CHAPTER ONE

1.1 OVERVIEW

This chapter will deals with the background of the study, statement of the

problem, objectives of the study, research questions, and significance of the

study, limitation, scope and organization of chapters.

1.2 BACKGROUND OF THE STUDY

Tertiary Institutions form an important part of the education system in this rapid

changing economic and social environment. The history of education in Ghana

dates back to 1592.

Over the centuries education has had different goals, from spreading the Gospel

to creating an elite group to run the colony. After Ghana gained its independence

in 1957 the education system, then modelled on the British system, has undergone

a series of reforms. Especially the reforms in the 1980`s geared the education

system away from purely academic to be more in tune with the nations manpower

needs. The main objectives of the reforms were to improve quality, efficiency,

access, equity, relevance and sustainability. The second word war affected the

progress of education such that all the European inspectors, teachers and other

scholars were mobilized for war. This prompted the government to draw up its

first plans in the 1882 to guide the development of education. An Inspector of

Schools was instated from 1887 until 1890. Then the office of the Director of

Education was created to control and monitor the activities of schools.

By 1983 the education system was in a state of crisis. It faced drastic reduction in

government financing, lack of educational materials, and deterioration of school

structures, low enrolment levels and high dropout rates. With the assistance of

several development partners such as World Bank, Department for International

Development and International Grants, the education system was reviewed and

proposals were implemented in 1987.

The government has seen tertiary education as a major instrument for national

development and has introduced many policies to regulate the activities of such

institutions. Ghana aims to reach “the middle - income country status” by the year

2020. For this purpose she has developed a road map known as Vision 2020. The

basic objectives of the Vision 2020 document are: “reduce poverty, increase

employment opportunities and average incomes, and to reduce inequities in order

to improve the general welfare and material well being of all Ghanaians”. The

Vision 2020 document contains an education policy with the objectives to

“ensure that all citizens regardless of gender or social status are functionally

literate and productive at the minimum”. It further states that in order to achieve

Vision 2020, the education system must embrace Science and Technology as it is

the technological era and countries that fail to recognize this will not be able to
 escape the clutches of poverty. By 1979 Ghana had three (3) Universities with a

number of research institutions and professional associations. Currently, Ghana

has many tertiary institutions both government and private. This reveals that great

strides have been made on the education front.

This research will be focus on cash management policies from the perspectives of

the tertiary institutions in Ghana to unravel the skills, techniques, managerial

competencies and systems that must be present in the operation of tertiary

institutions to have adequate and sound cash for survival and growth.

1.3 STATEMENT OF THE PROBLEM

Cash as a financial resource is a very important instrument of every institution.

Therefore every institution, be it public or private must plan, control, forecast and

budget the cash inflow and outflow. Some institutions of which Tamale

Polytechnic is of no exception are not able to plan, control forecast and budget

their cash inflow and outflow with reasonable accuracy due to inadequate

information which is a requisite for successful planning.

Extensive experience show that difficulties in financing or mobilizing cash by

tertiary institutions in Ghana often arise from a few common causes such as:

 The problem of disbursement of the fund as well as the collection of government

revenues such as school fees.

 Delay in the release of Government fund.

 Failure to sell all admission forms threatens the cash position of the institution

since the selling of admission forms is considered as one of the major sources of

cash to tertiary institutions.

Basically, this study will be to examine how tertiary institutions handle their cash

management and make recommendations as how they can be improving.

1.4 OBJECTIVES OF THE STUDY

This study will seek to:

 Examine the extent to which the activities of the institutions are finance by the

Central Government and how these funds are disbursed.

 Determine other possible sources of income to the institution and how such

incomes are used.

 Examine the controlling and monitoring measures on the utilization of the funds.

 Find out the constraints they face in acquiring and managing their funds.

 Suggest measures that will help to improve the conditions of tertiary institutions.

1.5 RESEARCH QUESTIONS

In dealing with the research questions, an attempt will be made to answer the

following questions:

 Will the institution capable of maintaining sound cash management?

 Will there be a system of effective internal control in place to promote sound cash

management?

 If there will be difficulties maintaining cash management, what are they and will

these difficulties beyond the capabilities of the institution?

 How does effective management of cash assist in the growth of tertiary

institutions?

These are pertinent issues that will need to be address, if the expectations of

education that has been placed on tertiary institutions in particular and solutions

of the socio – economic problems in Ghana are to be realized.

