Rural Istitute for Community Education

RURAL ISTITUTE FOR COMMUNITY EDUCATION

MATAHAGONDAPALLI 635114

ANNUAL AUDITED STATEMENT OF ACCOUNT AND THE ADUDOTR’S REPORT

AND

THE REPORT OF THE SECRETARY CUM TREASURER

Dear Members of the General Body,

I am very pleased to present the 28thannual report of the Secretary cum Treasureralong with the Auditor’s Report and the Audited Statement of Accounts for the financial year ending 31 March 2014. The Books of Accounts were audited by the appointed statutory auditors, M/s. Vekam and Associates, Chartered Accountants, Coimbatore and the internal auditing was done by Mr. Shivakumar, Chartered Accountant, Dindigul.

REFERENCE AND ADMINISTRATIVE DETAILS:

REGISTRATION DETAILS

Society Registration No: 165/2006 (Old No.2/1987)

FCRA Registration No :075870042

Income Tax Registration:U/s 12A (a)

Income Tax Registration No (PAN): AAATR4122L

Income Tax Registration u/s.80G:C.No.9755 (17)/1991-92

Tax Deducted at Source (TDS): CHER05930B

Provident Fund account No.: TN/SLM/47314

Central Board of Secondary Education:CBSE/AFF/1930175

REGISTERED OFFICE

RICE-MMS Campus

Mathagondapalli Post-635 114

(Via) Hosur, Krishnagiri District

Tamil Nadu, India

MEMBERS OF THE GENERAL BODY

Mr. A. A.GOPALAN-President

Mr. M.MERU- Secretary/Treasurer

Mr. N.DHANARAJ -Member

Mr. BERLIN JOSE-Member

Mrs. GLORY VIJAYAKUMAR-Member

Mr. B.C.GOPAL-Member

Mr. S.T.RAJU-Member

Ms. LATHA DHANASEKARN-Member

Mr. JEELAN KHAN -Member

Mr.CHANDRASEKARAM-Member

Dr.RAJAN-Member

MEMBERS OF THE EXECUTIVE COMMITTEE

Mr. A.A.GOPALAN -President

Mr. M.MERU - Secretary/Treasurer

Mr. S.T.RAJU - Member

AUDITORS

INTERNAL AUDITOR

K.SHIVAKUMAR,

Chartered Accountant,

Gandhigram-624 302

STATUTORY AUDITORS

K.THIRUMOORTHY,

VEKAM AND ASSOCIATES,

Chartered Accountants

1177, AvinashiRoad,Next to Aritel Office

Coimbatore- 641 037.

BANKERS

FCRA ACCOUNT:

INDIAN BANK, Mathagondapalli Branch,

(via) Hosur,

Krishnagiri-635 114

LOCAL ACCOUNT:

INDIAN BANK, Thally Branch,

(via) Hosur,

Krishnagiri-635 118.

AXIS BANK, Hosur Branch,

10-77-28, Bye Pass Road,

Palaniappa Building,

Hosur-635 109

Constitution

Rural Institute for Community Education (RICE) is a registered society under the Tamilnadu Society’s Registration Act, 1975 having its registered office at Mathagondapalli, Thally Block Krishnagiri district, Tamilnadu

Organisation

Vision Statement

All children have equal rights to quality life

Mission Statement

To develop models in education and to enhance the capacity of individuals, families, organisations and communities

Our Core Values

Aspiration: ‘Trust you are born to win’

Respect: ‘Be sensitive to others feelings’

Perseverance: ‘Pursue until you achieve’

Honesty: ‘Worship truth’

Happiness: ‘Enjoy life with your life being’

Moto

Liberating Creativity

Name of the Project:

Mathagondapalli Model School (CBSE)

Person Responsible to run the Project

M. Meru

Secretary/Treasurer

Key Priorities for the period under reporting:

RICE MMS is a ‘not-for-profit school’, dedicated to its mission and vision and an inclusive community where all our students and staff find their own success; a school that develops Independent Learners and Global Citizens on a Campus, as “Liberators” in which all buildings, grounds and services reflect our beliefs and values. This vision is simple but ambitious. It is also real, and requires realistic financial support.

Increasingly, we find ourselves using a common language and approach, based on the ideas of sustaining, improving and transforming the learning experience of our students. We currently sustain our current services through tuition fee income, TdH-NL grant, and self-generated income. Significantly, on the other hand, we are meeting our capital needs partially through external borrowing.

