 6 480
        (35 000 x R6 480)
        = 226, 800, 000
        Q2 30 000 110 5940 178, 200, 000
        Q3 20 000 100 5400 108, 000, 000
        Q4 10 000 80 4320 43, 200, 000
        Q5 5 000 20 1080 5, 400, 000
        TOTAL 100 000 R 561, 600,000*

        *Please note that totals (R 561, 000 and R 540, 000) do not balance due to the uneven learner numbers per quintile.
        *The target of public ordinary schools Grade R to independent Grade R (community-based sites) is 85:15.

    • Grade R teacher qualifications / requirements
      The recommended qualification for a Grade R educator is an ECD NQF level 4 Core Unit Standards.
    • For the sake of school policy, the following should be considered for a Grade R class of 30 learners:
      • mandatory / compulsory indoor equipment:
        • 10 pairs of blunt nosed scissors;
        • floor mat / ucansi / blanket;
        • paint, at least 3 colours, and paint brushes (enough for one group);
        • large wax crayons (10 packets);
        • 1 box of paper (computer or waste paper);
        • 10 story books (could be made);
        • paper glue (non-toxic);
        • 1 teacher resource poems / rhyme book;
        • 1 pack of shapes;
        • 1 set of blocks;
        • 6 x peg boards with pegs; and
        • balls (at least 3)
    • The items listed above could be made, collected or donated by parents and the community. Some of the equipment is only procured once every 5 years e.g. story books, floor mats, etc. whilst some need to be procured every year, e.g. consumables such as paint, glue, etc.
      • mandatory / compulsory outdoor equipment:
        • balls;
        • skipping ropes;
        • balance beam; and
        • bean bags
      • Other equipment to be provided (could be homemade or donated by parents):
        • cups and saucers;
        • posters (could be cut from old magazines);
        • puzzles (at least for 2 groups);
        • dolls;
        • maths blocks (at least 1 set);
        • wooden cars (enough for one group); and
        • first-aid kit
  5. No-fee Schools
    • SASA determines in Section 39 (7) that the Minister must by notice in the Government Gazette determine the national quintiles for public schools or part of such quintiles which must be used by the MEC to identify schools that may not charge school fees.
    • Section 39 (13) determines as follows in this regard:
      • “(13) Subject to Subsection (7), the Member of the Executive Council may, after consultation with the relevant Governing Bodies, annually by notice in the Provincial Gazette identify additional public schools within his or her province that although they have not been included in the list of schools contemplated in Subsection (I0)(c), may not charge school fees.”

6.4 COSTS AND EXPENDITURE

6.4.1Legislative and Policy Framework

ACTS

  • Employment of Educators Act 76 of 1998 [EEA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]
  • The South African Schools Act, No. 84 of 1996 [SASA]

 

REGULATIONS

  • National Norms and Standards for School Funding, Part 2: The Public Funding of Public Schools, Sections 104-112 [NR NSSF]
  • Amended National Norms and Standards for School Funding (Government Gazette 394 in GN 40818 of 28 April 2017) [NR 40818/2017]
  • Regulations relating to the Prohibition of the Payment of Unauthorised Remuneration or the giving of Financial Benefit or Benefit in kind to Certain State Employees (Government Gazette No. 34840 of 15 December 2011) [NR 34840/2011]

 

GUIDELINES

  • Medium Term Expenditure Framework (MTEF) Technical Guidelines. These Guidelines provide Essential Information for Preparation of Expenditure Estimates for the 2017 Medium-term Expenditure Framework (MTEF).  They apply to National and Provincial Departments, Entities and Constitutional Institutions.  Closely following the Guidelines will help to improve the Efficacy of Public Spending [MTEF]
  • Generally Accepted Accounting Principles [GAAP]

EasternCape

CIRCULARS

  • EC Circular 9 of 2015, Compliance Checklist and Submission of Compliance Certificate [Reference B1 9/2015]
  • EC Circular 10 of 2015, Financial Management and Compliance Evaluation [Reference B1 10/2015]
  • EC Circular 18 of 2015, ICU Assessments of Compensation of Employees and Leave Liability [Reference B1 18/2015]

