public expenditure tracking survey...

Final Report Public Expenditure Tracking Survey (PETS)

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Submitted By: Grant Thornton Consulting (Pvt.) Limited

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May 2016

Final Report

Public Expenditure Tracking Survey (PETS)

© 2016 Grant Thornton International Ltd. All rights reserved.

Table of Contents

Preface i Acknowledgments ii Executive Summary iii Section 1. Introduction 5

Chapter 1. Assignment Objectives, Methodology and Sources 6 1.1. Objectives of PETS 6 1.2. Methodology for PETS 6 1.3. Data Sources 7

Chapter 2. Diagnostic of Public Financing in Higher Education Sector 9 2.1. Macro Review of Higher Education In Pakistan 9 2.2. PFM Landscaping 11

Chapter 3. PETS Exercise 18 3.1. General Characteristics of Data 18 3.2. Data Inconsistencies 18 3.3. Contribution made by PETS 18 3.4. Tracking of Expenditures 19 3.5. Quality Enhancement Cell 22 3.6. Cost Per Student 22

Section 2. Findings 28 Chapter 4. Information, Reporting and Monitoring Mechanism 29

4.1. MIS 29 4.2. Budgeting 30 4.3. Accounting and Reporting 30 4.4. Utilization Reports and Variance Analysis 31 4.5. External Audit 32 4.6. HEC Supervision 32

Chapter 5. Institutional Capacity 33 5.1. Governance 33 5.2. Internal Audit 34 5.3. HR Capacity 35 5.4. Procurement 37

Section 3. Conclusion & Recommendation 39 Chapter 6. Recommendations in the light of PETS 40

HEIs Centered 40 HEC Centered 41

Chapter 7. Balance Scorecard 43 7.1. The Four Quadrants 43 7.2. Application of Balance Scorecard 44 7.3. Universities that benefited from BSC Application 44 7.4. Application of Balance Scorecard on HEIs 45

Chapter 8. Steps for Development of MIS Model 49 Chapter 9. Governance Model 52

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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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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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List of Annexure

1. Comments Received on Draft Report and Responses Provided by the Consultant 2. Supplementary Information Emerging from the Survey 3. Terms of Reference 4. Control Checklist

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Acronyms

AGPR Accountant General of Pakistan Revenue

BCC Budget Call Circular

BOG Board of Governors

BOT Board of Trustees

BPS Basic Pay Scale

DFA Deputy Financial Advisor

DFD Data Flow Diagram

DAI's Degree Awarding Institutions

FA Financial Advisor

GTCPL Grant Thornton Consulting Private Limited.

HEC Higher Education Commission

HEI Higher Education Institute

HR Human Resource

HRM Human Resource Management

IAS International Accounting Standards

IBC Indicative Budget Ceiling

IFRS International Financial Reporting Standards

IPSAS International Public Sector Accounting Standards

KPIs Key Performance Indicators

MoPD Ministry of Planning & Development

MTBF Medium Term Budgetary Framework

MTDF-HE Medium Term Development Framework for Higher Education

MIS Management Information System

MoF MoF

NAM New Accounting Model

NEC National Economic Council

ORIC Office of Research, Innovation & Commercialization

P&D Planning and Development

PETS Public Expenditure Tracking Survey

PFM Public Financial Management

PPRA Public Procurement Regulatory Authority

PSDP Public Sector Development Program

QAA Quality Assurance Agency

QEC Quality Enhancement Cell

TESP Tertiary Education Support Program

TOR Terms of Reference

TRP Technical Review Panel

TTS Tenure Track System

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© 2016 Grant Thornton International Ltd. All rights reserved. i

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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© 2016 Grant Thornton International Ltd. All rights reserved. ii

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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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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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, non- conflicted 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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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 Assignment Objectives, Methodology and Sources Chapter 2 Diagnostic of Public Financing in Higher Education Sector Chapter 3 PETS Exercise

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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

Funds Flow Mechanism

HR Assessement/Budget

Execution (Procurement)

Financial Management

Internal Audit Mechanism

Diagnostics

Figure 1: Execution Framework

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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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Selected universities as sample for this survey included: Table 1: List of Sample HEIs

Sr. Name of Institution Acronym Region Discipline

1. Allama Iqbal Open University, Islamabad AIOU Federal Capital General

2. Dow University of Health Sciences, Karachi DUHSK Sindh Urban Medical

3. Hazara University, Dhodial, Mansehra HU KPK General

4. International Islamic University, Islamabad IIUI Federal Capital General

5. Islamia University Bahawalpur IUB South Punjab General

6. Islamia College University, Peshawar ICU KPK General

7. Karakurum International University, Gilgit KIU Gilgit Baltistan General

8. Mirpur University of Science & Technology, Mirpur

MUST AJK General

9. Mehran University of Engineering & Technology, Jamshoro

MUET Sindh Rural Engineering

10. NWFP University of Engineering & Technology, Peshawar

NUET KPK Engineering

11. University of Punjab, Lahore PU Central Punjab General

12. Sardar Bhahdur Khan Women University, Quetta SBK

Baluchistan (Quetta)

General Women

13. University of Agriculture, Faisalabad UAF Central Punjab Agriculture

14. University of Sargodha, Sargodha UoS South Punjab General

15. University of Karachi UoK Sindh Urban 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.

http://www.iurc.edu.pk/

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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%.

2.1.2. Student Enrolment Trends Increase in enrollment of students for the period 2010-11 to 2013-14 was 44% with annual growth rate of 13% while during the year 2005-06 to 2009-10 there had been 59 percent increase in student enrolment over the five years or an 11% increase in enrollment per annum. This annual increase in enrollment coincides with the targets of MTDF HE-II. However the target numbers of enrolled students projected in MTDF II was much higher than the actual figure.

Source: Economic Survey of Pakistan 2014-15

135139

147

161

2010-11 2011-12 2012-13 2013-14

Figure 2: Higher Education Institutions- Pakistan

1,1081,320

1,595 1,595

0200400600800

1,0001,2001,4001,6001,800

2010-11 2011-12 2012-13 2013-14

Th

ou

san

ds

Figure 3: Student Enrolment in HEIs


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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.

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

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 No. of Universities in 701+Score Category

China 15

India 11

Turkey 4

Pakistan 4

Iran 0

Sri Lanka 1

Bangladesh 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)

176 202 273 254 308 322409 420

628

830 8321024

11181211

1351

0

500

1000

1500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


64 7078 78

0

50

100

2010-11 2011-12 2012-13 2013-14

Th

ou

san

ds

Figure 4: Faculty Strength in HEIs

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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 public expenditure on education sector, ranging between 2.3 to 2.5 percent of GDP from 2010 to 2014 as depicted in the figure 7. This was significantly less than the average of 5 percent of GDP of developing countries. Following is a table that observes trends over a period of 4 years, regarding federal expenditure on education and the percentage it constitutes to the GDP. 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. Table 3: Share of Tertiary Education Expenditure in GDP - Pakistan

FY GDP (US$, bn.)

Education Spend as a Share of GDP

Tertiary Edu. spend as a Share of GDP

Edu. as a Share of Total Public Expenditure

Tertiary Edu. as a Share of Total Ed. Expenditure

2010-2011 177.41 2.30% 0.24% 12% 11%

2011-2012 213.76 2.20% 0.18% 12% 8%

2012-2013 224.65 2.10% 0.20% 10% 9%

2013-2014 232.27 2.50% 0.21% 12% 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%.

Source: World Bank World Development Indicators

2.30%

2.20%

2.10%

2.50%

1.90%

2.00%

2.10%

2.20%

2.30%

2.40%

2.50%

2.60%

2010-2011 2011-2012 2012-2013 2013-2014

Figure 6: Education Expenditure as % of GDP - Pakistan

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Table 4: Recurring Grant in MTDF-II (In PKR billion)

Description FY11 FY12 FY13 FY14 FY15

Projected 29.06 32.87 38.29 44.76 51.45

Allocated 29.06 31.50 32.78 39.00 43.00

Released 29.06 28.89 32.78 39.22 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 (In PKR billion)

Description FY11 FY12 FY13 FY14 FY15

Projected NA 20.24 23.99 25.79 30.54

Allocated 15.763 14.00 15.80 18.49 27.02

Released 14.064 9.763 12.80 14.836 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.

Fund Allocation

PFM

Planning &

Budgeting

Accounting and

Reporting

Procurement

Auditing

Legislative Oversight and Governance

Figure 7: Elements of PFM

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

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 Activity

December 6,2012 Request to the Treasure for Budget Proposal from HEC for the financial year 2013-14

December 11,2012 Request to all relevant departments in University for submission of requisite information on prescribed Performa’s for budget proposal

January 09,2013 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)

February 28, 2013 Intimation of Provision Indicative Budget Ceiling to Chairman HEC by MoF

April 17,2013 Request from treasurer to all departments of the university for preparation of budget estimates for financial year 2013-14

May 08,2013 Intimation of Final Indicative Budget Ceiling to Chairman HEC by MoF

May 2013 Incorporation of Budget Estimate of PKR 1,159,621,000 for UAF in Pink Book for approval

Source: PETS

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June 30,2013 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

July 13,2013 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

Approved Budget of HEIs as per Utilization Reports (PKR MN)

Total Receipts(PKR MN)

Variance

AIOU 4,637.95 4,491.28 -3%

DUHSK 3,189.23 3,641.54 14%

HU 809.11 853.5 5%

ICUP 917.64 731.83 -20%

IIUI 1,729.71 1,659.98 -4%

IUB 2,692.53 2,067.32 -23%

KIU 477.1 436.77 -8%

MUET 1,432.97 1,821.61 27%

MUST 576.17 601.15 4%

PU 5,289.78 5,603.60 6%

SBK 430.97 291.77 -32%

UAF 2,063.62 2,288.29 11%

UETP 1,170.18 1,090.15 -7%

UOK 2,530.68 2,961.51 17%

UOS 2,235.23 1,721.67 -23%

Source: PETS – Annual Utilization Reports 2013-14

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 Variance of Grants %

AIOU 275.00 296.5 8%

DUHSK 1,144.23 1,203.70 5%

HU 380.83 413.71 9%

ICUP 350 303.71 -13%

IIUI 1,085.08 1,150.23 6%

IUB 1,161.13 1,009.67 -13%

KIU 226.61 240.27 6%

MUET 798.2 860.2 8%

MUST 256.57 276.3 8%

PU 1,991.21 2,096.45 5%

SBK 380.39 241.67 -36%

UAF 1,309.62 1,410.85 8%

UETP 604.5 678.8 12%

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UOK 1,368.75 1,655.64 21%

UOS 695.28 727.54 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 Budgeted Own Sources Actual Own Sources Variance of Own Sources %

