Accounting for Shared Funds

Common purposes may include projects to improve teaching and learning, for teacher professional development; to improve efficiencies; or to reduce administration costs.  Examples include:

• Extending High Standards Across Schools (EHSAS)
• Enhanced Programme Fund (EPF)
• ICT Professional Development clusters (ICT PD)
• Joint Schools Initiative Funding (JSIF)
• Resource Teachers of Learning and Behaviour (RTLB)
• School transport networks
• Supplementary Learning Support (SLS)

Schools form a cluster or group (referred to as a cluster in this advice) and share funds for a common purpose as an administrative convenience. The cluster is not a new entity but is a jointly controlled operation.

One school will be the ‘lead school’ or ‘host school’ or ‘fundholder school’ for the cluster and act as an agent for all the schools in the cluster. This school is referred to as the lead school in this advice. The lead school may set up a separate bank account on behalf of the cluster, or account for shared funds using a separate ledger, but can only spend shared funds as agreed with the cluster.

The lead school will receive resources from the Ministry of Education or other funding sources on behalf of the cluster. They may also receive funds from member schools to be used for the cluster’s common purpose.

The lead school should include GST transactions for the cluster with their own GST returns, but keep track of the cluster’s share of GST on income and expenses.

The cluster should have a written agreement about what the shared funds are for, how they are to be used, which school/s own any assets bought with shared funds, and what will happen to any remaining funds when the cluster stops working together.

The use of the funds is subject to the same considerations that apply to the schools that are members of the cluster e.g. reporting, audit, procurement processes, investment of funds and managing any conflict of interest.

Management Reporting

The lead school should track all income and expenses for the cluster’s purpose separately from its other operations so that it can provide regular detailed management reports to the cluster and the cluster’s funders that might look like the following:

KIWI PARK SCHOOL CLUSTER – MANAGEMENT REPORT

Income

Expenses

(a)    If the activities of the cluster are funded by the Ministry of Education, any unspent funds must be returned to the Ministry of Education. The report may then continue like this:

(b)    It may be that the cluster can keep unspent funds, provided they have achieved or provided what they were required to do with the funds. Then the report may continue like this:

Funds to be returned to members of the cluster   

Lead School Reporting

Lead School Accounting Entries

The lead school should account for funding received on behalf of the cluster as follows:

Funds received on behalf of Kiwi Cluster (from Ministry of Education)

Funds received on behalf of Kiwi Cluster (from other schools in the cluster)  

The lead school should account for payments made for the cluster as follows:

Funds paid on behalf of Kiwi Cluster (to contractor)

Lead School Disclosure in Annual Financial Statements

The lead school should show the balance of funds held on behalf of the cluster as a liability in its balance sheet, with reference to a note.

The note should include the income and expenses of the cluster for the year and how the balance of funds held will be allocated. Suggested note wording may be updated in the model financial statements provided for schools on the Ministry of Education website, but is likely to be something like this:

Funds Held on Behalf of Kiwi Park Cluster
Funds Held on behalf of Kiwi Park Cluster are for [e.g. the teacher professional development programme] that the Kiwi Park School, Kiwi Field School, Tui Farm School and Kowhai School are undertaking together.

Income

Expenses

These funds are committed as follows:

Represented by:

Member schools 

Member School Accounting Entries

Member schools (including the lead school) should account for funds contributed to the cluster as follows:

Funds contributed to Kiwi Cluster (20% share)

Each member school should recognise its (GST exclusive) share of net cluster income:

Recognise 20% share of surplus in Kiwi Cluster for the year
(Note: classification of income will depend on the type of activity the cluster is undertaking)

Member School Disclosure in Annual Financial Statements

Each school that is a member of a cluster should show the balance of funds held by the lead/host school on their behalf as an asset in their balance sheet, with reference to a note.

The note should include its share of the net income (or expenses) of the cluster for the year to show how the asset balance changed during the year. Suggested note wording may be updated in the model financial statements provided for schools on the Ministry of Education website, but is likely to be something like this:

Funds Held in the Kiwi Park Cluster
Tui Farm School is a member of the Kiwi Park Cluster for [e.g. the teacher professional development programme] along with Kiwi Park School, Kiwi Field School and Kowhai School. Tui Farm School has a 20% financial share in the activity of the cluster.

Shared Assets

The written agreement between members of the cluster should document which school/s own any assets bought with shared funds, and what will happen to those assets when the cluster stops working together.

If the cluster agrees to purchase a new asset to be owned by the lead school then the transfer of shared funds for that purchase needs to be recognised.

Lead school accounting entry: