Financial Monitoring Algorithm in the System of Higher
Education in the Context of the Management Consulting
A.V.Ruchkin, N.K.Shemetova
(Ural institute of Management-branch of Russian Presidential Academy of National Economy and Public Administration.)
Abstract: The purpose of this article is to study the specifics
of financial monitoring of the universties. Based on the
investigations authors proposed the algorithm of the financial
monitoring in higher education. In addition, in order to
concretize the methodological aspects of universities' financial
monitoring authors described the factors that influence the
formation of the internal financial monitoring system in higher
education.
Keywords: Financial monitoring; Universities; Factors
Authors: Ruchkin A.V.Candidate of Science
(Sociology), Assistant Professor of HR-department. Ural
institute of Management-branch of Russian Presidential
Academy of National Economy and Public Administration. 66,
8 Marta str., Yekaterinburg, Russia, 620090. E-mail:
[email protected]
Shemetova N.K.Candidate of
Science (Economics). Assistant Professor of Economics and
Management Department. Ural institute of Managementbranch of Russian Presidential Academy of National Economy
and Public Administration. 66, 8 Marta str., Yekaterinburg,
Russia, 620090. Email: E-mail: [email protected]
I Introduction
The relevance of the monitoring organization due to the fact
that the functioning of the enterprise in a market economy,
Russia's accession to the WTO, increased competition in all
markets is placing new demands on the efficiency of
enterprises, the competitiveness of their products and services
on the basis of scientific and technological progress, efficient
forms of management and production management.
Important role in the implementation of the tasks assigned to
the financial monitoring of the organization as a basis for
management decisions. Based on the monitoring data produced
by the strategy and tactics of the organization, justified plans
and management decisions, monitor their implementation and
identified reserves of increase of company efficiency.
With the growing role of information in making timely and
effective management decisions are activated search of new
processes and the objective necessity of collecting and
processing information sources. Obtaining accurate and
complete information about the processes in the organization, it
is a prerequisite of the effective management of its
development.
At the same time, management should solve the problem, the
solution of which affect on the efficiency of the organization:
− Given the large number of indicators characterizing
the effectiveness of the organizations, and a variety of
techniques of information support of the management process
is a problem of collecting and interpreting information.
− Organizations as a dynamic and open systems are
characterized by continuous changes in all indicators, which
requires an objective assessment of the changes.
− Organization of effective management requires a
qualitative prediction of the processes occurring in the
company.
− Formation of a complex continuous control
interventions aimed at promoting the positive and negative
tendencies decrease [1, p. 10].
The solution of these and many other problems of
information support of the effective management solutions can
be provided by a monitoring system, both internal and external.
II Literature review
At the moment, there is no single universally accepted
concepts of monitoring, as this term is versatile and is used in
various fields of science and practice.
The concept of "monitoring" implies its use in the field of
science and in practice.
Monitoring is most often considered as a way to explore the
reality that is used in various sciences, and as a way to ensure
that administrative processes accurate, timely and high-quality
analytical information needed for management decisions in
order to improve the effectiveness of the control object.
In economic terms, monitoring is the continuous observation
of the economic systems, phenomena and processes, with
appropriate analysis and evaluation, forecasting of
development, the possibility of further development of
administrative decisions.
There are different types of the monitoring depending on the
completeness of monitoring, from the standpoint of accounting
social, environmental and financial aspects of the operation and
activities of economic systems (business entities, including
corporate structures and cluster formation, regions, including
the municipalities of different levels): the socio-economic,
financial, economic and socioecological -economic subspecies
of economic monitoring.
According to Baldina E. and Levenkova N. enterprise
monitoring is an informational and analytical tool that connects
between a real economy and the banking system, designed to
produce rational decisions, interventions in the framework of
monetary policy and proposals for improvement of economic
policy in general [2].
