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Financial monitoring, reporting and evaluation

The school business manager is responsible for producing regular financial monitoring reports, including year-end returns that fulfil the requirements of the consistent financial reporting framework.

Monitoring reports

Budget monitoring involves comparing actual income, expenditure or cash flow against projected figures. The school business manager (SBM) should produce regular monitoring reports for budget holders, the leadership team and the school’s governing body. The content of monitoring reports will depend on the stakeholder’s requirements, but most will share a common basic format which will identify:

• budget
• projected income, expenditure and cash flow to date
• actual income, expenditure and cash flow
• variance

Schools are legally required to provide quarterly income and expenditure statements plus a consistent financial reporting (CFR) end of year return to the local authority. The Financial Management Standard in Schools requires schools to submit a signed Statement of Internal Control and a signed Best Value Statement with the year-end return. Academies are required to submit budget monitoring returns to the government at the mid-year point and at year-end.

Consistent financial reporting

The CFR framework standardises and simplifies the reporting of school finances in maintained schools. The CFR framework is split into five sections:

• core income
• core expenditure
• capital income
• capital expenditure
• balance

Further information

• DCSF - Consistent Financial Reporting

Checking financial reports

Once a report has been produced it needs to be checked by an authorised person or body. They should be looking for any significant variances between proposed and actual income, expenditure and cash flow, and between the budget set and the projected year end figures. If any problems are identified, the reasons behind the variations must be determined so that corrective action can be taken.

Budget evaluation

There are three aspects to budgetary evaluation:

• financial efficiency - comparing year-end figures with the estimates made at the start of the year
• resource efficiency - looking at what the budget was spent on
• effectiveness - assessing whether the expenditure achieved the intended outcomes.

The first two processes can be carried out immediately after the end of the financial year. Evaluating financial effectiveness is the strategic element of budgetary evaluation and should form part of the whole-school self-evaluation process.

Benchmarking

Benchmarking your school’s financial performance will help you to plan and manage your budget, identify areas for improvement, improve the effectiveness of your spending and achieve best value.

Benchmarking can be carried out internally, based on data from previous years, and externally, by comparing your data with schools in your local authority or by using the DCSF national benchmarking website. Benchmarking is increasingly used in Ofsted inspections to show how well schools use their budgets to improve performance standards and pupil attainment. Schools are expected to provide evidence that they have used benchmarking to improve their financial management.

Further information

• DCSF benchmarking website