AIOU 4,362.95 4,194.78 -4%

DUHSK 2,045.00 2,437.84 19%

HU 428.28 439.79 3%

ICUP 567.64 428.13 -25%

IIUI 644.64 509.75 -21%

IUB 1,152.58 1,057.65 -8%

KIU 250.49 196.5 -22%

MUET 634.76 961.41 51%

MUST 319.6 324.85 2%

SBK 50.58 50.1 -1%

PU 3,298.58 3,507.15 6%

UAF 754 877.44 16%

UETP 565.68 411.35 -27%

UOK 1,161.93 1,305.87 12%

UOS 1,539.95 994.13 -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

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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 non- teaching 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

*Information not provided by AIOU


Table 10: Segregation of Establishment Charges – FY 2013-14

Names Faculty salary

Salary of officers & Staff-Teaching Departments

Salary of officers & Staff-Non-Teaching Departments

TTS Faculty Salary Other Est Charges

AIOU 36% 3% 61% 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

0%

20%

40%

60%

80%

35%

68% 68%

47%

64% 68%

47%60%

47%

64%58%

80%

56%49%

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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



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



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.

22%

29%

22%21%

30% 32%

19%24%

24%

28%33% 34%

22%

23%

14%

39%

46%

26%

34% 36%

28%

36%

24%

36%

25%

41%

34%

27%

DUHSK HU ICUP IUB IIUI KIU MUET MUST PU SBK UAF UETP UOK UOS

Basic Pay Total Allowances

65%

32% 32%

53%

36% 32%

53%40%

53%

36%42%

20%

44%51%

DUHSK HU ICUP IUB IIUI KIU MUET MUST PU SBK UAF UETP UOK UOS

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Table 11: Composition of Non-salary expenditures FY 2013-14

AIOU DUHS

K HU ICUP IIU IUB KIU MUE

T MUS

T PU SBK UAF UOK UOS

Particulars

Fees 0.00% 0.40% 0.00% 0.60% 0.00% 0.00% 0.00% 0.10% 0.40% 0.00% 0.00% 0.10% 0.00% 0.00%

Communication 8.10% 1.50% 1.30% 2.40% 3.60% 2.90% 1.80% 2.10% 2.00% 1.70% 3.40% 1.70% 1.20% 0.70%

Utilities 2.30% 17.00% 1.80% 20.30% 11.50% 11.20% 3.20% 7.50% 4.00% 11.60% 8.30% 25.40% 24.80% 4.40%

Occupancy Costs 4.70% 4.60% 0.00% 2.50% 29.70% 0.70% 1.10% 0.00% 0.20% 10.10% 0.00% 0.30% 0.00% 0.00%

Operating Leases 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% 0.00%

Motor Vehicles 0.00% 0.40% 0.70% 0.00% 0.00% 0.00% 0.00% 0.20% 0.00% 0.00% 4.30% 0.10% 0.00% 0.10%

Consultancy & Contractual Work 1.70% 0.00% 0.00% 0.00% 0.00% 0.50% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Travel & Transportation 2.80% 7.40% 6.90% 4.30% 4.20% 14.20% 11.40% 9.70% 4.40% 4.10% 14.80% 5.00% 2.80% 4.90%

General operating Expenses 74.00

%

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%

Employees Retirement Benefits 7.10% 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%

Repair and maintenance 0.90% 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%

Feasibility studies 0.00% 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%

Research Survey & Exploratory Operations

0.00% 4.80% 0.00% 0.00% 1.20% 0.00% 6.00% 1.50% 3.40% 1.80% 0.20% 1.70% 0.10%

Financial Assistance/Scholarships 0.00% 0.00% 8.20% 2.30% 7.30% 6.30% 1.40% 0.80% 0.50% 6.00% 0.40% 5.00% 2.40% 5.30%

Technical Assistance 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%

Entertainments and Gifts 0.10% 0.00% 0.40% 0.90% 0.50% 0.60% 0.30% 0.30% 0.50% 0.70% 0.60% 0.20% 0.10% 0.30%

Other Transfer payments 0.00% 48.20% 10.80% 0.00% 6.50% 0.00% 17.40% 28.80% 4.30% 23.80% 0.00% 0.00% 14.80%

Advances to employees 0.00% 0.00% 0.00% 0.90% 0.00% 0.50% 0.00% 3.60% 7.30% 0.30% 0.00% 0.00% 0.30% 0.00%

Expenditures on Acquiring of physical Assets 0.10%

0.00% 4.90% 10.50% 2.30% 5.90% 6.40% 1.30% 22.70% 5.20% 14.30% 6.50% 1.60% 7.70%

*Information not provided by DUHSK


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 % of Non-Salary Expense Variance

DUHSK 15 0.28 0.01% 98%

HU 13.42 13.33 4.80% 1%

ICUP 2.5 - 0.00% 100%

IIUI 16.29 - 0.00% 100%

IUB 12.8 12.09 1.10% 6%

KIU 2 - 0.00% 100%

MUET 62.28 58 5.99% 7%

MUST 7.82 3.54 1.51% 55%

PU 100 98.23 3.38% 2%

SBK 5 2.03 1.85% 60%

UAF 3.11 1.87 0.20% 40%

UETP 5 4.29 1.61% 14%

UOK 25 24.1 1.75% 4%

UOS 0.95 1.01 0.09% -7% *Information not provided by AIOU


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 Score

DUHSK

HU ICUP IUB KIU MUET MUST PU SBK UAF UOK UOS Avg.

