Republic of the Philippines

North Eastern Mindanao State University

Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
www.sdssu.edu.ph

Name: Johnfecar Maestrado

Subject: Fiscal Management for Educational Institution
Instructor: Dr. Florife O. Urbiztondo

CONCEPT PAPER
FINANCIAL MANAGEMENT EFFICACY
AT BUTUAN CITY SCHOOL OF ARTS AND TRADES

I. Introduction

The students’ basic skills and practical application of their learning to the real
setting is one of the main focuses of a trade school. Also, there are subjects focus
on career-relevant skills and training which prepare learners for entry-level jobs in
their fields. Butuan City School of Arts and Trades develops the students’ practical
skills that they can use in their day to day living and can offer students a fast,
affordable path to well-paying careers , but one problem I was able to identify in this
scenario is the lack of school facilities that could help the students on their learning.

Teachers also had a hard time in teaching TVE subjects especially during
practical application time because of the limited numbers of equipment and
inadequate facilities the students used. Having adequate facilities in teaching TVE
subjects is really advantageous on providing quality instructions to the students.

While having good facilities deemed advantageous on the part of the students
and teacher, it is a burden on the part of the school when it comes to the
procurement of the necessary equipment and development of the important facilities
to sustain quality instructions on the TVE subjects. It is really hard to purchase some
equipment because of the limited budget of the school and also the maintenance of
the said equipment could also be a burden financially.
 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
www.sdssu.edu.ph

I believe that this problem needs to be deeply studied so that solutions will
emerge to solve the existing concerns regarding the inadequacy of equipment and
lack of facilities in teaching TVE subjects.

II. Objectives

This research aims to determine the efficacy of financial management at

Butuan City School of Arts and Trades.

To accomplish this goal, the study should achieve the following objectives:

 determine the fundamentals of financial school management;

 look into how relevant policies affect school finance management;

 determine the scope of any potential issues with financial

management that schools may have;

 and outline potential remedies for poor financial management in

schools.

III. Discussion and Analysis

Oosthuizen (2003:213) defined financial management in education as the

distribution and application of funds for the provision of educational services and the

encouragement of learner achievement. The goal of financial management in

modern school management is to:

 determine the demand for regional academic training;

 secure funding by the anticipated deadlines;

 handles the generated funds in a way that complies with the law.
 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
www.sdssu.edu.ph

The SMT's role as the body in charge of daily curriculum delivery at the

school, according to the FSDoBE (2005:21), is to support the SGB in managing the

budget. International communication on economic school management concerns,

according to Bisschoff and Mestry (2007:154), is crucial to making sure that all internal

stakeholders are aware of when to submit their contributions and use the allocated

funds. It is the most crucial channel for informing internal stakeholders and the school's

financial plan regarding economic school management (Bisschoff & Mestry, 2007:154).

Financial managers who integrate financial management principles in their schools

carry out general management tasks including planning and controlling, claims Khumalo

(2001:1).

According to Owen (2006:54), financial numeracy is a crucial skill for all

managers to have in order to support the aforementioned. Allocating resources and

setting priorities and goals are examples of financial management skills. To correctly

plan budgets, manage budgets, and keep expenditures under control, managers must

have strong financial abilities.

Urba and Brevis (2002:4) state that principals frequently carry out a variety

of tasks each day. A set of expected behavioral patterns associated with a specific

position in an institution or organization is known as a function. The principal in charge

of this school, according to Hellriegel et al. (2005:4), is in charge of the day-to-day

operations of the school. The management and organizing of schools is under the

principal's control. While according to Mestry (2004:128), the principal should efficiently
 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
www.sdssu.edu.ph

maintain various types of school accounts and records and use financial resources to

the advantage of students in collaboration with the appropriate institutions. The principal

is in charge of managing daily operations at the school and executing a number of

guidelines and regulations set out by the Department of Basic Education (DoBE) and

the School Governing Body (SGB).

The following are the duties of financial management, such as a principal:

 to confirm that they adhere to legal, ethical, and transparent procurement

practices;

 to establish a procedure or framework for properly coordinating the assessment

of all key capital projects before making a final choice about the project;

 to accept responsibility for the efficient, organized, cost-effective, and open use

of the school's assets funds; to collect all money owed to or payable to the

department; and to prevent unauthorized, unbalanced, unsatisfactory, and

wasteful expenditure as well as losses brought on by illegal activity.

