Financial Integrity in Public Schools: A Guide to SASA Sections 42 and 43

22 Aug

Managing the finances of public schools as guided by the South African Schools Act 84 of 1996, (SASA) is a big responsibility. To help ensure that everything is on the up and up, SASA provides some clear rules, particularly in Sections 42 and 43. Below is an explanation of what these sections mean for school governing bodies and those who work with school finances.

Section 42: Keeping Things Organised and Transparent

Getting the Records Straight

Each school’s governing body plays a crucial role in financial management by doing the following:

Keeping Detailed Records: It’s all about the details! Schools must track every penny received and spent, maintain an up-to-date list of assets and liabilities, and keep a clear record of all transactions.
Drafting Annual Financial Statements: These need to be prepared within three months of the financial year’s end as per the guidelines issued by the Member of the Executive Council (MEC).

Why It Matters: These steps are crucial for keeping everything transparent and providing a clear financial snapshot of the school's operations.

The Nitty-Gritty of Record-Keeping

These detailed records should include:

Money In, Money Out: Keep track of all funds coming in and going out, documenting each transaction.
Assets and Liabilities: Maintain a full account of what the school owns and owes.
Bank Reconciliations: Regularly check that the bank statements match the school’s books.
Inventory Lists: Keep tabs on physical assets like furniture and educational materials.

When preparing Financial Statements:

Follow the MEC’s Format: Ensure the financial statements comply with the prescribed formats and include important financial metrics.
Perform Internal Checks: Before external audits or reviews check your own work to verify everything is correct.

Section 43: Audits, review or examinations

Regular Check-Ups

Appointing a Registered Auditor, Reviewer or Accounting Officer: The governing body must appoint a registered auditor or an independent reviewer. When these are not feasible, a qualified individual approved by the MEC may examine the records.

Why It’s Important: Audits, reviews and examinations confirm the reliability of the school’s financial statements, ensuring integrity and trustworthiness.

Ensuring No Conflicts of Interest

Maintaining Independence: The chosen auditor or reviewer should be independent of the school's affairs. The auditor or reviewer of a school should not be involved in preparing the financial statements or providing any other financial services.
Accessible Records: Final financial statements are submitted to the Department Head within six months of the financial year’s end and are available for anyone interested to inspect.

Tips for Staying Compliant

To ensure compliance with Sections 42 and 43 of SASA, governing bodies and accounting professionals should:

Establish Clear Financial Policies: Develop and implement clear procedures for financial management and reporting.
Educate Your Team: Train school staff and governing body members on financial management and the specifics of SASA.
Perform Regular Reviews: Regular audits and reviews can help catch and correct any discrepancies.
Keep in Touch with Auditors: Effective communication with auditors ensures a smooth audit process.
Embrace Technology: Use accounting software to simplify financial management and record-keeping.

The Bigger Picture: Why This Matters

Robust financial management is crucial for public schools. By sticking to the guidelines of Sections 42 and 43, schools can ensure they operate transparently and efficiently. This not only builds trust among stakeholders but also supports the school’s educational goals.

Want to Get Involved with Public Schools and NPOs?

Learn more about how you can support public schools by becoming a licensed Nonprofit Accountant with CIBA!

This license is designed to equip Business Accountants with the BAP(SA) designation holders to achieve the following professional objectives:

Compile Financial Records for Compliance: Assist non-compliant NPOs in organizing incomplete financial records to meet regulatory standards during the DSD deregistration campaign.
Understand Marketing Fundamentals: Acquire knowledge of effective marketing strategies, keeping abreast of the latest industry trends and technological advances to enhance earning potential.
Enhance Non-Profit Financial Expertise: Develop proficiency in accounting, financial management, and financial reporting specific to charity and non-profit organizations.
Specialise in Non-Profit Legislation: Gain a deep understanding of the Non-Profit Organisations Act, 71 of 1997, and relevant provisions of the Income Tax Act concerning Public Benefit Organisations.
Financial Statement Mastery: Learn to accurately present and disclose financial statements in accordance with the specific requirements for not-for-profit entities.
Regulatory Compliance and Reporting: Familiarize with the filing requirements of the Department of Social Development and SARS for exempt organizations, understand the elements of the annual information return, and identify conditions under which an NPO might incur unrelated business income tax.
Best Practices in Governance and Risk: Adopt best practices in NPO board governance, risk assessment, and internal controls to ensure organisational integrity and accountability.
Effective Audit Planning: Master the steps involved in planning and conducting successful audits, reviews, or accounting officer engagements, emphasizing critical considerations and client communications.

This licensing program is structured to not only broaden your skillset but also to enhance your professional standing and effectiveness in the non-profit sector.

Eszter Rapanos