Part 6: The financial management of Māori immersion schools

6.1
In this Part, we provide the findings of our review of financial management in kura kaupapa Māori (Māori immersion schools), where most or all of the teaching is conducted in te reo Māori.

6.2
Some people refer to kura kaupapa Māori teaching years 1 to 8 as "kura" and to those schools teaching above year 8 as "wharekura". We use kura to refer to both types of Māori immersion school.

6.3
Overall, most kura had good policies and processes in place to manage their finances, comply with the law, and appropriately manage sensitive expenditure and conflicts of interest. However, the policies and practices in a significant minority of kura did not reflect the good practice set out in the guidance that the Ministry of Education (the Ministry) has provided to schools.

Financial management

6.4
Most kura (90%) had adequate budgetary control systems, but 41% recorded a deficit for the year. Half of the kura recorded a result that differed from their budget by more than $25,000. In some kura, variances were much greater. For example, one kura had budgeted for a $34,000 deficit but recorded an actual deficit of $158,000.

6.5
The financial understanding, policies, and controls of many kura were less than appropriate. Our appointed auditors considered that 17% of kura boards of trustees (boards) and 16% of kura principals did not adequately understand financial management, 16% of kura did not have sound financial policies, and 29% of kura had significant deficiencies in their financial controls.

Complying with the law

6.6
One-third of kura did not comply with all the legal requirements expected of them. The most common problem (noted in 18% of kura) was giving financial advances to school staff. An advance to staff is considered to be a security, and section 73 of the Education Act 1989 (the Act) prevents schools from acquiring securities unless they have ministerial approval. Advances to staff are undesirable. If loans are not repaid, they could lead to losses for the school and can add unnecessary complications to the relationship with the employee.

Sensitive expenditure policies

6.7
We noted that 15% of kura did not have a sensitive expenditure policy. A further 13% of kura lacked policies to adequately address gifts, travel, credit cards, and entertainment.

Managing conflicts of interest

6.8
Given the relatively few students and isolation of many kura, there is more potential for conflicts of interest arising at these schools than at other schools.

6.9
Many kura (72%) had employees who were close relatives of trustees. We consider that most conflicts of interest were dealt with appropriately. We have identified and highlighted conflicts of interest and the ways that boards have handled them.

Guidance from the Ministry of Education

6.10
We consider that the Financial Information for Schools Handbook (the Handbook) and the "Kiwi Park" examples available from the Ministry's website provide detailed guidance and examples to schools and encourage good practice in financial governance, management, and reporting.

6.11
Professional guidance and support is available for boards that need help or that the Ministry considers to be at risk.

6.12
In our view, the information provided by the Ministry should be enough for kura to be aware of, and meet, their responsibilities to comply with the law and manage finances, sensitive spending, and conflicts of interests. The Ministry told us that it has been revising the model financial management policies it makes available to schools. The revised guidance, which the Ministry plans to publish in December 2011, will include more detailed guidance about sensitive expenditure and delegations.

6.13
The Ministry is also reviewing the Handbook to more clearly and explicitly link the information about financial advances to staff to the raising securities provisions in the legislation.

6.14
We recommend that the Ministry monitor the effectiveness of, and compliance with, its guidance in kura and other small schools, and, if necessary, produce more targeted guidance.

Background

6.15
Kura kaupapa Māori are state schools established under section 155 of the Act.²⁹ Schools designated as kura kaupapa Māori adhere to a particular philosophy known as Te Aho Matua, which sets out an approach to teaching and learning. Māori values, beliefs, and customs underpin Te Aho Matua.

6.16
The first kura opened in 1985. It operated as a private school until 1989, when the Act was amended to permit the establishment of kura kaupapa Māori state schools. At 1 July 2009, there were 72 kura.

6.17
Kura tend to be small, with an average roll of 80 students. The number of students ranges from nine to 388 (see Figure 20).

Figure 20
Number of students enrolled at kura

Number of students enrolled	Number of kura
Fewer than 50	22
50-100	27
More than 100	21

Accountability and funding arrangements

6.18
The Act prescribes the process for establishing kura. Like other state schools, kura are governed by boards of trustees (boards) and managed by principals. Each kura also has specific governance mechanisms and a constitution that are meant to ensure that the community is fully involved in its governance and operation.

6.19
Kura are subject to the same accountability requirements that govern all other state schools. For example, they are required to prepare a school charter and to prepare and have audited annual financial statements. The Auditor-General appoints the auditors of all kura.

