The Office of the Auditor-General Te Mana Arotake has today released the results of its 2021 schools audits, finding more schools recorded a deficit in the audited period.
“We found that schools had more cash available and increased working capital, but there were more schools that recorded a deficit. Overall, there were about the same number of schools in financial difficulty this year compared to last year,” the Auditor-General stated in the new report.
The audit identified 19 schools that require further support from the Ministry of Education.
“If we consider a school to be in financial difficulty, we ask the Ministry of Education to provide a letter confirming that it will continue to support the school.”
The report found many schools were still not preparing and reporting full budgets – with 485 falling into this category in 2021.
“Having a full budget, including a balance sheet and statement of cash flows, is a legislative requirement and important for good financial management. The shift to the Equity Index system at the start of this year means that schools will receive different amounts of funding from previous years. Therefore, having a full budget in place will be particularly important as schools go through these funding changes.”
The audits also revealed continued non-compliance with the Holidays Act 2003.
“[This] has been ongoing for several years. The impact on thousands of current and former school employees who might have been incorrectly paid over many years is concerning. Progressing the remediation payments needs to be a high priority,” the Auditor-General said.
The Auditor-General has made three recommendations to the Ministry of Education to:
- ensure that schools are complying with their property planning requirements by having up-to-date cyclical maintenance plans. This includes reviewing those plans to assess whether they are reasonable and consistent with schools’ asset condition assessments and planned capital works;
- engage with the schools we have identified as not preparing full budgets and provide them
with the necessary support to ensure that their budgets for the next school year are complete; and
- continue to simplify the level of financial reporting required in the Kiwi Park model financial statements – in particular, reconsidering what information the Ministry of Education specifically requires in addition to what is required by financial reporting standards.
The Auditor-General said a global shortage of auditors and the Omicron outbreak in early 2022 affected the Office’s ability to complete audits on time.
“Changes to our audit approach also resulted in many school audits taking longer than planned. We completed 1400 (57%) of the 2021 audits by the statutory deadline of 31 May 2022. However, we have made steady progress completing outstanding school audits since then. As at 31 December 2022, we had completed 2231 (91%) of the 2021 school audits.”