Preventative Measures for Financial Health
by John Vegt, SCSBC Director of Finance ◊
Do you ever wonder about your school’s financial health? When was the last time your school had a financial health check-up? If your school could take preventative medicine to ensure good financial health, would you fill the prescription?
As SCSBC Director of Finance, one of my responsibilities has been to maintain oversight of the proper implementation of the SCSBC Charitable Tax Receipting Framework. Doing so has required me to monitor the financial statements of all our member schools over the past four years. Through this process, it has become abundantly evident which processes and procedures need to be in place to ensure that a school remains financially healthy.
Let’s examine the key ones:
- Adequate financial reporting with variance analysis and departmental statements
- Strong taxation and legal compliance for payroll, HST, donations and annual reports
- Application of generally accepted accounting principles (GAAP) for non-profit organizations with current GAAP Section 4400 requirement
- Effective internal controls which are documented, tested and compliant with the SCSBC Internal Control Checklist
- Accounting software and other software appropriate
- for schools
- Competent bookkeeping and accounting staff with job descriptions, professional development, goal setting and performance measurements
- Detailed budgets with documented assumptions, dynamic for significant changes during school year, involving responsible parties segregated for various funds such as operations, capital and other funds
- Application of benchmarking tools which highlight areas for improvement for all operational and capital performance indicators
- Appropriate long term financing with reasonable repayment periods, terms and conditions
- Informed administration with adequate financial literacy skills
- Qualified treasurer and finance committee with documented mandate to ensure solid financial recommendations to board and advise to the administration
- Fair compensation for staff but with efficient student staff ratios
- Fair tuition models including tuition assistance policies, collection procedures and flexible for families with single or multiple students
- Dynamic use of strategic plan reviewed and acted upon on regular basis focusing on future oriented financial information with operational, facilities, information technology and changing education program requirements
- Clear and appropriate communication at AGM with big picture story of financial position of the school
Under my leadership as Director of Finance, the SCSBC is conducting a number of school financial health reviews this year. School business managers and outside consultants will also be used throughout the review process. These reviews will make use of internal control checklists, benchmarking and tuition models. They will review financing terms, generally accepted accounting principles and the SCSBC Financial Stewardship and Development Review Handbook. All aspects of the items listed above will be addressed.
The purpose of these in-school financial health reviews is to provide school administrators and boards with a report of strengths and areas for further development regarding the financial aspects noted above.
It is hoped that such financial health reviews will result in assisting schools to improve their stewardship of financial resources, processes and procedures. Another goal would be to provide more assurance to administration and school board that the financial aspects of the school are operating at an optimum level. These financial reviews are not about determining the least expensive way to deliver educational programs, but rather are intended to match educational excellence with the most efficient and effective way to achieve it.
Proverbs 24:3 provides a clue of a school’s financial health: “Any enterprise [school] is built by wise planning, becomes strong through common sense and profits wonderfully by keeping abreast of the facts.” (TLB) This hints at strategic planning, budgeting, effective processes and procedures and being fully informed of the financial situation. Let’s consider them all!