Raizberg B., Lozovsky L. and Starodubtsev E. consider
monitoring as the continuous monitoring of economic entities,
with the analysis of their activity as an integral part of
management. Judging by the logic of this definition, the main
role of monitoring is to monitor the qualitative and quantitative
changes in the factors significantly affecting the activity of the
enterprises [3].
N. Reimers notes that the meaning of the monitoring is to
perform two related functions - monitoring (tracking) and
warnings. Such monitoring is aimed at fixing the negative
consequences of economic activities and their secondary
effects and, thus, has low potential prognostic [4, p. 2].
Common semantic analysis of monitoring concepts in
various fields of activity allows to identify the main
components of the process:
−
−
−
−
−
−
−
−
Collection, processing and storage of data
Analysis and evaluation of historical data
Selection of key diagnostic features
The study of causal relationships
Forecasting
Control
Analysis and evaluation of historical data
Continuous observation
Khachirov I. proposed the following definition of monitoring
as the information-analytical system functioning in the
relationship of the structural elements (continuous monitoring,
control, analysis, evaluation and forecasting), designed to
monitor specific phenomena and processes in various fields of
activity, identify causal relationships and patterns of
development, production the necessary administrative
decisions [1].
However, in this definition, there is no indication of the
monitoring entity that actually defines the goals, objectives and
monitoring program.
We monitor classification types (Table 1) was carried out.
Table 1 - Classification of types of monitoring (authoring)
Basis
of
Types of monitoring
classification
The subject of −
Internal monitoring
monitoring
−
External monitoring
The
object
of −
Financial monitoring
monitoring
−
Personnel monitoring
−
−
−
−
−
−
−
−
Tax monitoring
Monitoring technology
Monitoring of innovation
Procurement monitoring
Monitoring audit
Environmental monitoring
Monitoring of projects
Quality Monitoring
Monitoring is based on respect for the basic principles:
− The scientific - monitoring is based on the provisions
of the dynamic theory of knowledge, should take into account
the requirements of economic laws, to use scientific and
technological progress and economic research methods.
− Objectivity, specificity, accuracy involves the study
took place economic phenomena and processes and their causal
relationship. Monitoring should be based on reliable
information.
− System concept - each object is considered as a
complex dynamic system, which is a collection of
interconnected elements. The study of the object shall take into
account the internal and external relations, interdependence and
mutual submission of elements of the system.
− Operational efficiency and timeliness provide the
ability to quickly and accurately monitor, accept and
implement it on the basis of the results of management
decisions. Operational monitoring is timely identification of the
causes of deviations of actual indicators from planned.
− Planning and systematic approach - monitoring is
systematic, that allows you to schedule work on monitoring the
implementation and timely identify existing deviations.
− Efficiency - on monitoring costs must be justified by
its results [5].
In addition, the synthesis of existing literature leads to the
conclusion that the monitoring system should also be guided
by, and other basic principles:
− compliance monitoring purposes means its
organization, tasks monitoring system, as well as its structure;
− organizational, informational and functional integrity
of the monitoring system;
− the possibility of centralized and decentralizedauthorized use of the resulting monitoring information;
−
−
−
hierarchy of building monitoring system;
unification of software, information and facilities;
to ensure compatibility of monitoring system
components, the possibility of its modular build-up and
modernization.
Education may be regarded as one of the economic activities
along with other areas of the economy. In this case, education
is based on the departmental principle with a rigid centralized
definition of the objectives, the content of education, the range
of educational institutions and academic disciplines.
Educational institutions are under strict supervision of the
administrative authorities. Such a model is called a publicdepartmental.
III Results
In accordance with the Federal Law "On Education in the
Russian Federation" education system are monitored, which is
a systematic standardized supervision of the state of education
and the dynamics of changes in the results, conditions for
realization of educational activity, number of students,
academic and extracurricular achievements of students,
professional achievements of alumni organizations, carrying
out educational activities, network state organizations engaged
in educational activities.
Procedures for monitoring and a list of compulsory
information to be monitored by the Government of the Russian
Federation [6].
