Final Report
Public Expenditure Tracking Survey (PETS)
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May 2016
Final Report
Public Expenditure Tracking Survey (PETS)
Table of Contents
Preface
Acknowledgments
Executive Summary
Section 1. Introduction
Chapter 1. Assignment Objectives, Methodology and Sources
1.1. Objectives of PETS
1.2. Methodology for PETS
1.3. Data Sources
Chapter 2. Diagnostic of Public Financing in Higher Education Sector
2.1. Macro Review of Higher Education In Pakistan
2.2. PFM Landscaping
Chapter 3. PETS Exercise
3.1. General Characteristics of Data
3.2. Data Inconsistencies
3.3. Contribution made by PETS
3.4. Tracking of Expenditures
3.5. Quality Enhancement Cell
3.6. Cost Per Student
Section 2. Findings
Chapter 4. Information, Reporting and Monitoring Mechanism
4.1. MIS
4.2. Budgeting
4.3. Accounting and Reporting
4.4. Utilization Reports and Variance Analysis
4.5. External Audit
4.6. HEC Supervision
Chapter 5. Institutional Capacity
5.1. Governance
5.2. Internal Audit
5.3. HR Capacity
5.4. Procurement
Section 3. Conclusion & Recommendation
Chapter 6. Recommendations in the light of PETS
HEIs Centered
HEC Centered
Chapter 7. Balance Scorecard
7.1. The Four Quadrants
7.2. Application of Balance Scorecard
7.3. Universities that benefited from BSC Application
7.4. Application of Balance Scorecard on HEIs
Chapter 8. Steps for Development of MIS Model
Chapter 9. Governance Model
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List of Tables
Table 1: List of Sample HEIs ....................................................................................................................................................................................... 8
Table 2: Number of Asian universities in global ranking of 701+Score............................................................................................................. 10
Table 3: Share of Tertiary Education Exp in GDP - Pakistan ............................................................................................................................. 11
Table 4: Recurring Grant in MTDF-II
................................................................................................................................................................ 12
Table 5: Development Grant in MTDF-II
............................................................................................................................................. 12
Table 6: Budget Process Case Study of University of Agriculture Faisalabad ................................................................................................... 13
Table 7: Variance of Budgeted and Actual Receipts – FY 2013-14..................................................................................................................... 14
Table 8: Variance of Budgeted and Actual Grants – FY 2013-14 ....................................................................................................................... 14
Table 9: Variance of Budget and Actual Own Income – FY 2013-14 ................................................................................................................ 15
Table 10: Segregation of Establishment Charges – FY 2013-14 .......................................................................................................................... 19
Table 11: Composition of Non-salary expenditures FY 2013-14 ........................................................................................................................ 21
Table 12: Research Expenditure - Budgeted and Actual FY 2013-14 ................................................................................................................. 22
Table 13: Internal Quality Assurance of HEIs (Performance year 2013-14) ..................................................................................................... 22
Table 14: Cost per Student - Discipline Wise FY 2013-14 (PKR) ....................................................................................................................... 24
Table 15: Cost per Student - Cadre Wise FY 2013-14 (PKR) .............................................................................................................................. 25
Table 16: Teaching Faculty cost %age of Total Discipline cost FY 2013-14 .................................................................................................... 26
Table 17: Faculty to Student Ratio FY 2014 – 15 ................................................................................................................................................... 27
Table 18: MIS of sample HEIs ................................................................................................................................................................................... 29
Table 19: Financial Reporting in HEIs ..................................................................................................................................................................... 31
Table 20 : Composition of member of Governing Bodies for the period FY 2013-2014 .............................................................................. 34
Table 21: Internal Audit in HEIs ............................................................................................................................................................................... 35
Table 22: Percentage of Vacant Positions in HEIs 2013-14 ................................................................................................................................. 36
Table 23: Faculty of HEIs 2013-14 ........................................................................................................................................................................... 36
Table 24: System Observations of Procurement in HEIs 2013-14 ..................................................................................................................... 38
Table 25: Customer Perspective Balance Scorecard KPIs .................................................................................................................................... 43
Table 26: Financial Perspective of Balance Scorecard ........................................................................................................................................... 44
Table 27 : Balance Scorecard applied to HEIs ........................................................................................................................................................ 45
Table 28: Inadmissible Allowances Status in Sample Universities ....................................................................................................................... 60
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Final Report
Public Expenditure Tracking Survey (PETS)
List of Figures
Figure 1: Execution Framework................................................................................................................................................................................... 6
Figure 2: Higher Education Institutions- Pakistan ................................................................................................................................................... 9
Figure 3: Student Enrolment in HEIs ......................................................................................................................................................................... 9
Figure 4: Faculty Strength in HEIs ............................................................................................................................................................................ 10
Figure 5: PhD Output by Pakistani HEIs ................................................................................................................................................................ 10
Figure 7: Education Expenditure as % of GDP - Pakistan .................................................................................................................................. 11
Figure 8: Elements of PFM ....................................................................................................................................................................................... 12
Figure 9: Budgeting Process for HEIs ...................................................................................................................................................................... 13
Figure 10: Establishment Charges to Total Exp – FY 2013-14 ........................................................................................................................... 19
Figure 11: Share of pay and allowances in Establishment Charges – FY 2013-14 ........................................................................................... 20
Figure 12: Share of Non-Salary Expense in Total Expenditure FY 2013-14..................................................................................................... 20
Figure 13: Frequency of Meetings of BOT/Senate for the period FY 2013-2014 ........................................................................................... 33
Figure 14: Frequency of Meeting of BOG/Syndicate for the period FY 2013-2014. ...................................................................................... 34
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Final Report
Public Expenditure Tracking Survey (PETS)
List of Annexure
1.
2.
3.
4.
Comments Received on Draft Report and Responses Provided by the Consultant
Supplementary Information Emerging from the Survey
Terms of Reference
Control Checklist
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Final Report
Public Expenditure Tracking Survey (PETS)
Acronyms
AGPR
BCC
BOG
BOT
BPS
DFA
DFD
DAI's
FA
GTCPL
HEC
HEI
HR
HRM
IAS
IBC
IFRS
IPSAS
KPIs
MoPD
MTBF
MTDF-HE
MIS
MoF
NAM
NEC
ORIC
P&D
PETS
PFM
PPRA
PSDP
QAA
QEC
TESP
TOR
TRP
TTS
Accountant General of Pakistan Revenue
Budget Call Circular
Board of Governors
Board of Trustees
Basic Pay Scale
Deputy Financial Advisor
Data Flow Diagram
Degree Awarding Institutions
Financial Advisor
Grant Thornton Consulting Private Limited.
Higher Education Commission
Higher Education Institute
Human Resource
Human Resource Management
International Accounting Standards
Indicative Budget Ceiling
International Financial Reporting Standards
International Public Sector Accounting Standards
Key Performance Indicators
Ministry of Planning & Development
Medium Term Budgetary Framework
Medium Term Development Framework for Higher Education
Management Information System
MoF
New Accounting Model
National Economic Council
Office of Research, Innovation & Commercialization
Planning and Development
Public Expenditure Tracking Survey
Public Financial Management
Public Procurement Regulatory Authority
Public Sector Development Program
Quality Assurance Agency
Quality Enhancement Cell
Tertiary Education Support Program
Terms of Reference
Technical Review Panel
Tenure Track System
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Final Report
Public Expenditure Tracking Survey (PETS)
Preface
Public Expenditure Tracking Survey (PETS) is an instrument to track the public funding at various stages in order to enhance
transparency, efficiency and effectiveness regarding the policy objectives of the expenditure concerned. PETS, an instrument
in a broader context of Public Finance Management (PFM) is a useful tool for diagnostic purposes that offers opportunities
for analysis at various layers to identify the main bottlenecks in the existing system and used in planning and execution of
allocated resources towards targeted improvements.
To address challenges in higher education in the country, the Government of Pakistan established Higher Education
Commission (HEC) as a body corporate in 2002 with the declared intention of reforming and expending the higher education
sector to make Higher Education Institutes (HEIs) more relevant to the need of the 21st century. HEC developed the Medium
Term development Framework for Higher Education [MTDF-HE I], which outlined development priorities for 2005-2010.
The framework focused on measures to increase access, improve the quality and relevance of learning and research, and
strengthen governance and management. As per MTDF-HE II, Interventions introduced by MTDF-HE I were largely met as
higher education sector experienced unprecedented expansion and improvement in quality of learning, however there were
still a large and unfinished reform agenda. Subsequent to MTDF-HE I, HEC presented MTDF-HE II (2011-2015) with overall
focus to enhance the capacity of Pakistani institutions of higher learning to produce high quality graduates, support innovation,
and improve the overall governance and management of the higher education sector.
Tertiary Education Support Program (TESP) is a World Bank funded project with the objective to improve the conditions of
teaching, learning and research for enhanced access, quality and relevance of tertiary education. One of the important pillars
of TESP was Improvement of Fiscal Sustainability and Expenditure Effectiveness. The sustainability of public expenditures
on tertiary education is a core objective of TESP.
One of the key components of MTDF-HE II was Financial Management & Sustainability. Under this component
HEC embarked upon reforms to improve the financial management and accounting systems across the higher
education sector in order to enhance transparency, quality and reliability of financial information and
comprehensiveness as well as timeliness in financial reporting. One of the objectives under this component of
MTDF-HE II was to commission a PETS to identify inefficiencies, bottlenecks and institutional obstacles between
the sources of funds and the points of delivery.
Where sufficient funds are needed by HEC to implement the MTDF, HEC also needs to demonstrate effective and
efficient use of the funds allocated and released. Against this background, it was decided that a Public Expenditure
Tracking Survey would be completed, forming the basis for launch of this current exercise being led and implemented
by Grant Thornton Consulting Pvt. Ltd. (GTCPL).
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Final Report
Public Expenditure Tracking Survey (PETS)
Acknowledgments
GTCPL wishes to express their appreciation for the support and interest received from the HEC and TESP Unit as the main
counterpart for the project, especially in arranging and assuring the extended participation of the officials from the
Commission and Universities. Additionally we would like to acknowledge support extended by Ministry of Finance (MoF)
and AGPR for their cooperation to document funds flow process.
The genuine interest and insight of the members of Steering Committee of HEC for this project were not only rewarding, but
inspiring that enriched the understanding of the team, and guided us at each stage. The comments on the draft set of
deliverables were very helpful to align our efforts towards this final version. The team wishes to extend their gratitude. The
efforts of the survey implementing team leads and members at GTCPL are duly appreciated.
A special note of thanks for the Counterpart team at HEIs for staying closely engaged, enthusiastic and responsive in provision
of key information/documents. We hope that the recommendation put forth shall be helpful in achieving their targets and
objectives.
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Final Report
Public Expenditure Tracking Survey (PETS)
Executive Summary
In response to the efforts regarding implementation of Government's Higher Education Reforms program, as a part of the
second MTDF for Higher education (2011-2015), HEC and the World Bank jointly initiated TESP. The purpose of the
program is to enhance the capacity of Pakistani institution of higher learning to produce high quality graduates; support
innovation and improve the overall governance and management of higher education sector which is one of the common (italics) set of
agenda in MTDF HE I and MTDF HE II and way forward for MTDF HE III as well.
GTCPL was mandated by HEC to carry out PETS in order to document the efficiency in allocation and use of the funds
received by HEIs with a special focus on funds channeled through HEC. Key areas assessed at HEIs level included
Governance, Financial Management and Budgeting, Accounting and Reporting, Internal Audit, Human Resource,
Procurement and MIS.
Over the period of 6 years starting from 2008-09, higher education institutions in the country have increased by 60% at an
annual growth rate of 10% each year. Students Enrollment and Number of PhDs produced by the country also shows upward
trend in the last decade with achievement of MTDF II target of Producing 1000 PHDs per year since 2011 onwards. However,
spending on tertiary education as a share of GDP as well as share of total education expenditure has declined in 2013-14 as
compared to 2010-11 from 0.24% to 0.21% and 11% to 8% respectively. Per student spending trends declined from Rs. 38,928
to Rs. 30,546 during this period. Funds allocated for MTDF-1 were 31.61% less than those projected i.e. Rs. 175.33 billion
against the projected figure of Rs. 256.38 billion.
Funding of HEIs are derived through two avenues i.e. allocation from the federal government, as well as provincial
governments in rare instances, against the annual budget; and income from HEIs’ internal resources. Both sources are utilized
to meet the expenditures for operations of HEIs while these expenditures are broadly categorize as Establishment and Non
establishment charges. PETS exercise revealed that on average, income from own sources of sample universities constitute
49% of their total receipts which makes the portion of HEC grant for university funds just above 50%. Substantial portion of
the budget of universities is spent on establishment charges. In 2013-2014, on average 52 percent of the total receipts from
recurrent grants from HEC are allocated to salaries (employee related expenses) while this ratio goes to 56 % on average if we
compare it with total expenditure of universities including income generated from own sources. The selected universities also
differ in terms of the allocation for non-salary items with average spending amounting to 44% of their total expenditure on
non-salary and as low as below 2% average spend on research. Cost per Student both discipline and cadre wise shows
variations. Average cost per student based on the sample HEIs was driven equal to PKR. 140,609 while discipline-wise average
cost per student was calculated equal to PKR. 128,069.
PETS exercise has contributed in tracking of the public expenditure and identifying the bottlenecks in the broader context of
PFM; whilst survey effectively tried to establish a link between the goals of MTDF II and its implementers i.e. HEC and HEIs.
The exercise succeeded in identifying the key discrepancies and also enhanced the understanding of the potential leakages,
institutional and human resource bottlenecks and system inefficiencies in planning, allocating and executing of public funds
at various levels.
Overall recommendations have been framed in line with results of PETS exercise which shall form implementation roadmap
for the HEIs and HEC. Through identification of bottlenecks and system constraints at various levels we have tried to establish
a linkage of the triangle MTDF as policy, HEC as implementer and HEIs as ultimate beneficiaries. These stakeholders need
to follow a phased process of reforms introduction, legislation and implementation under MTDF HE-III through following
set of key recommendations:
-
Although the statutes of HEIs identifies the roles & responsibilities of the governing bodies however their effective role
in budget preparation, linking budgeting activity with long term business planning and MTBF, empowering finance and
planning committee, compliance with NAM, scrutiny of utilization reports and variance analysis, external and internal
audit to follow risk based auditing practices & independent reporting to hierarchy are some of the key recommendation
to strengthen budgeting, accounting and supervision mechanism at HEIs. To increase transparency and effective
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Final Report
Public Expenditure Tracking Survey (PETS)
disclosure of state of affairs at HEIs, minutes or decisions of key meetings, be placed on the website of the university,
must be communicated to HEC and should be made available to relevant stakeholders upon request.
-
Since MTBF is an approach to budgeting that integrates policy-making, planning and budgeting within a medium-term
framework it is essential for the HEIs to align their budget estimates with IBC issued by MoF in line with MTBF. The
Finance Planning (F&P) Committee is a recommending body and the budget requires approval of the Syndicate/BOG as
per statutes of the Universities. This must be ensured and release of HEC recurring grant be linked to it.
-
A comprehensive plan for adoption of NAM should be drawn by the HEIs. Preparation of financial statements by
Professional Accountants (considering system/capacity constraint of HEIs) will result in presenting the accounts in a
more professional way and more reliance on the same can be made as this practice reduces the possibility of a material
misrepresentation of financial information by the university. External audit of the universities shall be carried by
Professional Accountants.
-
There should be an internal audit department reporting directly to those charged with governance of the HEI in order to
ensure its independence. Risk based post audit approach should be applied in a formalized manner by documenting high
risk areas and regular updating in light of changing conditions. Formal reports should be prepared with proper
documentation of all internal audit observation, issues resolved or any pending issues.
-
Annual Planning, indexing total procurement transactions, development of complaint management system, nonconflicted and dedicated staff deployment and contract administration and supervision should be ensured to strengthen
institutional capacity of the HEIs in the area of procurement.
-
MIS at HEIs should be integrated capable of generating standardized reporting by HEIs to HEC, tailored specifically to
the HEIs needs, developed on the basis of suggested model and key steps as spelled out by PETS exercise.
-
HR Capacities needs to be geared up for succession planning, establishing JDs and visiting faculty records and payments.
-
Long term business planning at HEIs should be aligned with the overall objectives of institutions. Such a document shall
also help universities to implement and monitor its performance on Balance Scorecard Model, moreover activity based
budgeting and cost accounting shall also be ensured. HEIs need to gear up their efforts for application Balance Score
Card (BSC) Model at their universities with clear definition of overall vision and mission of the HEI, duly supported by
goals and Key Performance Indicators (KPIs) of the four perspectives of BSC Model i.e. Financial-Financially strong,
Customer Perspective-Making customers(employers) happy Internal Perspective-Operational excellence and Learning and
Growth Perspective. A plan of implementation shall be agreed by all the stakeholders with defined responsibilities and
implementation at HEIs within one year from launch.
HEC as well as the Universities should have budget monitoring cell in place to ensure regular budget monitoring. Budget
variance reports should be submitted to higher management on a regular basis to ensure compliance of budget. Representation
of HEC at HEIs through suitable nominee/expert must be made mandatory through participation at key board meetings.
HEIs funding formula to be rationalized with more emphasis on performance and need based grants. Establishment of
centralized Pay & Service Commission at HEC to adopt standardized pay and allowances for all Public Sector HEIs. HR
Capacities at HEC level needs to be strengthened to take up M&E role, close coordination and representation at HEI, Scrutiny
of budgets, Utilization reports, Financial Reports and other key documents.
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Public Expenditure Tracking Survey (PETS)
Section 1. Introduction
This section contains an introduction to the project along with its objectives, methodology and sources used for data
collection. This section also includes a diagnostic review of public financing in higher education in the light of PFM Mapping
as well as macro review of higher education sector based on key facts. Lastly this section highlights the PETS as carried out
by the consultant. Accordingly, this section has been divided into 3 chapters which are as follows:
Chapter 1
Chapter 2
Chapter 3
Assignment Objectives, Methodology and Sources
Diagnostic of Public Financing in Higher Education Sector
PETS Exercise
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Final Report
Public Expenditure Tracking Survey (PETS)
Chapter 1. Assignment Objectives,
Methodology and Sources
1.1.
Objectives of PETS
GTCPL was mandated by HEC to carry out PETS with an overall objective to identify sources of inefficiencies and
bottlenecks in the flow of funds and provide recommendations on measures to maximize the value of HEIs' outcomes.
More specifically, the following was expected from this exercise:




Understand the mechanism of resource allocation in the higher education sector at the federal (Mainly HEC),
provincial, & HEIs levels and to identify major issues in budgetary allocation, timely releases and transparent utilization
of funds.
Identify institutional obstacles between the source of funds and the points of delivery, and analyze how to efficiently
utilize the funds to meet the objectives of the higher education sector of Pakistan.
Provide pertinent information that would help to build the capacity of Tertiary Education Institutional managers,
policy makers, and other interested stakeholders in the process of maximizing the efficiency of resources allocated to
HEIs and in performing institutional performance reviews.
Recommend steps to develop a concrete Management Information System (MIS) for Universities and Degree
Awarding Institutions (DAI's) of Pakistan with particular reference to bringing efficiency in Public Expenditure.
1.2.
Methodology for PETS
This assignment was carried out in light of Terms of Reference (TORs) issued by HEC. TORs of the assignment were
mapped in the form of matrix and a planning memorandum, addressing all requirements of the assignment; was shared as
revised methodology in Inception Report which was duly approved by the client. Execution Methodology essentially
covered the following areas.
A.






Inception & Kick-off Phase
Kick Off meeting
Data Gathering & Literature Review
Development of Survey Tool
Training of Enumerators
Interviews and Group Discussions
Understanding the PFM in HEIs
B. Execution Phase
Execution Framework: The assignment was executed in 5 distinct
but inter connected initiatives, starting from fast track process for
Funds flow to HEIs (Origin to destination) followed by the 3 review
activities and the last stage of report compilation involving the
targeted deliverables. Following diagram depicts our overall execution
framework specifically designed for the project in question.
Task 1: Funds Flow Mechanisms
Mechanism of fund flow in the Higher Education Sector was assessed
in detail. A series of meeting was carried out with the stakeholders
involved in funds flow at the federal level including MoF, Accountant
General of Pakistan Revenue (AGPR), , and Higher Education
Commission. Based on the these stakeholders consultations and
review of available relevant documents, the system of funds flow to
the HEC and onward submission to HEIs was recorded in the form
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Figure 1: Execution Framework
Diagnostics
Internal Audit
Mechanism
Funds Flow
Mechanism
HR
Assessement/Budget
Execution
(Procurement)
Financial
Management
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Public Expenditure Tracking Survey (PETS)
of Data Flow Diagram (DFD) to diagnose the bottlenecks and impediments in the funds flow.
Task 2: Project Initiation/Entrance Conference
The assignment commenced with a fast track implementation planning. Entrance meetings with representatives from
respective HEIs were held to gain basic understanding of HEIs including their process of management, funding,
procurement and operations.