1.6 SIGNIFICANCE OF THE STUDY

Ensuring continuous operation in an institution requires a systematic and regular

flow of cash to use when needed. Cash management is therefore one of the basic

and most important function of every institution.

The study will assist tertiary institutions to make judicious use of cash for

sustainable developments despise the economic adversities.

The research will also help in the study of cash management in terms of

combining the theoretical framework and practical knowledge in Tamale

Polytechnic.
 It will recommend measures that will facilitate Government funding as well as

disbursement, how funds will be properly accounted for. It will also ensure the

checking and monitoring of revenue of the institution.

Again this will be of much important to other researchers. This will equip other

researchers with the requisite information and literature for further studies.

1 .7 LIMITATION OF THE STUDY

A number of problems will be encounter during the study, among them are the

following:

 Financial Constraints

The financial resources available for the study will be inadequate. This will serve

as an obstacle to the researcher hence, affect the sampling size of the institution

interview and consequently impacted adversely on the conclusion drawn.

 Time constraints

The time allowed for the conduct and submission of findings will be limited, it

was therefore not possible to make in depth analysis of the research problem.

 Access to Information

The subject is one that will touches on sensitive aspect of every institution and

hence the unwillingness on the part of some staff to disclose certain facts relevant
 to the study. In spite of these limitations, the researcher will be able to gather

some data for the study.

1.8 SCOPE OF THE STUDY

Due to anticipated constraints of time and funds, this study can not cover a wider

area. This study will be to Tamale Polytechnic.

1.9 ORGANIZATION OF CHAPTERS

The study will be organized in five chapters.

Chapter one gives a background of the study, statement of problem, objectives of

the study, research questions, significance of the study, limitations of the study,

scope of the study and organization of chapters.

Chapter two will deals with Review of Related Literature and this is broken down

into appropriate sub-topics.

Chapter three deals with the Methodology, which will be sub-headed as follows,

Population, Sample, Sample Procedure and Data Analysis Procedure.

Chapter four will deals with the Presentation and Analysis of Data, Tables and

Figures, Statistical Presentation and Discussion of Results.

Chapter five deals with Summary, Recommendations and Conclusion.

 CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter presents literature from other sources on cash management

pertaining to tertiary institutions. Thus, the discussion will be based on

acknowledging what authorities in this field have written in their various

books and published articles.

Areas to be looked at in this chapter are mainly definitions and write check

(history) given by authors. These areas are as follows:

 Definition of Cash Management

 The Role of Cash

 Managing Cash in Organization with particular attention on Tertiary

Institution and how effective application of cash controls can lead to the

operation of Tertiary Institution (Tamale Polytechnic)

 Sources of Cash

 Cash Budget

 History of Tertiary Institutions (Polytechnics)

 Objectives of Tertiary Institutions (Polytechnics)

 Institutional Support and Collaboration

 Problems Facing Tertiary Institutions (Polytechnics)

2.1 DEFINITION OF CASH MANAGEMENT

Black and Hirt (1997) defined cash management as the construct over the

receipt and payment of cash so as to minimize non-earning cash balances.

Pandy (2000) defines cash management as that concerned with the managing

of:

 Cash flows into and out of the business

 Cash flows within the business and

 Cash balances held by the firm at a point in time by financial deficit of

investing surplus cash.

Therefore, cash management can be defined as the management of

institutions receipt and payment of cash to minimize the appropriate cash

balances. Cash management can be explained as the strategy by which an

organization administers and invest its cash. It also means the control of cash

collection
2.2 THE NEED OR IMPORTANCE OF CASH

According to Warren, Reeve and Fee (1998) “cash includes coins, currency

(Paper money), cheques, money orders and money on deposit that is

available for unrestricted withdrawal from banks and other financial

institutions”.

Therefore, cash can be defined as the term covering cheques, money orders

and fund on deposits in a bank as well as notes and coins.

Since cash is the most liquid of all assets, an institution cannot survive and

prosper if it does not have adequate control over its cash. All these can be

met when there is good cash management in the institution.

2.3 MANAGING CASH

The effective and efficient management of cash is crucial to the survival of

every institution. One of the crucial management functions in any institution

is that of being able to prepare at all times to meet the cash demands placed

upon the operation,

But quite surprisingly more institutions fail. It is therefore imperatives that

institutions try to manage their cash effectively and efficiently in order to

lead the institution in a smooth operation.

