This document discusses resource management in technical and vocational education and training (TVET). It covers topics such as the definition of financial resource management, characteristics of financial management, types of finance, functions of a finance manager, factors influencing financial decisions, financial statements, budgeting, and sources of financial resources for TVET institutions. The key points are that financial resource management aims to efficiently allocate funds to achieve organizational goals, is influenced by internal and external factors, and involves financial planning, budgeting, and generating and utilizing various sources of income.

1. FTVETI
Postgraduate Program
DEPARTMENT OF TVET LEADERSHIP & MANAGEMENT
RESOURCE MANAGEMENT IN TVET
COURSE CODE: VPD- 504
ADDIS ABABA
ETHIOPIA
1

2. Introduction
Address of the teacher:
ICT BLDG: 1st floor, Room 104
email: adaneyalew@yahoo.com
Mobile: 0911 34 13 73
Consultation Hours:
Saturday and Sunday Morning
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3. CHAPTER THREE
FINANCIAL RESOURCE MANAGEMENT
Definition:
 FRM refers to an effective and efficient allocation and
utilization of financial resources corresponding to the
achievement of organizational goals.
 It is a process which includes the major activities that
are related to identifying the sources of organizational
finance and the how of generating them.
 Finance is the life blood of any organization
 It is the most sensitive asset that needs serious
attention by all stakeholders
 It refers to the process of planning, organizing,
directing, allocating, distributing, utilizing and
controlling of funds in achieving organizational
goals>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>3

4. Characteristics of FM
i) FM is an integral part of overall management.
 Financial considerations are involved in all
business decisions.
 Acquisition, maintenance, removal or
replacement of assets, employee compensation,
sources and costs of different capital,
production, marketing, finance and personnel
decision, almost all decisions for that matter
have financial implications.
 Therefore, FM is universal throughout
organisations.
ii) The central focus of FM is valuation of the firm.
 Financial decisions are directed at
4

5. Cont…
iii) FM essentially involves risk-return trade-off.
 Decisions on investment involve choosing of types of
assets which generate returns accompanied by risks.
 Generally, higher the risk returns might be higher and
vice versa.
 So, the financial manager has to decide the level of
risk the firm can assume and satisfy with the
accompanying return.
 Similarly, cheaper sources of capital have other
disadvantages. So to avail the benefit of the low cost
funds, the firm has to put up with certain risks, so, risk-
return trade-off is there throughout.
iv) FM affects the survival, growth and vitality/strength of
the institution.
 Finance is said to be the life blood of
institutions. 5

6. Cont…
v) Finance functions focus on investment,
raising of capital, distribution of profit, are
performed in all firms - business or non-
business, big or small, proprietary or
corporate undertakings.
 Financial management is a concern of every
intitution including educational institutions.
vi) FM is a sub-system of the institutional
system which has other subsystems like
academic activities, research wing, etc.,
 In systems arrangement financial sub-system
is to be well-coordinated with others and
other sub-systems well matched with the
6

7. Cont…
vii) FM of an institution is influenced by the external legal
and economic environment.
 The legal constraints on using a particular type of
funds or on investing in a particular type of activity,
etc., affect financial decisions of the institution.
 Financial management is, highly influenced/constrained by
external environment.
viii) FM is related to other disciplines like accounting,
economics, taxation, operations research, mathematics,
statistics etc.,
 It draws heavily from these disciplines.
ix) There are some procedural finance functions - like
record keeping, credit appraisal and collection, inventory
replenishment and issue, etc.,
 These are normally delegated to bottom level management
executives.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
7

8. Types of Finance
 Business Finance: The term
‘business finance’ is very
comprehensive.
 It implies finances of business activities.
 The term, ‘business’ can be categorized
into three groups: commerce, industry
and service. It is a process of raising,
providing and managing of all the
money to be used in connection with
business activities.
 According to Guthmann & Dougall,
business finance can be broadly defined
as the activity concerned with planning,
raising, controlling and administering of8

9. Cont…
1.Direct Finance
 The term 'direct', as applied to the financial organisations, signifies
that savings are effected directly from the saving-surplus units
without the intervention of financial institutions such as
investment companies, insurance companies, unit trusts, and so
on.
2. Indirect Finance
 The term 'indirect finance' refers to the flow of savings from the
savers to the entrepreneurs through intermediary financial
institutions such as investment companies, unit trusts and
insurance companies, and so on.
3. Public Finance
 It is the study of principles and practices pertaining to acquisition
of funds for meeting the requirements of government bodies
and administration of these funds by the government.
4. Private Finance
 It is concerned with procuring money for private organization
and management of the money by individuals, voluntary
associations and corporations. It seeks to analyse the principles
and practices of managing one’s own daily affairs.
5. Corporation Finance: Corporation finance deals with the 9

