What Financial Information Should Governors Review?

Governors are not required to be accountants. Nobody joins a governing board because they can read a balance sheet, and schools do not expect them to. But every governing board carries a statutory responsibility for financial oversight - and that means governors need to know what financial information to ask for, what to look at once they have it, and what questions to ask when something does not look right.

This is different from financial management. The headteacher and school business manager manage the budget day to day. The governing board's role is strategic oversight: receiving financial information, scrutinising it, asking informed questions, and holding leaders to account for the school's financial position. Governors also approve certain decisions within their scheme of delegation, such as the annual budget.

"Noting" a financial report is not the same as reviewing it. If the minutes simply say "the finance report was received and noted," there is no evidence that anyone actually looked at the numbers, asked a question, or understood the school's financial position. That is a common and avoidable gap - and one that becomes visible whenever governance records are examined closely, including at inspection. For more on how minutes should evidence engagement generally, see how governors can demonstrate effective oversight and recording board decisions effectively.

This article sets out the financial information governors should expect to see, what to look for in each area, and the specific questions to take into the next meeting.

The budget monitoring report: the core document

The budget monitoring report is the document most governors will see most often - usually at every full governing board meeting, or every finance committee meeting if the school has one. It compares actual income and expenditure against the approved budget for the year, broken down period by period.

What to look for:

The overall variance - is the school ahead of or behind budget, and by how much?
Significant variances on individual budget lines, not just the total
Whether variances are building into a pattern over several months, rather than a one-off blip

Questions to ask:

What is driving the largest variances this period?
Are these variances one-off or recurring?
Based on current trends, will the year-end position be within budget?
Are there any emerging risks to the school's financial sustainability?

A governor who asks these four questions at every meeting is doing meaningful financial scrutiny - even without any accounting background.

Staffing costs: the most important budget line

Staffing typically accounts for 70-80% of a school's total budget. Because the staffing line is so large, even a small percentage variance represents a significant amount of money - far more than an equivalent variance on, say, the stationery budget.

What to look for:

Vacancy savings - an unfilled post creates a budget saving, but it can also mean a gap in provision that needs addressing
Supply cover costs - rising supply spend often signals underlying staffing or recruitment difficulty, not just a cost issue
Any staffing line movement that has not been explained in the report

Questions to ask:

Is the current staffing model financially sustainable for the year ahead?
Are supply costs tracking within budget, and if not, why?
Are there any planned changes to the staffing structure that will affect next year's budget?

Governors do not need to second-guess staffing decisions, which sit with the headteacher. But they do need enough information to understand whether the staffing budget is under control and what is driving any change.

Income: what governors should understand

Governors should have a working understanding of where the school's money comes from, even if the detail sits with the school business manager.

Main income sources typically include:

The local authority allocation (for maintained schools) or the ESFA general annual grant (for academies)
Pupil premium funding
Other grants, such as SEND-related or capital funding, where applicable

What to look for:

Whether income is tracking as expected against forecast
Any income that is at risk - for example, because of falling pupil numbers
Whether pupil premium funding is being spent for its intended purpose

Questions to ask:

Is our overall income position secure for this year and next?
Are there any funding risks the board should be aware of?
How are we tracking spend against our pupil premium allocation?

Reserves and carry-forward

A school's reserve balance - the amount carried forward from one year to the next - is one of the clearest indicators of financial health, but it is often the figure governors understand least.

Schools are generally expected to hold a general reserve, often cited in the region of 2-5% of budget, though the appropriate level varies by school size, risk profile and local authority or trust policy.

What to look for:

Whether the reserve level looks adequate for the school's size and risk exposure
Whether reserves are being drawn down to cover recurring costs - a sign that the budget is not really balanced, even if it looks balanced this year
Whether any reserve is earmarked for a specific purpose, such as a building project, rather than being freely available

Questions to ask:

What is our current reserves position, and how does it compare with last year?
Are we drawing on reserves to fund costs that recur every year?
Do we have a reserves policy, and does the current balance meet it?

The annual budget: what governors approve

Formally approving the annual budget is one of the governing board's clearest financial decisions - usually delegated to the full board or the finance committee, depending on the scheme of delegation.

Approving the budget properly requires more than agreeing a total figure. It means understanding the budget's structure, confirming that it is balanced (or has a credible plan to reach balance), and being satisfied that spending priorities reflect the school's development priorities.

What governors should look for:

Does the budget reflect the priorities in the school development plan, or has it been built in isolation from them?
Are there identifiable risks built into the assumptions - for example, pupil number projections or unconfirmed grant income?
Is the resulting reserves position acceptable, given the school's risk profile?

A budget that balances only because of optimistic assumptions is a different proposition from one that balances on solid ground. Governors should be told which it is.

Cashflow and in-year pressures

A school can be on budget overall and still face timing problems within the year - for example, a large invoice falling due before expected income arrives. This is a cashflow issue rather than a budget issue, and it is worth distinguishing the two.

What to look for:

Any in-year pressure that the headteacher or school business manager has flagged
Any request for emergency or unplanned spending that needs authorisation outside the normal cycle

Questions to ask:

Are there any cashflow issues the board needs to be aware of this term?
Is there any unplanned expenditure that needs our authorisation now, rather than waiting for the next scheduled meeting?