The principal, who serves as the school's financial accounting officer, is in

charge of overseeing everything from resource management and upkeep to the

management of the school's liabilities and the practical and cost-effective management

of available working capital. The principal must inform the parents of the following when

a pupil is admitted to a public school (Government Gazette, 2006: No. 29311):

 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
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 the amount of required yearly school fees and the procedures for requesting an

exemption;

 the obligation for parents to pay school fees, unless an exception has been

granted;

 The SGB shall treat as secret any information submitted by a parent in support of

that parent's application and shall not, unless with the parent's consent, divulge

such information to a third party. The SGB of a school has the most influence

over the school's finances, second only to the principle.

Van Deventer and Kruger (2003:242) assert that an essential component of

the modern approach to education management in general and financial management

in particular is openness and information exchange among all stakeholders. The SGB

and school administration must properly handle funds and answer to the DoBE, parents,

students, and the community. In order to provide a comprehensive view of a school's

finances, the principal should make sure that monthly and quarterly statements are

retained, claim Van Deventer and Kruger (2003:243). The SGB is in charge of yearly

budget oversight at the school, according to the FSDoBE (2008:27). This suggests that

they need to make sure that revenue and expenses roughly follow the budget.

The treasurer creating a budget control statement for each SGB meeting is a

fantastic strategy. According to Mestry (2006:35), the SGB and principal must receive

financial management training from the School Management and Governance

 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
www.sdssu.edu.ph

Developers (SMGD) or other outside service providers. Effective and efficient SGBs and

sound financial management are related. Training in financial management is essential

for developing and preparing members of the SGB Finance Committee and school

principals for financial responsibility (Bush et al., 2004). To train all members of the

school's financial management team in cases when the provincial DoBE is unable to do

so because of funding restrictions, schools can form alliances with institutes of higher

learning or turn to outside service providers who provide financial management training.

The SGB should be able to be held accountable for the funds raised and used to

accomplish particular school objectives thanks to this training. Additionally, it must equip

students to contribute to raising the standard of instruction. According to Bisschoff and

Mestry (2007:30), for a school to operate economically (that is, using resources wisely

to prevent spending above an acceptable level) and efficiently, the SGB, or school

financial governance, must be educated about the following subjects (that is, achieving

the best possible results relative to spending).

 the balance of the bank account;

 the amount of funds still needed to be raised;

 where and how it will get the money it still needs; and

 what will the money be used for?

Before handling money, the SGB should be acquainted with the following

rules, under the FSDoBE (2005:2): a working knowledge of all applicable laws, such as

SASA and the PFMA (Public Financial Management Act).

 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
www.sdssu.edu.ph

 Working familiarity with rules like department circulars;

 Understanding a budget's goal;

 The requirement for policymaking;

 Construction of required structures, such as the finance committee will be in

charge of the money;

 Recognizing and keeping track of dates crucial to various operations; and

 Implementing surveillance systems and informing parents.

The principal and SGB may also take part in some or all of the following

tasks, according to Anderson and Briggs (2001:1): Creating the school's budget;

 Taking into account and managing the price of particular educational activities;

 deciding how to allocate resources within the department or school;

 Using entrepreneurial endeavors to bring the school more resources and

financing;

 Attending to the requirements and worries of parents;

 Establishing and preserving connections with regional business, industry, and

trade;

 Creating and executing a marketing plan for the institution; and

 Accountable for expenditure that has been delegated and exhibiting good

financial judgment.

Every choice made by financial managers has financial repercussions,

claims Khumalo (2001:1). As a result, the financial manager or the principle, who serves
 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
www.sdssu.edu.ph

as the accounting officer, must determine if the decisions made regarding school size

are practical. Budgetary restrictions shouldn't, however, stand in the way of

development or improvement. To assist the SGB in managing the school's financial

issues, a finance committee should be established, claim Bisschoff and Mestry

(2007:36). The SGB may create committees such as an executive committee and an

economic committee, select non-SGB members to such committees based on their

experience, and each committee must be chaired by an SGB member, according to

Campher (2002:52). In cases when SGB members have little to no financial knowledge,

according to Maestry (2004:131), the SGB should hire a parent community specialist

with extensive financial knowledge. To handle economic issues, this group must meet

frequently, and its members must be committed to getting the job done. The finance

committee aids the school by carrying out a number of "high level" duties, claims the

KZNDoBE (no date: iv):

 Maintain overall control over school funds.