Task 3: Review of Financial Management and Accounting Systems including Control Assessment
This segment started with understanding the key functional areas of HEI followed by a detailed review of the financial
management and accounting systems including detailed assessment of financial system and accounting system, process
framework, charts of accounts; organizational charts, personnel, payroll, and procurement policies and procedures;
progress reports, audit reports and the process in place for receiving and dispensing of funds. The internal control systems
were critically evaluated with the objective of assessing whether the internal control systems were suitably designed to
detect, correct and prevent the material misstatements; and the system existed and operating effectively.
Task 4: HR/Organization assessment: The ability/adequacy of the human resource is a critical aspect of the systems
capability. Accordingly to the extent of the accounting and the financial management system as well as the procurement
and purchase cycle system, the staff and the management structure within each department was checked to assess its
capability. A review of the HR policies and procedures including adequacy/standardization of personnel and payroll system
as well as the remuneration was considered.
Task 5: Review of Procurement Systems and Purchase Cycle:
The objective of this assessment was firstly to fully understand the procurement system /purchasing cycle followed at
HEIs and afterwards assessing the adequacy and effectiveness of such systems in place along with identifying any control
weakness in the existing policies and practices.
C. Data Collection Tools
During the course of survey, following tools were used to collect qualitative data:




Interviews with key informants including relevant people at HEC, MoF, AGPR and sample HEIs
Physical observation of the facilities, work processes, procedures and attitudes.
Examination and review of internal control documentations, operational manuals and guidelines, policy documents,
financial manuals and reports, vouchers, internal and external audits, and other relevant financial documents.
Survey check list
D. Reporting Framework
After completion of our review exercise on all the identified areas including financial and controls reviews, system and
process reviews, transactions reviews and other data gathering exercise, a detailed assessment report was drafted
consolidating all the findings of above activities for each of the HEI visited.
The report includes findings and recommended including but not limited to the following areas;
a) An opinion on the accountability environment of HEIs
b) Detailed findings of review activity on accounting, budgeting financial management, internal control environment and
overall management capabilities.
c) Application of Balance Score Card
d) MIS Model
e) Governance Model
1.3.
Data Sources
Primary sources of data for this survey comprise of information collected from the selected 15 universities across Pakistan
as well as from all the stakeholders involved in the process of fund flow i.e. from GOP (MoF) to HEC and onward
disbursement to HEIs.
1.3.1. Sample Selection
Selection of sample universities was purely based on the criteria mentioned in the TORs for the PETS assignment on the
principles of purposive quota sampling allowing for geographical as well as discipline representation. Size of the institutions
selected for PETS exercise represents an average size of an institution i.e. student strength of more than 10,000, 67% of
the sample HEIs qualifies this benchmark.
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Final Report
Public Expenditure Tracking Survey (PETS)
Selected universities as sample for this survey included:
Table 1: List of Sample HEIs
Sr. Name of Institution
1. Allama Iqbal Open University, Islamabad
2. Dow University of Health Sciences, Karachi
3. Hazara University, Dhodial, Mansehra
4. International Islamic University, Islamabad
5. Islamia University Bahawalpur
6. Islamia College University, Peshawar
7. Karakurum International University, Gilgit
8. Mirpur University of Science & Technology,
Mirpur
9. Mehran University of Engineering & Technology,
Jamshoro
10. NWFP University of Engineering & Technology,
Peshawar
11. University of Punjab, Lahore
12.
Sardar Bhahdur Khan Women University, Quetta
13. University of Agriculture, Faisalabad
14. University of Sargodha, Sargodha
15. University of Karachi
Acronym
AIOU
DUHSK
HU
IIUI
IUB
ICU
KIU
MUST
Region
Federal Capital
Sindh Urban
KPK
Federal Capital
South Punjab
KPK
Gilgit Baltistan
AJK
Discipline
General
Medical
General
General
General
General
General
General
MUET
Sindh Rural
Engineering
NUET
KPK
Engineering
PU
Central Punjab
Baluchistan
(Quetta)
Central Punjab
South Punjab
Sindh Urban
General
SBK
UAF
UoS
UoK
General Women
Agriculture
General
General
1.3.2. Key Stakeholders
All the stakeholders involved in the fund flow were approached for collection of quantitative as well qualitative data. There
included:

Higher Education Commission- Finance Division: HEC’s finance Division arranges, manages and generates
financial resources for the higher education sector of the universities, degree awarding institutes and centers. It is
responsible to budget and obtain recurring grant from the Federal Government for around 124 higher education
institutions. It also arranges funds from other international and multilateral donors. The division manages timely
disbursement of recurring and development grants to the federally funded universities.

Finance Division Government of Pakistan – Expenditure and Development Wings: The Finance Division deals
with the subjects pertaining to finance of the Federal Government and financial matters affecting the country as a
whole, preparation of annual budget statements and supplementary/excess budget statements. Budget, expenditure
and development wings of finance division are key stakeholder in the budget preparation and releases of funds for the
higher education sector of Pakistan.

Accountant General of Pakistan Revenue: Office of the AGPR is responsible for the centralized accounting and
reporting of federal transactions. For monthly releases of funds to HEC, office of the AGPR plays a vital role.

Management of the HEIs: Information was gathered through a multi-pronged approach at the HEIs which included
Interviews with the management of HEIs, particularly those charged with Governance, HR, Internal Audit,
Procurement, MIS, ORIC (Office of Research, Innovation & Commercialization and QEC (Quality Enhancement
Cell) followed by review of the systems and key documents at the HEIs.
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Chapter 2. Diagnostic of Public Financing
in Higher Education Sector
2.1.
Macro Review of Higher Education In Pakistan
In Pakistan, higher education refers to education above grade 12, which generally corresponds to the age bracket of 17 to
23 years (PAKISTAN Country Summary of Higher Education). The higher education system in Pakistan in Public sector
is made up of two main sectors: the university/ Degree Awarding Institutions (DAIs) sector and the affiliated Colleges
sector. HEC (a reincarnation of the erstwhile University Grants Commission) is an autonomous apex body responsible for
allocating public funds from the federal government to Universities and DAIs and accrediting their degree programs
(Regional Integration and Economic Development in South Asia, 2012). Colleges are funded and regulated by provincial
governments, but follow the curriculum of the HEC funded universities/DAIs with which they are affiliated.
The Pakistan higher education sector is predominantly public in nature, with public HEIs dominating both the
university/DAI and College sectors. Public HEIs generally offer a wide range of courses and programs, while private HEIs
predominantly offer a narrow range of vocationally oriented courses and programs such as business and IT. The bulk of
research in the HE sector is conducted in public universities. However, the private sector does play an important role.
(PAKISTAN Country Summary of Higher Education)
As per the economic survey of Pakistan 2014-15, 161 universities with approximately 77,600 teachers in both private and
public sectors were functional during 2013-14. During 2013-14, the overall enrolment of students in higher education
(universities) remained stable at around 1.60 million in the corresponding period of year 2012-13.
2.1.1. Growth in Higher Education Institutions
Over the period of 6 years starting from 2008-09, higher
education institutions in the country have increased by 19%.
This expansion of Higher Education Institutions in the last
decade is drastic as compared to first 60 years of country’s
creation where the total growth remained at 86%.
Figure 2: Higher Education Institutions- Pakistan
161
147
139
135
2010-11
2.1.2. Student Enrolment Trends
2011-12
2012-13
2013-14
Source: Economic Survey of Pakistan 2014-15
Thousands
Increase in enrollment of students for the period 2010-11 to
2013-14 was 44% with annual growth rate of 13% while during Figure 3: Student Enrolment in HEIs
the year 2005-06 to 2009-10 there had been 59 percent increase
1,595
1,800
in student enrolment over the five years or an 11% increase in
1,600
1,320
1,400
enrollment per annum. This annual increase in enrollment
1,108
1,200
coincides with the targets of MTDF HE-II. However the target
1,000
800
numbers of enrolled students projected in MTDF II was much
600
higher than the actual figure.
400
1,595
200
0
2010-11
2011-12
2012-13
2013-14
Source: Economic Survey of Pakistan 2014-15
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2.1.3. Faculty of HEIs
Enrolment of teachers over the same period grew at 22% only
with annual growth of 7%.To attract and retain highly qualified
individuals; a performance-based Tenure Track System for
appointment of faculty in public HEIs was also introduced. The
Tenure Track System has now been institutionalized in almost
90 % of Public Sector Universities/HEIs and has been adopted
through the respective Statutory Bodies of Public Sector
Universities.
Thousands
Figure 4: Faculty Strength in HEIs
100
64
70
78
78
2010-11
2011-12
2012-13
2013-14
50
0
Source: Economic Survey of Pakistan 2014-15
2.1.4. PhDs Produced by Pakistani Universities
Number of PhD graduates has been increasing over the years. Over a decade and half, number of PhDs produced each year
by Pakistani HEIs grew from a marginal number of 178 to a significant figure of 1250 in 2014. This shows an increasing
trend over the years and achievement of one of the targets of MTDF II which require PhDs awarded by Pakistani universities
to be increased to at least 1000 per year by 2015.
Figure 5: PhD Output by Pakistani HEIs
1500
1000
830
832
2009
2010
1024
1118
1211
1351
2013
2014
628
500
202
254
308
322
409
176
273
420
2000
2001
2002
2003
2004
2005
2006
2007
0
2008
2011
2012
Source: HEC - PhD Country Directory
2.1.5. Quality and Ranking of Pakistani HEIs
Quality of higher education in Pakistan is in the process of improvement under the oversight of HEC. With a substantial
increase in number of HEIs in the country during last few years, much is desired from Pakistani Universities to meet
standards of global ranking. Ranking of universities in Pakistan against regional countries is given in below table.
Table 2: Number of Asian universities in global ranking of 701+Score
Country
China
India
Turkey
Pakistan
Iran
Sri Lanka
Bangladesh
No. of Universities in 701+Score Category
15
11
4
4
0
1
1
Source: Quacquarelli Symonds (QS) World University Rankings -2015
2.1.6. Vision 2025
The government has formulated a long-term roadmap as the Vision 2025 for a developed and prosperous Pakistan
addressing key sector of the country. The vision aims to double Pakistan’s Higher Education coverage and the federal
government will increase investment significantly in human resources at the higher education level so that they can play a
vital role in development of a knowledge-economy in the highly competitive global environment. The government plans to
increase public expenditure on higher education from the current 0.2% of GDP to 1.4% of GDP and significant expansion
in higher education enrolment currently from 1.5 million to 5 million, increase in the number of PhDs in the country from
7000 to 15000 and a doubling of the number of degree awarding institutions currently from 156 to 300 by 2025. (Pakistan
2025, 2014)
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2.2.
PFM Landscaping
2.2.1. Synopsis of Public Expenditure in Higher Education
Public expenditure on education consists of recurrent and development public expenditure including government spending
on educational institutions (both public and private), education administration as well as subsidies for private entities.
(Education Indicators, 2015)
Recurrent expenditure is expenditure which does not result in the creation or acquisition of fixed assets. Expenditures
relating to wages, salaries and supplements, purchases of goods and services, being recurring in nature are categorized as
recurrent expenditure. A simple recurring expenditure model in higher education consists of the following three main
expenditure heads:
a. Faculty Salaries and allowances
b. Staff Salaries and allowances
c. All other university running expenditures
While the development expenditure in higher education relates to following types of expenditures:
 expenditures for development projects managed by HEC
 expenditures for development projects managed by Universities
MTDF-I
At the end of MTDF I, total higher education spending stood at Rs.40 billion, which is 80% increase in nominal terms
compared to 2005-06 but after accounting for inflation the actual increase is only 7%. Out of PKR 40billion, 53% represents
recurrent spending while development spending amounts to 47%.
Higher Education spending as a share of GDP has been declining since 2005. During fiscal year 2006, it was 0.29% of GDP
however at the end of fiscal year 2010 it had declined to 0.23% of GDP.
MTDF-II
During major period of MDTF II, Pakistan had low level of Figure 6: Education Expenditure as % of GDP - Pakistan
public expenditure on education sector, ranging between 2.3 to
2.60%
2.5 percent of GDP from 2010 to 2014 as depicted in the figure
2.50%
7. This was significantly less than the average of 5 percent of 2.50%
GDP of developing countries. Following is a table that observes 2.40%
2.30%
trends over a period of 4 years, regarding federal expenditure on
2.30%
2.20%
education and the percentage it constitutes to the GDP.
2.20%
Similarly expenditure on higher education has remained low
during period under consideration. Table below reflects that
share of higher education spending to total education expense
remained less than 10 percent while its percentage to total GDP
was marginal.
2.10%
2.10%
2.00%
1.90%
2010-2011
2011-2012
177.41
213.76
224.65
232.27
2.30%
2.20%
2.10%
2.50%
2013-2014
Source: World Bank World Development Indicators
Table 3: Share of Tertiary Education Expenditure in GDP - Pakistan
FY
GDP
Education Spend Tertiary Edu. spend Edu. as a Share of Total
(US$, bn.) as a Share of GDP as a Share of GDP
Public Expenditure
2010-2011
2011-2012
2012-2013
2013-2014
2012-2013
0.24%
0.18%
0.20%
0.21%
12%
12%
10%
12%
Tertiary Edu. as a Share of
Total Ed. Expenditure
11%
8%
9%
8%
Source: World Bank World Development Indicators and PETS
Recurring Grant
Total recurring grant projected for the whole MTDF-II was PKR 256.38billion but actual allocated grant for the duration
added up to 175.335 billion till June 2015, which is 31.61% less than actually projected. During fiscal year 2011, there was
no difference between allocated and projected grant, however, starting from the fiscal year 2012 the allocated grant vs
projected grant started declining at 4.17% p.a. which increased to 14.39%, 12.87% and 16.42% in the years 2013, 2014, and
2015 respectively. In hindsight, the projected grant targets were either over optimistic or the government deliberately cut
the funding. There was no discrepancy between the released and allocated grants with the exception of years 2012 in which
the released grant fell short of the target by 8.3%.
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Table 4: Recurring Grant in MTDF-II
Description
Projected
Allocated
Released
(In PKR billion)
FY11
29.06
29.06
29.06
FY12
32.87
31.50
28.89
FY13
38.29
32.78
32.78
FY14
44.76
39.00
39.22
FY15
51.45
43.00
43.00
Source: HEC MTDF –II and MoF
Development Grants
Analyses of development grants are no different from the Recurring Grants. Gap between projected and allocated grants
stood at around 26% on average during the years 2012 to 2015 while the actual amounts released were also way below the
targets of MTDF II. In 2012, 30.26% of the allocated grant was not released. The situation somewhat improved in 2013
and 2014 where withheld percentage as compared with allocated grant stood at 19%.
Table 5: Development Grant in MTDF-II
Description
Projected
Allocated
Released
FY11
NA
15.763
14.064
(In PKR billion)
FY12
20.24
14.00
9.763
FY13
23.99
15.80
12.80
FY14
25.79
18.49
14.836
FY15
30.54
27.02
24.582
Source: HEC MTDF –II and MoF
Overall the expenditure in Higher Education has remained lesser than the targets as identified in the MTDF-II. Share of
Higher Education expenditure has been compromised, particularly development expenditure; as priority has been given to
other areas of the economy. Further share of provincial/regional governments in funding of HEIs remained minimal.
2.2.2. Public Financial Management in Pakistan
The key to successful development is primarily based on the Efficiency, Integrity, and Effectiveness with which any
Government raises, manages and expends public resources. This is especially important for developing economies where
financial resources are scarce and thus the assurance of maximum utility is the primary means towards sustainability and
survival. Within this, the key fact is the existence of an effective Public Financial Management System which plays a pivotal
role in defining Good Governance and supports Aggregate Control, Prioritization, Accountability and Efficiency in the
Management of Public Resources and Delivery of Services.
Figure 7: Elements of PFM
Fund Allocation
Planning
&
Budgeting
Legislative
Oversight and
Governance
PFM
Accounting and
Reporting
Auditing
Procurement
Source: Study by ASP Program USAID on Development of Framework for National/Sub-national
Public Financial Management at institutional level, 2012
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2.2.3. Budgeting
The annual budget cycle involving legislature, MoF (MoF), HEC & HEIs is depicted below.
Figure 8: Budgeting Process for HEIs
Source: PETS
Budget cycle of HEC starts with the receipt of Budget Call Circular (BCC) for the year. BCC is issued by Government of
Pakistan through MoF. The department responsible in HEC for preparation of Budget (Consolidation of HEIs Budget
and including HEC own Budget) is the Budget Department which is a sub-department of the Finance Division. After
the receipt of BCC, HEC invites Budget Proposals from the HEIs separately for recurring and development expenditure
for the next financial year.
A document known as a Budget Proposal Performa is filled by Universities representing their recurring budget for next
financial year. This document presents complete projections of expenditure of next year in the form of budget estimates
along with revised estimates of current year.
MoF notifies HEC the budget ceilings known as Indicative Budget Ceiling which is recommended after deliberation
considering revenue streams projected expenditures. After such ceiling has been received and after all the Budget proposals
Performa have been received from HEIs by HEC, the commission submits detailed budget to the Federal Government
using a Funding Formula. The basic framework for streamlining HEC recurring funding to universities and institutions of
higher learning Base Grant 65%, Need Grant 20% and Performance Grant 15%.
The budget so submitted by HEC to Federal Government forms part of national budget where each University is
represented by an individual line item. Approved budget of federal government grants are translated in the universities’
budget for next financial year and the same is approved from the syndicate and subsequently from senate.
Case Study
Table 6: Budget Process of University of Agriculture Faisalabad
Date
December 6,2012
December 11,2012
January 09,2013
February 28, 2013
April 17,2013
May 08,2013
May 2013
Activity
Request to the Treasure for Budget Proposal from HEC for the financial year 2013-14
Request to all relevant departments in University for submission of requisite information on
prescribed Performa’s for budget proposal
Submission of budget proposal for the financial year 2013-14 to Finance and Planning Division
of Higher Education Commission. (budget estimate of HEC Grant PKR 2,447.9 Million)
Intimation of Provision Indicative Budget Ceiling to Chairman HEC by MoF
Request from treasurer to all departments of the university for preparation of budget estimates
for financial year 2013-14
Intimation of Final Indicative Budget Ceiling to Chairman HEC by MoF
Incorporation of Budget Estimate of PKR 1,159,621,000 for UAF in Pink Book for approval
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Public Expenditure Tracking Survey (PETS)
June 30,2013
July 13,2013
Review of budget estimate for FY 2013-14 by Syndicate under the presumption of recurring
grant of PKR 1,170 Million from HEC and approval of the same by syndicate
Allocation of Annual Recurring grant for FY 2013-14 to UAF amounting PKR 1,159,621,000
Source: PETS
Variations in approved budget receipts column and total actual receipts column of annual utilization reports of the
universities were observed. Eight out of five universities had lesser amount of receipts as compared to their projections in
the approved budget column of utilization reports. While on the other hand, rest of the sample had more receipts than their
projections which raise the question over budgeting process for HEIs. Since approved budget comprise of estimates of
federal grant through HEC as well as income from own sources, it is important to look into the two sources separately.
Table 7: Variance of Budgeted and Actual Receipts – FY 2013-14
Names of
Universities
AIOU
Approved Budget of HEIs as per Utilization Reports
(PKR MN)
4,637.95
DUHSK
3,189.23
HU
809.11
ICUP
917.64
IIUI
1,729.71
IUB
2,692.53
KIU
477.1
MUET
1,432.97
MUST
576.17
PU
5,289.78
SBK
430.97
UAF
2,063.62
UETP
1,170.18
UOK
2,530.68
UOS
2,235.23
Source: PETS – Annual Utilization Reports 2013-14
Total
Receipts(PKR MN)
4,491.28
Variance
3,641.54
853.5
731.83
1,659.98
2,067.32
436.77
1,821.61
601.15
5,603.60
291.77
2,288.29
1,090.15
2,961.51
1,721.67
-3%
14%
5%
-20%
-4%
-23%
-8%
27%
4%
6%
-32%
11%
-7%
17%
-23%
47% of the sample universities managed to get grants more than the budget amount. This excess receipt is generally
attributed to additional/supplementary grants received from the federal government during the FY 2013-14’ already not
provided in the budget; and can be considered as an isolated occurrence.
In rest of the sample where the actual grants were lesser than the budgeted; the projection regarding federal and provincial
supplementary grants as well as of grants under TTS were over estimated.
Table 8: Variance of Budgeted and Actual Grants – FY 2013-14
HEI
Budgeted Grants
Actual Grants
AIOU
DUHSK
HU
ICUP
IIUI
IUB
KIU
MUET
MUST
PU
SBK
UAF
UETP
275.00
1,144.23
380.83
350
1,085.08
1,161.13
226.61
798.2
256.57
1,991.21
380.39
1,309.62
604.5
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296.5
Variance of Grants
%
8%
1,203.70
413.71
303.71
1,150.23
1,009.67
240.27
860.2
276.3
2,096.45
241.67
1,410.85
678.8
5%
9%
-13%
6%
-13%
6%
8%
8%
5%
-36%
8%
12%
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UOK
1,368.75
UOS
695.28
Source: PETS – Annual Utilization Reports 2013-14
1,655.64
727.54
21%
5%
Income from own sources are projected on the best estimate of revenues which the management of the university forecast
based on its current capacity and near future expansion. Instances of positive variance of own sources income were observed
in 47% of the sample.
