WP3 – Practical Exercise Collection for the Identification of ...

WP3 – Practical Exercise Collection for the Identification of Possible Modernization in Financial Management FH JOANNEUM Gesellschaft mbH – Dimitrios Doukas & Claudia Linditsch Kasetsart University – Nirundon Tapachai November 2018

Project Coordinator

Dimitrios DOUKAS, Mag.

dimitrios.doukas@fh‐joanneum.at

+43 (0)316 5453 6816

Graz, November 2018

This project has been funded with support from the European Commission. This publication reflects the views only of the authors, and

the Commission cannot be held responsible for any use which may be made of the information contained therein. Project number:

561905‐EPP‐1‐2015‐1‐AT‐EPPKA2‐CBHE‐JP

Table of Content

Introduction to this Output of the ADVANSE Project ........................................................................................... 9

Methodology Applied for the Output Development ............................................................................................ 9

What is an Action Plan? ....................................................................................................................................... 10

Indonesia ............................................................................................................................................................. 11

Universiti Sumatera Utara ........................................................................................................................... 11

1. General Overview of the University ............................................................................................................ 11

1.1. Vision, Strategy and Objectives of the University ................................................................................... 11

1.1.1. Vision ............................................................................................................................................. 11

1.1.2. Strategy ......................................................................................................................................... 11

1.1.3. Objectives ...................................................................................................................................... 12

1.2. Financial Management ............................................................................................................................ 12

1.2.1. Financial Framework ..................................................................................................................... 12

1.2.2. Objectives of Financial Management ........................................................................................... 13

1.2.3. Key Player in Decision Making Connected to Financial Management ......................................... 13

1.2.4. SWOT Analysis of the Current Financial Management Framework ............................................. 14

2. Action Plan 2018 – 2021 for Financial Management ................................................................................. 15

2.1 Strategy Axes for Improvement ................................................................................................................ 15

2.1.1. New Forms of Financing ................................................................................................................ 15

2.1.2. Internet Technology ...................................................................................................................... 15

2.1.3. Planning and Controlling ............................................................................................................... 15

2.1.4. Human Resource Management .................................................................................................... 15

2.2. Implementation of the Defined Improvements ...................................................................................... 15





2.2.5. Involvement of the University Authorities ................................................................................... 17

2.3. GANTT Chart for the Planned Improvements ......................................................................................... 18

2.4. Summary of Improvements ..................................................................................................................... 18

2.5. Added Value to the University after the Implementation of Improvements ......................................... 21

2.6. Sustainability Measures for the Improvements Implemented ............................................................... 21

3. Feasibility of the Planned Improvements ................................................................................................... 22

4. Conclusion ................................................................................................................................................... 22

Universiti Gadjah Madha ............................................................................................................................. 23


1.1. Vision, Strategy and Objectives of the University ................................................................................... 23

1.1.1. Vision ............................................................................................................................................. 23

1.1.2. Strategy ......................................................................................................................................... 23

1.1.3. Objectives ...................................................................................................................................... 24













4. Conclusion .................................................................................................................................................... 38

Malaysia ............................................................................................................................................................... 40

Universiti Putra Malaysia............................................................................................................................. 40


1.1. Vision, Strategy and Objectives of the University .................................................................................. 41

1.1.1. Vision ............................................................................................................................................. 41

1.1.2. Strategy ......................................................................................................................................... 43

1.1.3. Objectives ...................................................................................................................................... 47

















2.2.5. Involvement of the University Authorities ................................................................................... 60






4. Conclusion .................................................................................................................................................... 77

Universiti Teknologi ..................................................................................................................................... 78


1.1. Vision, Strategy and Objectives of the University .................................................................................. 78

1.1.1. Vision ............................................................................................................................................. 78

1.1.2. Strategy ......................................................................................................................................... 78

1.1.3. Objectives ...................................................................................................................................... 79





















4. Conclusion ........................................................................................................................................... ……...92

Thailand ............................................................................................................................................................... 93

Kasetsart University ..................................................................................................................................... 93


1.1. Vision, Strategy and Objectives of the University ........................................................................................ 94

1.1.1. Vision ............................................................................................................................................. 94

1.1.2. Strategy ......................................................................................................................................... 94

1.1.3. Objectives ...................................................................................................................................... 95







2.1. Strategy Axes for Improvement ............................................................................................................... 98




2.1.4. Human Resource Management .................................................................................................. 100

2.2. Implementation of the Defined Improvements .................................................................................... 101

2.2.1. New Forms of Financing .............................................................................................................. 101

2.2.2. Internet Technology .................................................................................................................... 103

2.2.3. Planning and Controlling ............................................................................................................. 104

2.2.4. Human Resource Management .................................................................................................. 105

2.2.5. Involvement of the University Authorities ................................................................................. 105

2.3. GANTT Chart for the Planned Improvements ....................................................................................... 106

2.4. Summary of Improvements ................................................................................................................... 107

2.5. Added Value to the University after the Implementation of Improvements ....................................... 111

2.6. Sustainability Measures for the Improvements Implemented ............................................................. 111

3. Feasibility of the Planned Improvements ................................................................................................. 111

4. Conclusion .................................................................................................................................................. 111

Naresuan University .................................................................................................................................. 113

1. General Overview of the University ........................................................................................................... 113

1.1. Vision, Strategy and Objectives of the University ................................................................................ 113

1.1.1. Vision ........................................................................................................................................... 113

1.1.2. Strategy ....................................................................................................................................... 113

1.1.3. Objectives .................................................................................................................................... 114

1.2. Financial Management .......................................................................................................................... 114

1.2.1. Financial Framework ................................................................................................................... 114

1.2.2. Objectives of Financial Management ......................................................................................... 115

1.2.3. Key Player in Decision Making Connected to Financial Management ....................................... 115

1.2.4. SWOT Analysis of the Current Financial Management Framework ........................................... 116

2. Action Plan 2018 – 2021 for Financial Management ............................................................................... 115

2.1. Strategy Axes for Improvement ............................................................................................................. 117


2.2. Implementation of the Defined Improvements .................................................................................... 118


2.3. GANTT Chart for the Planned Improvements ....................................................................................... 119

2.4. Summary of Improvements ................................................................................................................... 120

2.5. Added Value to the University after the Implementation of Improvements ....................................... 122

2.6. Sustainability Measures for the Improvements Implemented ............................................................. 122

3. Feasibility of the Planned Improvements ................................................................................................. 122

4. Conclusion .................................................................................................................................................. 123

Introduction to this Output of the ADVANSE Project

The ADVANSE project wants to create a sustainable impact on the higher education institution partners

from Indonesia, Malaysia and Thailand. It is of utmost importance to the consortium that the outputs

created and the activities conducted during the frame of this Erasmus+ Capacity Building in Higher

Education project will also be used and applied after the end of the project.

The main aim of the ADVANSE project is the modernization of the financial management systems in

higher education institution in Indonesia, Malaysia and Thailand. In the output 3.2 practical exercises

were developed and presented. In this output which can be identified as the next step, it is the aim of

the project consortium to present individually created action plans for the participating higher

education institutions. The action plans focus on the period between 2018 and 2021 and given the

timeframe, partners are already implementing the action plans at their universities. With the

implementation of these action plans, the impact of the ADVANSE project on the partner higher

education institutions is well visible.

This document will be spread to other higher education institutions in Indonesia, Malaysia and

Thailand and can be taken as a reference model and spin doctor to improve financial structures at

other universities as well.

Methodology Applied for the Output Development

Generally, it was essential that all outputs created within WP3 ‐ Practical Exercise Collection for the

Identification of Possible Modernization in Financial Management are constitutive meaning that the

developed knowledge in outputs 1 and 2 are supportive for the development of the strategic action

plans that are output 3.

In terms of the methodology applied within this output it can be said that a template was provided to

the higher education institutions from Indonesia, Malaysia and Thailand which was filled out together

with the major stakeholders at the university dealing with financial management. The template

created and used for creating this output focused on identifying action plans for the financial strategic

axes that were identified in the previous two outputs (3.1 and 3.2). The stakeholders that were

consulted for this output included bursars, heads for the financial management unit, representatives

of faculties responsible for finances and accounting staff. The composition of staff suport for the

development of this outputs was determined by each university itself given the different financial

strategic axes on which each university focused. In order to combine knowledge from output 2,

partners were asked to adapt the content of output 2 to an implementation period until 2021.

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561905-EPP-1-2015-1-AT-EPPKA2-CBHE-JP

What is an Action Plan?

In some ways, an action plan is a "heroic" act: it supports organizations including universities in

improving and achieving future aims in a structured way. Further, it can be said that an action plan is

a way to make sure that the vision of an organization including universities is made concrete. It

describes the way a group of people within an organization such as a faculty or department will use its

strategies to meet its objectives. An action plan consists of a number of action steps or changes that

need to be incorporated in the available structure of the organizational unit/faculty.

An action plan is always connected to project management as whenever changes will be implemented

projects are created and need to be implemented according to a proper planning. Therefore, the

proper planning involves a template with milestones of the most important changes that will be

implemented, the responsibilities connected to the changes, a time‐ and resource plan. All these

essential elements are part of the template which was filled in by all partners. To add value to the

action plans created within the ADVANSE project, a feasibility study as well as sustainability indicators

of the changes were added, to show the impact that can be created according to the action plans.

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Indonesia

Thereinafter, the action plans of partner universities from Indonesia will be presented. In the end of

this section a short summary will be given to summarize the main results generated.

For Indonesia, the action plans for Universiti Sumatera Utara (USU) and Universiti Gadjah Madha

(UGM) will be shown thereinafter. Both universities are partners of the ADVANSE project and leading

universities in Indonesia.

Universiti Sumatera Utara

1. General Overview of the University

Universitas Sumatera Utara (USU) has been designated as Public University with Legal Entity based on

the Statute of USU under Government Regulation number 16 Year 2014. This regulation provides

autonomy for USU to increase its competitiveness in order to realize its vision through USU’s Strategic

Plan 2015 ‐ 2019 and its Long Term Development Plan 2015 ‐ 2039. Teaching and research activities in

USU involve 1,632 lecturers, whereas 81% of these lecturers have postgraduate education background.

USU has 15 faculties and 1 school focusing on Medicine, Law, Agriculture, Engineering, Dentistry,

Economics, Cultural Science, Mathematics and Natural Sciences, Social Sciences and Political Science,

Public Health, Pharmacy, Psychology, Nursing, Information Technology (IT), Forestry, and Postgraduate

Studies. USU offers 156 study programs consisting of 19 doctoral programs, 32 masters, 18 medical

specialists, 5 professional programs, 49 undergraduates, and 15 diploma degrees. Currently, USU has

43,000 registered students, of whom 3% of them are foreign students.

1.1. Vision, Strategy and Objectives of the University

1.1.1. Vision

USU follows the vision of becoming a university with academic excellence as a barometer of the

progress of science to compete in the global world.

1.1.2. Strategy

To reach its vision, USU follows the following strategies:

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Organizing autonomy‐based higher education institution which is a place for character development and human resource professionalism;

Producing graduates who become agents of change as a force of modernization in the lives of the wider community;

Developing and improving education, research culture and community service programs in order to improve academic quality.

1.1.3. Objectives

USU’s objectives in running high quality higher education institution are:

to produce high quality graduates that can compete at international level with the ability to develop science, technology, humanities, and arts;

to produce innovative research that promotes the development of science, technology, humanities and arts internationally;

to improve the quality of sustained learning managements based on international standards;

to serve as moral and intellectual power in building a strong Indonesian civil society;

1.2. Financial Management

Public University with Legal Entity such as USU has considerably greater autonomy than other

institutions in the field of organization, financing, staffing and academic matters. As a legal entity, USU

is separated from the government bureaucracy and becomes more accountable to the public.

Therefore USU has a dual management system with a board of trustees with external representation

responsible for the university as a whole apart from strictly academic matters where the university

senate is the highest authority.

Financially, USU receives block grants and can reallocate money between budget lines. USU has

freedom to use its self‐generated income and can accumulate reserves. Therefore, the expectation to

improve the performance of financial services is higher than before. Since 2014, USU has developed

several information systems such as Work Plan and Budget and Financial Accountability Information

Systems. These information systems aim to increase the budgeting efficiency and financial reporting

accountability of USU.

1.2.1. Financial Framework

Most public universities in Indonesia have financing model based on negotiated budget model derived

from historic costs. Therefore this kind of model does not adequately recognise differential costs and

carries no incentives for performance improvement. As legal entity, University of Sumatera Utara

(USU) manages its financial affairs based on the source of university’s funding. Funding that is received

from central government will follow regulations set by Ministry of Finance of Republic of Indonesia.

Funding from local government, income in the form of tuition fees, and earnings from its revenue

generating activities follow regulations set by University of Sumatera Utara. The Office of Accounting

13


of USU produces the university’s financial report quarterly and annually and submits these reports to

the Ministry of Finance and Ministry of Research, Technology and Higher Education of Republic of

Indonesia. In terms of monitoring and evaluation of its financial affairs, University of Sumatera Utara

is audited internally by its Financial Audit Unit and the Committee of Audit. External audit carried‐out

by Chartered Public Accountant Office at the end of financial year. University of Sumatera Utara is also

audited by the General Inspector of the Ministry of Research, Technology and Higher Education and

the Audit Board of Indonesia for funding received from the central government.

As USU is a state‐owned higher education institution with funding coming from the government and

its self‐generated income activity, the autonomous financial management allows USU to be more

flexible in the planning of its annual budget. USU has two types of sources of funding:

Non‐governmental funds consist of tuition fees, revenue from assets management, industrial projects, institutions cooperation, grant from local government and donations

Public funds from government consist of salaries for lecturers/staffs with employment status as civil servant, infrastructure investment and subsidy for overhead costs (direct and indirect)

Non‐governmental funds are allocated to every study programs, faculties and academic supporting

units with percentage between 65%‐85% of their projected incomes from tuition fees.

1.2.2. Objectives of Financial Management

Based on Statute of USU, 5 key objectives of USU’s financial management are followed:

Realizing an accountable financial budget and reports to its stakeholders.

Managing USU´s financial affairs professionally in the three categories of financial activities of teaching, research and community services (Tri Dharma).

Improving the internal monitoring and evaluation system in every aspect of USU’s financial activities.

Maintaining the credibility of Financial Bureau, Office of Accounting and Financial Audit Unit of USU in managing, auditing and reporting USU’s financial affairs following the national standards.

Maintaining Unqualified Audit Report.

1.2.3. Key Player in Decision Making Connected to Financial Management

As USU has the autonomy to manage its own financial affairs, the university´s annual budget and

spending is audited by registered public accountants at the end of fiscal year. Based on USU statute,

the key players that have authorities in decision making in USU’s financial management are The Board

of Trustees, Rector, Vice Rector for Financial Affairs (Bureau of Financial Office), Vice Rector for

Planning, Development and Information System (Bureau of Planning and Development), Accounting

Office and Internal Audit Unit of USU. Board of Trustees has a role to approve USU’s annual budget

planning. Rector of USU has the highest authority to execute the annual budget. In term of planning

the annual budget, Rector of USU is supported by Vice Rector for Planning, Development and

Information System. In term of executing the budget and managing every aspect of financial activities,

Rector of USU is supported by Vice Rector for Financial Affairs and Bureau of Financial Affairs of USU.

All these activities monitored and evaluated by the Internal Audit Unit and Audit Committee.

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Figure 1. Annual Work Plan and Budgeting

1.2.4. SWOT Analysis of the Current Financial Management Framework

Strengths:

USU has full authority to manage its financial affairs

USU has freedom to use its self‐generated income and can accumulate reserves

Weaknesses:

USU has several modular information systems. USU needs to integrate all its financial management information system and its accounting software

Opportunities:

USU has the authority to restructure its financial management organizations based on the autonomy given by the central government

USU has the authority to diverse its revenue generating activities through utilization of USU’ assets in order to increase its annual income. These include research and consultancy carried out for industry, donations and sponsorship, income earned from trading activities.

Threats:

USU needs to be adaptive to the financial rules, regulations and standards set by Audit Board of Indonesia and Ministry of Finance.

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2. Action Plan 2018 – 2021 for Financial Management

It is possible to improve the financial management system, which would allow achievement of the set

strategic objectives.

2.1 Strategy Axes for Improvement

2.1.1. New Forms of Financing

Donations

Project with third parties

2.1.2. Planning and Controlling

IT services

Campus connectivity

Financial hardware including software

Financial software including updates

Data quality


Quality norms of implementation

Audited Finance Processes

Existence of long‐term planning

Existence of short‐term planning

Current budget vs forecast situation analysis

2.1.4. Human Resource Management

Training

Recruiting and selecting procedure

Department structure

Institutional goals

2.2. Implementation of the Defined Improvements

There are 4 most important improvements which can be implemented at Universitas Sumatera Utara

in the future. These are new forms of financing, information technology, planning and controlling and

human resources.

16



USU has issue a more detail and clear financial guidance in accordance with USU’s financial autonomy status.

USU will simplify its regulation on partnership agreements and policy on mandatory fees in each project in order to stimulate the increased number of partnership realized by its researchers.

Increased collaboration with private parties and industries on researches and community services.

2.2.2. Internet Technology

USU will revitalize its IT systems and peripherals in order to support the workflow of the new integrated financial information system.

The IT department has increased the bandwidth connectivity from previously 500Mbps to 1Gbps as well as revitalized the internet connectivity in several offices such as financial bureau, accounting and internal audit department as well as planning and budgeting bureau.

The IT department also focusing on improving the database quality and its management as well as recruiting expert staffs to handle the database in more efficient manner.


USU plans its academic activities based on the USU Strategic Planning Document 2015 ‐2019 and the Long Term Plan Document 2015 – 2039.

In 2017 USU revise its Strategic Planning Document to adapt the Ministry of Research, Technology and Higher Education’s five‐year strategic plan.