Mpumalanga

POLICIES

  • MDoE Procurement Policy of 2011 [Reference B6 MP PROCUREMENT]
  • MDoE Travel and Accommodation Policy of 2010 [Reference B6 MP TRAVEL]
  • Provincial Policy Framework on Remunerative Work outside Employment, 2011 [Reference B6 MP WOE]

WesternCape

GUIDELINES

  • Important Additional Aspects of the Western Cape Regulations on Section 38A Payments
    [See WCED Circular 0039/2004 of 9 August 2004 – Reference B9 0039/2004]
  • WCED Implementation Plan for 38A [See Reference B9 38A IMPLEMENTATION]

6.4.2Guidelines for the Development of School Policy on Managing Costs And Expenditure

    1. Procurement
      Self-managing schools (schools on the Section 21 list) will receive a lump-sum, per-learner transfer for the payments for which they have responsibility, in accordance with the Resource Targeting Table. Such transfers will be smaller for better-off schools than for poorer schools.  If a school’s bills for these services or items are lower than the lump-sum transfer, the SGB may allocate the transferred amount to the purchase of other education-related items.  In general, however, SGBs may not vary the proportion of the funding devoted to such goods and services according to their own perception of education needs, and any variations may have to be accounted for to the Department.
      School Governing Bodies that are on the Section 21 list may deal directly with suppliers and contractors for the relevant budgeted items in accordance with standard procurement procedures.  They must keep documents as evidence of correct dealing with such suppliers and contractors, and records of how the materials and services were used, and produce such documents or records at the request of officials from the PED and for audit purposes.
      Schools that are not on the Section 21 list, and have, therefore, not been granted approval to procure their own goods and services, must procure their goods and services according to existing departmental arrangements.  In addition, the PED will exercise administrative controls to ensure that the cost per-learner is maintained at a level consistent with these norms, the Resource Targeting Table and the budgeted allocation for each applicable item.  Such schools must be informed of their school’s budget by the PED, even though it is a “paper’’ budget.  This will prepare them to understand actual costs of running their school, and improve their capacity to join the Section 21 list in due course.
    2. Inventory Control
      The designated staff member for inventory control should carefully monitor all inventory levels at the school as maintained in the inventory, consumables and asset registers.  For a high level of effectiveness of the school, it is recommended that optimum levels of inventory be determined by the SGB and also timeous inventory replenishment planning undertaken.  If proper inventory control is in place, the designated staff member will get the necessary quotations in line with the budget requirements.
    3. Quotes and Tenders
      Before making a purchase or acquiring the services of an entity, the principal must satisfy himself that available suppliers have been compared.  It is always good practice to obtain at least three written quotations based on the same specifications.  Once the quotations have been received, approval of the quotation that represents the best value for money should be decided upon in accordance with the school’s financial policy.  After approval has been granted, the order form for the acquisition of the goods can be processed or issued.
      Large purchases or contracts should be advertised for tender.  A tender is an offer to do specified work or deliver specified goods at an agreed price.  The tender process is designed to rule out any favouritism and to promote transparency; it enhances competitiveness, combats corruption and enhances efficient and effective procurement practices.  Once a tender has been accepted, it is binding on both parties.  This means that the person or company that won the tender has to provide the goods or service in the manner agreed to and at the price offered and the school must pay the agreed price at the agreed time.
    4. Order Forms
      Order forms are to be printed at least in duplicate and are to be numbered and entered into the register for face value forms.