Existence 6 6 6 6 6 4 6 6 6 6 6 6 6 92%

Organization 12 12 12 8 7 2 5 12 10 12 10 12 10 67%

Performance 82 73.36 50.72 46.31 64.1 5.5 44.18 69.42 69.58 76.61 77.08 39.56 72.94

67%

Total 100 91.36 68.72 60.31 77.1 11.5 55.18 87.42 85.58 94.61 93.08 57.56 88.94

*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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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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Table 14: Cost per Student - Discipline Wise FY 2013-14 (PKR)

Name of Universities Social Sciences

Business / management

science

Sciences Arts and Humanities

Computer Sciences

Engineering Medical Agriculture Pharmacy Islamic Oriental Learning

Veterinary HEI Average

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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Table 15: Cost per Student - Cadre Wise FY 2013-14 (PKR)

Names

Social Sciences Business /

Management Sciences

Arts / Humanities Computer

Science Pharmacy

Islamic Oriental Learning

Veterinary

Under Grad

Post Grad

Under Grad

Post Grad

Under Grad

Post Grad

Under Grad

Post Grad

Under Grad

Post Grad Under Grad

Post Grad

Under Grad

Post Grad

DUHSK

HU 161,424 148,365 127,981 192,178 117,462 238,347 83,844 239,736

ICUP 163,955 452,193 550,812 360,887 162,317 -

IIUI 322,198 437,371 119,574 274,083 52,287 149,139

IUB 223,415 91,408 56,168 126,036 229,646 102,983 27,385 58,648

KIU 532,643 360,893 427,633 378,561 912,380 244,123 519,498 810,924

PU 950,472 347,816 361,691 648,747 912,293 495,267 343,678 -

SBK 308,729 168,972 170,886 230,153 171,964 264,497 67,057 545,203

MUST 259,396 443,527 154,615 193,947 146,783 131,855 796,402

UOK 372,161 683,773 166,535 150,598 122,260 193,855 130,360 519,192

UAF 505,427 329,307 1,256,904 174,178 112,905 396,725 177,495 214,141 574,168

UOS 343,718 239,225 239,225 210,162 216,019 272,152 125,159 189,538 111,957 56,089

(Cont’d) Engineering Medical Agriculture

Under Grad Post Grad Under Grad Post Grad Under Grad Post Grad

DUHSK 914,368 4,028,270

HU

ICUP

IIUI

IUB 297,796 947,637

KIU 40,604 251,837

PU 541,563 1,143,862

SBK

MUST 1,454,559

UOK 75,758 674,786

UAF 201,169 339,035 65,494 227,464 577,759

UOS 136,481 282,244 179,818 675,758 *Information not provided by AIOU, MUET and UETP


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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)

HEI Social Science

Business / Management science

Science Arts and Humanities

Computer Sciences

Engineering Medical Agriculture Pharmacy Veterinary University Average

IIUI 33% 32% 26% 29% 31% 30%

SBK 36% 21% 32% 39% 32%

KU 22% 24% 38% 21% 45% 80% 38%

HU 38% 41% 37% 47% 25% 37%

ICUP 15% 37% 49% 28% 32%

IUB 46% 50% 41% 47% 44% 5% 27% 42% 59% 40%

PU 19% 10% 18% 9% 15% 23% 18% 16%

DUHSK 17% 17%

UOK 53% 9% 29% 6% 19% 62% 33% 30%

UAF 41% 13% 27% 8% 10% 3% 19% 29% 19%

UOS 10% 12% 15% 19% 56% 24% 12% 30%

MUST 48% 19% 47% 47% 37% 34% 39%

Industry Average 33% 23% 32% 29% 28% 25% 33% 36% 12% 44% *Information not provided by AIOU, MUET and UETP


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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 Arts / Humanities / Social Sciences

Business / Management Sciences

Sciences (Basic and Natural I.T) / Agriculture

Engineering Medical / Veterinary Sciences

Computer Science

DUHSK - - - - 1:8 -

HU 1:27 1:26 1:31 1:22 - -

ICUP 1:17 - 1:15 - - -

IIUI 1:38 1:83 1:74 1:25 - -

IUB 1:33 1:57 1:35 1:26 1:19 -

KIU 1:26 1:17 1:20 - - -

MUST 1:13 1:32 1:20 1:19 - -

SBK 1:8 1:15 1:12 - - 1:14

PU 1:35 1:72 1:30 1:22 - -

UAF 1:26 1:89 1:36 1:19 1:18 -

UOK 1:55 1:169 1:35 1:36 1:24 -

UOS 1:46 1:63 1:46 1:12 1:18 - *Information not provided by AIOU, MUET and UETP


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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 Information, Reporting and Monitoring Mechanism Chapter 5 Institutional Capacity

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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 Software Used Campus Management Solution

AIOU No No

DUHSK Yes No

ICUP No No

IIUI Tailor made software exist No

IUB Tailor made software for receipts and payments exist; however that software was not integrated with CMS

Yes

KIU No No

MUET Not operational at the time of our review however was in implementation stages during the survey

No

MUST No No

PU Tailor made software exist No

SBK No No

UAF No No

UETP No No

UOK No No

UOS Separate receipt and payments tailor made software exist however those software was not integrated at the time of our review.