This is because; the need for additional financing of a high growth,

institution may exceed its available resources even though the institution will

be generating income. Without additional resources, the institution’s cash

balance may well decline shabbily leaving the institution in a precarious

financial position.

The timing of cash receipt and cash payment is crucial to the survival of any

institution. Many Government institutions have not being operating

effectively due to improper internal control systems and delay in the release

of government funds to such institutions. To ensure that cash is well manage

in government institutions, the government should release funds in time and

proper measures should be put in place to measure the internal controls

2.4 CONTROL OF CASH

In public institutions the government might make all the important decisions

and will usually maintain a close watch over the affairs of the institution.

However, as the institution grows and the need arises for additional

employees, officers, and managers, the government begins to lose absolute

control. Realizing that precautions are necessary to protect the institution’s

interests, the institution establishes an internal control structure at this point.

 The internal control structure of an institution consists of “the policies and

procedures established to provide reasonable assurance that specific entity

objectives will be achieved”. The three elements of an internal control

structure are the:

 Control environment

 Accounting System

 Control Procedure

The Control Environment

The control environment reflects the overall attitude, awareness, and actions

of management.

The Accounting System

The accounting system consist of the methods and records that identify,

assemble, analyze, classify, record, and report the institution’s transactions to

provide complete, accurate, and timely financial information.

The Control Procedures

The control procedures of an institution are additional policies and

procedures that management establishes to provide reasonable assurance that

the institution achieves its specific objectives. Those control procedures may

pertain to proper authorization, segregation of duties, design and use of

adequate documents and records, adequate safeguards over access to assets,

and independence checks on performance.

2.5 PURPOSE OF INTERNAL CONTROL

An effective internal control structure includes all the procedures and actions

an institution takes to:

 Protect its assets against theft and waste.

 Ensure compliance with institution policies and federal law.

 Evaluate the performance of personnel to promote efficient

operations.

 Ensure accurate and reliable operating data and accounting reports.

2.6 COMPONENTS OF INTERNAL CONTROL

According to the Committee of Sponsoring Organization of the Trade way

Commission, there are five components of an internal control structure.

When these components are linked to the institution’s operations, they can

quickly respond to shifting conditions.

These components are:

 Control Environment

The control environment is the basis for all other elements of the internal

control structure. The control environment includes many factors such as

ethical values, management’s philosophy, the integrity of the employees of

the institution, and the guidance provided by management.

 Risk Assessment

After the institution sets objectives, the risk (such as theft and waste of

assets) from external and internal sources must be assessed. Examining the

risk associated with each objective allows management to develop the means

to control these risks.

 Control Activities

To address the risk associated with each objective, management establishes

control activities. These activities include procedures that employees must

follow. Examples include procedures to protect the assets through

segregation of employee duties.

 Information And Communication

Information relevant to decision making must be collected and reported in a

timely manner. The events that yield these data may come from internal or
external sources. Communication through out the institution is important to

achieve management’s goals.

 Monitoring

After the internal control structure is in place, the institution should monitor

its effectiveness so that it can make changes before serious problems arise. In

testing components of the internal structure, institutions base their

thoroughness on the risk assigned to those components.

2.7 HISTORY OF POLYTECHNICS

INTRODUCTION

Polytechnic are higher educational institution responsible for training in

scientific and technical subjects.

Since 1992, when Government directed Polytechnics in Ghana to run tertiary

programs, significant gains have been made in the output of the polytechnic

graduates. The Polytechnics provide the bulk of our people with technical

education that is relevant, up-to –date in technology, and forward looking in

approach. As such polytechnic graduates play a significant role in the

development of the nation.

HISTORICAL BACKGROUND
The polytechnics in Ghana were first established as technical institutions that

offered craft courses. In 1960, following the industrial development policy

and rapid technological projects in a broad range of areas, technical

education became a necessity for the country. Since the technical institutions

(Polytechnics) were offering second-cycle craft courses while the universities

were offering higher tertiary courses, there was a gap in the man power

supply means of the country (Nsia-Gyabaah 2005). In recognition of this, a

number of the technical institutes were established to train lower and middle-

level skilled man power to fill the gap. This technical institute was

established in Accra, Kumasi and Takoradi.

