‘Basic Financial Management Skills’

for
Elementary, Community and Primary Schools

Schools Work Better

When the Accounts are in Good Order

Department of Education and

Department for Community Development
 Introduction
This Flip Chart contains activities to enhance the capacity of community members, primary school Boards of
Management (BoM), head teachers, inservice coordinators, and teachers to better perform their current work
responsibilities. These school-based activities support and strengthen work-place skills and knowledge and
enhance individual personal development.

The Flip Chart is intended to be used with the Basic Financial Management Booklet, the activities in this
flip chart will some understanding of the financial skills suggested in the booklet.

School teachers and community members can use these capacity building activities for your personal and
professional development, and the needs your school. These capacity building activities can be undertaken by
groups or individually. The Papua New Guinea Education Institute will provide accreditation to their
students on the completion of assessment tasks.

The capacity building activities in this booklet will help you learn about:
• How to manage your school’s financial activities and working together in supporting and improving
the financial management of your school.
• The Financial Management Act and your school’s roles in relation to accountability and transparency.
• The responsibilities of the Board of Management and the Head Teacher in school budgeting and
planning,
• How the Head Teacher and the Board of Management need to work cooperatively together, and
• Your schools’ roles and responsibilities in the recording and reporting of financial information.

Those of you who are involved in school administration need to understand the correct ways of managing
your school finances. The same skills could be applied in managing your family, clan or community group’s
funds.

This material will assist those managing public funds to understand the importance of effective management
of school funds. From this booklet, Head Teachers, as accountable officers will develop cost-effectiveness
measures, understand what it means to be transparent, and ensure that they practice good governance and
accountability in all public institutions and communities.
NATIONAL SONG NATIONAL PLEDGE PRAYER
O arise all you sons of this land We the people of Papua Almighty and Eternal Father,
Let us sing of our joy to be free New Guinea We thank you and praise you.
Pledge ourselves, united
Praising God and rejoicing to For the infinite love and mercy,
in one nation
be You rain down blessings upon
We pay homage to our cultural
Papua New Guinea mankind,
heritage
Shout our name from the in spite of their faults and failings.
The source of our strength
mountains to seas Bless our nation PNG, and her
We pledge to build a
Papua New Guinea people.
democratic society
Let us raise our voices and We are pilgrims on our way to
Based on justice, equality,
proclaim freedom,
respect and
Papua New Guinea with good news for all we meet.
prosperity for our people
Help us travel lightly, travel
We pledge to stand together together.
Now give thanks to the good as
Lord above Learn as we go, we are disciples,
One people, One nation
For his kindness, his wisdom The mission is urgent,The journey
One country
and love is long.
God bless Papua New Guinea
For this land of our fathers so free Help us travel with authority, fearing
no one. We are apostles,
Papua New Guinea
Opponents of evil.
Shout again for the whole world to
hear Let the cross be our compass, love
be our sign.
Papua New Guinea
To lean upon your great strength,
We’re independent and we’re free
Trustfully and to wait patiently and
Papua New Guinea
serenely For the unfolding of Your
Will.
Amen
Topic 1: Who is the Accountable Financial Management Officer for schools?

Sopos yu lukautim moni blong school yu mas behainim

wei blong despela buk

Financial Management Act 1999

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 Topic 1: Who is the Accountable Financial Management Officer for
schools?

• The Head Teacher is the Accountable Financial Discussion Questions

Officer in a school.
• The Head Teacher is given the responsibility of 1. According to the Financial Management Act who is
keeping accurate records of all financial activities, the school accountable officer?
managing all school accounts, using school funds
for BOM approved activities, reporting to the 2. What are some of the responsibilities the
BOM on the use of school funds, acquitting accountable officer has in managing the school
grants, and for keeping all financial records in a finances?
safe place.
• The Head Teacher, as ex officio member of the 3. What is the BOM accountable for?
BOM needs to work very closely with the BOM
Treasurer and Chairperson in preparing a school 4. How should the BOM and Head Teacher work
budget and in managing the school funds. The together in managing school funds?
Head Teacher and BOM Treasurer need to
prepare quarterly financial reports for BoM 5. Who is going to be investigated if school money is
meetings regarding the school financial activities misused used? Why?
and the implementation of the school budget.
• The Head Teacher, as the accountable officer is 6. Who should be the signatories on any school
the person who will be held responsible if any accounts? Why?
school money is misused.
• The Head Teacher, the BOM Treasurer and BOM
Chairperson should all be signatories on any
school accounts.

