RAMON MAGSAYSAY TECHNOLOGICAL UNIVERSITY

Graduate School Department

Iba, Zambales

Course Code: EDMA 608

Course Title: School Finance and Business Management
Professor: Dr. Esmen M. Cabal
Submitted by: Jerson P. Agsi
Course: Doctor of Education Major in Educational Management

THE SCHOOL ADMINISTRATOR AS FINANCE OFFICER

Definition of Terms
• Budget – a written statement of money; where it is drawn from, its amount and
how it is to be spent
• Finance – management of public or company revenue
• Manager – someone who manages household or other affairs in a specified way
• Finance Manager – someone who manages the finances of the organization
• Financial Management – refers to the planning, organizational control of those
activities which affect the uses and sources of funds
• Cash Advance – cash entrusted to authorized employees to cover payments of
obligations
• Outstanding Accounts – unliquidated obligations
• Notes Payable – the liability of a borrower arising from a note given to a lender
• Note – is a written, legal document given by a borrower (maker or payer)
to a lender (recipient or payee)
• Liability – probable future sacrifices of economic benefits
• Treasury Bills – a government obligation bearing no interest but issued discount
and payable at par when it matures (usually 90 pays)
Introduction
 The increasing significance of the role of finance in the success or failure of any
educational institutions and the dramatic rise in operating a school demands that
the school administrator plays effectively the role of a finance manager and abide
 in the philosophy of financial management which is the “min-max” principle,
that is “minimize risk-maximize profit”. He operates on a budget, quantifies
resources needed and available for the achievement of educational objectives
Duties and Responsibilities of FMO
• General Functions
• Supervises the efficient operation on the Finance Office
• In-charge for the custody and supervision of the university funds
• Specific Duties
• Responsible for the custody and supervision of the university
• Supervises the collection and disbursement of funds
• Provides over-all supervision of the Receivable Accounts Management of
the university
• Submits regularly financial report to the management
• Guides management in the investment of surplus or earnings
• Recommends approval for the release of cash disbursement and petty cash
funds
• Does other duties as maybe required by the Vice-President for Finance or
University President
• Make sure that an adequate amount of funds is available, and that the
receipt of funds is timed to funds disbursement
• Sees to it that available funds are utilized to the full advantage and ensures
that funds are obtained at the most advantageous terms
• He does not spend nor approve the financial resources of the school to be
spent without passing the “A-N-A-T” guidelines
• “A-N-A-T” guidelines
• A – is such expenditure authorized by the budget?
• N – is such expenditure a necessity?
• A – are the amounts accurate?
• T – is the timing proper?
To monitor the financial condition of the school, he should ask the following questions:
• One: “What is our position?”
 • Two: “How much are payables?”
• Three: How much are our payables?”
Job Requirements
• Must be a holder of Bachelor’s Degree in Business Management, major in
Accountancy, preferably with an appropriate master’s degree
• Must be trustworthy, honest, alert, and loyal to the university
• Must be physically and mentally fit
• Possesses good communication skills

Most Common Financial Malpractice in Operating a School

 Violation of the accounting principle of cost entity concept. Separate the
owner/administrator personal account from the school account.
o Principle of Cost Entity Concept – It is an accounting concept wherein
cost should be properly considered. The purchase price of good should be
recorded at a time it was purchased. In the absence of original cost, use the
historical cost.
 Juggling the funds and interest – the funds of one institution or entity is being
used for another or are juggled to the other units. The school administrator should
know the actual funds allocated to each entity for proper allocation.
 Unaccounted Cash Advances – the exact cash advances given out to
owners/administrators cannot be accounted for, due to lack of documentation
 The school has a high amount of outstanding accounts and notes payable. The
school is spending more than what is earning. Overhead may be very high.
 The school gets a loan to pay another loan – this is more dangerous when the loan
borrowed is a short-term loan used to pay a long-term loan.
 Poor wage structure – the employees are paid not according to their job and
contribution to the school but according to their relationship to the owner.

Three Basic Components of Financial Statements

 Profit and Loss Statement (F and L statement) – this essentially contains the
revenues earned and the costs incurred by the school. In absolute terms the P and
L Statement shows the level of profitability of an educational institution for the
given period of time.
 Cash Flows Statement (CF Statement) – this basically shows the movement of
cash within the school for a given period of time. It essentially has two major
components: the source of cash, and the uses of cash. It immediately provides a
school manager information on how funds are utilized, and when major chunks of
funds go; it therefore assists him on how cash can be effectively utilized and
where control can be instituted.
 Balance Sheet Statement (BS Statement) – this fundamentally presents the
financial condition of the school at any given point of time. It consists of two
major components:
o Assets and Liabilities
o Capital
It follows one basic rule: what you own (assets) must be equal to what you owe
(Liabilities and Capital) and that the differences between the Assets and
Liabilities represents the true worth (value as return on investment) of the school.

A knowledge of such financial statement can lead school administration to

conceptualize some ideas for improving the financial condition of the school. The
following questions are for income improvement:
1. How can the school increase its services and what will be the effect on
income?
2. Where fees can the school reduce fixed expenses, and what will be the
effect on income?
3. What fees can be increased by how much, and what will be the effect on
income?
4. Where can variable costs be reduced, and what will be the effect on
income?
5. How can the school improve the services offered?
Alternative Decision to Formulate, to Increase School’s Income
1. Increase school services if the marginal income rate in the fees is positive
2. Reduce fixed costs
3. Increase marginal income rate by:
a. Increasing fee level
b. Reducing variable costs
c. Improving services

All income should be deposited in the account of the school and all payments as
much as possible should be by check.