Table 9: Variance of Budget and Actual Own Income – FY 2013-14
HEI
AIOU
Budgeted Own Sources
4,362.95
DUHSK
2,045.00
HU
428.28
ICUP
567.64
IIUI
644.64
IUB
1,152.58
KIU
250.49
MUET
634.76
MUST
319.6
SBK
50.58
PU
3,298.58
UAF
754
UETP
565.68
UOK
1,161.93
UOS
1,539.95
Source: PETS – Annual Utilization Reports 2013-14
Actual Own Sources
4,194.78
Variance of Own Sources %
-4%
2,437.84
439.79
428.13
509.75
1,057.65
196.5
961.41
324.85
50.1
3,507.15
877.44
411.35
1,305.87
994.13
19%
3%
-25%
-21%
-8%
-22%
51%
2%
-1%
6%
16%
-27%
12%
-35%
Over estimation of HEC grants which resulted in negative variance and significant discrepancy in budgeted and actual own
source income highlights the weaknesses in budgeting process of HEIs.
2.2.4. Fund Flow
Once the budget has been approved, it is then disbursed to HEC through an assignment account. Release of the funds to
HEIs starts from initiation of informal demand from the HEIs to HEC. Each month Finance and Budget Department in
HEC sends a detailed letter to the office of Financial Advisor (FA) – HEC in MoF, along with the sanction letters for
AGPR; requesting the release for funds to the universities. This letter contains the details of budget allocated to the university
along with the amount to be released for the month. This amount is calculated by dividing the quarterly allocation on
monthly basis. For the first six months of the year, this amount is equal to 6.67% of the allocated budget for the year while
for remaining six months, its equal to 10% of the allocated budget. As per funding policy of Federal Government,
disbursement has to occur quarterly in the following percentages (Percentage of the total budget disbursed)




20 percent in the First Quarter
20 percent in the Second Quarter
30 percent in the Third Quarter
30 percent in the fourth quarter
However in case of recurring grants these quarterly payments are further divided on monthly basis and payments are made
accordingly.
Once the letter is received at the office of FA –HEC, the same is scrutinized at the Deputy Financial Advisor (DFA )level
and recommended for releases subject to clearance by the budget wing in MoF. Budget wing in MoF gives the clearance to
the request for ways and means and the same is intimated to the FA’s office. Following this clearance, the DFA endorses
the sanction letters issued for AGPR by HEC.
Following the above process, the sanction letter in triplet issued by the HEC is delivered to the AGPR for the release of
funds which carries out the regular scrutiny of the same and upon its satisfaction advise the concerned branch manager of
National Bank of Pakistan for arrangement of payment in; against the mentioned ceiling and on the receipt of cheque and
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schedule of payment duly signed by the authorized signatories of; the assignment account of HEC.
2.2.5. Development Grant
Development grants for HEIs are disbursed in a different manner than recurring grants. The procedure starts with Budget
Call form the Ministry of Planning & Development (MoPD) at HEC for preparation of Public Sector Development Program
(PSDP). Subsequent to that HEC requests HEIs’ Planning and Development (P&D) Department for submission of their
PSDP in response to which respective departments at the HEIs submit their PSDP to HEC in quadruplicate as well as
through email.
At HEC, all submissions from the HEIs are compiled and after a series of meeting among relevant personnel a final draft
of HEC PSDP is prepared in consultation with Executive Director, Member - Operation & Planning, Adviser (M&E) and
Director General Planning; for onward submission to Ministry of Planning and Development after approval of Chairman
HEC. Draft PSDP is considered in priority committees at Finance Division and after recommendations from Annual Plan
Coordination Committee to National Economic Council (NEC) budget is approved from NEC and National Assembly.
Development grant are released quarterly with same Maximum Quarterly ceilings like recurring grants however unlike the
latter, these are not disbursed monthly. Furthermore, HEC has flexibility to recommend more releases against fast moving
projects while remaining within overall quarterly ceilings.
HEC furnishes consolidated project-wise requirement of funds (included in the PSDP) on the release demand proforma to
Advisor (Dev. Budget), Planning and Development Division while an authorized officer of the Division certifies /endorses
the proforma and a copy of the same is sent to HEC, expenditure wing of Finance Division and AGPR.
Based on the amount approved by Planning and Development Division, HEC issues sanction letter, indicating amount
required under detailed object head for release of funds; to AGPR with a copy to Advisor (Dev. Budget), Planning and
Development Division and budget and expenditure wings of Finance Division. AGPR, after carrying out due process, advise
the concerned branch manager of National Bank of Pakistan for arrangement of payment in assignment account of HEC.
2.2.6. Accounting & Reporting
The Applicable Regulatory Framework for Public Sector Educational Institutions requires preparation of Income and
Expenditure Account of the Higher Education Institutes (HEIs) with supporting trial balance, ledgers, and Fixed Asset
Register that are being reviewed and audited by Auditor General of Pakistan Teams on an annual basis. Activities of the
accounting and financial reporting system are governed by the ‘University Financial Rules’.
According to MTDF II, to enhance transparency, quality and reliability and timeliness of financial reporting, and good
financial management across the sector, HEC has implemented the principles of the New Accounting Model (NAM)
introduced under PIFRA and ensured that the International Public Sector Accounting Standards (IPSAS) compliant annual
financial statements are available for audit within 4 months after the end of each financial year. It also requires HEIs to
ensure timely submission of standardized, quarterly financial reports.
Salient Features of NAM (New Accounting Model)
This includes:
a). Accounting:
 Modified Cash Basis of Accounting.
 Double Entry Book Keeping.
 Commitment Accounting.
 Fixed Assets Accounting.
 Assets Register.
 New Chart of Accounts.
b). Reporting
 Timely, Accurate, Relevant and Reliable Financial Reports.
 Consolidated monthly and quarterly accounts.
 Monthly and Fortnightly Cash Forecasting Reports.
 Trend Analysis Reports.
 Appropriation Accounts.
 Annual Finance Account.
 Combined Finance and Rev. Account.
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 Investment Reports.
 Public Debt Profile.
 Report on Public Account.
c). Budget Monitoring:
 Development Expenditure.
 Capital/Revenue Receipt.
 Tax/Non Tax Receipts.
 External/Domestic Borrowings.
 Program/Project Monitoring.
2.2.7. Auditing
It was one of the targets under MTDF II to institutionalize process for conducting substantive annual audit, through private,
independent auditors, of all entities funded by the HEC. Currently no external auditor is appointed by HEIs to review the
accounts in order to ensure compliance with best accounting practices that helps the better presentation of accounting
record.
Similarly internal audit department plays a pivotal role in helping the organization achieve their stated objectives. It does
this by using a systematic methodology for analyzing business processes, procedures and activities with the goal of
highlighting organizational problems, recommending solutions and in maintaining a sound system of internal controls in
any organization. MTDF II also emphasize on a strong independent internal audit functioning in order to ensure a system
of checks and balances. It was observed in the survey that sample HEIs either does not have a separate Internal Audit
department or they are in the process of establishing this department, although in many cases the act of the universities
provides for having an internal audit function.
2.2.8. Procurement
The primary responsibility of the procurement cell at HEI’s is to assist in the procurement of materials, supplies, and
services, with the objective of attaining goods or services at the proper time, in the proper place, in the quantity, quality and
price consistent with the HEI’s needs.
Although the portion of procurement in HEIs recurring budget constitutes a very small percentage of the budget as major
procurements are conducted through development grants, still MTDF II requires upgrading procurement performance in
the higher education sector.
Most of the HEIs have setup separate procurement departments though their autonomy with respect to reporting remains
a challenge.
2.2.9. Legislative Oversight and Governance
Legislative oversight is an important element of PFM and a robust oversight mechanism lends strength to the outcomes of
PFM. HEC has an oversight role in the higher education sector of Pakistan. MTDF II identifies that HEC will work to
ensure the maximum value of public funds by reviewing and examining the requirements of public sector institutions, and
providing funds accordingly for development and research projects based on performance, intellectual merit, and relevance
to national requirements. Further it states that in its drive to achieve excellence, HEC continue to ensure value for public
money by seeking to make the best use of available resources and securing accountability while recognizing institutional
autonomy. (MTDF)
All Universities are governed by their Statute or Ordinance, the governing structure of all universities we have visited are
identical in constitution with few differences in terminologies like Board of Trustees (BOT) or Senate have same governing
function, these are the supreme authorities of Universities. These bodies are policy making authorities of HEIs and oversee
all the major decisions concerning the conduct of HEIs affairs and operations. Subordinate to supreme body is Board of
Governors (BOG) or Syndicate these are main active governing bodies in Universities, with the responsibility of exercising
general supervision over the affairs and the management of the university. To help implement its directives, execution and
follow-up on board directives certain committees are formed and the following are a common set of committees in each of
the HEIs visited i.e. (i) Finance and planning committee (ii) Academic Council (iii) Purchase Committee (iv) Disciplinary
Committee.
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Chapter 3. PETS Exercise
The present chapter discusses specific findings related to the data and their sources for PETS and how they relate to the
other main findings identifying leakages, information & monitoring mechanism, Human Resource (HR) constraints, equity
and bottlenecks.
3.1.
General Characteristics of Data
PETS in higher education was the first of its kind exercise in the country. The team carrying the survey came across various
challenges particularly at the HEIs level. Since the survey exercise was primarily focused towards tracking of expenditures
in the HEIs, on some instances management of selected HEIs was reluctant to share information relating to funds allocation,
minutes of meetings, access to financial data and additional information post visit that was sought from these HEIs based
on the comments from World Bank and PETS Steering Committee formed by HEC. More specifically, as our approach
included detail assessment of spending in the establishment charges, payroll data of the universities were not provided at
first instance despite of collective efforts by the consultants and HEC team, however we eventually managed to pull out this
data but at the cost of delayed submissions and deliverables. Furthermore, certain set of data not readily available as
mentioned throughout this report with either “NR” or “NP” due to lack of proper accounting records being kept at HEIs.
Due to lack of understanding of PETS, management at various universities took the survey as an audit of their funds and
was hesitant to share the information. There was delay in receiving information from various institutions in one way or the
other which though does not hinders the analysis to be carried but restricts the ability to draft the report timely in accordance
with the initial assignment timelines.
Balanced Scorecard is a new area for HEIs and their current information system capabilities are limited to generate and
provide set of comprehensive data required to implement scorecard to start with. A similar kind of situation was encountered
by PETS team while gathering related details from HEIs as evident from extent of missing information on the four quadrants
of balance scorecard. However an attempt has been made to form an initial sketch of the model.
3.2.
Data Inconsistencies
Comparison of PETS data with external sources on one hand, and layers within the PETS on the other, provides some
feedback on the record keeping system. There were number of inconsistencies between the data collected through the
survey and that kept by HEC. This is particularly evident through annual utilization reports which are submitted to HEC by
HEIs. Same document of the similar period, when obtained from two sources separately, were showing different figures.
One HEI i.e. AIOU is presented separately in tables and have been excluded from graphical presentation due to
the fact that results obtained for this HEI are not comparable with other universities due to the unique nature of
its operations, primarily as a Distance Learning Institution.
3.3.
Contribution made by PETS
By using data, through questionnaires and consulting documents from multiple levels and intensive analysis rather than
expanded coverage, the PETS exercise has chalked out fund flow from the center to the HEI levels and has identified the
major organizational leakages in the light of PFM. Both these are crucial outputs of a PETS exercise.
It has also enhanced the understanding of the potential leakages and the prerequisites for measuring them, institutional and
human resource bottlenecks and system inefficiencies in planning, allocating and executing of Public Finance at various
levels. Due to the nature and characteristics of Higher Education Sector in Pakistan, the exercise could not quantify the
magnitude of the leakage, if indeed it does take place, but rather spotted various bottlenecks which should be removed in
order to establish a clear verification of the leakages in the system. Most of these bottlenecks appear in the sphere of record
keeping and information flow and reporting mechanisms and standards between and within the various levels of agencies
involved as well as the Human Resource availability or skills in relation to these tasks. For that reason, and in the light of
the feedback received during the survey, the report had dedicated a separate section of two chapters on these issues.
The exercise also provides fairly detailed recommendations for all the issues identified during the survey. These all have
© 2016 Grant Thornton International Ltd. All rights reserved.
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Final Report
Public Expenditure Tracking Survey (PETS)
significant bearings on the quality of education issues, in line with the priorities of the National Strategy for Higher Education
Sector. In our opinion continuity of this PETS Exercise shall be ensured by HEC as part of MTDF-HE III.
3.4.
Tracking of Expenditures
Total recurring expenditures of the universities are divided into two heads i.e. establishment charges and non-establishment
charges. Establishment charges include spending on faculty salary, salary of officers and staff under teaching and nonteaching department and Tenure Track System (TTS) faculty salary. On the other hand, non-establishment charges include
utilities, travel, stationery, communications, repair and maintenance, acquisition of Physical assets, research survey and
exploratory operations. . If the budget for the year against any head remains unspent, it cannot be reallocated to another
head.
Establishment Expenditure
It is observed during the survey that substantial portion of the budget of universities is spent on establishment charges. In
2013-2014, on average 52 percent of the total receipts are allocated to salaries (employee related expenses) while on average
total share of establishment charges constitutes 56% of the total expenditure of universities. Newly established universities
are spending most of their funds in salary heads. However there were cases such as AIOU where the share of salary in total
expenditure is comparatively low attributing to limited number of their faculty members given the distant learning programs
it offers.
Figure 9: Establishment Charges to Total Exp – FY 2013-14
68% 68%
80%
60%
35%
80%
64% 68%
47%
47%
60%
64%
47%
58%
56%
49%
40%
20%
0%
*Information not provided by AIOU
Source: PETS – Annual Utilization Reports 2013-14
Table 10: Segregation of Establishment Charges – FY 2013-14
Names
AIOU
Faculty Salary of officers & Salary of officers & Staff-Nonsalary
Staff-Teaching
Teaching Departments
Departments
36%
3%
61%
TTS Faculty Salary
Other Est
Charges
0%
36%
DUHSK
54%
44%
0%
2%
54%
HU
57%
9%
27%
8%
57%
ICUP
0%
66%
34%
0%
0%
IIUI
46%
12%
35%
7%
46%
IUB
45%
17%
37%
1%
45%
KIU
41%
18%
32%
8%
41%
MUET
53%
20%
26%
0%
53%
MUST
58%
16%
25%
0%
58%
SBK
53%
3%
44%
0%
53%
PU
33%
19%
36%
12%
33%
UAF
33%
24%
22%
21%
33%
UETP
43%
9%
41%
7%
43%
UOK
46%
18%
35%
1%
46%
UOS
97%
0%
0%
3%
97%
Source: PETS – Annual Utilization Reports 2013-14
Further looking into the establishment charges, it was revealed that within the establishment charges allowance’s burden on
total expenditure has remained higher. Universities are paying substantial amount (on average 31% of total expenditure) of
allowances under various categories to their employees. In majority of the sample surveyed, amount of “pay portion” of the
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Final Report
Public Expenditure Tracking Survey (PETS)
salary remained lower than the allowances portion apart from a few exceptions like UAF, DUHSK and PU.
Figure 10: Share of pay and allowances in Establishment Charges – FY 2013-14
46%
39%
29%
22%
22%
14%
DUHSK
HU
36%
34%
ICUP
26%
30%
32%
28%
19%
21%
IUB
36%
IIUI
24%
36%
24%
24%
KIU MUET MUST
Basic Pay
PU
28%
SBK
41%
34%
33%
UAF
34%
23%
25%
22%
UETP
UOK
27%
UOS
Total Allowances
*Information not provided by AIOU
Source: PETS – Annual Utilization Reports 2013-14
Major portion of public expenditure in higher education is channeled towards payment of staff, both faculty and non-faculty;
in which larger share is of allowances. During the survey it was observed that there is discrepancy in the salary structure of
HEIs. Furthermore instances were identified where inadmissible allowances were paid to the employees. These inadmissible
allowances included those allowances which are either merged into other existing allowance or barred by the relevant statute.
(Table indicating inadmissible allowances by the sample HEIs is annexure 2).
Non-Establishment Expenditure
On average universities are spending only 44% of their total expenditure on non-salary items. Without adequate non-salary
allocations, universities cannot maintain a good quality of service provision, being the only source of funds, to meet the
needs related to utilities, travel, stationery, communications, repair & maintenance and more specifically acquisition of
physical assets and research.
Figure 11: Share of Non-Salary Expense in Total Expenditure FY 2013-14
65%
DUHSK
53%
32%
32%
HU
ICUP
53%
36%
IUB
IIUI
32%
KIU
40%
53%
36%
44%
42%
51%
20%
MUET MUST
PU
SBK
UAF
UETP
UOK
UOS
*Information not provided by AIOU
Source: PETS – Annual Utilization Reports 2013-14
It is observed that among the non-salary head expenditure items, general operating expenditures have the highest share with
an average 32.3% of the total non-salary expenditure. This is followed by utilities and other transfer payments with averages
of 11.53% and 11 % respectively.
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Public Expenditure Tracking Survey (PETS)
Table 11: Composition of Non-salary expenditures FY 2013-14
AIOU
Particulars
Fees
Communication
Utilities
Occupancy Costs
Operating Leases
Motor Vehicles
Consultancy & Contractual Work
Travel & Transportation
General operating Expenses
Employees Retirement Benefits
Repair and maintenance
Feasibility studies
Research Survey & Exploratory
Operations
Financial Assistance/Scholarships
Technical Assistance
Entertainments and Gifts
Other Transfer payments
Advances to employees
Expenditures on Acquiring of physical
Assets
0.00%
8.10%
2.30%
4.70%
0.00%
0.00%
2.80%
74.00
%
7.10%
0.90%
0.00%
DUHS
K
HU
0.40%
1.50%
17.00%
4.60%
0.00%
0.40%
1.70%
7.40%
0.00% 0.60% 0.00% 0.00% 0.00%
1.30% 2.40% 3.60% 2.90% 1.80%
1.80% 20.30% 11.50% 11.20% 3.20%
0.00% 2.50% 29.70% 0.70% 1.10%
0.00% 0.00% 0.00% 0.00% 0.00%
0.70% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.50%
6.90% 4.30% 4.20% 14.20% 11.40%
ICUP
IIU
IUB
KIU
MUE
T
MUS
T
0.10%
2.10%
7.50%
0.00%
0.00%
0.20%
0.00%
9.70%
0.40% 0.00% 0.00% 0.10% 0.00%
2.00% 1.70% 3.40% 1.70% 1.20%
4.00% 11.60% 8.30% 25.40% 24.80%
0.20% 10.10% 0.00% 0.30% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 4.30% 0.10% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
4.40% 4.10% 14.80% 5.00% 2.80%
PU
SBK
UAF
UOK
UOS
0.00%
0.70%
4.40%
0.00%
0.00%
0.10%
0.00%
4.90%
72.60% 17.30% 27.30% 23.30% 40.10% 48.20% 25.70% 19.30% 23.80% 10.50% 11.80% 31.50% 28.30%
9.50% 1.40% 5.80% 14.60% 0.10% 20.30% 15.90% 1.80% 17.10% 0.00% 37.30% 29.70% 0.10%
13.30% 2.10% 6.80% 3.00% 10.00% 5.30% 9.60% 2.30% 4.20% 5.10% 4.30% 3.70% 3.10%
0.00% 0.30% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
0.00%
0.00% 4.80% 0.00%
0.00% 8.20% 2.30%
0.00% 0.00% 0.00%
0.00% 0.40% 0.90%
0.00% 48.20% 10.80%
0.00% 0.00% 0.90%
0.00%
7.30%
0.00%
0.50%
0.00%
0.00%
1.20%
6.30%
0.00%
0.60%
6.50%
0.50%
0.00% 6.00% 1.50%
1.40% 0.80% 0.50%
0.00% 0.00% 0.00%
0.30% 0.30% 0.50%
0.00% 17.40% 28.80%
0.00% 3.60% 7.30%
3.40% 1.80%
6.00% 0.40%
0.00% 0.00%
0.70% 0.60%
4.30% 23.80%
0.30% 0.00%
0.20%
5.00%
0.00%
0.20%
0.00%
0.00%
1.70% 0.10%
2.40% 5.30%
0.00% 0.00%
0.10% 0.30%
0.00% 14.80%
0.30% 0.00%
0.10%
0.00%
2.30%
5.90%
6.40%
5.20% 14.30%
6.50%
1.60%
0.00%
0.10%
4.90% 10.50%
1.30% 22.70%
7.70%
*Information not provided by DUHSK
Source: PETS – Annual Utilization Reports 2013-14
From the table given above it is indicated that the universities are allocating, on average, 2.57% for communication, 6.19% for acquiring physical assets, 7 % for travel and
transportation and 5.35% for repair and maintenance.
