17115446 Topic 1 Theoretical Framework

Topic

1Theoretical Framework

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LEARNING OUTCOMESBy the end of this topic, you should be able to:

1. Identify the theory and concept of Financial Administration;

2. Distinguish models in Financial Administration;

3. Discuss Financial Administration in Malaysia;

4. Explain legal framework in Financial Administration;

5. State the principles of Financial Administration;

6. Decribe the delegation of Authority in Financial Administration; and

7. Explain the application of Financial Administration.

INTRODUCTION u

In education, school is an institution where !nancial administration is an important part of the management. The !nancial administration in education !eld must be managed according to legislation that has been provided by the ministry. It contains acts, laws, regulations, policies and circular so that it can be handled with integrity and accountability. To do this, school administrations have to prepare !nancial statements that must be managed and kept in proper order. This is because the problems continue to occur year after year and it will have an impact in the Auditor-Generals Report. In this topic, we should also be able to get an overview of basic fundamentals in !nancial administration. It needs to be acknowledged that there have been tremendous improvements in !nancial administration especially in the last few years.

1.1 BASIC THEORIES AND CONCEPTS IN FINANCIAL ADMINISTRATION

What do you understand about financial management?

Financial management is the word that we have heard often, but what does the term actually mean? Table 1.1 shows the de!nition of !nancial administration based on the views of some prominent writers.

2 u TOPIC 1 THEORETICAL FRAMEWORK

Table 1.1: De!nition of Financial Administration

Writers De!nitions

Scott, Martin, Petty & Keown (1999)

Financial administration is concerned with the maintenance and creation of economic value or wealth.

Dembowski, Frederick L.(1982)

Financial administration is the process of managing monies in order to ensure maximum cash availability and maximum yield on investment of cash.

Truman (1995) Financial administration is the process of how the government get the source of money and how it is spent.

Marianne Coleman & Lesley Anderson (2000)

Financial administration characterise the process of :

Planning;rImplementation; rCoordination;rControlling; rEvaluations of the !nances.r

Valente W. D. & Valente C. M (2001)

Financial administration is translated as the procedure or steps that show how money is managed ef!ciently.

Caldwell & Spinks (1998) Financial administration is utilised to the fullest potentials for the operation or program of the organisation.

Garner, C. W. (2004) Financial administration consist:

Budgeting management;rReceipts & collections management;rPurchasing and earning management; rExpenditures and payment management; rAccounting and auditing management;rAsset management.r

Guthrie, James, Walter Garms & Lawrence Pierce (1988)

Financial administration is concerned with four activities, that include :

Conversion of accounts receivable;rConversion of accounts payable to cash rdisbursements;

The rates at which cash disbursements clear the bank;rMaximising the consumption of cash. r

There are two types of organisations - one with !nancial goals while the other, without !nancial goals. In this case, school is a not-for-pro!t organisation which falls under the second category. This is because the core business of school is related to human development and not to reap pro!t. Financial pro!ts are generated in private sectors.

TOPIC 1 THEORETICAL FRAMEWORK t 3

Some of the most important non-!nancial goals include:

Promoting favourable business relations with vendors and banks; rEnsuring the orderly conduct of the !nancial aspects of organisations roperations;

Building trust and goodwill of the tax-paying community.r

To measure the relationship between private and public performances, refer to Figure 1.1 on page 4.

Figure 1.1: Organisation performance measurement

From your opinion, why should we manage our !nances? Some of the possible answers are:

Resources such as humans, money, things and time are limited;rRequest to that resource is not a limitation;rThere are alternatives of getting and using the resource;rFinancial management is the main component in the organisation; andrEconomical source cannot be moved without proper !nancial management.r

According to Dembowski F.L and Davey R.D (1986), the !nancial administrations must be developed by the following:

An interpretation by legal counsel on relevant federal and statutory guidelines rthat affect the operation of a !nancial administration program;

A written district policy approved by the board of education governing the rconduct of !nancial administration program; and

An on-going evaluation process that reviews progress throughout the !scal ryear and provides appropriate performance data.

Non-!nancial Performance Measures Financial Performance Measure


Figure 1.2: Sequence of statements for a strategic !nancial plan

1.2 MODELS OF FINANCIAL ADMINISTRATION

The preparation of a strategic !nancial plan for a school district requires the development of a series of policies, statements and plans that are linked together as shown in Figure 1.2.