10. Cont…
 The nature of finance functions as follows:
i) In most of the organizations, financial operations are
centralized.
ii) Finance functions are performed in all business firms,
irrespective of their sizes / legal forms of organization.
iii) They contribute to the survival and growth of the firm.
iv) Finance function is primarily involved with the data
analysis for use in decision making.
v) Finance functions are concerned with the basic
business activities of a firm, in addition to external
environmental factors which affect basic business
activities, namely, production and marketing.
vi) Finance functions comprise control functions
vii) The central focus of finance function is valuation of
the firm.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
10

11. Finance Function
1. Assessing the financial
requirements. The main objective of
finance function is to assess the
financial needs of an organization and
then finding out suitable sources for
raising them.
2. Proper utilisation of budget :
Though raising of funds is important
but their effective utilisation is more
important.
The budget should be used in such a way
that maximum benefit is derived from
them 11

12. The operational functions of finance includes :
 Financial planning :The first task of a financial
manager is to estimate short term and long-term
financial requirements of his/her business
 Deciding the capital structure :The capital structure
refers to the kind and proportion of different
securities for raising funds.
 Selection of source of finance: After preparing a
capital structure, an appropriate source of finance is
selected.
 Various sources from which finance may be
raised, include: share capital, debentures, financial
institutions, commercial banks, public deposits, etc.
 Selection of pattern of investment: When funds have
been procured then a decision about investment
pattern is to be taken.
 The selection of an investment pattern is related to
the use of funds. 12

13. Function of Finance Manager
 Formulation of objectives
 Estimating the financial requirement
 Efficiently manage entity resources
 Effectively mitigate risks to attain entity
objectives
 Maintain a sound financial condition within the
limits of available resources
 Comply with applicable policies, laws and
regulations
 Forecast and manage of cash
 Raising budget
 Managing the flow of internal revenue
 Financial controls
 Forecasting profits
 Managing assets
 Managing budget 13

14. FM as Science or Art
 Financial management is both a science and an
art.
 Its nature is nearer to applied sciences as it
envisages use of classified and tested
knowledge as a help in practical affairs and
solving business.
 Theory of FM is based on certain systematic
principles, some of which can be tested in
mathematical equations like the law of physics and
chemistry.
 Financial management contains a much larger
body of rules or tendencies that hold true in
general and on the average.
 The use of computers, operations research,
statistical techniques and econometric models
find wide application in financial management
as tools for solving corporate financial problems
like budgeting, choice of investments, acquisition or
mergers etc. 14

15. Cont…
 According to George knowledge of facts,
principles and concepts is necessary for
making decisions but personal
involvement of the manager through
his/her intuitive capacities and power of
judgment becomes essential.
 As the application of human judgment and
skills is also required for effective financial
management, financial management is also
an art.
 In the entire study of financial
management whether it is related to
investment decisions, financing decisions
i.e. deciding about the sources of
financing, or dividend decisions, there is a
mixture of science as well as art.
 When techniques for analytical purposes 15

16. objectives of FRM
a) To build up reserves for growth and expansion
b) To ensure a fair return to shareholders
c) To ensure maximum operational efficiency by
efficient and effective utilization of finances.
d) To Ensure regular and sufficient supply of capital
to the business.
e) To Ensure a fair rate of return to the suppliers of
capital.
f) To Ensure better utilization of capital by following
the principles of profitability.
g) To Coordinate the activities of the finance
department with those of other departments of the
institute.
 The achievement of central goal of maximisation
of the owner's economic welfare depends upon
the adoption of two criteria:
i) profit maximisation; and
16

17. FINANCIAL PLANNING
 Financial planning is apart of overall
planning of any business/institution
 Financial planning involves:
1. Determination of the amount of capital
required
2. Determination of capital structure or
kinds and proportion of different types
shares.
3. lay dawn of policies in regard to
cash control, borrowing and lending
etc.
17

18. Considerations in financial plans
1. Objectives: objectives are the ends towards
which the activities of the institute is aimed.
The objectives of financial management should be so
determined that they are consistent with the overall
organizational objectives.
 The objectives of financial management are the
procurement of funds at the cheapest cost and the
utilization of funds in the best possible manner to
maximize the earnings of the enterprise.
2. Survival and Growth: The financial plans
should be so devised that they do not jeopardize the
survival of the institute.
 The institute should be solvent both in the short-
and long run.
 The financial planning should also be aimed at the
growth of the institute through better financial
decision.
18

