Financial Management

New 14.1 Principles and Practice

(a) The Incorporated Management Committee is responsible to handle funds and assets received from the Government in the capacity of a trustee.

It should also act as trustee for subscriptions collected from the students and for donations from the general public. As trustee, the Incorporated Management Committee has full management and administration rights over the funds and assets but these rights must always be exercised in accordance with the purposes for which the Incorporated Management Committee is entrusted with such funds and to the full advantage of the students and the school. All profits earned from the funds and assets should be credited to the government or non-government funds accounts of the school as appropriate.

Section 40AF, Education Ordinance

(b) As trustee of government subvention and subscriptions collected from students and the public, the Incorporated Management Committee is obliged to set up and maintain a financial management and control mechanism which ensures a system of openness, integrity, accountability, probity and transparency. As a subvented organisation, the Incorporated Management Committee has to ensure that the school will not run into a deficit. Incorporated Management Committees should operate and maintain proper financial management and control functions in their schools.

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(c) The Incorporated Management Committee is required to observe the relevant legislations, rules,

circulars and guidelines which govern the use of government subvention, and to comply with the procurement procedures as promulgated.

(updated on 2 January 2014)

(d) For the purposes of proper financial planning and control, the Incorporated Management Committee should prepare a financial budget for each school year and establish a budgetary control system.

The annual financial budget should include the number of operating classes, a manpower plan, all subvention and other income and all expenditures for the ensuing year.

School Administration Guide

(e) Such financial budget should tie in with the daily operation and development plan of the school.

Any significant departure from the budget should be promptly investigated, clearly explained and properly rectified.

(f) The Incorporated Management Committee should always ensure that adequate and regular internal controls are put in place, so as to ensure that its school is managed in an orderly, efficient and effective manner, adheres to management policies, safeguards assets and secures the completeness and accuracy of records.

New (g) Internal audit provides an independent appraisal of the activities of the school and assists the Incorporated Management Committee to ensure that adequate control procedures and systems are in place to safeguard assets of the school. To achieve the long-term goal of enhanced accountability and financial control, the Incorporated Management Committee should take appropriate steps to develop internal audit activities and, if appropriate, to form an audit committee in accordance with the need and circumstance of the school.

14.2 Handling of Income and Expenditure

(a) The Incorporated Management Committee has the autonomy and flexibility of handling its income

Source Reference and the use of it in accordance with the conditions

and requirements as prescribed in this Code of Aid, including grants from the Government and approved income generated by the school or received from donation. Such income must solely be used for that school on educational purposes and not be transferred to other schools even under the same sponsor.

(b) The Incorporated Management Committee is required to establish a proper framework and procedural guides for school to use its funds.

(c) All income from non-government sources should be kept and recorded in bank account(s) separately from those holding government subvention. The Incorporated Management Committee should also ensure that no government subvention is spent on school’s self-financing activities.

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Revised [COA(Sec)/

(Pri) – s.18;

COA(Sp) – s.19]

(d) The Incorporated Management Committee should ensure that, where the school lets any part or all of its premises for any purposes, the rental or profit so received must be credited to the school’s accounts.

14.3 Collection of Fees and Charges Boarding Fees and Tong Fai

Revised [COA(Sec)/

(Pri) – s.13;

COA(Sp) – s.12]

(a) Unless otherwise permitted in writing by the Permanent Secretary, no fees should be charged in a school in receipt of aid under the terms of this Code of Aid.

Education Regulations 61, 62, 63, 64, 65, 66

& 67

Revised [COA(Sp) – s.12-13]

(b) The Permanent Secretary may approve the charging of boarding fees in a school where applicable. The boarding fees to be charged will be announced by circular. Unless otherwise permitted in writing by the Permanent Secretary, boarding fees should be collected on or after the first school day of each month during which the student is resident in the school.

Revised [COA(Sec) – s.14(a)-(b) &

s.15;

(c) The Permanent Secretary may approve the charging of Tong Fai in a school where applicable.

No Tong Fai should be charged to primary classes

COA(Pri) – s.14(a) &

s.15;

COA(Sp) – s.15(a)-(b) &

s.16]

and Secondary 1 – 3 except with the permission of the Permanent Secretary. Unless otherwise permitted in writing by the Permanent Secretary, the amount of Tong Fai should be collected on an equal monthly instalment basis payable on or after the first school day of each month, normally from September to June. However, the Incorporated Management Committee may, on justifiable grounds, require payment of the September instalment to be made not earlier than 1 August.