In 1963, the technical institutes were re-designated as polytechnics to run

non-tertiary programs. The Tamale and Ho technical institutes were elevated

to polytechnic status in 1984 and 1986 respectively. The Cape Coast

Polytechnic which was planned as a polytechnic was opened in 1986. In

1987, the Government of Ghana, constituted a University Rationalisation

Committee (URC) to develop proposals for reforming the management,

academic structure and funding of tertiary education in Ghana. Following the

submission of the University Rationalisation Committee’s report, the

Government issued a White Paper in 1991on the Reforms to the Tertiary

Education System. The White Paper gave prominence to Polytechnic

education and in 1993 following the promulgation of the Polytechnic Law,

1992 (PNDCL 32I), the Polytechnics were upgraded to tertiary status. In line

with government’s policy of making the Polytechnics regionally based

institutions, the Sunyani, Koforidua, Wa and Bolgatanga Polytechnics were

also established. In 1994 the Polytechnics commenced the running of Higher

National Diploma (H.N.D) programmes.

The White Paper specifically stated that the Polytechnics have a distinct and

important role to play in middle –level manpower development and those

programmes and courses were to be offered at the middle-level of technical

training leading to the award of Higher National Diploma but not departing

from syllabi dedicated to practical training. The provision of such

programmes will complete the cycle of technical education and provide a

capacity for higher level technician training and practical research.

(Source: Ministry of Education, 1993)

2.8 OBJECTIVES OF THE POLYTECHNICS

The Polytechnic Law assigned appropriate aims and objectives which the

polytechnics are to strive to achieve are as follows:

 Provide tertiary education through full time courses in the field of

manufacturing, commerce, science, technology, applied social science,

applied arts and such other areas as may be determined by the authority for

the time being responsible for higher education.

 Encourage study in technical subjects at tertiary level and

 Provide opportunity for development research and publication of

research findings.

The Polytechnic Law also gave legal backing to desirable changes in

polytechnic administration, course structure, grading certification and

staffing. The Polytechnics in Ghana now have their own governing boards or

councils and the right to design their own curricular, plan their management

and development activities.

2.9 INSTITUTIONAL SUPPORT AND COLLABORATION

In the performance of their functions a number of key institutions have been

set up to co-ordinate the activities of the Polytechnics to ensure quality of

programmes and award diploma certificates to students. The institutions that

impact on the governance and activities of the polytechnics includes:

 The Ministry of Education (MOE)

 National Council for Tertiary Education (NTCE)

 National Accreditation Board (NAB)

 National Board for Professional and Technician Examination

(NABPTEX)
2.10 CHALLENGES OR THREATS OF THE POLYTECHNICS

The running of polytechnics has not been without problems. The major

challenges facing the Polytechnics include:

 Competition for Quality Academic Staff and Students

With the presence of other tertiary institution in Ghana, Polytechnics face

strong competition for academic staff as well as first class students.

High- calibre academic staff and brilliant students are usually attracted to the

universities where better financial rewards are available. The Polytechnics

are not first choice institutions for many students because opportunities for

academic progression are limited in Ghana and public recognition of the

H.N.D is quite low.

 Misconception about the nature and the role of the polytechnics.

The role and nature of Polytechnic education are not clearly understood by

many. Until recently, many Polytechnic students had the erroneous

impression that H.N.D certificate was equivalent to the degree while some

members of the public felt that the Polytechnics were duplicating what the

universities are doing.

Lack of understanding of the career –oriented nature of Polytechnic

education has been responsible for these misconceptions.

 Inadequate infrastructure
 Poorly funded

 Inadequate facilities for practical training on campus

A PROPOSAL ON CASH MANAGEMENT IN TERTIARY

INSTITUTION

(A CASE STUDY OF TAMALE POLYTECHNIC)

PRESENTED BY;

GROUP SEVEN (7) MEMBERS;

NAMES: MATRIX NO:

SABOGU BETTY A. 08082382

NSOR CLEMENCIA 08082349

ALHASSAN IMORO HASSAN 08082413

TO OUR PROJECT MASTER;

 MR ISSAHAKU SALIFU

A PROPOSAL ON THE SOCIAL RESPONSIBILITIES OF

RURAL BANKS

A CASE STUDY OF BONZALI RURAL BANK LTD.

IN THE TAMALE METROPOLITAN AREA OF GHANA

PRESENTED BY;

GROPUP SEVEN (7) MEMBERS;

NAMES: MATRIX NO:

SABOGU BETTY A. 08082382

NSOR CLEMENCIA 08082349

ALHASSAN IMORO HASSAN 08082413

TO OUR PROJECT MASTER;

MR ISSAHAKU SALIFU