19. Cont…
3. Independence: The financial planning should aim at earning
sufficient earnings and retaining a part of earnings in to the
institute.
 This will reduce dependency on outsiders.
 If an Institute is highly dependent on external sources for or
budgets, they will interfere with the working of the organization.
4. Solvency and liquidity (Profitable): The financial plan should
be so created that the Institute is solvent and does not lack
liquidity both in the short and long run.
The funds should be invested in the profitable channels only.
 Sufficient funds should also be made available to meet the
working capital requirements of the firm.
5. Flexibility: the financial plans of the business should be flexible
and not rigid.
 Whenever new opportunities suddenly arise, the financial
planning should have scope of making use of such opportunities.
 It should allow the diversion of budget in to more profitable
channels.
 The management should also be able to raise more finance at a
short notice to finance new projects.
19

20. Financial Decisions
 Finance comprises of combination of
knowledge of credit, securities, financial
related legislations, financial
instruments, financial markets and
financial system.
 The financial manager must find a
rationale for answering the following
three questions:
1) How large should an Institute, College
be and how fast should it grow?
2) In what form should it hold its assets?
3) How should the funds required be
raised?
20

21. Types of Financial Decisions
 Financial decisions refer to decisions concerning
financial matters of a business firm or Institution.
 It can classify these decisions into four major
groups :
1. Investment decisions :Investment decision relates to
the determination of total amount of assets to be held
in the firm, Institute the composition of these
assets and the business risk complexities of the
firm as perceived by the investors.
 The investment decisions can be classified under
two broad groups;
 long-term investment decision and Short-term,
investment decision.
 The long-term investment decision is referred to
as the capital budgeting and the short-term
investment decision as working capital management.
21

22. Cont…
2. Financing decision: Once the firm/ Institute has
taken the investment decision and committed
itself to new investment, it must decide the
best means of financing these commitments.
3. Dividend decision: The dividend decision is
concerned with the quantum of profits to be
distributed among shareholders.
4. Liquidity decisions: the ability of the firm to meet
bills and the firm’s or Institute cash reserves to
meet emergencies.>>>>>>>>>>>>>>>>>>>>>>>
22

23. Factors Influencing Financial Decisions
A. External factors
 Capital structure
 Capital market and money market
 State of economy
 Requirements of investors
 Government policy
 Taxation policy
 Financial institutions / banks lending policy
23

24. Cont…
B. Internal factors
 Nature of business/Institution
 Age of the firm/Institution
 Size of the business /Institution
 Extent and trend of earnings
 Liquidity /Payment position
 Working capital requirements
 Composition of assets
 Nature of risk and expected return. >>>>>>>>>
24

25. Financial Statement
 A written report of the financial condition of
a firm.
 Financial statements include the balance
sheet, income statement, statement of
changes in net worth and statement of cash
flow. .
 The first step in developing a financial
management system is the creation of
financial statements.
 To manage proactively, you should plan to
generate financial statements on a monthly
basis.
 The financial statements should include an
income statement, a balance sheet and a
25

26. Income Statement
 Simply put, the income statement measures all the
revenue sources vs. organization expenses for a given
time period.
Example in outlining the major components of the
income statement:
 Sales. This is the gross revenue generated from the sale
of clothing less returns (cancellations) and allowances
(reduction in price for discounts taken by customers).
 Cost of goods sold. This is the direct cost associated with
manufacturing the clothing. These costs include materials
used, direct labor, plant manager salaries, freight and
other costs associated with operating a plant (for example,
utilities, equipment repairs, etc.).
 Gross profit. The gross profit represents the amount of
direct profit associated with the actual manufacturing of the
clothing. It's calculated as sales less the cost of goods
sold.
26

27. Cont…
 Operating expenses. These are the selling, general and
administrative expenses that are necessary to run the
business. Examples include office salaries, insurance,
advertising, sales commissions and rent.
 Depreciation. Depreciation expense is usually included in
operating expenses and/or cost of goods sold, but it is
worthy of special mention due to its unusual nature.
 Depreciation results when a company purchases a fixed
asset and expenses it over the entire period of its planned
use, not just in the year purchased.
 Whether depreciation is included in cost of goods sold or
in operating expenses depends on the type of asset being
depreciated.
 Depreciation is listed with cost of goods sold if the
expense associated with the fixed asset is used in the
direct production of inventory.
 Examples include the purchase of production equipment
and machinery and a building that houses a production
plant. 27