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Expenditure on non-salary items varies largely between the universities which questions the existence of any benchmark for
the same. Large variations have been identified in the budget amount and actual expenditure of non-salary items which show
either absence or non-compliance of criterion for budget projections of the same. Among the non-salary items, research
expenditure has remained below par in majority of the sample HEIs although it is assumed that proportion of same should
have been kept at maximum level given the resource availability and opportunities for application.
Table 12: Research Expenditure - Budgeted and Actual FY 2013-14
HEIs
Allocated Amount
Actual Expense
DUHSK
HU
ICUP
IIUI
IUB
KIU
MUET
MUST
PU
SBK
UAF
UETP
UOK
UOS
15
13.42
2.5
16.29
12.8
2
62.28
7.82
100
5
3.11
5
25
0.95
0.28
13.33
12.09
58
3.54
98.23
2.03
1.87
4.29
24.1
1.01
% of Non-Salary Expense
0.01%
4.80%
0.00%
0.00%
1.10%
0.00%
5.99%
1.51%
3.38%
1.85%
0.20%
1.61%
1.75%
0.09%
Variance
98%
1%
100%
100%
6%
100%
7%
55%
2%
60%
40%
14%
4%
-7%
*Information not provided by AIOU
Source: PETS – Annual Utilization Reports 2013-14
Expenditure on research remains below 2% on average as percentage of the total non-salary expenditure. This situation is
further aggravated when the variance between the allocated amount for research and the amount expended is compared at
20%.
3.5.
Quality Enhancement Cell
Adhering to international requirement of improving the quality of education and student at tertiary level, it was essential for
Pakistani HEIs to establish a department within to strengthen the internal quality assurance process with a special focus on
quality of higher education to fill the gap between the prevailing and the desired status of quality education. For this, Quality
Enhancement Cells (QECs) are working in all public sector HEIs under the guidelines of Quality Assurance Agency (QAA).
As part of PETS exercise, limited scope assessment of QECs, in terms of its existence, organization and performance; was
carried out to highlight the internal quality assurance mechanism adopted by Public Sector Universities. Eleven out of twelve
universities fully comply with existence parameters, while eight out of twelve universities fully comply with
organization/structure requirements. Performance of parameter of QEC showed varying results whilst the average score of
sample universities remained above fifty percent except for KIU.
Table 13: Internal Quality Assurance of HEIs (Performance year 2013-14)
Parameters
Maximum DUHS HU ICUP IUB KIU MUET MUST PU SBK UAF UOK UOS
Score
K
Existence
6
6
6
6
6
4
6
6
6
6
6
6
6
Organization
12
12
12
8
7
2
5
12
10
12
10
12
10
Performance
82
73.36 50.72 46.31 64.1 5.5 44.18 69.42 69.58 76.61 77.08 39.56 72.9
4
Total
100
91.36 68.72 60.31 77.1 11.5 55.18 87.42 85.58 94.61 93.08 57.56 88.9
4
Avg.
92%
67%
67%
*Information not provided by AIOU, IIUI and UETP
Source: PETS – QEC Reports 2015
3.6.
Cost Per Student
Cost per student shown in table below is calculated discipline wise as well as carder wise. Cost comprises of establishment
expenditures and operating expenses for the year 2013-2014 on actual. The number of students is extracted from budget
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Public Expenditure Tracking Survey (PETS)
estimates and total expenditure apportioned on the basis of each department students divided by total students of the
university .The total expenditure includes the salary expense discipline wise which is taken from the “Actual Expenses of
previous year in Budget Proposals” submitted by the universities and operating cost is extracted from the Annual Utilization
Report of the universities submitted to HEC.
Cost per student is calculated for analysis purposes and due to non-availability of required information and inability
of the financial management system at HEIs to calculate and produce cost per student or discipline wise costing,
we recommend HEIs to adopt activity based costing prospectively, on the following bases:
Firstly each department expenditures are to apportioned on the basis of each department student strength, secondly all those
costs which are central to university like electricity, security, general administration expenses and hostel charges are to be
apportioned on more comprehensive basis that need to be based on logical explanation that support basic need for such
activity e.g. electricity charges needs to be apportioned on floor size/covered area occupied by each department, security
charges are to be apportioned on total university students, hostel charges are to be apportioned on the rate obtained from
dividing the student of each department using hostel facility by total university students. Similarly general administration
departments are to be apportioned on the rate obtained from dividing student strength of each department by total university
students.
Cost per student, both discipline and cadre wise, of the sample universities of PETS shows variations in similar discipline.
Average cost per student based on the sample HEIs was driven equal to PKR. 140,609 with the exception of MUET and
UETP; due costs data for calculation not available. Furthermore, DUHSK and AIOU were also not included for average
HEI calculation given the unique nature of course offered by the former, and only distant learning programs offered by the
latter. Based on comparative sample, discipline-wise average cost per student was calculated equal to PKR. 128,069.
Considering limitation as discussed above, Internal Benchmarks, based only on HEIs costs (Horizontal Analysis) and Industry
Average based on the average of sample HEIs in similar disciplines (Vertical Analysis), of the PETS sample universities are
given below:
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Final Report
Public Expenditure Tracking Survey (PETS)
Table 14: Cost per Student - Discipline Wise FY 2013-14 (PKR)
Name of Universities Social
Business / Sciences Arts and Computer Engineering Medical Agriculture Pharmacy Islamic Veterinary HEI
Sciences management
Humanities Sciences
Oriental
Average
science
Learning
DUHSK
745,213
745,213
HU
77,310
76,821
86,323
101,723
62,120
40,604
NA
74,150
ICUP
120,327
NP
172,652
218,030
155,998
NA
166,752
IIUI
177,085
39,721
NA
108,403
IUB
70,340
38,853
78,923
71,099
85,306
NP
68,904
KIU
215,131
200,802
342,369
192,592
316,647
251,837
253,230
MUST
163,672
86,031
153,870
146,783
113,125
124,773
NA
131,376
PU
254,635
232,222
297,392
321,002
256,816
316,333
367,547
292,278
SBK
109,023
98,070
110,408
104,211
59,713
NA
96,285
UAF
142,721
83,479
178,133
46,880
53,131
108,615
121,523
NA
205,560 117,505
UOK
240,994
79,083
117,180
74,975
104,198
168,838
130,878
UOS
109,068
111,831
114,627
120,429
142,025
113,244
37,368
106,942
Industry Average
152,755
111,910
165,188
130,677
134,117
147,581
745,213
210,354
113,244
37,368
205,560
*Information not provided by AIOU, MUET and UETP
Source: PETS – Budget proposal 2015-16
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Public Expenditure Tracking Survey (PETS)
Table 15: Cost per Student - Cadre Wise FY 2013-14 (PKR)
Social Sciences
Names
DUHSK
HU
ICUP
IIUI
IUB
KIU
PU
SBK
MUST
UOK
UAF
UOS
(Cont’d)
Under
Grad
Post
Grad
161,424
163,955
322,198
223,415
532,643
950,472
308,729
259,396
372,161
505,427
343,718
148,365
452,193
437,371
91,408
360,893
347,816
168,972
443,527
683,773
329,307
239,225
Business /
Management
Sciences
Under
Post
Grad
Grad
127,981
192,178
56,168
427,633
361,691
170,886
154,615
166,535
1,256,904
239,225
126,036
378,561
648,747
230,153
193,947
150,598
174,178
210,162
Computer
Science
Arts / Humanities
Under
Grad
Post
Grad
Under
Grad
Post
Grad
117,462
550,812
119,574
229,646
912,380
912,293
171,964
238,347
360,887
274,083
102,983
244,123
495,267
264,497
146,783
193,855
112,905
272,152
83,844
162,317
52,287
27,385
519,498
343,678
67,057
131,855
130,360
396,725
239,736
149,139
58,648
810,924
545,203
796,402
519,192
177,495
122,260
216,019
Engineering
Under Grad
Post Grad
DUHSK
HU
ICUP
IIUI
IUB
KIU
PU
SBK
MUST
UOK
UAF
UOS
Pharmacy
297,796
40,604
Islamic Oriental
Learning
Under
Grad
Post Grad
Under
Grad
Post
Grad
125,159
189,538
111,957
56,089
Medical
Under Grad
Post Grad
914,368
4,028,270
Veterinary
Under
Grad
Post
Grad
214,141
574,168
Agriculture
Under Grad
Post Grad
947,637
251,837
541,563
1,143,862
227,464
179,818
577,759
675,758
1,454,559
201,169
136,481
339,035
75,758
65,494
282,244
674,786
*Information not provided by AIOU, MUET and UETP
Source: PETS – Budget proposal 2015-16
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Final Report
Public Expenditure Tracking Survey (PETS)
3.7.
Teaching Faculty Cost %age of Allocated Total cost of Discipline
Percentage of teaching faculty cost to total allocated cost of discipline is calculated in the table below. Teaching faculty cost includes Pay & Allowances of the discipline and it is
extracted from Budget estimates for the year 2013-14 on actual. Total cost of discipline is calculated on the same basis which we used in deriving cost per student as described
in section of this report.
The purpose for calculating this percentage is analyzing the overall spending of the HEI on the teaching faculty. The teaching faculty cost factor is also very important to improve
the quality of education that is directly proportional to quality of students produced by an institution. The higher teaching faculty salaries provide a dual benefit of retaining and
attracting a more effective distribution of teachers among the discipline.
The table below shows teaching faculty cost percentage of total allocated cost of discipline with variation in the percentage of similar discipline. On average, the percentage of
faculty cost remains above 30% of allocated total cost of discipline except for Some HEI (UOAF, PU, and DUHSK) where teaching faculty percentage to total cost of discipline
is as low as 3 % for Engineering, 9% for Arts and Humanities and 17% for Medical respectively.
Table 16: Teaching Faculty cost %age of Total Discipline cost FY 2013-14 (PKR)
Social
Business
/ Science Arts
and
HEI
Science
Management science
Humanities
IIUI
SBK
KU
HU
ICUP
IUB
PU
DUHSK
UOK
UAF
UOS
MUST
Industry Average
33%
36%
22%
38%
15%
46%
19%
32%
21%
24%
41%
53%
41%
10%
48%
33%
Computer
Sciences
Engineering
29%
39%
21%
47%
49%
47%
9%
31%
50%
10%
26%
32%
38%
37%
37%
41%
18%
45%
25%
28%
44%
15%
5%
23%
9%
13%
12%
19%
23%
29%
27%
15%
47%
32%
6%
8%
19%
47%
29%
19%
10%
62%
3%
Medical
Agriculture
Pharmacy
Veterinary
80%
27%
42%
18%
59%
17%
37%
28%
34%
25%
56%
33%
19%
24%
12%
33%
36%
12%
29%
University
Average
30%
32%
38%
37%
32%
40%
16%
17%
30%
19%
30%
39%
44%
*Information not provided by AIOU, MUET and UETP
Source: PETS – Budget proposal 2015-16
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Final Report
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3.8.
Faculty Student Ratio
Faculty to student ratio in the sample universities also showed varied results. Universities which were relatively newly established had lower student teacher ratio as compared to
those which are in sector for decades. Similarly HEIs with limited geographical coverage due to its location, such as HU, KIU and SBK; were also having lower faculty to student
ratio as compared to the HEIs located in geographically more accessible areas, particularly urban centers of the provinces/regions.
Table 17: Faculty to Student Ratio FY 2014 – 15
Names
DUHSK
HU
ICUP
IIUI
IUB
KIU
MUST
SBK
PU
UAF
UOK
UOS
Arts / Humanities /
Social Sciences
1:27
1:17
1:38
1:33
1:26
1:13
1:8
1:35
1:26
1:55
1:46
Business /
Management Sciences
1:26
1:83
1:57
1:17
1:32
1:15
1:72
1:89
1:169
1:63
Sciences (Basic and Natural I.T)
/ Agriculture
1:31
1:15
1:74
1:35
1:20
1:20
1:12
1:30
1:36
1:35
1:46
Engineering
1:22
1:25
1:26
1:19
1:22
1:19
1:36
1:12
Medical / Veterinary
Sciences
1:8
1:19
1:18
1:24
1:18
Computer Science
1:14
-
*Information not provided by AIOU, MUET and UETP
Source: PETS – Budget proposal 2015-16
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Final Report
Public Expenditure Tracking Survey (PETS)
Section 2. Findings
This section specifically highlights the main findings of the report. It contains two chapters. First chapter relates to the
findings of operational activities within the HEIs which are associated with PFM that includes budgeting, accounting
and reporting, auditing and monitoring. While in second chapter of this section, key findings relating to institutional
capacity; specifically in the functional areas of PFM; are highlighted.
Chapter 4
Chapter 5
Information, Reporting and Monitoring Mechanism
Institutional Capacity
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Final Report
Public Expenditure Tracking Survey (PETS)
Chapter 4. Information, Reporting and
Monitoring Mechanism
4.1.
MIS
MIS capabilities are generally lacking in HEIs. Finance department the most critical user in context of public financial
management, facing the difficulty in recording the large number of transactions executed daily. All universities which we
assessed show same issue as they are not using any software for record keeping. If any university is using any software it is
not integrated with any other section. For example in some cases universities admission process is using software’s for
receiving admission forms but admission fee payment or further integration with other departments is not integrated or
even software does not support further integration. Where available these accounting software are a prototype version of
some of the off the shelf packages available and also not integrated with HR Module and Campus Management solutions.
Table 18: MIS of sample HEIs
Universities
AIOU
Software Used
DUHSK
ICUP
IIUI
IUB
Yes
No
Tailor made software exist
Tailor made software for receipts
and payments exist; however that
software was not integrated with
CMS
No
Not operational at the time of our
review
however
was
in
implementation stages during the
survey
No
Tailor made software exist
No
No
No
No
Separate receipt and payments tailor
made software exist however those
software was not integrated at the
time of our review.
KIU
MUET
MUST
PU
SBK
UAF
UETP
UOK
UOS
No
Campus Management Solution
No
No
No
No
Yes
No
No
No
No
No
No
No
No
No
*Information not provided by HU
Source: PETS
Level of Threat
Low
Medium
High
It is observed that different functional departments of HEIs are not integrated and are solely working in their own capacity.
When the departments are not linked together through well integrated MIS, information sharing would become a more time
consuming process and would not reflect a complete picture.
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Final Report
Public Expenditure Tracking Survey (PETS)
4.2.
Budgeting
Role of Governing Bodies in Budget Preparation
It was revealed during the survey that in practice, budget estimates are submitted to HEC by HEIs without prior review of
any governing body within the HEI. Following the receipt of Budget Call Circular (BCC), office of the treasure in HEIs
prepares the budget proposal for next financial year and the same is submitted to HEC without approval of the same by
either Syndicate or Finance and Planning Committee of the HEI. This exercise raises the question over the ownership of
such an important document by a competent forum within the HEI since budgeting of upcoming year is linked to the future
plans of the institution.
Non Integration of Budgets with Business Plans/MTBF
Various HEIs have initiated making their business plans, which was also required in MTDF-HE II, and some of them have
successfully submitted their plans to HEC as well. However, it was observed that the budgeting exercise at HEIs was carried
without any integration of business plans of the universities. Furthermore, it was observed in the survey that people involved
in budget preparation at the HEIs have very little or no knowledge about the MTBF. This disconnect, regarding the MTBF,
between policy makers at the GoP level and implementers at HEIs possess a serious threat for achieving the objectives of
MTDF.
Funding of HEIs
Government funds are provided by the MoF to the HEIs through HEC according to the approved Budget. Budget is
provided on an incremental basis i.e. an increase at a certain percentage is allowed over the outgoing year, which is sometimes
not even sufficient to cope with the inflation. Incremental budgeting formulas, valid for other Government Departments,
may not be able to meet the requirements of the Education sector particularly the higher education, which is essentially a
dynamic activity in a developing country like Pakistan.
At HEC’s end, the funding formula is quite comprehensive and takes into account various parameters. At the first stage it
is supposed to allocate 70% to Universities and degree awarding Institutions and 10% each to Centre of
Excellences/Chairs/Others; Promotion of Research Activities by HEC; and HEC- University Programmes. 70% is further
distributed as Base Grant-65%, need grant 20% and performance grant 15%.
Base grant: is distributed on the basis of well-defined parameters, giving weightage according to levels, discipline and
enrollment.
Need Grant: It has four factors. One is income disparity compensation, with a weightage of 3% out of a total of 20% for
the overall category. Income disparity compensation is for need based scholarships.
Performance Grant: HEC has devised six parameters for the allocation of grant based on performance. The existing
parameters are just qualitative; performance based on them is difficult to be objectively assessed. For example mere existence
of PhD faculty qualifies a HEI for 8% weightage. No further details with regard to any ratios (no of PhDs as against overall
strength of faculty or number of students) have been prescribed. The same could be said about other parameters.
Quantitative criterion may be prescribed for performance measurement.
One interesting thing is that the paper delineating the funding formula requires HEIs to prepare IAS (International
Accounting Standards) compliant financial statements. This is a tall order and is not required either. IASs now IFRSs
(International Financial Reporting standards) are not applicable for public sector organizations which are not business
enterprises.
4.3.
Accounting and Reporting
Key functions that were reviewed for HEI’s capability and adequacy in accounting and financial management system
included accounting & financial reporting system.
Receipt and Expenditure Statement
The table below shows that most of the universities are not preparing Receipt and Expenditure Statement, they only prepare
Utilization report which is audited by AGP
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Final Report
Public Expenditure Tracking Survey (PETS)
Table 19: Financial Reporting in HEIs
Universities
Is it Audited
AIOU
Preparing
Receipt Is it Audited by Utilization
and
Expenditure Commercial Auditor? Reports Prepared
Statement
No
No
Yes
DUHSK
Yes
Yes
Yes
HU
No only Utilization
Report Prepared
No only Utilization
Report Prepared
No
No only Utilization
Report Prepared
Yes
Yes
No
Yes
By
AGP/DG
Sindh
By AGP
No
Yes
By AGP
Yes
No
Yes
Yes
By AGP
By AGP
Yes
Yes
Yes
Yes
Yes
Yes
No
No only Utilization
Report Prepared
No
No
Yes
No
No
No
Yes
Yes
Yes
Yes
Yes
By AGP
By
AGP/DG
Sindh
By AGP
By AGP
By AGP
By AGP
By AGP
No
Yes
No only Utilization No
Report Prepared
Yes
ICUP
IIUI
IUB
KIU
MUET
MUST
PU
SBK
UAF
UETP
UOK
UOS
By AGP
By
AGP/DG
Sindh
By AGP
Source: PETS
Compliance with New Accounting Model
HEIs prepare and present its statement of receipts and expenditures on cash basis of accounting which is more
comprehensive basis of accounting than generally accepted accounting principles, as compliance of International Financial
Reporting Standards (IFRSs) is not mandatory. However the Strategic Vision for Higher Education in MTDF II translates
adoption of modern reporting techniques as well as computerized financial management systems by the HEIs.
It was observed that implementation of standard accounting system based on NAM has not been carried out in the HEIs.
Most of the universities are still following single entry book keeping model of accounting where as MTDF II emphasizes
on preparation of NAM compliant financial statements.
Reporting Cut-off Period
It was observed that Cut-off period is not followed strictly to record, document the occurrence of all transactions by HEIs.
Preparing monthly as well as quarterly accounts to ensure timely, accurate, relevant and reliable financial reports is not in
practice in most of the cases. This contributes directly to difference in reported figure as per utilization reports submitted
to HEC and books of accounts of the HEIs.
Accounting Software
Majority of the universities are not using any software for record keeping. Instances where a university is using any software
in one area (department), it is not integrated with any other department of university.
4.4.
Utilization Reports and Variance Analysis
Utilization reports are sent quarterly and annually by HEIs to HEC. These reports are the only documents showing
utilization of budgeted fund of the HEIs. Differences are observed between the utilization reports that were collected from
HEIs and HEC of similar period which challenges the accuracy of both and makes it difficult to assess the performance of
relevant areas and to prepare correct budget estimates for the coming period.
In continuation to the above, variance analysis of budget and actual expenses does not exists in majority of the universities.
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Final Report
Public Expenditure Tracking Survey (PETS)
It is observed that activities are not performed in line with approved budget parameters and budget remain
unspent/overspent against line items at the end of the year, channelizing resources at the discretion of HEIs management
as there is no mechanism for variance analysis/re-appropriation of approved budgets.
4.5.
External Audit
MTDF II emphasizes on Institutionalize process for conducting substantive annual audit, through private, independent
auditors, of all entities funded by the HEC. However, in practice No external auditor is appointed by HEIs to review the
accounts in order to ensure compliance with best accounting practices that helps in not only better presentation of
accounting record but also in greater accountability of public money and intended reliance by stakeholders due to
effectiveness of reporting.
4.6.
