ENSURING GOOD FINANCIAL ADMINISTRATION IN TERTIARY INSTITUTIONS Budgeting
ENSURING GOOD FINANCIAL ADMINISTRATION IN TERTIARY INSTITUTIONS
§ § Budgeting Sourcing of Funds Monitoring Expenditure Respecting the Time Lines 2
INTRODUCTION The role of Financial Administration in the operations of tertiary institutions In the tertiary education sector, Financial Administration encompasses the operation of the entire finance function which include the following: Planning for resource mobilization and uses; Exploring sources of revenue; The treasury function; 3
INTRODUCTION Managing and control over uses of financial resources including procurement; Accounting for use of financial resources. This involves recording and reporting; Provision of financial information for decision making. 4
THE SERIOUSNESS OF LACK OF FINANCIAL RESOURCES Quality is compromised �Integrity of certificates becomes suspect Job dissatisfaction for staff Deterioration and congestion facilities Access is restricted in 5
PLANNING FOR FINANCIAL ADMINISTRATION For the above reasons effective financial administration should include proper planning of financial resources and their uses. As this will ensure that financial resources are made available in the planned period as and when required in the right quantities. 6
The need for planning the financial resources should include the following: Resource Mobilization (Sourcing of Funds) (Sustainable Funding) Effectiveness and efficiency of the use of financial resources (Monitoring Expenditure) 7
The most common tool for planning of financial resources in the short term (normally one year) is the budget which is in the form of estimates of revenue and expenditure (projected cash flows) and the estimated assets and liabilities (balance sheet). (Budgeting) 8
THE USES OF THE BUDGET The following can be listed to be some of uses of the budget. Planning: this involves the blue print for the activities of the institutions and its attendant uses of financial resources for the financial year. Organization: this involves the strategic arrangements and coordination of operations to achieve set targets. 9
Mobilization: the budget details how required resources should be mobilized for the operations of the various cost centers of the institution. Control: the budget is normally used to aid control over the entire system of financial management especially the uses of financial resources. 10
Monitoring: it provides the facility for monitoring of operations to ensure that planned targets and procedures are not unnecessarily varied. Evaluation: the budget is usually used to appraise the performance of Managers. It is also used to evaluate the overall operations through variance analysis. Motivation: achieving set target in the budget provides in itself a motivation factor for managers of various units of the institutions. 11
Highlights of the Budget should contain the aspiration of the institution. Aspiration 50 45 40 35 30 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 12
The aspiration should include the following: Growth in student numbers Growth in resources available on sustainable basis Improvement in quality �Centre of excellence �Type of Teachers Improvement in Student-Teacher-Ratios (STRs) Opportunity for Post-graduate training Quality of research and publications Efficiency issues which should include Unit Cost, FTEs etc. 13
Participation in the planning and budgeting process Managers must participate in the preparation of the institutions Budget. This will involve goal setting and implementation. 14
How often does your institution go through planning and budgeting process? How much do the Heads of Department, Deans etc, participate in this activity? Determine the relevance of budget to the financial management of your institution. 15
Resource Mobilization – (Sourcing of Funds) (Sustainable Funding) Given the importance of financial resources to the operations of tertiary institutions and for that matter any organization, if the institutions are to remain going concerns and have to exist into the future it must receive revenue on sustainable basis. 16
Sources of Financial Resources There are four (4) major sources of Financial Resources for the University which are grouped under two main headings, namely: Public Funding Private Funding 17
Public Funding The first major source of revenue is Public Grants which comprise of the following: Government Grants �Personnel Emoluments �Administration �Service Activity Cost GETFund 18
Private Funding The second source is made of student fees, which are of several types and have been introduced in the past decade, in order to compensate for the shortage of funding received from the State budget 19
Students fees comprises the following: 2. 0 2. 1 2. 2 2. 3 Tuition & User Fees Academic Facility User Fees Residential Facility User Fees Non-Residential Facility User Fees 2. 4 Ghanaian Fee Paying Students (Tuition) International Students (Tuition) Part-Time Programmes Distance Learning Parallel Programmes 2. 5 2. 6 2. 7 2. 8 20
