A school audit can be tough. Especially for the independent school.
Public schools get some support from their district as a whole, where independent institutions are well, left figuring it all out on their own.
While independence comes with more flexibility and the ability to come up with an audit process that works for your school—it’s also a challenge to know where to begin.
Digital procurement stands to make this process a lot easier. This way, you’ll know where everything is going—and can ensure that grant money, endowments, and tuition are allocated to the proper channels.
Here is a little more about how getting on board with technology can make auditing far less daunting.
[content_upgrade cu_id=”3898″]Get ready for the big day — download your auditing checklist by subscribing here.[content_upgrade_button]Click Here[/content_upgrade_button][/content_upgrade]
Digitizing Procurement Allows for More Internal Controls
Internal controls are the procedure a school puts in place for a few reasons. First, it ensures that the funds coming into the school are used as planned. Second, it keeps the school’s assets safe. Third, it helps to justify decisions made about the purchasing process.
This seems obvious, but when an audit rolls around, you’ll need to be able to furnish proof that you’re spending incoming cash on the appropriate funds, that you’re sticking to a budget, and that you’re recording all transactions according to protocol.
Without technology in place, we’re stuck placing some big jobs in the hands of fallible humans. During an audit, you’ll need to provide financial statements that match every transaction.
Paper POs, verbal orders, no purchasing procedure. All of these processes are flawed—and can be replaced by a digital PO system that increases visibility and eliminates that frantic energy that comes with preparing for an audit. In short—the right software means no surprises.
Better Year-Round RecordKeeping
Though paper tracking is a common practice in independent schools across the UK, it’s not so hot for keeping accurate records.
Traditional paper tracking is time-consuming and prone to human error. When audit time rolls around, you’ll need to produce a paper PO, the packing slip, invoice, and any associated documentation.
As you might imagine, an annual audit means school administrators or auditors will be scrambling to come up with a long list of documents from incoming cafeteria food to paper, school supplies, and more.
There are a lot of downsides to keeping paper records. For one, files can be destroyed or stolen. Offices can flood, or more likely, a staff member spills coffee or throws a critical paper in the recycling bin.
In the context of a purchasing audit, paper poses big problems. Digital purchase orders allow for a record of all purchases—from the document itself to the person who approved the order and when it was received.
ProcurementExpress.com stores all relevant documents from end to end. So, from the initial PO request to receiving and the approvals in between—all records are stored in the cloud.
As you can see, purchase orders and their corresponding statuses are organized inside the PO tab.
At the end of the year, all documents will be right where you left them. Plus, you can pull reports as needed.
Auditors can quickly see where money is being spent, and whether that money is being spent appropriately.
Making Auditing Easy for the Independent School
Digital procurement helps schools identify overpayment, review contracts, and avoid errors. But getting ready for your next audit takes more than just applying some technology to your strategy and hoping for the best.
Here are a few ways to ensure better recordkeeping and smoother audits:
1. Purchase Orders Are Mandatory
[bctt tweet=”Without a purchase order, there’s no way to ensure that an invoice is legitimate.” username=””]
Purchase orders are legally binding documents that offer proof of agreed-upon terms and pricing between the school and the vendor.
Without this document in place, there’s no guarantee a vendor isn’t overcharging for goods or services.
While it doesn’t seem like a huge deal when you’re responsible for several documents and transactions, POs matter. Without them, there’s no way to ensure that invoices and POs show the same prices, quantities, and line items.
As such, you’ll need to require teachers, admin, and other staff to submit a PO for every single order. And when they do, approvers will receive an email notification that looks like this:
2. Expensing & Company Card Issues — Quit it
With no approval process, staff might get the impression that they can purchase anything within reason. Many schools issue credit cards and allow the team to make purchases as needed.
Best-case scenario, they’ll later submit an expense report, and accounting will match the transactions. From a recordkeeping standpoint, this is okay, to some extent. However, expensing without permission means staff are ordering products from random vendors or spending without any regard for the budget.
While some staff may feel that shopping around online and using different vendors is a great way to get a deal—things work differently in the procurement world.
When you build vendor relationships, there are more protections in place—quality, predictability, and pre-negotiated bulk buying discounts.
Many companies, schools included, opt for the expensing solution because it seems more convenient. Adding ProcurementExpress.com to your strategy means your school can do things by the book while getting things approved and ordered ASAP.
3. Budgets are Big
One key area in the auditing process is making sure the school has enough money coming in to support normal activity. This includes everything from teacher and staff salaries, supplies, updated equipment, technology, food—everything it takes to run the school.
If a school cannot produce adequate cash flow, there’s a high likelihood you’ll need to have extra fundraising and donor outreach to keep things running smoothly.
In an independent school setting, an inability to manage budgets and maintain a reasonable cash-flow could make donors angry—and they may stop supporting the school.
As such, schools should have budgets in place for various activities, like food and beverage, sports, classroom supplies, arts programming, and so on. All purchasing activity will correspond with a budget, ensuring money is being used correctly and that all purchases are reviewed against the budget before they are approved.
These tight controls are essential, especially in an independent school. Without them, schools risk failure.
An audit is a big deal for any organization but certainly become easier with the right tools and a commitment to sticking to the procedure.
While it might feel like a major drag, the point of the audit is to ensure that your school is appropriately using funds—and as such, running as intended.
The auditor will evaluate your budget, spending, and how you’re using resources. In most cases, this information is presented to the board.
With a procurement solution in place, schools can stick to the budget with little effort, and ensure that vendors aren’t taking advantage of them.
Armed with the tips outlined above, schools can mitigate risk and maintain a high level of internal control. With this much visibility, you’ll know exactly what to ask for when it’s time to reach out to donors.
[content_upgrade cu_id=”3898″]Preparing for an audit? We’ve got you covered. Download your free checklist here.[content_upgrade_button]Click Here[/content_upgrade_button][/content_upgrade]