HEADTEACHERS warned today that plans to make schools manage and record their spending better will engulf them in a new wave of paperwork.

The Audit Commission is proposing new financial controls, including annual internal audits, for every school following concerns that the present system is inadequate.

The commission believes governors do not have the expertise to ensure that schools stay in the black or that funds are properly spent. It concludes: “The current system does little to help achieve value for money.”

It wants to compel schools to hire internal auditors and issue more detailed accounts.

But David Hart, general secretary of the National Association of Head Teachers, said: “This is the wrong time to embark on yet more radical changes.”

And Roger Adcock, secretary of the National Governors Council, added: “This might be the last straw for governing bodies.”

The Department for Education and Employment, which asked the commission to draft the proposals, is aware they will cause controversy, create extra work for schools and cost up to pound;16 million.

But it said a new system was needed to reflect schools’ growing financial independence.

The move came as a teacher union warned that the pound;500 of unspent cash sitting in school bank accounts could rise to more than pound;750m.

The National Association of Schoolmasters Union of Women Teachers said new rules stated that schools would not have to explain bank balances of up to 5 per cent of their annual income. It believes schools should hold back only 1 to 1.5 per cent or else have to explain to parents what the money is being allocated for.

Brian Clegg, the union’s head of salaries and pensions, highlighted Mulberry high school in Tower Hamlets, London, as the school with the most cash in the bank - pound;1,098,432.

Based on 199899 statements, the union has calculated that primaries in the Neath Port Talbot education authority in Wales have pound;192 per pupil unspent, while the figure for Windsor and Maidenhead was pound;146.

Secondary schools in north-east Lincolnshire have reserves totalling pound;146 per pupil, those in St Helens pound;147, while the figure for Tower Hamlets schools is pound;126.

The NASUWT also revealed wild variations in the amount spent per pupil across 56 authorities. For example, Tower Hamlets spends pound;2,787 per primary pupil, but Hartlepool spends pound;1,295.

Mr Clegg said that this “lottery” was “totally unfair”.

The DFEE said it was sensible for schools to have “a small amount” in the bank for contingencies.