13 Dec 2023

Schools spending grants on 'personal trips, home gym equipment' - report

7:35 am on 13 December 2023
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Photo: RNZ / Richard Tindiller

Seven schools had serious financial problems last year and auditors warned of potential problems at a further 13.

The Auditor General's annual report on this year's audits of schools' 2022 accounts said seven schools required letters from the Education Ministry pledging financial support, down from 19 in 2021.

The schools were Fraser High School, Matipo Road School, Nelson College, Ngakonui Valley School, Ross Intermediate, Verran Primary School, and Wyndham Primary School.

"As well as the schools that needed a letter of support, our auditors raised concerns about potential financial difficulties with school boards in the management letters of another 13 schools. This was usually because of continued deficits that were eroding the working capital and/or continued deficit budgeting," the report said.

The report said 25 schools spent excessive amounts on hospitality and 42 schools did not manage expenses properly.

It said at 12 of the schools, principals were approving their own expenses or the spending was not approved by someone more senior, and at 24 schools there was no approval of credit card expenditure or it was not approved by someone more senior than the person incurring the expenditure.

The report said Education Ministry instructions about how schools were to use $12,000 grants for principals' wellbeing were unclear and some schools spent the money on personal trips and gym equipment which was not appropriate.

"Some schools received a copy of draft guidance that did not specify the funding had to be used on wellbeing support clearly linked to their role as a principal. As well as listing examples under the headings of easing immediate workload pressures, personal development, and staff development and team culture, it included a heading that said 'Treat yourself' which could be interpreted to mean the funds could be used on personal expenses," the report said.

"As a result, some schools spent the funding in ways that could be considered to confer a private benefit, which is generally not appropriate for public funds. Examples identified this year included spending on personal trips for a principal and their family members and the purchase of personal home gym equipment. If the expenditure could be seen to provide a personal benefit, the board would have to consider whether ministry approval was required and whether the payment could be subject to fringe benefit tax."

The report said 524 schools with new principals received $6 million to be used as wellbeing payments.

It did not say how many schools used the money inappropriately.

Gift cards, management fees draw auditors' attention

The report said some schools were not planning properly for building maintenance, despite auditors raising the problem repeatedly.

"We are still finding that many schools do not have appropriate supporting evidence for their cyclical maintenance provisions. For the 2022 school audits, our auditors told us that about 14 percent (2021: 21 percent) of schools did not have reliable plans. We have shared this information with the Ministry of Education and will be following this up directly with the Ministry of Education's property team," the report said.

The report said auditors were unable to give any opinion on the 2019 accounts of Kura Kaupapa Māori o Takapau because the loss of records by their financial services provider resulted in incomplete financial information for the school's 2018 accounts.

It said auditors drew attention to the board of Palmerston North Boys' High School purchasing $31,201 of gift cards for school staff and parents for their coaching volunteer work and other sports contributions.

"The school did not keep adequate records to justify the spending on gift cards, the spending was not consistent with the school's gift policy, and there was no evidence of board approval for the purchase of the gift cards," it said.

Auditors drew attention to the Board of Nga Purapura o te Aroha spending $3600 on a gift for the principal for his 10 years of service to the kura.

"Any spending on gifts using public money should be moderate, conservative, and appropriate for the circumstances. Although the gift was approved by the board, the kura does not have a gift policy and the amount spent was considered relatively high for a school," the report said.

Auditors also drew attention to the board of Southern Cross Campus providing $15,000 of gift vouchers to families during the 2022 Covid-19 lockdown on the basis of hardship, and the board of Shotover Primary School making a donation to the Shotover Primary School Foundation.

The report said auditors completed an earlier unfinished audit of the combined board of two former charter schools, South Auckland Middle School and Middle School West Auckland and drew attention to a $200,000 payment to Villa Education Trust for management fees.

"When the management fees were agreed, the combined board and the board of trustees of the Villa Education Trust had the same members, except for the principals of the schools," the report said.

"The 2018 audit opinion of the combined board was qualified because the auditor could not obtain sufficient evidence for the management fees paid to the Villa Education Trust. This matter was also the subject of an inquiry by our office.

"For the 2019 and 2020 financial years, the combined board had entered into an agreement with Villa Education Trust to pay management fees. The agreement did not provide a detailed breakdown of the services to be provided nor did it set out how the costs of those services were ascertained. This has led to ongoing uncertainties about the services provided by Villa Education Trust to the school board."

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