28. FACTORS THAT INFLUENCES FRM
1. Economic environment
2. Political environment
3. The social environment and
4. Technological environment
Discuss how the above factors influence FRM?
Sources of financial resources
The government budget (public funding)
private funding
Community contribution
Internal income of organizations
{List the income generating system of your
institute} >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
28

29. BUDGETING
 It is a financial document used to project future income
and expenses.
 It is a set of interlinked plans that quantitatively
describe an entity's projected future operations.
 It is a financial plan for the future concerning the
revenues and costs of a business.
 The budgeting process may be carried out by
individuals or by Institute to estimate whether the
person/Institute can continue to operate with its
projected income and expenses.
 It is the most prevalent planning and control
techniques in resources management in an
organization.
 It is a statement, in dollars, birr or whatever currency,
showing the revenue and expenditure that an
organization plans to receive or to expend in the next
fiscal year.
29

30. Cont…
 Budgetary control is the process by which
financial control is exercised within an
organization.
 Budgets for income/revenue and expenditure are
prepared in advance and then compared with actual
performance to establish any variances.
 Managers are responsible for controllable costs
within their budgets and are required to take
remedial action. 30

31. Use of Budget
Budgets are used to:
 Control income and expenditure
 Establish priorities and set targets in numerical
terms
 Provide direction and co-ordination, so that
business objectives can be turned into
practical reality
 Assign responsibilities to budget holders
(managers) and allocate resources
 Communicate targets from management to
employees
 Motivate staff
 Improve efficiency
 Monitor performance
31

32. Guiding principle for budgeting
In an effective budget system:
 Managerial responsibilities are clearly defined –
in particular the responsibility to adhere to their
budgets
 Individual departments budgets lay down a plan
of action
 Performance is monitored against the budget
 Corrective action is taken if results differ
significantly from the budget
 Departures from budgets are permitted only after
approval from senior management
 Helps all types of organization to plan and
control their operations, and to support their
managerial strategies
32

33. Cont…
 The budgeting process typically begins with a
strategy planning session by senior management.
 The management team then applies the agreed
strategic direction to a series of plans that roll up
into a master budget.
 The plans include a sales budget, production
budget, direct material budget, direct labour
budget, manufacturing overhead budget, sales
and administrative budget, and fixed assets
budget.
 All of these plans roll up into the master budget,
which contains a budgeted income statement,
balance sheet, and cash forecast.
33

34. Types of budget
 Master budget. At the top of the cascade is the
master budget, a suite of statements with strong
similarity to the published financial accounts.
This budget consolidates all subsidiary budgets and
usually comprises the budgeted profit and loss
account, balance sheet and cash flow statement.
 Cash budget. This is a detailed budget of
estimated cash inflows and outflows incorporating
both revenue and capital items.
 Capital budgeting. This is a process concerned
with decision making in respect of specific
investment project choices and the total amount
of capital expenditure to commit.
 Operating budget. This is the budget of the
revenue and expenses expected in a forthcoming
period. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
34

35. Budget decision
In terms of managerial or control issues, budgets
may be:
 'Top-down' (imposed).
 'Bottom-up' (or participative) budgets.
 'Parallel' (or negotiated) budgets.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
35

36. Features of an effective budget
1. Accurate forecasting
2. Based on organisational goals
3. Information is timely and accurate
4. Formed with multilevel input
5. Regular reviews
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
36

37. CAPITAL BUDGETING DECISIONS
 Capital budgeting decisions are of paramount
importance in financial decisions, because
efficient allocation of capital resources is
one of the most crucial decisions of
financial management.
 Capital budgeting is budgeting for capital
projects.
 It is significant because it deals with right
kind of evaluation of projects.
37

38. Capital Expenditure
 A capital expenditure is an expenditure incurred
for acquiring or improving the fixed assets, the
benefits of which are expected to be received over
a number of years in future.
The following are some of the examples of capital
expenditure.
1) Cost of acquisition of permanent assets such
as land & buildings, plant & machinery, goodwill
etc.
2) Cost of addition, expansion, improvement or
alteration in the fixed assets.
3) Cost of replacement of permanent assets.
4) Research and development project cost etc.
38

39. Capital investments
Factors that give rise to the need for capital
investments are:
 Expansion
 Diversification
 Wear and tear of old equipment
 Productivity improvement
 Learning
 Replacement and modernization
39

40. Capital investment proposals involve:
a) Longer gestation period
b) Substantial capital outlay
c) Technological considerations
d) Irreversible decisions
e) Environmental issues
40

