Essay on Financial Risk Management Failures at Colleges & Universities

Financial risk management failures in colleges and universities have dominated the headlines in mainstream media for many years. Often, these failures are facilitated by poor corporate governance structures, where the management did not appreciate the financial risks that are likely to befall such institutions (Chance, 2019). Accounting supervisors, in particular, are among key members that have greater responsibilities of ensuring that college and universities do not lose money through engaging in reck-less risk-taking initiatives. There are several ways through which accounting personnel can ensure that institutions of higher learning do not lose money recklessly.

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Firstly, professional accounting officers play a critical role in helping institutions of learning improve their internal control programs in an effort to reduce and manage risk. Internal control system programs are policies and procedures that are implemented by an organization to increase efficiency and provide direction in an endeavor to achieve its objectives. For instance, they are always in the front line in identifying possible financial risks. This includes asset backed, liquidity, credit, operational, and market risks (Beasley et al., 2019). Thus, they need to quantify all the risks that have being identified. There are many financial tools available to calculate risks, including Quickbooks, Sage accounting tool, AccounEdge Pro, among many others. Thus, accounting supervisors play an important role in helping colleges and universities improve their internal control programs that are pivotal in reducing financial risks.

Again, college and university accountants play a crucial part in building an emergency fund kit. Even although such institutions have had a stable period as far as their financial stability is concerned, accountants contribute immeasurably towards determining how much the organization should save as an emergency fund (Chance, 2019). Taking precaution in all ventures is critical to its sustainment. The emergency funds will prove to be a critical solution when the institutions experience unexpected financial loss.

To wrap up, professional accountants in colleges and universities play an indispensable role in preventing financial risks. They effectively capture achieve this through espousing sound corporate financial governance, especially through designing and improving internal controls. Besides, they take part in determining the amount that should be set as an emergency fund in case of any unforeseen financial loss. In doing so, the financial statements at the end of each financial year always mirror positive fiscal position.

References

Beasley, M., Branson, B., Buckless, F., Hancock, B., Pagach, D., & Showalter, S. (2019). Enterprise Risk Management Initiative, Poole College of Management, North Carolina State University. Directors and Boards.

Chance, D. M. (2019). Accounting and Disclosure in Financial Risk Management. World Scientific Book Chapters, 735-776.