The monitoring results must be published in a final (annual)
reports and placement in the "Internet" on the official websites
of the executive authority. Based on the monitoring data it is to
develop state policy and normative legal regulation in the
sphere of education.
Monitoring of the education system is held one time per year
in accordance with the statistical reporting form №1Monitoring "Monitoring on the main directions of activity of
the educational organization of higher education."
It should be noted that the indicators used in this form, are
highly aggregated and do not allow for a detailed assessment of
the educational organization and allow only an overview of the
various areas of its activity.
In addition, monitoring of the activities of educational
institutions is carried out by other authorities (Figure 1).
Ministers
Educational
programs
Ministry of Education
and Science
Research
Federal Tax
Service
Students
ENVIROMENTAL FACTORS
International level
International department
factors
Federal level
National department level
Department level
Regional department level
Regional level
Socio-cultural factors
University
Financial
indicators
Personnel
Logistical support
Federal treasury
Federal State Statistics
Service
INTERNAL FACTORS
Strategy of the
university
Development plan of
the university
Local acts of the
university
Financial condition
of the university
Logistical
support
- Regulation of the activities of universities, financial control, the formation of requests for
information
The qualification structure
of the personnel
- Reporting in accordance with the demands and regulatory acts, implementation of orders of
authorized bodies
Figure 1 - The external monitoring of the educational
institutions of higher education system (authoring)
These competent authorities in one degree or another
exercise financial monitoring of the activities of educational
institutions, as in all forms of reporting provided by the
educational institution provides information about those or
other financial indicators.
In addition to external financial monitoring, university is
carried out internal financial control in accordance with the
strategy of development of educational institutions. So, each
year is generated and submitted to the Academic Council of the
higher educational institutions the report on the results of
financial and economic activity for the period. Just head on
request institution of higher education formed the required
statements.
A large number of factors affect the formation of the
financial monitoring of the university such as the external
environment and internal. For environmental factors include
demographic factors, political, economic, technological,
natural, cultural, etc.
From the point of view of monitoring the financial activities
of the educational institution the most important role played by
the legislative (for example, the various regulations that affect
the activity of the educational institution) and socio-economic
factors (Figure 2).
Environmental factors of the university:
Legislative factors
- International level - different regulations of international
law. There is also international factors includes the documents
adopted by international organizations: The World Trade
Organization, the Commonwealth of Independent States, and
other documents adopted at the international level, have an
impact on enterprises, and thus on the requirements for
qualification of personnel.
LEGISLATIVE FACTORS
SOCIO-ECONOMIC
FACTORS
Figure 2 - Factors that influence the formation of the system
of financial monitoring of the university (authoring)
For example, WTO accession leads to an increase in the
level of international cooperation between the countries,
entering the national and regional markets, international
companies, which leads to increased competition. Increased
competition leads to the realization of the university needs to
increase its effectiveness (for example, through the
introduction of new educational technologies, development of
new educational programs, updating the material and technical
base), which leads to the formation of the need to transition to
a qualitatively new level of development of the provision of
educational services.
By international standards apply different legal documents
regulating the activities of the educational institution. For
example may be Bologna Declaration, designed to facilitate the
process of convergence and harmonization of higher education
systems in Europe [7].
- National level - the legal framework of the country, which
regulates the activities of educational institutions, as well as the
country's development strategy, targeted programs within the
framework of which the financing of various projects.
Activities of the universities are regulated by a variety of legal
acts. As part of the system of financial monitoring are
particularly important, such regulations as the Budget Code of
the Russian Federation, the Presidential Decree "On the
implementation of the state social policy actions", the Federal
Law "On Noncommercial Organizations", and others.
- Departmental level - the various regulations governing the
operation of educational institutions, related to a particular
industry: quality standards, rules, procedures, etc. to the
departmental level also includes a variety of programs of
development of branches. In accordance with approved
standards, university implemented mandatory training of
employees in the tight time frame.