HEC Supervision
MTDF II states that HEC will, in its drive to achieve excellence, continue to ensure value for public money by seeking to
make the best use of available resources and securing accountability while recognizing institutional autonomy. However it
is observed that the utilization reports submitted to HEC on quarterly as well as monthly basis are not scrutinized
thoroughly. This deficiency on part of HEC can be attributed to shortage of monitoring staff in the Budget section of HEC.
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32
Final Report
Public Expenditure Tracking Survey (PETS)
Chapter 5. Institutional Capacity
5.1.
Governance
Governance is the system of rules, practices and processes by which an organization is directed and controlled (Corporate
Governance, 2015). Although universities are different from other community organizations in many ways, their need for
direction and monitoring makes them no different from organizations in either the corporate or public sector. They are
obligated to satisfy the wider community by ensuring that they are operating appropriately and effectively. It has been noted
that the university is no longer a quiet place to teach and do scholarly work at a measured pace and contemplate the universe
as in centuries past. It is a big, complex, demanding, competitive business consequently it is imperative for universities to
continue to focus on their governance arrangements to ensure their viability in the future (James Hutton, 2010).
While assessing the Governance Structure of HEIs we came across systematic issues which need to be addressed to form
robust Governing mechanism that is effective as well efficient in performing their duties.
Gap Analysis
(i)
Strengthening Governance Framework: None of the sample universities of PETS are currently preparing
Business Plans, or if preparing they are not using it. (Business plan was not made available by any of the universities
during the survey). A well-defined business plan will communicate the vision of the university to its stakeholders
and can be an effective tool to ensure efficiency in overall operations of the institute. It should contain the strategy
for growth, risk analysis and prospects for sustainability. Moreover such document shall serve as the controlling
tool for those charged with the governance of the HEIs in the form of quantitative targets and milestones
set/approved by the board to be achieved by each of the key functional unit of HEIs. Budgeting that is a key to
control and success of any institution does not get approved by the Board currently, and is only presented to the
board when it gets allocated from the HEC for endorsement purposes. This is contrary to the role assigned to the
supreme authority of the HEIs as the authority needs to be appraised of the budgeting process and their approval
shall be sought to this key document.
(ii)
Frequency of Board Meetings: Governing bodies meetings are not held frequently to effectively oversight the
affairs of the HEI. As shown in below-mentioned graphs meetings of BOT/Senate on few instances were not held
at all (DUHSK and ICUP) or not held at required frequency per statute. Lesser meetings may result in poor
governance, delays in decision making and actions that require urgent actions. It potentially affects other submanagement committees’ action as if no effective control of governing bodies exists, it may impair the effectiveness
and efficiency of sub-management committees.
Figure 12: Frequency of Meetings of BOT/Senate for the period FY 2013-2014
2.5
Frequency of meetings (BOT/Senate)
2
1.5
1
0.5
0
DUHSK ICUP
IIUI
IUB
MUET MUST
Actual
SBK
KIU
KU
UAF
UET
UoP
UoS
Required
*Information not provided by AIOU and HU
Source: PETS
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Final Report
Public Expenditure Tracking Survey (PETS)
Figure 13: Frequency of Meeting of BOG/Syndicate for the period FY 2013-2014.
10
Frequency of meetings (BOG/Syndicate)
5
0
DUHSK ICUP
IIUI
IUB
MUET MUST SBK
KIU
Required
Actual
KU
UAF
UET
UoP
UoS
*Information not provided by AIOU and HU
Source: PETS
(iii)
Composition of Governing Board: It was observed during the survey that governing committee’s composition is
not as per the Charter of University. Incomplete composition of governing bodies may not represent all the
stakeholders’ representations in governing matters of HEIs as per the university act.
Below table depicts the required and actual number of member’s composition for key governing bodies of HEIs:
Table 20 : Composition of member of Governing Bodies for the period FY 2013-2014
Number of Members of key Committees
Universities
BOT/ Senate
BOG/Syndicate
Academic Council
Finance and Planning C
Required
Actual no. Required no. Actual no. Required no. Actual no.
Required no.
Act
no.
AIOU
18
18
N/A
N/A
58
57
9
DUHSK
ICUP
IIU
IUB
KIU
MUET
MUST
PU
SBK
UAF
UETP
UOS
UOK
89
30
45
63
13
100
16
52
18
58
30
N/P
180
89
30
45
51
12
85
17
N/P
18
47
25
N/P
179
23
24
13
14
10
15
10
17
8
19
20
17
20
23
24
13
10
10
11
8
N/P
8
17
20
17
20
62
13
62
13
43
18
43
18
15
30
17
11
N/A
17
16
44
131
16
44
131
8
10
22
7
9
6
9
10
7
N/A
6
N/P
10
8
7
Source: PETS
Level of Threat
Low
Medium
High
*Information not provided by HU
5.2.
Internal Audit
Identification and quantification of risk is the prime focus of Internal Audit department and the controls are built within
the environment to mitigate such risks It was observed in the survey that sample HEIs either does not have a separate
Internal Audit department or in the process of establishing this department, although in many cases the act of the universities
provides for the same.
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34
Final Report
Public Expenditure Tracking Survey (PETS)
Table 21: Internal Audit in HEIs
Names of
universities
AIOU
DUHSK
HU
ICUP
IIUI
IUB
KIU
MUET
MUST
PU
SBK
UAF
UETP
UOK
UOS
Source: PETS
Statute Requirement for
Internal Audit
Department
No
No
No
YES
YES
No
No
No
No
YES
YES
No
YES
No
No
Existence of
Independent Pre audit
AGP
Reporting
representative
Yes
No
Yes
Yes
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Post
audit
Risk base
Auditing
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Risk management policies and risk profiling
There is no risk management policy developed by the HEIs which provides the procedures for the identification of risks
regarding various functions of the entity. Risk profiling is only being carried out in an in-formal manner. Internal audit does
not follow any prescribed or formal planning schedule to carry out their duties.
In absence of a risk management policy, there is no clear guideline for identifying and managing risk. It is possible to skip
risky areas that need special attention.
Reporting Hierarchy
It has been observed that the internal audit department, where it exists in an alternate form; is directly reportable to the
Director General/Director Finance/Vice Chancellor instead of directly reporting to the Chairman /BOG or its appointed
committee as per requirements of both statute and best practices.
To perform its role efficiently, internal auditor department requires organizational independence from management, to
enable unrestricted evaluation of management activities and personnel. As the internal audit department is also responsible
for the evaluation of the finance function, its evaluation may be affected if it is reporting to the same.
Internal Audit does not carry out post Audit
Internal Audit department only carries out pre-audit, there is no procedures in place to carry out post Audit. As per statute
in case of IIU and MUST; and also as part of best practices an annual audit is to be carried out in addition to Pre-audit
activity by the internal audit department.
Current operations of pre-audit only check transactions and their accuracy, there is no activity carried out by internal audit
to check the accounts and physical verification of assets. There is no formal mechanism to report annual internal audit
findings, which impair the effectiveness of internal audit function. This also raises concerns for evaluation of performance
of internal audit department.
5.3.
HR Capacity
All HEIs HRM is governed by standard government rules, there is no tailored made HRM manual in any of the HEIs. We
have assessed HR and have made observations which are discussed below:
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Final Report
Public Expenditure Tracking Survey (PETS)
Vacant Position
It was observed that in case of KU, SBK Women University, IUB, IIUI and UET Peshawar, 63%, 56%, 47%, 41% and 34% of the positions were vacant against sanctioned positions
respectively. This shows that the sanctioned positions in budget estimates are not planed properly.
Table 22: Percentage of Vacant Positions in HEIs 2013-14
Dow
General
Administration
Common Services
Examinations
Branch
University
Teaching – Faculty
Library
University
Managed Schools
HU
IIUI
IUB
IUP
KIU
39%
23%
24%
23%
31%
14%
NP
NP
47%
MUET
MUST
SBK
UAF
UET P
UoK
27%
21%
14%
12%
9%
20%
56%
15%
34%
63%
27%
21%
14%
12%
9%
UoP
UoS
NP
NP
UoK
No.
329
512
NP
841
23%
31330
3%
UoS
No.
285
275
256
816
33%
17543
5%
23%
NP
31%
44%
23%
43%
23%
NP
*Information not provided by AIOU
Source: PETS
Qualification of Faculty
Qualification of Faculty members of HEIs are as follows:
Table 23: Faculty of HEIs 2013-14
Direct Faculty Staff Qualification
PhD
M.PHIL/MS
MA/M.SC
Sub-total of above
Percentage to total strength
Total Students
Percentage to Number of Students
*Information not provided by AIOU
Dow
No.
360
228
NP
588
23%
4892
12%
HU
No.
NP
NP
NP
NP
NP
11080
NP
IIUI
No.
277
382
NP
659
21%
13219
5%
IUB
No.
179
331
NP
510
19%
15618
3%
IUP
No.
351
324
NP
675
23%
4903
14%
KIU
No.
52
189
NP
241
35%
2278
11%
MUET
No.
107
NP
146
253
18%
NP
NP
MUST
No.
132
183
NP
315
43%
4550
7%
PU
No.
490
748
NP
1238
17%
20482
6%
SBK
No.
1
18
17
36
10%
2883
1%
UAF
No.
393
49
160
602
22%
13472
4%
UETP
No.
132
183
NP
315
43%
NP
NP
Source: PETS
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Final Report
Public Expenditure Tracking Survey (PETS)
Job Description and Training Plan
In Majority of HEIs, the major issue was that there were no job descriptions prepared for all employees.
Further it was noted that most HEIs do not prepare the Annual documented training plan for Human
Resources. Needs of the University in term of Expansion are not analyzed and gaps are not identified. HEIs
currently give the training to the staff as and when required only if funds are available.
Teaching staff recruitment & remuneration
Two pay scales i.e. Basic Pay Scale (BPS) and Tenure Track System (TTS) have been implemented. BPS
employees’ compensation package comprises basic salary, conveyance allowance, medical allowance and
other allowances according to the designation. Employees with exceptional performance are paid annual
honorarium. TTS pay scale is only available for Professors, Associate Professors and Assistant Professors
and the initial pay of a faculty member appointed to a post is determined as a sum of the salary + up to a
maximum of 4 advance increments. During the PETS exercise, it was observed that all the sample HEIs
have adopted TTS. (Detail Procedure for teaching staff recruitment under BPS and TTS is annexed)
5.4.
Procurement
Most of the HEIs have setup a separate procurement department; however no dedicated procurement
specialist was available who is actually involved in the procurement transactions and all the procurement
transactions were being done under the guidance of treasurer which portrays lack of segregation of duties.
It was also observed that there is neither a policy nor they have implemented any practice of constituting a
procurement complaint redressal system/committee which can handle the complaints received by the
prospective vendors/bidders.
During our review it was also observed that procurement activities are being carried out by different
departments; however there is no practice to prepare a consolidated annual procurement plan (except for
the budget allocations for the procurements in the respective year). Hence, there are no documented details
(such as timelines, procurement method, relevant department name etc.) related to procurement
transactions. Also, contract roster was not prepared by the organization.
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Final Report
Public Expenditure Tracking Survey (PETS)
Table 24: System Observations of Procurement in HEIs 2013-14
System Observations
Existence/Updation
(in
light of PPRA rules) of
comprehensive
procurement policies &
procedures
Consolidated
annual
procurement plan
Contract Roster
Procurement
Complaint
Redressal System
Dedicated
Procurement
Specialist/Staff
Conflict
of
interest
situation/
Lack
of
segregation of duties
Contract administration
Source: PETS
DUHSK
No
No
No
NO
No
Yes
No
No
No
No
No
No
No
NO
No
No
No
No
No
No
No
No
NO
No
No
No
No
No
No
No
NO
No
Yes
No
No
No
Yes
No
Yes
No
Yes
Yes
No
Yes
No
No
No
No
No
Yes
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HU
ICUP
IIUI
IUB
KIU
MUE
T
AIOU
MUST
PU
SBK
UAF
UETP
UOK
UOS
No
Yes
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
No
No
Yes
No
No
No
Yes
Yes
No
Yes
No
No
Yes
No
No
Yes
No
Yes
Yes
NO
Yes
Yes
No
Yes
Yes
No
Yes
No
No
Yes
Yes
No
Yes
No
No
38
Final Report
Public Expenditure Tracking Survey (PETS)
Section 3. Conclusion &
Recommendation
This section is divided into four chapters. The first chapter emphasizes recommendations related to the financial and
institutional reforms of Higher Education Institutions in Pakistan. These recommendations are formulated to deal with
the financial efficiency and PFM concerns discovered as direct outcome of this PETS exercise bifurcated on respects
to be implemented at HEIs and HEC level.
The second chapter highlights the use and importance of Balanced Scorecard in HEIs. Third and fourth chapter of this
section provides recommendations for the development of concrete and integrated MIS and Governance Models for
HEIs respectively. These recommendations (last three chapters of this section) are based on the outcome of PETS and
suggest way forward for the HEIs to be implemented prospectively.
Chapter 6: Recommendations in the light of PETS
Chapter 7: Balance Scorecard
Chapter 8: Steps for development of MIS Model
Chapter 9: Governance Model
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39
Final Report
Public Expenditure Tracking Survey (PETS)
Chapter 6. Recommendations in the light
of PETS
HEIs Centered
Budgeting
 Since MTBF is an approach to budgeting that integrates policy-making, planning and budgeting within a mediumterm framework and as per MTDF-HE, HEC also requires preparation of three-year expenditure estimates within
the ceilings provided by the MoF; it is essential for the HEIs to align their budget estimates with IBC already issued
by MoF.
 Finance and Planning Committees of the HEIs should play their role in avoiding the on-going practice of making
incremental budgets. Instances of budgetary slack should be curtailed and the whole budget making exercise should
be focused on giving rational estimates.
 Representation of the Federal MoF and all concerned stakeholders should be ensured while the discussion of the
final budget for the universities at HEIs.
 Governing bodies, particularly Syndicate and Finance and Planning Committees should ensure the practice of
conducting variance analysis of budgeted and actual spending of the HEIs at least at the end of a financial year to
establish better controls on the budget making process.
 Presentation to and approval by the Supreme authority of the HEI shall be ensured by submitting budget to the
board before the submission to the HEC for approval.
Accounting and Reporting
 A comprehensive plan for adoption of NAM should be drawn by the HEIs.
 30th June should be considered the cutoff date for preparation of financial statement. Proper cutoff date should be
determined to easily keep track of relevant period expenditures and ensure compatibility among various financial
reports.
 HEIs needs to implement automated program to record income and expenses as currently finance departments in
HEIs are performing all of operational activities manually. The reporting format required by HEC for the quarterly
submission of expenses against approved budget is quite complicated; the use of accounting software will help the
finance staff in timely and accurate preparation of utilization report and maintaining records accordingly.
 Preparation of financial statements by Professional Accountants (considering system/capacity constraint of HEIs)
will result in presenting the accounts in a more professional way and more reliance on the same can be made as this
practice reduces the possibility of a material misrepresentation of financial information by the university.
 External audit of the universities shall be carried by Professional Accountants which will help to identify material
weakness in internal controls. Financial statements that have been audited and verified by an external auditor are
considered more reliable as external auditor works with the single-minded purpose of improving the accounts
Spending Pattern
 Attention needs to be diverted to the non- establishment charges like research to facilitate the students to achieve
better quality education. Output of HEIs should be measured against the nature and number of researches carried
out by them.
Governance
 HEIs should initiate the process of developing their business plans in order to keep abreast with international best
practices as followed by other universities worldwide. Such a plan should be aligned with the overall objectives of
their institution. Such a document shall also help universities to implement and monitor its performance on
Balanced Scorecard model; moreover approval of budgets from governing bodies shall also be ensured.
 HEIs should ensure compliance to the schedule of meetings of various authorities/committees as required by their
respective university act.
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40
Final Report
Public Expenditure Tracking Survey (PETS)

HEIs should fill all the vacancies in the Governing bodies to ensure compliance with their respective university
acts.
Human Resource
 HEIs should rationalize their human resource requirements and abolish unnecessary posts in their budgets
 Development of JDs for each post in HEIs should be initiated.
 Segregation of duties must exist for critical areas like authorization, pre-audit and authorized signatories. One person
should not be assigned multiple responsibilities, as it shows lack of control over transparent execution of the
transaction.
 It is recommended that there should be proper succession plans for human resource of the organization Future
expansion and current operations needs should be analyzed/ updated regularly; gaps should be identified; human
resource strategies should be developed, along with the plans to mitigate those gaps, so that any shortcoming of the
employee and development needs are identified at that time. In addition to that training plan should be developed
which should identify the timing of the training and should be broken up in monthly components.
 It is recommended that HR should form a recruitment and payment policy for the induction and payment of salaries
to visiting faculty staff members. HR should be involved in the recruitment of visiting staff and all staff members.
HR should maintain a record of visiting staff members.
Procurement
 Procurement Plan is mandatory. The afore-mentioned needs to be updated, revised to incorporate changes in (i)
items, (ii) quantity and (iii) procurement time line. In the event where delay/deviation from the timelines is within
a period of 6 months, it is acceptable; delay of more than 6 months warrants change and the approval of revised
plan. While making such projections, vigilance and professional competence of staff with better understanding of
the operations play a vital role.
 In accordance with international best practices, entity should prepare and continuously update contract roster to
record every procurement action being undertaken by the entity while entering details from the purchase order for
the completion of every single procurement action by giving actual particulars of the case and actual dates when
transacted.
 Separate department should be set up and dedicated resources should be deployed to manage this function at HEIs
where no separate Procurement Department exists.
Internal Audit
 There should be an internal audit department which should report directly to the Senate/BOT i.e. supreme
governing body of the HEI in order to ensure its independence.
 Clearly defined risk assessment procedures can help in the functioning of the department by highlighting the areas
of concern and areas requiring more attention. Risk profiling exercise should be undertaken in the formalized
manner by documenting high risk areas and regular updating in light of changing conditions.
 Post audit may be carried out to verify the effectiveness of activities and their accuracy e.g. Internal Audit shall
annually carry out an internal audit and check all the accounts and physical verification of assets, stores and
properties of the university and prepare a report for the review by the president. Formal reports should be prepared
with proper documentation of all internal audit observation, issues resolved or any pending issues.
HEC Centered
Budgeting
 Training should be provided by the HEC to the staff involved in budget making and execution of the same at the
HEIs level in order to ensure better utilization of public funds.
 HEC as well as the Universities should have budget monitoring cell in place to ensure regular budget monitoring.
Budget monitoring reports should be submitted to higher management on a regular basis to ensure compliance of
budget.
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41
Final Report
Public Expenditure Tracking Survey (PETS)
HEIs Funding
 To accomplish increased enrolment, improved quality of education through hiring of faculty with better
qualifications, upgraded/modern library, adequate laboratory and research facilities; funding has to be based on a
more rational criterion like per unit costs and activity based grants reflecting needs of HEIS rather than just inflation
indexed.
 Weightage for need grant may be increased so as to facilitate deserving students of lesser income groups particularly
in the remote areas. Its actual utilization may also be closely watched. Another factor is regional/location
backwardness, with a total weightage of 5%. Coefficients of locality/ remoteness have been subdivided on four
categories. Some adjustments are required here also. For example cities like Multan, Gujrat and Sargodha which are
now well developed could be shifted from category X to category W meaning thereby that these cities assigned an
coefficient of 1 may have zero coefficient. Similarly cities like Mardan and Bahawalpur could be shifted from Y to
X. Meaning a coefficient of 1 instead of 1.5.
 Performance Grant: One parameter hereunder is compliance with the Commission’s policies. Instead this being
one of the parameters determining performance grants, it should be a condition precedent for any funding by the
HEC. Whereas weightage allowed to evaluations by the professional bodies at national/ international level could
be increased. If compliance with commission’s policies is eliminated then weightage allowed to evaluations by the
professional bodies can be increased from 1% to 2%.
Human Resource
 Establishment of Centralized pay regulatory system at the HEC to ensure the following:
- Centralized Pay & Service commission should be set up at the HEC level with overarching mandate to
recommend and monitor a uniform pay and allowances and service structure for each of the HEIs.
- Restructuring of payroll and rationalization of Payroll numbers to abolish vacant posts in HEIs, thereby slashing
budgetary slack that is reapportioned towards other heads after being approved.
- Centralized record keeping of visiting faculty HR Department.
- Creation of Pension Funds
- Actuarial valuation of employee pension liability as part of separate Technical Assistance (TA) from MTDF
HE3.
- Payment of retirement benefits to flow out of fund created for such purposes and restriction on such payments
from recurring expenditure.
Monitoring by the HEC
 HEC should play an effective role in monitoring the financial activities of the HEIs. Finance and Budget Division
in the HEC should be vigilant, well trained and appropriately staffed to monitor budgeting and utilization of
recurring grant to the HEIs. Monitoring and Evaluation Mechanism should be developed and implemented in this
regard.
Funding Formula
 It is suggested that a committee of experts may be constituted with the mandate to evolve a comprehensive set of
performance indicators relating to Academic excellence. Such a committee may do its job in consultation with
various HEIs and experts.—nevertheless some broad performance indicators in this area could be continued to
improve the design and delivery of program of studies.