The basis for districts mission continues with the goals that support the mission and follows the objectives that are aligned with goals.


According to Brian Knight (1993), the School Financial Administration Model has four major components. These are:

Financial resources; rHuman and physical resources;rTime utilisation; andrEducational process. r

For further information, see Figure 1.4.

The process of preparing a strategic !nancial plan for the school is presented in Figure 1.3. By referring to the school districts mission, goals and objectives, the site-based units in the district prepare their own goals, objectives and targets. When these occur, the goals and objectives for site based unit become subordinate to the district policies and organisational strategic themes are created.

Figure 1.3: Process for preparing strategic !nancial plans

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Model A: Rational Approach

Most of the school development plans produced worldwide by state or local educational departments and by individual schools follow a rational planning model. This suggests a cycle of analysis, goals, objectives, plans, resources, implementation, monitoring and evaluation. Figure 1.5 shows is a typical example of this process.

A global target may be achieved within a year but it may take three or four years to compare. However, the !ne details of a plan should only be determined for about a year ahead so that adjustments can be made if circumstances change. Subsidiary targets, shown as dots in Figure 1.6 indicates the concrete actions or practical steps which, if taken over the next few terms, should lead to realisation of the long term goals. Where work towards a global target is intended to continue beyond the end of the year, further sub-target can be determined as part of the next development plan, after an annual review of progress.

Student, parent andcommunity demands

ChangingPupil needs

LEA andnationalpolicies

Analysis

School andcommunity needs

Performanceindicators?

School review

Schoolcontext

Educationaltrends

School strengthsand weaknesses

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Plans

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Figure 1.5: Management processSource: Financial Management for Schools; Brian Knight, 1993


According to rational approaches as shown in Figure 1.7, it seems this approach does not re"ect the reality of school life. This is because:

Schools are not necessarily rational organisations;rRational planning implies a reasonably predictable and stable environment;rRational planning is only plan from the situations that you can only see; andrIt is best to use a straightforward and practical situation.r

Figure 1.6: School development plan modelSource: Bershire LEA, 1989

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Figure 1.7: Model A - Rational planning approachSource: Financial Management for Schools; Brian Knight, 1993


Model B: Pragmatic Approach

In pragmatic approach, the organisations evolutionary process is stressed. The development and innovation of an increasingly confused environment varies accordingly. We cannot plan for an unpredictable future. Planning must be a learning and responsive process. We must be able to learn to understand our changing environment and respond to it. This situation is illustrated in Figure 1.8.

In this approach also, we need a strong underlying sense of direction, core ethos of mission and values. This approach seems more realistic and practical to many schools in our current environment. It is "exible and it builds on existing strengths. It is suited to a complex process such as curriculum development.

Figure 1.8: Model B - Pragmatic planning approachSource: Financial Management for Schools; Brian Knight, 1993


Model C: Entrepreneurial Approach

Rational planning and small step advances are not the benchmarks of the manufacturer. Basically, the manufacturer is an exploiter of opportunity. So, the manufacturers planning requires a positive search for opportunities and the availability of resources to exploit them as they occur.

An example of this approach is given by Goodchild and Holly about Garth Hill School. This describes how Stanley Goodchild as the new headmaster of a failing school rapidly developed a broad strategy to respond immediately to the situation, but also to exploit it. So changes in school uniform and the appearance of the school were used to bring positive publicity. Subsequently he identi!ed computer technology as the schools core development. A series of innovations followed a new computer centre, a business of!ce, electronic mail, a new hi-tech library, links with industry.

This entrepreneurial approaches is illustrated in Figure 1.9, where a plan that allows attack of an opportunity x, which initially appears tangential to main thrust to point B, actually opens up an unexpected opportunity to reach point C.

Figure 1.9: Model C - Entrepreneurial planning approachesSource: Financial Management for Schools; Brian Knight, 1993


Model D: Lateral Approach

The lateral approach is another approach that can be used to plan on visionary statement of future goals and identi!cation of a full range of possible routes by which they could be achieved.

In this approach, brainstorming and divergent thinking are required. In Figure 1.10 below, we can see and suggests a plan which explores several routes, two of which prove abortive, but one which leads to a long-term objective D.

