Sharing of Audit Experience

1
Sharing of Audit Experience

• Terence WONG
• SAud2
• School Audit Section
• 10 June 2009

2
Focus of the day

• Key aspects of sound financial management
• Common audit findings
• DOs and DONTs when handling government
  subventions

3

• Key Aspects
• of Sound Financial Management

4
Key aspects of sound financial management

• Proper authorisations and approvals.
• Proper documentations and reporting including
  minutes of SMC/IMC meetings.
• All transactions should be properly recorded and
  proper books of accounts and relevant documents
  should be kept.
• All school assets should be controlled in a way
  that they would not be misused or lost (e.g. by
  theft or negligence).

5
Key aspects of sound financial management

• Clear segregation of duties among the functions
  of authorisation, recording and custody.
• Clear and detailed duties and responsibilities of
  school staff.
• Authority limits (e.g. limits of amounts for
  conducting tenders or quotation exercise) should
  be adhered to.
• Internal checks should be carried out.

6
Key aspects of sound financial management

• Prudent in use of financial resources.
• Comply with the requirements of Code of Aid,
  School Administration Guide and relevant EDB
  circulars/guidelines.
• Management supervision and review.

7

• Common Audit Findings

8
Common audit findings

• Common audit findings by functional areas
• Procurement
• Payments and collections
• Personnel and leave matters
• Incorrect use of subventions
• Trading operations and others

9
Common audit findings

• A. Procurement
• Many of the audit findings related to procurement
  matters.
• To ensure the achievement of public
  accountability, value for money, transparency and
  open and fair competition.
• To conduct quotation/tender exercises in
  accordance with financial limits stipulated under
  EDBC No. 15/2007.

10
Common audit findings

• Procurement (contd)

11
Common audit findings

• Procurement (contd)
• Common errors
• - no tender/quotations exercises for contracts
  of
• leasing of photocopying machines and
  duplicators,
• security guard services, broadband internet
  services,
• provision of educational programmes and
  cleaning
• service

12
Common audit findings

• Procurement (contd)
• Common errors
• - no tender/quotation exercises for trading
  operations
• - no tender/quotation exercises for renewals of
  contracts
• - splitting orders
• - no declaration of conflict of interest
• - justifications were not provided for not
  accepting the
• lowest/lower offers

13
Common audit findings

• Procurement (contd)
• Common errors
• - tender procedures were not followed in
  accordance with
• EDBC No. 15/2007
• - no or insufficient quotations were obtained
• - insufficient information or selective release
  of
• information provided to tenderers/suppliers
• - Purchase-by-Quotation Forms were not prepared

14
Common audit findings

• Procurement (contd)
• Common errors
• - no segregation of duties (e.g. TOVC and TAC
  were not
• made up of different staff members) and
• - tender/quotation documents were not kept
  properly and
• intact.

15
Common audit findings

• Payments and collections
• No supporting documents (e.g. invoices or
  receipts) in making payments.
• Original invoices / receipts were not attached.
• No Paid mark was stamped on vouchers and
  invoices to avoid duplicate payment.
• Duplicate payments
• Spoiled cheques/receipts were not marked
  Cancelled immediately.

16
Common audit findings

• Payments and collections (contd)
• Cheques and/or official receipts were pre-signed.
• Daily Collection Summary (DCS) was not prepared
  or prepared without required information.
• Bank statements and bank reconciliation
  statements were not reviewed by School
  Principals.
• Official receipts were not issued in sequence.

17
Common audit findings

• Personnel and leave matters
• No employment contracts were prepared (for both
  teaching and non-teaching staff).
• Approvals from SMC/IMC for appointment,
  resignation, promotion, re-grading and retirement
  of teaching staff were not sought.
• Leave records for individual staff were not
  prepared or records were incomplete.

18
Common audit findings

• Personnel and leave matters (contd)
• Annual summaries of leave record were not
  prepared or records were incomplete.
• Details on annual summary of leave record did not
  correspond with those in individual staffs
  record.
• Wrong calculation of leave balances /
  entitlements.
• Wrong calculation of salaries leading to salary
  overpayment.

19
Common audit findings

• Incorrect use of subventions
• Advertisements and promotion expenses.
• Insurance expenses on top of the Block Insurance
  Policy provided by EDB.
• Wreath and/or flower baskets.
• Meal expenses of staff (cannot be charged to both
  government funds and school funds).
• Donations.

20
Common audit findings

• E. Trading operations and others
• Prior approval for trading operations were not
  sought from REO / IMC.
• Profits from trading operations exceeded the 15
  (on cost of sale) limit.
• Rates, government rent and other expenses such as
  electricity in respect of the tuckshop were not
  borne by the tuckshop operator.

21
Common audit findings

• Trading operations and others (contd)
• Fixed Asset Register (FAR) was not prepared or
  prepared without required information.
• Approvals (from School Head) were not sought for
  write-off of fixed asset items and relevant
  report(s) were not passed to SMC/IMC for
  information.
• Approvals from SMC/IMC for acceptance of donation
  were not sought and donation registers were not
  prepared.

22

• DOs and DONTs
• when Handling Government Subventions

23
DOs and DONTs

• DOs
• Adhered to key aspects of sound financial
  management mentioned above.
• Follow all circulars and guidelines promulgated
  by the Bureau.
• Prudent use of all resources and always put
  students interest as the first priority.

24
DOs and DONTs

• DOs (contd)
• Report cases of fraud immediately
• Obtain approval from IMC/SMCs before accepting
  donations.
• Observe the principles of value for money, public
  accountability, transparency and open and fair
  competition when utilizing resources.

25
DOs and DONTs

• DONTs
• Dont charge unsubvented expenses into government
  subventions account.
• Dont spend the income from trading operations on
  staff welfare.
• Dont deposit government funds into any bank
  account(s) not under schools name.

26
DOs and DONTs

• DONTs (contd)
• Dont allow the choice of trading operators to be
  in any way influenced by a donation or any other
  form of advantages.
• Dont split orders to bypass proper tender
  procedures.
• Details can be downloaded from
• http//www.edb.gov.hk/index.aspx?nodeID4838langn
  o1

27
The End

• .