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Topic 2: What will happen if you do not follow what it says in the Financial
Management Act 1999?

Des pela pasin em i pasin blong

stil

3
 Topic 2: What will happen if you do not follow the Financial Management Act?

• The Department is very concerned about theft and Discussion Questions

misappropriation of funds in some schools.
• Parents become angry and frustrated because they expect
teachers to set a good example to their children, and to properly
use all school funds.
• Parents sometimes refuse to enroll their children in schools
where they believe teachers are misusing school funds.
1. What are some of the bad financial practices that are continually occuring in
schools? Make a list.
2. What are the consequences of mismanagement of funds? Make a list of these.
Answer: Schools miss out on funds; Parents refuse to pay school fees, no
infrastructure maintenance on school buildings, no improvement to school
facilities and no school materials.

• Teachers who misuse school funds must expect to suffer the 3. What are the penalties for misappropriation of school funds? Please refer to
consequences. the notes on the financial management booklet.

• Teachers and the community have a responsibility to report any 4. In your groups discuss and list your schools financial rules and the
cases of misuse of school funds to the appropriate authorities. accompanying penalties if rules are not followed.

• Provincial Education Officers have a responsibility to thoroughly

investigate any reported cases of misuse of school funds.

• The District Education Officers and Standards officers have been

instructed to fully investigate reported cases and to bring these
matters to the courts and to the Teaching Service Commission as
soon as possible.

• Education officers who misappropriate school funds will be

investigated and if found guilty of the offence, they will be
prosecuted by the police and will be dealt with by the Teaching
Service Commission.

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Topic 3: What is School Income?

We are here to pay for our children’s school Fees

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 Topic 3: What is School Income?

• School income is money received by the school.

Discussion Questions
This money may be collected: 1. What income does your school receive each year? Make a list

as parent’s fees, of the sources of income.

school generated funds,

donations, 2. What type of grants does you school receive and what purpose

support grants from provincial governments, district are these grants for. Describe how these grants are used by
governments or LLGs your school.

aid donors

individual or business support funds etc. 3. What is the amount of school fees charged by your school BoM?

• The grants received by the school are sometimes tied to
specific school activities such as infrastructure maintenance.
• All school income must be recorded in the School’s Combined
Cash book,
4. Has it remained the same each year or has it changed and if it has
changed why it has changed? Discuss if you think the sum needs to
be reviewed.

• The Education Act recognizes the role of the BoM in setting

fees paid by parents or guardians of children attending
schools.

• The Secretary for Education recommends that large Primary

Schools operate two cheque accounts
• General account: for project fees, and other income and
• Subsidies account: solely for national and provincial
Government subsidies.

• These two school accounts should be audited by the PSI or

DEA every year.

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Topic 4: What is a budget?

We must come up
with a plan of how we
will spend our school
income. Let us use the
steps suggested in the
booklet

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Topic 4: What is a budget?
• A budget is a financial plan of how you intend to raise money for your
school and how that money will be spent.
• When you budget you look into the future and you identify the income
you expect to receive and how you will spend that income, and what
expenses you expect to incur.
• Your expenditure must not exceed the total income. If the proposed
expenditure (money out) is more than the income (money in) then:
• reduce the expenditure, or
• increase the income.
• Your budget must be flexible and should be easily adjusted.
This is done to allow for changes in prices of goods, unexpected damages
to school equipment or facilities.
• The BOM must be involved in preparing the school budget.
• Annual Budgets can be broken down into quarters or terms.
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Discussion Questions
1. Role Play: Prepare a role play involving BoM members’
teachers and the head teacher sitting down discussing what
should go into the next year’s school budget.
Discuss in the role play the following:
• what steps will you take to do a budget?
• what is the first thing you should consider and the next
and so on.
• when do funds come into schools and what are these
funds for
• what is your current school expenditure did your budget
last year match your expenditure of 2006?
2. What funds does your school expect to receive this year and
When do you expect to receive the funds?
3. What are your school priority activities for budgeting?
Topic 5: Why is it important that you keep financial records?

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Topic 5: Why is it important that you keep financial records?

• Maintaining financial records is important for the purpose of Discussion Questions

monitoring expenditure and keeping records of school
income. 1. Why is it important that we maintain financial records?

