Internal financial management of higher education institutions under the ministry of finance

Internal financial management is the key factor to ensure the efficiency and transparency in the operation of public higher education institutions under the Ministry of Finance.. Purpose

MINISTRY OF FINANCE

ACADEMY OF FINANCE



DOAN THI MY QUYEN

INTERNAL FINANCIAL MANAGEMENT OF HIGHER EDUCATION INSTITUTIONS UNDER

THE MINISTRY OF FINANCE

Major :Finance - Banking

Completed at Academy of Finance

The dissertation can be found at:

- National Library of Vietnam;

- Academy of Finance Library

INTRODUCTION

1 The urgency of the topic

As per the Prime Minister's approval in Decision No 395/QD-TTg, Decision No 722/QD-TTg and Decision No 1138/QD-TTg, the Ministry of Finance currently has 04 public higher education institutions: Academy of Finance, University of Finance and Accountancy, University of Finance and Business Administration, and University of Finance - Marketing The system of higher education institutions under the Ministry of Finance is an integral part of the national education system, with important contributions to training, improving intellectual standard and fostering talents in the financial sector, effectively serving the cause of industrialization, modernization and international economic integration Internal financial management is the key factor to ensure the efficiency and transparency in the operation of public higher education institutions under the Ministry of Finance

As these institutions have different levels of financial autonomy, internal financial management helps monitor, check and adjust financial operations in a timely manner to avoid financial waste

Management of Higher Education Institutions under The Ministry of Finance" not only bears theoretical but also practical

significance

2 Literature review

Many studies, both domestic and foreign, are quite extensive and in-depth on this topic The authors of these works include both individuals and organizations Countries such as the US, UK and Australia have fairly independent public education models between states or regions Each region has its own policies for public education Domestic and foreign research have together created a broad view of the current situation and issues related to internal financial management at public higher education institutions in the world These studies not only provide new knowledge but also propose specific solutions and strategies to

improve financial management efficiency in the higher education sector

Evaluation of relevant studies and research gaps for the topic

From overall results of the research, it can be seen that there have been many works, both domestic and foreign, that are comprehensive on financial management and issues related to financial management in the higher education sector

Regarding works with a focus on financial management at Vietnam's public higher education institutions in general, there have been no in-depth studies on financial management specifically for higher education institutions under the Ministry of Finance, particularly with the currently increasing competition in higher education Moreover, currently, as university autonomy has become an inevitable development trend in the world, the Government of Vietnam has issued Resolution No 77/2014/NQ-

CP dated October 24, 2014 on piloting the reform of the operation mechanism for higher education institutions and Decree No 16/2015/ND-CP dated February 14, 2015 regulating the autonomy

of public non-business units replacing Decree No

43/2006/ND-CP In addition, the National Assembly of the Socialist Republic

of Vietnam has issued Law No 34/2018/QH14 dated November 9,

2018 which amends and supplement a number of articles of the Law on Higher Education to create a mechanism to encourage the enhancement of comprehensive autonomy for higher education institutions

Recent studies on financial autonomy in particular and university autonomy in general in Vietnam have mainly focused

on researching and proposing macro solutions without much depth research to propose micro solutions that align with specific conditions of public higher education institutions

in-Currently, as the Government's mechanisms, policies, and legal regulations have changed, and international integration has been strong, some of the above-mentioned results and studies have become outdated Therefore, it is necessary for research to come

up with solutions that can meet the demand of financial management in higher education institutions under the Ministry of Finance in the new context In particular, the approach to financial management according to the process, associated with university governance is suitable with the fact that university autonomy is gradually becoming an inevitable trend

In summary, there has not been any scientific work on financial management for financial autonomy in higher education institutions under the Ministry of Finance in a systematic way both theoretically and practically This is the research gap, which at the same time affirms the independence and uniqueness of the author's dissertation topic

3 Purpose and objectives of the research

The purpose of the dissertation is to develop views,

orientations, solutions and recommendations with a scientific basis

in theory and practice, with high feasibility to improve the internal financial management of public higher education institutions under the Ministry of Finance

Objectives of the dissertation:

Firstly, to systemize and analyze, thus clarifying the theoretical

questions about public higher education institutions as well as concepts, characteristics, roles, objectives, tools and contents of internal financial management of public higher education institutions;

Secondly, to analyze and evaluate the situation of internal

financial management of public higher education institutions under the Ministry of Finance on financial planning, financial plan implementation, financial settlement and internal inspection and control, and to clearly identify the achieved results, limitations and causes leading to the situation of internal financial management of public higher education institutions under the Ministry of Finance;

Lastly, to develop views and orientations, and to propose

solutions and recommendations to improve the internal financial

management of public higher education institutions under the Ministry of Finance in accordance with the reform process of higher education in Vietnam

4 Subject and scope of the research

3.1 Subject of the research

The subject of the research is theoretical and practical issues on

internal financial management of public higher education institutions

4.2 Scope of the research

Scope of the research:

The research object is the Ministry of Finance (the managing entity - the primary estimating unit) and the public higher education institutions under the Ministry of Finance (including universities, academies - the estimating unit, the budget user unit) Public higher education institutions under the Ministry of Finance are public non-business units whose main activities are to perform the assigned tasks in the field of education and training, with partial autonomy in regular operating cost The financial management is mainly carried out according to the budget plan for regular tasks Therefore, the dissertation's approach is on the internal financial management content of public higher education institutions according to the financial management process including planning, plan implementation, settlement and inspection, monitoring and control of state budget, revenue from non-business activities and regular expenditures of public higher education institutions

Space and time scope of the research: The research is on public higher education institutions under the Ministry of Finance: the Academy of Finance, the University of Finance and Business Administration, the University of Finance and Accountancy, and the University of Finance - Marketing with secondary data collected between 2017 and 2022 as well as views, solutions and

recommendations for research applied until 2030 In addition, the research includes international experience in financial management

of public higher education institutions in France, the US, Singapore, Japan and Vietnam with public higher education institutions under the Ministry of Industry and Trade in a similar time and context to Vietnam, thereby drawing lessons for public higher education institutions under the Ministry of Finance

5 Methodology

Methodology: The dissertation utilizes dialectical materialism and historical materialism to study issues, ensuring comprehensiveness, systemicity, logic and practicality

Method: The dissertation combines economic scientific

research methods such as analytical method, systematization method, comparative method, descriptive statistical method and interpretive method with a synthesis of knowledge in finance In which:

Research overview: The dissertation uses the method of synthesis, analysis and comparison to find out the contents related

to the topic mentioned and solved in past research From there, the dissertation points out the research gap, and the new points that it needs to achieve

Theoretical and practical basis: The research uses the method of raising problems, generalizing, analyzing and synthesizing theories and experiences related to the topic This will act as a foundation for building content and criteria to analyze the situation

Situation: The research uses a synthesis method to collect financial data from management authorities and from public higher education institutions under the Ministry of Finance Based on the collected data, the research uses the method of descriptive statistics and case comparison to determine the achieved results and limitations in the internal financial management of public higher education institutions under the Ministry of Finance

Solution: The research uses the generalization method to systematize the views and strategic financial orientation of public higher education institutions while the method of logical reasoning

is applied to propose solutions to improve the financial management of the institutions

6 New contributions of the research

In theory: The research clearly indicates the research gap of

the previous works and the research results to be achieved The dissertation continues to systematize, analyze and study the basic theoretical issues of internal financial management of public higher education institutions according to the management process, including financial planning, financial plans implementation, settlement and inspection, internal financial control It also systemizes and develops criteria to evaluate the effectiveness of internal financial management of public higher education institutions In addition, the research looks into experiences in financial management of public higher education institutions of some countries and other ministries, thereby drawing lessons for Vietnam in general as well as public higher education institutions under the Ministry of Finance in particular

In practice: The research brings about an in-depth study and

clear analysis of the situation of internal financial management of public higher education institutions under the Ministry of Finance

in the period 2017-2022, thereby pointing out the achieved results and the limitations in the internal financial management process as well as analyzing the causes leading to such limitations Based on the analysis and evaluation of the current situation, the research looks into the general development orientation of the higher education system as well as the higher education institutions under the Ministry of Finance, thus proposing views, solutions and recommendations to solve the limitations and problems in the internal financial management of higher education institutions under the Ministry of Finance in both theory and practice in a scientific and feasible manner

7 The structure of the research

In addition to the introduction, conclusion, list of references and appendices, the structure of the research includes 3 chapters: Chapter 1 The theory and practice of internal financial management of public higher education institutions;

Chapter 2 The situation of internal financial management of public higher education institutions under the Ministry of Finance;

Chapter 3 Completing the internal financial management

of public higher education institutions under the Ministry of

Finance

CHAPTER 1 THE THEORY AND PRACTICE OF INTERNAL FINANCIAL MANAGEMENT OF PUBLIC

HIGHER EDUCATION INSTITUTIONS

1.1 PUBLIC HIGHER EDUCATION INSTITUTIONS AND THE FINANCE OF PUBLIC HIGHER EDUCATION INSTITUTIONS

1.1.1 Public higher education institutions

1.1.1.1 Concepts and characteristics

Public higher education institutions are public non-business units operating in the field of education with facilities equipped by the State, including investment in infrastructure construction Public higher education institutions are established and managed

by the State The funding, which guarantees public higher education institutions' operation, depends on the financial investment policy and the level of socialization of resources for higher education in each country

1.1.1 Categories of public higher education institutions

Based on the level of financial autonomy, public higher education institutions are classified into four types:

- Type 1: public higher education institutions that ensure recurrent and investment expenditures themselves;

- Type 2: public higher education institutions that ensure recurrent expenditures themselves;

- Type 3: public higher education institutions that ensure partly recurrent expenditures themselves;

- Type 4: public higher education institutions whose recurrent expenditures are managed by the State

1.1.2 Finance of public higher education institutions

1.1.2.1 Concept

The concept for finance of public higher education institutions

is as follows: "Finance of public higher education institutions is the revenue and expenditure activities in cash of the institution, reflecting the economic relationships in the form of value in the process of forming and using monetary funds to perform the functions and tasks in the field of higher education assigned by the State."