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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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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Table 19: Financial Reporting in HEIs

Universities Preparing Receipt and Expenditure Statement

Is it Audited by Commercial Auditor?

Utilization Reports Prepared

Is it Audited

AIOU No No Yes By AGP

DUHSK Yes Yes Yes By AGP/DG Sindh

HU No only Utilization Report Prepared

No Yes By AGP

ICUP No only Utilization Report Prepared

No Yes By AGP

IIUI No Yes Yes By AGP

IUB No only Utilization Report Prepared

No Yes By AGP

KIU Yes Yes Yes By AGP

MUET Yes Yes By AGP/DG Sindh

MUST Yes No Yes By AGP

PU Yes Yes Yes By AGP

SBK Yes No Yes By AGP

UAF No No Yes By AGP

UETP No only Utilization Report Prepared

No Yes By AGP

UOK No No Yes By AGP/DG Sindh

UOS No only Utilization Report Prepared

No Yes 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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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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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 sub-management 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

*Information not provided by AIOU and HU

Source: PETS

0

0.5

1

1.5

2

2.5

DUHSK ICUP IIUI IUB MUET MUST SBK KIU KU UAF UET UoP UoS

Frequency of meetings (BOT/Senate)

Actual Required

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Figure 13: Frequency of Meeting of BOG/Syndicate for the period FY 2013-2014.

*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 Committee

Required

no. Actual no. Required no. Actual no. Required no. Actual no. Required no. Actual no.

AIOU 18 18 N/A N/A 58 57 9 9

DUHSK 89 89 23 23 62 62 8 8

ICUP 30 30 24 24 13 13 10 10

IIU 45 45 13 13 22 22

IUB 63 51 14 10 43 43 7 7

KIU 13 12 10 10 18 18 9 9

MUET 100 85 15 11 6 6

MUST 16 17 10 8 15 11 9 7

PU 52 N/P 17 N/P 30 N/A 10 N/A

SBK 18 18 8 8 17 17 6 6

UAF 58 47 19 17 N/P

UETP 30 25 20 20 16 16 10 10

UOS N/P N/P 17 17 44 44 8 8

UOK 180 179 20 20 131 131 7 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.

0

5

10

DUHSK ICUP IIUI IUB MUET MUST SBK KIU KU UAF UET UoP UoS

Frequency of meetings (BOG/Syndicate)

Required Actual

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Table 21: Internal Audit in HEIs

Names of universities

Statute Requirement for Internal Audit Department

Existence of AGP

representative

Independent Reporting

Pre audit Post audit

Risk base Auditing

AIOU No Yes No Yes No No

DUHSK No Yes No Yes No No

HU No No No No No No

ICUP YES No No Yes No No

IIUI YES No No Yes No No

IUB No Yes No Yes No No

KIU No Yes No Yes No No

MUET No Yes No Yes No No

MUST No Yes No Yes No No

PU YES Yes No Yes No No

SBK YES Yes No Yes No No

UAF No Yes No Yes No No

UETP YES Yes No Yes No No

UOK No Yes No Yes No No

UOS No No No Yes No No

Source: PETS

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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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 HU IIUI IUB IUP KIU MUET MUST SBK UAF UET P UoK UoP UoS

General Administration

14% NP NP

39%

NP

23%

NP

27% 21% 14% 12% 9%

NP NP

Common Services 24% 23%

Examinations Branch

31% 23%

University Teaching – Faculty

47% 31% 20% 56% 15% 34% 63%

Library 44% 23%

27% 21% 14% 12% 9% University Managed Schools

43% 23%


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 Dow HU IIUI IUB IUP KIU MUET MUST PU SBK UAF UETP UoK UoS

No. No. No. No. No. No. No. No. No. No. No. No. No. No.

PhD 360 NP 277 179 351 52 107 132 490 1 393 132 329 285

M.PHIL/MS 228 NP 382 331 324 189 NP 183 748 18 49 183 512 275

MA/M.SC NP NP NP NP NP NP 146 NP NP 17 160 NP NP 256

Sub-total of above 588 NP 659 510 675 241 253 315 1238 36 602 315 841 816

Percentage to total strength 23% NP 21% 19% 23% 35% 18% 43% 17% 10% 22% 43% 23% 33%

Total Students 4892 11080 13219 15618 4903 2278 NP 4550 20482 2883 13472 NP 31330 17543

Percentage to Number of Students 12% NP 5% 3% 14% 11% NP 7% 6% 1% 4% NP 3% 5% *Information not provided by AIOU