6.20
Kura are funded in the same way as all other state schools. In line with government policies, funding is based on roll numbers and the school's decile rating. Kura receive extra money to fund the higher costs of teaching in te reo Māori.

Why we did this review

6.21
In 2002, the ERO reviewed the performance of kura.³⁰ The review concluded that many kura need to improve aspects of their practices, including their teaching practices. Serious deficiencies in effective systems for financial and asset management were noted in one-third of kura.

6.22
After the 2002 ERO report, we identified some common issues in our audits of the annual financial statements of kura. We described the settings in which kura operated and identified these common themes in our 2009 report, Central government: Results of the 2008/09 audits.

6.23
These common themes identified in our 2009 report included the need for:

• more financial governance and management expertise;
• preparing timely annual financial statements for audit;
• keeping adequate accounting records;
• adequately disclosing related party transactions in financial statements;
• effectively identifying and managing conflicts of interest;
• developing and implementing sound governance and operating policies that ensure the probity of decision-making and public expenditure; and
• approving any additional remuneration for principals and teaching staff.

6.24
In our 2009 report, we noted that we were completing our 2009 annual audit of all schools, including kura, and we would be considering what further work we might carry out to address these common themes.

How we carried out this review

6.25
We asked our appointed auditors to complete a questionnaire addressing the kura's performance during the financial year.

6.26
From the responses to these questionnaires, we identified four aspects where performance could be improved. These were:

• financial management;
• complying with the law;
• sensitive expenditure policies; and
• managing conflicts of interest.

6.27
We then examined the financial statements for 2010 of kura and reviewed the audit reports completed for each kura. At the time of writing, we had received financial statements and audit reports for 70 kura. Because of the Canterbury earthquakes, the audits of the two kura in Canterbury had not been completed and could not be assessed. Another kura had to be assessed on its 2009 audit because its 2010 audit had not been completed.

What we expect of kura

6.28
The Ministry has provided schools with detailed guidance and examples in the Handbook that set out good practice in financial governance, financial management, and financial reporting. This guidance includes reference to examples of financial policies that include: a credit card policy, entertainment policy, gift policy, and a travel policy.

6.29
The Ministry has also provided conflict of interest advice for schools and school employees on its website.³¹ This guidance includes reference to our guidance on conflicts of interest.³²

6.30
In carrying out our review of kura, we assessed how well each kura was complying with good practice. We were not looking for specific systems and policies within the kura, recognising that the systems and policies would be tailored to address the types and complexity of transactions that each kura carries out and the staff resources available.

6.31
Resourcing restraints can make it difficult for small schools to achieve good practice, but it is possible. Our review established that some kura were doing this well.

Financial management

Roles and responsibilities at kura

6.32
School boards are responsible for the financial governance of the school. This governance role includes establishing and maintaining financial policies, setting the strategic direction for the school, and allocating resources to achieve the school's goals. Every board must establish and maintain appropriate financial policies and understand significant financial information about their school.

6.33
Overall, boards and principals in most kura adequately understand financial management matters.

6.34
Twelve of the 64 boards (six kura had commissioners appointed) did not adequately understand financial management matters. We expect all boards to have at least one member who adequately understands financial management matters.

6.35
Boards usually delegate the day-to-day financial management of schools to principals.

6.36
Principals are responsible for monitoring and controlling spending to ensure that money is spent carefully on the school's priorities as planned and budgeted. Principals are to report regularly to the board and prepare audited financial reports.

6.37
In our view, 11 of the 70 principals did not adequately understand financial management matters. In nine kura, neither the board nor the principal adequately understood financial management matters. We looked at the financial results that these kura recorded.

6.38
In five of the nine kura, the kura had recorded an operating deficit for the year. Having a budget deficit might be appropriate in some circumstances, but in two of the five kura the deficit was much higher than the board had planned. In one of the kura, the board had planned for a $37,000 surplus and recorded a $39,000 loss. A similar loss had been recorded the previous year and the working capital³³ and equity in the kura are at a level where another loss of this magnitude could place the kura in financial difficulty. The other three of the five kura were in a much healthier financial situation. Although the deficits were higher than budgeted, the kura had a healthy working capital surplus and equity.

6.39
In another of the nine kura, the kura had incurred an operating deficit of more than $85,000 and this resulted in a working capital deficit. The three remaining kura had operating surpluses of $35,000, $62,000, and $73,000, respectively.

