Accounting for shared funds
Your school may share resources and funding with other schools to achieve a common purpose. You need to make sure you account for these correctly.
Resources may be shared for projects to improve teaching and learning, for teacher professional development, to improve efficiencies or to reduce administration costs.
Schools form a cluster or group and share funds for a common purpose to improve efficiency and reduce costs. The cluster is not a new entity but is a jointly controlled operation.
One school will be the lead school, host school or fundholder school for the cluster and act as an agent for all the schools in the cluster. The lead school may set up a separate bank account on behalf of the cluster, or account for shared funds using a separate ledger, but can only spend shared funds as agreed with the cluster.
The lead school will receive resources from the Ministry of Education or other funding sources on behalf of the cluster. They may also receive funds from member schools to be used for the cluster’s common purpose.
The lead school needs to include GST transactions for the cluster with their own GST returns, but keep track of the cluster’s share of GST on income and expenses separately.
The cluster should have a written agreement about what the shared funds are for, how they are to be used, which schools own any assets bought with shared funds, and what will happen to any remaining funds when the cluster stops working together.
The use of the funds is subject to the same considerations that apply to the schools that are members of the cluster, including reporting, audits, procurement processes, investment of funds and managing any conflict of interest.
The lead school must track all income and expenses for the cluster’s purpose separately from its other operations, so that it can provide regular detailed management reports to the cluster and the cluster’s funders.
If the cluster’s activities are funded by the Ministry of Education, any unspent funds must be returned to the Ministry. However, if the cluster has achieved or provided what they were required to do with the funds they may be able to keep unspent funds.
The written agreement between members of the cluster should document which schools own any assets bought with shared funds, and what will happen to those assets when the cluster stops working together.
If the cluster agrees to purchase a new asset to be owned by the lead school, then the transfer of shared funds for that purchase needs to be recognised in the accounts for all the schools in the cluster.
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