Rector makes it mandatory for dean and director of units to submit their annual budget plan with more detail forecast of revenues and target agreements from each unit/faculty.

Rector issues a policy for units with better target agreement realisation to be allocated additional development budget as an incentive to the best performance units.


Regularly perform evaluation, training, and workshop on the implementation of the integrated financial information system provided to the respected user.

Increase the quality of existing online recruitment system.

Conduct regular evaluation of the structure of the financial department.

USU has issued a new policy to certify and regularly perform evaluation and training for its financial officers in university and unit/faculty level.

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2.2.5. Involvement of the University Authorities

The new integrated financial information system requires active participation of all USU’s financial

officers. As USU has the autonomy to manage its own financial affairs, the university’s annual funding

and budget is audited by chartered public accountant office at the end of fiscal year. USU also produce

its financial accountability and performance report quarterly and annually to be disseminated to the

Ministry of Research, Technology and Higher Education and Ministry of Finance of Republic of

Indonesia. The current financial framework provides sufficient flexibility for USU as Higher Education

Institution to be efficient in planning its budget and allocate its funding based on the priorities

programs set its Strategic Planning document in order to achieve the expected KPI set by the Ministry.

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2.3. GANTT Chart for the Planned Improvements

2.4. Summary of Improvements

Improvements M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21 M22 M23 M24

IMP

1

Incentive of

Publication

SUB 1.1

Review of the

existing

accounting

system.

SUB 1.2

Development

new Accounting

System

SUB 1.3 Implementation

and Evaluation

IMP

2 Incentive of PATENT

SUB 2.1

Development of

Academic

Document

SUB 2.2

Development of

System

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Strategic Axes Core topic (Please select the ones related to your university)

Description of Improvement (max 5 sentences or describe in bullet points)

Objectives ( be precise and use bullet points)

Timeframe (short or long‐term and indicate approximate year of implementation)

Responsibility (Management/Academic/ Department)

Changes/Remarks

New Forms of Financing

Donations Projects with private

parties and industries

Issue a more detail and clear financial guidance in accordance with USU’s financial autonomy status.

Donation based with new form of donation which gives intangible benefit to funders

Increased collaboration with private parties and industries on research and community services

Increase non‐ government source of income

Year 2019 – 2020 (short term)

Year 2019 – 2025

Financial Bureau Planning and Development Bureau

Auditing Bureau

Internet Technology

IT services Campus connectivity

Financial hardware incl. software

Financial software incl. updates

Data quality Other (please name)

Revitalization of the IT system, peripherals and equipment in order to support the workflow of the new integrated financial information system

Revitalization of the internet connectivity in several offices such as financial bureau, accounting and financial audit units/offices as well as in the planning and development bureau

Increase the use of access to the new integrated financial information system

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Improvement of the database quality and its management as well as recruiting expert staffs to handle the database in more efficient manner

Planning and Controlling





Current budget vs. forecast situation analysis

Regularly perform evaluation, training, and workshop on the implementation of the system provided to the respected user

Conduct regular evaluation of structure of department. USU has made a new policy to certify and regularly perform evaluation and training for its financial officers in university and unit/faculty level.

Issue a more detail and clear financial guidance in accordance with USU’s financial autonomy status.

Increase efficiency in planning USU budget and allocate its funding based on the priorities programs

Achieve the expected KPI set by the Ministry of Research, Technology and Higher Education

Planning and Development Bureau

Auditing Office

Human Resource Management

Training



Institutional goals

Regularly perform evaluation, training, and workshop on the implementation of the system provided to the respected user

Good online recruitment system

Accountable financial officer

HRD bureau

Recruitment department of Financial Bureau

21


Conduct regular evaluation of organization structure.

Regularly perform evaluation and training for its financial officers in university and unit/faculty level.

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2.5. Added Value to the University after the Implementation of Improvements

Real time and easy to access accounting reports should be achieved in order to increase the

accountability of USU with its new status as Legal Entity State University. Increased sources of

income/funding should be realized include the research and consultancy activities carried out for

industries and private parties.

2.6. Sustainability Measures for the Improvements Implemented

Increased number of collaboration projects with private parties and industries

Unqualified Opinion on USU’s Annual Financial Report

Increased number of Certified Financial Officers in running the new Integrated Financial Information System

3. Feasibility of the Planned Improvements

The improvement planned fits to the strategy of USU as Legal Entity State University. It fits 5 key

objectives of USU’s financial management which are realizing an accountable financial budget;

managing USU financial affairs professionally in three categories of financial activities of teaching,

research and community services (Tri Dharma); Improving internal monitoring and evaluation system

in every aspect of USU’s financial activities ; Maintaining the credibility of Financial Bureau, Office of

Accounting and Financial Audit Unit of USU in managing, auditing and reporting USU’s financial affairs

following the national standard, and Maintaining Unqualified Opinion on USU’s Annual Financial

Statements

4. Conclusion

After the implementation of the improvements, University of Sumatera Utara (USU) will have a

modern and accountable and transparent financial system. This will guarantee the professionalism of

USU financial officer to realize good state university governance in Indonesia. Then, USU can efficiently

exercise its autonomy in order to increase its competitiveness internationally as planned in USU

Strategic Plan 2015 – 2019 and Long Term Development Plan 2015 – 2039 with the ability to increase

the self‐funding high quality teaching, research and community service activities with accountable

financial reports.

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Universiti Gadjah Madha


Universitas Gadjah Mada (UGM) was established on December 19, 1949 as a state and national

university. Considered one of the oldest universities in Indonesia, it serves as a pillar of educational

awakening in Indonesia, and purports to be a defender and disseminator of Pancasila (National Five

Principles).

UGM headquarters is located in the Bulaksumur Campus, Yogyakarta. As of today, UGM has 18

faculties, a vocational school, and a graduate school, offering more than 251 courses. UGM’s mission

is inspired by the spirit of Tri Dharma of Higher Education (Tri Dharma Perguruan Tinggi), comprised of

Teaching, Research, and Community Services. More than 56,000 students, both domestic and

international, are studying at UGM in a myriad of vocational, undergraduate, and graduate programs.

Further information is available on www.ugm.ac.id


As one of the leading universities in Indonesia, Universitas Gadjah Mada have to answer the nation’s

mandate to HEIs, which is to produce skilled human resources and contribute to research base and

innovation capacity which determines competitiveness in knowledge‐based global economy. UGM’s

vision and mission and also its objectives will be met by using strategies elaborated below.

1.1.1. Vision

Please describe the vision of your university clearly in max 10 sentences.

Vision: To be a pioneer World Class University, excellent and innovative, to serve the Nation and

Humanity based on national cultural values and the national Ideology, Pancasila.

Mission: To carry out education, research, and community service as well as preservation and

development of knowledge that is excellent and useful for society.

1.1.2. Strategy

Based on the university's internal and external conditions and the rapidly changing demands of the

environment in technology and service quality, the main strategies that will be run by UGM during the

period 2018‐2022 are as follows.

24


Strengthening the scientific orientation. UGM will focus on the development of UGM‐based

excellence and uniqueness science to improve the welfare of the people of Indonesia and the

World through tri‐dharma.

Strengthening bureaucratic reformation. UGM will reform the bureaucratic process to create

excellent university services, increasing stakeholder confidence, and providing welfare guarantees

based on clean bureaucracy and free of corruption, collusion and nepotism.

Reorganizing the university. UGM will reorganize its organization structure and governance to be

more flexible, functional, and precise so that it can effectively and efficiently adapt to the changing

demands of the environment.

Strengthening national and international cooperation. UGM should develop a sustainable

network with strategic partners to support the improvement of the quality of tri‐dharma.

Full Integration of information systems. UGM will integrate all academic and non‐academic

information system and database since it becomes a necessity condition for supporting the mission

and vision.

Strengthening the university governance. UGM must have good governance to improve the

organization's capacity in an accountable, fair, transparent, effective, and efficient manner.

1.1.3. Objectives

Education: Excellent quality education based on cutting‐edge technology, cross‐disciplinary, with Postgraduate Program as the backbone to produce graduates who are virtuous, superior, intelligent, creative, skilled, innovative and social entrepreneurial, who are aware of their responsibility to the nation and humanity.

Research: Environmentally sound research that becomes a national and international reference, and can provide solutions to community‐based problems, nations, and countries based on cultural wisdom by engaging external stakeholders.

Community Service: Community Service based on scientific and appropriate implementable technology that can encourage sustainable independent and welfare community development, so that the university could function as a place for the application of science and technology innovation for the community and for product development management to support the downstream of research results.

Supporting Areas consisting of Human Resources, Physical and Environmental Infrastructure, Organization and Governance, Finance, Information Systems and Cooperation: Good university governance based on a just, transparent, participatory and accountable integrated information technology system to support effectiveness and efficiency resource utilization.

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1.2 Financial Management

Universitas Gadjah Mada gets its funding from three main sources: government fund, tuition fees and

third parties funding. The financial management is conducted by the Directorate of Finance under the

leadership of Vice Rector for Planning, Finance and Information System. The university’s annual

budget undergoes review from the Board of Trustees and will be executed upon approval.


Based on the average of the three last year figures, the financial resources for the university budget

come from university activities (tuition fees, projects, etc.) (around 50%), allocation of government

budget (33%), and donations and others (15%). The government budget has been specifically

purported for salaries and benefits (15% of the university budget), research (10%), and block‐grant for

operating cost (10%). The budget of the university activities consists of 35% tuitions and fees, and 25%

non‐educational activities such as contracts,

Table 1. Budget of Fund Resources 2018

# Fund Resources Amount (US $) %

1 Allocation from Government Budget 71,227,318.87 33

2 University Activities 111,522,845.03 51

3 Donations and Others 35,221,792.74 16

TOTAL 217,971,956.64 100

# Government Budget Allocation Amount (US $) %

1 Salaries 36,116,249.19 51

2 Block‐grant for Operating Expenses 20,092,296.30 28

3 Research Activities 15,018,773.39 21

TOTAL 71,227,318.87 100

# University Activity Resources Amount (US $) %

1 Tuitions and Fees 66,690,046.89 60

2 Non‐educational Activities 44,832,798.14 40

TOTAL 111,522,845.03 100

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Table 2. Budget of Expenses 2018

# Expenses for Three University Functions Amount (US $) %

1 Education Activities 123,783,787.56 57

2 Research Activities 66,037,502.34 30

3 Community Development and Services 28,150,666.73 13

TOTAL 217,971,956.64 100

# Type of Expenses Amount (US $) %

1 Salaries and benefits 103,828,224.99 48

2 Purchase of Goods and Services 70,800,575.61 32

3 Maintenance 8,119,806.58 4

4 Transportations and Accomodations 13,945,544.81 6

5 Fixed Assets Investment 21,277,804.65 10

TOTAL 217,971,956.64 100

The budgeted expenses of the university are for education activities (55%), research (30%), and

community services (15%). Based on the types of activities, the expense budget consists of salary and

benefits (48%), purchases of goods and services (32%), maintenance (4%), transportation and

accommodations (6%), and investment on fixed assets (10%). For example, the following tables and

graphs present the structure and composition of the university budget for 2018.

71.227.318,87; 33%

111.522.845,03; 51%

35.221.792,74; 16%

Graph 1: Fund Resources 2018 (US $)

Allocation from Government Budget

University Activities

Donations and Others

27



The five key objectives of the university financial management for the next four to five years aim to

have:

comprehensive and autonomous integrated financial information and performance‐based budgeting systems,

an integrated cash‐less financial management system that is transparent, effective, efficient, and accountable,

an effective internal audit system for mitigating all financial risks,

a significant amount of contributions from university‐owned business units and auxiliary units, and

a significant amount of endowment fund.

123.783.787,56; 57%

66.037.502,34; 30%

28.150.666,73; 13%

Graph 2: Expenses Budget 2018 (US $)

Education Activities Research Activities Community Development and Services

103.828.224,99, 48%

70.800.575,61, 32%

8.119.806,58, 4%

13.945.544,81, 6%

21.277.804,65, 10%

Graph 3:Budget for Type of Expenses 2018 (US $)

Salaries and benefits

Purchase of Goods and Services

Maintenance

Transportations and Accomodations

Fixed Assets Investment

28



The annual accounting period for the university is January 1st to December 31st. At the beginning of

April, the university should submit an initial annual budget proposal to the Ministry of Research,

Technology, and Higher Education, as a basis for determining the allocation of government funds. The

ministry then will work together with the Ministry of Finance to determine the amount of government

block‐grant fund that will be allocated to the university. At the mid or end of September usually the

government has decided the indicated amount of budget allocated to the university.

The internal budgeting approach employed is participative budgeting which means that every unit

should chip in in developing budget to finance their activities. At the mid of the year the university

head office, represented by the Budgeting Committee, will distribute the budgeting guidelines to the

budget participating unit that consists of all faculties, schools, directorates, offices, and study

programs. The Committee consists of the Rector and all Vice Rectors, Executive Secretary, Directors

of Finance, Human Resources, Academics, Research, Community Services, Students’ Services, and

Internal Audit, supported by the budget unit’s staffs. The guidelines consist of rules, assumptions,

conditions, block‐grant fund, targeted outcomes, and budgeting schedules. Based on the guidelines,

the budget participating units (faculties and work units) develop and submit its proposed budget to

the Committee to be compiled and negotiated. The compiled budget then will be sent to the Academic

Senate to get consideration before processing for approval by the Board of Trustees. The Board of

Trustees will discuss and negotiate the proposed budget with the Committee and then approve the

budget on the third or fourth week of December.


Strengths:

UGM as Stated Owned Legal Entity has the authority to self‐manage non‐academic policies in the management of human resources, assets and finances.

UGM has been using a participative budgeting system (Annual Budget Plan) gradually with the approval from Board of Trustees through performance based information system, and the realization of that proposed budget is disbursed through integrated financial information system, so there is no cash disbursement other than approved budget aforesaid.

Treasury system (revenue and cash disbursements) decentralization in the Finance Directorate with rector accounts through virtual account and host‐to‐host transactions.

UGM periodically prepares interim financial statements (quarterly / quarterly) and annual. The Annual Financial Statement of UGM is audited by a qualified independent public accountants as approved by the Ministry of Finance and interim financial report reviewed by the Internal Audit Office.

Asset management and asset acquisition of UGM is conducted systemically through asset information system

29


under the responsibility of Asset Directorate (DA) and Procurement and Logistics Center (P2L) so that the procurement, management of usage, and asset maintenance can be done more optimally.

Weaknesses:

The flow of information and distribution of tasks among the units is less integrated and less equitable. The common practice is that the information as well as distribution of tasks are not conducted online but in papers so it takes extra time and energy to manage.

The delay in changing the paradigm of HR in responding to regulatory changes from public service unit into stated owned legal entity so that the implementation of some regulations is relatively less flexible. Any HR policies should be in line with the regulation from the central government therefore sometime the regulations are less appropriate compared to the development of the university and may impact on the decisions of execution decisions.

Not all budget participating units understand the rules and mechanisms of the implementation of the revenue allocation fund system and the centralized fund management system, so there are funds held in the unit's name.

Asset procurement is conducted using the concept of waiting for a new budget ceiling to plan needs so that planning is adjusted to the amount of ceiling but not necessarily based on their needs.

Policies, facilities and infrastructure, as well as culture to develop academic internationalization needs to be strengthened and developed to build up a deeply entrenched culture in UGM.

Lack of policy which regulates the management of incoming funds from third parties

Opportunities:

A relatively large autonomy with strong government support for programs and public scrutiny.

Development of performance measures that shift from administrative to more substantive, i.e. output‐based performance.

The development of resource use the scheme based on ideas comes from the vast network of UGM and many good practices have been implemented.

Improved integration of information systems in accordance with the latest information technology developments.

Increase of creative fund (the funding that UGM gets based on the utilization of its assets as well as from cooperation network with company to obtain CSR fund allocation and / or other creative fund) activity development as source of scholarship fund for underprivileged students.

Opportunities for profitable business investments that can be an additional source of funds.

30


Availability of integrated information system technology to support the innovative learning process through digital learning and integration of UGM database. This will speed up the teaching – learning process as well as the decision making.

Threats:

Some existing internal and government regulations and policies are less synchronized with each other and less supportive for UGM as PTN‐BH.

Stakeholders and communities increasingly demand the excellent service from the university otherwise they could easily choose other universities providing excellent service.

Increasing number of competing programs or institutions using creative resources and CSR.

Strict business competition may increase the risk of business investment failures by the university.

The need for large funds to adopt the rapid development of information technology in maintaining the current state of the information system.

The development of information technology and the digital world that increased the funding needs for innovation.


Based on the SWOT analysis and strategies to apply, the usage of IT is the most important thing to do

to ensure a real time online reporting in order to ease the decision making process of the university

leaders. Improvement in the IT will be conducted through several stages, in which it needs the

cooperation among directorates to ensure the smoothness of the improvement process.

2.1. Strategy Axes for Improvement

In which axes are you planning to make your improvements in? Please select only those which are

relevant for you and delete the others. This is the core chapter of this report – therefore, please

describe actions and improvements in very detail. It is not necessary to define an action plan for each

of the subchapters which can be found below.


The usage of virtual accounts in the university will simplify the process of managing the incoming funds centrally and easy in terms of processing.

Less cash and maximise the telegraphic transfer/internet banking to pay transactions made by working units.

31


The usage of web‐based information technology in the financial management: budgeting (simabeka.simaster.ugm.ac.id), procurement of goods and service (sirencang, simpel, spse, dan simonev), and fund disbursement and reporting (simkeu.ugm.ac.id) to enable efficient and effective financial management in UGM.

Usage of hris.simaster.ugm.ac.id to manage human resources (employees’ data and payroll)

Online SPJ (Financial Transaction Claim Process) to enable efficient financial reporting.