6.40
Principals can delegate financial management tasks to school employees and can also pay for external accounting services. However, principals retain full responsibility for the financial records and reporting.

6.41
Only four kura had not used a financial service provider. In these four kura, we considered that the board and the principal adequately understood financial management matters. We noted that two out of the four schools had recorded deficits for the year. However, only one of these two might face financial difficulty. This school incurred a $87,582 deficit for the year and its working capital was only $67,246. Another deficit this large would place the school in financial difficulty.

Quality of budgeting

6.42
A budget is an estimate of costs, revenue, and resources for a specified period, reflecting managers' reading of future financial conditions. This important management tool serves as:

• a plan of action for achieving quantified objectives;
• a standard for measuring performance; and
• a device for coping with foreseeable adverse situations.

6.43
Seven of the 70 kura did not have reasonable budgetary control. Four of these kura had fewer than 50 students. Two had 50-100 students and one had more than 100. In six of these seven kura, the board and/or principal lacked a reasonable understanding of the school's finances. Five of the seven had recorded deficits for the year and two had significant surpluses (of more than $100,000).

6.44
In our view, schools should make a small operating surplus each year, so that funds can be put aside for larger items such as replacing assets, and to pay for unexpected expenses. A good example is one kura that maintained a healthy financial position despite reporting a deficit. For years, this school had recorded surpluses in case this deficit situation occurred.

6.45
An operating deficit for one year might be planned for a specific purpose, such as to address a particular educational need within the school. This is a useful way of using surpluses that have been accumulated in previous years and means that the school will have cash reserves set aside for the planned purpose.

6.46
Ongoing operating deficits can indicate financial difficulty. They will progressively deplete any reserves that the school might have and put the school at risk of not being able to pay its bills. This means that the school needs to reduce its expenses or increase its income (or both) to make ends meet.

6.47
When we analysed the financial results for 2010, we noted that 29 of the 70 kura had recorded deficits. Fourteen of the 29 kura recorded deficits of less than $20,000, four were in the $50,000 to $100,000 range, and two kura recorded deficits of more than $100,000. One of these schools budgeted for a deficit of $34,000 but the actual deficit was $158,000. In three of the last four years, the school posted a deficit of more than $155,000.

6.48
Forty-one kura recorded surpluses. The largest surplus was nearly $700,000. Three more kura recorded surpluses of more than $200,000 and nine further kura recorded surpluses of more than $100,000. In one of these schools, the surplus was because local fundraising brought in $100,000 more than what had been budgeted. The kura that had the surplus of nearly $700,000 did so with more than $600,000 of fundraising.

6.49
Of the 70 kura, 38 recorded a result that differed from the budget by more than $25,000.

Financial records and internal control

6.50
Internal control refers to the set of policies, procedures, and systems that an organisation uses to safeguard its resources. These can range from requiring two signatures on a cheque to having a computerised purchasing and accounting system that separates ordering, approving, receipting, and paying for purchases.

6.51
Every principal has a responsibility to maintain sound financial systems, understand significant financial information about their school, and provide appropriate reporting.

6.52
In our view, 11 of the 70 kura did not have sound financial policies. In six of these schools the board and/or principal lacked an understanding of financial management matters. One of the six recorded large deficits for the year and were in a negative working capital situation (that is, they did not have enough liquid assets on hand to meet their current liabilities).

6.53
The auditors we appoint prepare management letters after each year's audit to help kura improve and strengthen their systems of internal control. We note that 25 of the 70 kura did not resolve significant problems noted in the previous year's management letters.

6.54
More than three-quarters of kura have fewer than 100 pupils. Staff are often required to carry out several roles. This can make it easier for dishonest behaviour to occur without detection. The appointed auditors noted in their management letters that 20 of the 70 kura (29%) had significant deficiencies in financial control. This is a concern.

6.55
Kura can improve how they segregate duties. In one management letter, the auditor noted that the person responsible for opening mail receipted the money that came in and did the banking. The auditor recommended that these duties be separated. In another management letter, the auditor recommended that the school introduce better separation of duties between receipting and recording of local funds.

6.56
The auditors were unable to locate invoices to support some of the payments made. A lack of supporting documents was a theme in some kura, even though management letters had highlighted a problem with approving the payment of invoices. In some kura, the evidence of approval for payments was not available. Our auditors found that not all cash that the schools received was banked, and the money used for small purchases was not always recorded nor approved.