B 2 2. 10 Registrations/Admissions Charges 2. 11 Sale of Admission Forms 2. 12 Examination 2. 13 Sports 2. 14 Information & Communication Technology 2. 15 Matriculation /Student's Guide 2. 16 Health Care 2. 17 Library Levy 21
The third source of funding is termed Internally Generated Funds (IGFs) which forms part of Private Funding The University in exploring sources of funding have in the past commercialized some of its services in order to raise revenue to supplement dwindling revenue from the traditional sources. The commercialized units includes, Printing Press, Photocopy, Bookshop, Furniture making, products from their Farms, University Hospitals, Basic Schools and Consultancy Services. 22
The major areas of IGFs are the following: 3. 0 Investment Income 3. 1 Rent from Staff Bungalows 3. 2 Dividends 3. 3 Interest on Staff Loans 3. 4 Interest on Bank Deposits 3. 5 Private Patients at University Hospital 3. 6 Hire of Academic Costume 3. 7 Production Unit Activities/Consultancies 3. 8 Hire of University Facilities (Hall etc) 3. 9 Certificate/Transcripts 3. 10 Introductory Letters 3. 11 Guest Houses 23
Research/Project Funding The fourth source of revenue is research/project funding. Donor Agencies which are mainly foreign provide funding to specific approved projects. The staff of the Universities from time to time write proposals for research projects for the attention of these Agencies. These are strictly controlled and managed by the Donor Agencies. 24
Resources Utilization (Monitoring Expenditure) The use of financial resources must be done in such a way as to achieve the objectives set for the institution in order to ensure that the mission of the institution is attained. An effective control system should be provided to include the following among others. 25
The Regulatory Framework This refers to policy directives and regulations established for proper governance of the institutions and adequate controls to safeguard its assets. These include the following: The Act of Parliament establishing the institutions. Statutes developed by Council to provide operational directives. Various relevant Acts passed by Parliament 26
Examples �Public Procurement Act, 2003, (Act 663) �Financial Administration Act, 2003, (Act 654) �Internal Audit Agency Act, 2003, (Act 658) �Financial and stores regulations developed by Council. 27
Recording It is both a legal and institutional requirement that proper records are kept for transactions that involves the receipt and use of financial resources. Such records should allow for the following: analysis to provide information for management decision making; the preparation of financial statements for audit and accountability, and Proper storage of the records should be by an appropriate archival facility. 28
Procurement payment procedures and processes must be detailed enough without being unduly cumbersome. And this must comply with relevant laws of the country. Authorization with levels or threshold for responsible officials should be provided. 29
Custody The custody of the asset both moveable and immoveable are usually detailed in the relevant regulatory document. This is to avoid the misuse of the assets and misappropriation by staff placed in responsible positions. 30
Budgetary Control Since the budget is the blueprint for financial administration practices in the institutions on annual basis, it is important that it is monitored seriously to ensure that variances are very minimal and properly explained to avoid deviations. Variances must be analyzed to ensure correctional actions where necessary 31
Budgetary Control Extra budgeting items must be avoided as much as possible as it brings indiscipline in the system. To make this possible, Units and Departments should be provided with information on budget allocation. Expenditures must be properly committed. Balances must be regularly provided. Any possible overrun and virement of these budgeting allocations must be fully justified and properly authorized by the responsible official. 32
Internal Check This is to ensure that no single individual initiates and ends a process. Thus the work of every staff serves as a check on the work of others. The aim of this control is to prevent fraud through collusion and to detect errors easily and early. 33
Respecting the Time Lines Adequate planning Respecting the procedures (procurement and the internal administration) Proper authorization Proper threshold Appropriate channel 34
Respecting the Time Lines Proper documentations should be made Checking for availability of funds Request should be placed on time Inter personal/sections/departments/faculties/colleges communication improved should be 35
6. 0 Conclusion Effective financial management must therefore be the aim and concern of the governing body of the institution who should develop the regulatory framework for it, monitor to ensure compliance and demand financial reporting to ensure accountability. These are normally achieved through the work and report of Auditors both internal and external. 36
04/06/2021 Frederick Kwame Essien THANK YOU 37
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