 Evolving performance indictors was not exactly within the mandate or competency of this study, as it requires
comprehensive input from education experts. However, a set of performance indicators could be evolved based on
various findings and recommendations about the overall financial management and governance contained in other
parts of the report like effective utilization of resource vis-à-vis cost per unit of output (a graduate qualifying in
various disciplines and at different levels).
 HEC has a comprehensive formula for the ranking of HEIs. This formula can also provide a useful basis for
evolving performance indicators for the purpose of more rational allocation of funds.
 Revision of formula towards increased weightage for performance Related Component of HEIs may also be
considered by the committee of experts to be constituted as recommended above.
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42
Final Report
Public Expenditure Tracking Survey (PETS)
Chapter 7. Balanced Scorecard
The use of the word ‘Balanced’ reflects the roots of the Balanced Scorecard in concerns that organizations were giving
too much emphasis to short term financial and budgetary issues. Many business leaders, academics and consultants
recognized that a short term financial or budgetary focus could lead to other important, but perhaps longer term issues,
such as customer development, changing markets, standards of service and organizational learning, being given
insufficient attention or possibly neglected altogether. In response to those concerns, Kaplan and Norton (1991)
formulated an organization model comprising of four quadrants to represent and focus attention on what they saw as
the key components, timescales and perspectives of an organization’s strategy. (A practitioners guide to the balanced
scorecard, 2005)
The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect
data and analyze it relative to each of these perspectives (About the Balance Scorecard). The public universities need
organizational performance measurement systems that are tailored to and match their specific goals and characteristics.
The proposed approach is a step towards introducing such systems. The main advantage of the proposed BSC model
can be summed up as follows:
Position in international rankings – A well designed and updated BSC model enables to understand the reasons of
a specific positioning and improve the quality performance;
The system can be adjusted to the changes in environment – BSC measures should be verified periodically and
checked if the current set of indicators is still relevant to monitor the organizational performance;
Measurement of intangible assets – in the academic field, this area can be critical.
Since the balanced scorecard was popularized in the early 1990s, a large number of alternatives to the original 'four box'
balanced scorecard promoted by Kaplan and Norton in their various articles and books have emerged. Most have very
limited application, and are typically proposed either by academics as vehicles for promoting other agendas (Brignal).
7.1.
I.
II.
III.
The Four Quadrants
The Learning & Growth Perspective: This perspective includes employee training and organization cultural
attitudes related to both individual and corporate self-improvement. In the current climate of rapid technological
change, it is becoming necessary for knowledge workers to be in a continuous learning mode with identified
goals for faculty development, use of technology, innovative processes (assessments) and adequacy of facilities
(Learning and Growth Perspective, 2015).
The Business Process Perspective: This perspective refers to internal business processes. Metrics based on
this perspective allow the managers to know how well their business is running, and whether its products
(students) and services (Research & Development) conform to customer requirements (the mission) (About the
Balance Scorecard).
The Customer/Stakeholders Perspective: Recent management philosophy has shown an increasing
realization of the importance of customer focus and customer satisfaction in any organization. These are leading
indicators: if customers (employers/students and Faculty) are not satisfied, they will eventually find other sources
that will meet their needs. In terms of goal setting (About the Balance Scorecard).
Table 25: Customer Perspective Balance Scorecard KPIs
Stakeholders
Students
Goals
Measurement through KPIs
Attract-develop-graduate-satisfy
Persistence rate, market share,
high Quality students
department GPA, on campus
recruitment/ linkages to employers,
graduate exit surveys.
Community-Employers, alumni, Establish Linkages with Business Customer Survey ratings, Parents
parents
Community.
Feedback and faculty involvement in
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43
Final Report
Public Expenditure Tracking Survey (PETS)
Faculty
IV.
Faculty satisfaction
community services.
Engagement
in
development
activities, personnel policies, office
space and access to technology
The Financial Perspective: Timely and accurate funding data will always be a priority, and management will
do whatever necessary to provide it. There is perhaps a need to include additional financial-related data such as
risk assessment and cost-benefit data.
Table 26: Financial Perspective of Balance Scorecard
Type
Fund Raising
Goal
Building endowment/fund raising/ annual
giving
Revenue from Increased research grants, Increased state
operations
appropriation, Increased other sources
income
including
(Research/Incubation/Commercialization)
and enhanced teaching productivity.
Financial
Based on sound financial management
management
principles.
Measurement through KPIs
Size/growth of endowment, donor support for
new initiatives, total funds raised
Volume and number of research grants
received, % of funding relative to others in
system, Student/faculty ratio, % of
contribution cost,
Balanced
budgets,
Extend
budget
submissions/approvals, cover all essential
requirements
including
research
and
professional development of faculty, Cost per
student relative to peers and growth in own
sources income.
7.2.
Application of Balanced Scorecard
Using BSC in higher education Public agencies and institutions, such as public universities, are often seen as achieving
inferior performance in comparison to the business sector. According to the New Public Management concept, the
public sector organizations should try to be as efficient and elastic as business firms, Increasing competition, both in
the public and private sectors raises the interest in measuring performance to better allocate resources (Jordan &
Mortensen, 1997; Juhl & Christensen, 2008). Many organizations concentrated their efforts on designing and implementing
adequate organizational performance measurement systems to manage and improve their quality. The efficient
management of public universities also requires the use of various instruments. The BSC can be used as a tool for
coordinating the activities of the academic and non-academic departments of a university and the mechanisms of
budgeting and target agreements (Küper, 2013). The aim of the concept is to overcome the shortcomings of traditional
performance measuring systems, which rely only on financial outcomes. The BSC offers the interesting possibility to
improve the reporting process at the University (Karathanos & Karathanos, 2005; Nayeri, Mashhadi & Mohajeri, 2007;
Papenhausen & Einstein, 2006; Umashankar & Dutta 2007). (Pietrzak,M., Paliszkiewicz,.J, Klepacki,B., 2015)
7.3.
Universities that benefited from BSC Application
In the literature we can find different examples of implementing the BSC model in higher education (Tapions, Dyson, &
Meadows 2005; Papenhausen & Einstein 2006; McDevitt, Giapponi, & Solomon 2008; Asan & Tanyas 2007; Umashankar &
Dutta 2007; Juhl & Christensen 1997). Tapions, Dyson, and Meadows (2005) presented the alignment between an
organizational strategy and performance measurement at Warwick University (UK), where the BSC applies to
Hospitality Services. As Taylor and Baines (2012) notice, the universities in the UK have become increasingly concerned
with the performance management in recent years. Those organizations began to use methods for performance
management development in business and industry. For example, the BSC model is used by top management as a mean
of enhancing their learning on the institution’s strengths and weaknesses. Papenhausen and Einstein (2006) underlined that
successful BSC implementation requires active contributions from everyone in the organization. Papenhausen and Einstein
noted an example from College of Business at the University of Massachusetts – Dartmouth (U.S.A.). Another example
from the U.S.A. was described by McDevitt Giapponi, and Solomon (2008) (University Division, Connecticut). The authors
described the process and benefits of developing a custom BSC to revitalize a faculty strategy. Asan and Tanyas (2007)
connected the BSC and the Hoshin Kanri tool for strategic management to monitor an Engineering Management
Graduate Program. Umashankar and Dutta (2007) discuss in what way the BSC approach may be applied to higher
education in India. Juhl and Christensen (1997) presented the BSC concept to analyze the set of performance measures
proposed by the Ministry of Science to allocate resources among Danish Universities. From the analysis of the papers,
we can find that the BSC is well suited for organizational performance measure in higher education. (Pietrzak,M.,
Paliszkiewicz,.J, Klepacki,B., 2015)).
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44
Final Report
Public Expenditure Tracking Survey (PETS)
7.4.
Application of Balance Scorecard on HEIs
Table 27 : Balance Scorecard applied to HEIs
Balance Score Card
Total Students
Male
Female
Local Students
Foreign Students
No.
of
students
(Financial
Aid/Scholarships)
Foreign Faculty
MOU Signed
with
local/Foreign research
Institutes & Universities
N.P
N.P
N.P
N.P
N.P
N.P
4,892
N.P
N.P
N.P
N.P
N.P
11,080
8,071
3009
N.P
N.P
N.P
13,219
6,825
6,394
11,219
2,000
N.P
15,618
7,202
8,416
15,614
4
1,100
4,903
3,620
1,283
4,868
35
532
2,278
1,298
980
N.P
N.P
342
MUE
T
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
40
60
Nil
Nil
Nil
N.P
Nil
19
Existence
of
Alumni
records and data base.
Existence of Placement
center
and
Student
Counseling Wings?
Percentage of Students
being recruited through
placement
center
of
University
Percentage of Students
receiving first-class honors
Market/Industry Linkages
developed by University?
(if any)
Existence
of
any
mechanism
to
gather
employer feedback.
Existence of Institutional
arrangements
for
apprenticeship in local
industries/corporate sector
No
No
No
Yes
Customer Perspective
No
No
No
No
No
No
No
No
No
NR
NR
NR
NR
NR
NP
NP
NP
70%
No
Yes
No
No
No
No
Percentage of Faculty
holding doctoral degree
or
equivalent/
distinctions.
Staff-student ratio
AIOU
DOW
HU
IIUI
IUB
IUP
KU
MUST
PU
SBK
UET
UOAF
UOK
UOS
4,550
3,201
1,349
N.P
N.P
979
20,482
8,862
11,620
20,351
131
6657
2,883
0
2,883
2,822
61
1326
N.P
N.P
N.P
N.P
N.P
N.P
13,472
8,348
5,124
13,397
75
3001
31,330
15,895
15,435
N.P
N.P
N.P
17,543
9,112
8,431
N.P
N.P
N.P
N.P
N.P
N.P
N.P
8
N.P
Nil
14
N.P
N.P
Nil
163
N.P
N.P
N.P
N.P
No
No
Yes
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
NR
NR
NR
NR
5%
NR
NR
NR
NR
NR
30%
NP
NP
30%
NP
NP
NP
NP
NP
NP
NP
No
Yes
Yes
No
Yes
YES
YES
No
No
No
YES
No
No
No
Yes
No
N/A
No
No
No
No
Yes
No
No
No
No
No
No
Yes
No
N/A
No
No
Yes
No
No
No
No
No
NP
61%
NP
42%
Internal process Perspective
35%
NP
7%
42%
42%
NP
NP
75%
15%
39%
35%
1:15
1:13
1:32
1:32
1:21
NP
NP
1:33
1:23
1:11
1:37
1:22
© 2016 Grant Thornton International Ltd. All rights reserved.
1:39
NP
1:22
45
Final Report
Public Expenditure Tracking Survey (PETS)
Balance Score Card
AIOU
DOW
Total Students
N.P
Male
N.P
Female
N.P
Local Students
N.P
Foreign Students
N.P
No.
of
students
N.P
(Financial
Aid/Scholarships)
Foreign Faculty
N.P
MOU Signed
with
N.P
local/Foreign research
Institutes & Universities
Training
workshops
Yes
offered by HEI for
Continuous professional
development for faculty.
Is
budget
dedicated
HEC
directly for faculty learning
Funding
program.
How often curriculum is
As per
updated and No. of new requiremen
courses offered to include
t
educational, business and
commercial trends for
Program
internationalization
Number
of
Students Only PHD
passing an external quality
students
assurance assessment.
Number of staff-training
provided to faculty in 2014
Percentage of Revenue
earned from Research
activities to total revenue.
Mechanism for rewarding
research team based on
their successful research
publications?
5
HU
4,892
N.P
N.P
N.P
N.P
N.P
11,080
8,071
3009
N.P
N.P
N.P
13,219
6,825
6,394
11,219
2,000
N.P
15,618
7,202
8,416
15,614
4
1,100
4,903
3,620
1,283
4,868
35
532
2,278
1,298
980
N.P
N.P
342
MUE
T
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
40
60
Nil
Nil
Nil
N.P
Nil
19
Yes
Yes
Yes
Yes
Yes
Yes
HEC HEC Funding
Fundin
g
2 to 3 Every 2 years
years
HEC Funding
HEC
Funding
2 to 3 years
As per
requiremen
t
HEC
Funding
As per
requiremen
t
Only PHD
students
Only
PHD
student
s
6
7
IIUI
IUB
Only PHD
students
6
IUP
KU
PU
SBK
UET
UOAF
UOK
UOS
4,550
3,201
1,349
N.P
N.P
979
20,482
8,862
11,620
20,351
131
6657
2,883
0
2,883
2,822
61
1326
N.P
N.P
N.P
N.P
N.P
N.P
13,472
8,348
5,124
13,397
75
3001
31,330
15,895
15,435
N.P
N.P
N.P
17,543
9,112
8,431
N.P
N.P
N.P
N.P
N.P
N.P
N.P
8
N.P
Nil
14
N.P
N.P
Nil
163
N.P
N.P
N.P
N.P
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
HEC
HEC
Fundin Funding
g
2 to 3
2 to 3
years
years
HEC
HEC
Funding Funding
2 to 3
years
HEC
HEC
HEC
Funding Funding Funding
Every 2
As per
years requiremen
t
2 to 3
years
HEC
HEC
Fundin
Funding
g
2 to 3 Every 2
As per
years
years requiremen
t
Learning and growth Perspective
Only PHD Only PHD
Only
Only Only PHD
Only Only PHD
Only
Only
Only Only PHD
students
students
PHD
PHD
students
PHD
students
PHD
PHD
PHD
students
student students
students
students students student
s
s
7
8
10
5
4
12
7
11
9
9
6
N/A
N/A
N/A
No
commercializa
tion
N/A
N/A
N/A
N/A
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
© 2016 Grant Thornton International Ltd. All rights reserved.
MUST
N/A Minimal
income
from
testing
and
research
Yes
Yes
46
N/A Minimal
income
from
testing
and
research
Yes
Yes
N/A
N/A
N/A
Yes
Yes
Yes
Final Report
Public Expenditure Tracking Survey (PETS)
Balance Score Card
AIOU
DOW
HU
IIUI
IUB
IUP
KU
Total Students
Male
Female
Local Students
Foreign Students
No.
of
students
(Financial
Aid/Scholarships)
Foreign Faculty
MOU Signed
with
local/Foreign research
Institutes & Universities
Project based monitoring
plan in accordance with the
grant
objectives
and
variance analysis
N.P
N.P
N.P
N.P
N.P
N.P
4,892
N.P
N.P
N.P
N.P
N.P
11,080
8,071
3009
N.P
N.P
N.P
13,219
6,825
6,394
11,219
2,000
N.P
15,618
7,202
8,416
15,614
4
1,100
4,903
3,620
1,283
4,868
35
532
2,278
1,298
980
N.P
N.P
342
MUE
T
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
N.P
40
60
Nil
Nil
Nil
N.P
Nil
19
No
No
No
Yes
YES
No
Percentage of total salary
expense as per total HEC
grant allocated
Percentage of Federal
Grants to total expenditure
incurred.
Percentage
of
supplementary
grant
/additional grant to Total
grant?
Other sources of revenue
i.e. any investment by HEI
and their percentage to
total revenue?
Percentage of non-salary
expense as per total actual
expense incurred
Percentage
of
establishment expense as
per total Receipt
How much of expenses are
met by tuition fee?
Percentage of operating
expense as per total Receipt
365%
287.50%
143%
90%
94%
9%
12%
47%
70%
7%
N/A
9%
5%
31.84
66%
MUST
PU
SBK
UET
UOAF
UOK
UOS
4,550
3,201
1,349
N.P
N.P
979
20,482
8,862
11,620
20,351
131
6657
2,883
0
2,883
2,822
61
1326
N.P
N.P
N.P
N.P
N.P
N.P
13,472
8,348
5,124
13,397
75
3001
31,330
15,895
15,435
N.P
N.P
N.P
17,543
9,112
8,431
N.P
N.P
N.P
N.P
N.P
N.P
N.P
8
N.P
Nil
14
N.P
N.P
Nil
163
N.P
N.P
N.P
N.P
No
No
No
No
No
No
No
No
No
57%
115%
93%
70.40%
71%
123%
118%
64%
36%
49%
44%
42%
34%
52%
64%
61%
42%
28%
12%
5%
8%
13%
7%
7.5
5.50%
10%
11%
7%
12.38
4%
1%
NIL
4%
NIL
3%
33%
4.6
9%
4%
4%
42%
2.72
6%
64.70%
32%
37%
50%
32%
44%
53%
40%
52.20%
36%
25%
42%
43.5
51%
24%
36%
68%
63%
3%
67%
61%
47%
44%
76
45%
75%
58%
61%
n/a
124%
31.47%
15%
16%
4%
45%
12%
3%
36.8
4.87
4%
26%
11% 11.50%
16%
46%
28.36
32%
37%
35%
18%
47%
24%
9%
42.60%
26%
25%
42% 28.13%
16%
Source: PETS
© 2016 Grant Thornton International Ltd. All rights reserved.
47
Financial Perspective
95% 74.30%
57%
Final Report
Public Expenditure Tracking Survey (PETS)
While the above list out some of the indicative measures (KPI’s and Critical Success Factors) that the Universities need to
collect and report to the top Management to assess their performance, comparative analysis with similar universities and
top scoring Universities might provide a useful tool for assessing HEI performance and align efforts to achieve goal
congruence. Since application of the Balanced Score Card is relatively new area as a performance measure of HEI, adequate
attention and importance needs to be given to this area by the governing bodies of HEIs and HEC making this a mandatory
annual evaluation tool in line with the existing rating mechanism established by HEC.
Recommendations and Way Forward: The subject organizations i.e. HEIs need to gear up their efforts for application
of this tool at their universities with clear definition of overall vision and mission of the HEI, duly supported by
objectives/goals of the four perspectives of Balanced Score Card Model i.e. Financial-Financially strong, Customer
Perspective-Making customers(employers) happy and win-win relationship, Internal Perspective-Operational excellence
and Learning and Growth Perspective- trained motivated workforce and Providing measures/KPIs to achieve clearly
defined targets in each of the four perspectives.
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48
Final Report
Public Expenditure Tracking Survey (PETS)
Chapter 8. Steps for Development of MIS
Model
As per PETS findings various departments at HEIs are working in isolation without a common platform integrating core
operation i.e. Campus Management Solution (CMS) with accounting and reporting function primarily and HR/
Procurement Module secondarily. MIS in HEIs should be integrated capable of generating standardized reporting by HEIs
to HEC, tailored specifically to the HEIs needs, considering the state of affairs as depicted in table 17 chapter 4 above.
Apparently an off the shelf package working in isolation cannot cope with the requirements of effective and timely
reporting.
Steps for Development of MIS
Assessment and planning Phase
 Preparation of long term IT Strategy Plan
 Define Modules/functionalities and Set of Business Applications (Core and Support) to be Implemented.
 Estimate of IT Infrastructure requirement (Network architecture, Data Center, Business continuity, backup and IT
Security) based on selected application as above.
 Deployment Plan including Cost, procurement and installation.
 Hiring and Training Plan
Execution Phase
 Standardization and documentation of IT policies and procedures.
 Procurement of Hardware and Software
 Deployment/enhancement of data center and Campus wide-Network architecture.
 Implementation of new Application Software.
 Integration with Existing Applications (if any)
 Hiring and on the job training of resources.
 Completion/closedown
Post-Implementation Phase
 IT Reviews and Performance Audits
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49
Final Report
Public Expenditure Tracking Survey (PETS)
MIS Model
Following are the modules/applications of the proposed model of MIS at HEIs (Campus ERP, 2015).
-
-
-
-
-
-
-
ADMISSION AND REGISTRATION
The student management system gives the complete solution for the complete admission process. The candidates can
be alerted automatically after they have been shortlisted by this module. The student details e.g. roll nos., ID cards and
access cards are also assigned. The best part about this module is that it makes managing the admission details, personal
details, marks, previous academic records, student interview details and much more. This campus ERP module
automatically shortlists candidates and then automatically sends e-alerts to them.
COLLEGE/TRUST/UNIVERSITY PROFILE
All the information about the educational institutions is kept in this module. It also customizes the calendar of these
institutions, which schedules the events, task and holidays in an efficient manner.
STUDENT MANAGEMENT
The student management software maintains the complete details of the students, including their personal details,
passport, health history, contacts, details about previous college/university etc. It also helps to maintain their
attendance, conduct, details about the counseling sessions.
STAFF/ FACULTY MANAGEMENT
All the information about the staff is stored in this module including their personal details, their qualification and
service history. The leave structure, attendance details and staff discipline are defined by this module. Subjects for a
class that are required to be taught are also defined. The ERP system allows time tables to be created based on different
variables and then these time tables can be sorted accordingly.
TIME TABLE SCHEDULING
It generates timetables based on different constraints which can be sorted accordingly.
ACADEMIC
The campus ERP module is a university management system which provides a central learning plan along with lesson
plans for the entire year. Students can check information related to assignments, notices and events. Courses, subjects
and fee structure for a session can be managed. It also helps in grading the performance of the students depending on
all the activities conducted in the campus.