      • The name of the school is to be entered on the original and on the duplicate.
      • All purchases are to be specified in full.
      • Only persons authorised by the financial committee may issue an order form.
      • Measures should be taken to ensure that payments are only made for purchases and that only authorised purchases are invoiced.
    5. Procedure to be followed on Receipt of Goods or Services
      • When goods (or services) are delivered, they must be checked against a copy of the order form to make sure that the correct goods / services have been delivered before “signing-of”.
      • Details of stock received must be entered into the relevant registers immediately on the receipt of the stock.
      • Page numbers of the register must be entered on the payment copies of the order forms next to the relevant item.
      • Payment copies must be certified and forwarded to the District Controller of Payment on receipt in the case of non-Section 21 schools.
      • The above are specifically applicable to the receipt of reading books and textbooks which are supplied directly by the publishers.
      • As soon as textbooks or readers have been received the inventory controller must complete the prescribed form in duplicate and the principal must send it to the Controller of Supplies in the local District Office, together with the packing slip.
      • Copies of all forms must be kept for record purposes.
      • All school property must be marked as soon as possible.
    6. Cheque Authorisation
      Before a cheque can be issued, it must be authorised by means of a preceding “Advice of Payment” or a cheque requisition form and accompanied by a properly specified account or invoice.
    7. Cheque Payments
      • All payments, including petty cash payments, are to be made by persons authorised to do so by the SGB.
      • At least three persons, who are always readily available, should be authorised by the SGB to sign for any transaction. Every written cheque should contain at least two signatures of which one is preferably the principal’s.
      • Cheques must be crossed and the words “or bearer” must be deleted.
      • The signatories are not allowed to sign blank cheques.
      • Expenditures for which provision has not been made in the budget are first to be approved by the Governing Body.
      • Payments for a particular item in the budget should also first be checked against the budget and cleared, and cheques are to be signed only on submission of a completed Advice of Payment form (see sample below) and are to be accompanied by:
        • authorisation for the purchase in the form of a copy of the order form; and
        • a specified invoice on which a signature for receipt of the goods / services has been written.
          As a safety precaution, it is essential for the official who approved the purchase to certify the invoice as correct.
      • Documentary evidence of the payment mentioned in the two sub-paragraphs above is to be kept in the same sequence as the cheque numbers and must be bound together with the bank statements and kept for control and audit purposes.
      • When cashed cheques are received from the bank, they are to be attached to the above documents.
      • An alteration on a cheque has to be signed by both officials.
      • A cheque is cancelled by using a rubber stamp or ink to write “CANCELLED” in large letters across both the front of the cheque and the counterfoil. The cheque is to remain in the book or it may be kept with the cashed cheques in numerical order for audit purposes.
      • Purchases on credit are to be paid for monthly or at least before the end of the financial year.
      • Only one cheque book at a time may be in use.
        Example of an Advice of Payment
        NAME OF SCHOOL: (Letterhead)
        ADVICE OF PAYMENT
        Date:
        Pay:
        Invoice numbers: ______________
        Cheque numbers: ______________
        Date: ______________
        Amount: R_____________
        For: _______________________________________________________________
        __________________________________________________________________
        __________________________________________________________________
        Particulars of estimate:
        Amount available for the item in the budget R_____________
        Amount cleared fro the item in the budget R_____________
        ITEM NUMBER AMOUNT AVAILABLE AMOUNT ACTUALLY SPENT
         ________________  ________________   ________________
          ________________   ________________   ________________
          ________________   ________________   ________________
        Total amount of cheque  _____________________
        Requested / Compiled by:
        ___________________________ Date: _____________________
        Checked and approved for payment by:
        ___________________________ Date: _____________________
    8. Additional Remuneration to Government Employed Staff
      Section 38A (2) of the South African Schools Act makes provision for a SGB to apply to the employer for approval to pay a state employee any payment contemplated in Subsection (1) of the same section (remuneration, other financial benefit or benefit in kind). Subsections (3) to (10) of Section 38A elaborate on this provision as follows:
      (3)       Such application must be lodged in writing in the office of the employer and must state:
      (a)     full details of the nature and extent of the payment;
      (b)     the process and resources that will be used to compensate or remunerate the state employee; and
      (c)     the extent of compliance with section 20 (5) to (9).
      (4)       The Governing Body must make the application contemplated in Subsection (2) at least four months prior to the finalisation of the school’s budget.
      (5)       Despite Subsection (1), a Governing Body may pay travel and subsistence expenses relating to official school activities but such expenses may not be greater than those that would be payable to a public servant in similar circumstances.
      (6)       An employer must not unreasonably refuse an application contemplated in Subsection (2).
      (7)       In considering the application, the employer must take into account:
      (a)     the implications for the employer in terms of the employment contract and labour law;
      (b)     whether the service concerned in the application will interfere with the normal service delivery of the employee;
      (c)     whether the service concerned in the application has already been paid for by the employer; and
      (d)     whether the additional remuneration, other benefits or benefits in kind support the core activities and functions of the school.
      (8)       The payment contemplated in Subsection (1) must be reflected in the school’s budget, as presented to the general meeting of parents as contemplated in Section 38 (2).
      (9)       If a Governing Body pays remuneration or gives any financial benefit or benefit in kind contemplated in Subsection (1) to an employee without prior approval of the employer, the amount of money paid or benefit given must be recovered by the employer on behalf of the school from members of the Governing Body who took that decision, excluding a member of the Governing Body who is a minor.
      (10)     A Governing Body may appeal to the Member of the Executive Council against the:
      (a)     refusal by the employer of an application contemplated in Subsection (2); or
      (b)     failure of the employer to provide a decision on an application contemplated in Subsection (2) within three months after the lodging of the application in the office of the employer.