Figure 1.10: Model D - Lateral-planning approach[Source: Financial Management for Schools; Brian Knight, 1993]

Which Approach Is The Best?

There is no single answer. Each school and management team needs to adopt the approach best suited to its situation. In practice, two or more approaches can be combined. Mike Wallace (1991), suggest that;


In practice, the choice will often depend upon the personality and mindset of the senior management team. Conservatives may refer the pragmatic approach, radicals, and the lateral or entrepreneurial approach. Whatever you do, you need to feel comfortable.

The most important thing is, you must understand a clear purpose and set of priorities, produced in whatever way seems comfortable, directed to your schools !nance management.

Figure 1.11: Different planning approachesSource: Financial Management for Schools; Brian Knight, 1993

SELF-CHECK 1.1

1. List four major components of the School Financial Administration Model.

2. State four types of mode in Financial Administration.

3. Why doesnt the rational approach re"ect the reality of school life? Discuss.


1.3 INTRODUCTION TO FINANCIAL ADMINISTRATION IN MALAYSIA

ACTIVITY 1.1

Discuss with your friends why !nancial administration in the education !eld is an important part to be managed.

Figure 1.12: Proper !nancial administration is importantSource: http://www.CartoonStock.com

Financial administration in Malaysia is almost the same as international business !nance. It is concerned with the maintenance and creation of economic value and wealth. This means that the goal of the organisation is to maximise shareholders wealth and it is done by maximising the price of the existing common stock. In Malaysia, the bene!ts are not only focussed on shareholders, but also to provide bene!ts to the society.

In Malaysia, the !nancial administration also deals with many decision makings. For example, when to introduce a new product, when to invest in new assets, when to replace existing assets, when to borrow from banks, when to issues stock or bonds, when to extend the credit to a customer and how much cash to maintain.


The implementation of !nancial administration in Malaysia is as per shown in Figure 1.14:

1. Assessing the current position of the school or college against its environment;

2. Assessing the current strengths and weakness in the use of human and !nancial resources in the organisation;

3. Reviewing the aims of the organisation and whether these should be changed in light of this strategic audit process;

4. Considering, and costing, the alternative ways in which the organisation could develop to meet its objectives;

5. Reaching decisions on the priorities for the future planning;

6. Developing the long term, medium terms and actions plans for the use of resources to meet aims.

According to Wallace (1991), !nancial administration is involved in an ongoing cyclic process which are:

1. Establishes strategic aims for the organisation;

2. Builds long and medium terms plans which will enable the strategic aims to be met;

3. Produces an annual plan which is based on the priority of the objectives;

4. Establish action plans which include details of objectives, resource needs, supervision and criteria for success;

Figure 1.13: Product knowledge is a part of !nancial administrationSource: http://www.CartoonStock.com


Financial administration is always directly related to strategic development of an organisation. The implications are:

1. A logical, rational and totally intended planning perspective !nancial plans are fully known;

2. A logical but instrumentalist perspective building year by year on where we are now incremental !nancial plans;

3. A political perspective dependent upon the operation of internal and external pressures !nancial plans subject to power dynamics;

4. A cultural perspective in which planning is linked to status quo;

5. A visionary perspective in which organisational development is driven by a view of where we are going !nancial plans linked to the major objectives;

6. A natural selection perspective in which future direction is determined by the strength of the competition between other perspectives - !nancial planning is evolutionary but cannot be forecasted

5. Monitor the progress of action plans and outcomes from these;

6. Evaluate the contribution of these outcomes to the overall aims of the organisation as a prelude to review and re-planning.

Figure 1.14: Business processSource: Accounting; Horngren, Harrison & Robinson, 1995


1.4 LEGAL FRAMEWORK FOR FINANCIAL ADMINISTRATION

There are some rules that we must understand in !nancial administration. It is the rules and policies that must be used in the administration of the organisation, especially in school administration. They include, act or laws, regulation, statement policies and circular. It can also be represented as shown in Figure 1.15 below:

ACTIVITY 1.2

Why do you think we must have a good school leadership to manage our school !nancial administration? Discuss with your classmates and present it in class.

Figure 1.15: Legislations aspect in !nancial management

1.4.1 Act

There are two types of act that can be used in school !nancial administration as shown in Figure 1.16. There are Educational Act 1996 and Finance Act 1957.