How: By implementing the plan into several actions. Pilot project will be conducted in the central office and after gaining feedback from the users, the system will be socialized to all units within the university.

Who: The Directorate of Finance, the Directorate of ICT and the Executives

When: Within the framework (2018‐2021)

Where: Universitas Gadjah Mada

With which resources: Human resources, financial resources, IT resources

32




IMP

1 Online Financial Report

SUB 1.1

Standard Operating

Procedure

SUB 1.2 Support system

SUB 1.3 Human Resources

IMP

2

Administrative

Centralization and

Academic

Decentralization

SUB 2.1

Organization

Evaluation

SUB 2.2

Preparing Modules

(batch 1 & 2)

SUB 2.3

Presenting the

modules to

university top

management to get

feedback

SUB 2.4

Revising modules

based on feedback

33



2018‐2021

Strategic axis Aspects/Variables Activity

Objectives Target

Stays Improves Indicator

New ways of Financing Donations Government grant for

employee's salary payment

V

The salaries and

allowances for

civil servants

Projects with 3rd parties

(Government, Enterprises)

BPPTN Support for integration

system, DAMAS, ADVANSE, HELM

Project

V More

sophisticated

system, meet

the needs of

users,

intergrated

system which

applied in all

units in the

University

34



Objectives Target


Sell of services Company or

University Alliances

University Management

(Director, staffs) their expetise as

resource person for

benchmarkings, trainings, etc

V

Information Technologies

IT services fulfill University´s

needs.

Developing intergreted financial

system (real time online)

Manual IT V

Internet base

(can be accessed

anytime and

anywhere)

On time university financial

report

It takes around

3 months to

complete the

financial

reporting

V

Financial

reporting is

completed

within 30 days

Campus Connectivity Workshop on financial

management system

development

V

Financial Hardware or

Software update

35



Objectives Target


Data Quality

Reconciliation of

financial data and

assets are

conducted manually

V

Reconciliation of

financial data and

assests conducted

automatically

Planning and Control

Quality Norms of

Implementation

annual budgeting forecast,

monthly monitoring and

evaluation, quarterly financial

reporting

V

Audited Finance Processes audit financial statement of

university/faculty/units

Existence of Long Term

Planning

5 years strategic planning

activities

Existence of Short Term

Planning

annual strategic planning

activities

Correct Budget vs. Forecast

Situation Analysis

The Implementation of the

budget in accordance with

applicable regulations

V

36



Objectives Target


Human Resources

Training

Workshop and training V

Website for any news update on

financial matters

V

Selection Open Recruitment conducted by

Directorate Human Resources

Centralized V

University´s Finance

Department Structure

Available at ditkeu.ugm.ac.id

(attached)

V

Institutional Goals Decentralization V Centralized

37


UNIVERSITAS GADJAH MADA

WP 3.2. & 3.3.FINANCIAL MANAGEMENT MODERNATION AND ACTION PLAN (2018‐2021)

Field Problem Solution ACTION PLAN

INFORMATION SYSTEM FOR FINANCIAL REPORTING

It takes 3 months to complete financial report.

Develop a strong and integrated finance information system (start from budgeting – treasury – reporting)

simabeka. simaster.ugm.ac.id

simkeu.ugm.ac.id

Improve a compliance of financial reporting

Cooperate with Information System Department and Finance Department to evaluate, improve our financial information system to be more powerful and integrated for financial reporting

Evaluate regulation of financial reporting in whole units

Implement reward and punishment for person/unit that comply or not comply

Estimated Schedule: start from 2019

Different asset balance between Asset Department and Finance Department

Data reconciliation periodically (monthly)

Build integrated system for asset reporting

Asset Department and Finance Department make a reconciliation meeting.

Cooperate with Information System Department, Finance Department, and Asset Department to evaluate, improve our financial information system to be more powerful and integrated for financial reporting.

Estimated Schedule: 2018

Various characteristic units (such as faculty, study center, hospital, bank, hotel)

Provide a comprehensive accounting standards and guidance for every different unit.

Supervise units how to make accountable report

Finance Department and Internal Audit Unit collaborate to make guidance and supervise all units.

Estimated Schedule: December 2017

Disability to use information technology for financial reporting

Held workshop and training information technology periodically ( twice a year)

Host: Finance Department

Participant: Finance Staffs and IT administrators

Estimated Schedule: March and October 2018

38



The planned improvement of the university is conducted by implementing

the plan into several actions. Pilot project will be conducted in the central office and after gaining

feedback from the users, the system will be socialized to all units within the university. The feedback

the university get from the users helps in improving the system. At this time the improvement is

conducted in the integration of the human resource system and financial management to finance the

performance based incentives. Other areas are targeted and improved gradually.

4. Conclusion

As the university’s mission is to carry out education, research, and community service as well as

preservation and development of knowledge that is excellent and useful for society, and to adapt the

changing demands in the international world, UGM reorganizes its organization structure and

governance to be more flexible, functional, and precise so that it can effectively and efficiently run its

business. UGM must have good governance to improve the organization's capacity in an accountable,

fair, transparent, effective, and efficient manner by integrating all academic and non‐academic

information system and database since it becomes a necessity condition for supporting the mission

and vision.

The improvement in the information system and database is conducted through the following things:

integrating financial information system (SIMKEU) and human resource information system (HRIS),

procurement of goods and service as well as asset management information system (SIMPEL,

SIRENCANG etc.), online financial claim process (SPJ online) etc.

It is expected that by improvement in several areas, UGM will be able to leverage its service to the

stakeholders while at the same time accomplish its mission.

Summary

Summarizing the action plans of Indonesia, the following statements can be made:

UGM is strongly focusing on internet technology as a strategic axe in order to improve the available

financial management system. Important issues connected to this strategic axe and the action plan

are the usage of virtual accounts which will simplify the process of managing the incoming funds

on a central basis which also minimizes cash payments and the usage of web‐based information

technology for budgeting, procurement and reporting. Implementation of these improvements will

be done through pilots that are already in place and in trial as the timeplan states a duration of 24

months after the official end of the project.

USU concentrates on improvements in the areas of new forms of financing, internet technology,

planning and controlling as well as in the area of human resource management. All major strategic

39


axes are covered and a special focus will be put on internet technology and human resource

management.

o USU will increase the bandwidth of the internet on campus to make sure that the planned

integrated financial management system which is based on ICT and supports in budget

decision, fiduciary responsibilities and the preparation of financial reports and statements is

working on adequate speed.

o USU will further offer trainings on the integrated financial information system to make sure

that users are well trained and the outputs needed can be generated given the right skills

available.

o USU created a timeplan that reflects on all improvements planned in all strategic axes.

Certainly, both universities are aware of the fact that resources need to be invested in order to

implement the universities which are already planned by the financial department given also the

support promised by the rectorates of both universities and the impact generated through the

ADVANSE project.

40


Malaysia

Following the action plans of the two partner universities from Malaysia will be introduced in detail.

Both plans will be presented and analyzed in the end of the section.

This section starts with presenting the action plan of Universiti Putra Malaysia, UPM, and will then

continue to give deeper insights on the case of Universiti Teknologi Mara, UiTM.

Universiti Putra Malaysia


Universiti Putra Malaysia (UPM), a multi‐disciplinary university with a distinguished 87‐year history, is

globally‐recognised for its excellent academic disciplines and programmes that have contributed

immensely to knowledge and skilled human capital development since 1931. As one of Malaysia’s

largest and premier universities, UPM has a long standing reputation for teaching and research

excellence and has over the years become a favoured choice for students from all over the world.

As a world class centre of learning, UPM offers a wide portfolio of academic disciplines for its nearly

25,000 students. The students are enrolled in 74 bachelor, 7 diploma and 42 coursework programmes.

There are 5 research programmes at the Master and PhD levels. All these programmes cover 265 fields

of studies including include Engineering, Agriculture, Forestry, Veterinary Medicine, Medicine & Health

Sciences, Economics & Management, Educational Studies, Science, Food Science & Technology, Human

Ecology, Modern Languages & Communication, Design & Architecture, Computer Science &

Information Technology, Biotechnology & Biomolecular Sciences and Environmental Sciences. Except

for the diploma programmes which are offered exclusively at UPM’s branch campus in Bintulu,

Sarawak, and other courses are offered at the main campus in Serdang, Selangor.

Located approximately 22 kilometres south of Malaysia’s capital city, Kuala Lumpur, UPM is one of the

five designated Research Universities (RU) that are deeply committed to the discovery, research and

distribution of knowledge. Founded in 1931 and known internationally as one of more distinguished

universities in the region, UPM main campus in Serdang is strategically located within Malaysia’s

ambitious Multimedia Super Corridor (MSC), a special zone designated by the Malaysian Government

to support the country’s transformation into the information technology and knowledge age. As one

of the largest universities in Malaysia, UPM is also a key‐player in contributing to the growth of learned

and skilled human capital in the nation.

UPM aims to inspire its academic community towards teaching and research excellence; and ultimately

towards the material and spiritual betterment of the society. While its forte is agriculture,

understandably because of its proud history as a pioneering agriculture school established in 1931,

UPM is today a multi‐disciplinary institution of higher learning and an outstanding research hub,

attracting researchers, scientists and scholars from all over the world. UPM possesses all the necessary

41


qualities and resources to be at par with renowned local and international institutions of higher

learning. There are currently ten research institutes that focus on research in the areas among others

agricultural and food policy, halal products, mathematical research, research on ageing, bioscience,

tropical agriculture and food security and advanced technology. Research outputs are commercialised

through Putra Science Park, which is dedicated towards moving potential technologies and research

from laboratory to the market. Until now UPM has accumulated more than 2,000 intellectual

properties and has successfully commercialised a total of 134 innovations, achieving more than RM58

million in gross sales. UPM is also currently housing 52 startups with 12 startups securing more than

RM6.8 million in capitalisation in just 2 years

Over the decades, UPM has cemented its reputation for research by achieving spectacular results

through ground breaking research outcomes in various scientific fields, which have won numerous

national and international awards.

UPM is now among Asia’s top 50 universities, 36th ranked in Asia QS University ranking 2017/2018 and

world’s top 250. UPM commitment to environment is as solid as its commitment to excellent in

education. UPM was ranked 34th in the UI‐Greenmetric World University Ranking 2016. UPM’s

campuses, both in Serdang, Selangor (main campus) and Bintulu, Sarawak (branch campus) are among

the greenest found in the country; and are perfectly complemented with excellent amenities and state‐

of‐the‐art facilities and services.

Today, UPM makes meaningful contributions towards wealth creation, nation building and universal

human advancement. Its slogan “With Knowledge We Serve” succinctly describes its greater purpose

which is to explore and generate knowledge and disseminate and apply the knowledge for the benefit

of the society, country and world.

1.1 Vision, Strategy and Objectives of the University

UPM set itself on the path of becoming a centre of higher education, internationally recognised,

capable of providing various fields of studies, especially in agriculture, science and information

technology, to facilitate national development in the new millennium. Hence, to motivate the entire

university community towards achieving excellence, it ensures that all its members, both students

and staff; share the responsibility of strictly adhering to the demands of the University’s vision,

mission and goals.

1.1.1. Vision

As a premier institution of learning, widely recognised for leadership in research and innovation, UPM

sets it vision on becoming a university of international repute.

42


UPM set a higher aim of achieving an excellent rank in the QS Ranking to increase its international

visibility. In 2018 UPM had leaped from 229th to 202th in QS World University Ranking. The QS Ranking

significantly contributes towards evaluating UPM’s level of visibility, particularly in the aspects of

teaching and learning as well as research and innovation. Moreover, improving the quality of the

curriculum can improve the network and reputation of UPM too. Recently, a total of 14 subjects from

UPM were ranked among the best 200 in QS World University Rankings by Subject 2018 as announced

on 28th February 2018. Furthermore, UPM also retained its position in the worlds’s best 100 for six

consecutive years, in both Agriculture and Forestry subjects. The following figure shows UPM scucess

of moving from Top 400 to Top 250 QS World Ranking within seven years period from 2012.

Fig. 1 QS World University Rankings by Subject 2018

Programme offered by the Faculty of Economics and Management, UPM is accredited by International

Association to Advance Collegiate Schools of Business, (AACSB). The International Board of AACSB has

agreed to extend the AACSB accreditation to UPM (3 Degree Programs, 9 Master Programs and 5 PhD

Programs) after accreditation audit on 11 and 12 March 2018. The faculty aims to get “double crown”

by also acquiring EQUIS accreditation. Currently, the faculty is preparing for the Application for

Eligibility, the fourth stage in the EQUIS accreditation process. Meanwhile, programmes offered at the

Faculty of Education are accredited by Teacher Education Accreditation Council (TEAC). Meanwhile,

the Royal Chartered Institute of Environmental Health (CIEH), London awarded its accreditation for

UPM Bachelor of Environmental and Occupational Health programme. Moreover, UPM Faculty of

Veterinary Medicine’s Laboratory Service Unit (VLSU) was the first academic faculty in Malaysia to be

granted an accreditation certification by the Malaysian Laboratory Accreditation Scheme (SAMM).

UPM latest achievements include receiving the status of Higher Education Centre of Excellence for its

Institute of Bioscience and also accreditation from the Royal Chartered Institute of Environmental

Health (CIEH), London for the Bachelor of Environmental and Occupational Health programme.

43


1.1.2. Strategy

Teaching and learning & Student development holistically

In an effort to ensure that UPM is a leading and renowned centre of education and research, UPM emphasizes that the content of the programmes offered is in accordance with the requirements of the current job market. This is to fulfil its vision of becoming a reputable international university. Study programmes offered in UPM are revised gradually in line with the standard set by the Malaysia Qualification Agency (MQA). Stakeholders involved in the review process are UPM Alumni, representatives from industry, government agencies, NGOs, and experts from international higher education institutions in other countries such as the United Kingdom, Australia and New Zealand. UPM also created the Centre for Academic Development (CADe), on 2nd January 2004, to develop teaching and learning as its main task. CADe handles trainings for academic staff development, develops teaching and learning by introducing among others online teaching and learning programme such as Massive Open Online Course (MOOC). Furthermore, CADe had also created a platform; PutraBlast, to be used by academics and students to share materials, conducts students assessment such as quizzes, tests and assignments. The online T&L initiave is inline with the Ministry of Higher Education Transformation of Higher Education (Malaysia Education Blueprint 2015‐2025) which include the focus on enablers for the higher education ecosystem, covering critical components such as funding, governance, innovation, internationalisation, online learning, and delivery. In order to prepare the students for competition in the job market UPM had also introduced a 2u2i programme which enables students to study for two (2) years at the university and two (2) years in the relevant industry through industrial attachment with selected firms or companies. The objective of the 2u2i programme is to strengthen the psychomotor domain of the students. Other than academic development, UPM has a Centre for Entrepreneurial Development and Graduate Marketability (CEM) which organises career events for students; helps students through career planning and developmental processes; assists students in acquiring job‐finding skills; creates university network with companies and industries and advertise job vacancies on the website, social media sites and other mediums. Apart from preparing students for working in firms and companies after graduation, UPM also aims at

nurturing students enterprenuers who, after graduation, will participate in the private sectors as

successful enterpreneurs. To achieve this goal, UPM plans, implements and evaluates

entrepreneurship programs and trainings to UPM students from time to time. It also provides in

campus business hub and opportunities. Furthermore, UPM also coordinates and evaluate students

business in UPM campus and conduct Public Private Research activities under the PPRN Network. (a

network created by the Ministry of Higher Eduction as one of the strategies to close the technological

knowledge gap, increase productivity and strengthen Malaysian economic development through

innovation and commercialisation programs)

Research, commercialization and innovation

The success of UPM as a prominent Research University is defined by its successful research transformations that have helped in developing its its academic and research excellence. UPM always

44


strives to evolve in response to the inevitable emergence of new areas in science, agriculture, medicine, engineering, education and humanities. The task of keeping UPM excellent in research is spearheaded by the Office of the Deputy Vice Chancellor (Research and Innovation) (DVCRI). The office of the DVCRI is responsible to strengthen and consolidate research, development and commercialisation (R&D&C) in accordance with the status of UPM as a Research University (RU). Under this office there are various research institutes which focus on UPM’s area of expertise including Institute of Bioscience (IBS); Institute of Tropical Agriculture and Food Security (ITAFoS); Institute of Tropical Forestry and Forest Products (INTROP); Institute of Advanced Technology (ITMA); Institute of Social Science Studies (IPSAS); Malaysian Research Institute on Ageing (MyAgeing); Institute of Mathematical Research (INSPEM); Halal Products Research Institute (IPPH); Institute of Agricultural and Food Policy Studies (IKDPM) and Institute of Plantation Studies (IKP). UPM´s excellent achievement in research, development and commercialisation confroms with the KPI which is founded on UPM seven (7) core services, one of them is research and innovation. KPI data is measured every quaterly. The data is analysed and monitored via a system known as MyPutra Cockpit. Data ameasured includes income generated via product commercialisation, technology transfer, labs services, Edupark services, public sectors research grants, industry research grants and international grant. Other relevant data for KPI includes Intellectual Property filed by UPM. When the government reformed HEIs via the Malaysia Education Blueprint 2015‐2025, research and publication outputs are considered as important factors in measuring performance. The number of graduates produced by UPM, the quality of the graduates, sucessful students business ventures are also significant measurement. As such UPM must always move forward to improve its outputs or risk loosing public funding.