(updated on 1 September 2009)

Fines, Charges and Fees for Specific Purposes

Revised [COA(Sec) – s.14(d);

COA(Pri) – s.14(c);

COA(Sp) – s.15(d)]

(d) The Incorporated Management Committee may approve the collection of fines, charges and fees for specific purposes exceeding the ceilings under the blanket approval given by the Permanent Secretary if such collection has, in particular, the express agreement of the majority of parents. However, the Incorporated Management Committee should waive the charges or make sufficient provision of assistance to cater for the needs of the students in financial difficulties. Yet, no additional government expenditure on student financial assistance should be incurred.

Education Regulation 61 (updated on 1 September 2011) EDBC 14/2012 (updated on 1 April 2013)

Revised [COA(Sec) – s.14(c) &

s.16;

COA(Pri) – s.14(b) &

s.16;

COA(Sp) – s.15(c) &

s.17]

(e) A school must not transfer income arising from the approved collection of fines, charges and fees for specific purposes to any other body, or to a fund separately kept by the Incorporated Management Committee for educational development or any other purpose, unless such transfer has been approved by the Permanent Secretary in writing.

All such income should be kept in the Capital Reserve Fund to be used to meet educational and school needs. The Incorporated Management Committee should consider requiring the school to draw up a list of items to be charged to the above Fund account and providing procedural guides for their school to use the funds.

(updated on 1 April 2013)

Source Reference 14.4 Acceptance of Donations

Revised [COA(Sec)/

(Pri) – s.17;

COA(Sp) – s.18]

(a) The Incorporated Management Committee may accept donations, both in cash and in kind, made to school, but prior approval from the Permanent Secretary is required when the donations will incur recurrent government expenditure.

(updated on 2 January 2014)

(b) The Incorporated Management Committee should note that before donations are accepted, it must be satisfied that:

Prevention of Bribery Ordinance

(i) relevant requirements under the Prevention of Bribery Ordinance have been observed;

(ii) there is no connection between the donation and any student’s standing or possible future standing in the school;

(iii) offers of donations from commercial concerns cannot be interpreted in any way as inducements; and

(iv) the acceptance of school donation or outside contribution will benefit the students.

New 14.5 Accounting and Auditing

(a) The Incorporated Management Committee must keep proper books of account and other financial and accounting records.

Education Regulation 64

(b) Detailed guidelines on accounting procedures in respect of important financial activities are included in the control and reporting system set out in the School Administration Guide.

School Administration Guide

(c) The Incorporated Management Committee is required to prepare its annual financial statements and submit the financial statements to the Permanent Secretary at such time and in such manner as the Permanent Secretary may specify.

(d) The financial statements shall include an income and expenditure account and a balance sheet and shall be authenticated by the signatures of the

Supervisor of the school and one other manager authorised by the Incorporated Management Committee of the school.

(e) The Incorporated Management Committee is required to appoint an accountant, who should be a certified public accountant (practising) as defined in the Professional Accountants Ordinance (Cap.

50), as the auditor.

Section 40BB, Education Ordinance

(f) The auditor must audit the financial statements as stated at (c) above and report whether the financial statements present fairly the financial performance of the Incorporated Management Committee during the accounting year and the financial position at the end of the year, subject to such qualification, if any, as he thinks fit.

(g) The audited financial statements together with the report of the auditor shall be submitted to the Permanent Secretary within 6 months after the year end date of the school.

Section 40BB, Education Ordinance

(h) An aided school shall not make any provision in its accounts for depreciation. Expenditure in respect of a capital asset shall be debited to the relevant capital asset account and shall not be debited to an income and expenditure account.

(updated on 1 September 2017)

New 14.6 Compliance with Public Accounting Procedures for Procurement of Stores and Equipment

It is the responsibility of the Incorporated Management Committee to ensure that its school and staff conform to the requirements and prescribed procedures governing the procurement of services, stores and equipment for public and subvented organisations. As such, the Incorporated Management Committee should put in place a procurement policy abiding by the principles of transparency, fairness and competitiveness in the school.

School Administration Guide