Residual Agent for school merger task list

The Residual Agent is appointed by the board(s) to help with their financial management prior to merger and prepare all financial statements associated with merger.

Note:

– In a merger one school is identified as the continuing school and the other school(s) are the merging school(s).

– Where possible one residual agent for the continuing school and the merging school(s) is appropriate.

– As part of the merger process the accounts of the merging school are wound up and the finances of the continuing school are closed off at the date of merger.

For the merging school(s) the residual agent prepares a set of audited accounts and signs the ‘Statement of Responsibility’ that goes with those accounts. For the continuing school the residual agent identifies the assets and liabilities and closes off the accounts as at the date of merger.

– The liabilities and assets of the merging school become the liabilities and assets of the continuing school as at the date of merger.

Task:

To work with the Ministry, the Board(s) of the merging school(s), the Principal/s, the Board of the continuing school, and the Change Manager to implement the Minister’s decision to merge the schools.

If the Residual Agent has any financial queries they should be directed to the Ministry’s Regional Financial Advisor.

Upon Appointment

Meet with Specialist Senior Advisor, Senior Financial Advisor, and Change Manager to discuss roles and responsibilities, timelines, reporting requirements, etc.
Meet with Boards of the merging school and the continuing school to identify concerns and issues, particularly addressing the importance of probity:

– proper stewardship of school funds, no matter what the source

– examples of types of inappropriate / excessive expenditures that will be monitored (e.g. gifts to staff, class trips that are not usually offered etc)

The Residual Agent has the right (and duty) to advise the Board where expenditure could be seen as inappropriate or a misuse of funds. If the Residual Agent has a concern they should contact the Ministry’s Financial Adviser.
With the support of the Board of the merging school the Residual Agent and Board Chair can become the only signatories to the school account. This will ensure that the school’s remaining funds are appropriately spent up to the date of merger.

Before Merger

Obtain a copy of the EDI Memorandum of Agreement as soon as it is negotiated.

Ensure that the financial records for the Board of the merging school and the Board of the continuing school are current.
Work with the Board of the merging school to prepare an interim set of financial statements as at the date of merger. This should include budget to date of merger redundancies, cost of residual agent and pre-merger function.
Work with the Board of the continuing school to prepare a set of financial statements as at the date of merger. This should include budget to date of merger redundancies, cost of residual agent and pre-merger function.
If the financial position of either school at the date of merger is estimated to be negative, inform the Board of the continuing school and the Ministry’s Regional Financial Adviser.
Work with the Change Manager to ensure that the schools’ asset register is up to date. This may include reconciling the asset register with the physical asset (stock take) and obtain sign off by the Board chair / principal of the register.
Work with the Change Manager to establish a list of each school’s fixed assets which may have a community contribution and cannot be relocated to the merged school site (eg swimming pool, tennis court). In order for the Ministry to reimburse the community for its contribution there needs to be evidence of how much was donated and the percentage of the total value of the asset at the time it was purchased. Identify and retain this paperwork if possible. If it cannot be found it is unlikely that the Ministry will be able to reimburse the community the same percentage for its value at the time of closure. If document is presented this payment is able to be made to a community group that is an incorporated society.
Where the Residual Agent is becoming the co-signatory of the merging school’s accounts, remove all other signatories to that account.

Monitoring

Ensure all financial records are current.
Review all financial commitments (e.g. painting contracts and leases).
Place an advertisement in local newspapers to inform school suppliers of:

– the merger date and that orders placed with the Board of the merging school after date of merger will not be honoured by the Board

– the contact details of Residual Agent and

– a final date for receipt of outstanding invoices.

Request school administrators to contact the Payroll to receive payroll information (including appropriate forms) relevant to the employees of the school. The Boards will need to cover costs of redundancies of support staff.

