Submission of Annual Audited Accounts by Kindergartens

Submission of Annual Audited
Accounts by Kindergartens (KGs)
Management Services Section
Finance Division,
Education Bureau
November 2014
− Submission of audited accounts
− Preparation of audited accounts
− Electronic submission of audited accounts
9 – 15
− Issues identified during the examination of
audited accounts
16 – 18
− Appointment of auditors
19 – 20
− Late submission/submission of incomplete
/incorrect audited accounts
KGs Required to Submit Annual
Audited Accounts
KGs joining the Pre-primary Education Voucher
Scheme (PEVS)
[EDBC No. 6/2011 – Pre-primary Education
Voucher Scheme]
KGs receiving subsidies under the Child Care Centre
Subsidy Scheme
[EDBC No. 3/2008 – Child Care Centre Subsidy
KGs receiving rent reimbursement
[EDBC No. 2/2004 – Reimbursement of Rent for
Non-profit-making Kindergartens]
Submission of Annual Audited
Circular memorandum calling for KGs’ 2013/14
audited accounts was issued on 26 September 2014 (i.e.
EDBCM No. 142/2014). Major contents include:
Points to note in preparation of audited accounts
Formats of 2013/14 audited accounts
Points to note for schools’ auditors
Electronic submission of audited accounts
Deadline for submission: 13 February 2015
Points to Note in Preparation of
Audited Accounts (1)
In preparing the 2013/14 audited accounts, KGs should
note the following:
Observe the list of items that are covered by school fees as set out
in relevant EDB circulars/guidelines, and not to charge parents for
these items separately.
Follow the relevant EDB circulars/guidelines to properly classify
their school incomes (i.e. “School Fees”, “Income from Trading
Operations” and “Other Income”) and report them in the audited
accounts accordingly.
Disclose all related party transactions in the audited accounts,
including those that had been reported by schools in their fee
revision applications.
Points to Note in Preparation of
Audited Accounts (2)
Draw auditors’ attention to the reporting requirements as set out in
the EDB’s circular memorandum calling for KGs’ audited accounts
prior to the commencement of audit.
Observe the guiding principles on scope of expenditure as set out in
relevant EDB circulars/guidelines in the use of resources from
school fees which should be basically devoted to supporting
teaching and learning activities, the operation of KG and
maintenance of the standard education service.
Formats of 2013/14 Audited Accounts
The formats of 2013/14 audited accounts are more or
less the same as previous years with slight revisions as
Add new row for “Prior Year Adjustment” in the Income and
Expenditure Account.
Delete the statement for Teacher Development Subsidy.
Add a new statement for reporting income and expenditure relating
to the One-off School Development Grant for KGs under the
Add common items for “Other Expenditure” so as to align with the
schedules submitted by KGs when applying for fee revision.
Points to Note for Schools’ Auditors
Auditors should submit an Auditor’s Report on the
school accounts and state whether in the Auditor’s
opinion (a)
the accounts give a true and fair view of the state of the school’s
affairs as at the balance sheet date and of its result for the
accounting year then ended; and
the school has used the government subsidies in accordance with
relevant EDB circulars/guidelines.
Points to Note for Schools’ Auditors
Auditors should draw the attention of the School
Management Committees or School Supervisors to
weaknesses in internal controls discovered during
the course of their audits with recommendations
for improvement.
KGs should discuss with auditors and rectify the
problems as soon as possible.
Electronic Submission of Audited
Accounts (1)
KGs are encouraged to join e-Submission on voluntary basis,
i.e. use the excel template prepared by EDB in compiling their
audited accounts and submit the softcopy to EDB in addition
to the identical hardcopy of audited accounts.
The excel template can be downloaded from the following
addresses for preparation of the audited accounts.
For School Portal users:
For non-School Portal users:
Electronic Submission of Audited
Accounts (2)
Benefits of joining e-Submission include:
(a) Facilitate schools’ accurate and easy input of
financial data.
 Excel templates for input:
- Automatic linkage
- Cross reference
- Correct format
(b) Speed up the review of fee revision applications
submitted by schools.
Electronic Submission of Audited
Accounts (3)
Compared with last year, the excel template for e-Submission
has been improved as follows:
allow schools to “unshade” shaded cells, change column widths
and hide unused rows according to their reporting requirements;
allow schools to
schools can input data up to two decimal places; and
reserve more rows for schools’ input of “Other Current Assets”,
“Other Current Liabilities”, “Other Income” and “Other
Expenditure” etc. according to their needs.
Schools can provide softcopy of their audited accounts on or
before the deadline:
- electronically via the School Portal Account; or
- by submitting a CD.
Electronic Submission of Audited
Accounts (4)
KGs may download the excel template and submit the
softcopy of the audited accounts via the School Portal.
Electronic Submission of Audited
Accounts (5)
Electronic Submission of Audited
Accounts (6)
Electronic Submission of Audited
Accounts (7)
Issues Identified During the
Examination of Audited Accounts (1)
Schools did not submit their audited accounts in time:
2010/11 Audited Accounts --- 54% submitted before the deadline
2011/12 Audited Accounts --- 66% submitted before the deadline
2012/13 Audited Accounts --- 65% submitted before the deadline
In accordance with
EDBC No. 16/2013, no profit from the sale of
textbooks is allowed and the profit generated from the
sale of other school items and provision of paid
services should not exceed 15% of the total cost.
exceeding the relevant limits.
Issues Identified During the
Examination of Audited Accounts (2)
Schools had made transfer of surplus (e.g. donation
expenses). According to EDBC No. 6/2011, KGs joining
PEVS shall not transfer the surplus, in whatever form, to any
of their sponsoring bodies or other organisations.
Schools incurred investment loss in their accounts.
According to EDBC No. 2/2003, school are not
recommended to place surplus funds in speculative
investment because of risks of financial loss. In case of loss,
the liability shall strictly fall on school management
responsible for incurring such loss and shall not be allowed
to be recovered as a charge against the income of the school.
Issues Identified During the
Examination of Audited Accounts (3)
Auditors did not certify whether the schools had used
government subsidies according to the EDB requirements.
Schools did not put each activity of trading operations
under separate columns.
Schools did not report the income from the sale of school
items or provision of paid services in the Statement of
Trading Operations.
Appointment of Auditors (1)
The accounts of KGs should be audited by Certified
Public Accountants (practising) registered under the
Professional Accountants Ordinance.
Besides the cost for the audit services, schools should
also take into account other factors in the selection of
auditors, e.g. relevant experience of the auditors and
potential conflict of interest (e.g. business relations
with the members of the School Management
Committee, School Supervisor and staff of the school),
Appointment of Auditors (2)
An engagement letter should be signed when appointing the
auditor and it should generally include the following:
the objective and scope of the audit of financial statements;
the respective responsibilities of the school and the auditors;
the right of access to records, documentation and other
information requested in connection with the audit;
the form of any reports or other communication of results of
the audit; and
[EDBC No. 5/2014 – Appointment of Auditors and
Audit Engagement Letter]
Late Submission/Submission of
Incomplete/Incorrect Audited Accounts
Late submission of the audited accounts may cause
delay or suspension in the processing of the
applications for school fee revision.
Incomplete/incorrect audited accounts may be returned
to the schools for amendment.
Thank You

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