 Every year, create a budget.

 Approve all expenditures if they are within the budget.

 Provide fundraising advice.

 Assist in the preparation of yearly financial statements.

 Internally review financial documents.

 Make recommendations on who should be selected as an auditor.

 Inform the SGB of the number of school fees.

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Formerly Surigao del Sur State University
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 Advised the SGB on school fee exemption.

The financial committee may consist of the treasurer, principal, teachers,

parents (who are not necessarily SGB members), and non-teaching staff, according to

Bisschoff and Maestry (2007:65). At least eight people should be on this committee, and

an SGB member should serve as chair. The treasurer is required to maintain accurate

records of all transactions and provide documentation for auditors, according to Mixuma

(2006:26).

According to Oosthuizen and Botha (2002:206), the SASA's many

provisions, particularly those relating to financial management, contain the legal

requirements for management operations (other than those covered by the PFMA).

 Section 12(1) determines that the provincial minister must provide public

schools for the education of learners out of funds provided for this purpose by

the provincial legislature.

 Section 20(1) determines that the SGB of the school must administer and

control the school’s property, and the buildings and grounds occupied by the

school, including the hostels, were applicable.

 Section 20(2) determined that the SGB may allow the reasonable use of

schools’ facilities for the community and social purposes and the school fee

collection.

 Section 34 defines that the country must fund public schools equitably. In

contrast, Section 35 states that the Department of Education, after

 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
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consultation with the secretary of Education, and the Department of Finance,

must determine norms and minimum standards for funding public schools.

 Section 44 determines that the financial year of a public school commences

on the first day of January and ends on the last day of December of each

year. According to Joubert and Prinsloo (2001:15), the Constitution (Act 108

of 1996) took effect on 4 February 1997. South Africa has a long history of

Apartheid and unfair discrimination in education.

Taking charge of school budgets

This subsection covers a range of topics related to managing school

finances. According to Oosthuizen (2003:214), the SGB is responsible for maintaining a

thorough record of all cash received and expended as well as assets, liabilities, and

financial transactions. Schools are required to maintain financial records and

statements, as stated in Section 42 of SASA, according to Bischoff and Mestry

(2007:37). A public school's SGB must:

 Keep a record of funds received and spent by the public school and its

assets, liabilities, and financial transactions; and

 As soon as possible, but no later than three months after the end of each

financial year, draw up annual financial statements by specific guidelines.

 According to Marishane and Botha (2004:105), in budget reporting, the

school-based management structures (SBMS) gather, process and supply

 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
Tandag City, Surigao del Sur
Telefax No. 086-214-4221
086- 214-2723
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detailed financial information. Financial information is communicated

through short - and long-term financial statements and reports and

indicates the school’s revenue and expenditures. Xuma (2006:36) states

that the SASA places a duty on the SGB to keep a written record of

everything that has to do with the money or property of the school. All

funds the school receives must be written into financial statements,

recorded, or entered the computer. There must be an asset register in

which all the property that belongs to the school is written down. This will

contain a list of everything of which the school is the owner. If the school

buys or receives something new, it must be entered into the record

immediately. The KZNDoBE (no date: iv) states that the overall

responsibility for controlling school money lies with the SGB of the school.

Usually, the principal of the school is the “accounting officer”. According to

Van Deventer and Kruger (2003:242), financial control includes the

following tasks:

 Drawing up criteria to ensure that the school’s resources are mobilized

effectively;

 Monitoring and evaluating the school’s financial progress;

 Initiating corrective action if needed; Determining financial procedures;

 Collecting money;

 Financial reporting; and

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 Accountability

Conradie and Fourie (2002:9) put forward four steps in financial control, which are:

 Determining performance criteria, i.e. drawing a financial budget and

planning what should be done;

 Measuring the actual performance or the concrete results, i.e. setting up a

bookkeeping system with regular reporting outputs; and

 Comparing the expected with the actual performance. Van Deventer and

Kruger (2003:242) mention that monitoring entails checking the difference

between the planned financial status at any given time and the actual

financial status at the time. Monitoring and control involve the following:

 Drawing up a plan (for the revenue and spending) for the whole year and

identifying positive and negative differences;

 Checking expenditures against the budget allocations;

 Evaluating and reorganizing if and where necessary;

 Noting if there is a surplus or shortage at the end of the year and whether

there is any possibility of building reserves;

 Controlling and checking expenditures using monthly, quarterly, and

annual reports.