Industry networking and community service

UPM believes in empowering the campus community by creating opportunities for its staff and students to connect with the industry and society in general. This opportunity is essential to provide an entrepreneurial perspective to the University’s core areas which are education and research. In line with the government’s decision to turn UPM and several other public universities into Research University (RU), the office of the Deputy Vice Chancellor (Industry and Community Relations) (DVCILC) was established to support the Research University mission in terms of extension of knowledge and technologies across the Industry and Community. This is supported by several entities which work together to transform the community through transfer of knowledge and technology including University Community Transformation Centre (UCTC), Centre of Industry Relations and Network (CiRNeT), Agriculture and Food Policy Studies Institute (IKDPM), Cancer Resource and Education Centre (CARe), Centre for Diagnostic Nuclear Imaging (PPDN), Sports Academy, and University Veterinary Hospital. UPM managed to implement strategic partnerships with Industry and the community through the office of the DVCILC which sees UPM experts carrying out projects and running programmes outside the University. The DVCILcC’s office monitors the progress and achievements of industry and community relations projects in terms of effect and positive impact of the activities. Futhermore, it also measures the impact of the industri and community activities on UPM by the amount of income generated thorugh those activites. The office of the DVCILC works to ensure the smooth and effective implementation of the university’s industry and community relations thorugh enhanced communication and dissemination of information internally and externally.. The KPI for this office is measured by assessing among others income generated via industry community research grants, industry sponsorship for students excellent awards and sponsorship for students development activities.

45


Income generation

One of the objectives of the Malaysia Education Blueprint (2015‐2025) is to transform higher education

institutions (HEIs) by ensuring that the HEIs are financially sustainable. This can be achieved by

reducing HEIs reliance on government resources. In line with that inspiration, UPM targets to achieve

the ratio of 70:30 government‐UPM resources by 2021. Currently, UPM relied on close to 80 per cent

of government contribution.

Generating revenues is an issue faces by many public funded universities in Malaysia. UPM needs to take steps in enhancing revenue generation by optimally utilising University resources and strengthening financial resources to ensure that UPM can achieve its vision and mission. To achieve this goal, UPM has developed the Income Generation Policy (DPPU) as a source of reference and guidance for Resources Centres in conducting income generating activities. This policy is in line with the University Transformation Program which was made based on the guidance book published by the Ministry of Higher Eduction entitled Enhancing University Income Generation, Endowment & Waqf, also klnown as the Purple Book ‐In order to improve the University's financial resources. UPM identified several activites for income generation including increase in tuition fees collection by offering academic programmes and expert services related to research and commercialisation, training, and colsltancy serives. Moreover, UPM can also generate more income through asset monetisation activites whereby business activities involving UPM assets should be intensified. Apart from that, UPM also identified investment as one of the way to generate more income. Hence, it is necessary to identify best investment methods. Corporate joint venture between UPM and private entities is also considered as a good source of income for UPM considering many resources which UPM possess and can be used for joint‐venture project. Finally, UPM also targets to generate income through endowment funds, waqaf, and donation.

Agricultural Excellence

Agriculture has been and will be a key sector in the overall development of Malaysia. It is the third

most important sector in Malaysia after services and manufacturing. UPM, which began as an

Agriculture College, continues focusing on research development for the growth of national agriculture

sector. UPM focus in agriculture is not limited to education and research but covers s knowledge

enrichment, human capital, innovation and sustainability of life. UPM’s excellence in the agriculture

discipline has once again been recognized by the US News & World Report. It has listed UPM as one of

the 50 best universities in the world, and 7th best in Asia, therefore putting UPM in the number one

spot in South East Asia via Best Global Universities for Agricultural Sciences ranking. The evaluation for

Best Global Universities for Agricultural Sciences used eight (8) research indicators such as publication,

global research reputation, citation impact and international cooperation. In QS World Ranking by

subject 2018, UPM agriculture subjects are ranked between 51‐100.

46


Fig.2 UPM Agriculture Subjects, QS World Ranking by Subject 2018,

UPM also takes the initiative to assist urban community by introducing 19 Urban Agriculture

programmes in Selangor, Kuala Lumpur, Johor, Perak and Pahang. This initiative is taken to enhance

the availability and accessibility of food among urban dwellers which is expected to increase in

numbers rapidly due to the migration of rural dwellers to urban areas. The goal is to help boost food

production as well as assist the low income group in urban areas. This will also lessen the dependence

on food from rural areas which will in turn reduce carbon footprint and increase the nation’s food self‐

sufficiency. UPM also aims at developing agri‐ entrepreneurs among graduates. The programme has

been carried out since 2012. Among the main objectives are to produce excellent and diligent agri‐

entrepreneurs, whom possess high confidence and attributes of an agri‐entrepreneur and are ever

ready to carry out agricultural projects.

Research development in UPM has produced a variety of agricultural technology and innovations

which have been successfully commercialized, benefiting the community and agro‐based industry. Six

areas of innovation and commercialisation in agriculture are crops, livestock, fishery, herbs, farming

and health and environment. UPM success in Innovation and technology has significantly impacted

crops, livestock, fishery, farming and other sectors related to agriculture. UPM allocated an amazing

426 hectares (or 1,022 acres) of undulating land in Taman Pertanian Universiti (TPU or University

Agriculture Park) to agriculture and animal husbandry for education, research and training purposes.

UPM will continue to uphold agriculture as an important niche in the ecosystem of higher education

to support the advancement of the country’s agricultural sector and food sovereignty. The HEIs

transformation plan and the need for financial sustainability requires UPM to generate income from

its own farms through sales of fresh fruits, vegetables, fish and meat like chickens and quails, compost,

fruit cordial and saplings of fruit trees.

1.1.3. Objectives

47


Enhancing the Quality and Competitiveness of GraduatesIn order to enhance the quality and competitiveness, the academic programs offered are required to go through revision every five years. The revision process will incorporate inputs from the industry and assessors from renowned universities which would insure the quality of the program and marketability of the graduates. To improve students’ quality and competitiveness, UPM perform exit survey which helps to enlighten UPM of improvement necessary for achieving Malaysia Vision 2020.

Creating Value through a Strong and Sustainable Research Development Commercialization (RDCE)UPM has established a Research Management Centre (RMC) in order to oversee all research related activities. Related to this task, it is the duty of the RMC to commercialize research findings of its researchers from time to time.

Boosting Industry and Community Networking Services One of the many ways for the university to boost Industry and Community Networking Services is by having a formal unit established under the office of deputy vice chancellor. One of the duty of this unit is to oversees that all faculties must have a continuous engagement with the surrounding community and industry.

Strengthening UPM as a Centre of Excellence in Agriculture Positioning UPM as a centre of excellence for agriculture has always been the main agenda of the university. To accomplish this, the university would allocate fixed amount of capital allocation from its main budget every year to carry out agriculture based research and activities. At the same time, UPM also establishes strong networking with ministry of agriculture by providing them with advisory assistance from time to time.

Enhancing the Quality of Governance Ensuring academic quality and the overall operation of UPM is carried out with high governance standard; UPM has established the Quality assurance Unit under the office of the Vice Chancellor. One of the roles of this office is to conduct regular inspection on academic entities in UPM to ensure that they have complied with the academic standards and governance set by the Ministry of Education and relevant accreditation bodies.


Financial management system in UPM consists of financial framework, decision making structure, FM

policies, rules and procedures, FM objectives and targets. The FM system consists of planning,

organizing, directing and controlling; and is developed and governed in line with sound and

comprehensive financial policies, rules and procedures. These policies, rules and procedures are

derived from policies and rules issued by various Ministries and government agencies such as Ministry

of Higher Education, Ministry of Finance, the Treasury and Auditor General. They are reviewed

periodically. The scope of financial management is set by having targets variants to achieve and

corrective actions to be performed. Financial activities from budget preparation, allocation of fund,

procurement, payment process are those parts of the flows to ensure efficient utilization of funds.

This process involves various stakeholders. UPM financial management also concerns with financial

control in order to ensure adequate expenditure. Moreover, in the FM system functions and means

have been prepared to forecast, analyse and control over financial activities i.e. estimating return on

investment, set some basis for allocation of fund and management of cash so that monthly payments

or cost of maintenance can be minimised.

48



In the diagram given below it can be seen that UPM financial management framework is grounded on

the vision to create an efficient and effective university financial management. This vision is set in line

with the Malaysian Education Blueprint which requires every public university to be financially

sustainable. In order for UPM to be financially sustainable it must be able to reduce dependency on

government grant and at the same time generate income from other sources. In this regard, the long

term target set by UPM management is to generate 30 per cent income hence, reducing government

grant dependency to 70 per cent from 80 per cent by year 2020. In short term, UPM targets to generate

25% of its annual operation expenditure in 2018.

UPM Financial Management Framework is shown in the following diagram

Diagram 1 UPM Financial Management Framework

The vision of UPM FM is to be efficient and effective in order to support UPM’s goal to be financially

sustainable as required under Malaysian Education Blueprint In line with that vision UPM FM sets to

reduce dependency on government grant and also increase its income. Growth of income through

various income generation activities will reduce the needs to rely on financial support from the

BUSINESSS STRATEGY

Financial Sustainability

‐ to reduce dependency on government grant ‐ to increase income generation from multiple sources

Short term

‐generate ≥ 25% of total

annual operation

Expenditure from

TARGET VISION

Efficient and

effective University

Financial

Management

Long term

‐ Govt. vs. income generation (70:30%)

Planning & Control

KPI Monitoring Quarterly

Review (Q1-Q4)

ISO Cert +

Technology usage in FM -Integrated business Planning software (Jedox) -SAGA system

Financial Reporting

-ISO Certification

- Accounting Standard

Standard & Compliance

49


government. The target is to reach 30 per cent income generated through various planned activities.

By the year 2020 UPM should be able to achieve 70:30 ratios of government and self‐generated

income. Meanwhile, UPM also targets to gain 25 per cent of its operational expenditure annually from

self‐generated income. This amount will top up the gap between UPM current needs and actual

expenditure.

In order to be effective and efficient and ultimately make UPM financially sustainable, planning and

control aspect of the FM allows the financial manager to plan, monitor, review and decide on relevant

improvement strategies. Financial target and quality assurance are created in order to ensure that

UPM FM is effective and efficient. Every key process in FM such as budgeting, procurement, payment,

asset acquisition, account management and income are subject to planning and control procedures.

The idea is to ensure FM quality and at the same time attain the planned target.

FM Standard operating procedures (SOP) are prepared based on the MS‐ISO Certification

requirements but guided by rules and regulations imposed by Central Agency (the Ministry of Finance).

The SOP facilitates the process of monitoring UPM FM to ensure that it is in line with the legal

requirements set by the central agency and also to achieve UPM’s planned Key Performance Index

(KPI).

Furthermore, to ensure UPM FM meets its target, each key process is monitored every quarter of the

financial year (Q1‐Q4). Monitoring of the activities is done via presentation of reports to respective

financial management committees. Monitoring enables the financial management committees to

evaluate actual achievement of each key process against the Key Performance Index (KPI) set for the

respective process. In case, the achievement is lower than the set target (non‐conformance), and

comments for improvement are given by the committees, the financial manager will prepare corrective

action plan to improve the performance of the relevant key process. Some activities such as

procurement and budget may be subject to report to central agency from time to time as required by

the respective agency. Apart from the individual report for each key process, consolidated report of

all financial activities are prepared in each quarter of the financial year and presented to the Central

Agency.

As a mean to ensure effective and efficient FM in UPM, various tools are used in the financial

management processes. UPM utilises, Jedox, intelligent business system software, which assists

financial manager to prepare financial analysis for planning, monitoring, and reviewing purposes and

ultimately facilitates decision making at the university management level. At the operational level,

Standard Accounting System for Government Agencies (SAGA) is used in each key financial process.

SAGA facilitates effective and efficient financial process according to central agency requirements.

UPM Financial manager has responsibilities to manage financial management for UPM at two

campuses namely Serdang, Selangor and Bintulu, Sarawak. All financial management activities for

Bintulu Campus are based on UPM central planning and follows the same SOP. Similarly, reporting also

50


follow the same requirement and SOP. Meeting and discussion between financial manager and

financial officers in Bintulu are regularly conducted via video conferencing.


UPM provides excellent financial services through Quality Management System (QMS) in meeting

stakeholders´ expectations.

Financial Managers in UPM is given the responsibility to ensure sustainable financial objectives aremet according to UPM strategic and operational targets. These targets are set based on UPM long term planning which found its basis in the Malaysian Education Blueprint 2015‐2025. The following are the objectives of UPM financial management.

To ensure sustainable financial objectives are met according to the university’s strategic andoperational targets.

UPM financial planning and targets must be monitored and revised periodically to ensure it meets

UPM vision, mission, strategic planning and targets. The revision is also guided by directives and orders

issued by the central agency directives. Actual financial management performance is measured based

on indicators set for each key process. Performance review enables UPM FM identify weaknesses

hence, presents opportunity for corrective action improvement. This corrective performance is used

to direct back UPM FM to achieve its target, i.e. to be financially sustainable

To monitor financial targets such as income and expenditure and performance is in line withstandard operating procedures (SOP).

Planned financial targets and Key Performance Index (KPI) are monitored and revised to ensure that

they are parallel with current SOP which will ensure that financial sources are optimised.

To provide an excellent customer service that is effective and efficient to attain the highest level

of customer satisfaction

Customer Charter is prepared and it contains a set of promises to give effective and efficient quality

services, to customers, namely stakeholders. The charter is prepared to correspond to the target for

each key process and continuously improved to satisfy customers’ needs. For instance, payment

process must be completed within a period determined by the SOP.

To ensure that budget allocation is done according to the targets to ensure financial sustainability

is achieved according to the financial planning

51


Financial targets are used to monitor financial planning. The targets are set by financial manager based

on the target set by the resource centres in UPM. The financial manager will determine budget

allocation for the respective resource centre based on the target made by the resource centre and

endorsed by the relevant authority. To ensure that the budget is fully optimised financial manager will

carry out performance analysis whereby current expenditure will be measured to prepare plan for

future budget allocation.

To ensure that the procurement process meet customers’ needs and payment are made within

its established deadlines

Procurement activity is an important part of financial management. Annual procurement plan is

prepared before budget allocation is determined. Procurement is exercised according to the SOP and

must comply with the specifications and fixed time frame. Procurement performance will be assessed

and the outcome will be used to assist management in the decision making process and prepare

corrective improvement


UPM is a statutory body under the federal government. Some decision making authorities are reserved

for the relevant ministries. UPM Board of Directors is the highest authority who makes decisions in

UPM. The Vice‐Chancellor is also a member of the board. The university board can also establish sub‐

committees to help the board monitor the financial management of the university. The Finance

Standing Committee, Audit Committee, Investment Committee and other committees can be

established from time to time as any need arises. Usually, the sub‐committees meetings will be chaired

by a member of the board.

The government recognises the university Vice‐Chancellor as the Chief Executive Officer (CEO) of the

university. Any directives from the government through various ministries or central government

agencies will be implemented through the CEO. The university management will support through its

offices guided by the established policies and procedures. The main stakeholders in the structure of

UPM FM consist of the UPM Board of Directors (the Board), and sub‐committees under the university

Board. The Ministry is always involved in all public university financial management decision making.

However, the diagram given in this report only refers to stakeholders in UPM.

The following diagrams shows the stakeholders involve in UPM Financial Management

52


Diagram 2: UPM Financial Management Structure


SWOT Analysis of the current financial management framework emphasizes on four (4) major areas

mainly; Strengths, Opportunities, Weaknesses and Threats.

A financial SWOT analyses is necessary to identify strengths, weaknesses, opportunities and threats of

UPM financial management. All the elements of the SWOT analysis are observed in the current state

of UPM as a research university in the background of the Malaysian Education Blueprint (MEB) 2015‐

2025. This SWOT is made taking into account the fact that UPM FM framework is related to sources

and application of funds to achieve its vision and mission.

53


Diagram 3 Financial Management SWOT


UPM has developed its Business Plan in line with its mission and vision. In developing the plan, the

Malaysian Education Blueprint (MEB) was used as a reference. One of the key areas mentioned in the

MEB is financial sustainability. The following are some of the action plans targets used to achieve

financial sustainability though generation of income from diversified sources such as fees, training,

unlocking of assets, products and services, endowment and others.

To ensure financial sustainability, UPM adopted a Quality Management System (QMS) for continual

improvement since 2007. UPM established an advance financial management practices which includes

monitoring, implementing, evaluating and reviewing of strategic objectives and targeted action plans.

In accordance with the QMS, the Bursar’s Office established six (6) core businesses emphasising on

Budgeting, Procurement, Payment, Assets Management, Accounts and Revenues Generation. Each

core is regulated by its standards and procedures, goals, preventive actions/corrective actions to the

process of reporting, evaluating and recommendations for improvement.

54







UPM decided to focus on two of the axes namely, New Forms of Financing and Planning and

Controlling. The reason behind this choice is due to the importance of the two axes in achieving UPM

long term planning of reducing UPM dependency on government grants and achieving financial

sustainability.


Following the government budget reforms in Malaysia, UPM aims at achieving its financial

sustainability as the amount of resources allocated by the government to UPM is reduced. By the year

2020 UPM plan to be able to generate 30 per cent of its income while currently it has generated about

20 per cent of its income. Before the budget reform, UPM relied 100 per cent on government funds.

In 2007 almost 90 per cent of public university operation budget came from the government. After

2007, the government had reduced the allocation to public university.

Diagram 4 Government Budget Reform Approaches

The budget cut encourages UPM to take short‐term cost–cutting measures in administrative functions,

travel reimbursements, and events management. Moreover, reduction of international faculty

recruitment, academic staff mobility, and infrastructure development was also done to reduce

operational expenditure. This was followed by measures to generate more income through rentals and

55


leasing of on‐campus assets, increasing public consultancy services, and a push for joint venture

development activities with private sector in order to commercialise R&D outputs as well as utilising

UPM natural resources such as land and forest for business premise, training centre, tourism facilities

and farming purposes. New sources of income identified include rental of space, consultancy services,

returns from endowment funds and academic chair ships, sale of farm produces,

seminars/conferences/workshops and business property development which involved partnership

with private sectors. The ratio between income generated and government grants are used to measure

against the targets. The percentage (%) funded by government grants and percentage (%) from income

generating activities made by UPM are according to decision made by the Ministry of Higher Education

(MoHE). UPM has set the target of being 30 per cent financially independent by 2020.


