Transcript Slide 1

CONCEPT, THEORY, AND MODEL IN
FINANCIAL MANAGEMENT OF EDUCATION
INSTITUTION
Definition and characteristics of financial management
Elements in financial management
Basic concepts and terms in financial management
Theory and model related to financial management
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CONCEPT OF
FINANCIAL MANAGEMENT
management activity that is concerned with
decisions on how to procure funds, of an
organization's financial resources, disburse and
give account of funds provided for the
implementation of educational programmes.
• Pengurusan kewangan dalam pendidikan adalah
berkaitan dengan pengagihan dan penggunaan
sumber kewangan oleh institusi pendidikan bagi
memenuhi tujuan penyediaan perkhidmatan
pendidikan dan pencapaian kejayaan pelajar.
(Odden & Picus, 2004).
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THE PURPOSE OF FINANCIAL MANAGEMENT
IN EDUCATION
1. The funds are utilized in the most effective
and efficient manner.
2. To assist educational managers and
administrators to keep a record of their
stewardship in financial matters.
3. Supervision of cash receipts and payments
and safe guarding of cash balance.
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School business administration contributes to teaching
and learning by providing information and services that
speak to questions such as:
1. What are educational needs that have business
implications?
2. What are the nature and cost of each feasible
alternative to meet a given educational need?
3. What is the most efficient means to provide each
alternative?
4. What is the cost-effectiveness of each alternative (to
what extent does each alternative meet the
educational need, and how does this equate to the
expenditure involved)?
5. What is the relative priority of each expenditure
decision to all of the other expenditure decisions in
the school system?
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EDUCATIONAL FINANCE
education finance as the process by which tax
revenues and other resources are derived for
the establishment and operation of educational
institutions as well as the process by which
these resources are allocated to institutions in
different geographical areas. (Ogbonnaya, 2000)
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THE ROLE OF ECONOMICS
IN EDUCATION POLICY RESEARCH
(BREWER ET AL, IN LADD & FISKE, 2008)
Economists are interested in how society organizes and
uses resources to produce various types of knowledge
and skills through formal schooling and distributes them
to various groups in society.
Economics is a framework for helping understand the
behavior of individuals and organizations in allocating
resources
1. How much education should an individual acquire?
2. How should education be produced and allocated by
a society?
3. Can we be more efficient in organizing the
production of education?
COMPONENTS IN FINANCIAL MANAGEMENT
(Garner 2004)
1.
2.
3.
4.
Management structure
Programs, services and institution activities
Budgeting
Financial system that manage budgeting and
accounting
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FINANCIAL MANAGEMENT OF
PUBLIC SCHOOLS IN MALAYSIA
1. Entities involved (Malaysia Treasury, Accounting General
Department, National Audit Department, Financial Division
Ministry of Education)
2. Activities in managing school finance
3. School organizational structures related to school finance
(PTj, committee of school finance)
4. Concept of public financial management
5. Financial regulations
3 ACTIVITIES IN FINANCIAL MANAGEMENT
FOR EDUCATION INSTITUTIONS
1. Obtained financial resources
a.
b.
Budgeting administration
Generating income
2. Implementing educational programs/projects/activities
a.
b.
c.
Procurement
Payrolls
Managing asets
3. Controlling financial resources
a.
b.
c.
d.
Managing cash and debts
Preparing financial reports
Disposal, Loss, and write-of,
Auditing
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SCOPE OF PUBLIC FINANCIAL
MANAGEMENT IN MALAYSIA
1. Expenditure management
2. Accounting management
3. Revenue collection and deferred revenue
management
4. Supplies and asset management
5. Preparation and presentation of financial
report and annual report for federal
statutory body
EVALUATION IN FINANCIAL
MANAGEMENT
1. Cost-benefit analysis
The process of weighing the total expected costs vs.
the total expected benefits of one or more actions
in order to choose the most profitable option
2. Cost-effectiveness
Cost-effectiveness relates effectiveness to the cost
incurred – greater effectiveness for the same or low
additional cost, or the same effectiveness at lower
cost.
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ISSUES IN SCHOOL FINANCE
• Discuss in a group, identify main problems in
financial management at your school.
• Explain the impact of the problems on teaching
and learning proses for your school.
• Elaborate steps need to be taken to rectify the
problems
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5 CONCEPTS OF COST
1.
2.
3.
4.
5.
The nature of costs
Costing
Opportunity cost
Cost classification
Cost characteristics of school
COST CLASSIFICATION
Cost information needs to be organised into a
pattern before significance can be read into it.
a. Direct and indirect costs
b. Prime and subsidiary costs
c. Variable and fixed costs
d. Controllable, sunk, and idle costs
e. Unit costs
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• Variable and fixed costs
• Controllable, sunk and idle costs
• Unit costs
• Unit cost of education
COST CHARACTERISTICS OF SCHOOL
(KNIGHT, 1993)
1. Most schools are ‘non-profit’ organisations.
2. Schools are service organisations and perform a social
as well as an economic function.
3. School cost structure are very stable
4. Schools work within a very slow cycle.
5. School unit costs tend to rise when education become
more technical and science-centred.
6. Schools are very labour-intensive
7. School calendar cause high costs
8. Schools are constrained by legislation, regulations,
policies and attitudes that have often developed
without consideration for costs, and yet which
considerably affect them.
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6 KEY CONCEPTS FOR EFFECTIVE FINANCIAL
MANAGEMENT (Knight, 1993)
1.
2.
3.
4.
5.
6.
Economy
Efficiency, cost-efficiency
Effectiveness, cost effectiveness
Cost/benefit analysis
Productivity
Value for money
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• Cost-efficiency
• Effectiveness
• Cost-effectiveness
• Cost / benefit analysis
• Productivity
• Value for money