Stephen Fitzgerald
Finance Directorate
To: Headteachers of all Hounslow
Schools
Copy to Chair of Governors of all
Hounslow Schools
Civic Centre
Lampton Road
Hounslow TW3 4DN
Your contact: Alex Taylor
Direct Line: 020 8583 2836
Fax: 0208583 2613
Minicom: 020 8583 2618
E-Mail: alex.taylor@hounslow.gov.uk
Our ref: AT/ unofficial school funds
Date: 15 September 2010
Dear Colleague,
School Unofficial Fund Bank Accounts: Statement of Accounts and Audit
Certificates
Following a review of the process carried out last year with regard to the submission of
statement of accounts and audit certificates by schools in respect unofficial or “private”
school fund accounts I detail below further guidance which I hope will be of assistance to
schools during this years exercise.
It is the school’s responsibility to ensure that where the school operates an unofficial or
“private” school fund/s account that this is subject to audit on an annual basis by a suitably
qualified auditor. Schools should note that “suitably qualified” does not necessarily mean
professionally qualified and this is explained in more detail below. Schools should note it
is good practice to have a model constitution approved by the Governors stating, amongst
other things, the purpose of the fund and the type of expenditure permitted to be incurred
through the fund. The Statement of Accounts for the fund should be sufficiently detailed to
enable the Governors to derive clear financial information from them, and examples are
attached which I hope will be of assistance. At the end of the audit the auditor must
prepare an auditor’s statement, see attached. The auditor’s statement, along with copies of
the Statement of Accounts, should then be circulated to the Governing Body, discussed
and formally approved, and this procedure must be minuted.
Where an unofficial fund account/s year end is 31 st August 2010 the statement of accounts
and auditors certificate must be submitted to the Local Authority by 30th November 2010;
and unofficial fund accounts having a year end of 31st March 2011 these documents must
be submitted to the Local Authority by 30th June 2011. Where any schools unofficial funds
have a year end other than 31st August or 31st March the statement of accounts and
auditors certificate must be prepared and submitted to the Local Authority within three
months of the fund accounts year end.
The Statement of Accounts in respect of all unofficial school fund accounts must be in the
form of either a Receipts and Payments Account or Income and Expenditure Account, and
both statements must be supported by a Balance Sheet. It is acknowledged that unofficial
funds can fall into different categories:-

Small Funds – funds having an annual income or expenditure of not more than
£25,000 or a year-end balance of not more than £15,000.

Large Funds – funds having an annual income or expenditure of £25,000 or
more or a year-end balance of more than £15,000.
Small funds may have a Receipts and Payments account and Balance Sheet prepared.
Large funds should have a formal set of accounts produced, and as a minimum these
would take the form of an Income and Expenditure account and Balance Sheet. The
funds should be audited by an independent person (i.e. a person who has no direct
financial interest in the fund) who is professionally qualified to undertake this work.
Statement of Accounts must be prepared and audited within 3 months of the year end.
Qualification guidelines for the appointment of auditors is recommended to be:-
Annual Fund Income
Qualification Guide
Up to £5,000
Person familiar with accounts
£5,000 to £24,999
Individual with appropriate
status, i.e. senior bank official
Over £25,000
Qualified Accountant
professional
The duties of the appointed Auditor(s) are:1. To provide an independent assurance to the School Governors and the Local Authority
that:
The fund is being correctly operated in accordance with the fund objectives.

The financial statements produced by the fund manager are correctly stated.
2. This will be achieved by applying a programme of tests to the fund records that are
intended to demonstrate amongst other things that:
All income has been correctly accounted for

That the monetary balances reconcile

Verify that the stated monetary balances do in fact exist. Independent
confirmation should be obtained from the bank of balances in hand at the year
end.

That expenditure is reasonable and in accordance with the fund objectives

That the funds have not been used as a vehicle for personal transactions

That there has been no mixing of official and unofficial school funds

That the unofficial fund account/s do not include school related income or
expenditure in order to ensure that all school related income and expenditure
has been captured within the school’s official accounts for inclusion on the
schools CFR (Consistent Financial Reporting) report.