Source: PETS

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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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Table 24: System Observations of Procurement in HEIs 2013-14

System Observations AIOU

DUHSK HU ICUP IIUI IUB KIU MUE

T MUST PU SBK UAF UETP UOK UOS

Existence/Updation (in light of PPRA rules) of comprehensive procurement policies & procedures

No No No NO No Yes No No No No No Yes No No No

Consolidated annual procurement plan

No No No NO No No No No No No No No No No No

Contract Roster No No No NO No No No No No Yes No No No No No

Procurement Complaint Redressal System

No No No NO No Yes No No No No No Yes No No No

Dedicated Procurement Specialist/Staff

No No Yes No Yes No Yes Yes No Yes No No Yes No No

Conflict of interest situation/ Lack of segregation of duties

Yes Yes No Yes No Yes No Yes Yes NO Yes Yes No Yes Yes

Contract administration No No No No Yes No Yes No No Yes Yes No Yes No No

Source: PETS

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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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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 medium-term 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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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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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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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. The Four Quadrants

I. 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).

II. 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).

III. 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 Goals Measurement through KPIs

Students Attract-develop-graduate-satisfy high Quality students

Persistence rate, market share, department GPA, on campus recruitment/ linkages to employers, graduate exit surveys.

Community-Employers, alumni, parents

Establish Linkages with Business Community.

Customer Survey ratings, Parents Feedback and faculty involvement in

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community services.

Faculty Faculty satisfaction Engagement in development activities, personnel policies, office space and access to technology

IV. 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 Goal Measurement through KPIs

Fund Raising Building endowment/fund raising/ annual giving

Size/growth of endowment, donor support for new initiatives, total funds raised

Revenue from operations

Increased research grants, Increased state appropriation, Increased other sources income including (Research/Incubation/Commercialization) and enhanced teaching productivity.

Volume and number of research grants received, % of funding relative to others in system, Student/faculty ratio, % of contribution cost,

Financial management

Based on sound financial management principles.

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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7.4. Application of Balance Scorecard on HEIs Table 27 : Balance Scorecard applied to HEIs

Balance Score Card AIOU DOW HU IIUI IUB IUP KU MUET

MUST PU SBK UET UOAF UOK UOS

Total Students N.P 4,892 11,080 13,219 15,618 4,903 2,278 N.P 4,550 20,482 2,883 N.P 13,472 31,330 17,543

Male N.P N.P 8,071 6,825 7,202 3,620 1,298 N.P 3,201 8,862 0 N.P 8,348 15,895 9,112

Female N.P N.P 3009 6,394 8,416 1,283 980 N.P 1,349 11,620 2,883 N.P 5,124 15,435 8,431

Local Students N.P N.P N.P 11,219 15,614 4,868 N.P N.P N.P 20,351 2,822 N.P 13,397 N.P N.P

Foreign Students N.P N.P N.P 2,000 4 35 N.P N.P N.P 131 61 N.P 75 N.P N.P

No. of students (Financial Aid/Scholarships)

N.P N.P N.P N.P 1,100 532 342 N.P 979 6657 1326 N.P 3001 N.P N.P

Foreign Faculty N.P N.P N.P 40 Nil Nil Nil N.P N.P 8 Nil N.P Nil N.P N.P

MOU Signed with local/Foreign research Institutes & Universities

N.P N.P N.P 60 Nil N.P 19 N.P N.P N.P 14 N.P 163 N.P N.P

Customer Perspective

Existence of Alumni records and data base.

No No No Yes No No No No No Yes No No No No No

Existence of Placement center and Student Counseling Wings?

No No No No No No No No No Yes No No No No No

Percentage of Students being recruited through placement center of University

NR NR NR NR NR NR NR NR NR 5% NR NR NR NR NR

Percentage of Students receiving first-class honors

NP NP NP 70% 30% NP NP 30% NP NP NP NP NP NP NP

Market/Industry Linkages developed by University? (if any)

No Yes No No Yes Yes No Yes YES YES No No No YES No

Existence of any mechanism to gather employer feedback.

No No No No Yes No N/A No No No No Yes No No No

Existence of Institutional arrangements for apprenticeship in local industries/corporate sector

No No No No Yes No N/A No No Yes No No No No No

Internal process Perspective

Percentage of Faculty holding doctoral degree or equivalent/ distinctions.

NP 61% NP 42% 35% NP 7% 42% 42% NP NP 75% 15% 39% 35%

Staff-student ratio 1:15 1:13 1:32 1:32 1:39 NP 1:22 1:21 NP NP 1:33 1:23 1:11 1:37 1:22

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Male N.P N.P 8,071 6,825 7,202 3,620 1,298 N.P 3,201 8,862 0 N.P 8,348 15,895 9,112

Female N.P N.P 3009 6,394 8,416 1,283 980 N.P 1,349 11,620 2,883 N.P 5,124 15,435 8,431








Training workshops offered by HEI for Continuous professional development for faculty.

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No

Is budget dedicated directly for faculty learning program.

