As School Head, it’s a good bet that you are not an accountant. Yet, you need to have a handle on what financially is happening with your school. While you have a Business Manager (as most of you do) to handle financial operations, you are still responsible for accurately reporting information to the Board. How comfortable are you with those reports? Do you know you are asking the right questions of your staff? Getting the explanations you need to ensure transparency of your operations? You need to get your feet wet and get familiar with accounting terms and other key details that will ensure that you are providing the Board with the best information you can to advance your school’s mission.
Here are a few tips.
- Explore the world of accounting terms. Accruals, allocations, deferrals, reserves, depreciation, capitalizing vs. expensing. How your school’s money is slotted makes a difference in how you look at your school’s financial health. Check out Accounting for Non-Accountants Fast Learn Basics on amazon.com.
- Get a handle on benchmarking. How does your financial report compare with the industry standard, and with schools similar to yours? When you benchmark this way, you can see where you need to improve your business operations or adapt to best practices in the industry. Wikipedia offers an in-depth definition of benchmarking and its uses. You can also get http://www.youtube.com/watch?v=v4ZfhyR4dzM 3+ minute tutorial on YouTube part of a series on financial statement analysis.
- Nonprofit organizations (including nonprofit schools) have their own set of financial reporting standards, even though the reports are very similar to for-profit businesses. According to Clayton Browne, writing on the Investing @ suite 101 blog, it's how the money is allocated, depending on the structure and organization of activities, that is different. Plus, there are fund-raising expenses involved that a for-profit would not have. The Free Management Library is a resource for you, with the online article All About Financial Management in Nonprofits.
Additional ISM resources of interest
A Guide to School Financial Statements for the Board of Trustees ISM Web site
Board/Head Relationships ISM Web site
Additional resources for ISM Consortium Gold members
Ideas & Perspectives Vol. 28 No. 9 Your Strategic Financial Plan: Format and Reporting
To The Point Vol. 9 No. 9 Enhance School Marketing with Solid Financial Reporting
Ideas & Perspectives Vol. 29 No. 7 Your School’s Annual Report: A Strategic Financial Plan Reporter and Institutional Promoter