We are also looking forward to major capital upgrades of the Campus, which will be financed through a mix of loans, donations and strategic use of our revenue.

Achievement of students-Planned

• Raise achievement levels of all students year after year through teacher training and support
• Develop and meet further strategies within RICE MMS pathways to meet the needs of all learners
• Improve the use of and impact of students’ data and tracking system
• Increase the capacity of Impact Monitoring
• Improve the learning and progress in all subjects

• Improve the quality of teaching
• Improve the use of learning assessment strategies
• Improving the use of technology both for admin and teaching and learning

Key Activities and targets were identified in the school annul plan and were driven by our self-evaluation and influenced by the challenges and opportunities arising from national curriculum framework 2005 and the position paper 2009 published by NCERT

PUBLIC BENEFIT:

Rural Institute for community EducationMathagondapalli Model School confirms that we have complied the regulations of the CBSE, offering a broad contextualised and integrated curriculum with a strong emphasis on, but not limited with the specialisation of use of technology. This is evident in the results in the CBSE Board Examination and the participation of our students in the games and sports events at all levels and their exemplary performance. Beyond this, the school aims to offer an education for the holistic development of children. The wide range of extracurricular and co-curricular activities educational trips and visits offered to and taken up by our students contribute to a school which is happy and in which students thrive. We are in the process of getting connected with institutions and establishments for the spiritual growth of children.

We support other schools through ERTD unit, the delivery of professional development and the sharing of best practices and knowledge to ultimately benefit the wider community which is our mission.

Going Concern

By and large the financial position during the year has been satisfactory and has adequate resources for operational existence. For this reason I adopt to write this report on the “going concern basis”. Only 53.27% of the revenue is from the fee paying students.

After the decision of the funders, Terre des Hommes Netherlands, The executive committee has planned to have adequate funds to run the school. However the sudden reduction of funds by Terre des Hommes by more than half of the requested funds, the school has to go for raising a external borrowing from Axis Bank to buy four buses to transport the students to school and to drop them back around the vicinity of the school. Various plans are being planned to meet the funding requirements to continue to educate around 400 children from 3rd to 12th standard. Revenue generation is the concern especially in the high skyrocketing price raise.

ACHIVEMENTS AND PERFORMANCE:

Teacher quality is proven to be the single most important feature of successful education systems. We invest a great deal of effort to get the staffing structures right, recruiting the right people and ensuring that they are continually supported to improve. Furthermore, there was a considerable progress in respect of the provision of high quality professional development for teaching staff through different methods of training and the revised performance appraisal system. Linking of targets to the units’ objectives and individual performance management priorities has not yet sharpened fully. We need external support to do this exercise.

FINANCIAL REVIEW

As like most private schools around the country, our income is primarily raised through tuition fee income. There are a number of key drivers that we look to maintain each year; the number of students, the number of teachers, the level of tuition fees and the amount of financial aid received. As we are a 'not for profit' organisation, as such, we never generate a surplus of income.

The very large majority of our revenue each year is allocated towards staff salary expenses. And our staff receives annual seniority increases. This incremental cost is largely driving the annual tuition fee adjustment decided by the senior staff.

RICE MMS also play a major role in generating income, for example managing additional activities such as offering to hire the school facilities, trying for grants and generating sponsorship. Starting Lei Brouns Endowment Fund for Education under RupeeKind Club is a step ahead to generate an endowment fund to help needy children to continue their education after 10th class.

Exploring the possibilities of associating with Inter Milan Football Academy is yet another milestone for income generation and quality improvement in fulfilling our mission.

Robust practices are in place to ensure the school gets what it pays for, and if a supplier fails to do something at a certain time or to a standard outside the agreed contract, the school does not pay the full price. The school never accepts the first quote from suppliers; no matter how big they are, as they find that there is generally always room for manoeuvre.

To improve its financial management system of the school, the purchase of learning materials, food supplies and other maintenance materials were procured from the whole sale vendors. A seminar on suppliers and service providers were held during the year at our campus mainly to expose them to our vision and mission statements and the “not for profit culture” of our school. Direct interaction between our staff and vendors moderated by leading corporate purchase mangers gave lot of ideas and suggestions to reduce the cost of procurement, stock and disbursement. Above all the accountability part of the above said factors is being taken care of for higher performance and accountability

We are creating a framework within which the units of the school under seven coordinators can improve their own levels of efficiency, while still maintaining the freedom to take the decisions that are right for them. We hope to implement more vigorously, a skilled based training programme and performance appraisal system of staff that will address commonly cited concerns and hindrances to improve the efficiency of the school.