For example, the introduction of new educational standards
leads to a change in the educational programs, the emergence
of the possibility of providing new services, which is reflected
in the financial activities of the educational institution.
During the monitoring of financial monitoring entities
governed in the first place, the relevant orders and guidelines
of the Ministry of Finance of the Russian Federation and the
Ministry of Education of the Russian Federation.
- Regional level - different legal acts adopted at the level of
the country entity. For example, the regional program of access
to education development.
Socio-economic factors
- International department factors - this category includes a
variety of factors (for example, the technology used in the field
of education).
- National department factors - a market in which
universities operate, the level of educational and other
technologies in the country.
- Regional department factors - factors in this category
include the regional labor market, the system of higher
education in the region. Thus, the developed market of
educational services in the field of higher education leads to
increased competition for students, increase the demand for
educational services organization, the emergence of new
educational programs and services, which is also reflected in
the financial monitoring system.
Regional department factors also includes the structure of the
economy of the region, whose territory has been operating
universities, as namely economy degree of development of the
regional economy has a direct impact on the demand from the
population for educational services, educational services
structure (by types of training programs, areas of training,
forms of training).
- Social and cultural factors - the activities of universities are
largely influenced by this group of factors, which include such
factors as the age and sex structure of the population, birth rate,
the level of education of the population, the level of income of
the population living in the region, certain trends existing in
society (for example, the prestige of higher education).
The factors of the internal environment of the university
Legislative factors
- Local acts of the university - acts regulating the activities of
educational institutions (for example, charter, staffing).
Economic factors
- The financial condition of the university - a financial
monitoring system is directly dependent on its financial
condition. Depending on this choice will depend on the forms,
methods and monitoring of the financial scale, determined by
the resources attracted to the event.
The factors that are equally related to both legislative and
economic factors of the internal environment include:
- The strategy of the university - the basic document that
defines the direction of development of the university. In
general, the strategy is a document that describes a set of
interrelated decisions determining priority areas of resources
and efforts of the university to implement its mission. As part
of the strategy of the university may also be provided for the
main provisions of the financial management of the
organization (one element of which is a financial monitoring),
outlined the priorities of financial activities of the institution.
- The development plan of the university (short-term,
medium-term) - in the presence of the development strategy of
the plan is its integral part. In the absence of a strategy
development plan is the main document that defines the
direction and priorities of the educational institution.
- Investment plan of the university - within the framework of
the documents with the main directions of university in the
implementation of the investments of certain areas or projects.
Accordingly, the implementation of new or development of
existing projects will arise the need for financial monitoring of
certain areas.
- Logistical support of the university affects, first and
foremost, on the quality and modernity provided by the
educational institution services. In terms of financial
monitoring this group of factors affect the timing of the
financial monitoring (timing information gathering),
determines the technical capabilities of its holding.
- The qualification structure of the personnel of the
university. On one hand, this relates to legislative factors
because at the legislative level, specifies the requirements for
qualification of personnel (managers, financial staff
departments). On the other hand, the staff of university
(primarily employees of financial services and units)
determines the effectiveness of financial monitoring and a set
used in the framework of its tools.
As the study of these factors is an essential stage of the
financial monitoring, the authors developed an algorithm for
carrying out financial monitoring of the university in view of
the previously described factors and features of financial
monitoring in the sphere of education (Figure 3).
Strategy of the university
Financial monitoring targets
I
Setting objectives, the definition of the circle of
responsible persons
II
1. Analysis of external
and internal
environment
2. Identification of
evaluation in the
financial monitoring
III
Analysis of the
efficiency of budget
expenditures of the
previous periods
Adoption of the
standard values of
indicators
Adoption of the financial
monitoring program
FINANCIAL MONITORING
EVALUATION OF FINANCIAL PERFORMANCE
The actual values correspond
to the planned
The actual values don't correspond
to the planned
Identifying the causes of deviations
Definition of directions of increase of
university financial activity efficiency
Formation on the results of financial monitoring report
IV
Transparentization report data and the presentation of the financial results of
the monitoring
Adoption of the head of university management decisions
Figure 3 - Algorithm of the financial monitoring of the
university
The process of implementation of the financial monitoring
program consists of 4 main steps:
Stage 1 - Planning Financial Monitoring
The main purpose of this stage is statement of financial
monitoring.
