Memorandum submitted by The Chartered
Institute of Public Finance and Accountancy (CIPFA)
EXECUTIVE SUMMARY
— CIPFA's
submission addresses the issue of financial accountability and
in particular a number of obstacles faced by local authorities
in helping improve schools' accountability.
— A small
change in the requirements made by the Department for Education
and Ofsted could lead to a potentially large improvement in the
lines of accountability if Ofsted could include in its inspections
and reports the school's progress towards achieving the Financial
Management Standard (FMSiS).
— Guidance
to Ofsted inspectors should include the need to check for any
worrying finance or accountability issues and if found, to include
these in a Notice of Concern.
— Schools
should be required to provide information on school balances in
the report card.
— Local
authorities' existing powers to intervene if a school is unable
to manage its finances effectively are cumbersome and not easily
understood by the public. Therefore it would be helpful if local
authorities could be clear that backing from the Department for
Education can be expected for authorities where a Notice of Concern
has been issued.
SUBMITTER: THE
CHARTERED INSTITUTE
OF PUBLIC
FINANCE AND
ACCOUNTANCY (CIPFA)
CIPFA, the Chartered Institute of Public Finance
and Accountancy, is the professional body for people in public
finance. Our 14,000 members work throughout the public services,
in national audit agencies, in major accountancy firms, and in
other bodies where public money needs to be effectively and efficiently
managed.
As the world's only professional accountancy body
to specialise in public services, CIPFA's portfolio of qualifications
are the foundation for a career in public finance. They include
the benchmark professional qualification for public sector accountants
as well as a postgraduate diploma for people already working in
leadership positions. They are taught by our in-house CIPFA Education
and Training Centre as well as other places of learning around
the world.
We also champion high performance in public services,
translating our experience and insight into clear advice and practical
services. They include information and guidance, courses and conferences,
property and asset management solutions, consultancy and interim
people for a range of public sector clients.
Globally, CIPFA shows the way in public finance by
standing up for sound public financial management and good governance.
We work with donors, partner governments, accountancy bodies and
the public sector around the world to advance public finance and
support better public services.
Factual Information / Submission
1 CIPFA welcomes the Inquiry into the role and
performance of Ofsted. Although we appreciate that the focus of
the Inquiry will be mostly on Ofsted's wider role in inspection
and performance reporting in relation to maintained schools in
England, we note that the Committee is interested to receive views
on the role of Ofsted in providing an accountability mechanism
for schools operating with greater autonomy. We believe that some
small changes in Ofsted's role could lead to a potentially large
improvement in the lines of accountability even within the context
of a scaling down of Ofsted's overall role.
2 At the time of writing, some of the detail
around the financial accountability for the new academies and
free schools will work and it is possible that some of our following
paragraphs may not in practice fit fully with the new arrangements.
Nevertheless, CIPFA believes that it is vital for accountability
overall that all schools funded from public money should be held
financially accountable and our submission addresses the
issue of financial accountability and how we think the current
arrangements might be best improved.
3 Schools' expenditure through the Dedicated
Schools Grant amounts to some £30bn of public money and in
CIPFA's view there is currently no real opportunity to show publicly
and ultimately to the taxpayer, how a school manages its finances
for this money, however it is distributed to the schools and regardless
of a school's model of governance. At present, in CIPFA's view,
lines of accountability and delegated responsibility are not always
present and where they are, there is sometimes confusion. In CIPFA's
view, there is a danger that this confusion will increase with
the move towards the new "free" schools if steps are
not taken to address these issues.
4 CIPFA believes that local authorities have
a clear role to play in helping improve and reinforce lines of
accountability from schools to government, but that at present
local authorities face a number of obstacles to ensuring accountability,
for example where there is currently no obligation on schools
or some kinds of schools to provide the information essential
for clear accountability.
5 One area where a small change in the requirements
made by the Department for Education and Ofsted could lead to
a potentially large improvement in the lines of accountability
is around the requirement in the authority's Scheme for Financing
Schools that all schools are assessed against the Financial Management
Standard (FMSiS). Good financial management must surely be a prerequisite
for good financial accountability. Assessment against the FMSiS
is currently - and CIPFA believes rightly so - compulsory. There
is however little or no comeback for schools which score badly
against the standard or fail to submit for assessment, apart from
the Authority's ability to issue a Notice of Concern. It would
be helpful if perhaps Ofsted could include in its inspections
and consequent reports the extent of a school's progress towards
achieving the standard. The authority's scheme should still make
it clear that its section 151 responsibilities apply.
6 CIPFA believes that it would be helpful if
schools could be required to provide information on how they control
and manage their financial performance within their overall activities,
and what part of their funding is spent on children currently
attending the school, ie, that information on school balances
should be included in the report card. Requiring the inclusion
of the trend in school balances and the percentage that
the total balances represent for the school, compared to the average
percentage for the same sector in that Local Authority would also
be useful, because if the percentage is rising it is indicative
that the school is not spending its current funding on the children
currently in school. While performance and financial accountability
are intrinsically linked, there are in schools, as with other
public services differences between service users and funders.
Therefore schools should be accountable to the taxpayer who provides
the resources, not just to the parents and children who use the
service.
7 CIPFA believes that there is sometimes a lack
of clarity about the evidence on which Ofsted make their judgements
on financial management and Value For Money. CIPFA suggests therefore
that guidance to Ofsted inspectors could include the need to check
for any worrying finance or accountability issues and if found,
to include these in a Notice of Concern. Such a Notice could then
encourage good practice in financial management and accountability
as could follow-up enquiries from Ofsted on whether and how a
school resolved such concerns.
8 Also to this end, CIPFA suggests that school
report cards, as part of school accountability to parents, could
be required to include financial information, such as: what the
school's balances are and what they are held for. The school report
card could also include a statement on whether or when the school
had achieved FMSiS. This would help bring together both financial
and performance accountability information, providing clear evidence
of how a school is doing to those people to whom schools should
be accountable - the parents, the local authority, the pupils,
the teachers and other school staff.
9 We recognise that local authorities do have
some powers to intervene if a school is unable to manage its finances
effectively, i.e. issuing a Notice of Concern or withdrawing delegation.
However, these are cumbersome and not easily understood by the
public. Withdrawing delegation is widely regarded as a last resort
as it takes away a governing body's responsibility to solve its
own problems, causes significant additional work for the Local
Authority, and can damage the relationship between the school
and the Authority, making it difficult to make the transition
when delegation is reinstated. It would be helpful if local authorities
could be clear that backing from the Department for Education
can be expected for authorities where a Notice of Concern has
been issued, as the Department's emphasis on school autonomy can
sometimes lead schools to disregard the LA's powers.
Recommendations
CIPFA therefore recommends:
— That
guidance to Ofsted inspectors should include the need to check
for any worrying finance or accountability issues and if found,
to include these in a Notice of Concern
— That
school report cards be required to include financial information,
such as: what the school's balances are and the purposes for which
they are held. For inspection purposes this could, for example,
include a copy of the signed budget plan.
— That
the school report card should also include a statement on whether
or when the school had achieved the required Financial Management
Standard (FMSiS) (or if the school has been deemed by the s151
Officer to have achieved the Standard without external assessment).
— That
the Department for Education should make clear to schools its
backing for authorities where a Notice of Concern has been issued.
October 2010
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