Wednesday, July 15, 2015

Investigating some post modern accounting figures...

On the 14th of July, 2015, the first thing in the morning, I found myself staring at a Times of India report that stated that The Government of India spends Rs. 12,00,000 per student per year at the Film and TV Institute of India or The FTII. I assume that the figure relates to the year 2011, as the report also mentions that the recovery from the students, as academic fees, is about 11% for the year 2011. There were 350 students... so 350 into 12,00,000 is equal to... wait let me check with the calculator.. is equal to.. 42 and seven zeros... is it eight... no, seven...  42 and seven zeros which is Rs 42,00,00,000. In words, forty two crores for the Film Institute, I presume, for the year 2011.

It is more than what the Government spends on students of Engineering, Management and Medicine, screamed the news item.

Is it? One part of me felt elated as it boosts ones ego to know that at some point of time in your life, your worth was more than that of other wannabe professionals. Another part of me was defiant, funding a film course is of course expensive; 10 minutes of film raw stock would cost more than Rs. 10,000 and a good camera with accessories Rs 30,000 per shift. A third part in me zoomed in, with sharp focus, to the words that Times of India used, 'What comes as a shocker..'.

Buddy, I should not let this 'shock' unchecked - I got determined.

A quick investigative internet search with the help of my friend Google, got me to the 'FTII Audit Report for the year 2013-14' pdf file. It was not of the contentious year of 2011, but so what? My newly found investigative senses decided that I should study the 2014 year ending audited 'Balance Sheet' and 'Income and Expenses Account' of FTII because it was available to me.  So what if it is of 2015? If people are waiting for seven years to complete their courses at FTII, I could as well jump three years ahead.

Suspense music begins. The 'Balance Sheet' talks about 'Capital Fund', 'Endowment Fund', 'Fixed Assets', 'Current Assets, loans' etc. Somehow, the accountant in me ticked me off saying that these are not the figures that one needs to cross check for the statistics reported in The Times of India.

For all those of you who are uninitiated with my flash back, I was supposed to complete a course in Chartered Accountancy, like my friends Gurunandan and Shanker Narayan did.  But much to the dismay of my dad, I had donated the two fat blue books that came from the Institute of Chartered Accountants weighing a minimum of two kilos each, within three months of its arrival, because I got selected at the FTII.

The next page is the 'Income and Expenditure' statement. Ah, this could be it.

The expenditure for the year 2014 at FTII amounted to 26,41,22,380.69. Excess of expenditure over income that was transferred to the 'Trust Fund' account was 4,08,23,409.68. Which meant that income for the year 2014 was 26,41,22,380.69 minus 4,08,23,409.68 which is equal to .. wait... I'll use a calculator...  ah.. it is 22,32,98,971.01.

I will take the liberty and assume that there were 350 students studying at FTII in 2014, as in 2011. So, if I divide 22,32,98,971.01 by 350, the amount the Government of India spent on each student for the year 2014 would be 6,37,997.06 - which little more than half of what the Times of India report says the Government spent in 2011.

But remember, I am an amateur Accountant and I may be wrong. The advantages of being a non professional is that one can take liberties with certain things. I will also do so, henseforth I will deal with only round figures and forget the decimals and the odd numbers.  But wait..  why only expenses? Maybe I should deal with income first. Didn't The Times of India report say that the recovery via fees etc is just 11% of the costs incurred on film students?

Further down the pdf file is a page where in it is mentioned that 'Fees and Subscription' collected at FTII amounted to 1,22,50,000 in 2014. According to Times of India, in 2011, this figure is 11% of the total cost of running the Institute. So, what is this percentage for 2014? 100 into 1,22,50,000 divided by 26,50,00,000.... Oh my God, it is 4.62!!! The recovery of student fees of 1,22,50,000 is 4.62 % of the total expenditure of 26,50,00,000 in 2014. This is embarrassing. If it was 10 or 12, I could have understood, but 4.62? No, no... something must be wrong in my calculation or the calculator has run out of batteries.

I crack my accounting brain, as the suspense music intensifies. According to the report, of the 26,50,00,000 rupees mentioned as expenditure in 2014; 15,25,00,000 is 'Establishment Expenditure', 6,70,00,000 is 'Administrative Expenditure', 'Subsidies to students' is 5,50,000 and 'Depreciation' is 4,50,00,000. What if I calculate the percentage for 2014 minus the Depreciation? Again, for the uninitiated, Depreciation would mean a decrease in value of your property because of its usage.

