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Expert Tips for Writing an Effective Financial Procedures Manual

Like every school and academy in the country, yours will have its own manual detailing the processes and procedures you use to manage school finances. The question is, is that manual something your team use and refer to on a near-daily basis? Or is it lying forgotten in a filing cabinet or stuck on a server?

If it’s the latter, we can only advise that it’s time to review your document and ask how it could be working harder. Yes, the manual is a government requirement. But rather than view it as such, see it as an opportunity to define and refine your processes, get everyone working efficiently together and save valuable time and money.

Our first tip for achieving a useful working document is to consult with different groups – for example, finance staff, budget holders and external auditors – and use their input to shape processes. As well as being good practice, this can also encourage people to put the finished manual to good use.

Next, ensure it’s specific to your school. Templates make a great starting point, but remember to customise everything so it’s relevant to your school and team. On a basic level, that means the document should refer to your school by name, and use the terminology commonly used within your school. For example, if you have a ‘headteacher’ the document shouldn’t refer to them as the principal.

Posted 15/05/2018

It also means the procedures outlined in the policy should accurately reflect those that are in place in your school. Be realistic in your aims and write down what actually happens, not what you think should happen. If there’s a disparity there, consider what you need to improve.

Getting the whole team to read and use the document is likely to be one of your biggest challenges, so make sure everyone likely to need the manual is made aware of it. It might be a good idea to arrange some one-on-one time with key people to go through salient points and make sure they understand the policy and the responsibilities assigned to them. You could ask them to sign it to confirm their understanding.

Finally, one of the most important tips we can pass on is to write the document with the end user in mind. Keep the wording as simple and as clear as possible for the people who’ll be following the processes every day. As well as helping to reduce misunderstandings and errors, this will also make it easier for auditors to check compliance.

So what should you actually look to include? We recommend breaking it down into thirteen sections:

  1. Introduction
    Outline your school’s background, mission, aims and organisational structure.

  2. Financial responsibilities and competencies
    Detail who’s involved in managing the school’s finances, and what they do.

  3. Accounting systems and controls
    Describe how you record different financial transactions, your audit arrangements, and your procedures for month-end and year-end accounts.

  4. Assets
    Give details of the process for purchasing new assets, plus your procedure for recording and checking assets.

  5. Documentation and security of records
    List your main accounting records and explain how and where documents are filed.

  6. Budgeting procedures
    Include your processes for preparing and approving school budgets and authorising budget changes or transfers.

  7. Cash-flow management
    Detail your processes for managing the school’s cash flow.

  8. Reporting timetable and format of reports
    Outline your process for compiling reports on the school’s income and expenses.

  9. VAT and other taxes
    Cover your procedures for reclaiming VAT from either your local authority or HMRC, and for processing the reimbursement in your school accounting system.

  10. Governing body
    Detail the governance you have in place and the policies and the procedures you follow.

  11. Risk analysis and risk register
    Show how you analyse and manage risk.

  12. Benchmarking
    List the benchmarking practices and tools you use. 

  13. Resource documents
    Add links to any policies or templates you’ve used.

Once you break the document down into manageable chunks, progress becomes a lot easier. And if you’d like more help, just get in touch. Having worked with many schools and academies over the years, we’ve developed a template that reflects the latest guidance and requirements from the DfE and EFSA. Either we can visit your school to customise the template with you, or we can review your existing manual and make sure it meets best practice.

To find out more, read about our financial procedures manual service.