Figure 1.16: Types of act in Administration of School Finance


A. Educational Act 1996 According to Seksyen 130 (2), minister can create the rules and policies on

account book keeping and auditing account statement including the fund that the organisation receive as an academic institution.

The responsibility and accountability of a leader of a public entity in ensuring sound !nancial management is even heavier as can be seen in the responsibilities of the Controlling Of!cer (Pegawai Pengawal) and this is stated in Financial Procedure Act 1957 (revised 1972)

B Finance Act 1957 Perkara 18, surcharge will be charged to the government of!cer if:

(i) Failed to collect the revenue or tax;

(ii) The payment transaction is made without referring to the regulations that has been adhered;

(iii) Involved in losing or obliterating government property;

(iv) Failed to keep a complete account statement; and

(v) Late in settling payments.

1.4.2 Regulation / Policies

In terms of regulation, it is explained by Account Regulation and Audit 1962. In this regulation, school management must keep the !nancial statement and another set of book keeping in a good condition. Every year, school administration board, must submit !nancial statement for the whole year of !nance before 31st March of the next year.

Source: Financial procedure Act 1957


1.4.3 Circular

Finance Circular is the procedure and policies that explain how the organisation should manage its !nancial aspects.

1.4.4 Statement

The statement often used in !nancial administration is Arahan Perbendaharaan (AP). This statement contains the details of the following procedures:

Financial;rAccounting;rAuditing; andrWrite-off and disposal of assets.r

The main purpose of this statement is to explain fund management in terms of:

Receipts and collections;rPurchase and earnings;rExpenditures and payments;rAsset management; andrResources management. r

ACTIVITY 1.3

Find an article from the Internet about the differences between an order statement and a circular.

SELF-CHECK 1.2

When an administrator revises policy rules and procedures, what should be considered?


1.5 PRINCIPLES OF FINANCIAL ADMINISTRATION

There are six main major aspects, in !nancial administration. It includes budgeting management, receipts and collections management, purchasing and earnings management, expenditures and payments management, accounting and auditing management and asset management. This is shown in Figure 1.17 below:

ACTIVITY 1.4

Why do you think, as a leader, we must know and try to understand the components and areas in !nancial administration?

SELF-CHECK 1.3

State four major legal aspects in !nancial administration.

Figure 1.17: Major aspects in !nancial administration


According to the Government Audit Department (2007), there are nine important elements that need to be looked in !nancial administration. These are:

Organisation management controlling;rBudget controlling;rReceivable controlling;rExpenditure controlling;rKumpulan Wang Amanah management controlling;rAsset, inventory and store controlling;rInvestment controlling;rLoan controlling; andrFinance statement;r

The scope of !nancial administration covers seven partsmanagement, contributors, taxes, budgeting, expenditures, accounting and collections. See Figure1.19.

Figure 1.18: Areas in !nancial administration

According to Percy, Vern & Rulon (1999), the component in !nancial administration involve !ve areas. It can be illustrated as Figure 1.18 below :


In the education journal, A Handbook for School District Financial Management, by Dembowski, Frederick L, it was shown that in administration !nancial framework, it is necessary to attain the !nancial goals. Furthermore, in cash administration, it includes cash budgeting, cash information and control systems, collections and disbursement procedures for cash and borrowing.

Figure 1.20 sets out a simple form of relationships between !nancial administration. It makes a distinction between management decisions and administration. It is always about de!nitions of objectives and policy, strategic allocation of resources, motivation and team-building, creation of systems, coordination and evaluation and reporting of information.

The strategic group might be the senior management team, but in school it maybe referring to principles or senior assistances. Another group is !nancial administrators who maybe referred to as clerk at school of!ce or school secretary.

Figure 1.19: Scope of !nancial administration


Figure 1.20: Financial management relationships Source: Brian Knight, 1993

SELF-CHECK 1.4

1. What are the six major aspects of !nancial administration?

2. Can you list the !ve areas discussed by Percy, Vern & Rulon in

!nancial adminstration?

3. List the seven parts of the scope of !nancial administration.


1.5 DELEGATION OF AUTHORITY

In Malaysia, the delegation of authority can be represented as in Figure 1.21 below:

Delegation devolution of !nancial administration to schools increase the importance of decisions to be made and the quantity of work to be done. In school roles depend upon the scale of internal delegation. The more management decisions are delegated downwards to !nancial administration, the more roles need to be modi!ed and adjusted. Figure 1.22, below illustrates this situation.