Not Applicable


Becoming financially sustainable is not impossible. In order to reach that state, it is necessary for UPM

to properly plan its activities in order to have effective and efficient financial management. Among the

important element of effective and efficient financial management is planning and controlling.

Planning and controlling part of UPM financial management is made based on the Key Performance

Index (KPI) set for the university and each resource centre is given a set of KPI to be achieved to ensure

UPM’s overall KPI is achieved. Strategic planning for UPM is made base on the Malaysian Education

Blueprint 2015‐2025 (MEB). In the process of generating income, it is important that UPM manages

the whole of the revenue cycle i.e., the process of managing claims processing, payment and revenue

generation. In this regard, it is also necessary for UPM to have a debt collection strategy and putting

in place an effective and efficient debt monitoring and collecting system. UPM has also drafted

Standard Operating Procedures (SOP) for debt collection activities. Financial technologies are also

used to enable financial manager to trace unpaid amount due and follow up with demand and finally

legal action if the payment are not paid as stated in the contract.

The following diagram shows the planning and controlling process in UPM Financial Management. At

the budgeting and planning level, financial manager will identify the available resources including the

amounts unpaid by other entities to UPM. By using the Debt Management System, the financial

manager can trace the amount due and the debtors. It also allows the manager to monitor the process

of debt colleting until payment is made by the debtor online or off line. However, there is still some

area of improvement required to the system. In particular, the period given for the debtors to settle

the payment before legal action is taken against them needs to be shortened.

56


Diagram 5 Planning and Controlling Process in UPM Financial Management.


Not applicable



UPM presently emphasizes the new funding mechanism to be detailed in the financial implications

section to reduce dependency on government funding. Business plan was prepared and used as a

guide to direct UPM towards finding new sources of income. It is also necessary to ensure that UPM

can diversify income sources other than relying on tuition fees and block and research grants. In line

with the Budget Reform and the MEB 2015‐2025, UPM identified the following sources of income.

Steps are taken to generate more income from these sources through various activities.

Offering academic programmes and expert services related to research and commercialisation;

57


(i) Through the academic programmes UPM is entitled to collect tuition fees from local and international students, at the undergraduate and postgraduate levels. UPM can also offer executive development programmes, specialist courses and continuing professional development (CPD) programmes, Industry & Executive training, Online learning & MOOCs, and Twinning academic programmes. Experts in UPM can also provide consultancy and advisory services to government agencies, private sector, and statutory bodies through UPM Consultancy & Services Sdn. Bhd. UPM has the authority under its constitution to conduct research and to commercialise the research outputs. UPM can also collect charges for accommodation and other charges approved by the university authority.

Income generation through asset monetisation activities; Asset monetisation activites covers all business activities that transform land area and other tangible assets belonging to UPM which do not generate income to assets that can bring incomes thorugh activities such as joint venture development projects, leasing, and rental. Moreover, rental activities must also be improved to generate income from rental and lease of seminar rooms, lecture hall, theatre hall, various labs in all engineering and sciences faculties, football pitch, hockey field, and sport stadium. UPM can also generate income by providing additional services related to rental and leasing of facilities such as event management fees, supply of food and baverages, transportation, and accommodation for partipants in events organised by and in UPM. Apart from that reserved forest can also also used as a training ground for various groups of individuals including summer schoo participants, forestry officers and other private sector training activities since the reserved forest has accommodation and seminar room facilities. Monetisation activities also include sale of farm produces such as vegetables and fruits, poulty and meat products, ornamental plants, compos and fertiliser and also saplings and seedlings. UPM has to intensify marketing and promotional activities of its farm produces. Princing stragety must be competitive with the outside market price and the process of making decision must be made easy by reducing the bureaucracy involve in the retaiting activities.

University’s financial and investment management activities; UPM realised the importance of short and long term investment in generating income. As such it is important for UPM to identify investment methods which offers good return at minimum risk. UPM has developed investment policy which take into account its liquidity, acceptable level of investment risk, and reasonable returns. UPM realised that it is necessary to give authority to make investment to certain officers and the activites and must be meticolously accounted and reported. However, UPM has to develop clear policy and rules and regulations to govern its investment projects.

Corporate Alliances for Business Ventures UPM as a public university and a statutory body is governed by various rules and regulation including rules and regulations administered by the Ministory of Finance (MOF). Accordingly, any joint‐venture activities with third party (outside entities), which is business in nature and generating income, must be approved by the MOF and other relevant government agencies. Moreover, UPM requires its private entity (UPM Holdings and its subsidiaries) to intensify business activities in local and international market. Returns for UPM invenstment can be in the form of dividends and other forms of income. UPM will charge managemen fees to UPM Holdings or its subsidiary if their business activities use UPM assets. UPM also charge rental fees, for facilities and services used by UPM Holdings and its subsidiaries.

58


Endowment; Endownment fund refers to cash donation or contributions received from individuals, corporatons or agencies for the prupose of education in UPM. There are two types of endowment, True endowment and Quasi endowment. True endowment are resources with respect to which a donor has stipulated, that the gift is to be maintained inviolate and in perpetuity. A true endowment is to be invested for the purpose of producing present and future income that may, also by donor stipulation, be expended or reinvested with the original gift. The principal or corpus of the true endowment must be maintained intact. Quasi endowment or “board designated endowments” refers to resources that the University board has determined to be retained and managed like an endowment. Principal and income of these funds may be utilised at the discretion of the board. All endowment funds are administered throught UPM Wakaf, Zakat and Endowment Management Centre (WAZAN). Collection of endowment funds is set as the KPI for the Bursar Office and measured every quater of the year.

Waqf; Waqaf generally refers to religious endowment, established by founder (waqif) by dedicating an asset for the benefit of a defined group of people. The proprietary right in the waqaf property is wholly relinquished and given in the name of God for the benefit of man. The property given to UPM for Waqaf includes cash, and immovaable property such as house. Waqaf funds and property are used for the purpose of providing facility and infrastructure to promote education and the dissimination knowledge. Currently there are four (4) waqaf schemes in UPM: General waqaf, facilities waqaf, book waqaf and vehicle waqaf. Since Waqaf is part of the administration of Islamic Law of property, it must be managed according to Wakaf (state of Selangpor) Enactment by WAZAN Waqaq like Endowment is also the KPI for the Bursar Office of UPM; and

Donation (Fundraising) Donation refers to fundraising activites through activites such as crowfunding, club activities, and public campaign. The donors can be individual, business entities, foundation or government agencies. The donations can be in cash or non cash such as supply of foods and beverages for students activites, and supply of materials for UPM charitable activites with orphanage and senior citizen. Students exchange programmes also attract donation from business entities. Normally donors give cash donation to support purchase of air tickets or accommodation or land transport. Some donors support students campus activities such as charitable run and entreprenership week. Other donors provide annual excellent study award for excellent students in a specific field of study. Donations are sometimes given to the resource centers directly and not necessarily through central body. The donations is measured as KPI of the respective resource centres and considered as linkages activities between the respective resource centre with the body which had given the donation.

59


Table 1: Target Income Growth


Not Applicable


Strategically, financial management and sustainability are part of UPM’s strategic planning elements

which include planning, monitoring, implementing, evaluating and reviewing. In order to ensure long

term sustainability of those income streams, the revenue from a variety of sources must be continually

generated based on available strategies, facilities, assets and expertise which UPM possess. In

addition, old and unpaid debts have to be collected efficiently and effectively. Moreover, cost saving

requires UPM to control spending on activities that are not crucial and can be done at reduced cost. In

the Debt Management System, a letter of reminder is issued to the debtors through the SAGA system

for overdue payment. The system also includes the issuance of a letter of claim by UPM legal division.

The Debt Collection Management System is linked to UPM Payment Gateway which allows Debtors to

make online payment. Debt Management System was introduced in 2015. The system allows UPM to

record communication with debtors, analysis of collection period, retain all debtors’ records, issuance

of statement of debt and monitor process and progress of debt collection. The current debt

management is to be improved by reducing the time taken from identifying debtor to receipt of

Items

2018 2019 2020 2021

(A) Increase in Tuition Fees

RM71M RM72M RM75M RM80M

(B) Increase in Professional Services/Sale of Farm Produce and Asset Unlocking

RM153M RM159.5M RM165M RM170M

(C) Increase in Endowment, Waqaf and donation

RM2.3M RM2.65M RM3M RM5M

(D) Initiatives (Others) Business joint‐venture and

Property Development and

Investment

RM6M RM6.5M RM7M RM10M

60


payment from the debtors. Currently, the system takes 100 days for the Bursar office to identify the

debtors, give payment reminder, monitor response of the debtor, resend the reminder, and finally

receipt payment. If the debtor fail to pay after the period of 100 day, the case will be forwarded to

the legal division for a legal action. UPM targets to reduce the process to 60 days by early 2021. After

60 days, failure of the debtor to pay the amount due will enable the financial manager to refer the

case to the legal division for legal action.

Apart from effective and efficient debt management, sustainable financial system also requires

measures to reduce unnecessary costs. Measures such as reducing cost of travel reimbursements,

reducing cost of staff training, cost of events management and other activities are implemented in

order to control spending. This cost control measure is expected to reduce RM600000 in 2018, 2019

and 2020 respectively. By 2021 UPM targets to save RM18M. Cost measures just like debt

management involve every Resources Centre apart from the Bursar Office. Some of the measures

include using leasing contract for IT facilities such as desktop for lecture hall, lecturers, and offices.

Conduct periodic monitoring of quality of services provided by vendors to assess whether the vendors

are providing value for money. The contract includes cleaning and facilities maintenance services.

Providers are changed when necessary. Cost of travelling for academic staffs such as travelling for

conferences are to be paid from their research grants and not from UPM expenditures.


Not applicable


Not applicable

61



Improvements (2018) M3

M6 M9 M12 (2019) M15

M18 M21 M24 (2020) M27 M30 M33 M36 (2021) M39

M42 M45 M48

IMP 1 New forms of financing

SUB

1.1 Increase in

tuition fees

The

achievement is

assessed every

quarter of the

given year.

RM17.75M

RM35.5M

RM53.25M

RM71M

RM71.25M

RM71.5M

RM71.75M

RM72M

RM72.75M

RM73.5M

RM74.25M

RM75M

RM76.25M

RM77.5M

RM78.75M

RM80M

62


Improvements (2018) M3

M6 M9 M12 (2019) M15

M18 M21 M24 (2020) M27 M30 M33 M36 (2021) M39

M42 M45 M48

SUB

1.2

Professional

service

Sale of farm

produced

Assets unlocking

RM38.25M

RM76.5M

RM114.75M

RM153M

RM154.625M

RM156.25

M

RM157.875M

RM159.5M

RM160.875M

RM162.25

RM163.625

RM165M

RM166.25M

RM167.5M

RM168.75M

RM170

M

SUB

1.3

Increase

Endowment,

Wakaf and

donation

RM0.575M

RM1.15M

RM172.5

RM2.3M

63


RM2.3875M

RM2.475M

RM2.5625M

RM2.65M

RM2.7375M

RM2.825M

RM2.9125

M

RM3M

RM3.5M

RM4M

RM4.5M

RM5M

SUB

1.4

Others :

Business joint

venture &

property

development

From 2018 to

2021 UPM

target to

increase income

from this activity

to RM10M

RM1.5M

RM1,702,231.

05M

RM1,931,727.

03M

RM2,192,1

63.83M

RM2,487,712.

89M

RM2,823,1

08.09M

RM3,203,721.

50M

64


RM3,635,649.

48M

RM4,125,810.

29M

RM4,682,0

54.92M

RM5,313,2

92.85M

RM6,029,

634.71M

RM6,842,554.

29M

RM7,765,07

2.25M

(2018) M3

M6 M9 M12 (2019)

M15 M18 M21 M24 (2020) M27 M30 M33 M36

(2021) M39

M42 M45 M48

RM8,811,964.

74M

RM10M

IMP 2

Planning and control

(2018)

M3

M6

M9

M12

(2019) M15

M18

M21

(2020)

M24

M27

M30

M33

(2021)

M36

M39

M42

M45

M48

SUB

2.1

Debt

management

system‐ efficient

debt

collection—

reduction of

time in the debt

collection

100

6.25days

25 days/ 4

Quarters

=6.25 12.5 days

65


process from

claim to

payment in days

per annum.

= 2018‐ 100

days

Target in = 2019

‐ 75 days,

= 2020 ‐ 70 days

=2021‐ 60 days.

100‐60= 40days

to be reduced

18.75 days

25 days 75 days

26.25 days

5 days/ 4

Quarters

=1.25 27.5 days

28.75 days 70 days

30days

10 days/ 4

Quarters

2.5 32.5 days

35 days

37.5 days 60 days

(2018)

M3

M6

M9

M12

(2019) M15

M18

M21

(2020)

M24

M27

M30

M33

(2021)

M36

M39

M42

M45

M48

40days

(2018) M6 M9 M12 (2019) M15 M18 M21 M24 (2020) M27 M30 M33 M36 (2021) M39 M42 M45 M48

SUB

2.2

Cost control via

cost saving ‐

cost–cutting

measures in

administrative

functions, travel

reimbursements

, and events

management

(The amount of

cost reduction is

RM.15M

RM.3M

RM.45M

RM.6M

RM0.75M

RM0.9M

66


measured every

quarter of the

relevant year.

RM1.05M

RM1.2M

RM1.35M

RM1.5M

RM.1.65M

RM1.8M

RM6.3M

RM10.8M

RM15.3M

RM19.8

M

67



Strategic

Axes

Core topic (Please select

the ones related to your

university)

Description of

Improvement (max 5

sentences or describe in

bullet points)

Objectives ( be precise

and use bullet points)

Timeframe (short or

long‐term and

indicate

approximate year of

implementation)

Responsibility

(Management/Acade

mic/ Department)

Changes

/Remark

s

New Forms of

Financing

Increase tuition fees

professional

services/ sale of

farm produces,

assets unlocking

Improve the tuition

rate for

international

students

full time

summer programme

Executive

programme,

Professional training

programmes

To increase the

income through

consultancy and

training services,

sale of produces

Increase the number

of international

students via summer

programme, credit

transfer mobility

programme and full

time undergraduate

and postgraduate

students.

Increase the number

of participants for

the executive

programme and

professional training

programme

Short term

annual growth

of international

students (full

time and

mobility).

Medium term –

increase

number of

participants in

executive and

professional

training

programmes.

Short and

medium term

Current project

is about RM 53

million/year

Deans of Faculties, Directors of Institutes, Directors of Responsibility Centres

Dean of Faculties,

Directors of

Research

Institutes

68


Donations /

Endowment

other: Business and

property

development

from UPM farms and

also asset

To increase the

amount of

donations /

endowment

To increase

income through

business activities

To provide more

consultation and

advisory projects to

the industry to

identify marketable

farm produces and

increase the sales

through more

promotion and

marketing activities.

Getting the alumnus

to come back and

contribute back to

UPM

Increase income

through non‐core

university activities

with proper risk

management

consideration

Short and

medium term

Currently UPM

have 16

faculties

Within 5 years

each faculty

should have

one

endowment

chair worth at

least RM 1

million

Short and

medium term

Estimated

income of RM

10 million/year

All Head of

Responsibility

Centres

Dean of Faculties,

Director Office of

Endowment,

Director Office

of Alumni

University

wholly‐owned

company, UPM

Holdings

69


Planning and

Controlling

Debt Management

System‐ to put in

place effective and

efficient debt

collection system.

To achieve the

Financial

Sustainability

targets as

mentioned in the

Malaysian

Education

Blueprint (MEB).

To achieve the

target of collecting

debt in more

efficient way by

reducing period of

collection. The

period from making

claim to receipt of

payment should be

reduced from 100

days in 2018 to 60

days by 2021.

Medium term

by year 2021

University Board of Directors (BOD),

Bursar Office,

Relevant Committees,

Deans of Faculties, Directors of Institutes and other Heads of Responsibility Centres.

Cost control via cost

reduction‐ review

unnecessary

spending and cut

cost by stopping the

activities or

replacing the

activities with

identical activites

but at cheaper cost.

To achieve the

Financial

Sustainability

targets as

mentioned in the

Malaysian

Education

Blueprint (MEB).

To reduce cost of 1%

of total RM600M

operational

expenditure for each

year in 2018, 2019

and 2020. In 2021

UPM target to

reduce 3% of the

OPEX equal to

RM18M.

Medium term

by year 2021

University Board of Directors (BOD),

Bursar Office

Relevant Committees

Deans of Faculties, Directors of Institutes and other Heads of Responsibility Centres.

70


For instance, in non‐

critical area of

study, instead of

sending academic

staff to Europe or

America to pursue

their study,

alternative high

ranking HEIs in Asia‐

Oceanic region are

chosen for human

capital

development.

71



After the implementation of improvements, strategic and operational targets are easier to monitor

and reviewed. Allocation of resources is targeted on focus areas and risks are mitigated. The journey

towards becoming an international repute university is clearer because we are able to monitor and

review even when targets are missed. We know the reasons and are able to strategise on the next

plan.

The two major categories of improvement planned are:

New forms of financing; and

Improvement of planning and control

The added value in the new forms of financing is the ability to source for new streams of income or

enhance from the existing source. By doing so, risks are mitigated through diversification of income.

Identification of the income streams also add focus and targets activities with greatest impact.

UPM lists of new forms of financing initiatives are as follows;

Tuition fees;

Donations/endowment;

Consultation;

Training; and

Business and property development

These activities are very targeted and responsible core team leaders are identified and their

performances are measured periodically. The following graphics shows an example of the periodical

presentation of the 34 KPIs and dashboard for review of the university’s performance.

