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Financial Report

Financial Report. March 26, 2006. Unaudited FY2005 vs Audited FY2004 2005 – Actual vs Forecast Financial Reporting – Initiatives & Issues Measures to Address Financial Results 2006 Revised Budget. Contents. Operating deficit (all funds) Baht 73 mio (improved 5%)

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Financial Report

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  1. Financial Report March 26, 2006

  2. Unaudited FY2005 vs Audited FY2004 2005 – Actual vs Forecast Financial Reporting – Initiatives & Issues Measures to Address Financial Results 2006 Revised Budget Contents

  3. Operating deficit (all funds) Baht 73 mio (improved 5%) Net deficit (all funds) Baht 147 mio (improved 11%) Net deficit in Fund 10 (unrestricted fund) Baht 131 mio (up from Baht 85 mio) School results, high salary, large administrative structure/headcount are key factors Results are far from satisfactory Unaudited FY2005 vs Audited FY2004

  4. F10 school operating results (revenue less direct costs) SOM Baht 15 mio SERD Baht 60 mio SCE Negative Baht 3 mio SAT Baht 23 mio Total Baht 95 mio (down from Baht 116 mio) F10 school operating results (revenue less direct costs plus allocated/indirect costs) SOM Negative Baht 26 mio SERD Negative Baht 38 mio SCE Negative Baht 55 mio SAT Negative Baht 36 mio Total Negative Baht 155 mio (up from negative Baht 138 mio) Unaudited FY2005 vs Audited FY2004

  5. F10 school direct costs Baht 329 mio (up Baht 10 mio) SOM Baht 55 mio SERD Baht 130 mio SCE Baht 67 mio SAT Baht 77 mio F10 other indirect costs Baht 258 mio (up Baht 6 mio) including: Library Baht 24 mio Utilities &insurance Baht 32 mio Infrastructure Baht 55 mio Central admin Baht 147 mio Unaudited FY2005 vs Audited FY2004

  6. Reserves : Baht 166 mio (-42%) AIT Baht 33 mio AITCV Baht 79 mio UNEP Baht 54 mio Unaudited FY2005 vs Audited FY2004

  7. Forecast made last Aug 2005 Actual results not in line Forecasting process needs review Accounting provision/accrual procedure Prevailing budget spending culture Year-end break & vacations Accountability of projections/KPIs Rolling forecast required 2005 - Actual vs Forecast

  8. More detailed reports – monthly, quarterly, schools, tuition fees, fellowships, centres, admin offices Review balances in restricted funds – F21, F30, F42, F50 Reclassification of accounts – residual, inter-fund borrowing/lending Year-end closing of F10 & 21 Year-end balances in Sponsored Program – classify as receivables & payables Financial Reporting – Initiatives & Issues

  9. Agency fund (F50) accounts – proposed write-off Baht 66 mio for 30 accounts (further review, possible offset of Baht 13 mio) i) Findings Risk management (FX, fee fixing, contract terms) Internal controls (authorization, recording) Fund administration (roles of coordinator, office of scholarship & finance) ii) Appointment of external auditor for independent audit Verification of account balances Identification of cause Recommendation of improvement in procedures/control Financial Reporting – Initiatives & Issues

  10. Review accounting of UNEP.RRC.AP i) Status – joint academic centre, AIT employees, comply with P&P ii) Funding source - 100% external iii) Fund mandate - restricted nature iv) Use of reserve – ? Financial Reporting – Initiatives & Issues

  11. AITCV – Current Issues i) Ownership ii) Administrative structure iii) Overhead/cost recovery iv) Use of reserve - ? Financial Reporting – Initiatives & Issues

  12. Bank accounts management system i) Cash pool system (all cash in one general bank account) used substantially ii) Individual bank accounts to be opened for restricted funds, major donors iii) Easier cash reconciliation & monitoring Financial Reporting – Initiatives & Issues

  13. Revise 2006 budget Monthly reporting & monitoring of academic / operating / financial data & agreed KPIs Quarterly rolling forecasts supported by academic/operating plans Fund raising, cash injection – concrete strategic & financial restructuring plans required Measures

  14. Necessitated by poor 2005 financial results & declining reserves position 2006 budget revision process: Review latest actual results Set new cost targets Seek endorsement of new targets from Executive Committee Communicate approved targets at coming Institute Forum Deans/Heads to revise budgets/strategic plans to achieve new targets & identify consequences Submit revised detailed budget for Board’s approval 2006 Revised Budget

  15. New cost targets for endorsement: Reduce direct costs budget (excl F30) of schools by Baht 68 mio Reduce budget of indirect costs by Baht 52 mio Reduce capital budget to Baht 25 mio from Baht 45 mio 2006 Revised Budget

  16. 2006 Revised Budget

  17. Thank You

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