Finance: Lessons in freedom for colleges grappling with finances
Wednesday 19 October 1994
Moreover, they are likely to be sceptical of the benefits of receiving their funding directly from the Further Education Funding Council rather than via the local education authorities, and so compound the problems.
In an effort to provide some much-needed help for managers trying to grapple with this tricky area, the Chartered Association of Certified Accountants has just published (6 oct) what it calls 'a comprehensive and practical guide'.
Written by Graham Carr, of North Hampshire (correct) Business School, which is part of Farnborough College and one of the 600-odd organisations affected by a change that came into operation in April 1993, it focuses on internal or management accounting systems. Among the topics covered are unit costing, profit centre financial management, budget development, financial controls, performance indicators and inter-college comparisons.
As Mr Carr points out, all of this is second nature to the average business but largely absent from the education arena. The funding council offers guidance on the presentation of basic accounts.
But, there is such due to the a shortage of material on such matters as costing individual courses, that he says he has had to take a largely prescriptive approach and describe the advantages and disadvantages of different methods and leave it up to individual colleges to pick what was is best for them.
Even colleges that have recruited accountants to deal with their new responsibilities have had trouble as result of the need to develop appropriate systems from scratch and without the aid of suitable models.
Nor is such information of merely theoretical interest. With colleges for the first time having the 'freedom to fail', it is possible for them to develop serious financial problems without knowing why.
This is likely to be because - although the managers can report either a small surplus or a loss over the year - they will not be aware of which aspects of the college are making money. and which are not. In a true business context such an approach would be like a manufacturing company trying to survive without product costing, says Mr Carr says.
However, obvious as is the need to break college costs down to the course level, is, finding an effective way to do it break costs down to the course level is difficult. The typical college - which may be a sixth-form college or a further education institute where less fewer than half the courses are of degree level - will have an annual budget of about (pounds) pounds 15m.
About 60 per cent of that is accounted for by salaries, with teaching staff taking up the biggest share.
But the rest is made up of indirect costs, such as running the building and administration, and it is here that the problems start. 'There is no obvious way to break it down,' says Mr Carr says. , adding that All he has set out to do is to tell colleges of the issues at which they need to look at.
He came to the subject because, besides working at one of the organisations affected, he and his colleagues had previously looked at the transformation in the National Health Service and advised on the development of accounting in the changing economy of Russia. He realised that the situation was broadly similar because it involved people who had not previously been exposed to a financial environment.
Acknowledging that the changes are creating a lot of stress, he hopes the guide will make managers - reluctant or otherwise - better able to make difficult decisions about such matters as closing courses.
(in italics) Effective Financial Management in Colleges of Further and Higher Education, by J G Carr, is available from the Chartered Association of Certified Accountants, PO Box 66, Glasgow G41 1BS. Price (pounds) pounds 15.
Diving in at the deep end is no excuse for shirking the style stakes
Consumers given power to choose a green deal
'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers
Money Alert: Twice as many young women fall into debt woes
Bargain Hunter: Eurostar offers child fares for £1 each way to Paris, Brussels and Lille
Relaxed pensions rules: Guide to what they mean to you
- 1 World Cup 2014: 20 things we learned in Brazil
- 2 Why I'm on the brink of burning my Israeli passport
- 3 War is war: Why I stand with Israel
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 World Cup 2014: Robin van Persie gives his bronze medal to eccentric Netherlands fan moments after being handed it by Sepp Blatter
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
Day In a Page
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square