Figure 1.21: Delegation of authority

Figure 1.22: Changes in roles with !nancial delegationSource: Brian Knight, 1993


In order to achieve !nancial integrity and accountability, a leader has to:

1. Know his responsibility and details of the job;

2. Be able to carry out the tasks entrusted to him;

3. Know the standard and level of evaluation; and

4. Give full commitment and put aside personal prejudices and preferences.

Besides these, a leader should also ensure the following:

1. Establish clear goals and ensure that there are regular reports on the

progress of meeting these goals;

2. Ensure that reliable, complete and timely data are maintained and used

for decision-making at all levels;

3. Ensure all programs and operations achieve their intended results

ef!ciently and effectively;

4. Eliminate costly waste, duplication and errors;

5. Ensure that programs that do not work or are redundant should be

terminated, streamlined or consolidated;

6. Ensure close supervision of staff to eliminate waste, fraud and

mismanagements; and

7. Ensure all laws, regulations and policies are strictly adhered to at all

times.

The board of management in an organisation must realise that management must be done with excellence and make efforts to put !nancial management in order. Commitment from the leader will give proper signal to other personnel involved in !nancial management that proper !nancial management must be practised.

ACTIVITY 1.5

Assume you are the superintendent and have received the needs assessment from all site-based units in the district. You must appoint a committee to review the assessment to set priorities and make a recommendation.

1. Who would you select for your committee and how would you conduct the reviews ?

2. How would you consolidate the reports?

3. How would your plan prevent possible tactical strategies from in"uencing a policy recommendation?


A leader is needed to set goals and priorities for development plans and for operational budgeting, strategic planning for the sub-allocation of expenditure targets across the various programs and activities. Strategic planning is fundamental for new policies, savings proposals and one-off. Without regulations, budgeting will be conducted as a routine affair whereas budgeting for performance calls for budgeting according to departmental priorities.

Financial administration is an important aspect of recourse management that encompasses on all responsibility areas. School have a capacity to select their own staff, who remain employed by the central authority, with provision for annual to the local community.

According to Maxcy (1995), the link between the needs of the school and the level of operation of the school management is illustrated in Figure 1.23.

Figure 1.23: Levels of autonomy in school managementSource: Marianne Coleman & Lesley Anderson, 2000

Administration, management and leardership levels re"ect the degree of the autonomy in the school. Administration is de!ned as consisting of routine work, usually carried out alone, such as organising and !ling, management includes decision making and supervision of others. Leadership is characterised by strategic thinking, policy formulation, evaluation and review.

The top part of Figure 1.23, shows that the school are operating on a range between dependency and autonomy.

District managed schools are exempli!ed by those under special measures. Locally managed schools are characterised as those managed in Malaysia.


Site based schools are found in Malaysias city technology colleges or grant maintained schools.

The lower part in Figure 1.23, illustrates the level of autonomy or dependency. District managed schools need administration managers who spend the majority of their time on operational and functional task, but who can assume some supervisory and management responsibilities. Support service manager are found in schools with more autonomy and less district control. These bursars operate mainly at the managerial level but their role also incorporates administration and leadership elements. This level requires the bursar to have a greater understanding of the educational business of teaching and learning.

School with site based management and high degree of autonomy are likely to need School Business Managers who can think strategically and operate at a leadership level. These people lead their own teams, manage outsourced contracts, are full members of the senior management team, and analyses and evaluate data for strategic decision making providing organisational support and understanding the learning core.

SELF-CHECK 1.5

1. How many types of level of operation are there in !nancial administration in school?

2. Can you list the three management levels in !nancial administration in school?

1.6 APPLICATION OF FINANCIAL ADMINISTRATION IN GOVERNMENT SECTOR IN MALAYSIA (SCHOOL)

Figure 1.24: It is not enough to do well on paper alone. Source: http://www.CartoonStock.com


School !nancial management is:

Table 1.2: De!nition of School Financial Administration

Writer De!nitions

Brian Knight (1993)

School !nancial administration is a:

Clear vision of where the school should be going, based upon a rcoherent philosophy and set of values;

Sharp focus on results, matching achievement against outlay;rThoughtful, analytical approach to issues and problems; andrCapacity for lateral thinkingr

C. William Garner (2004)

School !nancial administration is the administration of !nancial resources, manage investment of public money, generate income, manage income producing capital assets and strategic plans.

