This study sets out to examine the relationship, if any, between the decentralization of funding for schools and the prevalence of corruption and fraud. It is based upon work carried out in four countries: Australia (the State of Victoria), the United Kingdom (specifically England), Poland (with particular reference to two cities) and Brazil (focusing on one state, Rio Grande do Sul). The report starts by defining what is meant by "formula funding of schools" and summarizes the key principles of self-management that are essential elements in recent trends in education finance. The introduction attempts to define "corruption" in the educational context, and the authors suggest how, in theory, formula funding and school self-management should reduce the likelihood of corruption occurring. The study's questionnaire and e-mail debate is then explained in more detail. A summary of the way in which schools are funded in each of the subject countries is given in Chapter 1. Chapter 2 examines each of the study areas in detail, bringing together the responses from each country. Chapter 3, on transparency, considers the extent to which stakeholders can understand the basis on which money is allocated to their individual establishment and how it is used. Chapter 4 discusses the importance of accurate collection and external verification of data. Chapter 5 covers measures taken within the school setting to ensure that finance is not deflected from its proper use. Chapter 6 discusses auditing procedures at various levels. Chapter 7 offers examples of fraud that has occurred despite procedures designed to deter it. Chapter 8 highlights the different but equally valid ways in which each of the countries under study are addressing the issue of corruption. The following are appended: (1) Background to the Case Study Countries; (2) Questionnaire; (3) Poland: Ministry of Education Formulae for Allocating Subventions to Local Authorities for Educational Expenditure; (4) Formulae for Allocation of Funds to Individual Schools in Victoria; (5) The School Financial Calendar in Victoria; (6) Cambridgeshire County Council--Financial Regulations for Schools; and (7) Consistent Financial Reporting-- the Principles behind the New Budget Headings. (Contains 5 tables and 1 footnote.) [Country case studies written by Brian Caldwell, David Gurr, Jim Spinks, Peter Downes, Jan Herczynski, Maria-Beatriz Luce, and Nalu Farenzena.]