72


Fig. 3 UPM Overall KPI for 2018

Fig. 4 KPI achievement in Q1 2018

73


Another added value which is required under these initiatives implementation are better planning and

control. The reports require UPM to properly plan and engage all the relevant stakeholders so that the

feeling of ownership for the activities helps to get support during implementation.

The way we plan, implement, monitor and review follows certain standards, so that the information

can be used for further action. .


UPM ability to increase its international reputation continuously has contributed towards continuous

support from its stakeholders. As shown in the picture below, we have identified that our initiatives

supports our operational targets as well as our strategic targets. University ranking is one of the

indicators that we use to benchmark ourselves with others. We also have other indicators which we

use to measure our performance and sustainability of our initiatives.

An increase in a university ranking will create a positive reputation for UPM. It will make us more

attractive. Tuition fees can be reviewed for the more popular courses since the government has

allowed us to charge competitive rates to others but not to locals. Tuition fees on competitive

programs with international repute such as veterinary medicine, agriculture and others will be used to

create sustainable streams of income to the university.

Competitive training and consultancy programs will be more sustainable with an increase in

reputation. Partners will be easier to find for collaboration, hence resulting in sustainable income from

those activities.

74


Fig. 5 UPM ranking in QS World Ranking February 2018

For donations and endowment income streams, we are targeting our industrial players and alumnae

to provide the support. We also accept in‐kind donations from them because sometimes in the long‐

run these activities will create positive impact for sustainability of the projects. As an example, we

received an in‐kind advertisement from our local airline, AirAsia and construction of a facility from a

group of alumni members.

75


Pic. 1 AirAsia Adopted UPM as Its Official University

Pic. 2. Alumni sponsored We Love UPM Campaign

In order to create sustainability of the planned improvements for our new forms of funding initiative,

targets were benchmark so that it is reasonable and achievable. We try to set our goals according to

the normal standards. For our goals to be clear and reachable, each one should be:

Specific (simple, significant);

Measurable (meaningful, motivating);

Achievable (agreed, attainable);

Relevant (realistic/results); and

76


Time bound (time sensitive/cost limited)


We have seen a gradual increase from various income streams. We expect to achieve our targets as

shown in the earlier Gantt charts.

We have identified that the plan improvements that are listed are feasible to be implemented. The

government has produced a blueprint and playbook guidelines for income generation and we are

benchmarking the outcomes against those guidelines.

Pic. 3 . Guidelines issued by Ministry of Higher Education for use by Public HEIs

From the new forms of financing, our core activities for income generation are as follows:

Increase income through tuition fees;

Increase donations/endowment through alumnus and university partners;

Increase income through consultancy activities;

Increase income through training and services activities; and

Increase income through business and property development

We have also identified the timeframe until year 2021 realising that some of the initiatives are short,

medium and long‐termed initiatives.

These strategies may be reviewed periodically as part of our continuous improvement as iterated in

our planning and control initiative. We believe that with the standards followed, our improvements

planned will fit our strategy.

77


4. Conclusion

In conclusion, our developed, measured, monitored and continuous revision of the strategies has

helped UPM in achieving its short, medium and long‐term targets. These strategies has increase our

competitive advantage and made our stakeholders satisfied, thus allowing UPM to continuously bid

for the necessary funding from our stakeholders.

Our targets to be financial sustainable through 70:30 ratio of government grants vs income generation

requires us to strategise the necessary improvements to be implemented and monitored carefully.

The future outlook of UPM’s financial management framework will definitely change from total

dependency on government grants to less dependency by at least 30%. More income generation

activities will be introduced from time to time to ensure the financial sustainability of the university.

Planning and control activities will have to be continuously improved in order to support the new

framework.

78


Universiti Teknologi


Universiti Teknologi MARA (UiTM) is the largest public university in Malaysia. UiTM plays an important

role in providing the best education system for the Bumiputera to strive in various competitive

professional as well as semi‐professional job markets.

Thus, in order to excel the university are focusing on 3 strategic axes. Namely:‐

New form of financing to ensure sustainability


Internet Technology

Additionally, UiTM contributes significantly in fulfilling the Agenda of Bumiputera Commercial and

Industrial Community (BCIC), which has long been established by the government, a success. BCIC is

an effort making Malaysia a country with competitive advantage emphasizing in balancing the socio

economics development of the ethnics groups. This is because Malaysia comprises of multiple ethnics

with multi income level. BCIC is when the government accorded special privileges for Malay businesses

and joint ventures, particularly in bidding for contract jobs, quotas and licences. Under this BCIC

agenda Malay entrepreneurs were to be nurtured. The NEP targets were that within one generation

or about 20 years, the Malays would own, manage and control at least 30 per cent of the country’s

commercial and industrial sectors at all levels of economic activities


1.1.1. Vision

To establish UiTM as a premier university of outstanding scholarship and academic excellence capable

of providing leadership to Bumiputeras’s dynamic involvement in all professional fields of world‐class

standards in order to produce globally competitive graduates of sound ethical standing.

1.1.2. Strategy

New Form of Financing

Focusing on usage of online financial system, to ensure efficiency in financial management of the university (FAIS) that covers payroll, tuitions, procurement and all aspects of the financial management of the university.

79


Encourage involvement of industries through endowment, WAQF, privatisation of facilities

Investments in the financial systems through financial institutions and creation of companies under UiTM Holdings.


Selections of staffs are rigorous taking into consideration academics qualifications as well as expertise in specific areas. This covers both academics as well as non‐academic staff

Continuous trainings are given to enhance competency and efficiency through in house facilities as well as professionals. Staffs are encouraged to enhance their professionals qualifications e.g. professionals accountants and engineers.

Internet Technology

Promote the usage of ICT in teaching and learning through smart‐ classroom, create a platform for virtual classroom (i‐ learn).

Paperless for claims and payments.

1.1.3. Objectives

To provide maximum opportunities for bumiputeras to pursue professionally‐recognized programmes of study in science, technology, industry, business, arts and humanities.

To provide quality and innovative programmes of study relevant to current market needs and customer demands, and in line with policies of national development.

To establish a human resource development programme as a tool for the assimilation of a value system within the university community.

To ensure that UiTM graduates are adequately prepared to join the local as well as the global workforce.

To establish UiTM as a centre of excellence that is accountable for the effective and efficient management of its human resources, finances and assets in order to achieve its educational objectives, while playing its role as a catalyst in community development.


All financial service delivery processes meet the specified Client Charter

University accounting management is implemented, controlled, recorded in accordance with established standards, procedures and regulations.

The level of customer satisfaction is excellent and brilliant where the percentage of the justified complaints that requires action does not exceed 20%

Staff engaged in improvement activities exceeds 80%.

80



Leadership and Governance

The Senior Management Team is the line of leadership responsible for determining the Vision, Mission

and Values of the Treasury Office which is assimilated through the Vision and Mission of the University

by UiTM Vice‐Chancellor. All aspects of financial services management will be directed at the limits of

the powers given with structured Line of Authority

Resource Management

With a total allocation of RM2 billion, university budget management is implemented through a

mandate given by top management of the University based on government procedures, rules and

circulars that are in force. UiTM's budget management is based on a balanced budget. The level of

budgetary performance measurement is based on planning and approval from top management. FAIS

(Financial Accounting Integrated System) through the Budget Module is a key resource in managing,

controlling and monitoring the university's budget and spending. This budget system enables

information on the latest budget status of Cost Centers consisting of departments, faculties and

branches.

Measurement and Best Practices

81


The financial performance of the university is at the best level where the achievement in obtaining a

certificate of Clean Audit has been maintained for 16 consecutive years. Controls and monitoring the

performance of major financial processes of the university are implemented according to government

regulations and circulars.

System and Procedure

Implementation of the financial system by the Treasurer's Office such as FAIS, FinEPortal, and UiTM‐

BIMB IBG System which is the vehicle to the Treasurer's Office to record all UiTM financial transactions

Compliance with Financial Acts, Laws, Treasury Circular in accordance with the policies of finance.

Provides the latest financial and accounting management requirements through ICT facilities such as

FAIS (involving database and key processes in the Intranet System), FinE‐Portal (web‐based service)

and IBG payment execution.


To achieve the best financial management by obtaining a Certificate of Clean Audit.

To increase customer perceptions and satisfaction by fulfilling Client Charter(our contract to our client to give services of high quality, with integrity, and ethical)

To promote the culture of continuous improvement by all staffs with staff involvement at least in one project or quality initiative each year.

To achieve 100% usage of information and communication technology (ICT) systems for all financial management system operations.


Planning and Budget Management Division

Staff Salaries and Facilities Division

Account and System Management Division

Procurement Management Division

Property Management Division

Development and Management Division of Facilities

Student Financial Management Division

Corporate Finance Management Division

Quality Administration and Management Division

Trust Account, Research and Consultancy Division

Zone Finance Division

UiTM State Financial Management

Budgets are received from the ministry and channeled to the main campus, who will then are allocates is based of several factors such as; size of campus, students enrolments, program runs on the campus. The decisions are based on the budget proposal prepared by each campuses yearly.

82



SWOT Analysis of the current financial management framework emphasizes on four (4) major areas

mainly; Strengths, Opportunities, Weaknesses and Threats.

Strengths:

Ability to manage large amount of financial resources above RM1.8 billions

Create and own a dynamic financial system called FAIS (Financial Accounting Integrated System) that bind together all the financial management system of the university

Implementation of ISO 9001:2015

Clean Audit for the past 17 years

Weaknesses:

Dependency on financial resources from the government (95%)

Opportunities:

Collaboration with other universities, public and private, statutory bodies, private sectors as well as alumnus

Explore new areas in income generations through investments

Create cost saving culture amongst the university’s community

Threats:

Changes in government policies


New Form of Financing

Enhance involvement of all stakeholders of the university, students, community and industries. To

achieve this university created an income generation unit under Bursar Office in 2016. This is to reduce

dependency to public funds.


To date the university established two training centres in 2016 (Institute of Leadership and

Development) aiming to enhance competency and efficiency of all staffs. Training are for both

academics and non‐academics staff. This is under the jurisdiction of Assistant Vice Chancellor. The

centre received yearly funding from the university and at the same time is allowed to generate income

through rentals and consultations.

Internet Technology

Information Technology Unit of the university is the platform that integrates the Human Resource

information system with Financial Integrated Management System and student’s management

system. This network is also a link with all branch campuses, to ensure synchronization.

83


It is a contractual obligation of the universities to continuously upgrading the facilities through their

administrative budget.






Donations


Donations: The university is working towards making this big as it is tax deductible for contributors. Expected to increase in productivity of academic and cost efficiency. Projects with 3rd parties: Funds are normally project based and higher percentage are for research by academic staffs. Strategic Business Units(SBU) Activities are focused on commercialization of students’ projects. Rebranding of Buildings/Laboratories: Corporate are invited to upgrade our premises and can renamed accordingly or set up lab to be used together in the name of smart partnership. Hostels/ Guest house: Upgrading of the premises as well as facilities to attain 3 stars rating.




Internet Technology

IT services

Campus connectivity


IT Services: Speed of Wi‐Fi and internet are constantly being upgraded according to technology development. Campus connectivity: The whole campus run on Wi‐Fi and wired internet access.

84



Data quality

Other (please name)

(the university allocated 3% of their budget on IT annually) Thus the university is getting outside funding to supplement the low annual government budget. E.g. getting funding from MDEC to create big data lab at the Faculty of Computer Science and Mathematics.

Financial software updates: The university run FAIS, a home‐grown system that integrated our financial management practices. Data Quality: The university upgraded varieties of software according to request by users.










Quality norms of implementation: The control process involves authority of each level of administrator that prepare, verify and approves before any payment was made. Audited Finance Processes: Both internal as well as external, internal audit is ongoing process and answerable only to the university’s audit committee. Existence of long‐term planning: Long term planning of the university is in line with the nation agenda according to Malaysian Plan as well as the Education Blue print Existence of short‐term planning: University conducted short term plan to support the long term agenda. It is run and monitored on yearly basis. Current budget vs. forecast situation analysis: RM2.2 billion/year (EURO435 million) (Projected increment of 6%/year).

85






Training



Institutional goals

Training: It is compulsory for all staff in the university to attend. Recruiting and selecting procedure: Academic staff are constantly encouraged to upgrade their qualification by giving them full paid leave. Department structure: Academics are divided according to faculties and academic departments. Administrative staffs are distributed according to needs. Institutional goals: To enhance knowledge of the indigenous in all fields of study through professional programs, research work and community services based on moral values and professional ethics.



Donations:

Limited amount receipt by the university mostly cater for students activities. The amounts are small

and not really significant to university’s fund. However, the university is working towards making this

big as it is tax deductible for contributors.

Expected increase in productivity of academic and cost efficiency. Extra funds will not increase the

number of academic staff but will help to create projects that will enhance the quality of teaching and

learning without financial constraint.

86


Projects with 3rd parties:

Funds are normally project based and higher percentage are for research by academic staffs. Recent

trend is that the university received waqf for special projects from corporations as well of individuals.

Part of academic endeavour is to being able to do more fundamental academic research, lack of fund

is now hindering it, and more involvement with industries will increase number of research and create

patterns, copyright and publication as well as commercialization of research findings.

Strategic Business Units (SBU)

Activities are focused on commercialization of students’ projects e.g photography services. Renting

out spaces on university’s premises for functions as well as seminars.

Creation of strategic business unit is now moving toward academic programs that will generate income

to university, currently a spin‐off of Faculty of Business Management, Arshad Ayub Graduate Business

School is focusing solely on MBA and EMBA which is generating income and create self‐sustainability

for the school. A lot of academic programs and academic units are now moving in the same direction.

Rebranding of Buildings/Laboratories:

Corporate are invited to upgrade our premises and can renamed accordingly or set up lab to be used

together in the name of smart partnership.

Labs and incubator centre are created within the university with industries e.g Azman Hashim Centre

of Tropical Disease is focusing on research and development in this area, funding are solely from third

party. The project will commence in 2018.

Hostels/ Guest house:

Upgrading of the premises as well as facilities to attain 3 stars rating, thus making it presentable and

available to the general publics at a nominal fees when it is vacant.

INTEKMA Resort, a hotel facilities of UiTM, is now in the process of refurbishing and rebranding as the

facilities is old. It now on phase by phase basis, in 2020 it will be fully commercialized.


IT Services:

87


Speed of Wi‐Fi and internet are constantly being upgraded according to technology development. The

university has a dedicated unit that oversees the development, maintenance and upgrading of IT for

the whole university.

Efficiency in our financial management is essential if we have a good internet connection, e.g.

University launch e‐procumbent is an ongoing process to make the human capital understand the

usage and getting a stable system running. This involve a lot of training at all level of user.

Campus connectivity:

The whole campus run on Wi‐Fi and wired internet access which is accessible to all at no fee.

Improvement are continuous.

To improve the network, the university used infrastructure allocation, to lay out new cabling for

network infrastructure.

Financial software updates:

The university run FAIS, a home‐grown system that integrated our financial management practices.

Create a state of the art training facilities that will connect main campus with all the branches via

internet and online training, in financial management of the university.

Data Quality:

The university upgraded varieties of software according to request by users.


Training:

It is compulsory for all staff in the university to attend, a minimum of 42 hrs/year of training. The

training can be internally or externally. On the 42 hrs of training: 14hrs on financial management

aspects, 10hrs on IT and 8 hrs on general knowledge.

Internal training involves, all level of staffs. All must understand the process on what the university is

running with regards to financial management.

Recruiting and selecting procedure:

Academic staff are constantly encouraged to upgrade their qualification by giving them full paid leave.

All staff must fulfilled a certain minimum qualification at the level of services the individual provided

e.g. high school leaver will be at the lower supporting staff level. All will undergo the same selection

process that involves interview as part of the process.

88


In terms of the bursary side, all new recruits are required are exposed to basic knowledge of accounting

and finance. This is to ensure the competency level to execute their task.

Department structure:

Academics are divided according to faculties and academic departments. Administrative staffs are

distributed according to needs. Current ratio of administrative staff to academician is currently at 2:1.

Financial management practices knowledge runs at all level.

Institutional goals:

To enhance knowledge of the indigenous in all fields of study through professional programs, research

work and community services based on moral values and professional ethics

The objectives of the university is to:

Clean Audit Certification continuously since 2000.

Accountability Index on Financial Management at 5Star rating.

Sustainability on financial management

Achieved the target of Trans4U with no glitches.

The university go on the motto of 2 J (Jana –Generate and Jimat‐ Save).

89



Action Plan 2016 2017 2018 2019 2020

WP1 Tuition fees

SUB 1.1 Number of Student Enrolment 146,303 148,776 180,000 190,000 200,000

Action Plan 2016 2017 2018 2019 2020

WP 2 Product, services and portfolio management

SUB

2.1

Training and short courses

5M

10M

10M

10M

10M

SUB

2.2

Internet Technology

49M

45M

51M

50M

50M

SUB

2.3

Portfolio management‐ return from short term investment (i.e.,

fixed deposit)

110M

103M

95M

95M

95M

90



Strategic Axes Core topic

(Please select the ones related to your university)

Description of Improvement

(max 5 sentences or describe in bullet points)

Objectives (be precise and use

bullet points)

Timeframe (short or long‐term and

indicate approximate year

of implementation)

Responsibility (Management/Academi

c/ Department)

Changes/ Remarks


Donations


Strategic Business Units(SBU)

Expected increase in productivity of academic and cost efficiency.

To increase the income from companies through consultancy and services

To increase the income from training and services

To get continuous contribution from alumni

To do continuous projects with industries

To provide training and services to related parties.

Short and medium term

Medium and long term


All Head of Responsibility Centres,

Dean of Faculties,

Head of Income Generation Unit (Bursar Office),

Directors of Research Institutes,

Deputy Vice Chancellor (ICAEN)

91


Rebranding of Buildings/Laboratories

Hostels/ Guest house

To increase the income through renting activities

Long term


Internet Technology

IT services

Campus connectivity



Data quality

Other (please name)

To upgrade the internet connection according to technology development.