Why the hell should it be passed on to the students? So, 26,50,00,000 minus the Depreciation figure of 4,50,00,000 is 22,00,00,000. Ah.. that means 'Fees and Subscription' collected from the students would be 5.56% of the total expenses. That is better, but still worrisome for it is far off from the dreaded 11%.

Now, hold it. Just, what is this 'Establishment Expenditure'? It has fifteen crores of amount against it which is quite a large chunk of the total amount of twenty six crores mentioned against total expenditure; in fact it comes to 57.69%!!!. Further down the pdf file, another  table shows the list of all the 'Establishment Expenditures'. It all pertains to salary, wages, staff welfare expenses etc. 

Holy shit!!! When I once went to conduct a short workshop at FTII, I was told that the pay scale of the teachers are not at par with other academic institutions in India because FTII does not come under the University Grants Commission or the UGC. And I know that UGC pay scales are damn good. And yet this salary thing is more than half of the total expenses of the institute. My investigative imagination took me to another page on the FTII web site that listed 160, as the number of employees at the institute for the year 2014. Hey, not bad man, roughly one staff for every two students.

I will now make a logic, if some of you find it bizarre I have no issues with it. If the ratio of staff and students is one is to two, the money spent on students should also be double the money spent on the staff. The money spent on staff is 15 crores, so the money spent on students should logically be 30 crores. The total expenditure in that case should be 45 crores. But we know that it is just 26 crores and more than half of it comes under the heading "Staff etc.."  And the staff is actually under paid.

Now a few of you might question as to why things like the 'Welfare activities' to staff and 'Provision for provident fund' for the staff should be borne by the students and be reflected in the fees that is supposed to be calculated in a Government run Institution? After all, these are indirect expenses. Since most of the students who get admitted at FTII are from the middle class background, they can't afford it. A few others of you could say that the students be made to pay some of the direct expenses incurred on them. That is also fair enough.

The money spent directly on the students is, I presume, under the 'Administrative Expenses' head located in another sheet on another page. These include 'Production Expenses', 'Consumption of Raw stock', 'Repairs and Maintenance', 'Electricity and power', 'Conveyance', 'Taxes and water charges' and the likes. Now, like it occurred to me, you can also say that some of these are not direct expenses. Let us not be mean, unreasonable, un-patriotic and reject everything.

So, adding up all the direct expenses ie.. 'Administrative Expenses' would come to 6,70,00,000. This is 25.28% of the total expenses incurred at the institute in 2014. But what the hell, shouldn't it have been double, going by our 'staff to student ratio' logic that some of you might have called bizarre? Why is it just six point seven? Yaar, this is getting nowhere because as we all know that the pay scales of the staff at FTII is not at par with the UGC scales.

And then the moot issue - if the fees collected from the students is 1,22,50,000 and the amount spent on them is 6,70,00,000, what would be the percentage of cost recovery via fees? Wait... 100 into 1,22,50,000 divided by  6,70,00,000  which is equal to 18.28%. Then why the hell is Times of India saying 11%? Agreed, it is a 2011 figure, but shouldn't it also be saying that there are lot of variants involved?

Variants are varied in nature. Like. some of you might argue as to why should students bear the cost of "Repairs and Maintenance"? So if you remove 1,70,00,000 from 6,70,00,000 the percentage would be as high as 24.5; more than double of 11%. And some others of you might say we should include only 'Raw stock and Production' expenses and 'Library' expenses. So, what would then happen to the percentage?

And there is another variant that I haven't even looked into as a post modern investigative amateur accountant. Does this student figure of 350 mentioned in the Times of India report, include all the trainees who came to FTII to upgrade their vocational skills or does it excludes them? The FTII web site have numbers for such people in the 'personnel trained' chart - people who have come from Doordarshan, Films Division and the Indian Information Service Probationers from IIMC, New Delhi. All that is too much of an calculation for a person who had dropped out of his accountancy studies; but I suspect that if all that is included the percentage would figure would be different.   

Maybe there should be a social audit. Maybe I am 'massaging the data' here, as that 'commie' called P Sainath referred to, albeit in another context. Or maybe, The Comptroller and Auditor General of India is the person who would know the best.

I wonder how does the Government fix the cost of a second class train ticket or the cost of making a one rupee coin or the amount spent on the production of a small post card. Hats off to those who sit and calculate, so that others can use.

Gosh!!! To borrow a Facebook phrase, 'It's complicated'. I wish I had not donated the two fat blue books that came to me from the Institute of Charted Accountants many years back. I am sure that Gurunandan and Shanker Narayan would break into wry smiles, if they read this piece. 

Well, I will stop calculating post modern accounting figures that seem surreal and watch a Louie Bunuel film.