The objectives of school council financial audits are to provide reasonable assurance:
- over the financial activities under direct control of school councils and the financial governance and financial management of the school
- that the school financial report presents fairly, in all material respects, the school’s financial position and financial performance
- that the school financial report has been prepared in accordance with the Department’s
Finance Manual for Victorian Government Schools and other financial guidelines/instructions relevant to schools’ financial reporting.
The audits are also intended to:
- provide recommendations to improve the robustness of financial governance and the management of finances, accounting and internal control systems at individual schools and on a system-wide basis
- collect information from schools for the purposes of identifying schools’ characteristics (for profiling and to inform targeted audit recommendations).
Policy and legislative context
All government school councils must:
- undergo an independent financial audit at least once every four years
- follow department policy and procedures ensuring that financial systems and controls are in place to enable contracted auditors to perform all the required field work and issue an audit opinion.
The requirement to perform independent financial audits of school councils is underpinned by the following:
Financial Management Act 1994
Audit Act 1994
Public Administration Act 2004
Education and Training Reform Act 2006
- Education and Training Reform Regulations 2007.
School selection criteria
Each year, schools that meet one or more of the following criteria will be scheduled to undergo an audit:
- with CASES21 operating revenue averaged over three years greater than $3.5m per annum
- that have not been audited in the previous three years
- that performed poorly in the previous year's school council financial audit program
- schools that have changed status in the previous 12 months, i.e. opened, closed or merged
- schools as requested by the Regional Monitoring & Support Division or the Financial Services Division with the agreement of the Audit & Risk Branch of the Governance and Executive Services Division.
Non-financial criteria such as NAPLAN results, FTE enrolments, ratio of education support staff to teaching staff, student retention and change of key personnel is also considered in selecting schools for audit.
Schools that do not meet any of the above criteria will be scheduled for an audit in one of the following three years.
This table provides an overview of the audit process:
Audit & Risk Branch
- Appoints contract auditors.
Audit & Risk Branch
- Advises schools, by end of Term 4 prior to the year of the audit taking place, that they will be audited.
Conduct the audit in accordance with Australian auditing standards under a special purpose framework.
|Principal, business manager and school council president|
- The principal and business manager must make themselves available on the day of the audit to answer questions and discuss the final recommendations (and the school council president if requested).
- Provides management comments within the specified timeframe to the auditor for completion of the management letter.
- Provide the final audit report and management letter to the school council president, principal and the Audit & Risk Branch.
|School council president and principal|
- Organise for the reports to be tabled and formally minuted at a school council meeting.
|Audit & Risk Branch|
- Conducts an electronic satisfaction survey of schools following completion of the audit.
|Audit & Risk Branch|
- Compiles a state-wide summary of findings and report to the Department’s Portfolio Audit and Risk Committee.
- Circulates a summary of audit findings to regions and all schools.
Conduct of the audit
This table describes the audit process undertaken by the appointed external auditors.
Determine the audit methodology which may include schools completing a pre-audit questionnaire.
Agree with the school on a suitable time for an audit visit to the school.
|3||Conduct an opening meeting with the principal and the business manager.|
Undertake the audit.
Conduct an exit meeting with the principal to discuss the issues identified.
Draft an audit report and a management letter outlining issues identified and recommendations to address those issues.
Request that the principal provide management responses to the management letter’s recommendations including:
- acceptance or non-acceptance of the audit recommendation
- action planned in response
- responsible officer
- planned completion date.
Finalise the audit report and management letter including the assignment of an overall audit rating based on the 'overall audit rating definitions', see
Department resources below.
Forward the following completed audit documentation to the school council president and to the principal:
- audit report
- financial statements upon which the audit opinion is made as attachments to the audit report. (The financial statements are prepared by schools).
- management letter outlining areas for improvement.
|10||Provide a copy of the final reports to the Audit & Risk Branch.|
Undertaking the following activities prior to the audit assists the efficient conduct of the audit and minimises potential disruptions:
- understanding and adhering to the requirements of the Finance Manual for Victorian Government Schools
- reviewing findings from previous school council financial audits and ensuring that all actions have been implemented
- reviewing any correspondence from the Department or the auditors regarding the audit
- assigning an appropriate staff member (usually the business manager) to be responsible to support the audit process
- collating all required data and files at the site of the audit in a logical manner
- having the final signed financial statements and other documents requested by the auditors completed prior to the commencement of the audit
- ensuring that all records/registers are up-to-date.
This table outlines some of the other audits that may involve schools.
- Each year the Department will identify one or more audit themes or topics for review/testing by the auditors at a sample of schools to gain a better understanding of processes and to identify improvement opportunities. The sample of schools will be a subset of the schools allocated for financial audit in that year.
- The Audit & Risk Branch delivers an annual internal audit plan.
- Internal audits may include a sample of schools.
Ad hoc audits
- As required, schools may be audited by the Audit & Risk Branch at the request of regional offices or the Financial Services Division.
- The Audit & Risk Branch may also undertake special investigations in schools in response to suspected financial anomalies.
|Victorian Auditor-General's Office (VAGO) performance audits|
- Schools may be included in VAGO performance audits as required.
For further information, contact details are provided below.
School council financial audits ||Senior Project Officer, Projects Unit, Audit & Risk Branch (03) 9637 2885,
|Topic audits||Senior Project Officer, Projects Unit, Audit & Risk Branch (03) 9637 2885,
|Internal audits||Manager, Audit Unit, Audit & Risk Branch (03) 9637 1864|
|Ad hoc audits||Manager, Audit Unit, Audit & Risk Branch (03) 9637 1864|
|Special investigations||Fraud Control Officer, Audit Unit, Audit & Risk Branch (03) 9637 3669|