That guidelines for record keeping have been followed
3. At the conclusion of the audit to provide a certificate stating that the audit has
been conducted
4. Audit Certificates – The auditors of those funds where professional audit is
engaged will provide an audit certificate in accordance with published
professional standards. It should be noted that a statement of “preparation” of
accounts is not an audit certificate and does not meet the requirements.
School Unofficial Accounts
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The precise format of the Annual Statement of Accounts is a matter that is best
determined locally with your unofficial fund auditor. I have attached to this letter an
example of Income and Expenditure Account, sample layout 1 and sample layout 2 if
you carry balances forward to the following year for specific items, e.g. trip deposits,
money raised for charity. The sample layouts are just examples, but do give an
indication of the level of information required which I hope will assist in ensuring that the
correct format is used. I have also attached Form 1 in order to list all the funds you have
(a blank form and one with example figures to assist with completion of the form) and
Form 2 which is the audit certificate noting that a separate audit certificate will be need
for each unofficial fund account, again I have attached a blank form and one with
examples figures which I hope will be of assistance.
Whether a Receipts and Payments Account, Income and Expenditure Account
horizontal format or Income and Expenditure Account in vertical format is used the
following general notes must be considered:
Receipts and Payments account. This account summarises but does not itemise
the cashbook entries, beginning with the opening cash and bank balances and
concluding with the closing cash and bank balances. A receipts and payments
account is a statement of cash actually received and paid during the year.

Income and Expenditure account. This is a revenue account which takes note of
debtors, creditors and provisions for amounts assessed and which shows a
surplus/deficit for the year. The Income and Expenditure Account may be
prepared in either horizontal or vertical format. For horizontal format income is on
the right and expenditure on the left. For vertical format income items go on top
and below the income items the expenditure items are shown. There is no major
advantage or disadvantage in using either format.

Wherever possible expenditure should be shown opposite the equivalent income
collected, however note for vertical format income and expenditure accounts this
will not be possible.

All receipts and payments must be shown gross in the receipts and payments
account or income and expenditure account and it is not acceptable to simply
show a net receipt or net expenditure from an activity.

Receipts and Payments, Income and Expenditure must always be analysed
under meaningful headings, with minimal use made of “miscellaneous or
sundries”.

Dissimilar types of income receipts and payments should never be contained
under one heading i.e. books and outings.

Figures for the previous year should be shown on the Statement for purposes of
comparison.

Exceptional items or peculiarities in the accounts should be accompanied by
explanatory notes.

The annual Statement of Accounts and also unofficial fund(s) account audit
certificate must be signed by both headteacher and the fund auditor.
School Unofficial Accounts
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
All unofficial fund accounts must be subject to audit and a copy of the final
accounts, together with the auditor’s signed certificate must be submitted
annually to the School Governors and to the Local Authority.
The following information in respect of your schools unofficial fund(s) must be provided
to the Local Authority within 3 months of the unofficial fund account year end.
1.
Statement of Account and Balance Sheet and copy of bank statement showing year
end balance for each Unofficial Fund Bank account held by your school.
2.
Completed Audit Certificates (FORM 2 as attached to this letter). The submission of
audit certificates without the supporting Statement of Accounts and Balance Sheet is
not permissible and the audit certificate and Statement of Accounts must be
submitted together.
The above noted Statement of Accounts and Balance Sheet and Audit Certificate should
be sent to the Local Authority and marked for the attention of Donald Fraser, Schools
Financial Services Section, CS&LL, Civic Centre.
If you require any further information or guidance please contact Donald Fraser, tel: 0208
583 2845, email donald.fraser@hounslow.gov.uk .
Yours sincerely
Alex Taylor,
Head of Finance,
Children’s Services and Lifelong Learning.
School Unofficial Accounts
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