MODULE 8

AUDITING ACADEMIC INSTITUTIONS

Overview:

Educational Services is widely considered a counter-cyclical industry. Typically, when the

economy is doing poorly and unemployment is rising, more working adults, as their career
prospects start to dim, decide to upgrade their education. This, in turn, leads to higher enrollment
and increased profit at the schools. We note that traditional undergraduate education for young
students is generally non-cyclical. Culinary arts schools, however, can be labeled as moderately
cyclical. Also, certain types of educational institutions do perform largely in sync with the broader
economy. For example, providers of information technology instruction benefit in good times, when
companies are likely to boost related investment.

Module Objectives:

• Know the nature and background of the particular specialized industry;

• Learn the overview, statistics, and updates of the specialized industry in the
Philippine setting;
• Identify the different audit considerations and trends for the industry.
Nature and Background of Specialized Industry

The Educational Services sector comprises establishments that provide instruction

and training in a wide variety of subjects. This instruction and training is provided by
specialized establishments, such as schools, colleges, universities, and training centers.
These establishments may be privately owned and operated for profit or not for profit, or
they may be publicly owned and operated. They may also offer food and/or
accommodation services to their students

The education industry can be described as the collection of organizations and businesses
that provide products and services aimed at enhancing the quality of education in society.
The education industry plays an increasingly important role in supporting public education
by meeting the demand for products and services that both complement basic education
services and supplement their underlying goals. The industry is defined by four main
categories:

 School Service Providers

 Supplemental Education Service Providers
 Educational Products & Services Sector
 Education Support Services Sector
Overview, Updates, Statistics of the Specialized Industry in the Philippines

Philippines’ education industry has showcased a significant growth in the past decade owing to the
adoption of the enhanced basic education model.
The several programs and initiatives have been taken by the Philippines government to improve the
quality of education in the country. The increasing investments by the government and other local
and foreign agencies for the provision of universal access to quality education at all levels to the
Filipinos are likely to boost the total number of enrollments and establishments in the education
industry in Philippines.

Sectors Contributes in the Philippines Educational Industry

 The K-12 education market

 The higher education market
 The technical-vocational training segment
 The test preparation market
 The teacher training market
 The Philippines e-learning segment has been expanding rapidly and includes online- learning
and training, software development and e-content development.
SUB-SECTORS

• Community college programs and boarding schools: Continues to be a niche market.

Most Filipino families prefer direct university entry.

• Higher education (undergraduate and graduate): According to the IIE Open Doors
Report, there were 3,295 Filipino students enrolled in the United States for the 2019-2020
academic year, including 1,753 pursuing undergraduate degrees, 1,007 seeking graduate
degrees, 444 pursuing Optional Practical Training (OPT), and 91 in other programs. The
states with the highest number of Filipino students are California, New York, Texas,
Massachusetts, Maryland, Illinois, Hawaii, Florida, Pennsylvania, and New Jersey. This
mirrors locations with the largest Filipino communities in the U.S., as community and family
support networks are determining factors in where Filipino students choose to study. With
over 50% of the population aged 24 and younger, there will be a surge of youth positioned
to enter higher education institutions.

• Online programs and education technology: The pandemic has sparked demand for
online programs and education technology tools across all academic levels for distance
learning.
• Research and development: Research and development opportunities lie in academic
programs relevant to the government priority disciplines of science, maritime, medicine, health,
engineering and technology, agriculture, teacher education, hospitality, and architecture and
town planning. Private and public institutions welcome partnership opportunities for research
and accommodate visiting fellows and professors for knowledge exchange programs and
capacity building.

• Professional training services: The majority of the Philippine workforce is aged 25– 54 years
old. There are more than 500,000 Philippine small- and medium-sized enterprises (SMEs)
seeking training to advance their business operations. Several training centers partner with
private and public sector employers to offer technical training and programs. There is an
increased interest in executive education programs and certificates among Philippine business
leaders. The Philippine Business for Education, a USAID-funded education organization, and
several others urge the government to create a national plan for workforce competitiveness and
skills development to support its growing economy
DIGITAL MARKETING STRATEGIES

Filipino students are fascinated by education events promoted via social media. As a
social media capital of the world, Filipinos actively use social media platforms for a whopping
10 hours per day, seven days per week. The best platforms to reach the most students are
Facebook (75 million active users), Twitter (12 million active users), and Instagram (10
million active users). YouTube (11 million active users) is the most popular platform for social
video streaming. LinkedIn’s usage (8 million active users) has also been growing among
newly graduated students and young professionals.
AUDIT CONSIDERATIONS

