Educational institutes asked to disclose balance sheets

Of late, education as a sector is being tagged as a ‘business' as opposed to a not-for-profit service. Removing all doubts, the balance sheets of institutes are expected to reflect the true picture as the ministry of human resource development (MHRD) gets down to check the financial status of higher education institutes in the country.

Following the introduction of a new accounting system, universities and colleges must be prepared to disclose their financial information in a standard and uniform format set by the Institute of Chartered Accountants of India.

Moving from the cash basis of accounting to accrual-based system, the higher education institutes will now have to disclose their balance sheet and the income and expenditure account.

Government provides significant concessions and incentives to support educational institutions, apart from other donations received by institutes, and the fees charged from students has also been rising over the years. But as educational institutions in India do not follow any standard accounting practices and the present system is not transparent, it leaves the stakeholders clueless about the use of these funds and profits generated by the institutes.

The new accounting standards may require the institutes to segregate the funds received into specific categories to allow for more accountability and clarity in the system, reported the Financial Express. Read more

While the MHRD wishes to implement the new accounting standards from this year, making it compulsory for the institutes offering higher studies, schools should take a cue and be prepared if asked to follow the new accounting format in future.

While the new system will be an improvement over the old system, the institutes find it to be an administrative burden. A professor from IIT suggested the use of technology as a solution to reducing human involvement in the process and also ensuring accuracy of financial accounting by institutes.

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