Contact the school’s financial service provider to ensure access to all relevant financial information.
Respond to all mail received notifying writer of school merger and the contact person for the Board of the continuing school.
Liaise with appropriate Ministry departments and Payroll to ensure all payroll activity for the merging school is ceased upon merger of the school.[1]

Property / Assets

Work with Change Manager to ensure that the merging school’s and continuing school’s asset registers are up to date (including any school monuments, time capsules, plaques etc)

Work with Change Manager to ensure:

– final utility readings are scheduled and reported and paid

– funds are available for payment of future mowing / gardening / maintenance / security contracts until day of closure, as required.

When the asset register is up to date, work with the Board and the Change Manager to

– agree, in writing, on which assets will be transferred to the continuing school (this could include physically viewing all of the merging school’s assets with the Board of the continuing school).

– agree, in writing, the date that the physical transfer will occur.

– Ensure that the assets of higher value are securely locked under residual agent’s authorisation.

Work with the Board of the merging school and the Change Manager to determine where the school’s assets are to be transferred. Most will move to the continuing school (note that this many not be a physical move if the merged school is to operate from split sties and the location of the merging school is one of them). For any assets that are not to be transferred to the continuing school, provide the Ministry Regional Financial Advisor with a list of these assets and the proposed disposal plan for them (donation, sale, etc) for APPROVAL.

After the transfer date, update the asset register of the continuing school and forward that to the Board of the continuing school.

Reporting

Provide monthly financial status reports to the Regional Financial Advisor.

Financial Statements

Work with the Board to prepare an interim set of financial statements as at the expected date of closure including:

– budget to closure date

– redundancy costs for not teaching staff

– cost of residual agent

– end of school function costs.

Inform the approved Auditor appointed by the Auditor-General of the name and contact details of the person/agency preparing the final accounts for the merging school, and of the agreed timetable for completion of these final accounts.

– Consult with the Regional Financial Advisor if an extended financial year is required.

Day of Merger

Identify all high value assets at the merging school are secured. If they are to be relocated to another site, then ensure that this process is overseen by the residual agent or the change manager.

Ensure all outstanding order books, cheque books and financial records are collected.

Documentation

Collate documentation to be passed to the Ministry to archive on completion of the audit.

– current financial year’s invoices, receipts

– bank statements / cheque butts

– minutes from Board meetings and finance committees

– any other supporting documents of financial management.

Post-Merger

Payments / Deposits / Filings

Receive (and pay) accounts from all final creditors and debtors, including any debt to the Crown.

File all final returns or applicable revenues (e.g. PAYE, GST, and FBT) with Inland Revenue.

Complete and file a business cessation form.

Return all unused cheque books for the Board of the merging school to the bank and close all bank accounts.

Audit

Prepare a set of auditable financial statements for the Board of the merging school on a liquidation basis including a liquidation statement (see Appendix 1).

– The final financial statement for the Board of the merging school must be with the auditor no later than three months after the merger date.

Arrange for the final audit by the approved Auditor appointed by the Auditor-General and monitor to achieve timely completion.

Sign the statement of responsibility that goes with the final audited accounts for the Board of the merging school. The accounts for the Board of the continuing school should be detailed at the date of merger and forwarded to Board of the merged school.

Provide the Regional Financial Adviser with an electronic PDF set of the audited financial statements.

Surplus / Asset Distribution

If, after receiving all accounts, the final financial position of the Board of the merging school is positive, this funding is to be forwarded to the Board of the merged school.
If, after receiving all accounts, the final financial position of the Board of the merging school is negative, the debt is to be honoured by the Board of the merged school.
The amount in the Board of the continuing school’s accounts as at the date of merger (when its accounts were closed off) should be identified and where positive it is forwarded to the Board of the continuing school. Where this is negative the debts are to be honoured by the Board of the merged school.

Documentation

Collate documentation to be passed to the Ministry to archive on completion of the audit.

– current financial year’s invoices, receipts

– bank statements / cheque butts

– minutes from Board meetings and finance committees

– any other supporting documents of financial management.

[1] There may be situations where it is necessary for the school to be kept open on the payroll system (past the date of merger). This allows the principal’s pay to be continued during their notice period (which can be up to 3 months). The Senior Adviser will advise if this is the situation and National Office staff will inform payroll services that in this case the school payroll services need to stay open.