University Finance

And
Accounting System

Presented by:
PRANESH DEBNATH
28/03/201
5

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.

Step 2:
Deciding the
capital structure

Step 1:
Estimating the
financial
requirement

Step 7:
Implementation
of financial
control

Step 3:
Selection of
source of
finance

Function
of
Finance

Step 6:
Proper use of
surplus

University Finance and Accounting

System

Step 4: Pattern
of investment
Step 5:
Proper cash
manageme
nt

28/03/2015

Classification of Finance
Finance
Public Finance

Central Government
State Government
Local authority

University Finance and Accounting

System

Private Finance

Personal Finance
Business Finance
Finance of academic
intuition, &
Other Non profit
making
organization
28/03/2015

Financial
System of
University
Application
s

Sources

Internal
Admission Fee

Central Govt.

Registration Fee
Tuition Fee

Sale of Prospectus

Staff Payments

Furniture

Other Funding Agency

Guest House Rent

Miscellaneous

Land & Building

State Govt.

Examination Fee

Non-planned
Expenditure

Planned
Expenditure

External

Equipment.

Donations

Administrative Exp.
Academic Exp.

Books & Journal

Vehicles

Transportation Exp.

Repair & Maintenance

Computer & Xerox

Miscellaneous

Finance Cost
Other Exp.

Depreciation

University Finance and Accounting

System

28/03/2015

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.
University Finance and Accounting
System

28/03/2015

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.
University Finance and Accounting
System

28/03/2015

Limitations of Cash basis of Accounting

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.

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

Source: www. http://esafa.icai.org/wp-content/uploads/2014/03/StudyAccrual_Accounting_in_SAARC_Governments_1.pdf

University Finance and Accounting

System

28/03/2015

Basis of University Accounting

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

2. Purchase of stocks

Sponsored Project

expenditure) unutilized.

3. Purchase of computer
4. Retirement benefits

University Finance and Accounting

System

28/03/2015

Balance Sheet of University

University Finance and

Accounting System

Source: www. http://mhrd.gov.in/

28/03/2015

Income and Expenditure A/C of University

University Finance and Accounting Source: www. http://mhrd.gov.in/

System

28/03/2015

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 (Auditors) work he has to submit a report stating the fact
whether or not the financial statements exhibits a true and fair position of the
Efficiency
financial affairs of an organization.Transparenc
Good
Internal Audit

Audit

Statutory Audit

University Finance and Accounting

System

y
Accountabili
ty

Governanc
e

Economy
Effectiven
ess

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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.

University Finance and Accounting

System

28/03/2015

Thank You
University Finance and Accounting
System

28/03/2015