According to Campher et al. (2003:40), transparency and information sharing

among all stakeholders have replaced external reporting and accountability. Following
 Republic of the Philippines
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Formerly Surigao del Sur State University
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the idea of information sharing among all stakeholders, the following actions are

necessary:

 The area of accountability for the school finances must be increased.

Staff, learners, parents, the business community, and the community, in

general, must be included.

 Teamff, learners and learners’ parents should be aware of the financial

control process so that they are informed of what is happening in the

school. This will allow them to utilize the school resources for the

maximum benefit of the school rather than trying to achieve only efficient

resource utilization.

 Decisions onon–making should be done more collectively rather than only

at the management level. Cooperative financial school management will

lead to collective leadership and practices involving all stakeholders.

 There must be a trusting and collaborative relationship amongst all the

stakeholders instead of an atmosphere of mistrust, division, and exclusion.

A new type of relationship must be established using construction and

ongoing discussion to reach an agreement.

All parties should have access to financial data. A budget needs to be

regulated in order to be valuable and effective as a tool for financial management,

according to Campher et al. (2003:41). The following duties should be included in

budget control:
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 Comparing the amount budgeted and the results achieved;

 Analysis and interpretation of discrepancies;

 Auditing and calculations;

 Accounting and reporting; and

 Implementation of corrective measures.

Poor cash management at schools, according to Bisschoff and Mestry

(2007:168), can lead to a great deal of frustration among the role participants. Neither

the state, the donor, nor the parents want to see their hard-earned money being

mismanaged.

Cash flow is defined as the difference between the amount of rands that

came in and the amount that left, according to Westerfield and Firer (2001:30). Money,

such as coins and notes, negotiable documents, such as checks and postal orders, and

funds kept in a banking institution are all examples of a school's cash resources.

According to Bisschoff and Mestry (2007:168), the SGB needs to regularly receive

reports on the following for efficient cash management at schools:

 The cash flow positions every month;

 Unexpected and sudden changes in the cash flow and the precautionary

balance; and

 Projections of the expected cash requirements and the cash flow.

Guidelines for managing cash and petty cash are presented by Goniwe

(2005:129). A shared policy must be in place at schools on how to handle cash

 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
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payments. Someone must be in charge of the system for granting permissions and

managing the funds. Money handling and banking security must be in place and under

constant surveillance. Schools should retain a limited amount of cash on hand to cover

expenses like travel, purchases, and other cash-based expenses. A set sum of money

is kept in a secure location at the school (looked) and used to fund minor accounts for

checks or online payments. Making a budget for the school is a key component of

managing any financial resources.

Auditing is the review of a person, group, enterprise, system, process,

project, or product by an internal or external auditor. Mxuma (2006:37) argues that the

governing body's preparation of the financial accounts is insufficient. The accounting

must be reviewed by an outside auditor to make sure they are in order. The individual

chosen to review the school's financial records must be impartial and cannot be

involved in any of the institution's operations or business. Brimley and Rulon (2008:331)

define auditing as a systematic process or procedure for assessing a school's financial

operations in order to ascertain if assets and finances have been or are being used

lawfully and effectively. To audit a school's books and financial statements, the SGB of

a public school is required to designate a person who is registered as an accountant

and auditor under the Public Accountants and Auditors Act (Act No. 80 of 1991).

(FSDoDBE, 2005:7).

IV. Findings and Recommendation

 Republic of the Philippines
North Eastern Mindanao State University
Formerly Surigao del Sur State University
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FINDINGS

These findings aim to answer the following research question:

What are the essences of financial school management?

Managing school finances requires the four management pillars of

organizing, planning, leading, and controlling. Delegation is the process of giving

another member of the team the authority to carry out a certain task or activity and

giving them the resources they need to do so.

Monitoring and managing the school's financial situation are part of the

financial management task. Its three main responsibilities are controlling the school's

economic system, managing its asset structure, and analyzing its financial position. To

effectively manage the funding the school receives, a principal must use all

management processes and concepts.