Allan R. Odden & Lawrence O. Picus (2004)

School !nancial administration is the distribution and use of money for the purpose of providing educational services and producing student achievement.

The areas and tasks of !nancial management are illustrated in Figure 1.25.

Figure 1.25: Areas and tasks of !nancial managementSource: Brian Knight, 1993


1.7.1 Accountability

Accountability as de!ned in the Oxford Advanced Learners Dictionary means a requirement to give an explanation of ones actions, expenditures. Accountability refers to the ability to call public of!cials, private employers or service providers to be answerable for their policies, actions and use of funds.

In the case of !nancial administration, accountability means being liable and able to explain all expenditures incurred by an organisation and ensuring that all transactions are done honestly and adhere to all laws, policies and !nancial regulations. In the case of the public sector, accountability is even more important since the funds are actually public monies and liable for close scrutiny by all interested parties.

According to Jabbra and Dwivedi, accountability is the fundamental pre-requisite for preventing the abuse of delegated power and for ensuring instead that power is directed towards the achievement of broadly accepted national goals with the greatest degree of ef!ciency, effectiveness, probity and prudence.

We also can de!ne the accountability as:

Requirement to give an explanation of ones action;rBeing liable and able to explain all expenditures incurred by an organisation;rEnsuring that all transactions are done honestly and adhere to all laws, rpolicies and !nancial regulations.

In Malaysia, there are a few words that always have been used in !nancial administration. These are in Figure 1.26 below:

Figure 1.26: Terms in !nancial administration


There are a number of basic ingredients to ensure accountability in the conduct of affairs of an organisation. Amongst the more important are as follows:

Set measurable goals and responsibilities;rPlan what needs to be done to achieve the goals;rDo the work and monitor progress;rReport on results; andrEvaluate results and provide feedback.r

1.7.2 Integrity

Integrity as de!ned in the Oxford Dictionary is quality of being honest and upright in character. Allan R. Odden & Lawrence O. Picus (2004), de!ned integrity as adherence to moral principles, honesty, wholeness and soundness.

Integrity is often misunderstood or interpreted as only encompassing corruption. Corruption is actually only one of the elements that affect integrity. It encompasses a wide range of elements such as honesty, trustworthiness, adhering to proper code of conduct and having good values and ethics.

In fact, more importantly, integrity also includes good governance, transparency, putting interest of the public !rst and doing an honest days work. Transparency is de!ned as the state or quality of being transparent, which in turn means that easily understood, accessible, simple, clear and straightforward. Thus, in every decision made to award a tender, quotation or other associated matters in !nancial management there should be clear cut criteria and be able to stand up to close scrutiny.

Other attributes of integrity are being able to discern what is right and wrong, acting on what you have discerned, even at personal cost and saying openly that you are acting on your understanding of right from wrong. Thus, integrity encompasses a whole range of good values and ethics at all levels be it personal, organisational or even national.

There are three main points in the concept of integrityeconomy, ef!ciency and effectiveness.

A. Economy

Economy means there should be value for money spent;rIt is also de!ned as careful use of resources, frugality and good rhousekeeping;


While spending public money one should ensure that it is being spent on rgoods or services is actually worth the money;

This means that goods and services that are being purchased should not rbe over-priced and should meet the minimum criteria of quality for the amount being spent on them;

It implies the avoidance of expenditure above a reasonable minimum or rof a speculative sort.

B Ef!ciency

Ef!ciency refers to measurement of cost involved in producing the rservice or goods;

The fullest possible attainment of speci!c objectives or standardsr

C Effectiveness

Fullest possible attainment of the goals and objectives of the school;rEffectiveness is the impact of uses the money;rIt can also be de!ned as what has been achieved for the money spent on ra programme or on the delivery of a service;

This performance measurement allows one to determine the physical or r!nancial performance over a certain period of times;

We can ensure that the money is been used wisely and can achieve what rwe want to get.

1.7.3 Legality

Legality refers to rules of !nancial administration policies that must be obeyed by organisations.