Annual financial reports

6.57
In 68 of the 70 kura, the standard of financial reporting was reasonable (that is, the financial statements were of the standard that the auditors had expected).

Complying with the law

6.58
Of the 70 kura, 24 had breached the law during 2010. The most common breach of law was for giving advances to staff, which breaches section 73 of the Act. There have also been breaches of sections 87(2)(e), 89, 103(3), and 103A , which we discuss below.

Loans to staff

6.59
Section 73 of the Act places restrictions on the acquisition of securities by schools. School boards can only acquire a debt security nominated in New Zealand dollars that is issued by a registered bank, or by any other entity, a public security, or where approval is given jointly by the Minister of Education and the Minister of Finance.

6.60
Our view, and that of the Ministry of Education, is that an advance of wages to a staff member is a loan. This is an investment which, under the Act, needs the approval of both the Minister of Education and the Minister of Finance.

6.61
Fourteen kura breached section 73, and of these 13 were breaches by providing advances to employees. This high proportion indicates a lack of understanding of the legislation. None of the advances had the required approval of the Ministers.

6.62
We consider such loans undesirable because they could lead to losses for the kura if the amounts are not repaid. The loans also add unnecessary complications to the employer/employee relationship.

6.63
In one kura, some of money still owed to the kura was paid to the staff member before 1 January 2007. One kura has $6,000 outstanding from advances to staff in 2009. Another kura was forced to write off almost $7,000 that had not been repaid.

6.64
The Ministry's website provides information about section 73 to help school boards, and the Handbook discusses loans to staff in section 3.3.16. This section makes it clear that unapproved loans to staff are illegal.

6.65
Securities are covered by section 3.3.19 of the Handbook, which explains what a security is and what the approved securities are. The explanation of security in the Handbook includes a loan, but does not specifically identify advancing wages to staff as a security and does not refer to section 73.

6.66
Given the number of breaches of section 73, we consider that the Ministry needs to clarify the guidance it provides about advances to staff and securities. The Ministry told us that it will review the Handbook to clarify the link between financial advances to staff and the wording in the legislation about raising securities.

Local payments to staff

6.67
Two kura boards have failed to comply with section 89(2) of the Act because they paid teachers directly. Section 89(2) of the Act states that "unless authorised by the Secretary not to do so, every board shall use the payroll service for the calculation and payment of the salaries and wages of all employees of the board who are in the education service".

6.68
It also says that:

The Secretary shall ensure that there are established and maintained, within or on behalf of the Ministry, staff and facilities for, and sufficient for, servicing the payrolls of boards.

6.69
It is important that correct procedures are followed so that all kura spending can be properly accounted for. The Ministry pays teachers, and kura are not supposed to pay teachers directly.

Rules for board members

6.70
One kura was in breach of section 103(3) of the Act. In 2009 and 2010, a teacher who was also a parent of a pupil at the same school served on the board, along with the principal and the staff representative. Section 103(3) prevents a permanently appointed member of staff being elected to the board or being appointed or co-opted on to the board if they are not the staff representative. This rule is in place to prevent potential staff over-representation on the board.

6.71
If a person has an interest in contracts with the board that total more than $25,000 in a financial year, section 103A of the Act requires the Secretary for Education to approve the contracts. Without an approval, the board member will be disqualified.

6.72
At one kura, a board member was the owner/operator of a bus company that had service contracts with the school. These contracts were for more than $25,000 a year but Ministry approval was not obtained. The board has taken steps to rectify the breach, and the kura disclosed the breach in its 2010 annual report.

Sensitive expenditure policies

6.73
Fifteen of the 70 kura (21%) needed to improve their probity or sensitive expenditure practices. The main concerns were:

• cash cheques that were not supported by an invoice or a receipt from the recipient of the money;
• no policy about significant payments towards school trips (this included overseas travel); and
• payments for principals' and parents' spending on privately owned assets.

6.74
Nine of the 70 schools lacked a sensitive expenditure policy. One management letter to the board of a kura stated:

We noted the school does not have documented policies and procedures for dealing with expenditure of a sensitive nature. These include expenses relating to travel, credit cards, entertainment and gifts. It is essential to have a policy relating to sensitive expenditure to ensure school funds are used for appropriate purposes.

6.75
A further eight kura (11%) lacked policies for gifts, travel, credit cards, and entertainment. In one management letter to a kura, the auditor noted that:

Having such a policy would provide clear guidance on the classification and treatment of transactions relating to these categories.

