Management Information Sheet

Payments to Individuals and Staff - Schools

In January and February 2023, Norfolk Audit Services carried out a thematic audit on Payments to Individuals and Staff within maintained schools. A sample of 20 maintained schools were audited.

The following risk were identified for this audit:

• Tax and national insurance obligations, as well as adherence to other employment rights, may not be met by the school where individuals are incorrectly treated as self-employed for tax purposes, or where staff are not paid through payroll.
• Inappropriate expenditure may occur where staff reimbursements for purchases made are not authorised.
• The opportunity for schools to claim back VAT on appropriate goods or services may also be missed where those have been purchased and claimed back by members of staff.

Overall Summary

The following findings are an overall summary of the areas that need strengthening, and are not representative of every School visited: -

• An individual's employment status for tax purposes is not being verified, for example, using the HMRC online service.
• Written approval is not sought from the Headteacher, and recorded, prior to purchases being made by staff members.
• Schools are not utilising all available means when purchasing items, such as purchasing cards, petty cash, and online business accounts, such as ESPO and Amazon, or by raising a purchase order.
• Staff reimbursements are being used to claim payment for mileage and accommodation and training costs, instead of completing a travel and expenses forms which would be reimbursed via payroll.
• Schools are not planning sufficiently in advance when purchasing certain items such as classroom and cooking supplies, to utilise online accounts for example, with supermarkets. Instead, staff make these purchases themselves as items are needed and seek reimbursement.

Detailed Findings

Payments to Individuals

In relation to payments to individuals who have completed work at schools, 11 of the 20 schools in our sample had not verified the individual's employment status for tax purposes.

There is a risk that the individuals may be being incorrectly treated as self-employed and Schools could be liable for tax and national insurance payments in relation to these individuals. If individuals should be treated as an employee, other employment rights may also not be being adhered to.

Payments to Staff

In relation to payments to staff, all payments identified were to reimburse staff for purchases made by them for items required for various reasons.

No members of staff were paid via cheque or BACS for additional work undertaken outside of their normal duties. Any additional hours completed by staff for any work should always be paid through the payroll.

During the period of testing between 1st November 2021 - 1st November 2022, the number of reimbursements made at each school ranged from 154 to six, with the total cost of reimbursements ranging from £6,053.53 to £363.14 for the year.

Staff were reimbursed by BACS or cheque for purchasing various items at all 20 schools in our sample. Purchases were for a wide variety of goods with the following most frequently identified: -

• School club provisions (including breakfast, after school and gardening clubs)
• Cookery ingredients
• Classroom resources and lesson supplies
• Postage of school records
• Items for SATS breakfasts

With better advanced planning, some items, such as cooking and classroom supplies, could have been purchased via the School's online accounts. Schools should also be utilising their purchasing cards, seeking increased limits and additional cards as necessary, and petty cash to purchase items, or a purchase order should be raised. Staff should not need to purchase items from their own monies and seek reimbursement.

On occasions, travel (mileage and train tickets) and accommodation costs were reimbursed to staff via BACS payments as well; these should be claimed by staff via a travel and expenses form and staff reimbursed for these costs through the payroll if it is not possible to purchase these items via a purchase order, petty cash, or a purchasing card.

Written approval had only been sought and recorded prior to purchases being made by staff at 11 of the 20 schools. Purchases should always be approved at the appropriate level prior to being made by staff.

Recommendations

We recommend the above issues are considered by your School's Leadership Team, together with any proposed actions for improvements you need to make in relation to your School. Any issues and proposed actions should be presented to the relevant Governing Body Committee for approval and monitoring.

Payments to Individuals: -

Schools should verify any individuals' employment status for tax purposes, when they conduct work at the School, using the HMRC online service. Check employment status for tax - GOV.UK (www.gov.uk)

Payments to Staff:

It should not be necessary for staff to purchase items using their own money and seek reimbursement. Schools should be reducing the need for staff to purchase items themselves by using purchasing cards, petty cash, online business accounts and raising purchase orders for any items that are required to be purchased. Staff should not routinely purchase items outside of these methods.

Written approval should be sought and recorded prior to purchases being made by the staff members by whatever means.

Staff at schools should plan the supplies needed for upcoming lessons in advance to allow for items to be purchased using online accounts or purchasing cards instead of staff making purchases themselves and seeking reimbursement.

Schools should consider whether any additional purchasing cards are needed by staff members who regularly purchase certain items and whether the limits on their current purchasing cards are sufficient for their needs and seek additional cards and increased limits as necessary.

In most circumstances, purchases for items over £100 should be made via purchase order.

Travel and accommodation costs should always be claimed via a travel and expenses form and staff reimbursed via the payroll for these costs.