Tuesday, May 28, 2024

School’s out for 2020 audit

NZ Auditor-General, John Ryan, has today released the results of the 2020 school audits.

Mr Ryan said the audits had found 17 schools in financial difficulty for the 2020 year, compared to around 40 schools in a normal year, despite the logistical and economic challenges caused by the COVID-19 pandemic.

We also identified an overall improvement in the financial position of schools at 31 December 2020. However, this had largely been achieved through additional government funding, so we might see different results when we complete our 2021 audits,” he said.

“Our expectation was that COVID-19 would not significantly affect most schools financially because schools were given additional support through 2020. However, the restrictions put in place as alert levels changed meant that many schools could not carry out their usual fund-raising activities.

“The border closures also meant there were fewer international students. As a result, we were concerned that more schools would find themselves in financial difficulty.

“We also carried out some analysis of the schools’ financial information held by the Ministry. This showed an overall improvement in the financial position of schools at the end of 2020.”

He said total funds that schools raised locally reduced for schools in all regions during 2020 and international student revenue also reduced, but only by about a quarter. However, additional government funding mitigated some of this loss in revenue.

“This included the COVID-19 support funding, including $20 million to support schools with international students, and funding for those decile 1 to 7 schools that opted into the donation scheme.”

“While COVID-19 support has been available in 2021 during alert level changes, the levels of Covid-19 support has been less this year, so our 2021 audits might show a different picture. It is important that schools carefully consider the changed circumstances in which they are now operating and plan accordingly,” the Auditor-General said.

The OAG has repeated recommendations for the Education Ministry from previous reports on school audits:

  • The first is to make sure that schools are properly planning for their future maintenance. This is an area that causes a lot of work for auditors and despite raising this matter regularly in our reports, it has not improved. We have issued more audit opinions than normal this year (23) where we could not get enough information about a school’s cyclical maintenance provision. We understand the Ministry is working on further guidance to schools about this. We will also be collecting information during our 2021 school audits to share with the Ministry to help resolve this long-running issue. 
  • The second is to make sure that changes to the school payroll result in schools having appropriate controls over all their payroll transactions. The audit of school payroll for the 2020 audits went smoothly, apart from a small delay in distributing the payroll reports to schools. However, our auditors have since made us aware of a change to the payroll system as it has moved to EdPay, which means that a key control schools rely on is no longer available. We have asked the Ministry to follow this up with Education Payroll Limited.

The Auditor-General said a lack of auditors and the resulting increase in audit costs would continue to challenge schools and the OAG office into the future.

“While the borders remain closed and restrictions continue, we will face challenges in completing school audits, and we cannot rule out further delays for the 2021 school audits,” Mr Ryan said.

“To mitigate against this, we re-sized some audit portfolios during the recent appointment process to better reflect auditors’ capacity so that audits can be completed on time. However, the changes made to the school payroll this year could affect the amount of work auditors need to do at individual schools next year.

“This year’s report shows an overall continued improvement in the school audit process, which is a testament to the good communication and collaboration between our staff. Thank you for your ongoing support,” he wrote in a letter to Ministry of Education Secretary, Iona Holsted.

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