In the Schools Act No. 84 of 1996 school governing bodies are mandated to manage the funds of schools. The Act also provides guidelines for the school governing body and the principal on their roles and responsibilities in managing the finances of the school. However, some members of school governing bodies and principals either have little knowledge of the Schools Act or simply interpret it incorrectly, which results in many schools experiencing financial mismanagement. Although the provincial department of education provides financial management training for school governing bodies, many schools still encounter problems in this area. When financial problems are referred to the department of education, many remain unresolved. The purpose of the study was to determine the perceptions of stakeholders on the financial functions of school governing bodies, to explore the functions of a school governing body in managing a school's finances and, based on the findings of the research, to develop guidelines for principals and school governing bodies to enable them to manage their school funds efficiently and effectively. The research design was based on qualitative research because of its exploratory, descriptive and contextual nature. The collection of the data was done by means of focus group interviews. Themes forthcoming from the study revealed a misconception amongst various stakeholders regarding the functions of the school governing body in managing the school's funds.