Pupil premium and ring-fenced funding

Pupil premium is one of the few funding streams where governors are explicitly expected to have oversight of both spend and impact, not just the amount received.

What to look for:

A pupil premium strategy that has been reviewed by governors and published as required
Spend tracked against the strategy through the year, not just reported once
Some evaluation of the impact that spend is having on outcomes for eligible pupils

Questions to ask:

How is our pupil premium allocation being spent this year?
What evidence do we have that this spending is making a difference?

The same discipline - publish a strategy, track spend, evaluate impact - is a useful model for any other ring-fenced or conditional funding the school receives.

What good financial scrutiny looks like in the minutes

The gap between "noted" and genuine oversight shows up most clearly in the minutes. A strong finance minute entry does not need to be long, but it should show that governors received the information, engaged with it, asked at least one substantive question, and recorded anything specific that followed.

Weak example:

The finance report was presented and noted.

Stronger example:

The SBM presented the Term 2 budget monitoring report, showing a GBP 4,200 in-year underspend, largely driven by a teaching vacancy from September to November. Governor J. Patel asked whether the vacancy saving would be offset by supply costs for the same period; the SBM confirmed supply costs were GBP 1,800 for the period and remained within the contingency line. The Chair asked whether the vacancy affected SEND provision; the headteacher confirmed cover arrangements were in place and the post had since been filled. No further action required.

The second version demonstrates the board actually did its job - and would stand up to scrutiny months later. See board minutes and inspection evidence for more on what strong minute-taking looks like across all governance areas, and the board meeting preparation checklist for getting financial papers ready in advance.

The finance committee: when and how it feeds the full board

Many governing boards delegate detailed financial scrutiny to a finance committee, which reviews budget monitoring reports, staffing costs and reserves in more depth than time allows at full board.

This works well only if the finance committee reports back properly. The full board should receive a summary of what the committee discussed and found - not simply be asked to approve the committee's minutes without discussion. Governors who are not on the finance committee still need enough information to ask questions and exercise their own judgement; approving delegated minutes without any summary or discussion is a governance gap in itself.

Common governor finance oversight gaps

Budget monitoring is not a standing item on the meeting agenda
The financial report is "noted" with no further detail recorded in the minutes
Staffing costs - the largest budget line - are not discussed despite being the area of greatest financial risk
Most governors do not know the school's current reserves position
Pupil premium spend and impact are not reported to the full board
Finance committee minutes are circulated but not summarised or discussed at full board

Reviewing this list against recent meeting records is a useful exercise for any governing board - and connects directly to the wider inspection readiness picture; see common inspection readiness gaps in schools.

FAQs

Do governors need a finance or accounting background? No. Governors need enough understanding to ask informed questions and interpret answers, not to prepare financial statements. The school business manager or finance officer provides the technical detail; governors provide independent scrutiny.

How often should the governing board review budget monitoring reports? Most boards review a budget monitoring report at every full board or finance committee meeting - typically termly at minimum, though many review monthly or each half-term, particularly where a finance committee meets more frequently.

What is an acceptable level of reserves for a school? There is no single fixed figure, and it varies by school size, risk profile, and local authority or trust policy. Governors should ask what their reserves policy specifies and whether current balances meet it, rather than relying on a generic percentage.

What should governors do if they do not understand a figure in the report? Ask. A governing board that asks the school business manager or headteacher to explain a figure in plain terms is doing exactly what financial oversight requires. There is no such thing as a question that is "too basic" when it comes to financial scrutiny.

Is approving the finance committee's minutes enough oversight for the full board? Not on its own. The full board should receive a summary of what the finance committee found and discussed, with an opportunity to ask questions, rather than simply ratifying committee minutes without further engagement.

How Edvance helps

Financial oversight is only as strong as the record of it. Edvance helps governing boards maintain governance records that clearly show financial scrutiny took place - budget monitoring discussed and questioned, finance decisions recorded with context, and approval trails complete - so that oversight is visible in the minutes, not just assumed. Book a governance readiness demo to see how Edvance supports governing boards in building a financial governance evidence trail that is board-ready and inspection-ready.

This article provides general governance guidance for governors of UK maintained schools and academies. It does not constitute financial advice. Governors should always work with their school business manager, finance officer or external finance advisers for specific financial decisions, and should refer to current DfE and, where applicable, ESFA guidance for their school type.

Frequently Asked Questions

Do governors need a finance or accounting background?

No. Governors need enough understanding to ask informed questions and interpret answers, not to prepare financial statements. The school business manager or finance officer provides the technical detail.

How often should the governing board review budget monitoring reports?

Most boards review a budget monitoring report at every full board or finance committee meeting - typically termly at minimum, though many review monthly or each half-term.

What is an acceptable level of reserves for a school?

There is no single fixed figure, and it varies by school size, risk profile, and local authority or trust policy. Governors should ask what their reserves policy specifies and whether current balances meet it.

What should governors do if they do not understand a figure in the report?

Ask. A governing board that asks the school business manager or headteacher to explain a figure in plain terms is doing exactly what financial oversight requires.

Is approving the finance committee's minutes enough oversight for the full board?

Not on its own. The full board should receive a summary of what the finance committee found and discussed, with an opportunity to ask questions.