Page 107 - DLIS003_LIBRARY ADMINISTRATION AND MANAGEMENT

Library Administration and Management

Notes 6.1.1 Principles of Financial Management

For effective financial management, some guiding principles are necessary. An understanding
of these principles is useful. These are:
1. Effective Control

2. Simplicity
3. Regularity and Farsightedness
4. Economy
5. Flexibility

These principles are explained as follows:
1. Effective Control: Financial management can work efficiently only when it is controlled
properly. The method of financial control should be simple and easy. Control is also
necessary for the economical use and channelization of resources so that there is little
wastage and the limited financial resources can be put to maximum use.
2. Simplicity: Procedures for financial management should be simple and easy to operate.
Simplicity results in efficiency and economy.
3. Regularity and Farsightedness: Financial management programmes should have a typical
timetable so as to acquaint everybody with what he/she is expected to do at a particular
point of time. For example, in the preparation of the budget for a library, inputs should
come from the heads of sections who would in turn expect cooperation from their staff.
The preparation of the budget would be time-bound and the budget should be submitted
to the authorities on time so that the budgetary sanctions can be obtained in time to
operate it. Similarly subscriptions to current journals should be sent to the publishers at a
particular time of the year. Sticking to a timetable facilitates advance thinking and
preparation. Not only present needs but future requirements should be kept in view when
making provisions for finance.
4. Economy: Economy should be affected in any activity and every activity, more so in
financial matters. All precautions should be taken to avoid unnecessary expenditure and
wasteful use of scarce finances.
5. Flexibility: Financial management should keep in mind the virtues of elasticity so as to
learn scope for adjustment according to circumstances. Only then can it be successful in
times of emergency and crisis. But this does not mean that one should take undue advantage
of its flexible nature. There are provisions and practices in utilising or diverting funds
appropriated for a certain item of expenditure to the purchase of books or any equipment.
But this flexibility should be within the framework of financial rules and procedures. This
type of adjustment usually is done at the fag end of the financial year when unutilised
funds are available in other items.
While these principles are useful in operating and managing finances in libraries, there are
statutory financial rules and procedures laid down by the executive authorities. Libraries have
no option but to follow financial rules.

The other related fields which need to be kept in mind by library and information professionals
include cost accounting and economics (particularly welfare economics and theory of production),
various tools and techniques of financial management, economics and cost accounting like
funds flow analysis, ratio analysis, break even analysis, operating and financial averages. Financial
forecasting, capital budgeting, economic theory, theory of production, costing, etc. have adequate
scope for application in library and information centre management.

102 LOVELY PROFESSIONAL UNIVERSITY