HEC Funding

HEC Funding

HEC Fundin

g

HEC Funding HEC Funding HEC Funding

HEC Fundin

g

HEC Funding

HEC Funding

HEC Funding

HEC Funding

HEC Funding

HEC Funding

HEC Fundin

g

HEC Funding

How often curriculum is updated and No. of new courses offered to include educational, business and commercial trends for Program internationalization

As per requiremen

t

As per requiremen

t

2 to 3 years

Every 2 years 2 to 3 years As per requiremen

t

2 to 3 years

2 to 3 years

2 to 3 years

Every 2 years

As per requiremen

t

2 to 3 years

2 to 3 years

Every 2 years

As per requiremen

t

Learning and growth Perspective

Number of Students passing an external quality assurance assessment.

Only PHD students

Only PHD students

Only PHD

students

Only PHD students

Only PHD students

Only PHD students

Only PHD

students

Only PHD

students

Only PHD students

Only PHD

students

Only PHD students

Only PHD

students

Only PHD

students

Only PHD

students

Only PHD students

Number of staff-training provided to faculty in 2014

5 6 7 6 7 8 10 5 4 12 7 11 9 9 6

Percentage of Revenue earned from Research activities to total revenue.

N/A N/A N/A No commercializa

tion

N/A N/A N/A N/A N/A Minimal income

from testing

and research

N/A Minimal income

from testing

and research

N/A N/A N/A

Mechanism for rewarding research team based on their successful research publications?

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

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Male N.P N.P 8,071 6,825 7,202 3,620 1,298 N.P 3,201 8,862 0 N.P 8,348 15,895 9,112

Female N.P N.P 3009 6,394 8,416 1,283 980 N.P 1,349 11,620 2,883 N.P 5,124 15,435 8,431








Project based monitoring plan in accordance with the grant objectives and variance analysis

No No No Yes YES No No No No No No No No No No

Financial Perspective

Percentage of total salary expense as per total HEC grant allocated

365% 287.50% 143% 90% 94% 57% 115% 93% 70.40% 71% 123% 118% 95% 74.30% 57%

Percentage of Federal Grants to total expenditure incurred.

9% 12% 47% 70% 64% 36% 49% 44% 42% 34% 52% 64% 61% 42% 28%

Percentage of supplementary grant /additional grant to Total grant?

7% N/A 9% 12% 5% 8% 13% 7% 7.5 5.50% 10% 11% 7% 12.38 4%

Other sources of revenue i.e. any investment by HEI and their percentage to total revenue?

5% 31.84 1% NIL 4% NIL 3% 33% 4.6 9% 4% 4% 42% 2.72 6%

Percentage of non-salary expense as per total actual expense incurred

66% 64.70% 32% 37% 50% 32% 44% 53% 40% 52.20% 36% 25% 42% 43.5 51%

Percentage of establishment expense as per total Receipt

24% 36% 68% 63% 3% 67% 61% 47% 44% 76 45% 75% 58% 61% n/a

How much of expenses are met by tuition fee?

124% 31.47% 15% 16% 4% 45% 12% 3% 36.8 4.87 4% 26% 11% 11.50% 16%

Percentage of operating expense as per total Receipt

46% 28.36 32% 37% 35% 18% 47% 24% 9% 42.60% 26% 25% 42% 28.13% 16%

Source: PETS

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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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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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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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- 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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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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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


clear responsibilities Academic Board


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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• 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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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 Balance Scorecard Institute: http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard

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 from Investopedia:

http://www.investopedia.com/terms/c/corporategovernance.asp

6. Education Indicators. (2015, November 2). Retrieved from World Bank: http://data.worldbank.org/indicator/SE.XPD.TOTL.GB.ZS

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 from Balance Scorecard Institute: http://balancedscorecard.org/Learning-and-Growth-Perspective

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 from World Bank: worldbank.org/EDUCATION/Resources/278200-1121703274255/1439264-1193249163062/Pakistan_countrySummary.pdf

14. (2012). Regional Integration and Economic Development in South Asia. Stockport, Cheshire: Asian Development Bank and

Edward Elgar.

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Annexure

1. Comments Received and Responses Provided by the Consultant

Source Comments Remarks

The World Bank

Overall, the report is of a good quality, and shows a good understanding of the TORs 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.

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.

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.

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”

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

(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

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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.

Addressed in the report

Mr. Ahmad Sher

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.)

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 conclusion part which should have been given before this part of the report.

Sequence of mentioned chapter has been kept intentionally as all these 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 Hussain

The portion of in admissible allowances being paid by various universities has been excluded from the final draft.

It has been incorporated in the final report. This is discussed under 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 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.

Added fund flow of development grants in Chapter 2 section 2.2.5.

GT has mentioned that in Where F&P and Academic councils are not provided in charter what mechanism these universities are adopting for approval of budget and programmes and comparison with other sample universities

It is mentioned that minimum required number of members for the respective councils was not provided. Although these councils exits and functional in all sample universities.

Final report has been submitted in April 2016 wherein under the ranking data GT is quoting QS ranking of 2104 for universities in top 700. Latest QS ranking should be quoted to make it rational

Table has been revised in light of recent ranking available

The source of data where mentioned should be specific. Like instead of given HEC, it must indicate whether GT is referring to some specific Annual reports or report of a division

Addressed in the final report

GT has not checked the spells correctly as I have noted the spelling of Peshawar as Peshar in report.

Carried out spell check in the report

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Same text is repeated in report several time like figures and text of Vision 2025 is mentioned again and again. Repetition, if possible, be avoided.

