Oversight of Financial Management in Local Authority Maintained Schools : Department for Education

This report underlines the importance of effective financial management in schools.

It is essential that the financial management framework for schools is capable of alerting the Department for Education to any systemic issues that may require action or intervention.

Weak financial management and weak academic performance often go hand in hand.

The Department sets standards but responsibility for financial management and cost reductions lies with schools themselves, with local authorities responsible for exercising effective oversight.

Schools' financial management capability has improved - for example, as more schools have employed or have access to a school business manager.

In the current financial environment, however, more schools are having to manage with reduced funding, and strong financial management is more important than ever.

Many schools consider that they need to reduce staff costs and that they need guidance on how to do so while maintaining high-quality education.

Local authorities do not publish systematic data to demonstrate how they are monitoring schools' financial management and that they are intervening where necessary. Indeed, many local authorities are set to devote fewer resources to monitoring and supporting schools' financial management.

Forty per cent of authorities responding to an NAO survey do not believe they have sufficient resources to provide effective support to schools and almost half of those authorities are planning to reduce the amount of staff time spent on support.

The report recommends that the Department should make clear how it is going to review the working of the financial management arrangements.