In December 2011
amended Regulations were announced in Government Gazette No. 34840:  Regulations relating to the Prohibition of the Payment of Unauthorised Remuneration or the giving of Financial Benefit or Benefit in kind to Certain State Employees.  Note that these Regulations were subsequently withdrawn.

 

APPENDIX 1

DATES FOR PROCESSING APPLICATION

 1. With regard to applying for permission to pay additional remuneration, financial benefit or benefit in kind:

1.1 On or before 31 May in the year in which the school budget is finalised in terms of Section 38 of the Act, Governing Bodies must submit their applications to the Head of the Provincial Education Department for approval.

1.2 On or before 31 August in the year referred to in Item 1.1, the Head of the Provincial Education Department must communicate to the Governing Bodies his or her decision regarding the application referred to in Item 1.1.

1.3    On or before 30 September in the year referred to in Item 1.1, Governing Bodies may appeal to the Member of the Executive Council against the Head of the Provincial Education Department’s failure to provide a response to, or against his or her refusal to grant permission in respect of, the application made in terms of Section 38(A) of the Act.

6.5 BANKING

6.5.1Legislative and Policy Framework

ACTS

  • The South African Schools Act, No. 84 of 1996 [SASA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]

6.5.2Framework for the Development of School Policy on Banking

According to the South African Schools Act, 84 of 1996, Section 37

  1. “The Governing Body of a public school must establish a school fund and administer it in accordance with directions issued by the Head of Department.
  2. Subject to Subsection (3), all money received by a public school including school fees and voluntary contributions must be paid into the school fund.
  3. The Governing Body of a public school must open and maintain one banking account, but a Governing Body of a public school may, with the approval of the Member of the Executive Council, invest surplus money in another account.
  4. Money or other goods donated or bequeathed to or received in trust by a public school must be applied in accordance with the conditions of such donation, bequest or trust.
  5. All assets acquired by a public school on or after the commencement of this Act are the property of the school.
  6. The school fund, all proceeds thereof and any other assets of the public school must be used only for:
    1. educational purposes, at or in connection with such school;
    2. educational purposes, at or in connection with another public school, by agreement with such other public school and with the consent of the Head of Department;
    3. the performance of the functions of the Governing Body; or
    4. another educational purpose agreed between the Governing Body and the Head of Department”.
    1. Receiving Money
      Immediately after receiving money for whatever purposes, a receipt must be issued.