• There are different types of records that you could use to 2. Name the different types of financial records kept in schools and explain
maintain your school financial activities and these are: how each one may be used.
• Cheque account records,
• Receipts, invoices, 3. Which two records must be brought together to check if they
• statements of account, correspond with each other.
• files for all payment transactions,
• combined cash book, 4. Discuss what happens if your financial records do not correspond with
each other.
• Annual budget and others as outlined in the booklet.
5. What are the two elements of the combined cash book?
• A statement of account is information provided by the bank of
your banking activities.

• This information should be used to check whether it

corresponds with your Combined Cash Book or whether this
information is correct or inline with your other records.

• There are two parts of the combined Cash book

(i) Cash Book:
The Cash Book includes date, details of transaction, cheque number
or deposit slip, details of receipts or payments and a copy of
the progressive balance, eg
(ii) Item Analysis Section:
The Item analysis section includes receipt items and payment items.

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Topic 6: Maintaining financial records

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 Topic 6: Maintaining Financial Records

• To reconcile means to bring together in agreement. A bank reconciliation Discussion Questions

statement compares the school’s records with the bank’s record of the accounts.
1. Reconciliation of accounts means to bring together in
• Bank reconciliation ensures agreement two records of accounts. What are these
- that you have done no mistakes in entering your payments and receipts into the accounts called?
CCB
- that the bank did not accidentally deduct money from your school’s account 2. Why is it important that reconciliation of these financial
records must be done quarterly?
• Bank reconciliation statements are usually required to be
carried out monthly by a responsible officer. 3. Why do you think there may be differences between the
bank statement and combined cash book?
• Why could there be the differences between bank statement and cashbook?
There are several reasons for differences between the bank statement and a month’s 4. Explain how you would reconcile these two accounts.
entries in the combined cashbook. These are:
• some entries appear in your CCB, but not in the bank statement
• cash withdrawn and/or deposited not being cleared until the next day
• cheques deposited in the bank are often not cleared for 7 to 14 days
• some entries from the bank statement do not appear in your CCB until
you enter it
• interest paid by the bank will appear on the bank statement but will not
be shown in the Combined Cash Book
• any bank charges (e.g. bank fees) appear on the bank statement but do
not in the combined cashbook
• there may be incorrect entries in the bank statement or in the combined
cashbook.

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TOPIC 7: Petty Cash

You must ensure

that all funds are
recorded

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TOPIC 7: Petty Cash

Discussion Questions
• Petty cash is:

a small amount of money kept in the school 1 What is a petty cash account?

used only for the purchase of small value items

usually has a maximum amount of K200.00 2. How much petty cash money should be kept by the school?

topped up every so often to the agreed amount

managed by one designated individual who must 3. Who is responsible for maintaining the petty cash account?
at all times be prepared to account for the cash or
4. What are his/her responsibilities in maintaining the petty cash account?
its use.

• The designated officer verifies that the request for

reimbursement is legitimate, collects any possible
receipts and pays out the cash.
• Ensures that a receipt or docket is used for every petty
cash amount paid out.
• Keeps the cash in a safe, locked place.
• Regularly manages the petty cash so it will not get out
of control.

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TOPIC 8: Acquittal of funds

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TOPIC 8: Acquittal of funds
• Funds acquittal refers to reporting on how funds are used. Usually
original receipts are provided with an acquittal report.
• The provider usually provides an acquittal format to be used by the
school when a acquitting funds.
• There are a number of reasons why the provider of the funds requires
you to provide acquittals. These are:
o if you acquit they will continue to fund school activities
o it demonstrates that the funds have been used for the correct
purpose.
o It assists the provider in assessing how successful the funds have
been in achieving the goals of the funding activity.
o It helps you to consider how you can better use funds available to
your school in the future.
• What happens if you do not acquit?
Failure to satisfactorily acquit funding will make you ineligible for
future funding opportunities and may result in action to recover the
funds made available to your school.
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Discussion Questions
1. What is meant by acquitting funds? Answer: Acquitting funds refers
to reporting on how funds have been used. Usually original receipts
are provided to the donor to show that the funds have been correctly
used.
2. How can schools acquit funds given to them? Answer: by providing
a detail account of how the money made available to them has been
used. As well as this the school will have available original receipts
of any purchase made or services provided to the provider of the
funds.
3. Why is it important that schools acquit funds given to them? Answer:
o if you acquit they will continue to fund school activities
o it demonstrates that the funds have been used for the correct
purpose.
o It assists the provider in assessing how successful the funds have
been in achieving the goals of the funding activity.
o It helps you to consider how you can better use funds available to
your school in the future.
4. What documents do you need to produce as evidence of how funds
have been used? Answer: Original receipts