NATIONAL COLLEGE OF BUSINESS AND ADMINISTRATION

CENTER FOR GRADUATE STUDIES IN BUSINESS & MANAGEMENT

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Fairview, Quezon City

FINANCIAL MANAGEMENT
Case study for Group 3

Submitted by: Junie P. Maambong

Submitted to: Dr. Maximo S. Artieda

1. TITLE: Linking the Level of School Financial Management Among School

Heads: A Case Study in Mandaue District, Cebu, Philippines

2. Situation:

One of the problems that arises in the appointment of school managers is that the
appointment itself is not based on the training and expertise possessed by school
heads, which in turn will cause the appointed school heads to manage in a trial-and-
error manner. The said school head will also be heavily dependent on the
accounting clerk who is known to be more experienced in the school's financial
management. Therefore, this would cause problems in the financial management of
the school due to the prevailing in due course, which will cause the school heads to
lose confidence in deciding concerning the financial management of their schools.
This inadequate situation will be made worse if Department of Education (DepEd)
officials are not involved in monitoring and handing assistance to them.

The study found that only 32.8% of the total number of principals were directly
involved in the school’s financial management. The number showed a quite
disturbing rate of the lack of involvement of school heads who were directly involved
in their schools’ financial management. All school heads should participate actively
in all aspects and stages of the financial management of the school this is to ensure
the effectiveness and efficiency financial management of the school. With this,
things happen because the school head has to give full confidence to the staff to
manage the finances and accounts of the school, wherein the school head only has
to put their signatures down on essential documents.

School heads as well fail to plan available resources in managing the school
accounts proficiently. Accordingly, problems arise when expenditure is made without
proper planning which will cause other impediments such as failure to use the school
funds to achieve intended purposes. Additionally, several procurement procedures
may also show incongruities such as purchases made without proper order forms
which obtained in advance by suppliers. Moreover, some payments might be made
without using payment vouchers or supporting documents. Thus, if the school head
does not have the same level of knowledge of the school's financial management,
this will lead to his/her failure to plan, manage, and control the school accounts
effectively.
A delayed government fund received by the schools is an additional common issue
involving school financial management in the Philippines. This causes limited
financial resources for the schools and to overcome this issue, schools must use
another source of funding such the funding from the collection generated by the
Parents and Teachers Association (PTA). Nevertheless, if the PTA account does not
have sufficient financial resources, this will eventually lead to problems in carrying
out school activities by the school administrations.

This study seeks to determine the level of understanding of financial management

school heads and ten secondary schools in Mandaue District, Cebu, Philippines.
The comparison of the level of teachers’ knowledge of financial management based
on gender, experience, educational attainment, and finance training attended will be
discussed in this study.

3. Introduction and Background of the Topic

Financial management in education is the most vital realm, the effective dealing of
which ensures the promotion of education quality achieved by the provision of
resources. Educational expenditures are considered as investment, which forms one
of the tangible inputs. Cost-benefit analysis can be used to identify school
effectiveness. A proper ratio of expenditures can be maintained by keeping a
balance between spending on teachers and instructional processes as well as
expenditures on management and pupils. Effective supervision of educational
expenditures ensures control over both overspending and money lapsing. The
financial category includes revenues, grants, expenditures, and use of funds.

The financial aspect of schools also merits consideration as the allocation of funds
and its proper utilization of students’ learning enhance the internal efficiency of
schools. Unfortunately, a meager amount fact that is lacking of knowledge and
experience among school heads in preparing school expenditures. The Auditor
General explained that one of the causes of the financial management weaknesses
that were often raised is the Luck of interest among school heads in managing the
accounts and finances of the school. This problem is almost certainly due to lack of
knowledge and experience, to the education failing to make supervision of the
officers and staff involved in finance.

The appointment system of a principal or school head in the Philippines is not purely
based on expertise possessed by the individual in the school management as well
as their training in leadership and management, instead, most principals or school
heads are appointed based on “seniority” or the length of service rendered.
Therefore, school heads will have no choice but to manage the finances and
accounts of their respective schools assisted by the financial clerk. This is allocated,
annually, to schools and that is not adequate to help promote the efficiency of
schools. According to Masood et al (2004:12), Government’s spending on education
shows how much priority is given by Government to the education sector.

On the other hand, Caldwell and Spinks in Mestry (2006; 27) explain school-based
management as an approach to the management of public schools wherein there is
a significant and consistent decentralization to the school level (giving the school
the) authority and responsibility to make decisions related to the allocation of
resources, in a system of education having centrally determined goals, priorities and
frameworks for accountability.

The Dep-Ed central office and its school heads remain involved in direct
management and operations, including decisions in procurement, health and
nutrition, project management, and building of physical facilities, when it should be
performing a more directive role. Dep-Ed continuously issues memos as the basis
for action even for very local decisions, perpetuating a culture of compliance and
reliance (PIDS, 2009).