The goals of financial management in modern education are to accurately

assess local educational training needs, secure funding based on those needs, and

lawfully administer the funding that has been secured.

The following research question is addressed in the next section:

What is the impact of policy-related documents on financial management in

schools?

The SASA states that the state pays for public schools. In order to ensure

that students' rights to an education are properly exercised and to address historical

inequities in the delivery of education, the state must allocate general revenue funds to
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public schools in a fair manner. The state must annually give public schools enough

details about the financing mentioned in Subsection 1 of the SASA so they can plan

their budgets for the following fiscal year.

In order to create self-managing schools, Section 21 of the SASA allows

schools to apply for certain of the duties that are typically handled by the state. These

duties include looking after school property, buying equipment and learning support

materials (LSM), paying for the services, and planning extracurricular events. Extreme

inequality and the potential for local populations, including parents and educators, to

lack the knowledge and resources necessary to appropriately safeguard the standard of

education supplied to their children are brought on by decentralization.

The funding allocated to each student in each of the five quintiles of schools

is seven times more for the poorest schools than for the richest. To rectify historical

injustices, this strategy is acceptable. However, it also puts more pressure on the school

governing bodies (SGB) of the schools in the top two quintiles to make up for the lost

revenue through fees or other forms of fundraising

RECOMMENDATION

This section addresses the research objectives:

What can possible solutions regarding financial management in schools be

brought forward?
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Based on the findings obtained from the questionnaires of the principal and

the chairpersons of SGBs, the following recommendations are made:

By the SMGD or by the deadline, the principal and the SGB chairperson

must have received financial management training. A choice to participate in

fundamental financial education is also provided by external service providers or higher

education institutions (HEIs). The DoBE may create a brief course in collaboration with

HEIs and make it available to principal SGB members.

The SGBs must be staffed with individuals who possess the relevant

qualifications, according to school communities. A individual with strong financial

expertise who could chair or be co-opted to the finance committee should be included in

this. Parents who fit the bill and possess the necessary qualifications ought to be

appointed to the SGB.

The administrator and the SGB (via the chairperson) must come up with

plans for how to get more money for the students from parents, the neighborhood, and

private organizations. At a parent meeting, these systems can be explored. Each grade

could be asked to plan one fundraising initiative for the entire year.

All monies received by the school must be monitored and handled properly,

according to the principals and SGB chairperson. This implies that any funding received

by the school must be recorded in journals or first-entry books. You have the option of

doing this manually or digitally. For each school in the district, the DoBE should think
 Republic of the Philippines
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about purchasing and downloading accounting software. To use such a piece of

software, certain individuals from each school need be trained.

Principals and SGB Chairpersons need reliable systems and tools to stop

money-laundering and fraudulent activities. A finance committee should be established,

and it should be led by an SGB member with strong financial competence.

The SGB should be in charge of the conversation when it comes to money-

related issues. Although the principle may have the most expertise about how money

should be allocated, SGBs shouldn't be coerced into making judgments because they

don't have enough financial knowledge.

Financial management procedures in educational institutions must be open,

transparent, trustworthy, and communicative. To achieve efficient financial

administration at the school, a close relationship between the principle and SGB

chairperson is crucial.

The terminology used in the present SGB training materials must be

understandable to SGB members. Because of the importance of school governance

and the fact that South Africa is a bilingual nation, SGB members must be adequately

prepared to participate in meetings.

V. Conclusion

The improvement of the financial management of failing schools by enlisting

the aid of the heads of successful institutions.

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The potential impact of bad financial management on secondary school

curriculum delivery.

The study dealt with financial management in Butuan City School of Arts and

Trades. The goal of the study was to determine how well-versed in financial

management in schools the SGB chairpersons and administrators are. Whether

financial management procedures and policies were correctly applied in the schools

was the researcher's main concern. Another major concern was the necessity for the

chairpersons of the SGBs and the principals to strengthen their financial skills.

Prior to the inquiry, the literature on financial management systems was

studied. The researcher was inspired to share the study's findings and

recommendations after receiving feedback from principals and the SGB chairperson. To

determine if the study adequately addressed these research questions, they were

connected to the research questions. According to the researcher, these study

questions have been satisfactorily addressed.