Finance Management in Education

MGT202

Lecture # 02
Financial Management in Education

Muhammad Toseef Aslam

M.B.I.T (Finance), MSBA
 Why
Financial Management
in Education?
 Financial Management in Education

Definitions of FM in business and commerce

cannot be applied in their entirety to FM in
education.
FM in education applies both at the level of
an education authority and at the level of
individual schools and colleges
An integral part of general educational
management
However, for the managers of schools and
colleges, the main focus of Financial Management
of the delegated budget will be internal
management (the tasks of planning and control)
rather than the stewardship functions (i.e. legal
and external requirements) of accountancy. Hence,
school and college managers will be more
concerned with drawing upon relevant techniques
from management accounting rather than those of
stewardship accounting.
(Levacic, 1989)
 Financial Management in Education

Practical meaning of FM varies in different

educational systems depending on the degree
of financial autonomy granted:
to the educational authority, and
by the educational authority to individual
schools and colleges.
 USA View of FM Role of Education Authority

Financial Management involves dealing with problems

relating to receiving the maximum revenue available to the
school district, safeguarding all financial resources and
controlling expenditures and financial commitments
throughout the fiscal period as directed by the budget
adopted by the board of education. School business
administrators are employees of the school district who,
therefore, are primarily responsible for operating the school
system within its financial resources as directed by policies of
the board of education.
(Tidwell, 1986)
 Financial Goals & Activities

Availability
To ensure liquidity (cash availability) to meet
daily needs and to increase cash available for
investment purpose.
Yield
To earn the maximum return on cash invested
Safety
To protect the assets of the school district against
loss
 Cash Management
The conversion of accounts receivable to
cash receipts
The conversion of accounts payable to cash
disbursement
The rate at which cash disbursements clear
the bank
Maximizing the utilization of cash
 Concluding Point

Financial Management is essentially a part

of the general management function and
covers a much wider range of activities than
the more mechanical function of accounting.
 Quick Recap

Why Financial Management in Education?

Financial Management in Education
Financial Goals & Activities
Cash Management
Main Point (Conclusion of the Discussion)
 Precap

Lesson # 03
Characteristics of
Financial Management
in Education
Thank you very much

Take Care!