Calling all accountants: your help is needed at SA’s 26,000 schools


Book your place at the webinar (29 May 2019) where Lettie will go over the business opportunity and technical requirements.

There are roughly 26,000 schools in SA in need of audits or examinations. In practical terms, given the financial constraints facing most schools in SA, there is a huge business opportunity here for auditors and accountants. 

There is good reason for business accountants to start getting out to these schools and assisting them in bringing financial order to their affairs.

The Corruption Watch Report titled, “Loss of Principle: New Schools Report” indicated that a total of 37% of corruption cases involved financial mismanagement. Some 20% of cases involved theft of funds and tender corruption made up 13%.

“Employment corruption, abuse of power and theft of goods made up the rest of the reports received with the bulk of reports coming from Gauteng, Free State, KwaZulu-Natal and Eastern Cape,” says the report.

Some of the root causes for mismanagement in schools were:

  • Insufficient documentation;
  • Inaccurate financial statements prepared and examined by Accounting Officers;
  • Theft of assets;
  • Collusion between Principals, School Governing Bodies and Auditors;
  • Poor internal controls for compliance with SASA;
  • No accounting manuals in place;
  • Lack of segregation of duties between bookkeepers and auditors; and
  • Changing of audit opinions

All School Governing Boards (SGBs) are required to appoint relevant accounting and auditing professionals and within three months of their yearend present financial statements.

The Department of Basic Education has issued Guidelines For Preparation Of Public School Financial Statements to assist auditors and accounting officers in the preparation of school financial statements and the standards of assurance required.

In terms of Section 42 of the South African Schools Act (SASA) the governing body of a public school must –

a) Keep records of funds received and spent by the public school and of its assets, liabilities, and financial transactions; and

b) as soon as practicable, but not later than three months after the end of each financial year, draw up annual financial statements in accordance with the guidelines determined by the Member of the Executive Council.”

The Member of the Executive Council means the Member of the Executive Council of a province who is responsible for education in that province.

When an accounting officer is to be appointed rather than an auditor

The governing body of a public school must appoint a person registered as an accountant and auditor in terms of the Public Accountants and Auditors Act to audit the records and financial statements in schools.

However, if an audit is not “reasonably practicable”, then the governing body may appoint an accounting officer. In practical terms, most of the accounting work at schools should be done by accounting officers due to the lower costs involved.

This is therefore a huge business opportunity for auditors and accounting officers.

Difference between audit and examination

Accounting officers should have a clear understanding of the differences between assurance and non-assurance engagements. Accounting officers may incur both statutory and civil liability if they issue incorrect reports.

In an assurance engagement an auditor or independent reviewer is required to issue an independent written report that provides assurance in the form of an opinion. Users may rely on this opinion.

The International Framework for Assurance Engagements (IFAE) defines an assurance engagement, as an “…engagement in which an accounting officer expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party, about the outcome of the evaluation or measurement of a subject matter against criteria”.

In a non-assurance engagement an accounting officer issues a statement containing information that will assist users in forming their own opinion about the financial statements. In other words users of reports issued as part of non-assurance engagements are required to form their own opinion of whether the financial statements are fairly presented.

In an examination engagement the accounting officer report does not include an evaluation of financial statements against an appropriate accounting framework to assess and conclude on fair presentation. By way of contrast an auditor expresses reasonable assurance and a review accounting officer limited assurance on whether financial statements have been prepared in accordance with an appropriate accounting framework.

Though SASA does not provide a definition of what constitutes an “examination” of financial statements, we can turn to the definition of ‘assurance engagements’ as defined in the International Framework for Assurance Engagements (IFAE) issued by IFAC.

The duties of accounting officers are explicitly stated in various statutes. However, in addition to these statutory duties, accounting officers have certain common law duties such as:

  • Performing engagements with professional competence and due professional care;
  • Planning and supervising the engagement performance; and
  • Obtaining sufficient relevant data to afford a reasonable basis for issuing an accounting officer report.

Going concern

When preparing financial statements, the governing body of a school using these guidelines must make an assessment of the school’s ability to continue as a going concern. The school is a going concern unless the governing body either intends to liquidate the school or to cease operations, or has no realistic alternative but to do so.

Challenges in public schools

According to the Department of Basic Education, principals, teachers and SGB members are perpetrators of various financial mismanagement activities related to financial mismanagement, due to:

  • Lack of knowledge of legislation and skills, poor monitoring and control of funds, unavailability of financial policies in schools, lack of honesty and openness.
  • Conflict of interest: SGBs serve for too long in their position and no segregation of duties between bookkeepers and auditors.
  • No accounting manuals in place, poor internal controls of compliance with SASA.
  • Insufficient documentations.


The message could not be clearer: if you are an accountant or registered auditor, get out there and market yourself to schools. They surely need you.

Book your place at the webinar (29 May 2019) where Lettie will go over the business opportunity and technical requirements of providing accounting services to schools.

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