      • The following should appear on the receipt:
        • date of receipt;
        • the amount received;
        • the name of the person from whom the money is received; and
        • the purpose for which it was paid
      • The following procedures should be strictly adhered to:
        • The carbon copy of the receipt must be made out simultaneously.
        • Pre-printed duplicate receipt books can be purchased from any stationer but these must then be stamped with the school stamp.
        • All monies received by the school must be paid into the school fund bank account within 24 hours (where practicable) but always within seven days.
        • Before money is banked, it must always be kept in safe custody on the school premises.
        • The total amount of money deposited must correspond with the total amount in the receipts issued for the same period.
      • Receipt books must:
        • be pre-printed;
        • be sequentially numbered; and
        • have carbon copies.
      • Only one receipt book should be operated at a time.
      • Never issue more than one receipt for a payment.
      • If a receipt must be amended, all copies must be cancelled in writing, a new receipt issued and all copies of the cancelled receipts retained by the school.
      • Receipt books must always be kept in a safe or strong room.
    2. Petty Cash
      • The Financial Committee should appoint (in writing) the person responsible for petty cash. Petty cash is used for payments which are too small to pay by cheque.
      • For each payment from petty cash, there should be at least two items: use a petty cash voucher and a receipt, to prove that the money was paid.
      • All petty cash vouchers should be kept in numerical and date order and in a safe place.
      • To each voucher should be stapled a receipt or document which proves that the money was paid.
      • The SGB must approve the maximum amount of petty cash to be retained by the school and the maximum amount for single payments allowed from petty cash, e.g. 10% of the petty cash float.
      • A cheque may be made out to the responsible person referred to above and the treasurer can make arrangements with the bank for immediate clearance of such cheques.
      • The amount must be reflected as a receipt in the petty cash analysis book.
    3. Bank Deposits
      • In terms of SASA, the school must open and operate a banking account, preferably a cheque account.
      • All money must be deposited into this account on a daily basis.
      • School funds or school fees can be deposited in the following ways:
        • over-the-counter deposits;
        • Automated Teller Machines (ATMs);
        • Electronic Fund Transfers (EFTs);
        • stop orders;
        • debit orders; and
        • direct bank deposits (e.g. parents pay school fees directly into the school’s account)
      • Completion of the deposit slip
        • It is very important that the deposit slip is correctly completed;
        • The flip side of the duplicate deposit slip should reflect the following:
          • a breakdown of the nature of the income deposited with the respective amounts; and
          • the receipt series from which the deposited income was sourced.
      • Safety measures with reference to depositing
        • Don’t establish a pattern when doing the banking, e.g. don’t go on the same day in the week or the same time. Another person should accompany the person who is doing the banking.
        • Control measures should be put in place, e.g. segregate the duties when compiling the deposit, i.e. the person compiling the deposit should not verify the correctness thereof.
        • The person making the deposit should verify the deposit and sign it.
    4. Bank Statements
      • Bank statements are crucial documents for the purpose of reconciling the books and auditing, and should therefore be properly filed, recognising that the bank statement is the only document that contains certain crucial information.
      • Once a month, the cheque book and cash book must be reconciled with the monthly bank statement.
    5. Bank Reconciliation
      • The school is not permitted to go into overdraft, and it is, therefore, vital to manage the account properly.
      • The counterfoil in the cheque book should be completed simultaneously every time that a cheque is written out.
      • Once a month, the cheque book and cash book must be reconciled with the monthly bank statement:
        1. During the month, record all receipts in the Receipts Cash Book.  Also record all cheque payments in the Payments Cash Book.
        2. At the end of the month, compare the Bank Statement with the two Cash Books.
          • Tick the items that agree.
          • Compare the “credits” in the Bank Statement with the deposits in the Receipts Cash Book.
          • Compare the “debits” in the Bank Statement with the cheques in the Payments Cash Book.
        3. The Bank Statement may contain information that is unknown, e.g. bank charges, dishonoured cheques, stop orders, direct deposits.
          • This information must be recorded in the Cash Books.
          • Close the Cash Books and fill in totals.
        4. The Cash Books will show information that is known to the school, but not by the bank, e.g. deposits not yet credited, or cheques not yet presented.
          • This information must be recorded in the Bank Reconciliation Statement.
          • It must be written in the Payments Cash Book.
        5. At the end of the process, the balance in the Cash Books must be “reconciled” with the closing balance in the Bank Statement.
    6. Investments
      • Surplus funds in a school’s current account may be transferred into a savings or fixed deposit account or other sound investment options operated by financial institutions.
      • Section 37 (3) of SASA states that SGBs must obtain the approval of the MEC for such investments into another account.
      • Since the SGB is in a position of trust they may not take undue risks with the money in the school fund account: investments in unit trusts, stocks and shares and the like are, therefore, not permitted.
      • All legal investments must be done in the name of the school and must be done with a registered financial institution.
      • Schools are strongly advised to budget for some reserves to be set aside for expensive medium- to long-term development projects.
    7. Internet Banking
      Internet Banking is the use of a personal computer for making transactions in bank accounts over the Internet.Advantages

