Annual report

FINANCIAL AND INFRASTRUCTURAL REVIEW OF HISTORIC SCHOOLS BY KPMG SERVICES (PTY) LTD

PREFACE TO THE KPMG REPORT

The Historic Schools Restoration Project (the ‘Project’) aims to revive historically significant, mostly underresourced, South African schools into centres of cultural and educational excellence. It was recognised that simply restoring the schools without paying attention to the many other components that make for a successful school was not conducive to the long-term sustainability of the schools. Accordingly, a more holistic approach has been adopted by the Project and, in addition to the restoration of the infrastructure of the schools, attention is being paid to other areas such as administration and finance, curriculum, the level of ongoing training required for the educators and, finally, looking to create the structure which would see endowments created for each of the schools.

As a first step Messrs KPMG Services (Pty) Ltd offered, as their contribution the Project, to undertake a financial and infrastructure review of the six pilot historic schools. In this instance the infrastructure review focused on the effectiveness of the infrastructure in so far as it enabled the schools to fulfil their role as educational institutions. The establishment of good financial and administrative systems together with sound governance is seen as key to the long-term sustainability of the schools, and it is for this reason that this review by Messrs KPMG was seen as important for the Project overall.

The HSRP selected six historically significant schools to be visited by KPMG (hereafter referred to as the ‘Schools’):

• Adams College (KwaZulu-Natal)
• Ohlange High School (KwaZulu-Natal)
• Tiger Kloof Educational Institution (North West)
• Lemana High School (Limpopo)
• St Matthew’s High School (Eastern Cape)
• Healdtown Comprehensive High School (Eastern Cape).

The areas requested for review, as defined in the engagement letter, included the following:

• Perform a high-level assessment of the Schools in terms of the following areas:
  • financial management
  • existing infrastructure
  • safety and security within the Schools.
• Provide high-level recommendations, where applicable, on areas for improvement regarding the functioning of the School that may come to KPMG’s attention during the project – pertaining to the three specific areas mentioned above.

Specifically excluded from the scope of this evaluation is providing commentary relating to any technical aspects of the infrastructure.

The purpose of this evaluation is to assist the HSRP in assessing the financial management structures, existing infrastructure and associated safety and security aspects of the different Schools in order to identify their basic needs.

The team followed a consultative process in liaison with each school management team. Key activities undertaken included, amongst others, the following:

• Site visits to the six identified Schools
• A review of historical documents, policy and procedure documents, financial records and other information relating to the Schools
• Interviews with key staff members.

GOVERNANCE STRUCTURES

In accordance with the South African Schools Act of 1996, the governance of every public school is vested in a School Governing Board (SGB). The SGB’s code of conduct is aimed at establishing a disciplined and purposeful school environment, dedicated to the improvement and maintenance of a quality governance structure at a public school. All SGB members must adhere to the code of conduct.

Furthermore, the SGB is allowed to establish subcommittees to act on its behalf. These subcommittees shall report directly to the SGB. The following are typical standing committees formed by the SGBs:

• an executive committee that makes the day-to-day decisions
• finance committee
• fund-raising committee
• safety and security committee
• discipline resolution committee
• student representative council
• health committee.

Each subcommittee’s chairperson will be a member of the SGB, but the other committee members need not be.

EFFECTIVENESS OF THE SCHOOLS’ GOVERNING BOARDS

All six Schools had a functional SGB that consisted, on average, of 13 members. The majority of Schools (five of the six) were very pleased with the dedication and support that they were receiving from their respective SGBs.

POLICIES AND PROCEDURES

Operational and financial policies and procedures are implemented to regulate the School’s activities and process. The following policies and procedures were available from the Schools:

• the school policy which includes, amongst other things, the school’s vision, mission and the code of conduct for learners and teachers
• the health and safety policy
• the financial policy
• the school governing constitution.

It was noted that some of these policies and procedures were insufficient and did not include the necessary detail that was required.

AUDITORS AND AUDIT STATUS

The objective of an audit is to express an opinion on the financial statements to ensure that the financial statements are free of any material misstatement and fairly present the financial position of the School. A high-level review of the audited financial statements of the six Schools that have been visited has been completed and the detailed results form part of the main report. It is however noted that none of the audited financial statements have been qualified on the basis of going concern. It would therefore appear, based on the audited financial statements, that the Schools would be financially sustainable. However, the qualified financial statements in the majority of the Schools indicated that the systems of internal control were, in most instances, less than adequate.

STRUCTURE OF THE FINANCE DEPARTMENT

In terms of the South African Schools Act, the SGB should be responsible for the maintenance of adequate accounting records and the preparation of the school’s financial statement. Therefore, the SGB should ensure that the School’s financial department is functioning properly in order to produce appropriate accounting records and financial statements.

An analysis of the qualifications and experience of the staff members within the Schools’ financial departments revealed that staff did not have the appropriate training, background and/or adequate experience to perform their roles and responsibilities. Three of the six Schools (50%) had a dysfunctional financial department, as the staff was not acquainted with the basic principles of accounting and financial management.

FINANCIAL SUSTAINABILITY

Financial sustainability has been assessed under a number of headings with a view to determining whether there is appropriate handling of key financial areas, namely:

• revenue
• expenditure
• asset management
• cash and investment management
• student debt.

Incorporated into this section of the review was the system in place for budget setting and for the control of the budget once set by the School Governing Board.

INFRASTRUCTURAL REVIEW

This section of the review dealt with a number of areas directly linked to the operational effectiveness of the schools. Specific areas covered in this section included:

• operational infrastructure, which incorporated a review of state of classrooms and furnishings
• ablution facilities in each school
• disability access
• staff housing
• hostel facilities.

Incorporated in this section is an assessment of the security of each of the schools and the needs of each school with regard to security of the entire campus as well as the individual classrooms.

CONCLUSION

Where the evaluation report has shown up areas of weakness within the Schools’ administration, the HSRP, together with service providers, will work with the School Governing Boards to upskill personnel, implement appropriate systems and ensure that all identified areas of concern are effectively dealt with and that a high level of governance is established in each of the Schools.

The Historic Schools Restoration Project would like to express its appreciation to Mr Gary Pickering and Ms Elanie Webster and the team from KPMG Services (Pty) Ltd for undertaking this evaluation on a pro bono basis. The high quality of this evaluation will ensure that the HSRP is able to address key areas of need effectively.