02. The Financial Framework

Statutory/Non Statutory Regulation and Controls

The Devolved School Management ( DSM ) scheme complies with the financial requirements of the:

1. Standards in Scotland’s Schools etc. Bill 2000.
2. The Scottish Office Education Department Circular 6/93.
3. School Boards ( Scotland ) Act 1998 ( check status of Parental Involvement Bill)

The DSM scheme also complies with the Highland Council Financial Regulations and Contract Standing Orders.

It is essential that no contravention of the above statutory/ non statutory guidelines take place. If there is any doubt it is incumbent upon Head Teachers as Budget Holders to take the appropriate advice.

Responsibilities for financial management

The management of the school budget is devolved to the Head Teacher and he/she is responsible and accountable for the appropriate management of this budget.

The role of the financial support officer is to support the Head Teacher with the management of his/her budget. This support will take the form of providing the necessary advice and guidance, including interpretation of the financial information available to Head Teachers. In order to under-pin the above process, the financial support officers for the Secondary schools and the larger Primary schools will meet formally with Head Teachers 3 times in each financial year. The outcomes of these meetings will be documented and the expectation is that issues raised will be addressed in advance of the next formal meeting. For further details of this process please refer to Chapter 8 – Review and Expenditure Analysis.

Financial information is made available to Head Teachers at the end of each month. This information is supplemented with detailed payroll reports.

It is the responsibility of the Head Teacher to ensure that this financial information is reviewed monthly and that he/she is aware of the financial position of their school. In order to ensure that the integrity of these financial reports is maintained, it is important that the appropriate financial support officer is made aware of any errors and/or queries immediately. This will ensure that queries can be rectified and thereby that the integrity of the financial ledger is maintained.

At the end of the financial year the DSM scheme currently allows Head Teachers to carry forward a surplus of up to 5% of their devolved budget and a deficit of up to 3% of their devolved budget. Head Teachers should take the appropriate steps throughout the financial year to ensure that they are operating within these parameters.

Internal Audit

The Head of Audit within his 5 year Audit Plan has included the annual review of a fixed number of schools. This review will focus on the following issues:-

•  Compliance with Financial Regulations and Contract Standing Orders
• The operation of School Fund accounts
• The operation of the Purchase to Save VAT scheme
• The overall compliance with the DSM scheme
• The integrity of financial transactions within PECOS and Oracle will also be tested

Financial systems

The system used for raising purchase orders is PECOS. It will eventually replace paper purchase order books. The system will ultimately be fully implemented in all Secondary schools and large Primary schools. The implementation of PECOS in the smaller Primary Schools will be phased in during academic session 2006/07. Until then the smaller Primary Schools should continue to use paper purchase order books.

Invoices will be processed through PECOS and thereafter following an interface with the corporate financial system, Oracle Financials (Oracle), payments will be issued.

Oracle performs the following functions:-

• The payment of invoices
• The processing of internal recharges
• The receipt and accounting of income
• Budget management and financial reporting

In common with PECOS, Oracle is available only in Secondary schools and the larger Primary schools. Within these schools Oracle is well established, with training being provided on an on-going basis.

Oracle is not available in the smaller Primary schools ( school roll 71 or lower). Instead the relevant invoice processing is carried out at Area Education Office level. The ECS Finance Central Unit provides the relevant budget monitoring reports on a monthly basis.

Oracle provides all Head Teachers with the financial information necessary to manage their budgets effectively.

In order to supplement the financial information available from Oracle detailed payroll transactions reports are issued to all Head Teachers at the end of each month.

Desk Top Reporting (DTR) will ensure that the financial transactions relating to the previous accounting period are available to Head Teachers within 2 days of that accounting period closing. This facility is also available to the Head Teachers of non-Oracle schools.

In addition detailed guidance on the procedures for effective financial management within schools is contained within the School Financial Administrative Hand-book.

Coding structure

The Oracle coding structure comprises of 30 digits. The composition of the code is as follows:-

Notes:

1. The Organisation code will always be 01 within the ECS Service. 
   There are 9 Area codes unique to each Council Area – it is essential that the correct Area code is utilised.
2. The Cost Centre code denotes the location where the costs are being incurred. Within the devolved sector this will invariably be the school name.
3. The Department Code denotes that the expenditure is devolved. The most commonly Department Code used is A10 – whole school.
4. The Subjective Code denotes the type of expenditure. Examples include AA1100 - Teachers Basic Pay, DA1000 – Purchase of Equipment.
5. The Project Code is utilised only for specific Capital projects. For non Capital expenditure the code used will be 00000.
6. The Activity Code is never used and will always be 00000.

The accurate recording of expenditure and income within Oracle is the foundation on which good financial management is based. In order to assist with this a prescriptive list of the subjective codes which should be used within schools is appended as Annex 2A. No other codes should be utilised without prior agreement with your financial support officer.

Some schools choose to differentiate expenditure by utilising the variety of Department codes currently available. This accounting treatment is normally used when recording expenditure which relates to government initiative funding. The relevant codes are appended as Annex 2B

Back to Top