Module can be downloaded from this link – email email@example.com for the password.
Module 2: Financial and Asset Management, NQF Level 5, Credits 15
Finance is called “The science of money”. It studies the principles and the methods of obtaining control of money from those who have saved it, and of administering it by those into whose control it passes. Finance is the process of conversion of accumulated funds to productive use. It is so inter- mingled with other economic forces that there is difficulty in appreciating the role it plays.
In simple terms finance is defined as the activity concerned with the planning, raising, controlling and administering of the funds used in the school. Thus, finance is the activity concerned with the raising and administering of funds used in the school.
- Lectures 13
- Quizzes 10
- Skill level NQF Level 6
- Language English
- Students 3
- Assessments Self
Financial and Physical Resources Management
Section 1: School Principals and School Finance
As a school principal or aspiring school principal, you need to understand the basics of financial management. Doing this will give you a better understanding and an informed view of the school's performance and allow you to play a role in shaping its strategy. Thousands of non-financial people: Feel uncomfortable in discussions with financial and accounting specialists Are baffled by financial terminology and accounting ‘buzz words’ Miss career and school opportunities because they lack financial knowledge Fail to effectively use budgets, balance sheets, income statements and other financial data that they receive. Your actions and decisions affect your school’s financial picture. If you are making those decisions without a solid understanding of finance and accounting, you are working in the dark. As schools become more competitive, it gets harder to be successful by just doing OK. Finance and accounting are having an impact on many schools in ways never before thought of by school leaders outside of financial departments.
Section 2: Key Financial Concepts.
What are the key concepts of Finance? Accounting is ‘the language of money ' – at its most basic level. Accounting is a tracking system of the income, expenses, assets and debts of a school. By learning the language of accounting, you will be able to communicate and understand the financial operations of any school. At its heart, accounting is the recording, presenting and interpreting of financial transactions into useful information. Of course, there are many ways to record, present and understand accounting information so, to avoid confusion, a standard set of rules or principles were created. These are known as GAAP – Generally Accepted Accounting Practices. It is because of GAAP that financial information can be compared, and it means that everyone is playing by the same rules. (More on GAAP later in this module.)
Section 3: Financial Planning
One of the tasks of a school leader and manager is planning. There are two types of plans – strategic plans and operational plans. A Strategic Plan Is usually more than just a statement of goals. It is a statement of purpose, a request for support and a call to action. The purpose of a school strategic plan is to guide the overall direction of the school, i.e. what it wants to do and how it will do it. The strategic plan does not contain a lot of details about implementation or how the program is going to be put into place. It talks more about the strategies the school will follow, the benefits that will be achieved, and how that will make the school move closer to achieving its primary goals. An Operational Plan Is primarily intended to be a short-term guidebook, (usually one year), for the school leaders and staff who have the responsibility for carrying out the plan. It contains details they need to do their work – milestones, action steps, detailed budgets and timetables. Once management has decided on a school plan for the next year they need to find out if they can afford to achieve the goals they have set and if the plan will make a profit for the school.
Section 4: Financial Reporting, Forecasts and Budgets
Objectives of Financial Reporting • Providing information to management of an organisation which is used for the purpose of planning, analysis, benchmarking and decision making. • Providing information to investors, promoters, debt provider and creditors which is used to enable them to male rational and prudent decisions regarding investment, credit etc. • Providing information to shareholders and public at large in case of listed companies about various aspects of an organization. • Providing information about the economic resources of an organization, claims to those resources (liabilities and owner’s equity) and how these resources and claims have undergone change over a period of time. • Providing information as to how an organization is procuring and using various resources. • Providing information to various stakeholders regarding performance management of an organization as to how diligently and ethically they are discharging their fiduciary duties and responsibilities. • Providing information to the statutory auditors which in turn facilitates audit. • Enhancing social welfare by looking into the interest of employees, trade union and Government. There are several financial reports that a school leader must be able to read and use. These include a balance sheet, an income statement, a cash flow statement and an audit report.
Section 5: Financial Monitoring Systems, Fundraising and Sponsorship
Financial monitoring or control systems need to be in place in any school to ensure that the school can be held financially accountable. In the module on School Leadership and Management, we discussed what accountability meant – "the Buck Stops Here". In other words, the school leader has the ultimate responsibility for what happens in his school. There have been numerous cases of fraud and corruption in our schools, municipalities, State Owned Enterprises (SOEs), etc. As school leaders, we need to ensure that we have financial monitoring systems in place to expose fraud and corruption.
Section 6: Supply Chain Management, Asset and Risk Management
Assets procured for use over a period of time must be carefully managed and controlled. This process is also known as inventory management. Assets represent cash, and therefore the mismanagement of assets means the mismanagement of cash. If the process of purchasing, storage and control of goods and assets is not properly managed, this creates an environment conducive to theft and corruption.