The management of school financial policy and internal financial controls in designated section 21 schools in the Motheo Education District, Free State

English:This study examines the efficacy of school financial policy, procedures and internal financial controls in designated section 21 schools in the Motheo Education District, Free State. The decision to conduct the research in the Free State province was motivated by having read reports in education journals and newspapers of financial mismanagement in other provinces. Prior to this study the researcher sought out similar dissertations and theses at the University of Free State library and on the internet in an attempt to establish what research has been done since 1994 which was devoted entirely to school financial management in the Free State post-1994. Research relating to pre-1994 was available, together with research post-1994 primarily relating to school management, or aspects thereof, in which school financial management was accorded a subsection or a chapter. Thus, the researcher is of the opinion that a research gap exists in this area in the Free State (post-1994) and believes that this study fuifiIIs a need for such research which could be of mutual benefit to schools and the Free State Department of Education. Having consulted literature as documented in chapter one highlighting financial management and control deficiencies at researched schools a research problem was formulated, namely, whether the designated schools have an effective financial policy in place which is supported by efficacious financial/accounting procedures and controls and which are verified by ongoing internal audit and/or management checks. This was followed by an extensive literature study in chapters two and three relating to the aims of the research and providing a sound framework for the empirical study. The literature study included, inter alia, a theoretical review of policy followed by an extensive review of education and school policy in South Africa, post-1994 which were necessary precursors to a study of school financial policy. This was necessary to establish as to what constitutes a sound school financial policy, being one of the aims of the research. It was necessary in the literature review to extensively examine and analyse applicable national legislation and regulations. Furthermore, it was necessary to examine literature (including applicable legislation) relating to financial control procedures, financial accounting and internal auditing standards to first establish what constitutes generally accepted accounting and internal control standards and, secondly, to investigate compliance with these standards during the qualitative research. An extensive school financial policy and related procedures are suggested and appended to this research (Appendix A).A qualitative research methodology was adopted for this study, the design of which is documented in chapter four. The qualitative research embodied semi-structured interviews with financial management role players and finance clerks, together with a document study of school financial policies and documents. This chapter includes an exposition as to how reliability and validity of the research will be ensured.Chapter five presents a comparative analysis of data collected, the identification of recurring theme/patterns and the coding thereof. Categories were created within the broad themes identified and findings emanating from the comparative analysis were presented. Deficiencies are documented in respect of: • Outdated school financial policies. • Lack of management involvement in financial control processes. • Inadequate budget control systems. • Irregular meetings, membership and ineffectiveness of finance committees. • Inadequate receipting procedures. • Lack of stationery control. • Inadequate petty cash systems. • Poor cheque control procedures. • Incorrect financial recording. • Lack of bank reconciliations. Recommendations arising from the findings are presented in chapter six. The recommendations include, inter alia, a recommended internal audit checklist to assist and encourage school management to effect ongoing internal management financial control checks, which if applied correctly, could, in the opinion of the researcher lead to quality financial management. It is hoped that this study will have value in assisting schools and the Provincial department in highlighting financial control deficiencies, for which corrective action can be implemented, thus reducing the risk of financial losses due to defalcations or errors.