41. Steps involved in the capital
budgeting process
(1) Project generation: In a dynamic and
progressive firm there is a continuous
flow of profitable investment proposals.
(2) Project evaluation:
 Project evaluation involves two steps:
i) estimation of benefits and costs and
ii) selection of an appropriate criterion to
judge the desirability of the projects.
(3) project selection and
(4) project implementation: After the final
selection of investment proposals, funds
are earmarked for capital expenditures. 41

42. Factors Influencing Investment
Decisions
 Technological change
 Competitor' strategy
 Demand forecast
 Type of management
 Fiscal policy
42

43. The capacity to acquiring budget depends
on following factors:
 Nature of the Institute / business
 Tenure/term of services
 Reputation and credibility acquire
 Types of services offered
 Cost of production and generation of services
most likely set of users or beneficiaries
 Type and nature of stakeholders
 Willingness and ability of users and beneficiaries
to pay for the services offer
 Continuity or perpetually of demands for
services
 Internal strength of institute to generate its own
funds
 Support or kind assistance available
43

44. The acquisition of budget is also
determined by:
 Philosophy of the institute
 Vision, mission and goals of the institute
 Regulatory framework
 Competitive environment
44

45. Kinds of Budget Nomenclature
A. Nomenclature based on function of the state
 Enables to picture out the details of the functional plan as it
makes the analysis of the expenditures for each functions
possible.
 It also allows the determination costs for each public functions
combining functional classification with the economics
classification.
 Moreover, it helps to identify the state priorities assigned to the
different functions.
B. Nomenclature based on service or management unit
 Concerns all public sector units at different levels (central,
regional or local) or the independent once.
 It shows the nature of the spending and the responsible body
that is in charge of the money at the various echelons of the
system.
 It is essential and should be clearly defined particularly under
decentralized administration system as it aims to ensure
accountability; budget administration and legal appropriation.
45

46. Cont…
C. Nomenclature based on programs and activities
 Establish the link between expenditures and expected
results.
 Its main aim is policy formulation and performance
accountability.
 It clearly indicates the expenditures required in line with
the programs and activates to be carried out.
 It allows helps to facilitate the cost benefit analysis for
better decision makings though measuring benefits.
D. Nomenclature based on the type of expenditure
 Helps to plainly distinguish between recurrent and
capital expenditures.
 It facilitates budget control as it identifies expenditures
by economic object.
 It creates uniform concepts of expenditures among all
public sectors and makes information arranged for
budget commitments.
46

47. PHASES OF BUDGET PROCESS
Three main phases are :
budget preparation,
adoption and
execution.
 The preparation phase of budget is the base
for decisions reflecting budget priorities for
the coming year based on the development
plans and objectives of the government.
 It is the stage at which a budget request or
plan can be strengthened because the
proposed budget that the members of the
legislature examine; change and ultimately
pass based on it. 47

48. Cont…
 The second phase of a budget process is
related to the parliament vote( adoption).
 The budget should be voted before the end
of the elaboration period.
 It is primarily a legislative branch function.
 The legislature involves agencies as
necessary in the process by holding
hearings on budget issues affecting each
agency.
 The final products of this process are the
enrolled budget bills, state laws.
48

49. Cont…
 The legislature may modify the budget
through supplemental appropriations, which
legally have the same form as the regular
appropriations, an act.
 The parliament usually uses a highly
qualified and experienced financial experts
and economic advisors before voting to the
budget, and sometimes seek for clarification
before decisions.
49

50. Cont…
 The third phase (budget execution) of the budget
process is related to the implementation of the
budget allocated to each sector.
 In line with the implementation, countries do
have their own principles and methods of public
accounting.
 These principles are usually developed by the
ministry of finance to assure the implementation
of operations as per the initial authorization of
credits given by the parliament.
50

51. Cont…
 In general, the implementation of budget should be
done as per the budget line described by the
nomenclature and the rules and regulations
developed by MoF as per the vote of the
parliament.
 Thus, educational decisions made at this stage
require actual budget, capacity, good governance,
transparency and accountability at the various
echelons followed by strong monitoring and
controlling mechanisms.
51

52. Steps in budgeting
The major steps in budgeting include:
1.The budget message: This step refers to the
plan. It deals with the institute goals and
objectives of the organization system.
the expenditure plan: expenditures refers to
estimation of the amounts required to plant the
institute plan into effect.
 After defining the organizational plan,
expenditures and revenues estimates should
be done.
 However, this requires some detail activities
which are strongly related to preparation of
time schedule, collection of data as well as
estimation and classification of expenditures. 52