At this stage, the plan of financial monitoring of the program
of activities of the university, which is influenced by such
factors as:
− Legal framework;
− Social factors;
− Economic factors;
− The strategy of development of the region;
− Strategy of the university;
− Others.
Stage 2 - Development of the financial monitoring program
At this stage, the direction of assessing the financial
condition of the university on the basis of previously
established goals and objectives.
In parallel, the analysis of factors external and internal
environment of the university.
Environmental analysis may be conducted using various
techniques. In our opinion, the most significant are the PEST
(EL), SWOT, SNW and GAP analysis.
The most common methods are the PETS (EL) analysis,
SNW and SWOT-analysis. The choice of methods of analysis
affected by the availability of access to the necessary
information, staff qualifications and terms of financial
monitoring.
Analysis of the financial performance of the universities is
carried out in previous periods. Based on these data the
normative values of parameters determined in accordance with
the objectives defined in the strategic documents of
universities, as well as the level of socio-economic
development of the territory.
After identifying and fixing the standard values of selected
indicators developed financial monitoring program.
Stage 3 - Financial Monitoring Implementation
At this stage, the financial monitoring of the activities of the
university, calculated values of the selected parameters. The
financial performance of the university, comparing actual
performance with planned are assessed
In case of deviations of the actual values of the planned
subjects of financial monitoring is conducted to identify the
reasons of deviations and identifies ways to improve the
financial performance of university in terms of eliminating the
causes of deviations.
It should be noted that the reason for the deviation of the
actual values from the planned may be incorrect installation of
regulatory efficiency indicator values during the development
of the financial monitoring of the program due to an
incomplete account of all environmental factors, as well as
errors in the analysis of the available data of past years.
Stage 4 - Formation of the report and the presentation of the
financial results of the monitoring
Financial monitoring report is generated based on the set in
the first phase objectives. Another significant, in our view, the
action at this stage is transparentization results (transfer of the
data in a form accessible for perception of heads of university).
Financial results of the monitoring are the basis for
management decisions.
The implementation of financial monitoring of the university
is cyclical. So, after the end of the financial monitoring, cycle
starts from the beginning.
The cyclic nature of the financial monitoring will ensure the
effective management of financial activities of universities and
the effectiveness of financial monitoring in general.
Thus, the effectiveness is the primary objective for
management evaluation. Without an objective assessment of
the management are unlikely to come to any agreement,
disagreements are inevitable estimates and, consequently,
conflicts. However, although the role of the concept of
"efficiency" is significant, its use is facing some difficulties,
because it is treated differently. The ambiguity of the concept
makes it necessary to define it.
In our opinion, the universal concept of efficiency is that
which produced the economic science, but the status is still not
recognized. By efficiency, economists understand the costbenefit ratio of a particular activity or minimizing wasteful use
of resources. In our view, the identification of costeffectiveness of one of its kinds, in particular at a profit, while
the latter is limited to the sphere of commercial organizations,
hence the conclusion that the effectiveness of a cost-benefit
ratio is also applicable in the field of state and municipal
government.
Evaluation of the effectiveness of financial monitoring in
general is carried out according to three basic principles:
- Financial monitoring of expediency - the existence of
objective conditions for its implementation.
- The effectiveness and results - financial monitoring should
lead to certain economic effect in terms of obtaining certain
results.
- Execution of tasks - tasks that lead to achieving the goal of
financial monitoring should be performed. Otherwise the
program will not be achieved.
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