To promote efficiency in our financial management system.


Infrastructure Office


Training



Institutional goals

To provide staffs with necessary skills.

To enhance knowledge of the indigenous in all fields of study through professional programs, research work and community services based on moral values and professional ethics.


Registrar

92



After the implementation of improvements, strategic and operational targets are easier to monitor

and reviewed. Allocation of resources is targeted on focus areas and risk is mitigated. The journey

towards becoming an international repute university is clearer because we are able to monitor and

review even when targets are missed. We know the reasons and are able to strategies on the next

plan.


Implementing a financial management system professionally, efficiently, effectively and responsibly

on planning, program execution and continuous improvement to become a superior, prudent and

professional department.

QUALITY FOR ALL, JOINT ACCOUNTABILITY is the core of services to meet customer satisfaction.

In specific, as a public university the organization is subjected to be audited by the auditor general

office. Compliance of all procedures will grant the university clean audit certificate. The bursar office

has also been awarded with Lloyd's Register Quality Assurance Ltd (LRQA) which indicates a continuous

quality improvement process is in practice. The university will go through continuous audit process

both internally as well as externally to ensure that the award remains.


Periodic meetings inter departments are conducted to ensure that the strategy are implemented. A

quarterly meeting are conducted at both universities and ministry level to ensure that all strategy is

implemented according to plan. The purpose is to identify shortcoming at the earlier stage and budget

allocation for universities are based on previous achievement.

4. Conclusion

In conclusion, our developed, measured, monitored and continuous revision of the strategies has

helped and is continuously assisting UiTM in achieving its short, medium and long‐term targets. These

strategies has increased the university’s competitive advantage and made its stakeholders satisfied,

allowing UiTM to continuously improve its QS University Ranking as well as secure a good percentage

of allocation from the government.

93


Summary

Generally, in the case of Malaysia and the two participating universities it can be seen that the

generation of income through new forms of financing is an important issue for both universities as also

in Malaysia universities are under pressure to diversify their income sources.

Further, it was observed that controlling and planning as well as human resources are strategic areas

in which improvements need to be made to create a beneficial environment for financial management.

In the area of controlling and planning, debt management and cost controlling via cost reduction were

mentioned as essential factors for success in the action plans. Moreover, in the area of human

resources, tailored trainings as well as adequate recruiting according to the institutional goals were

identified as beneficial actions for creating a value added periphery.

Finally, when talking about the needed resources to implement a long‐term successful financial

management system, both universities are aware that resources need to be made available and that

costs are connected with the improvements identified. The feasibility of the implementation of

improvements was identified as high as the needed support from the major stakeholders is granted

also given the involvement through the ADVANSE project.

94


Thailand

Thereinafter, the action plans of Thailand will be presented and in the end a short summary will be

given to summarize the main results generated.

In Thailand the cases of Kasetsart University (KU) and Naresuan University (NU) will be presented to

show two examples from different populated areas in Thailand and the aims connected to financial

management.

Kasetsart University


Kasetsart University devote itself to the task of accumulating and developing intellectual knowledge.

It thrives for the growth in academic wisdom including ethical and moral excellence. In addition, it has

a responsibility to play a leading role in keeping our Thai heritage alive and to ensure that it continues

to grow to enrich the civilization of the notion. The university has a long history dated back to year

1904 as the first agricultural education school in Thailand. Later, in year 1943, Kasetsart university was

officially established as a university. Currently Kasetsart university is one of a comprehensive higher

education institution which is offering 588 academic programs in bachelor, master and doctorate level.

The university has 66,763 students (year 2017) in 4 campuses including Bangkok campus (34,611

students), Kamphaengsean campus (14,123 students), Sri racha campus (10,801 students), and

Chalermphrakiat Sakon Nakhon campus (7,170 students). There are 609 academic services projects

(including research) undertaken by the university in year 2017. Currently there are 30 Faculties in 4

campuses, 18 research stations, 4 training stations, 4 veterinary teaching hospitals, 2 laboratory

schools, and 4 radio stations in 28 provinces. Kasetsart university is striving for excellence by aiming to

be green university, digital university, research university, world class university, social responsibility

university, and happiness university.


The University is committed to academic excellence and to the benefits of society. Therefore, the

University has determined the following directions to achieve its mission which consist of vision,

strategy, and objectives.

1.1.1. Vision

Kasetsart University aims to provide ‘Knowledge of the Land' to promote sustainable development in

the country in order to be internationally recognized.

The primary mission of Kasetsart University is:

95


To create intellectual and sensible human resources with virtue and public consciousness;

To be a hub of local wisdom, to create and develop diversified knowledge, and to produce high‐standard and competitive output;

To work with local communities and embrace social responsibilities;

To maintain and strengthen art, culture and the identity of the university

To manage the university’s resources effectively

1.1.2. Strategy

Kasetsart university has 5 core aspects of strategy as followed:

Strategy 1: To strengthen and modernize academics to improve people wellbeing.

Strategy 2: To create knowledge to strive for excellence and for appropriate application.

Strategy 3: To provide academic Services for society and sustainability.

Strategy 4: To conserve religion, arts and Thai culture to glorify Thailand and to internationalize

the country.

Strategy 5: To reform the administrative system in order to improve management efficiency and

deal with changes

1.1.3. Objectives

The 5 most essential objectives of your university are consisted of:

At least 88 percent of graduates will be employed within 1 year after graduation

There are research outputs and innovation which will has positive impact to society

There are academic service projects and can apply knowledge and experience from these projects to teaching, learning and researching development

Students and personnel appreciate aesthetics from art and culture

Information system will be improved to satisfy the users


This section will describe in details the financial framework which includes the structure and

composition, objectives of financial management and key players in decision making in concern with

financial management.


There are two main units which are responsible for financial management of the university – Division of Planning and Division of Finance.

The division of planning is structured into 4 sections as followed:

Plan and budget analysis section

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Institution research and information

Physical Master Plan section

Administrative section

While, Financial Division is divided into 7 sections;

Financial Section,

Accounting Section,

Budgeting Section,

Administrative Section, and

Procurement Section.

Revenue Section

Information for Accounting (ERP)

However there are other units which are related to financing or financial management as followed

Asset management division. The division is responsible for generating income from all assets of

the university e.g. property management, diary product, book centre etc.

Student affairs division. The division is responsible for collecting tuition fee, fees, and others from

students.


To efficiently manage assets and effectively generate income.

To effectively and efficiently apply the government budget and university revenues in accordance with the regulations

To provide high quality finance and procurement services in order to satisfy clients.

To provide financial reports which are useful for executives’ decision making in all levels of management.

To promote governance in financial management


The main parties in financial management of the university include the university council, president,

vice‐president, director of finance division, director of planning, Dean of faculties, finance supervisor

of Faculty.

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The budgetary process of the university is as followed

The university council sets the university policy framework based on the national development plan and government policies

The management of the university including the president, vice presidents, director of planning division, deans and directors of departments develop the university strategic and operational plans according to the university council policies

Faculties and departments develop action plans and budget according the council policies

Vice president for planning and division of planning aggregates and analyzes budget proposed by faculties and departments and then summits to president

The draft budget is submitted to the university management committee which comprised of all deans and directors of administration units for consideration

The draft budget considered by the university management committee is submitted to the university council for approval

Faculties and departments implement/apply the approved budget

Vice president for finance and division of finance (in coupled with other units e.g. Asset management division, student affairs) are responsible for supervising the budget implementation and financial reporting.

Vice president for planning and division of planning monitors and evaluates the budget implementation


As other universities, KU has resources and capabilities which result in strength and weakness. Also

the university is facing favour opportunities and threats effected from the changing environment. This

section will analyse the SWOT of KU in pertaining to financial management.

Strengths:

KU is one of 9 research universities in Thailand which has potential to get more research fund from the government

The university applied ERP for financial planning and management

80 % of staff cost was supported by the government

KU has introduced the cash‐less based university which reduces operating cost and fraud

Weaknesses:

Financial information is not used for decision making by the university management

Financial information is not updated enough for decision making

Lack of financial and accounting staffs in general

Financial procedures are complicated leading to delay and inefficiency

Investment projects were not sufficiently analysed which led to the failure of the projects

Financial data bases are dispersed, so consequently difficult to use for decision and planning

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Opportunities:

Research fund from the government will be increased in areas specialized by the university e.g. agricultural, food etc.

Income generated from research output (e.g. patents) in areas of aging society

As KU has numerous alumni, donations from alumni are a potential source of funding

Threats:

Decline of students enrolling in HEIs due to demographic change which will affect the income from tuition fees.

Changing from block grant to demand‐side financing

Changing in Government policy lead to the changing in university policy. The change implies risk.


This section will describe strategy areas need to be improved by the university, Implementation of the

Defined Improvements, involved authorities, and time line of implementation.






Kasetsart University, based on need analysis, plans to make improvement the financial management

on 4 strategic areas. These are 1) New Forms of Financing 2) Internet Technology 3) Planning and

Controlling and 4) Human Resource Management

2.1.1. New form of Financing

Kasetsart, in this strategic axe, plans to improve new form of financing through company or university

Alliances, asset Management, and donations

2.1.1.1 Company or university alliance

Venture in new business with strategic partners is a potential form of financing for Kasetsart. Currently

the university has had collaboration with some private companies mainly just for academic, not

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business purpose which aims to generate income. New business projects with partners which focuses

more on income generating and profit making will be encouraged.

However currently jointing ventures with private companies to set up a business entity (company) is

not yet allowed according to the present university regulations. So amending the current regulations

and issuing the supporting regulations to ease the process of strategic alliances with companies are

needed.

2.1.1.2 Asset Management

Asset management is another potential source of income. Currently assets cannot be fully utilized due

to regulation constraint. As KU has become an autonomous university, most of assets e.g. Land will be

permitted by government to fully utilize. Therefore the new regulation is needed.

Issuing the new regulation to enable the university to fully manage its asset e.g. property development

for business centre.

2.1.1.3 Donation

Donation is another main source of fund of KU. KU has many potential alumni who can support the

university via donation. In the past there have been some donations from alumni in forms of

scholarship. However new form of donation will be encouraged. For example, donation for research

endowment.

In addition to alumni, donation from company or state enterprise can be the other sources of donation.

Incentive such as tax deduction and the name listed in the hall of fame will be encouraged.


2.1.2.1 Financial Software update

Developing information system for financial management analysis and reporting using Tableau

software so called ”Management Information System for Financial Management“‐MISFM. The system

will integrate data from different sources (budgeting data base and accounting data base) so that

comparison between planned budget and actual outcome can be monitored in real time. The system

can be used to analyse financial performance and financial scenario of the university such as financial

ratios and sensitivity analysis. The system will provide the accurate and meaningful information for

executives for decision making.

2.1.2.2 Data quality

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Integration of financial data which are dispersed in the different sources (budgeting data base and

accounting data base) using MISFM. The accounting data is based on ERP system, while the budgeting

data is based on E‐revenue system. So the data from both sources will be standardised using Tableau

software.


2.1.3.1. Quality norms of implementation

New financial management for tuition fee payment will be launched through outsourcing to a

commercial bank. The current method of tuition fee payment by students is managed by the university

which is not efficient and hardly to be controlled. The new method is that students will pay their tuition

fee to the bank and the bank will manage all concerning operation for the university.

Building Paper less practice for payroll by replacing paper pay slip with files. This new practice will

ensure financial staffs don’t have to spend their time for processing paper pay slip.

2.1.3.2. Audited Financial Process

New audited finance process will be established. Internal auditing for efficiency and risk assessment

will be more focused. In addition, new auditing method for preventive control will be introduced.

2.1.3.3. Existence of long‐term planning

KU will add more financial management plan in the long term and short term plans.

2.1.3.4. Existence of short‐term planning

Planning in long and short terms horizon will be continuously undertaken.

2.1.3.5. Current budget vs. forecast situation analysis

Current budget VS forecast situation analysis will be made thru sensitivity analysis. For example,

sensitivity of cash flow statement in different scenarios of student enrolment.

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2.1.4.1. Training

Development of appropriate training courses in modern financial management for all level staffs

concerning financial management. The main topics will concern with:

The application of MISFM system for financial planning and controlling.

Budgeting for new government standard

Updated accounting system

The target group will be financial related staffs from Faculties and management units at all level.

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Strategic “Axes”

Aspects How Target Who when Resources

2.2.1 New Forms of Financing

Company or University Alliances

amending the current regulations and issuing the supporting regulations

promoting Venture in new business with strategic partners

To generate 100 million baht by year 2020

KU management, (President,

Vice President for Strategic Development and Organizational Communication,

Vice President for Finance)

Director of the President Office

Director of the Finance Division

Head of Office of the Legal

Management of Company Partners

2018‐2021 Budget 100,000 Baht for implementation

Asset Management

Issuing the new regulation to enable the university to fully manage its asset e.g. property development for business centre


KU Council







Head of Office of the Property

Management

2018‐2021 Budget 100,000 Baht

One New Staff

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2.2.1 New Forms of Financing (Con’t)

Donations

Establishment of a unit to coordinate and manage new initiatives for endowment

Development of Alumni database

To Increase contribution to 100 million baht by year 2020

KU Council



Vice President for Finance,

Vice President For Information Technology)


Director of General Affairs Division


Deans

Alumni

2018‐2021 Budget 1,500,000 Baht (Outsource for Developing Database)

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Strategic “Axes” Aspects How Target Who when Resources

2.2.2.InternetTechnology

Financial Software update

Developing tools for financial management analysis using Tableau software

Called MISFM

Software for financial management analysis

KU management,

(President, Vice President for Finance,

Vice President For Information

Technology)

Director of the Office of Computer Service

Director of Planning Division


Deans Head of Finance Section in Faculty

2018

Budget 1,227, 950 Baht

Data Quality Enhancement of ERP efficiency

Centralized financial data base

KU management,

(President, Vice President for Finance,

Vice President For Information

Technology)




Deans

Head of Finance Section in Faculty

2018 Using the same budget as Financial Software update

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2.2.3 Planning and Controlling


Internal Audit Department will be under the university council to ensure its independent and transparency

Internal audit unit will be independent

KU Council


Vice President for Finance,)



Director of Office of Internal Auditing

Invited Staff from Auditor General

2019‐2021

Budget 300,000 Baht

Cash less based payment

Paper less payroll

New financial management for tuition fee payment

Building paper less practice for payroll by replacing paper pay slip with files. This new practice will ensure financial staffs don’t have to spend their time for processing paper pay slip.

Students

All staffs


Director of the office of computer services

2018‐2019 2018

No Budget

Current Budget vs. Forecast Situation

Create new way of financing

Budget Ratio : Gov Grant (30%) : self funding (70%)

KU Council





2018‐2021

Using the same budget as New Forms of Financing

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Head of Office of the Property

Management

Deans




2.2.4.Human Capital (HR)

Training Finance related personnel be trained in Appropriate training courses

Finance related personnel have sufficient knowledge and skill in modern financial management

Vice President for Finance


Financial Staffs in Finance Division and Office of Internal Auditing

Financial Staffs in the Faculties

2018‐2021

Budget 3.000,000 Bath


KU Council

KU management, (President, Vice Presidents)


Director of the Planning Division



Head of Office of the Property Management

Deans

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Improvements 2018 2019 2020 2021

M1‐3 M4‐6 M7‐9 M10‐12 M13‐15 M16‐18 M19‐21 M22‐24 M25‐27 M28‐30 M31‐33 M32‐36 M37‐39 M40‐42 M43‐45 M46‐48

IMP 1 New form of Financing

SUB 1.1 Company or University Alliances

SUB 1.2 Asset management

SUB 1.3 Donation

IMP 2 InternetTechnology

SUB 2.1 Financial Software update

SUB 2.2 Data Quality

IMP 2 Planning and Controlling

SUB 3.1 Audited Finance Processes

SUB 3.2 Cash less based payment

SUB 3.3 Paper less payroll

SUB 3.4 Current Budget vs. Forecast Situation

IMP 2 Human Capital (HR)

SUB 4.1 Training

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In sum, the improvements planned by Kasetsart University compose of 10 activities in 4 dimension including new form of financing, internet technology, planning

and controlling and human resource management as shown in the table below.






Changes/Remarks


Company or University Alliances

Asset Management

amending the current regulations and issuing the supporting regulations

promoting Venture in new business with strategic partners

Issuing the new regulation to enable the university to fully manage its asset e.g. property development for business centre



Year 2018‐2021

Year 2018‐2021







Management of Company Partners

KU Council


Vice President for Strategic evelopment and Organizational Communication


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Donations

Establishment of a unit to coordinate and manage new initiatives for endowment

Development of Alumni database

To Increase contribution to 100 million baht by year 2020

Year 2018‐2021




Head of Office of the Property management

KU Council

KU management, (President, Vice President for Strategic Development and Organizational Communication, Vice President for Finance, Vice President For Information Technology)


Director of General Affairs Division


Deans

Alumni Internet Technology

Financial Software update

Developing tools for financial management analysis using Tableau software Called MISFM information system

Software program for financial management analysis

Year 2018

KU management, (President, Vice President for Finance, Vice President For Information Technology)

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Data Quality

Enhancement of ERP efficiency

Centralized financial data base

Year 2018




Deans

Head of Finance Section in Faculty

KU management,

(President, Vice President for Finance, Vice President For Information Technology)




Using the same budget as Financial Software update



Internal Audit Department will be under the university council to ensure its independent and transparency

Internal audit unit will be independent

Year 2019‐2021

Year 2018‐2019

KU Council

KU management, (President, Vice President for Finance,)



Director of Office of Internal Auditing

Invited Staff from Auditor General

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Cash less based payment

Paper less payroll

Development of new system for tuition fee payment

Building paper less practice for payroll by replacing paper pay slip with files. This new practice will ensure financial staffs don’t have to spend their time for processing paper pay slip.