      • It is obviously time-saving.
      • By registering for electronic banking one can access various important services and facilities.
      • It is possible to request statements, to review the history of the account’s transactions, transfer funds from one account to another, pay bills, settle school fees, etc.
      • Internet banking makes banking much more hands-on and it is much easier to monitor the account on a daily basis.
      • Discrepancies are noticed more quickly and can be dealt with more swiftly.
      • The hassle of paperwork is also eliminated to a great extent and transaction records are accessible online whenever you need them.

Security

    • Internet banking user interfaces are secure sites (generally employing the https protocol) and traffic of all information – including the password – is encrypted, making it next to impossible to obtain or modify information after it is sent. Encryption alone, however, does not rule out the possibility of hackers gaining access and intercepting the password as it is typed in (key logging).  Many electronic banking services impose a second layer of security.  Strategies vary but a common method is the use of transaction numbers, or TAN, which is essentially a single password.  Another strategy is the use of two passwords, only random parts of which are entered at the start of every banking session.  This is, however, slightly less secure than the TAN alternative and more inconvenient for the user.
    • As with the required two signatures for a cheque, rules and options should also be in place for Electronic Fund Transfers (EFTs) at school. Every internet payment must also be authorised by the same persons appointed by the SGB to sign cheques by means of individually allocated passwords.  The same rules must also apply as with cheque requisitions (e-payment requisition).
    • Passwords must be protected. Never write them down or share them with anybody else.  If you suspect that your password is compromised, change it immediately.
    • Ensure that there is an up-to-date anti-virus package on-board the computer.
  1. Writing Cheques
    • Use a non-erasable ballpoint pen.
    • Use the full names of the payee.
    • Don’t leave spaces between words.
    • Draw a line through unused space.
    • Write the amount immediately after “The sum of”.
    • Write the amount in figures as close to the “R” as possible.
    • Alterations to a cheque are not allowed.
    • Fill in the date correctly.
    • Remember to sign the cheque.

6.6 FINANCIAL CONTROL

6.6.1Legislative and Policy Framework

ACTS

  • South African Schools Act 84 of 1996, Section 42, 43 [SASA]Financial records and statements of public schoolsSection 42:     The Governing Body of a Public School must:
    1. keep records of funds received and spent by the public school and of its assets, liabilities and financial transactions; and
    2. as soon as practicable, but not later than three months after the end of each financial year, draw up annual financial statements in accordance with the guidelines determined by the Member of the Executive Council.