Because the bulk of school spending is on the workforce, we have focused a great deal already on how we can support and encourage effective workforce deployment. As a result, we begin by setting out the wide programme of reforms that the units are already undertaking in this area. We follow this with a series of proposals, developed through this review, covering school spending more prudently.

RESERVES POLICY

The school budget has not been planned to create any reserve fund, though it is necessary for a school of this size. But we have planned to include reserves for supporting poor children after 10th class under the head “Lei Brouns Endowment Fund for Education” and “depreciation fund” from this year.

INVESTMENT POLICY

The fund flow is planned in such a way that the funds not required immediately for the month/s is invested in short term deposits to raise some income through the bank interest within the legally approved methods.We do not have an investment policy as such due to the fact that we do not get any surplus of income over its expenses.

STATEMENT ON REGULARITY, PROPRIETY AND COMPLIANCE

As the Treasurer of the organisation, I have considered my responsibility to notify the members of the general body of material irregularity, impropriety and non-compliance with the accounting principles and condition of funding, under the funding agreement in place with the small and major donors. As part my consideration I have had due regards to the requirements of the accounting principles and procedures. I confirm that no instances of material irregular, impropriety or funding non-compliance have been discovered to date. To further strengthen the system the executive committee has approved an appointment of a Compliance Consultant who will report to me directly on matters related to non-compliance.

Going concerns:

Despite Student numbers continuing to increase modestly, income from other sources has not been increased in real terms and this will reduce the funding protection of the school. Following the fixation of fee by the Government fee committee we are not in a position to recover the cost from the parents’ community fully to meet all the teaching and learning facilities provided by the school and the adequate salary increase to the staff. I recommended a committee to look at our strategic plan 2014-16 to suggest a way forward for us.

The skill levels of non-teaching staff are either lower than required or not improving due to less interest in learning is be attended on priority.

KEY FINANCIL PERFORMANCE INDCATORS AND STRTEGIC FINANCIAL REVIEW:

The Key Performance Indicators are designed to analyse the financial and entrepreneurial risk but also staffing ratio, academic performance and government policies.

Key performance Indicators:

Reserves:

Our internal financial reviews of future net cash flow need compels us to make provisions for meeting the estimated future revenue and capital expenditures for educating the poor and expansion of infrastructure to which reserves should be assigned. The future needs of reserves are to be calculated using an independent financial evaluator.

• Net reserves
• Capital reserves
• Teachers pay
• Other staff pay
• Total salary commitment for the next three years
• Total staff salary commitment vs. Total expected revenue

The main financial performance indicator is the level of reserves or the difference between the liability and the liquid cash available for settling the liability

Working capital:

The level of working capital is an indicator of our ability to meet our short term financial obligations through sound financial operation. Working capital is normally measured as a ratio of our currents assets to current liabilities. Having a working capital ratio of 1:1 means that we will be able to meet our short term debts and operate with some flexibility. If the ratio is 1:1.20, means that we have for every Rs.100/- we have Rs.20/- more after meeting our current liabilities.

The highlights of our financial results for the financial year ending

March 31, 2014 is as follows:

Receipts

During the financial year 2013-14 the TdH NL grant proportion was 31.56%of the total receipts (Previous year 49.57%) which is now reduced by 18.01% of total receipts during the year 2013-14. The deficit of 68.44% was mobilized locally out of which 53.27% is from the parents. The improved usages of facilities have earned a sum of Rs.49.94 lakhs, whereas it was only Rs.37.83 lakhs during last year 2012-13. We are looking at more opportunities to raise money through inviting more people to use our facilities on a contribution towards our deficit.

