The South African Institute of Chartered Accountants (SAICA) is leading the way in improving the financial management environment of public school through the development of proposed uniform financial reporting guidelines which have been submitted to the National Department of Basic Education for consideration and adoption as national policy to guide financial statement preparation by public schools.
Public schools are required by the South African School Act to prepare their financial statements in accordance with guidelines determined by the Member of the Executive Council (MEC). “Unfortunately, in some of the provinces such guidelines have not been issued by the MEC,” says Julius Mojapelo, SAICA Senior Executive: Public Sector. “In the provinces where the guidelines are issued, the guidelines do not adequately address the accounting treatment, presentation and disclosure requirements for key items in the financial statements.”
“One such example is the accounting treatment for land and buildings which in many cases do not legally belong to the school. Another case is the accounting treatment for ring-fenced fundraising and conditional donations. Clarity is also required as to whether the financial statements of a public school should include Grade R and hostels or not,” adds Mojapelo.
“The lack of clarity on the accounting treatment of these items has led to public school financial statements that are not comparable and in certain instances not useful for decision making by users such as creditors, parents and donors. Auditors and accounting officers are also not able to provide appropriate reports on the financial statements as they have no common criteria against which to audit or examine the financial statements of public schools.
The draft guidelines proposed by SAICA provide clarity on the accounting treatment, presentation and disclosure requirements for all significant items in the financial statements of public schools. The process for development of the guidelines involved extensive consultation with key role players including provincial education departments, auditors, accounting officers and governing body associations.
The guidelines are being considered and, if accepted, will be published as national policy on financial statement preparation by public schools for adoption by the provincial education departments,” Mojapelo concludes.
See copy of submitted draft guidelines on the link below: