By Hayes Knight – 24 August 2010

Many schools are only disclosing the school portion of the leases in their financial statements. The correct disclosure is to show both the school portion and the Ministry of Education portion. In most cases adjustments we have found arising from this are not significant to the financial statements and therefore we have not requested any adjustment. However, you may wish to make a note of this and ensure correct disclosure in the 2010 financial statements

Cyclical Maintenance
Another issue that came up fairly frequently in our 2009 audits was cyclical maintenance provisioning. Under the Property Occupancy Document that schools have with the MOE, there is a requirement to maintain a cyclical maintenance plan that goes out 10 years into the future. Many schools had not properly updated their plans.  We urge you to ensure that your cyclical maintenance plans are updated properly during 2010 so that there will not be any issues arising as part of our 2010 year end audits.

Capital Works Notes Disclosures
We have seen many schools where there is a single note disclosure in relation to capital works.  Unfortunately the requirement is for a separate note disclosure for each project showing opening balance, funds received, funds spent and any closing balance, whether or not the project has been completed by year end.

“Netting off” of Fundraising
There is a requirement for school financial statements to disclose the total income and total expenses relating to fundraising activities and not just disclosing a net balance.  To disclose only a net balance does not provide adequate information of the true size of the activity undertaken to readers.

Related Party Disclosures
Many of the related party disclosures we have been presented with in draft financial statements have been light on detail or in some cases quite inadequate.  This is an especially important area in the case of integrated schools who, by virtue of their relationship with the proprietor, have a greater number of required disclosures.