Great thoughts I think MTC should pursue this idea with experts from
cost acounting institutes.
Regards
Narahari
On 6/3/16, Chittaranjan Chatterjee <crchatterjee@gmail.com> wrote:
> Performance Audit in the Educational Institution
>
> We are all aware that business performance can be measured by several
> criteria:
>
> 1. Profit
>
> 2. Return on Investment
>
> 3. Brand equity
>
> 4. Market Share
>
> 5. Customer Satisfaction
>
> 6. Employee Retention, etc
>
>
>
> When it comes to service sectors and business of intangible services, the
> same criteria can't be applied. Similarly, for education, some of these
> criteria become redundant. At the same time, to make these institutions
> viable & sustainable, proper MIS & performance appraisal reporting are
> required. Moreover, many of these get some form of direct/indirect
> financial support from government.
>
>
>
> As we have seen over the years, many institutions in these sectors have
> been set up with much fanfare and have been serving the society. However,
> with passage of time, they lose the qualities which made them stand apart
> from other peers. Often, this is because inertia sets in. This can happen
> with businesses as well, but the management keeps checking the pulse of the
> organization as outlined above and keeps changing with the times as also
> keeps on deploying additional resources (monetary/non monetary) to take the
> business to not only sustain, but take it to the next level.
>
>
>
> Everybody understands that Education should not be run purely as businesses
> and need to maintain their dignity as noble professions. At the same time,
> our experience has shown that we need to nurture and sustain these
> institutions. In spite of many competitors coming up, IIMs & IITs have
> retained their premier positions. To continue doing so for next 50 years,
> will need faculty, infrastructure, new curriculum, control over costs &
> sustained goodwill. To keep them on track, Performance Reporting relevant
> for them needs to be devised.
>
>
>
> These can't be captured on financial reporting formats of a business as we
> all know, financial reports, such as Balance Sheet and P & L A/c do not
> tell the complete story of a business.
>
>
>
> The governing authorities of education institutions are often eminent
> persons from various strata of society and government nominees. Often they
> do not have domain expertise. However, they have entrepreneurial &
> administrative skills. Given the right reporting support, they can
> discharge their duties more effectively.
>
>
>
> Institutions in these sectors are often not competitors to each other, but
> serve a certain pocket of population. Hence sharing of performance
> parameters can help to achieve the best through benchmarking.
>
>
>
> Many of these get direct government funding. Rather than just get a fund
> utilization report, it is better to get Performance Report for the benefits
> derived from deployment of these funds. Often it happens that there is need
> to put more funds to get the desired benefit, which may not be visible in
> financial/ conventional reporting.
>
>
>
> Certain subsidies are extended to these institutions. Reporting of the
> benefits derived there from and justification for the same needs different
> form of reporting. There are cases where tax benefits end up benefiting the
> people who can afford to pay higher price. Hence, this angle needs to be
> brought out.
>
>
>
> By collating reports of all organization, the apex body can often spot gaps
> in the service for the area. It may happen that there is no Management
> Educational Institution in a district, which can't be brought out by
> conventional reporting. Similarly, to direct future capex and
> infrastructure buildup, paradigm shift in reporting is required.
>
>
>
> In addition to the above, it is also necessary to apply Cost Accounting
> tools to ascertain the following & include in the Performance Appraisal:
>
> 1. "Product/Service wise" costs & revenues: To identify "segmental"
> profit/loss and identify "cross-subsidiasation".
>
> 2. Fixed & variable cost analysis: For proper pricing of services and
> identification of "need" to subsidise Capital / Operational costs
>
> 3. Optimum utilisation of assets – by increasing utilisation, cost per
> unit impact can be reduced
>
> 4. Ideal ways to recover the above
>
> 5. How proper pricing can meet twin objectives of meeting costs and
> sustaining operations
>
> 6. "Industry norms" for benchmarking
>
> 7. Fair return to all stakeholders
>
> Need for Assurance:
>
> While it is good to get Performance Report from institutions, audit thereof
> is equally important. While there may be initial resistance to the same,
> this need to be formalized for the following:
>
>
>
> 1. Major Improvements in Governance have in most cases
> come only with force of law
>
> 2. Any system improving governance is a huge VALUE ADD for
> the Society i.e. you and me
>
> 3. Authentic Past Cost Data helps in preparation of
> reliable Budget/forecast
>
> 4. Ensure proper end-use of funds
>
> 5. Identification of visible & invisible losses/waste
>
> 6. This is suggestive in nature and not punitive & provides timely
> signals for corrective actions
>
> 7. Can be a good tool for "price" determination
>
> 8. The benefits of performance far outweigh costs thereof
>
>
>
> Under the above backdrop, I suggest that being Management Teachers
> Consortium, MTC Global should put up a proposal to the Institute of Cost
> Accountants of India (ICAI) for preparing a Guidance note on Performance
> Audit Format for economic viability and sustainability of the Institution
> in the future days to come.
>
> --
> Warm Regards
> CMA Chittaranjan Chattopadhyay
> Former Chairman, EIRC of ICAI (Formerly ICWAI)
> Founder Trustee of Society for Human Aptitude Knowledge Training &
> Implementation (SHAKTI)
> 09433013380
> *"They alone live who live for others, rests are more dead than alive."-
> Swami Vivekananda. *
>
> --
> The views expressed are individual and not necessarily MTC Global also share
> the same views.
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--
Dr.N.S.Narahari
Professor & Head,
Department of Industrial Engineering & Management
RV College of engineering
Bangalore-560059
Ph 91-080-67178032
Mobile :-09880311128
Personal E- Mail nsnarahari@gmail.com
--
The views expressed are individual and not necessarily MTC Global also share the same views.
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