53. Cont…
2. The revenue/income plan: refer to the incomes of an
organization.
 The actual expenditure of institute depends on the
amount of income collected from the anticipated
revenues from various sources as per plan.
 The revenue plan should reveal an estimate of
approximately actual receipts from different sources.
balancing expenditures and revenues: In most cases,
activities are strongly related to the balance between
the income and expenditure side of an organization.
 Creating balance between two sides demands
anticipating revenues from the various sources.
 This in turn will help to have a sound plan for
organizational expenditure by creating balance with
anticipated revenues.
53

54. Cont…
3. Budget approval: Can be done at various
levels. budget prepared should be presented to
the highest administrative body of the
organization .
 The highest administrative body in the system
could accept, modify or reject the proposed in
fact with justification.
 Budget administration and the budgetary
review: The actual implementation of the
allocated budget.
54

55. Characteristics of finance function in
educational institution
 Finance function is focused at systematic acquisition and
development of funds
 The purpose of finance function is stabilization of financial position.
 Sources of finance in educational institution are restricted by
nature.
 It is because of regulatory frame work for governance the
educational institute.
 The principle source of revenue for educational institute are
related with fees and certain other sources like grant in aid,
donations etc.
 The fees are defined by the regulatory institution.
 As such the education institution cannot change fees more than
as what is guided by regulatory institute or bylaws of institute.
 It is not the discretion of the institute to revise the fees at will.
 Educational institution cannot take unspecified fees without prior
permission of the regulatory bodies.
55

56. Features of financial environment in
educational institution
 Educational institution usually works out for profits.
 This non profit motive of educational institution changes their
finance.
 As such, their approach towards finance is very narrow and
restricted.
 As these institutes do not work for profit, the fund management
system do not focused on higher revenue generation or
generation of extra surplus.
 There is no owner’s equity and concept of profit sharing in a
conventional manner in educational institution or public charity
institute.
 Therefore generation of revenue is not the prime function of these
institutes.
 The concept of finance is driven by resource utilization and not by
resource generation.
 The concept of wealth maximization is not also implemented in
large scale because maximization of wealth is not the prime
motive of these institutes.
56

57. Cont…
 The conventional educational institution also
does not give priority t rapid or large scale
expansion.
 Often most of the institute continues with
same scale and mode of functioning.
 Retention of earnings and creating of reserves
has also a limited scope.
 The type of financial information required by
this institute is very limited because of low
dimensions and limited flexibility in approach.
 The stake holders are diversified in nature and
have different ends to meet. However, none of
the stake holders have any financial purpose
to perceive.
57

58. Discussion questions
1. Discuss in group the utilization of budget in
your organization? What are the challenges
encountered? Recommend possible solutions
to minimize the challenges?
2. How do you generate income to subsidize the
expenditure?
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58

59. Auditing
 Auditing is an examination of books of
accounts and vouchers of business, as will
enable the auditors to satisfy him/her self
that the balance sheet is properly drawn up,
so as to give a true and fair view of the
state of affairs of the business.
 Auditing is an examination of accounting
records undertaken with a view to establish
whether they correctly and completely
reflect the transactions.
59

60. Cont…
 Audit is a systematic and scientific
examination of the books of accounts of a
business.
 Audit is undertaken by an independent
person or body of persons who are duly
qualified for the job.
 Audit is a verification of the results shown by
the profit and loss account and the state of
affairs as shown by the balance sheet.
 Audit is a critical review of the system of
accounting and internal control
60

61. OBJECTIVES OF AUDITING
i. Report to the manager whether the balance
sheet gives a true and fair view of the Institute's
state of affairs and the profit and loss.
ii. Detection and prevention of Errors.
61

62. Merits of Auditing
 Detection of errors
 Evaluate financial status
 Loan from banks
 Builds reputation
 Proper valuation of investments
 Settlements of claims
 Proper valuation of assets
 Good security and Evidence in court
 Government acceptance and Settlement of
accounts
 Update accounts .
 Suggestions for improvement
 Facilitates taxation
62

63. Demerits of Auditing
 Non-detection of errors/frauds: Auditor may
not be able to detect certain frauds which are
committed with calm intentions.
 Dependence on explanation by others:
Auditor has to depend on the explanation and
information given by the responsible officers of
the company.
 Audit report is affected adversely if the
explanation and information prove to be false.
 Dependence on opinions of others: Auditor
has to rely on the views or opinions given by
different experts, Lawyers, Engineers,
Architects etc. 63

64. Cont…
 Conflict with others: Auditor may have
differences of opinion with the accountants,
management, engineers etc.
 In such a case personal judgment plays an
important role. It differs from person to person.
 Corrupt practices to influence the auditors:
The management may use corrupt practices to
influence the auditors and get a favorable report
about the state of affairs of the organization.
 Detailed checking not possible: Auditor cannot
check each and every transaction.
64