6.76
The Ministry's website and Handbook each have a section on probity, which addresses the importance of boards being accountable for all expenditure. The section states that boards "should not spend money on transactions or activities that are extravagant or wasteful, but only approve spending that is appropriate and necessary for the effective operation of the school". The website gives examples of inappropriate spending and the factors that the board needs to consider before approving spending.

6.77
The Handbook and website have examples of sensitive expenditure, entertainment, travel, and credit card policies. The Ministry told us that it is revising the model financial policies that it makes available to schools. The revised model policies will provide more detailed guidance about sensitive expenditure and financial delegations.

6.78
The policy examples provided on the website are based on a fictional school called Kiwi Park. These examples are clear and easy to understand and can be easily adjusted and applied to other schools. The example policy for sensitive expenditure sets out the reasons for the policy and when it applies. The policy outlines the principles and questions that need to be taken into account before authorising spending.

6.79
The example policy for credit card expenditure sets out the reasons for the policy, the process for issuing credit cards, procedures to be followed when using the cards, discretionary benefits, and cardholder responsibility. These explanations are clear and should be easy for any school to follow.

6.80
One kura paid for some of the travel costs and accommodation costs for its principal and the principal's daughter to help with their attendance at the World Waka Ama championships in New Caledonia. The auditor reported to the school that "we are concerned how this type of assistance would be seen by members of the general public and whether it would be considered appropriate use of public funds". A sensitive expenditure policy might have helped this kura better decide on the appropriateness of this spending.

6.81
The auditor of another kura found that cash was often provided to teachers and parents responsible for school trips. No documented evidence was produced to justify this and the money was distributed to teachers and parents inconsistently.

Managing conflicts of interest

6.82
Every member or official of a public entity has professional and personal interests and roles. Conflicts of interest sometimes cannot be avoided, and can arise without anyone being at fault. Conflicts need not cause problems when they are promptly disclosed and well managed. Given the close community nature of kura, conflicts of interest are likely to occur regularly.

6.83
Our 2007 good practice guide, Managing conflicts of interest: Guidance for public entities, stated that there is a conflict of interest where:

… a member's or official's duties and responsibilities to a public entity could be affected by some other interest or duty that the member or official may have.

6.84
Another way to consider whether there is a conflict of interest is to ask: Does the trustee's other interest create an incentive for them to act in a way that might not be in the best interests of the kura?

6.85
It is not enough to consider the possibility of financial loss or other direct disadvantage to the kura. Sometimes, there is a risk that a trustee could:

• use publicly funded resources or time to advance their own interests; or
• be influenced in their decision-making by a sense of loyalty or obligation to someone else, or by an unduly fixed view.

6.86
The Ministry has summarised the main points of our 2007 good practice guide and provides guidance for all state and state-integrated schools. This guidance, available on the Ministry's website and in its Handbook, clearly sets out the nature of conflicts of interests, and information on dealing with conflicts of interest and policies and procedures that can be applied. This applies to trustees and staff.

6.87
The Handbook describes a situation where a trustee has an interest that conflicts (or might conflict, or might be perceived to conflict) with the interests of the board. The interest can relate to money or any other potential benefit. The Handbook states that the question to ask when considering whether an interest might create a conflict is:

Does the interest have the potential to create an incentive for the trustee to act in a way which might not be in the best interests of the school?

6.88
The Handbook identifies situations where trustees will need to assess the risk of a conflict of interest. These situations include:

• involvement in meetings where decisions are made about close relatives;
• principals or staff representatives attending meetings where any matter relating to their own employment is discussed;
• the student representative attending meetings where any matter relating to that student is discussed;
• where a trustee has a child at school, where any matter specifically involving that child is considered at the meeting; and
• where an appointed trustee faces a problem and the interests of the school diverge from the outside interests of the body that appointed the trustee.

6.89
If any of these situations exist, then there is a conflict of interest. A conflict of interest does not necessarily mean that a trustee has done anything wrong, or that the interests of the kura have suffered. The existence of the incentive is enough to create a conflict of interest. Whether or not the individual concerned would act on the incentive or allow it to influence their decision-making is irrelevant.

6.90
The Handbook identifies situations where a conflict can arise. It could be professional or family related, financial or non-financial, and direct or indirect.

Relationships

6.91
Given the special character of kura, we were not surprised to find that, of the 64 kura that had boards, 46 (72%) had employees who were close relatives of trustees. Related parties are required to be disclosed in annual accounts.

