Submission of Annual Audited
Accounts by Kindergartens (KGs)
Management Services Section
Finance Division,
Education Bureau
November 2013
Agenda
− Submission of audited accounts
2–3
− Preparation of audited accounts
4–6
− Requirements to be observed by KGs
joining PEVS
7–9
− Issues identified during the examination of
audited accounts
10
− Appointment of auditors
11 – 13
− Electronic submission of audited accounts
14 – 20
− Late submission/submission of incomplete
/incorrect audited accounts
21
1
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
Scheme]
KGs receiving rent reimbursement
[EDBC No. 2/2004 – Reimbursement of Rent for
Non-profit-making Kindergartens]
2
Submission of Annual Audited
Accounts

A circular memorandum was issued earlier this month
to request KGs to submit the 2012/13 audited accounts.
Major contents include:

Points to note in preparing the annual audited accounts

Formats of 2012/13 audited accounts

Points to note for schools’ auditors
Deadline for submission: 10 February 2014
3
Points to Note in Preparing Audited
Accounts

In preparing the 2012/13 audited accounts, KGs should
note the following:

Observe the list of items to be covered by school fees as set out in
relevant EDB guidelines, for which parents should not be charged
separately.

Follow the relevant EDB circulars/guidelines to properly classify
their incomes (i.e. “School Fees”, “Income from Trading
Operations” and “Other Income”) and report them in the audited
accounts accordingly.

Disclose related party transactions in the audited accounts (which
should match with the relevant disclosure made by schools in their
fee revision applications).
4
Formats of Audited Accounts

The formats of 2012/13 audited accounts are more or
less the same as previous years with slight revisions as
follows:

KGs have to provide breakdowns for “Other Income” and “Other
Expenditure” reported in their audited accounts.

KGs have to properly classify the related party transaction(s)
disclosed (i.e. “Amount due from related party(ies)”, “Amount due
to related party(ies)”, “Receipt from related party(ies)” and
“Payment to related party(ies)”.

KGs have to list out all their trading operations and put each
activity under separate columns in the “Statement of Trading
Operations”.
5
Points to Note When Submitting
Audited Accounts

Audited accounts in the prescribed format should be
submitted promptly on or before the deadline
2010/11 Audited Accounts --- 54% submitted before the deadline
2011/12 Audited Accounts --- 66% submitted before the deadline

Audited accounts must be signed by the School
Supervisor and stamped with the school chop. Each
statement to the accounts should be stamped with the
identification chop of the auditor as well.
6
Requirements to be Observed by KGs
Joining PEVS(1)

KGs joining PEVS shall not transfer the surplus, in
whatever form, to any of their sponsoring bodies or
other organisations.
[EDBC No. 6/2011 – Pre-Primary Education
Voucher Scheme, para. 2(g) in Appendix I]
7
Requirements to be Observed by KGs
Joining PEVS(2)

No profit on sale of textbooks.
[EDBC No. 16/2013 – Collection of Fees, Sale of
School Items and Provision of Paid Services in
Kindergartens, para. 5(e)]

Profits from the sale of other school items and
provision of paid services should not exceed 15% of
the total cost.
[EDBC No. 16/2013 – Collection of Fees, Sale of
School Items and Provision of Paid Services in
Kindergartens, para. 5(f) ]
8
Requirements to be Observed by KGs
Joining PEVS(3)

School are not recommended to place surplus funds in
any form of speculative investment because of the risk
of financial loss.

The liability for any such loss shall strictly fall on the
school management responsible for incurring such a
loss and shall not be allowed to be recovered as a
charge against the income of the school.
[EDBC No. 2/2003 – The Choice of Bank
Counterparties in the Investment of Public Assets]
9
Issues Identified During the
Examination of Audited Accounts

Schools failed to comply with the requirements and had
made transfer of surplus (e.g. donation expenses), profits
from trading operations exceeding the relevant limits and
incurred investment loss in their accounts.

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.
10
Appointment of Auditors

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),
etc.
11
Appointment of Auditors (cont’d)

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
fees.
[EDBC No. 17/2008 – Appointment of Auditors and
Audit Engagement Letter]
12
Matters to be Followed Up with the
Auditors

Auditors should draw the attention of the School
Management Committees or School Supervisors
on 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.
13
Electronic Submission of Audited
Accounts (1)

To facilitate schools in the preparation of their
audited accounts, the relevant pro-formas in Excel
format have been uploaded for use.

Using the Excel template to prepare the audited
accounts is very convenient .



Automatic linkage
Cross reference
Correct format
Annex 1.xls
14
Electronic Submission of Audited
Accounts (2)

Guide to completing the audited accounts

Complete Annex 1 first, the school’s basic information will be shown
in other statements automatically.

Fill in the cells shaded in light blue, the relevant data in other
statements will be calculated automatically to minimize input errors.

Schools may follow the sequence below in completing the
statements:
- Statement 7_FA and Statement 7_Others
- Statements 4, 5 and 6
- Statement 1/1A
- Statement 2
- No input is required for Statement 3
15
Electronic Submission of Audited
Accounts (3)

The Excel template can be downloaded from the following
addresses for the preparation of the audited accounts.
For School Portal users:
https://kgac.edb.gov.hk
For non-School Portal users: http://www.edb.gov.hk/circular/adhocforme/2013fdkg-e.xls

Schools are advised to provide the softcopy* of their audited
accounts on or before the deadline:
- electronically via the School Portal Account; or
- by submitting a CD.
[*Submission of softcopy of the audited accounts is on a voluntary
basis, i.e. schools may make their own choices.]

Should your school choose to provide the softcopy of the
audited accounts, please ensure that it is identical to the
16
hardcopy.
Electronic Submission of Audited
Accounts (4)

KGs may download the Excel template and submit the
softcopy of the audited accounts via the School Portal.
17
Electronic Submission of Audited
Accounts (5)
18
Electronic Submission of Audited
Accounts (6)
19
Electronic Submission of Audited
Accounts (7)
20
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 revisions.

Incomplete/incorrect audited accounts may be returned
to the schools for amendment.
21
Thank You
22