Revenue components / 2013-14 / 2012-13 / 2011-12 / 2010-11
Grant received-TdH-NL / 209.33 / 292.24 / 316.51 / 315.86
Donation received / 5.83 / 3.76 / 5.30 / 4.12
Interest Received / 28.59 / 22.43 / 19.44 / 15.96
Education fees / 257.73 / 153.79 / 99.79 / 39.70
Residential hostel fees / 16.42 / 15.77 / 9.79 / 5.00
Transportation / 79.18 / 46.23 / 26.10 / 8.07
Life Skill Education Programme / 7.05 / 4.45 / 6.33 / 5.79
ERTD / 5.70 / 6.74 / 11.27 / 5.40
Contribution/Establishment / 49.94 / 37.83 / 29.65 / 33.48
Sale of Fixed Assets/Scarp / 3.47 / 6.36 / 0.60 / 0.75
Total / 663.24 / 589.58 / 524.78 / 434.13

FINANCIAL STATUS OF INCOME & EXPENDITURE ACCOUNT IN 2013-14

While comparing with the last year 2012-13, the expenses for school, hostel, transportation, contribution & Establishment and ERTD have increased by 31.76%, 19.03%, 52.24%, 151.21% and 15.55 respectively. However, the income has increased only by 18.01%. Overall, the expense to income ratio is reduced from 116.74% to 114.99%, which results in the excess of expenses over income of Rs.96.17 lakhs including depreciation cost.

Revenue Expenditure

The new admissions, appointments and inflation had contributed to the increase of our total operating expense which is 33.27% more than the last year. The total expenditure for the year 2013-14 is Rs. 627.43 lakhs but it was only Rs. 470.79 lakhs in 2012-13 as detailed below:

Revenue Expenditure / 2013-14 / 2012-13 / 2011-12 / 2010-11
School Expenses / 372.93 / 294.97 / 198.34 / 173.55
Hostel expenses / 137.62 / 103.69 / 97.85 / 79.09
ERTD expenses / 15.27 / 16.17 / 12.20 / 12.56
Contribution/Establishment expenses / 30.25 / 9.08 / 14.05 / 12.99
Transportation expenses / 71.36 / 46.87 / 27.45 / 14.45
Total / 627.43 / 470.79 / 349.89 / 292.65

The following are the top 10 expenses incurred during the last financial year which accounts for 86% of the total expenses:

Sl.No. / Particulars / 2013-14 / % of Top 10 expenses / % of total expenses
1 / Staff Salary / 3 31 67 428 / 61.47 / 52.86
2 / Food expenses / 83 28 329 / 15.43 / 13.27
3 / Vehicle Maintenance / 41 82 931 / 7.75 / 6.67
4 / Learning and Teaching materials / 18 85 541 / 3.49 / 3.01
5 / Housekeeping maintenance / 18 31 078 / 3.39 / 2.92
6 / Electricity, Water expenses / 15 75 352 / 2.92 / 2.51
7 / Telephone, Internet & Epbax expenses / 8 63 145 / 1.60 / 1.38
8 / Building Maintenance / 8 24 464 / 1.53 / 1.31
9 / Security service charges / 7 73 476 / 1.43 / 1.23
10 / Sports participation expenses / 5 29 185 / 0.98 / 0.84
Total / 5 39 60 929 / 100.00 / 86.00

The staff salary alone accounts for 61.47% (58% in the year 2012-13) of total top ten expenses, which amounts to Rs.3.32 crores. Due to the increased cost of living, the salary was revised by 10% (on an average) during the reporting period. Apart from the salary revision, the total number of teaching and non-teaching staffs has also increased from 134 to 153.

The second major portion of expenses is food. This constitutes 15.43% of total top ten expenses. The average food and accommodation expenses per student per month is Rs.3, 168/-. Due to the increase in the number of students from 918 to 1093, the incremental cost per student is 38% and it was mainly due to the increases in cost of food materials and groceries. We are providing lunch to the day scholars also.

Per capita expenses

The third major portion of top ten expenses goes towards meeting the cost of transportation (vehicle maintenance). This covers 7.75% of total top ten expenses. The cost of transportation and the maintenance of all vehicles amount to Rs.41.83 lakhs. It has increased by 45.54% than the previous year 2012-13. The use of new bus to transport the students during the year is the major reason for the increase. We are, running the transportation with breakeven point containing the expenses within the income. But the ever increasing cost of diesel is the biggest challenge for us to maintain the transport facility for our students.

The fourth expense was made on the purchases of learning and teaching materials, which amounts to Rs.18.85 lakhs. This constitutes 3.49% of total top ten expenses. However, special focus was given to provide the learning materials to each and every child, which results into 30% increase while comparing with last year. The incremental rate of learning materials per student was 0.2%. It directly relates to the total number of students studied during 2013-14, which is increased by 19.06% (increased from 918 to 1,093) and quality enhancement in teaching and learning materials.