University Finance And
Accounting System
Presented by:PRANESH DEBNATH
28/03/2015
Finance
• Finance is defined as the provision of money at the time when it is required. It performs all the activity
relating to procurement and proper allocation of resources to produce a better intended results.
28/03/2015University Finance and Accounting System
Step 1: Estimating the financial requirement
Step 2: Deciding the
capital structure Step 3: Selection of
source of finance
Step 4: Pattern of investment
Step 5: Proper cash manageme
nt
Step 7: Implementation
of financial control Step 6:
Proper use of surplus
Function of
Finance
Classification of Finance
28/03/2015University Finance and Accounting System
Central GovernmentState GovernmentLocal authority
Personal FinanceBusiness FinanceFinance of academic
intuition, & Other Non profit making organization
Finance
Private FinancePublic Finance
Admission Fee Central Govt. Land & Building Staff Payments
Registration Fee State Govt. Furniture Administrative Exp.
Tuition Fee Other Funding Agency Equipment. Academic Exp.
Examination Fee Donations Books & Journal Transportation Exp.
Guest House Rent Vehicles Repair & Maintenance
Sale of Prospectus Computer & Xerox Finance Cost
Miscellaneous Miscellaneous Other Exp.
Depreciation
28/03/2015University Finance and Accounting System
Financial System of University
Sources Applications
Internal External Planned Expenditure
Non-planned Expenditure
Accounting
• Accounting may be defined as the process of recording, classifying, summarizing, analyzing and interpreting
the financial transaction and communicating the result thereof to the person interested in such information.
Following functions are involve in accounting practice:
1. Recording,
2. Classifying,
3. Summarizing,
4. Analysis and Interpretation and
5. Communicating the information to interested parties.
Accounting is basically accountable for answering the following questions
1. What is owned by an organization;
2. what is owed to other;
3. . what is the amount of surplus/deficit for a particular period; and
4. Financial position at a particular date.28/03/2015University Finance and Accounting System
Basic assumption of University Accounting practice
• Fund based accounting: (W.J.Vatter in 1947)
In this concept of accounting instead of owner or separate entity an activity oriented unit (i.e. fund) is taken as basis of accounting. Here fund includes money and other resources employed for the attainment of intended objective. Mathematically it can be expressed as
Assets = Restriction on Assets*
*Liabilities against the fund.
Basically at the initial period cash basis of accounting was dominated in fund based accounting system because of some benefits of cash basis of accounting.
1.No need to exercise any judgment in determining non cash income & expenditure.
2.Compilation of cash based information is easier.
3.Operating costs are lower etc.
4.More objective in recording of transaction least subjectivity.28/03/2015University Finance and Accounting System
Limitations of Cash basis of Accounting
28/03/2015University Finance and Accounting System
Information Cash Basis
Accrual Basis
Is information about the assets & liabilities available? NO YES
Whether matching of costs and benefits is possible? NO Yes
Whether financial information is Comparable in wide manner?
NO Yes
Accrual basis of accounting enjoys some advantages over the cash basis of accounting and because of that in some developed countries like UK, USA, Australia, Canada, Germany, Itali etc. Government organization also maintaining their books of account on accrual basis and developing South Asian countries are in the stage of implementation of accrual based accounting system for public sector and other non profit making institutions for financial reporting purpose.
Source: www. http://esafa.icai.org/wp-content/uploads/2014/03/Study-Accrual_Accounting_in_SAARC_Governments_1.pdf
Basis of University Accounting
28/03/2015University Finance and Accounting System
Cash basis (recording of transaction on the basis of actual receipts and
payments of cash)
Accrual basis (recording of transaction based on its relation with the current period )
1. Fees from students, Interest on Savings A/c
Grant from UGC: utilized (Capital + Revenue expenditure) unutilized.
Sponsored Project2. Purchase of stocks
3. Purchase of computer
4. Retirement benefits
Balance Sheet of University
28/03/2015University Finance and Accounting SystemSource: www. http://mhrd.gov.in/
SOURCES OF FUNDS Schedule Current Year Previous YearUNRESTRICTED FUNDS
Corpus Fund 1 General Funds 2 Earmarked Funds 3
RESTRICTED FUND 4LOANS/BORROWINGS 5
Secured UnsecuredCURRENT LIABILITIES & PROVISIONS 6
TOTALAPPLICATION OF FUNDS
FIXED ASSETS 7 Tangible Assets Intangible Assets Capital W-I-P
INVESTMENTS 8 Long Term Short Term
CURRENT ASSETS 9LOANS, ADVANCES & DEPOSITS 10
TOTALNotes on Accounts 22
(Amount Rs………..)
Income and Expenditure A/C of University
28/03/2015University Finance and Accounting SystemSource: www. http://mhrd.gov.in/
R.F.CorpusDesignated General Capital Total Total
INCOME Academic Receipt 11
Grants & Donations 12
Income from Investments 13
Other Income 14
TOTAL(A)EXPENDITURE
Staff payments & Benefits 15
Academic Expenses 16
Administrative Expenses 17
Transportation Expenses 18
Repair & Maintenance 19
Finance Cost 20
Other Expenses 21
Depreciation 7
TOTAL(B)
Surplus/Deficit carried to General FundNotes on Accounts 22
Unrestricted FundPrevious
Year
Balance being excess of Income over Expenditure(C=A-B)
Transfer to/ from designated fund, building fund, other(D)
(Amount Rs………...)
ScheduleCurrent Year
28/03/2015University Finance and Accounting System
Role of Audit
When the accounting work is completed, an Auditor is invited to check the accounts prepared by the accountants. That means “Auditing begins where accounting ends”. After completion of his (Auditor’s) work he has to submit a report stating the fact whether or not the financial statements exhibits a true and fair position of the financial affairs of an organization.
AuditInternal Audit
Statutory Audit
Transparency
Accountability
Good Governance
Efficiency
Economy
Effectiveness
Conclusion• Accounting and Finance are distinct from each other but these two terms are
not mutually exclusive rather complementary in nature because in present business scenario large volume of financial activity is hardy possible without proper record keeping and accounting without financial activity has no use.
• Accounting is a knowledge and this knowledge helps in finance function. In a nutshell Finance is the life blood which helps to keep the organisation alive and Accounting is the record keeper and reporter of information regarding financial activity i.e. both of them take equal part in forming the financial system of an organisation.
28/03/2015University Finance and Accounting System
Thank You
28/03/2015University Finance and Accounting System