Audit Findings on
Kindergarten
Inspections
Internal Audit Section
Finance Division
November 2015
Objectives of inspection


to evaluate the accounting operations and the
adequacy of the internal control systems of the
kindergartens joining the Pre-primary Education
Voucher Scheme (PEVS).
to evaluate whether the kindergartens
concerned comply with the relevant circulars,
circular memoranda and guidelines issued by the
EDB.
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Audit Findings –
Accounting & Internal Controls



Payment vouchers and/or receipt vouchers
were not prepared.
Receipt or payment vouchers were not initialed
by approving officer.
Invoices were not date-stamped with the word
“PAID” after payment to prevent duplicate
payment.
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Audit Findings –
Accounting & Internal Controls
(Cont’d)


Bank reconciliation statements were not
initialed by the responsible officer after review.
Approval for acceptance of donations by the
kindergarten was not obtained from the School
Management Committee.
(EDBC No. 14/2003 – Acceptance of advantages and
donations by schools and their staff)
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Audit Findings –
Accounting & Internal Controls
(Cont’d)


Daily collection summary (DCS) was not
prepared or the DCS contained incomplete
details (including description of income,
amount, receipt number, banked-in date and
preparing officer ‘s initials).
Petty cash holder approved his own claim of
expenses.
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Audit Findings –
Accounting & Internal Controls
(Cont’d)


Information on Fixed Assets Register was not
complete, e.g. date of acquisition, description,
location, quantity, purchase price.
Proper approval was not obtained for write-off
of fixed assets.
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Audit Findings –
Accounting & Internal Controls
(Cont’d)

Kindergarten made donations to sponsoring
bodies or other organizations.
(EDBC No. 6/2011 – Kindergartens under
PEVS shall not transfer the surplus, in
whatever form, to any of their sponsoring
bodies or other organizations)
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Audit Findings –
Tendering and Quotation

Procurement procedures were not established
or documented. Kindergartens should put in
place a fair, open and transparent system of
procurement procedures and that there are
adequate checks and balances to prevent
favouritism, corruption and malpractices.

Staff involved in purchasing duties were not
required to declare any current or future connection
they or their families had with suppliers by signing
an undertaking and declaring their interest when
conflict of interest arose.
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Audit Findings –
Tendering and Quotation (Cont’d)




Quotation exercise was not carried out for
appointment of KGs’ auditors (EDBC No.
5/2014).
Quotation records were not kept or not available
for inspection.
Insufficient quotations were obtained without
reasons stated.
The staff obtaining quotations and the staff
authorising the acceptance of the offer were the
same person.
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Audit Findings –
Trading Operations


Profits were made from sale of textbooks.
Profit from sale of exercise books, uniform,
stationery, equipment and other items (other than
textbooks) exceeded the profit limit of 15% of the
cost price at which they were procured from
suppliers.
(EDBC No. 16/2013 – Collection of fees, sale of school
items and provision of paid services in kindergartens)
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Audit Findings –
Trading Operations (Cont’d)

Income and expenditure relating to trading
activities were not reported in the Audited
Accounts in accordance with the prescribed
format in Statement 5 of EDBCM No. 135/2015.
(EDBCM No. 135/2015 – Submission of 2014/15 Annual
Audited Accounts by Kindergartens and Kindergartencum-Child Care Centres)
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Special Audit Findings (1)

Kindergarten did not have an effective
accounting system and adequate internal
control procedures in place. Important
documents (such as ledgers, cash book,
vouchers, bank statements and supporting
invoices, etc.) were not properly kept and
not available for inspection.
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Special Audit Findings (2)

Personal bank accounts were used for
collecting kindergarten’s income or effecting
payment.
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Special Audit Findings (3)

Accounting records were not kept for sundry
fees, snack fees, meal fees and the relevant
income and expenditure were not shown in
audited accounts.
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Special Audit Findings (4)

Kindergarten was unable to provide
explanation and supporting documents as to
the nature of current account balances with its
School Sponsoring Body.
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Special Audit Findings (5)

Investment losses were noted in kindergarten’s
accounts.

EDBC No. 14/2015 – Any form of speculative
investment (e.g. local equities) is not recommended
because of the risk of financial loss. Any such loss
will not be allowed to be charged to any of the
school's accounts. The liability shall strictly fall on
the school management responsible for incurring
such a loss.
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Follow-up Action


Management letter will be issued to the KGs
after inspection.
KGs are required to submit a reply within one
month from the date of issue on the actions
taken on the issues raised.
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Thank you
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