    Audit or examination of financial records and statements

    Section 43

    1. The Governing Body of a public school must appoint a person registered as an accountant and auditor in terms of the Public Accountants and Auditors Act 80 of 1991 to audit the records and financial statements referred to in Section 42.
    2. If the audit referred to in Subsection (1) is not reasonably practicable, the Governing Body of a public school must appoint a person to examine and report on the records and financial statements referred to in Section 42, who is:
      1. qualified to perform the duties of an accounting officer in terms of Section 60 of the Close Corporations Act 69 of 1984;  or
      2. approved by the Member of the Executive Council for this purpose.
    3. No person who has a financial interest in the affairs of the public school may be appointed under this section.  (This means that the Auditor may not be an SGB member.)
    4. If the Member of the Executive Council deems it necessary, he or she may request the Auditor-General to undertake an audit of the records and financial statements of a public school.
    5. A Governing Body must submit to the Head of Department, within six months after the end of each financial year, a copy of the annual financial statements, audited or examined in terms of this section.
    6. At the request of an interested person, the Governing Body must make the records referred to in Section 42, and the audited or examined financial statements referred to in this section, available for inspection.
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]

6.6.2Framework for the Development Of School Policy on Financial Control

  1. Records
    According to Section 42(a) of SASA, records must be kept of all financial transactions.  All relevant source documents and books must be kept in a safe place or strong room and, if kept electronically, there must be backups stored separately and apart from the originals.
  2. Reporting
    • Monthly reporting
      • Financial statements should be prepared monthly for submission to the SGB or Financial Committee. The statements should be distributed at least three days before the monthly meetings of the SGB.
      • Monthly statements should provide information on the following:
        • income and expenditure for the month and for the year to date;
        • comparisons of income and expenditure with budgeted amounts and an analysis of any variance; projected income and expenditure for the year;
        • total amount of fees outstanding;
        • analysis of debtors and debts owed to the school;
        • status of all projects; and
        • details of money in the bank and funds invested.
      • Annual Financial Statements
        • Unaudited Annual Financial Statements should be presented to the SGB for consideration as early as possible after the end of each financial year.
        • Audited Annual Financial Statements should be presented to the SGB within three months after the end of each financial year.
        • The audited Annual Financial Statements should be tabled for noting at the Annual General Meeting. (AGM)
        • The audited Annual Financial Statements must be submitted to the Head of Education within 6 months after the end of each financial year, as required by SASA

6.7 STOCK CONTROL

6.7.1Legislative and Policy Framework

ACTS

  • South African Schools Act 84 of 1996, Sections 20 (1) and 37 (1) [SASA]
  • The Public Finance Management Act, 1999 as amended by Government Gazette No. 38735 of 30 April 2015 (Act No 1 of 1999) [PFM]

 

GUIDELINES

  •  Generally Accepted Accounting Principles [GAAP]

FreeState

ACTS

  • Free State School Education Act 2 of 2000 [Reference B2 FS EDACT]

 

GUIDELINES

  • SA-SAMS Book Retrieval Manual [Reference B2 FS SASAMS]
  • How to print LSM Inventory Summary on SA-SAMS [Reference B2 LSM SUM]

KwaZulu-Natal

POLICY

  • KZN Department of Education Policy on Movable Assets [Reference B4 KZN MA]

Mpumalanga

POLICY

  • Policy for Procurement, Supply, Maintenance and Retrieval of LTSM in Schools of 2011 [Reference B6 MP LTSM]

NorthWest

ACTS

  • North West Schools Education Act 3 of 1998 [Reference B8 NW EDACT 3/1998]

