An analysis of the financial management systems, cost management systems and decision making systems of private higher education institutions in South Africa from 1990 to 2005
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The changing higher education environment has created a sense of urgency within private higher education institutions to change or else to perish. The latest legislation by the government compelling private higher education institutions to register with the Department of Education, coupled with the creation of mega-public higher education institutions by mergers, has made it imperative for private institutions to re-examine their financial management systems, cost management systems and decision-making systems. Private higher education institutions do not receive any funding from government, unlike their public counter-parts. They depend totally on private funds from student fees, investors and donors. In order to compete with the State subsidized public institutions, private institutions must minimize costs and maximize profits. This means that the cost of their courses must be comparable to those of public institutions, while at the same time offering quality teaching and learning. This study examines the cost management system, the financial management system and the decision-making system of private higher education institutions. The research is supported by a detailed literary study of these issues within the higher education sector, as well as an empirical study of cost management in private higher education institutions in South Africa. The literature review focuses on the role of private higher education as well as higher education systems in South Africa. The issues surrounding cost management, especially budgeting and decision-making, were examined closely in relation to private higher education institutions.