65. QUALITIES OF AN AUDITOR
 In addition with his/her formal qualification, he/she
should be concerned with the reporting on financial
matters of business and other institutions.
 The qualities required are tact, caution, firmness,
good temper, integrity, discretion, industry,
judgment, patience, clear headedness and
reliability.
 In short, all those personal qualities that goes to
make a good businessman contribute to the
making of a good auditor.
 He/she must have the highest degree of integrity
backed by adequate independence.
65

66. Cont…
 He/she must have a thorough knowledge of the general
principles of law which govern matters with which he/she
is likely to be in intimate contact.
 Needless to say, where undertakings are governed by a
special statute, its knowledge will be imperative; in
addition, a sound knowledge of the law and practice of
taxation is unavoidable.
 The auditor should be equipped not only with a sufficient
knowledge of the way in which business generally is
conducted but also with an understanding of the special
features peculiar to a particular business whose
accounts are under audit.
 The auditor, who holds a position of trust, must have the
basic human qualities apart from the technical
requirement of professional training and education.
66

67. Brain storming question
1. Evaluate the practice of FRM of your
organization? What are the challenges
observed in your institute? Indicate the
possible solutions to alleviate the challenges
observed in your organization?
2. Reflect on FRM of the Ethiopian context?
3. List the challenges observed in the practices
of auditing in your institute?
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67

68. CHAPTER FOUR
TIME MANAGEMENT - MEANING AND ITS
IMPORTANCE
Failing to plan …
is planning to fail
How do you
go about
managing
your time?
68

69. Time Management (TM)
 Time management is the act of taking conscious
control over the amount of time spent on specific
activities.
 Helps to increase productivity, effectiveness and
efficiency.
 Time management is about effective scheduling
of time, goal setting, prioritizing and choosing
what to do and what not to do, delegating tasks,
analyzing and reviewing spent time, organizing
work space, keeping concentration and focus at
work, motivating to work towards a goal.
69

70. Five basic principles
 Be realistic about the task….how long will it
take?
 Be determined…..limit
distractions/displacement
 Be organised………books, pens, coffee
 Balance the other parts of your life
 Be flexible…things may change
70

71. Taking control of time
Ask yourself from time to time:
 How am I using my mental and physical
energy now?
 Is this good use of my time?
 Identify priorities/commitments for the week
ahead and write on blank sheet all sessions/
meetings; leisure activities; paid work; time
for self; adequate rest/sleep.
71

72. Use personal timetabling to:
 acknowledge what you have achieved
 save mental energy
 be purposeful and realistic
 meet deadlines and keep up with work
 have effective study time and effective
relaxation
 Enjoy yourself without guilt and worry
72

73. Strategies to move forward
 Set goals
◦ realistic, reachable, sequential
 Experiment with standards for success
◦ Try for 80% or even 60%
 Focus on the process not the end result
 Evaluate success in terms of what
you accomplished and what you enjoyed
 Celebrate and learn from mistakes
73

74. Time Management includes:
i. Effective Planning
ii. Setting goals and objectives
iii. Setting deadlines
iv. Delegation of responsibilities
v. Prioritizing activities as per their importance
vi. Spending the right time on the right activity
74

75. Time Management Skills
1. Stay organized
2. Learn to prioritize
3. Be punctual and disciplined.
4. Take ownership of work
5. Be a little diplomatic
6. More focused
7. Be reasonable
8. Do not over burden yourself
9. Remember time once gone never comes
back
10. The rules and regulations of an organization
are not only meant for subordinates but also
for team leaders and superiors.
75

76. Cont…
11. Ask your employees to keep their work
stations organized..
12. Ask your administration supervisor to issue
notepads, registers, pens, folders etc to all your
employees. .
13. Delegate them responsibilities as per their
specialization, educational qualification and
background.
14. Keep a track of employee performance.
15. It is essential for the superiors to know what
their employees are up to.
16. Promote various training programs to in still
time management skills in employees.
17. Be a good listener.
76

77. How to practice effective time
management in organization
 Know your targets well
 Organize yourself
 Be loyal to your organization
 Plan your things well in advance
 Keep a notepad and pen handy
 Be punctual
 Reach office on time
 Manage yourself well
 Use a planner or organizer to plan your day well
 Leave a little early for meetings outside office
 Set priorities for yourself
 Avoid gossiping or loitering around at the
workplace
 Avoid long personal calls during office hours 77