A World Bank study assesses the quality of basic education services and the strength
of existing systems used to allocate and manage public education resources. It tracked
public education resources from national and local governments to a nationally
representative sample of elementary schools and high schools in the Philippines and
assessed the availability and quality of key education inputs. The key findings of the report
are as follows:

Teachers
• The availability of teachers in schools has improved as a result of recent teacher hiring
efforts. However, there are signs of growing inefficiency in teacher deployment because
of weaknesses in teacher allocation systems.
• Teacher absenteeism rates in elementary and high schools are generally low compared
to other countries. However, they tend to be high in highly urbanized cities.
• There have been big improvements in the hiring process but significant delays still exist.
• Teacher performance on content knowledge assessments is poor and professional
development systems are inadequate.
School infrastructure
• The availability of key facilities has improved but classroom deficits still remain.
• Public infrastructure improvement systems suffer from many problems which result in
poor quality and incomplete classrooms and water and sanitation facilities.

School funding and management

• Schools have only limited discretionary funding to implement their own school
improvement plans.
• While most discretionary funding is provided by the national government, a significant
portion fails to reach schools.
• Schools face difficulties in using public funds because of burdensome management and
reporting requirements.
• Transparency and accountability for fund use in relatively weak at the school level.
• School level accountability through School Governing Councils is generally weak.
• Parental awareness of the existence of School Governing Councils is limited. However,
parents are more aware and participate more actively in Parent Teacher Associations.
Local government funding
• Local government funding to basic education is relatively low, declining and unequal.
• Poor record-keeping and reporting makes it difficult to assess the distribution and
effectiveness of local government funding for education.

Equity
• Significant differences in levels of education spending and the quality of the learning
environment exist across regions and provinces.
• Even though urban schools tend to serve wealthier populations, they tend to perform
poorly compared to rural schools.
• Schools serving poorer communities tend to be more resource-constrained than
wealthier schools.

Detailed policy suggestions are provided in the main report for each of the topics covered.
Common policy suggestions include:
• Increase public spending on education.
• Improve allocation of education inputs through better planning.
• Give schools greater authority in planning and resource management decisions and
simplify reporting requirements.
• Address funding and quality inequalities through improved financing mechanisms and focused
interventions for schools serving disadvantaged groups.

Accounting

The industry’s primary sources of income are – Fees, Subscriptions, Donations, Grants, etc. A group
of persons known as ‘Trustee’ or ‘Governing Body’ or ‘Executive Committee’ or ‘Board of
Management’ organise and manage it. Day-to-day routine activities are entrusted to a person who is
known as Secretary. Since there are many chances of fraud and embezzlement of the fund of the
Institutions, it becomes essential that the accounts of Institutions should be drawn properly.
Generally, accounts of an educational institution are maintained under cash-basis of accounting and
not under Mercantile-basis of accounting. Collection of tuition fees, admission fees, fines, session
charges and special fees— laboratory fees, library fees, sports fees etc. — should be separately
recorded in Collection Register. Students’ Ledger must be maintained where all these collections
should be credited to the respective students. Students’ Ledger should also include free
studentship, concessions and writing-off irrecoverable fees which are to be sanctioned by higher
authority or Managing Committee etc. Periodical reconciliation should also be made between the
fees collected, fees outstanding at the beginning and at the end of the period, fees written-off with
fees that should have been collected according to the number of students in different classes having
regard to the number of students enjoying free studentship, concessions etc.
AUDIT TRENDS
Integrated Strategic Planning and Monitoring • Turnaround Strategies (District, School, Support
Services) • Business Intelligence Systems • National Assessments and Examinations • Data
Quality Audits • Organizational Structure Design (Amalgamation/Rationalization) • Post
Provisioning • Business Process Re-engineering

Covid-19 Pandemic
The COVID-19 pandemic has forced the Philippine education sector not only to upgrade its
capabilities for remote learning, but more importantly, to realize that it could barely survive without
the social, economic, and political problems of the country being resolved. As it appears, charging
head on into a crisis with these problems as baggage would require Filipino students to take
charge of their education, since their respective families and teachers can only do so much to help
them. However, there is no need to leave these students alone to fend for themselves. Rather, an
opportunity presents itself: to gather students together into small communities – communities of
learning and inquiry – with the help of technology. With the new strategies being developed and
reintroduced, the direction now seems to point to the possibility of fostering communities of
learning and inquiry through distance education (Spencer, 2020), preferably, using social media. In
the end, it will be noteworthy for future researchers to look into how the community of inquiry and
learning framework can best help students from the Philippines as well as students from other
developing and poor countries to achieve quality education through technology-assisted
interventions.