LECTURE PLAN
The software creates lecture plan for different subjects and updates their status, allowing higher management to have
a check on the status.
NOTES AND ASSIGNMENTS
Notes/ assignments can be uploaded online via this software.
EXAMINATION
The exams reports can be created which allows the faculty to analyze the performance of the students in an efficient
way.
FEE MANAGEMENT
This module also helps to maintain the fees details of the students while providing them with the different payment
options e.g. credit card, check.
LIBRARY MANAGEMENT
The library rules can be maintained through this software. The complete list of books can be stored and viewed. Books
can be issued, reserved and renewed. The fine or loan be period are also maintained.
ACCOUNT MANAGEMENT
The account management module takes care of the needs of the finance department by providing a comprehensive
solution. The information from various sources such financial statements is stored. It also prevents duplications of
billing entries etc.
PAYROLL MANAGEMENT
The payroll function of the software calculates the salary and payment of all the staff. The appropriate receipts can also
be printed.
TRANSPORT MANAGEMENT
The software also helps in managing the transportation function of the institutions. It does so by helping in planning,
procurement, route planning etc. Information related to vehicles such assignment and their maintenance is also
provided easily.
HOSTEL MANAGEMENT
The software keeps the records of students, their meal, lodging and other facilities, provides online status of room
availability and allocations. It gives complete solution to the management of residential facility.
STUDENT LIVE PORTAL
This portal enables to share information among students and teachers. It can be accessed from anywhere.
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50
Final Report
Public Expenditure Tracking Survey (PETS)
-
-
FACULTY LIVE
The Faculty live is a tool which acts as a platform for interaction with staffs, students and parents. Mentors can also
access the details about the students.
ALUMNI LIVE PORTAL
The basic function of the alumni portal is to run email campaigns, social networks, event registration etc. It also helps
to create alumni network.
RECRUITMENT PORTAL (optional)
The recruitment portal helps the students to get employment by providing the potential employers with the huge
database of students. The students are also helped in resume writing and preparation for the interviews.
ACTIVITY TRACKING MANAGEMENT
The Campus ERP module enables to use applications in real-time (caption, description, executable, URL etc.) The all
required statistics can be compiled for different applications, websites and documents. Data can then be filtered out
by different filters.
RESEARCH MODULE
Keeps track of the On-going and completed research projects and progress towards any projects not yet approved and
in the pipeline for evaluation.
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51
Final Report
Public Expenditure Tracking Survey (PETS)
Chapter 9. Governance Model
Governance encompasses the structures, relationships and processes through which, at both, national and institutional
levels, policies for tertiary education are developed, implemented and reviewed. Governance comprises a complex web
including the legislative framework, the characteristics of the institutions and how they relate to the whole system, how
money is allocated to institutions and how they are accountable for the way it is spent, as well as less formal structures and
relationships which steer and influence behavior. (OECD, 2008).
In the Context of PETS Survey that highlights deviations vis-à-vis non adherence to composition of board, lesser
frequency of required board meetings, lack of representation of independent non-executive directors and vacant positions
on the board of directors we suggest the following reforms model while allowing for the following provisions based on the
recent comprehensive review of university governance in Australia, undertaken in New South Wales by the General Purpose
Standing Committee No. 2 and code of corporate governance 2012 in Pakistan.
-
-
Universities should place a greater emphasis on training and development across the sector and particularly of
council members
Universities must have access to high-level financial skills; currently vital because of the financial crisis and volatility
in financial markets
Universities need to tailor their governance arrangements to meet their specific needs, while bearing in mind that
board members must act in accordance with the fundamental principles of good governance, including transparency,
accountability and ethics for which a code of conduct needs to be established, circulated and signed by each
member/employee of HEI.
Cultural issues need more emphasis, as they are just as important for an effective governance system as structural and
procedural ones.
The board of directors is encouraged to have a balance of executive and non-executive board members, including
independent members and those representing institutional/minority interests with the requisite skills, competence,
knowledge and experience so that the board as a group includes core competencies and diversity, including gender,
considered relevant in the context of the company’s operations (James Hutton, 2010).
Listed below are the items relating to the governance arrangements for strengthening exiting governance framework and
empowering those charged with the governance. This is pertinent to note here that following structures are present at HEIs
which only needs to be empowered/restructured to align their efforts with key principles of governance while exercising
necessary controls. This list is not aimed at presenting ideal guidelines but provides the key items and dominant factors.
Governing/Supervisory Board
 Clear responsibilities
- formulating an institutional mission or/and strategic plans and policies
- support the executive in its work  avoid overloading the work of the board
- draw lines between day-to-day management and strategy formulation  uphold its independence
 Committees
- delegate authority to committees
- delegate duties only if there is an advantage
- clearly explain what can be delegated and to whom
 Members
- decide on the number of internal/external stakeholders involved
- establish clear rules for remuneration
- Decide on the role of members: are they stakeholders or representatives of the public?
- Decide on whether specialists (finance, etc.) are needed
- Make sufficient information available to the members and if appropriate use key performance indicators
- Avoid conflicts of interest
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52
Final Report
Public Expenditure Tracking Survey (PETS)




Chair
- define the role clearly
- Any casual vacancy on the board of directors shall be filled up by the members at the earliest but not later than
90 days thereof
Transparency
- decide what should be available to the public
- assure clear internal transparency for sufficient deliberation, trust and support for the institution‘s mission
- standardize available information and improve its readability
Supervision
- risk management system
- sound financial accountability
- self-evaluation
- supervision of the institution
- internal quality assurance system
Minutes of the Meeting of Board shall be kept updated and shall be available to relevant stakeholders on request and
decisions of the board, agenda items and policy directives to be placed on the web-site for HEI for ease of access.
Head of Institution/Vice Chancellor
 a clearly defined role
 clearly defined tasks as head of the institution
 a clear election/selection process of appointment
 accountability to the governing/supervisory board Academic Board
 a clearly defined role
 clear responsibilities
Academic Board
 a clearly defined role
 clear responsibilities Institution
 to ensure deliberation so that all constituencies have been consulted in decision making processes
 to identify actors in university governance and, if necessary, propose policies (e.g. affirmative action)
 to establish grievance and whistle-blowing procedures
 to define values (such as academic freedom and consideration of a code of conduct)
 to determine clear delegation of authority and limits of discretion for positions and their accountability structure
 to promote consistency and transparency in internal actions and decision-making by comprehensive internal policies
and procedures, e.g. committee review, moderation processes for assessment, Quality Control and Enhancement,
research protocols and new avenues of streams of education.
External Stakeholders
 clearly articulated relationships with the community and industry
 Definition and evaluation of policies towards external/institutional stakeholders (e.g. donors, alumni, research partners,
affiliated set-ups and academic partners).
 Representation of institutional stakeholders on operational board.
Empowering Finance and Planning Committee
HEIs shall empower finance and Planning Committee by ensuring representation of non-executive members and at least
one independent member. The chairman of the committee shall preferably be an independent member, who shall not be
the chairman of the board. The board shall satisfy itself (at least one member) that this committee has relevant financial
skills/expertise and experience to decide and recommend actions of financial domain, Internal Controls and risk
assessment.
- review of quarterly, half-yearly and annual financial statements of the HEI, prior to their approval by the Board of
Directors, focusing on:
• Major judgmental areas;
• Significant adjustments resulting from the audit;
• The going concern assumption;
• Any changes in accounting policies and practices; • compliance with applicable Public sector standards (IPSAS);
• Compliance with listing regulations and other statutory and regulatory requirements including HEC;
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53
Final Report
Public Expenditure Tracking Survey (PETS)
-
-
• Significant related party transactions.
review of preliminary announcements of results prior to publication;
recommending appointment of external(commercial) auditors
facilitating the external audit and discussion with external auditors of major observations arising from interim and final
audits and any matter that the auditors may wish to highlight (in the absence of management, where necessary);
review of management letter issued by external auditors and management’s response thereto;
ensuring coordination between the internal and external auditors of the listed company;
review of the scope and extent of internal audit and ensuring that the internal audit function has adequate resources
and is appropriately placed within the HEI;
consideration of major findings of internal investigations of activities characterized by fraud, corruption and abuse of
power and management's response thereto;
ascertaining that the internal control systems including financial and operational controls, accounting systems for timely
and appropriate recording of transactions, receipts and payments, assets and liabilities and the reporting structure are
adequate and effective both for the purposed of reporting to HEC, donors (if any) and meeting accounting and
reporting requirements as per the provisions of NAM and IPSAS;
Instituting special projects, value for money studies or other investigations on any matter specified by the Board, in
consultation with the VC and to consider remittance of any matter to the external auditors/consultants or to any other
external body.
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54
Final Report
Public Expenditure Tracking Survey (PETS)
Bibliography
1. A
practitioners
guide to
the
balanced scorecard. (2005). Retrieved from
CIMA Global:
http://www.cimaglobal.com/Documents/Thought_leadership_docs/tech_resrep_a_practitioners_guide_to_the_
balanced_scorecard_2005.pdf
2. About
the
Balance
Scorecard.
(n.d.).
Retrieved
from
http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard
Balance
Scorecard
Institute:
3. Brignal, S. (n.d.). The UnBalanced Scorecard: a Social and Environmental Critique. International Conference on
Performance Measurement and Management. PMA 2002, World Trade Centre. Boston.
4. Campus ERP. (2015). Retrieved from Online24x7: http://www.online24x7.in/campuserp/
5. Corporate
Governance.
(2015).
Retrieved
http://www.investopedia.com/terms/c/corporategovernance.asp
6. Education
Indicators.
(2015,
November
2).
http://data.worldbank.org/indicator/SE.XPD.TOTL.GB.ZS
Retrieved
from
Investopedia:
from
World
Bank:
7. James Hutton, D. P. (2010). Corporate governance - Good governance in the university context. Retrieved from Minter Ellison:
http://www.minterellison.com/Pub/NL/201003_HEFd/
8. Learning
and
Growth
Perspective.
(2015).
Retrieved
http://balancedscorecard.org/Learning-and-Growth-Perspective
from
Balance
Scorecard
Institute:
9. Michał Pietrzak., J. P. (2015). The application of the balanced scorecard (BSC) in the higher education setting of a
Polish University. Online Journal of Applied Knowledge Management.
10. MTDF.
(n.d.).
Retrieved
from
Higher
Education
Commission:
http://www.hec.gov.pk/InsideHEC/Documents/Higher%20Education%20Five%20year%20Plan.pdf
11. OECD. (2008). Tertiary education for the knowledge society., (p. 68). Paris.
12. (2014). Pakistan 2025. Islamabad: Ministry of Planning, Development & Reform Government of Pakistan.
13. PAKISTAN Country Summary of Higher Education. (n.d.). Retrieved
worldbank.org/EDUCATION/Resources/278200-1121703274255/14392641193249163062/Pakistan_countrySummary.pdf
from
World
Bank:
14. (2012). Regional Integration and Economic Development in South Asia. Stockport, Cheshire: Asian Development Bank and
Edward Elgar.
© 2016 Grant Thornton International Ltd. All rights reserved.
55
Final Report
Public Expenditure Tracking Survey (PETS)
Annexure
1. Comments Received and Responses Provided by the Consultant
Source
Comments
The
World Overall, the report is of a good quality, and shows a good understanding of the TORs
Bank
and of the questions expected to be addressed by the consultant. The data collected
are quite useful, the budgeting mechanisms and the flow of funds are well described,
the analysis well conducted and the recommendations by and large, fully appropriate.
The tone is candid. The report testifies of the professional capacity of the latter. It
is heavily emphasizing the budgeting/accounting/auditing dimensions of the HE
sector, not surprisingly so, given the business/management profile of the
consultant. However, the report would have benefited from more attention to
“academic” aspects.
Examples of areas on which the report could have pushed the analysis in further
details: (a) HEIs’ size – where do the 15 HEIs of the sample stand vis a vis the
average size [10,000 students/ HEI]; (b) rules and practices regarding teaching staff
recruitment & remuneration and enforcing the tenure track system; (c)
existence/organization/performance/cost of internal QA systems; (d) details of the
performance-based module of the allocation formula; (d) unit costs could have been
put in an international comparison perspective.
Observations on some recommendations and more specifically on the “balanced
scorecard”: (a) a few recommendations in table 22 are not based on the
diagnosis/analysis; this is the case of the recommendation to increase student fees
and HEIs own resources –which are already substantial; (b) the “balanced scorecard”
is only one amongst many other types of scorecards, and it may have been fair to
present it as such rather than as the silver bullet coming out of the management
literature; (b) this balanced scorecard misses some important indicators such as (i)
the internationalization of HEIs [number of foreign faculty staff/students; number
© 2016 Grant Thornton International Ltd. All rights reserved.
Remarks
Thank you for acknowledging the work of consultant and encouraging
remarks.
TORs of the assignment predominantly focused on performance
management of the HEIs within PFM elements whilst
academic/operational activities of the HEIs were reviewed summarily.
Observation under this comment addressed in final report under the
following areas:
Point
Reference in Report
(a)
Chapter 1, Sub Section 1.3
(b)
Chapter 5, Sub Section 5.3
(c)
Chapter 3, Sub Section 3.5
(d)
Chapter 4, Sub Section 4.2, Heading
“Funding of HEIs: Performance Grant”
(a) The point of emphasis was to increase sustainable long term sources
of revenue generation from activities like research and commercialization
to support operational activities.
(b) Variants of scorecard model described in the relevant section
(i) and (iii) are incorporated in the report
(ii) Information was not available as no such record is kept at HEIs
56
Final Report
Public Expenditure Tracking Survey (PETS)
Source
Mr.
Sher
Comments
of
partnerships
with
foreign
HEIs],
(ii)
origin
of
students
[gender/location/economic background], (iii) number of scholarships.
It would have helped the reader to keep the universities’ acronyms consistent
throughout the report and to present the universities in the same order in all the
tables.
Ahmad Some parts were not even touched to further improve especially the MIS part.
(Previous Comment: Should be simple and address only financial matters of HEIs.)
Remarks
Addressed in the report
In our opinion MIS is overarching and should cover and link all functions
within an organization. Therefore we have kept the content to maintain
comprehensiveness.
Moreover, three chapters 7, 8 & 9 have been presented after recommendations and Sequence of mentioned chapter has been kept intentionally as all these
conclusion part which should have been given before this part of the report.
chapters broadly form part of Way Forward which follows the
recommendations.
Chapter 7 Balance Scorecard is a totally new performance measure
suggested and required to be implemented as part of good principles of
PFM. Chapter 8 and 9 deals with MIS and Governance component
which in one form or the other are present at HEIs however our
suggested reforms to these existing systems are presented as a way
forward and as a mean to restructure the existing ailing systems.
Mr.
Ejaz The portion of in admissible allowances being paid by various universities has been It has been incorporated in the final report. This is discussed under
Hussain
excluded from the final draft.
Chapter 3 sub-section 3.4 while table is made part of annexure
Mr. Tariq Iqbal In all processes of budget formulation, approval and disbursement the development Added fund flow of development grants in Chapter 2 section 2.2.5.
grants have grossly ignored by the GT and where mentioned it was only a one and
two paragraphs. All these institutes have been developed through development
grants which include award of works, faculty development, and procurements. No
mention of these activities.
GT has mentioned that in Where F&P and Academic councils are not provided in It is mentioned that minimum required number of members for the
charter what mechanism these universities are adopting for approval of budget and respective councils was not provided. Although these councils exits and
programmes and comparison with other sample universities
functional in all sample universities.
Final report has been submitted in April 2016 wherein under the ranking data GT is Table has been revised in light of recent ranking available
quoting QS ranking of 2104 for universities in top 700. Latest QS ranking should be
quoted to make it rational
The source of data where mentioned should be specific. Like instead of given HEC, Addressed in the final report
it must indicate whether GT is referring to some specific Annual reports or report
of a division
GT has not checked the spells correctly as I have noted the spelling of Peshawar as Carried out spell check in the report
Peshar in report.
© 2016 Grant Thornton International Ltd. All rights reserved.
57
Final Report
Public Expenditure Tracking Survey (PETS)
Source
Comments
Remarks
Same text is repeated in report several time like figures and text of Vision 2025 is This has been addressed in final report
mentioned again and again. Repetition, if possible, be avoided.
Recommendations are mostly of generic nature. Can these be made more specific Recommendations are dully supported by the findings where applicable.
by inferring it from data?????
Mr. Munir A.  Report unilaterally excluded / ignored various discussions of Steering
Recommendations of Pay and Allowances commission are given in the
Shaikh
Committee on pay and allowances. This was almost agreed agenda, therefore in final report.
my opinion without incorporating following suggestions report may not be
Report also highlights admissible and inadmissible allowances.
fulfill the purpose
This not part of our current mandate to design a model at optimum level
 GT should design a model at optimum level of the allowances as per
of the allowances as per Government Basic Pay Scales.
Government Basic Pay Scales and identify the entitled and non-entitled types
Rest has been covered in the report
of allowances being drawn in various Universities / HEIs.
We
have already did this. A recommendation in this regard has been
 Report suggest and recommend the standardized Pay Structure Model for
made.
However development of any such design was not part of GT
Public Sector Universities, in accordance with the Government Pay Scales to
mandate.
be controlled by HEC or ministry of education as in practice in various
countries of world.
 There are various shortfalls in Tenure Track System and some universities have This is an administrative issue between HEC and HEIs.
been allowed TTS without total criteria of HEC while others were regretted.
This is very serious issue, it is quite possible that Universities may allow TTS at
their own level due to faculty pressure, this will be total disaster. The GT
should include this matter in the report.
Formatting has been reviewed
 Also the formatting may be reviewed before finalizing
Khawaja Zahid Figure (Table) 6 on page no 18 describe that 80% of the sample universities manage Addressed
Hussain
to get grants more than the budget amount but as per the table it is almost 50%
NAM is not being implemented in all the sample universities
True –Already Mentioned in the report
There is repetition of different components in different chapters creating Components being repeated are separately structured in report first at
complexities
PFM landscaping in chapter 2 and then at the findings in Section 2. At
former level purpose was to introduce the same in context of PFM at
HEIs while at latter level findings relating to these components at the
sample HEIs are discussed.
A draft model of good governance structure for Pakistan public sector universities A complete model in this regard has already been made part of the report
is not addressed in the final consolidated report.
as last chapter of the report.
Methodology part of report not includes the instrument by which the qualitative data This is addressed in first chapter of the report
is collected.
Management Information System (MIS) for Universities is not suggested in the It is referred in Chapter 8
report for better efficiency and accuracy.
© 2016 Grant Thornton International Ltd. All rights reserved.
58
Final Report
Public Expenditure Tracking Survey (PETS)
Source
Comments
The issue of teachers’ distribution, cost efficiency and equity was not explained in
the final report.
References and Annexure (Supporting material) are not given in the report
Tables do not carry the financial year’s indication page 22
Balanced scorecard may also be improved by giving a comparison with international
universities specifically in the areas of governance and IT
© 2016 Grant Thornton International Ltd. All rights reserved.
Remarks
This addressed in section 3.7 and 3.8 of the report
Annexure and Reference provided in the final report
Addressed
Balance Score is specific to universities. There are no universal
benchmarks or threshold that can be targeted for specific institutions.
59
Final Report
Public Expenditure Tracking Survey (PETS)
2. Supplementary Tables Emerging from the Survey
Table 28: Inadmissible Allowances Status in Sample Universities
Inadmissible Allowances
1. Local Compensatory Allowance has been
discontinued. (Discontinuation date. Mid 90s)
2. Dearness Allowance has been discontinued and
merged in Basic Pay. ( 2008)
3. Washing Allowance has been merged in Integrated
Allowance. ( 2011)
4. Dress Allowance has been discontinued and has been
merged in Integrated Allowance ( 2011)
5. Project Allowance. I understand it has been
discontinued by the Govt. in 2012 - 13
6. Dusting Allowance has been discontinued and merged
in Integrated Allowance ( 2011)
7. Drinking Water Allowance has been discontinued and
merged in Integrated Allowance ( 2011)
8. Ad hoc Relief Allowance @ 15 percent w.e.f.
1.7.2004 has long ago been merged in basic pay. (2008)
9. Ad hoc Relief Allowance @ 15% and 20@ w.e.f.
1.7.2009 has been merged in basic pay scales long ago.