1.1.2.2 Financial sources of public higher education institutions 1.1.2.3 Payment tasks of public higher education institutions 1.1.2.4 Financial results of public higher education institutions

1.2 INTERNAL FINANCIAL MANAGEMENT OF PUBLIC HIGHER EDUCATION INSTITUTIONS

1.2.1 Concept and objectives of internal financial management

of public higher education institutions

1.2.1.1 The concept of internal financial management of public higher education institutions

The concept for internal financial management of public higher education institutions used as a basis for the research is as follows: Internal financial management of public higher education institutions is to manage the process of formation, use and distribution of financial sources through the planning, implementation, inspection and control of financial activities according to the State's financial management mechanism to ensure funding for the implementation of the institutions' tasks

1.2.1 Objectives of internal financial management of public higher education institutions

Firstly, to improve the efficiency of revenue sources in public higher education institutions

Secondly, to effectively use expenditures of public higher education institutions

Lastly, to be transparent

1.2.2 Contents of internal financial management of public higher education institutions

1.2.2.1 Development of financial plan

1.2.2.2 Implementation of financial plan

Firstly, managing and utilizing revenue sources

And secondly, managing and implementing expenditure plans

1.2.2.3 Financial settlement

1.2.2.4 Inspection and control

1.2.3 Evaluation criteria for internal financial management of public higher education institutions

First, management effectiveness

Second, efficiency

Last, financial management impact

1.2.4 Factors affecting the internal financial management of public higher education institutions

1.2.4.1 Objective factors

Firstly, national socio-economic development conditions Secondly, the State's mechanisms and policies for higher education institutions

Lastly, international integration and cooperation in the field of higher education

1.2.4.2 Subjective factors

Firstly, development strategies of public higher education institutions

Secondly, the brand and quality of public higher education institutions

Thirdly, the internal financial management tools at public higher education institutions

Fourthly, the organization of internal financial management at public higher education institutions

Lastly, the internal financial management capacity of public higher education institutions

1.3 EXPERIENCES AND LESSONS LEARNED ON INTERNAL FINANCIAL MANAGEMENT OF PUBLIC HIGHER EDUCATION INSTITUTIONS

1.3.1 Experience in financial management of higher education institutions

the upper level, then the unit is given an one-off amount without any additional funding, any excess amount from the funding or from collecting, after financial settlement, will belong to the unit

1.3.1.2 France's experience

Internal financial management of public higher education institutions in France shows that the transition from input-based to results-based management brings many benefits: i) Increased transparency and accountability: Financial authorities and leaders

of public higher education institutions can accurately monitor and evaluate the financial situation, ii) Improved budget efficiency: Clearly defining priority objectives and using evaluation indicators help optimize financial resources, and iii) Improved management tools: Accounting and budget management reforms help ensure transparency and efficiency in financial management Lessons from France can help public higher education institutions in Vietnam improve financial management efficiency

1.3.1.3 The US' experience

Higher education in the US is implementing two ways of allocating state budget to institutions: input-based funding and performance-based funding Input-based funding is typically based

on the number of students enrolled, faculty, staff, and other resources required to provide educational services However, this type of allocation is no longer reasonable as the US economy is in need of more and more university-educated workers (Tandberg and Hillman, 2013) Performance-based funding is a state system

of educational budget allocation based on specific performance measures such as course completion rates, credit completion, and degree completion This type of allocation was applied in 26 US states between 1979 and 2007 (Miao, 2012)

1.3.1.4 Japan's experience

The Japanese government specifically allocates basic expenditures for many educational reform activities, cooperation between universities, between universities and businesses, and internationalization of higher education Another noteworthy point

in Japan's budget allocation method is that the budget for individual scientific research activities is an important component and is categorized according to research nature (academic or strategic research) or related subjects (PhD students, teaching assistants, research assistants) The state budget is allocated indirectly through financial support for students, which accounts for the second largest proportion and is for both domestic students

as well as international students

1.3.1.5 Experience of the Ministry of Industry and Trade

1.3.2 Lessons for higher education institutions under the Ministry of Finance

The first lesson: financial planning

Planning for financial resource allocation should be given more attention Financial allocation planning should focus on the main activities of educational institutions (funding for teaching or for regular activities) which play the most basic role, as well as funding is for scientific research, and should be used on a competitive basis The allocation of funding should be flexible, competitive, and sensitive to innovation trends to increase the efficiency, proactiveness, and competitiveness of the institutions

The second lesson: implementation of financial plans

Revenue sources should be more diverse to increase income for institutions Each public higher education institution can diversify revenue sources in accordance with its own characteristics, using many different methods to utilize all potentials and advantages such as linking universities in training to take advantage of facilities, textbooks, scientific research, etc., linking institutions