78. Role of Planning in Time Management
 Time Management plays an essential role in corporate and helps
employees to finish off assignments on time.
 Doing the right thing at the right time is called Time Management.
 It is essential for an individual to value time as time once lost never
comes back, no matter how much money you spend.
 An individual who fails to deliver results on time is appreciated by
none and is never taken seriously at the workplace.
 Planning plays a pivotal role in effective time management.
An individual needs to plan his/her day well in advance to
make the best possible use of time.
 There is no point in working just for the sake of doing work.
Planning gives an individual a sense of direction in the
organization and motivates him to complete assignments on time.
 Plan how you want to move forward. It is important for an
individual to set a goal and objective for him/herself and work hard
towards achieving the same.
78

79. Cont…
 Detailed planning suggests you the steps towards realizing your
goals at the workplace within a defined time frame.
 Planning helps an individual to know what all he needs to do
urgently and what all can be done a little later.
 To plan things better, employees should prepare a Task Plan
where he/she can jot down tasks against the time slots assigned
to each activity.
 High priority activities must come on top followed by the ones
which do not require immediate attention.
 Planning helps to accomplish urgent and critical tasks way ahead
of deadline.
 Plan as to how your day should look like.
 Develop the habit of using an organizer.
 It helps to plan things better.
 Individuals who adopt a planned approach finish off work on time
as compared to those who just accept anything which comes
there way. 79

80. Benefits of Time Management
 Time Management makes an individual punctual and
disciplined.
 One becomes more organized as a result of effective
Time Management.
 Effective Time Management boosts an individual’s
morale and makes him/her confident
 Individuals who stick to a time plan are the ones who
realize their goals and objectives within the shortest
possible time span.
 Better Time Management helps in better planning and
eventually better forecasting.
 Research says that individuals who accomplish tasks on
time are less prone to stress and anxiety.
 Time Management enables an individual to prioritize
tasks and activities at workplace.
 Time Management helps an individual to adopt a
planned approach in life.
80

81. Time Management Techniques
 Set your Priorities
 Make sure you finish your assignments
within the stipulated time frame
 Understand the difference between urgent
and important work
 Stay focused
81

82. Cont…
 Do include time for your tea breaks, net
surfing, personal calls and so on in your daily
schedule
 Set realistic and achievable targets for
yourself.
 Do not overburden yourself
 Be disciplined and punctual
 Keep things at their proper places
 Do not treat your organization as a mere
source of money.
 Develop the habit of using an organizer
82

83. Task plan
Date ………………
Day ………………
9 AM - Day Begins
9.15 - 10 AM - Reply urgent emails.
10 AM - 12 noon - Work on client A’s proposal, prepare reports and
necessary data. (Most Urgent).Also work on comparative analysis of
competitors. (Urgent)
12 Noon - 12.30 PM - Sit and discuss with team members on pending
issues (Have to clear all pending work by end of the day).
12.30 - 1.30 PM - Lunch Break (Enjoy with fellow workers).
1.30 - 1.40 PM - Call up spouse.
1.40 - 3 PM - Work on Client B’s Proposal (Still have two days).
3 PM - 4 PM - Sit with Boss for approvals and other critical issues.
4 PM - 5 PM - Call up existing and potential clients.
5 PM - 5.15 PM - Check personal mails.
5.15 - 6 PM - Collate reports and send to immediate reporting Boss.
6 PM - 6.15 PM - Organize Work Station.
Day Ends
83

84. Activity
1. What are the reasons why time resource
seeks more attention than other resources?
2. Who need to think about time management?
Why?
3. What are the misconceptions of time
management?
4.Explain what we mean when we say ‘TM
is more than just managing time.
5. What are the common resource organizations
in the world do have resources in common
rather than human resources?
84

85. Individual exercise (25%)
 Visit TVET institute/College/organization and
assess the methods how the institute manages
use to manage financial resources and
indicate the challenges encountered in the
institute. Construct semi-structure interview
questions to gather information from the
respondents. From your findings what
professional suggestions can you recommend
to solve the challenges?
 Consult the updated directives/proclamations
of FRM and analyze it. Give professional
recommendations for those issues that needs
modifications.>>>>>>>>>>>>>>>>>>>>>>>>>
85

86. References
 Crumb, Chery (2005). Personality styles. http:
WWW.ccrumb.com/articles/May 05en.pdf
 Fogleman G.R (2010). Leadership integrity. New York.
 Mind tools.com. Resource Management. Articles
,Various , Retrieved April27,2010
 Soft copies provided by the instructor
 Resources from Library and internet
END
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86