Reference no: EM13558846

PKG High School has 900 pupils, 40 teachers, ten support staff and a budget of $3 million per annum, 85% of which represents salary and salary-related costs. PKG's local authority allocates government funding for education to schools based on the number of pupils. It ensures that the government-approved curriculum is taught in all schools in its area with the aim of achieving government targets. All schools, including PKG, are subject to an independent financial audit as well as a scrutiny of their education provision by the local authority, and reports of both are presented to the school governing body.

The number of pupils determines the approximate number of teachers, based on class sizes of approximately 30 pupils. The salary costs for teachers are determined nationally and pay scales mean that more experienced teachers receive higher salaries. In addition, some teachers receive school-specific responsibility allowances.

PKG is managed on a day-to-day basis by the head teacher. The governance of each school is carried out by a governing body comprising the head teacher, elected representatives of parents of pupils, and members appointed by the local authority. The principles of good corporate governance apply to school governing bodies which are accountable to parents and the local authority for the performance of the school.

The governing body holds the head teacher accountable for day-to-day school management, but on certain matters such as building maintenance the head teacher will seek expert advice from the local authority.

The governing body meets quarterly and has as its main responsibilities budgetary management, appointment of staff, and education standards. The main control mechanisms exercised by the governing body include scrutiny of a year-to-date financial report, a quarterly non-financial performance report, teacher recruitment and approval of all purchases over $1,000. The head teacher has expenditure authority below this level.

The financial report (which is updated monthly) is presented to each meeting of the governing body. It shows the local authority's budget allocation to the school for the year, the expenditure incurred for each month and the year to data, and any unspent balances. Although there is no external financial reporting requirement for the school, the local authority will not allow any school to overspend its budget allocation in any financial year.

PKG's budget allocation is only just sufficient to provide adequate educational facilities. Additional funds are always required for teaching resources, building maintenance, and to upgrade computer equipment. The only flexibility the school has in budget management is to limit responsibility allowances and delay teacher recruitment. This increases pupil-contact time for individual teachers however, and forces teachers to undertake preparation, marking and administration after school hours.

Note: A local authority (or council) carries out services for the local community and levies local taxes (or council tax) to fund most of its operations.

Required

a) Explain why the review and audit of control systems is important for the governing body of a school such as PKG.

b) Evaluate the effectiveness of the governing body's control over PKG High School and recommend ways in which it might be improved.