6.92
The Handbook identifies family relationships and existing professional and personal relationships as situations where a conflict of interest could occur.

6.93
Our 2007 good practice guide dealt with situations where relatives and close friends need to be considered. In general, we considered that, at least, the interests of any relative who lives with the member or official (or where one is otherwise dependent on the other) must be treated as being effectively an interest of the trustee.

6.94
In Māori culture, there is a broad concept of who is regarded as a family member or relative. Whether a person is considered a family member or relative depends on the closeness of the relationship and the degree to which the kura's decision or activity could directly affect the family member or relative. A relationship could become close because of the directness of the blood or marriage link, or because of the amount of association.

6.95
Our 2007 good practice guide noted that there are no clear rules, because these questions involve matters of degree, but it will usually be wise to not participate in decision-making if relatives are seriously affected. In our view, a conflict of interest issue will not often arise where the connection is simply that a person belongs to a trustee's or employee's iwi or hap . However, care must be taken.

6.96
In one kura, the principal and the office administrator were in a relationship and were authorising each other's reimbursements. This is a conflict of interest because the situation could create an incentive for the principal and the office administrator to act in ways that might not be in the best interests of the kura.

6.97
Some kura were handling conflicts of interest appropriately. For example, in one kura the principal's husband tendered for the contract to paint the school's fence. The school received three tenders. To ensure that the process was fair, and seen to be fair, the principal abstained from the vote and did not take part in discussions about the contract. The chosen tender was the lowest of the three.

6.98
In another positive example, the brother of a trustee at a kura worked for a firm that had tendered for a contract at the school. It was felt that the company he worked for covered all the board's requirements. The board minutes state that the board member concerned was not consulted because there would have been a conflict of interest.

Other interests

6.99
The Handbook identifies directorships or other employment, interests in business enterprises or professional practices, and share ownership as situations where a conflict of interest could arise.

6.100
In one kura, a conflict of interest occurred where the principal owned half of a business that provided services to the school. The principal left meetings when the business was discussed and returned when those discussions ended, and did not take part in decisions about the business the principal owned.

6.101
The Handbook identifies decisions that could benefit the decision-maker as a conflict of interest. At one kura, a board member worked as the school bus driver. We expect that, in situations where the school bus was discussed, he would excuse himself from the discussion.

6.102
The Handbook states that there is a conflict of interest where board members or principals have a beneficial interest in a trust and professional associations or relationships with organisations such as appointing bodies. We did not identify any situations where this occurred in kura.

Policies and procedures

6.103
All kura should have policies and procedures to help them and their trustees to identify and deal with conflicts of interest.

6.104
Policies and procedures can provide clear rules for simple and predictable situations, and establish a process for dealing with more difficult ones.

6.105
Policies and procedures could:

• establish rules for the most important and obvious actions that people must or must not take;
• establish a mechanism for recording types of ongoing interests that commonly give rise to a conflict of interest, and a procedure for putting this mechanism into effect and regularly updating it;
• set out a process for identifying and disclosing instances of conflicts of interest as and when they arise (including a clear explanation of how a member or official should disclose a conflict of interest); and
• set out a process for managing conflicts of interest that arise (including who makes decisions, and perhaps detailing the principles, criteria, or options that will be considered).

6.106
Policies and procedures cannot be expected to anticipate every situation. Policies and procedures need to retain some flexibility for the exercise of judgement in individual cases. A policy should not state or suggest that the specific situations it covers are an exhaustive list.

6.107
We identified that about 20% of the audited kura did not have a reliable system for identifying conflicts of interest. We asked for further information about what the schools did to identify a conflict of interest and how they managed the conflicts of interest that arose.

6.108
Some kura managed these situations well. In one kura, some school employees were close relatives of the principal. The school had a separate personnel subcommittee that made recruitment decisions. Affected personnel on this committee would be asked to "stand down" when decisions were made about employing any of their relatives.

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29: Our review did not include the character schools designated under section 156 that use the words kura or kaupapa in their name, nor the character schools designated under section 156 that are referred to as a kura ā-iwi.

30: Education Review Office (June 2002), The performance of Kura Kaupapa Māori, Wellington.

31: See www.minedu.govt.nz.

32: Controller and Auditor-General (2007), Managing conflicts of interest: Guidance for public entities, Wellington.

33: Working capital is a measure of an entity's short-term financial health. A negative working capital means that an entity is unable to meet its short-term liabilities with its current assets (cash, accounts receivable, and inventory).

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