6.7.2Guidelines for the Development of School Policy on Asset Control

  1. Stock Register (Also called Inventories)
    • The Principal can appoint (in writing) one person to be the “stock controller”. Even if this task is delegated, the principal is still personally responsible for keeping the inventories for assets and stock, up to date.  Principals must take the necessary precautions against damage, fire or theft.  If negligence can be proved, the negligent person will be required to compensate the Department.
    • Before submitting orders, the principal should survey each grade’s needs, check the stock on hand and ensure that the right equipment and books are ordered.
    • A Section 21 school needs only one stock register as all moveable assets are transferred to the school. A Non-section 21 school should have two registers:  One for departmentally provided assets and another for assets purchased from school funds.
    • The pages of the Stock Register should be numbered consecutively. Each item and each group of textbooks has its own page.  The page should have three sections:  Receipts, Disposals and Annual Stocktaking information.  (See example below.)
      NAME OF SCHOOL: Stockreg. Item
      STOCK REGISTER
      Quantity unit….Each…. Description _____________ Monitors  ________  Folio ______
      RECEIPTS DISPOSALS To be completed at Annual stocktaking
      DATE REQUISITION NO. QUANTITY VALUE DATE AUTHORITY QUANTITY SIGNATURE STOCK DATE SIGNATURE OF STOCKTAKING OFFICER
      YYMMDD CHEQUE NO. R c YYMMDD ON HAND YYMMDD
    •  A-class stock includes furniture and equipment, that is, items with a longer life-span than E-class.
    • E-class items are consumable, A-class not.  The school must keep an inventory for all A-class stock.
  2. Annual Stocktaking
    By tasking delegated persons, the principal must take stock of all stores, equipment and livestock at least once every financial year.  There should be at least two persons to do the stocktaking and they should be different from the usual stock controller.  A good practice which is used in many schools is to hire an external service provider to mark all items and undertake the annual stocktake.
  3. Stocktaking Procedures
    • The aim of stocktaking is to see if the actual items correspond with the balances on the records. The Stock Controller cannot do his / her own stocktaking but must be present when the appointed persons take stock.
    • After stocktaking has been completed, the controllers will be asked to explain any surplus, shortage or deficiency found. Each controller could be held liable for any discrepancies.
    • After the annual stocktake, a report should be made to the SGB. The report should answer the following:
      • What is the general condition of items or stores and equipment?
      • Are there any surpluses? What is the value of these surpluses?  Why are there surpluses?
      • Are there any shortages? What is their value?  Are there explanations for the shortages?
      • Are there any redundant, obsolete, irreparable or useless items?
      • Can the quantity and condition of stores, in terms of the activities of the specific department, be justified? Science Labs, for example, definitely use up their consumables and wear out their equipment.
      • Is it possible that any shortages or damage may be the result of negligence?
    • Every year the principal should establish a Board of Survey to review the stock position of the school.
      There are three members on this board, generally the principal and two senior members of staff.
      The Board must enquire about old and problematic items of stock.
      The Board must also enquire about any surpluses or shortages
      After the Board has completed the inspection, they must draw up a report and forward it to the SGB.
      If big problems have been discovered, the SGB should establish a Board of Enquiry.
  4. Hand-over Certificate
    • When a principal of a school terminates his duties at the school such a principal must prepare a hand-over certificate to be given to the person taking over his duties.
    • See Reference C [Hand-over Certificate] for an example of a template which can be used for this purpose.
    • It is also required that when other staff members are replaced, or where control of stocks is handed from one staff member to another, a “handing-over certificate” is completed.

6.8 THE PAYMENT OF VALUE ADDED TAX (VAT)

6.8.1Legislation and Policy Framework

ACTS

  • Act on Value Added Tax, Act 89 of 1991 [VAT]

6.8.2Framework for the Development of School Policy on the Payment of Value Added Tax

In terms of section 12(h) of the Act on Value Added Tax, Act 89 of 1991, the Department and all departmental institutions, with the exception of secondary schools which offer the agricultural field of study, are exempt from the levying of VAT on any goods or services that these institutions provide.

The first paragraph means that VAT will not be levied on any money collected or on the sale of goods manufactured in the course of the curriculum or in any other way.  Boarding fees and the money to transport pupils are also exempt from the levying of VAT.  VAT is, however, to be paid when goods or services are purchased.

With the exception of schools which offer the agricultural field of study, departmental institutions need not register as vendors with the Receiver of Revenue.

The “farming component” of schools which offer the agricultural field of study may be registered as a vendor for the purposes of VAT.  Documents are to be requested from the local branch of the Receiver of Revenue for this purpose.

Enquiries concerning any uncertainties about VAT are to be directed to the local Receiver of Revenue.