This success is in large part thanks to significant increases in financial investment

by the central government. A recent report from the World Bank shows that
“between 2010 and 2015, public spending on basic education increased by 60
percent in real terms, and per-student funding levels also increased considerably”
(AlSamarrai, 2016). This is due to an increase in education expenditures as a share
of the national budget coupled with an expanding Philippine economy (David &
Albert, 2015).

4. Summary of your Results / Solutions

LITERATURE REVIEW

Clarke (2008) describes financial management as follows: It is essential that the

school principal makes sure that she/he has the knowledge and understanding of the
basic processes involved in managing the school accounts, the budgeting process,
and the systems and controls that are necessary to ensure that the schools’ monies
are not misappropriated.

With this, one of the weaknesses faced by the school heads in financial management
is that they don’t know how to administer accounting issues in school. This deficiency
of understanding in the accounting field results in troubles in the school
administration. The efficiency of the school heads in financial management is
essential and should be given attention. Effective accounting management requires
the school head to possess some theoretical knowledge in the field of accounting.
This knowledge will help them in framing the actual situation to be faced in the
financial administration of the school. It also helps the school head in providing
supporting documents on how funding is acquired and spent.

Among the undertakings to be addressed by the school head are managing orders
and dealing with uncontrolled purchases to avoid the problems of excessive buying.
Additionally, some school heads also fail to review the list of purchases made. There
are also cases of teachers who have violated the procedure of purchasing goods
purchases.

This problem of the appointment of school heads and principals who are mostly
without proper training and skills in financial management and have not attended any
training before being appointed eventually causes the newly appointed school heads
to have a trial and error scheme in administering their respective schools. This,
makes the school head solely rely on the finance staff to deal financial issues of the
school. These problems are made worse if the school does not have financial staff.

RESEARCH METHODOLOGY

Qualitative methods were used in this study using face-to-face interviews with the
selected school heads. The findings from these interviews are supported by the
observation of further documents, files, and records. This method required the
researchers to go to schools to interview subjects. Structured questions were used in
the interviews and all respondents were asked the same set of questions.
Researchers also take down notes during interviews. The selection of ten (10) school
heads/principals was done randomly in ten schools in the different districts. Method
of in-depth interviews was conducted on each of the respondents to obtain complete
information.

The interview used in the research consisted of two main parts. Part A concerns the
background and experience of the school heads/principals, while questions used in
Part B are designed to find out the school heads/principals’ understanding of the
financial management of the school. The content questions to the school heads
during the interview relate to issues such as the school financial system, procedure
of receivable and collection, purchasing and payment, cash book management,
school account management, and auditing.
Table 1 shows 4 male respondents and six female respondents who were randomly
selected to be interviewed. The respondents also had different levels of education.
In terms of teaching experience, three of the respondents had more than fifteen
years of teaching experience, while three of the respondents had more than ten
years of administrative teachers. Among ten respondents, only four had
experienced being school heads for more than six years. The findings showed that
all school heads had basic knowledge about the accounts in school and the details
should be recorded in each account. However, only three of the respondents had
not attended any training concerning financial management. School Heads 1 and 9
had the highest academic qualifications compared to the other respondents and the
study found that they could explain more efficiently about how to manage schools
finance and accounting. They also understood clearly about cash book
management and how reviews/evaluations should be made in the payment and
receipts.

Research showed that the experience as a teacher of the selected school heads
did not affect the level of understanding of the school’s financial management and
accounting. Such as, School Heads 1, 3 and 6 had more teaching experience than
other school heads but they did not display a high level of understanding of the
school's financial management and accounting compared to other respondents.
Instead, School Heads 1, 4 and 9 who had more experience in years as a
headmaster had a higher level of understanding of the school’s financial
management and accounting. The findings, on the other hand, showed that gender
did not affect the level of understanding of the accounting and financial
management of the school. For example, School Heads 2 and 4 (male) had a lower
level of understanding of accounting and finance schools, on the other hand,
Headmaster 7 (male) was more dependent on the financial clerk in the financial
management of the school.

The level of understanding of the headmaster on the school’s financial management

and accounting was not influenced by the experience as an administrator or as a
senior assistant teacher. As such, 3, 6, and 8 were more experienced as senior
assistants of their schools but did not display a high level of understanding of the
school’s financial management and accounting.

Thus, school heads who had attended courses on financial management were
found to have a better understanding of the school’s finances and accounting.
Although other factors helped them in understanding the financial management of
the school, such as the headmasters’ own experiences and academic qualifications,
these financial courses were also seen as helping the headmasters to better
understand the school’s financial management.

5. Conclusion

The results presented that the experience of being school head, education level,
and financial courses attended are important factors in determining the school
head’s knowledge in accounting and financial management of the school. However,
the gender, and experience as a teacher and senior assistant teacher do not
contribute to knowledge in accounting and financial management of the school.
Most teachers and senior assistant teachers are not directly involved in the school’s
financial management and accounting. Most of the tasks related to financial
management and accounting of the school usually become the responsibilities of
the school managers and financial clerks. Hence, appointment as school managers
should have a first degree and are obliged to follow courses about the schools’
financial management.

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