(2011)
10. Special Relief Allowance @ 15% w.e.f. 1.7.2003 has
been merged in basic pay long ago (2008)
11. Personal/ Secretariat Allowance has been
discontinued long ago by the Govt. (Mid 90s)
Dow
No
HU
No
IIUI
No
IUB
No
IUP
No
KIU
No
MUET
No
MUST
No
SBK
No
UAF
No
UoK
No
UoP
No
UoS
No
No
No
No
No
No
No
No
No
No
Yes
No
No
Yes
No
No
Yes
No
No
Yes
No
No
No
No
Yes
No
No
No
No
No
No
Yes in some
cases
Yes in some
cases
no
No
No
No
No
No
Yes
Yes
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
*Information not provided by AIOU and UETP
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Procedure for teaching staff recruitment under BPS and TTS
Appointment procedure for Associate Professor (B-20) & Professor (B-21)
Appointment procedure for TRA (B-17), Lecturer (B-18), Assistant Professor (B-19)
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Appointment procedure under TTS
The tenure track process normally involves an initial term contract appointment of a faculty member for a period of three
years. For a faculty member appointed at a junior rank (not higher than Assistant Professor) it will be followed by a second
term contract appointment for an additional period of three years. A tenure decision must be made for such a faculty
member in the third year of the second term contract appointment. Faculty members initially appointed at a junior rank
will thus normally serve six years, before a final tenure decision is made. For a faculty member appointed at a senior rank
(Associate and Full Professor) the probationary period shall normally be four years for associate and professors. The
services of a faculty member having tenure shall be terminated only for adequate cause, except at the normal retirement
age or under extraordinary circumstances discussed in these statutes
Each candidate who wishes to be considered for the Tenure Track Scheme should prepare a comprehensive application
dossier that includes letters of reference from his/her Ph.D. supervisor as well as others from eminent researchers in
his/her area of specialization, and all publications in Internationally Abstracted Journals, recognized for the purpose of
appointment on Tenure Track by the Higher Education Commission.
The dossier of each candidate from all applicants other than Assistant Professors should be sent to an independent
Technical Review Panel (TRP) to be constituted by the University and composed of eminent international academics and
researchers in the relevant area, drawn only from technologically advanced countries. A copy of the dossier, along with
names of the Technical Review Panel members should also be sent to the HEC. The following criteria should be followed
while selecting members of the TRP:
i.
Should not have served as Supervisor/Co-Supervisor of the candidate under review.
ii.
Should not have been a student of the candidate.
iii.
Should not have been a co-author of the candidate on any publication.
iv.
Must have the rank of an Associate Professor or above in a recognized university or equivalent position in a
recognized research organization. He/ She also must not have a lower rank than the applicant.
Upon receipt of application for appointment on the Tenure Track Scheme at the Associate / Full Professor level by
eligible candidates, the respective institution is required to process the application by first obtaining the recommendation
of the external Technical Review Panel. Upon receipt of a favorable recommendation from this panel the matter is to be
placed for consideration by the Selection Board of the Institution. The application for the position of Assistant Professor
will be placed directly before the Selection Board after internal review.
i.
The Selection Board may make any of the following decisions on merit:
ii.
Reject appointment on Tenure Track.
iii.
Recommend “first term” appointment on Tenure Track at the level of Assistant Professor only, with the first
review occurring after 3 – years, and the “second term” (Final Tenure review) occurring after 6 years.
iv.
Recommend “probationary” appointment on Tenure Track at the level of Associate Professor with a final tenure
review occurring after a period of 4 years.
v.
Recommend “probationary” appointment on Tenure Track at the level of Professor with a final tenure review
occurring after a period of 4 years.
vi.
Recommend grant of tenure with immediate effect for exceptional cases, provided that their cases, in addition to
being recommended by the external Technical Review Panel and Selection Board of the University, are also sent
to the HEC for evaluation by an independent international panel of experts from technologically advanced
countries constituted for this purpose, and recommended by them.
A faculty member appointed on probation on the Tenure Track scheme who wishes to be considered for permanent
tenure prior to completion of the 4 – year probationary period may apply to the University to be considered early. This
case will be treated as an exceptional case, and in addition to being recommended by the external Technical Review
Panel and Selection Board of the University, the case is also sent to the HEC for evaluation by an independent
international panel of experts from technologically advanced countries constituted for this purpose, and recommended
by them.
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3. Terms of Reference of the Assignment
The sustainability of public expenditures on tertiary education is a core objective of the Tertiary Education Support
Project (TESP) funded by the World Bank (Annexure II). The TESP aims to support the MTDF and its first component
is based on the MTBF which has been agreed both by HEC and the MoF. Compliance with the MTBF conditions the
bulk of disbursements under the project. However, whereas sufficient funds are needed by HEC to implement the
MTDF, HEC also needs to demonstrate effective and efficient use of the funds allocated and released. Against this
background, it was decided that a Public Expenditure Tracking Survey (PETS) would be completed for this purpose
HEC intends to hire a Consultant firm.
I.
Objectives of the Assignment
The Public Expenditure Tracking Survey (PETS) will be undertaken in order to document the efficiency in the allocation
and use of the funds received by HEIs with a special focus on funds channeled through HEC. The PETS will help to
identify sources of inefficiencies, and bottlenecks in the flow of funds and will recommend measures to maximize the
value of HEIs’ outcomes.
More specifically, the following are expected from the PETS:
 Understand the mechanism of resource allocation in the higher education sector at the federal (Mainly HEC),
provincial, & HEI’s levels and to identify major issues in budgetary allocation, timely releases and transparent
utilization of funds.
 Identify institutional obstacles between the source of funds and the points of delivery, and analyze how to efficiently
utilize the funds to meet the objectives of the higher education sector of Pakistan.
 Provide pertinent information that would help to build the capacity of Tertiary Education Institutional managers,
policy makers, and other interested stakeholders in the process of maximizing the efficiency of resources allocated
to HEI’s and in performing institutional performance reviews.
 Recommend steps to develop a concrete Management Information System (MIS) for Universities and Degree
Awarding Institutions (DAI’s) of Pakistan with particular reference to bringing efficiency in Public Expenditure.
II.
Scope of Work
The PETS will serve as a powerful tool to inform about prevailing public financial management (PFM) practices and the
extent to which government budgets link to execution and desired service delivery objectives and beneficiaries in the HEIs
i.e. Universities, Degree Awarding Institutes and Centers. This initiative includes, but not limited to, following:








To ascertain and analyze the rules and practices of funds allocation from MoF/Ministry of Economic Affairs to HEC
and from HEC to HEIs, as well from Provincial governments to HEIs/
To identify the final destination of (recurrent and development) monies allocated to HEIs: salaries and other
compensation schemes, pedagogic equipment, labs, IT, scholarships, non-academic activities, etc.
To determine and critically evaluate the level of execution & utilization of budgets at each level of the flow of funds.
To identify main sources of leakages and inefficiencies (e.g. absenteeism, strikes, campus violence, examination
cheating, etc.) and main issues with PFM reporting.
To assess the efficiency in the use of human and physical resources at the frontline level (HEIs), in particular with
regard to the deployment of faculty staff.
Cost over per student spending in tertiary education sector, as well as, in each HEI, with further classification such
as discipline-wise, cadre-wise (undergraduates, graduates, and Post-graduation level).
Study the existing level of accountability, adequacy or otherwise of internal audit, the existence and adherence to
SOP’s and recommendations in this regard.
Provide a menu of possible recommendations aimed at increase the efficiency of the resources allocated to the sector
It is clarified that PETS is not only Survey but full fledge study for institutionalization of reforms to quote a few examples,
such as:
Internal Controls – Whether in Place, Internal Auditor appointed by Federal/ Provincial Audit Department, make shift
arrangement, and its implementation status, as well as, a Model structure of Internal Control System for university is
required.
Governance Issues - Deployment of right resource/Professionals VS Dual Charge to Faculty and the overall existing
structure of university including VC, Registrar, Controller, Treasurers. The current status of all statutory meetings like
Syndicates, Finance Committee, yearly number, timely provision of agenda, HEC Representation. Also a comparison with
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international universities governance structure and practices. As an output for this Study, a draft model governance
structure for Pakistan public sector universities is required.
Score Card of Productivity - Based on International Score Card, one is to be developed for universities. Based on it also
rate the selected universities.
Sampling – Selection of Universities, based on geographic locations, Discipline wise such as General universities,
Engineering Universities, Medical universities, IT & Management Sciences, Women Universities. Also in keeping with the
problems faced by the universities.
In short it should provide pertinent information that would help to build the capacity of Higher Education Institutional
managers, policy makers, and other interested stakeholders in the process of maximizing the efficiency of resources
allocated to HEI’s and in performing institutional performance reviews. It should also recommend steps to develop a
concrete Management Information System with particular reference to bringing efficiency in Public Expenditure.
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4. Control Checklist
Governance
Sr. #
Control Procedures
1
Is the board composition as per the approved charter?
2
Are the meetings held frequently enough to allow oversight?
3
Does the board reviews and discuss financial performance?
4
Is the Board involved in budget review?
5
Does the organization have a management reporting policy? If yes, can it link financial information
YES
NO
N/A
Remarks
with physical process?
6
Does the organization have a written policy for document retention and destruction? If not, note
the general practice.
7
Is the organization involved in any lawsuits?
Fund Flow Mechanism
Sr. #
Control Procedures
1
Does effective mechanism exist for reviewing budget proposals from HEIs?
2
Documentation of actual expenditure reported by HEI as part of budget proposals/progress report
YES
NO
N/A
Remarks
checked by HEC?
3
Does the estimates used by HEIs in preparing budgets tested against reported KPIs?
4
Are the figures stated in budget proposals reconcile with the Statistics Information unit?
5
Fund allocated to HEIs is in accordance with Funding Formula?
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6
Funds flow procedure follows documented SOPs of HEC?
7
Reasonableness of time taken by HEC, MoF, Ministry of Planning & Development, AGPR and other.
Finance
a) Budgeting
Sr. #
Control Procedures
1
Is professional staff available to prepare the budget estimates?
2
Does a proper criterion exist for preparing the budget estimate?
3
Does the budget procedure require that all revenue/expenditure are included in the budget
YES
NO
CP
Remarks
estimates?
4
Is the budget approved by the BOG?
5
Are the capital projects formally approved by the BOG?
6
Does any basis exist for funding to be provided by HEC?
7
Is the deficit b/w HEI’s revenue & expenditure fully provided by the HEC/other fund providers?
8
Is the all recurrent & capital budget integrated?
9
The fund released by the HEC according to the requirements/prescribed schedule?
10
Does mechanism exist for the physical verification of development projects?
11
Does the HEI have a robust monitoring system?
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b) Books of Accounts and Financial Statements
Sr. #
Control Procedures`
1
Documented framework for accounting and financial reporting available? Applicability of
YES
NO
N/A
Remarks
NAM and HEC requirements if any
2
Books of account maintained for each discipline/ cadre?
3
Basis of Accounts Preparation i.e. Cash or Accrual.
4
Accounting manual properly updated?
5
Monthly closure of accounts?
6
Financial statements prepared at year end?
7
Financial statements audited by external auditors of HEI?
8
Financial statements audited by Independent Chartered Accountant?
9
Financial statements prepared under IFRS?
10
Following major policies disclosed in the financial statements?
a)
Basis of preparation
b)
Revenue and funds
c)
Fixed assets
d)
Borrowings
e)
Investments
11
Automated accounting system?
12
Draft accounts prepared using the Module?
13
Summary of movement of fund balances received?
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14
Fixed assets schedule received?
15
Fixed assets schedule and movement of fund balances incorporated into accounts?
16
Compilation of the above with the financial statements?
17
Accounts reviewed by the Audit Committee or any other appropriate authority?
18
Budget variance analysis and cash flow statement prepared by the treasurer/Financial
Controller?
19
Accounts reviewed by the Member (VC/Board/Syndicate) and circulated to the following:
a)
Pro-chancellor
b)
Rector
c)
Members of Board of Governors
d)
Vice Chancellor
e)
Head of Internal Audit
20
Review of monthly accounts by the Audit/Managing Committee?
21
Annual accounts reviewed by the Audit/Managing Committee?
22
Requisite vouchers (bank payment, bank receipt, JVs, cash payment, invoice booking slip)
prepared?
23
Vouchers supported by adequate documents?
24
Vouchers approved and authorized by appropriate management personnel?
25
Proper mapping of accounts?
26
Financial statements approved by Board of Governors?
27
Financial statements signed by:
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a)
b)
Treasurer/Financial Controller (HEI)
Member (VC/Board/Syndicate)
c) Property Management (Fixed Assets)
Sr. #
Control Procedures
1
Is Fixed Assets Register maintained?
2
Is physical verification of fixed assets done by External Auditors?
3
Has the management ever conducted a valuation exercise?
4
Is reconciliation done periodically with control ledgers/ fixed assets register?
5
Do appropriate safeguards exist against theft and pilferage?
6
Have HEI documented policies and procedures for additions and/or disposal of fixed assets?
7
Are fixed assets orderly arranged and physically traceable?
YES
NO
N/A
Remarks
d) Financial Aid
Sr. #
Control Procedures
1
Is There any Financial Aid/Scholarship offered to Students.
2
Documented policies and procedures exist for the regular financial aid?
3
Is physical verification carried out for all students who applied for financial aid?
4
Are interviews conducted from the parents/ guardians by the person appointed for physical
YES
NO
N/A
Remarks
verification?
5
Does the financial aid committee meeting review the case?
a)
Student file
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b)
Accounts & Finance department
e) Procurement
Sr. #
Control Procedures
1
Does the organization have a procurement policy?
2
Are the procurements initiated using any procurement form?
3
What is policy for conducting ad hoc procurements?
4
Is there any policy for receipt and inspection of goods?
5
Are purchases made based upon competitive procurement?
6
Is there an approval process embedded in the procurement cycle?
7
YES
NO
N/A
Remarks
YES
NO
N/A
Remarks
What is the policy for repeat procurement (procurements conducted to procure similar items e.g.
stationary and kitchen supplies)
8
What is the policy for procurement of short term consultants? Note if not documented.
9
How is the data bank of the short term consultant updated, if any
f) Tuition Fee (Including self-finance)Other receivables and Defaulters
Sr. #
Control Procedures
1
Does Student Affair Dept. receive admission applications for fee processing?
2
Does the cashier (F & A) make receipt entry?
3
Does the accounts receivable officer posts the receipt voucher in the ledger after reviewing it and
getting it approved by the (designation) in charge receivable?
4
Is the offer letter to students for admission signed by the Dean of the relevant dept. or the Manager
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Admissions?
5
Is the fee card prepared by the Admission Office?
6
Is the financial aid form reviewed by the Finance dept. (designation) for completeness and is it
forwarded to FA Committee?
7
Is there any acceptance/regret letter written to the students with regards to financial aid?
8
Does the fee card reflect basis of student and applicable fees?
9
In case of Self Finance students is there any difference in Fee Structure? If yes obtain fee
structure and basis for calculation?
10
Does the admission office issues a revised fee cards to students?
11
Does the admission office forward the fee card to accounts dept.?
12
Is the fee card verified by the (designation) and is it approved by the In-charge?
13
Are there multiple copies of the Fee card, one of which is sent to Accounts dept. , admission dept.
and another given to the students?
14
When Accounts dept. opens student ledger in system does it allocate a new roll number to the
new admission?
15
Does the Accounts Officer prepares receipt voucher for all the receipts?
16
Is the receipt voucher checked by Accounts Officer and approved by In-charge of Receivables?
17
Are there any reminders to those students’ whose dues are still pending? Is there any penalty for
late fee submission
18
Is there any online system for students to pay fees.
19
Is there any online system for students to register for desired courses?
20
Does anyone update the student listings?
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21
Does the student wishes to drop Courses/Modules?
22
After the add/drop is complete is the final list of students enrolled for each program is emailed to
Accounts Officer?
23
Does the Accounts Officer makes accrual of fee based on the final list of students enrolled?
24
Does the Senior Officer Accounts generate monthly variance report on total revenue receivable
and the outstanding receivables?
25
Does the accounts officer get information from the student coordinator/head of department
regarding the list of enrolled students for each program that he extracts from the manual
registers/online system?
26
Does the In-charge receivable approve the voucher of accrual of fee after it is has been checked
by the senior officer and updated in the student ledger G/L is updated?
27
Does the accounts officer check whether fee has been received from all students by extracting
data from the student ledgers?
28
Does the assistant manager generate monthly report on total receivables and trace outstanding
fee?
g) Other receivables
Sr. #
Control Procedures
1
Does the (designation) prepare details of amount receivables and send invoices at month end?
2
Does the (designation) follow up on the invoices to recover the receivables and puts accruals into
YES
NO
N/A
Remarks
the system?
3
Are vouchers approved by (designation) and then posted into the system?
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4
Does the (designation) checks the voucher and gets it approved by (designation) after the amount
is received against invoices and then posted into the system?
5
Does the (designation) generate a monthly report and forwards the outstanding receivables on
monthly basis to (designation) receivables?
h) Defaulters
Sr. #
Control Procedures
1
Documented policies and procedures exist for Defaulters?
2
Does the (designation) extracts the list of defaulters from the system at the month end and emails
YES
NO
N/A
Remarks
YES
NO
N/A
Remarks
them to clear their dues?
3
Does the (designation) contact personally those students whose outstanding amount is material?
4
Does the student account are charged with daily late payment charges?
5
Does the (designation) block the registration for those students whose outstanding amounts
exceed security deposit?
6
Does the (designation) receive deposit evidence prior to re-activation of the registration?
Internal Audit
Sr. #
1
2
3
4
Control Procedures
Does internal audit function exist?
Internal audit reporting to audit committee or to the management?
Approach used by internal audit (risk based or pre audit)?
Access the quality of the internal audit plan in terms of:
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a.
b.
c.
5
6
7
8
9
Comprehensiveness, clarity and timeliness:
Coverage of priority and high risk area:
Focus on testing the control framework:
Internal audit function working competently i.e. timely reporting any weaknesses in controls?
How well does internal audit’s staffing reflect it roles and responsibilities?
Is there evidence of effective coordination of internal and external audit work?
Are success measures used for evaluating the performance of internal audit function?
Do you consider that internal audit has added value to the organization?
Balance Score Card
Sr. #
Customer Perspective
1
Existence of Alumni records and data base.
2
Existence of Placement center and Student Counseling Wings?
3
Percentage of Students being recruited through placement center of University
4
Percentage of Students receiving first-class honors
5
Market/Industry Linkages developed by University? (if any)
6
Existence of any mechanism to gather employer feedback.
7
Existence of Institutional arrangements for apprenticeship in local industries/corporate sector
Sr. #
Internal process Perspective
1
Percentage of Faculty holding doctoral degree or equivalent/distinctions.
2
Staff-student ratio
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YES
NO
N/A
Remarks
YES
NO
N/A
Remarks
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3
Available Infrastructure and utilization Index.
4
Key strengths of institutions in a particular area/discipline.
5
Success stories and number of completed Projects over past 5 years
Sr. #
Learning and growth Perspective
1
Number of units passing an external quality assurance assessment.
2
Percentage of plans/projects that follow the University development plan.
3
Number of staff-training hours and CPD hours for faculty.
4
Number of research grants per full time faculty.
5
Number of Research Publications per full time faculty.
6
Outcome of the research (regular and task based) and potential benefits to the community
7
Percentage of Revenue earned from Research activities to total revenue.
8
Cost Benefit Analysis of Research and Development activity within HEI and Collaborations if any.
Sr. #
Financial Perspective
1
Operating expense per full time equivalent student
2
Percentage of staff salary per total operating expense
3
Percentage of management staff salary per total operating expense
4
Percentage of staff salary per total number of graduates
5
Percentage of central administrative expense per total operating expense
6
Percentage of total income per total operating expense
7
Operating expense for teaching and learning development per total operating expense
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YES
NO
N/A
Remarks
YES
NO
N/A
Remarks
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Human Resource
Sr. #
Control Procedures
1
Does the organization have a hiring policy? Note if not documented
2
Are the salary grades clearly defined for different cadres? Note the top 5 highly paid employees
YES
NO
N/A
Remarks
for checking compliance.
3
Are there written contracts for all employees? Note if this practice is not followed
4
Are employee files maintained?
5
Does the organization use attendance sheets (time sheets where applicable) for all staff?
6
Does the organization use employee time sheets as the basis for charging salaries to different
grants
7
Is the payroll paid by bank transfer to individual bank accounts OR if not possible, by check in
the name of each staff member
8
Does the organization do regular training workshops for all staff at all levels and share ideas to
improve performance of the organization?
9
Is there a process of performance reviews of employees? If yes, what is the frequency of such
reviews?
10
Does the organization have an equal opportunity policy
11
Polices followed in assessing the competence of new hires.
12
Is there any continuous development programme for the faculty?
13
Succession plans in place to replace the retirees?
14
Is the staff Strength appropriate with regards to Teacher Student Ratio
15
Is the staff Qualifications commensurate with disciplines offered?
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16
Turnover ratio
17
Ratio of Core Function i.e. teaching staff to Support Function Staff
Management Information System
Sr. #
Control Procedures
1
Is there any management information system in place?
2
Was the cost/benefit analysis being performed before development of MIS system?
3
For how long the systems have been in use?
4
Is it a standardized system or tailored to specific needs of HEI?
5
Effectiveness of MIS system? i.e. timeliness/accuracy
6
How many staff members are trained to use the system?
7
How is the MIS used in a single department?
8
How MIS system is integrated with other departments?
9
What data validation/verification procedures have been implemented?
10
What form of reports is generated and where are they used?
11
What are the maintenance cost/ procedure requirements?
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YES
NO
N/A
Remarks
77
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