Finance Management in Education

MGT202
Lecture # 04
How Adequate Are Current Financial
Management Systems?

Muhammad Toseef Aslam

M.B.I.T (Finance), MSBA
 Recap (Lecture # 03)
1. The secondary role of educational authorities in major
decisions on educational finance.
2. The high degree of centralization in the management of
educational finance.
3. Lags in the flow of money to users in the educational field.
4. Poor relations between the management side of
educational finance and the technical aspects of education.
5. The concern with financial inputs rather than with their
relation to educational outputs.
6. The domination of traditionalism and rigid formalism in
the management of educational finance.
7. The lack of efficient administrative personnel.
El-Ghannam (1970)
Financial Management System

The absence of effective financial

management can become an obstacle to
the optimum use of resources and may
thwart development of an entity.
 How to Improve Financial Management

In order to improve financial management, developing

countries must:
Develop effective accounting and auditing practices
Ensure the presence of skilled personnel to effectively
run their financial management systems
Develop a comprehensive and up-to-date training
program at both the national and regional level of the
developing countries
Increase their commitment to the realization of an
effective training development program and work more
closely with the internal donor community in this effort
US General Accounting Office (GOA)
 The link between planning and budgeting
processes is weak in many developing
countries and needs to be strengthened.
Successful working of program budgeting
calls for significant reforms in prevailing
accounting systems, training of officials in
the new skills and strong support from the
political and administrative leadership. The
developing countries should accord priority
to these measures.

( US GOA Report with approval from UN publication Report on Fourth Meeting of Experts on the UN Program in Public Administration and Finance )
Government accounting is still seen mainly as an
accountability device for public receipts and expenditures;
its evaluation, performance, measurement and managerial
function tend to be neglected. Accounting in the public
sector has, by and large, adhered to a book keeping or
administrative / legislative approach; the accounts are
generally kept according to the cash basis system rather
than the accrual system The amount of paperwork is vast,
but neither efficiency, accountability nor financial control is
improved budget items are rarely assessed from a
managerial (performance budget) point of view. A
tremendous gap might exist between budgetary estimates
and actual receipts or expenditures.

( US GOA Report with approval from UN study Government Accounting in Economic Development Management )
 Weaknesses in FM

Lack of integrated financial information

Incomplete and unreliable information
Extended reporting delays
Not synchronized with past and present accounting
data
Future requirements without projecting past data
No real comparison of planned and actual financial
performance
Shortage of trained financial managers
 Recap

Financial Management System

How to improve Financial Management

Quoted text from report

Weaknesses in Financial Management

 Precap

Lesson # 05
Budgeting and Budget Practices
 For any lecture-related question, use MDB forum.
For any comments/feedback, send an email at mgt202@vu.edu.pk

Thank you very much

Take Care!