This has been addressed in final report

Recommendations are mostly of generic nature. Can these be made more specific by inferring it from data?????

Recommendations are dully supported by the findings where applicable.

Mr. Munir A. Shaikh

Report unilaterally excluded / ignored various discussions of Steering Committee on pay and allowances. This was almost agreed agenda, therefore in my opinion without incorporating following suggestions report may not be fulfill the purpose

Recommendations of Pay and Allowances commission are given in the final report. Report also highlights admissible and inadmissible allowances.

GT should design a model at optimum level of the allowances as per Government Basic Pay Scales and identify the entitled and non-entitled types of allowances being drawn in various Universities / HEIs.

This not part of our current mandate to design a model at optimum level of the allowances as per Government Basic Pay Scales. Rest has been covered in the report

Report suggest and recommend the standardized Pay Structure Model for Public Sector Universities, in accordance with the Government Pay Scales to be controlled by HEC or ministry of education as in practice in various countries of world.

We have already did this. A recommendation in this regard has been made. However development of any such design was not part of GT mandate.

There are various shortfalls in Tenure Track System and some universities have 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.

This is an administrative issue between HEC and HEIs.

Also the formatting may be reviewed before finalizing Formatting has been reviewed

Khawaja Zahid Hussain

Figure (Table) 6 on page no 18 describe that 80% of the sample universities manage to get grants more than the budget amount but as per the table it is almost 50%

Addressed

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 complexities

Components being repeated are separately structured in report first at 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 is not addressed in the final consolidated report.

A complete model in this regard has already been made part of the report as last chapter of the report.

Methodology part of report not includes the instrument by which the qualitative data is collected.

This is addressed in first chapter of the report

Management Information System (MIS) for Universities is not suggested in the report for better efficiency and accuracy.

It is referred in Chapter 8

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The issue of teachers’ distribution, cost efficiency and equity was not explained in the final report.

This addressed in section 3.7 and 3.8 of the report

References and Annexure (Supporting material) are not given in the report Annexure and Reference provided in the final report

Tables do not carry the financial year’s indication page 22 Addressed

Balanced scorecard may also be improved by giving a comparison with international universities specifically in the areas of governance and IT

Balance Score is specific to universities. There are no universal benchmarks or threshold that can be targeted for specific institutions.

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2. Supplementary Tables Emerging from the Survey

Table 28: Inadmissible Allowances Status in Sample Universities

Inadmissible Allowances Dow HU IIUI IUB IUP KIU MUET MUST SBK UAF UoK UoP UoS

1. Local Compensatory Allowance has been discontinued. (Discontinuation date. Mid 90s)

No No No No No No No No No No No No No

2. Dearness Allowance has been discontinued and merged in Basic Pay. ( 2008)

No No No No No No Yes in some cases

No No No Yes No No

3. Washing Allowance has been merged in Integrated Allowance. ( 2011)

Yes No No Yes No No Yes in some cases

Yes No No No No Yes

4. Dress Allowance has been discontinued and has been merged in Integrated Allowance ( 2011)

No No No No No No no No No No No No Yes

5. Project Allowance. I understand it has been discontinued by the Govt. in 2012 - 13

Yes No No No No No No No No No No No No

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)

No Yes No No No No No No No No No No No

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)

No No No No No No Yes No No No No No No

11. Personal/ Secretariat Allowance has been discontinued long ago by the Govt. (Mid 90s)

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 YES NO N/A Remarks

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

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


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

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 YES NO CP Remarks

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

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` YES NO N/A Remarks

1 Documented framework for accounting and financial reporting available? Applicability of

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:

Final Report



a) Treasurer/Financial Controller (HEI)

b) Member (VC/Board/Syndicate)

c) Property Management (Fixed Assets)


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?

d) Financial Aid


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

verification?

5 Does the financial aid committee meeting review the case?

a) Student file

Final Report



b) Accounts & Finance department

e) Procurement


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 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


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

Final Report



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?

Final Report



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


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

the system?

3 Are vouchers approved by (designation) and then posted into the system?

Final Report



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


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

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


1 Does internal audit function exist?

2 Internal audit reporting to audit committee or to the management?

3 Approach used by internal audit (risk based or pre audit)?

4 Access the quality of the internal audit plan in terms of:

Final Report



a. Comprehensiveness, clarity and timeliness:

b. Coverage of priority and high risk area:

c. Focus on testing the control framework:

5 Internal audit function working competently i.e. timely reporting any weaknesses in controls?

6 How well does internal audit’s staffing reflect it roles and responsibilities?

7 Is there evidence of effective coordination of internal and external audit work?

8 Are success measures used for evaluating the performance of internal audit function?

9 Do you consider that internal audit has added value to the organization?

Balance Score Card

Sr. # Customer Perspective YES NO N/A Remarks

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 YES NO N/A Remarks

1 Percentage of Faculty holding doctoral degree or equivalent/distinctions.

2 Staff-student ratio

Final Report



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 YES NO N/A Remarks

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 YES NO N/A Remarks

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

Final Report



Human Resource


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

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?

Final Report



16 Turnover ratio

17 Ratio of Core Function i.e. teaching staff to Support Function Staff

Management Information System


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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