New financial

management

system for

tuition fee

payment

Paper less system used through the university

Year 2018


Director of the office of computer services


Training

Finance related personnel be trained in Appropriate training courses

Finance related personnel have sufficient knowledge and skill in modern financial management

Year 2018‐2021 Vice President for Finance


Financial Staffs in Finance Division and Office of Internal Auditing

Financial Staffs in the Faculties

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New Forms of Financing o Better financial health and risk reduction o Sustainability of finance

Internet Technology o Higher quality of financial information for decision making

Planning and Controlling o Building good corporate governance o Cost reduction o Enhancement of financial management efficiency

Human Resource Management o Higher skill of financial staffs in every units


New Forms of Financing o Annual goal /target is set and evaluated o A committee is established

Internet Technology o MISFM usage will be encouraged in planning and controlling for every units

Planning and Controlling o Cashless based payment and paperless payslip will be used in regular basis

Human Resource Management o Training program will be set in annual plan o Training attendance will be part of personal evaluation


The improvements planned will fit well with the strategy and outlook of the university as Kasetsart

university aims to be the world class university, the improvements in financial management will

support this achievement.

4. Conclusion

It is expected that, after the implementation of the improvements, Kasetsart university will have

financial efficiency and stability. These characteristics are crucial for the university to implement her

missions and achieve her strategic goals.

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Naresuan University

1. General Overview of the University Naresuan University emphasises the improvement of educational opportunity and equity for all as one of the top government university in Thailand. A strong focus is placed upon research, innovation, partnership, and internationalisation. The comprehensive university lives up to the public expectations in providing diverse, cutting‐edge programmes through 23 faculties, colleges, and a demonstration school. Sixteen professional faculties, two schools, and five colleges are categorized into three clusters: the Social Sciences Cluster, the Science and Technology Cluster, and the Health Sciences Cluster with almost 22,000 students including doctoral, master and mainly bachelor degrees. Naresuan University is aiming to become a "Research University" and to rank in the country's Top Ten universities. The university, with the approval of Naresuan University Council, has projected its research policy comprising 9 key performance indicators for research; i.e., to increase the number of research papers, commercialised research, published papers at national level, published paper at international level, research paper/head/year, research capital, research impact for community development, citations of research, and increased patents/petty patents/rights. This has to be done in a systematic and concrete operation at all levels for the faculties, the university, as well as all the related organisations. This strategic operation has encouraged a crucial development in research personnel, research projects, intellectual properties, national and international publications of research studies, and research collaborative networks.

1.1 Vision, Strategy and Objectives of the University Naresuan University aspires to be the University of Innovation. Our vision statement affirms a commitment to continue proactive roles in promoting high standards in higher education both in the national and international arenas. Through ongoing review and the development of new paradigms of the best practice, the university continues to improve the quality of teaching and learning, especially highlighting the project‐based, inquiry model throughout the university. All the programmes are continuously enriched and informed by the rapid transfer of new knowledge used in ongoing curriculum improvements.

1.1.1. Vision Naresuan University becomes one of the top 250 universities ranked by QS World University Ranking before 2021.

1.1.2. Strategy The university strives to achieve the following key strategies:

Internationalisation driven by commercialized research, international programmes, and international partners

Cooperation under the Public Private Partnership (PPP) scheme and expand linkages with the private sector and highly potential entrepreneurs

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Programmes precisely delivered to the demands of learners and bring participation of private companies to help with the development and adjustment of the ones that are currently delivered

Rely less on government budget and pay much more attention on increasing university revenue through commercialised research, demand based academic programmes, and innovations for the community

Capacity building for university staff personnel, focusing on academic/research fronts and professionally delivered services , particularly in herbal medicine, alternative energy, historical tourism, and logistics and supply chain.

1.1.3 Objectives The university has pledged to fulfil the following 4 key objectives:

Well‐qualified students. The university is to produce students who can potentially achieve not only academic excellence but be ethical and moral. The students are expected to be a model for a healthy and peaceful society.

Research excellence. The university focuses on the further development of applied research. This includes the communication of research outcomes to the community resulting in economic and social development.

Academic services. Activities are varied to appropriately serve the society in terms of wisdom and learning. This will require a proactive role for the university to properly approach each community and be a reliable hub of knowledge.

Arts and culture conservation. The university will play an important role in arts and culture conservation, including the Thai unique tradition.

1.2. Financial Management Financial Management of Naresuan University is strictly in accordance with the Twelfth Higher Education Plan (2012‐2016) of the university. Required mechanisms are steered towards sufficiency and efficiency to respond well with the planned strategies and missions, which include financial and budget administration and exercise of university revenue, government budget, and earned capitals to achieve the highest possible efficiency based on Good Governance Policy set forth by the Office of the Prime Minister of Thailand on ‘Regulations of the Office of the Prime Minister on Establishment of Good Governance 1999.


The university has earned two major funding resources; i.e., federal funding and non‐federal funding, to support and promote the 4 key objectives (see above), as detailed below:

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Revenue Expenditure

Federal Funding Non‐Federal Funding Federal Funding Non‐Federal Funding

Seek federal funding based on the minimum cost of annual expenditure and investment cost

Reach out for federal funding for the development plan of the university in accordance with University Development Strategies

University revenue

o Tuition and fees o Revenue from

university’s properties

o Fees for students’ activities and sports facilities

o Revenue from academic services

o Revenue from health service delivery

o Profits from special projects

Other budget o Deposited budget o Underwriting budget

Other revenues

Federal Funding allocated in relation with the Annual Budget

Stable financial rules and regulations and appropriation in each fiscal year

Non‐federal funding is obtained through revenues or profits earned from the university´s properties and assets


Having practical financial management and administration, including supportive mechanisms to draw additional budget from the private sector, partnered entrepreneurs, and collaborative projects in order that the university can effectively be operating independently. This expands to administration of a reliable and accountable budget system, procurement, finance, foundation accounts, and earned revenue from each department, which are dedicatedly in line with accrual basis in 3D system for supporting missions and strategies of the university.

Administering and managing finances and the budget based on good governance, transparency, reliability, and accountability, which includes a delivery of well‐planned budget exercise

Coming up with an effective monitoring process to assure that all expenditures are spent deliberately and cost‐effective.


Administration and management of the financial and budgeting system are systematically planned by the Division of Planning and efficiently executed by the Division of Finance. The system is driven towards decentralisation, in which each of the faculties has its own authority to spend a given budget whereas the Division of Finance plays its significant role in disbursing and balancing the given budget. Besides, to ascertain that monetary related issues are thoroughly scrutinized, participations from the University Administrative Committee and the University Council are required, not to mention the fact that the university has also formed the Risk Management Committee and the Finance Committee to serve as examiners and data providers.

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Strengths:

Administration of budget management is in line with established rules and regulations set forth by the Bureau of the Budget and the Ministry of Finance.

Monthly and quarterly, financial reports are submitted to the University Council.

The university has endorsed the Planning and Government Budget Monitoring Committee.

Financial management is governed by transparency and good governance.

Decentralisation is made possible to achieve flexibility yet reliable and accountable.

Information technology is intensively employed to maximise financial management and administration

The Internal Audit and risk management are meant to bridge every possible gap in finance.

Weaknesses:

Estimation between expectedly earned revenue and actually earned revenue is hugely different, resulting in a readjustment of budget in the midst of the fiscal year.

Financial rules and regulations are released too frequently.

Personnel who are in charge of finance and budget are reassigned to other units/divisions/department, resulting in continuity of deliverable.

Opportunities:

The university continually receives educational/research grants from public/private organisations.

The university has cooperated with international universities to welcome more exchange students and staff members.

The government sector has a concrete and solid information technology system to support regional bodies to get easier access to these resources such as e‐Budgeting and GFMIS System (Government Fiscal Management Information System.

Threats:

It is factual that the administration and management of finance and the budget are handled by an information technology system, which with huge traffic may pose undesirable situations.

Implementation of planning, finance, accounting, and procurement might be hindered with rules and regulations released by different responsible bodies such as Ministry of Finance, Bureau of the Budget, etc, which prevent possible flexibilities.

Higher competition of education business in the region as there are a number of newly accredited HEIs.

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2. Action Plan 2018 – 2021 for Financial Management Presently, the university places a firm emphasis on seeking financial support from other sources besides the receiving government budget. This channel of financial approach could be retained within the university under the Regulation of University Revenue, which helps to boost university activities´ to respond well to the directions of the university. It also indicates that the financial capacity of an HEI in that how sustainable and secure a university can become with less support from federal funding.


2.1.1. New Forms of Financing With reference to the government policy to push all public universities to become autonomous due to the restricted resources of federal funding, the university has to keep pace with its astronomical expenditure, which differs hugely from its gains from the government; hence efficient and fair tuition, fees, dormitory fee, facility usage fee, etc. have to be well sorted out to gather sufficient revenue besides proactively reaching out for cooperation and collaboration with the private sector for curriculum development and research and innovation commercialisation to draw external funding to elevate physical visibility and academic/research capabilities of the university using the below directions:

Analysis and comparison of annual profit o To analyse data of expected revenue and actual revenue in fiscal year 2018. o To analyse plans of expected revenue and actual revenue in fiscal year 2018. o To analyse capital to be spent at university/faculty level in fiscal year 2018.

Channels of earned revenues o Seek financial support or grants from external resources. o Come up with activities/projects under academic service, research, innovations, inventions,

donations, and participation from the alumni. o Promote cooperation under the Public Private Partnership scheme. o Administer special projects by establishing responsible sub‐units to handle the tasks. o Manage revenue earned from university properties/assets.

Revenue strategies: Objective:

To expand channels of funding resources besides federal funding and university revenue. Strategies:

Maximise the use of owned properties/assets.

Utilise earned capital based on university resources and capacity. Measures:

Analyse revenue and expenditure of the university, including major source of university revenue.

Promote technology transfer and innovative inventions.

Emphasise possible donations and participation of the alumni.

Earn more revenue from academic service and research.

Promote the Public Private Partnership scheme. Expected outcomes:

Be able to validate financial status of the university and properly identify Sources of university revenue.

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Earn more revenue from academic service, technology transfer, research, and innovative inventions.

Come up with special projects co‐investing with the private sector.



MMYYYY Activities Office in Charge

December 2018 Responsible bodies are assigned and KPIs are identified to increase broader channels of university revenue

Naresuan Administrative Team

December 2018 Form the steering committee and task forces to drive the plans

NU ADVANSE TEAM

January ‐ October 2019

Analyse revenue and expenditure and budget exercise at university/faculty/college levels

NU ADVANSE TEAM

November 2019 Call for meetings to implement short‐term and long‐term plans

NU ADVANSE TEAM

November 2019 Responsible bodies report back towards the plans Assessment Team

December 2019 Conduct workshops for relevant bodies and assure that the plans are properly delivered

NU ADVANSE TEAM

December 2019 – September 2020

Responsible bodies implement the agreed plans Faculty/College/Institute

December 2019 – September 2020

The committee monitor/examine the process NU ADVANSE TEAM

October 2020 Responsible bodies report back Faculty/College/Institute

November 2020 The committee evaluate the progress based on KPIs Assessment Team

November 2020 Synthesis submitted to the university NU ADVANSE TEAM

Analyse expectedly earned revenue and actually earned revenue of fiscal year 2018

Endorse the Revenue and Asset Management Committee

Faculty and relevant bodies submit earned revenue plans

Come up with revenue and asset management plans of the university

PR the plans to the community

Arrange activities with regard to technology transfer, channels to earn more revenue, and asset management to relevant bodies

Analyse expectedly earn revenue and actually earned revenue of fiscal year 2019

Conduct meetings between Revenue and Asset Management Committee and relevant bodies

Host KM activities in cooperation with the private sector or interested HEIs

Submit the synthesis to the university KPIs:

Percentage of earned revenue obtained from technology transfer and innovations

Percentage of earned revenue obtained from academic service provided for external stakeholders

Percentage of earned revenue from research by external funding

Percentage of donations from external sources and the alumni

The number of increased activities compared with past fiscal years/outcomes

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IMP 1 Establishment Strategic Plan for Increasing University Revenue

SUB 1.1 Form steering committee

SUB 1.2 Create strategic plan covered project period

SUB 1.3 Set up working group

IMP 2 Analysis of Financial Management in University and Faculty Level

SUB 2.1 Macro: Analyse revenue and expenditure and exercise at university level

SUB 2.2 Micro: Analyse revenue and expenditure and exercise at faculty level

SUB 2.3 Comparative: Analyse capital to be spent at university and faculty level

IMP 3 Project Implementation

SUB 3.1 Conduct workshops for relevant bodies and assure that the plans are properly delivered

SUB 3.2 Practical exercise

SUB 3.3 Responsible bodies report result back

IMP 4 Strategic Plan Evaluation and Report

SUB 4.1 Project evaluation

SUB 4.2 Possible risk

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2.4. Summary of Improvements Strategic Axes Core topic (Please select the

ones related to your university)





Changes/Remarks


● Royalty fee (For spin off enterprises and technology transfer)

● Projects with 3rd parties ● Donations/Alumni

● Fund raising ● FM system with

effectiveness ● Operational

Excellence (OPEX) ● Low risk ● Budget control ● Properly identifiable

financial status of the university

● Increased revenue from academic service, technology transfer, research and innovations

● Special projects co‐investing with the private sector

Create a broader range of financial resources besides federal funding and university revenue

Long‐term for 24 months (during December 2018 – November 2020)

NU ADVANSE TEAM consists of ● Division of Academic

Service and Asset Management

● Division of International Development

● Division of Planning ● Division of Finance ● Office of the President ● Office of Internal Audit

Internet Technology

IT services

Campus connectivity



Data quality

Other (please name)

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Other (please name)


Training



Institutional goals

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The university will be independently working and effectively keep pace with the borderless world,

resulting in a more professional and efficient deliverables (academic/research) to the stakeholders

The university will become part of the business network for the society and community, adding more desirable values through academic service, research, and innovations

The university alumni will expectedly be involving in more university/societal activities and help the university gear forward multi‐dimensional approaches in education business


Establish a centralised unit to locate financial cooperation The unit (equating Faculty level) will mainly serve as a source of initiating efficient link for potential cooperation, which draws more revenue to the university and operates independently under administration of the university. It is expected that the unit will maximise the use of university properties and assets and possibly address key issues to increase transparency, reliability, and accountability towards research projects, technology transfer activities, and other required service delivery. It also acts as a main channel of business interaction between the university and external bodies to potentially draw attentions of stakeholders to invest in. Information technology through MIS will primarily be used to serve as fundamental information for better decision‐making situations; all of which will greatly assist in the university future and sustain its roles as a major contributor of the society. Identify influential alumni of the university to serve as committee and consultants or other

productive combinations of taskforce This implementation is primarily highlight highly‐capable alumni, whether in academic, research, business, or industry fronts, to take as much part in university activities, which could effectively push the university recognition, nationally and internationally, through academic symposia, seminars, networks, committee, etc. It is proposed that this should be implemented at both the Faculty level and university level.


In accordance with the 12th Naresuan University Developmental Plan (2017‐2021), the university thrives to promote research activities by utilising both basic research and competency of academic staff members to the fullest, which potentially links with national research strategies and academic service policies. The Work Package 3, focusing on strategies of financial management and administration, strongly supports the university plan in achieving management efficiency for financial front; resulting in increased revenue to more effectively drive research/academic departments in a long‐term run.

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Summary Given the input from the action plans, the following statements were generated:

KU concentrates on all four strategic axes when it comes to improvements that will be implemented in the university structure which will support financial management in the university. In terms of new forms of financing as strong focus will be put on the generation of company‐university alliances, asset management and donations. For all these improvements a timeplan was provided and the value will be added in terms of sustainability of finance and risk reduction due to income diversification. Further, an updated financial software will lead to increased data quality which will lead to a higher quality of financial information for decision making in the university. In the area of human resource management trainings will be offered to staff to make sure that the available infrastructure is used appropriately with the available skills. Again feasibility is granted through commitment by the major stakeholders and resources are already planned accordingly to benefit from the improvements implemented.

NU is strongly focusing on the strategic axe, new forms of financing, given the enormous need to diversify income. The university has to seek more external funds and to rely less on revenues earned from government/tuition/fees. A detailed time‐ and resource plan was delivered and as indicated actions are already in place.

Both universities are well aware of the additional work connected to the implementation of the improvements and will prioritize the implementation according to the biggest effect for the university.

4. Conclusion The ultimate goal of these action plans is to achieve a higher efficiency and cost effectiveness of all university activities, which require stable yet flexible financial management and administration through well‐steered measures to assure that good governance, transparency, reliability and accountability are seamlessly interwoven. This is made possible through a cooperation of the university community to strive for the best for students who will be shaped for the future to come through research, innovations, and curricula. Efficient financial management and administration is an essential mechanism to ascertain that the university stays on course in the globalised world. As all ADVANSE participant universities must be adaptable and resilient in the face of a changing external environment and new challeges, these strategic action plans will serve as a blueprint for the transformation of the universities towards modernization of financial management and to enable the universities to succefully achive their goals. These are ambitious but manageable plans with many actionable elements which direct resources and clear points of focus. Overall, the strategic action plans cover four strategic axes including new forms of financing, internet technology, planning and controlling, and human resource management. However, the focuses are different among the six universities depending on their needs and context. To ensure the plan success in the changing environment, the plans should be treated as a living document, subject to course corrections along the way. Aslo the periodic reviews of progress against each of the four major strategic dimensions 5 will be conducted to assess how effective the current plan has been in meeting the objectives. Through the successful implementation of these plans, the six partner universities will have more efficient financial management system and financial sustainability which will consequently support all of the university missions to achieve their university goals.

WP3 – Practical Exercise Collection for the Identification of ...

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