Legality is divided into !ve stages. It is related to the activities:

1. Receivable;

2. Investment;

3. Expenditure;

4. Payment; and

5. Accounting.

Based on the criteria of Anugerah Kualiti Pengurusan Kewangan (AKPK), there are four major components as shown in Figure 1.27.


1.7.4 Productivity

Increasing outcomes for each unit of input.

Example: Cheaper education for the same but less cost.

Figure 1.27: Criteria in AKPK

SELF-CHECK 1.6

1. List the school administration tasks in !nancial management.

2. Give !ve examples in areas related to !nancial management in school.

3. Explain what is the difference between economy, ef!ciency and effectiveness.

4. Write the four major components involving the criteria of Anugerah Kualiti Pengurusan Kewangan (AKPK).

ACTIVITY 1.6

Discuss with your friend on why the concepts of legality and productivity are important in the !nancial administration of a school.


SUMMARY

Theory and concepts of Financial Administrationr1. Non-!nancial performance measures.

2. Financial performance measures.

Models in Financial Administration:r1. Rational Approach

2. Pragmatic Approach

3. Entrepreneurial Approach

4. Lateral Approach

Financial administration in Malaysia:r1. Management

2. Implementation

3. Co-ordination

4. Controlling

5. Evaluation

Legal framework in Financial Administrationr1. Act

2. Regulation

3. Statement

4. Circular

Learn more, visit these websites:

National Council for Accreditation of Teacher Educationhttp://www.ncate.org

National Policy Board for Educational Administrationhttp://hpbea.org


The principles of !nancial administration:r1. Receipts and collections

2. Assets

3. Purchasing and earnings

4. Expenditures and payments

5. Budget

6. Accounting and auditing

Delegation of authority in !nancial administration.r1. Changes in roles

2. Levels of autonomy

Application of Financial Administration:r1. Area

2. Tasks

3. Terms

Act

Accountability

Autority

Autonomy

Asset

Budgets

Circular

Controlling

Coordination

Creditors

Earning

Ef!ciency

Effectiveness

Entrepreneurial

Expenditure

Evaluation

Goals

Implementation

Integrity

Lateral

Legality

Mission

Objectives

Payment

Pragmatic

Productivity

Purchasing

Rational

Receivable

Regulation

Statement

Task


REFERENCES

Birrup, P.E., Brimley, V., Jr., & Gar!eld, R. R. (1999). Financing Education: In a Climate of Change (7th ed.). Boston: Allyn & Bacon.

Caldwell, B. J., & Spinks, J. M. (1998). The Self-managing School. London: Falmer Press.

Garner, C. W. (2004). Educational Finance For School Leaders: Strategic Planning and Administration. Boston : Allyn & Bacon.

Guthrie, J. W., W. I., & Pierce, L.C. (1998). School Finance and Educational Policy: Enhancing Educational Ef!ciency, Equality and Choice (2nd ed.). Upper Saddle River, NJ: Merrill/ Prentice Hall.

Knezevich, S.J. (1973). Program Budgeting (PPBS). Berkeley, CA: McCutchan.

Morgan, G. (1986). Images of Organization. London: Sage.

Percy E. Burrup, Vern Brimley JR & Rulon R. Gar!eld. (1999). Financing Education: In A Climate of Change. New York: Longman.

Rippa, S.A. (1980). Education in a free society (4th ed.). New York: Longman.

Schultz, T. W. (1963). The Economics Value of Education. New York: Columbia University Press.

Scott, JR, Martin JD, Petty JW & Keown AJ. (1999). Basic Financial Management. Prentice Hall: New Jersey.

Swanson, A.D., & King, R.A. (1997). School Finance: Its Economics and Politics. (2nd ed.). New York: Longman.

Truman, D.B. (1995). The Government Process. New York: Knopf.

Valente, W. D. & Valente, C. M. (2001). Law in the schools (5th ed.). Upper Saddle River, NJ: Merrill/ Prentice Hall.

Wallace, M. (1991). Flexible planning: a key to the management of multiple innovations in educational management and administration. London: Routledge.

Welsch, G. A., Hilton, R. W., & Gordon, P. N. (1998). Pro!t Planning and Control. (5th ed.) Upper Saddle River, NJ: Merrill/ Prentice Hall.

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17115446 Topic 1 Theoretical Framework