The 1st Hong Kong
School Principals’ Conference 2004
Financial Management of Schools
19 March 2004
Kennedy Tat-yin Liu
Chairman, Community Services Committee
Hong Kong Society of Accountants
What is Financial Management ?
Manage Financial Risks
 Key Risks – those keeping you awake at
nights
 Other Major Risks
 Financial Practices – Compliance,
Accountability and Reporting
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How to handle the Risks Identified ?
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Manage - Policies & Procedures
- Compliance
- People
Limit; Transfer
Decline
Accept
Internal Controls
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Minimise Financial Risks
Safeguard Assets
Coverage
- Revenue
- Expenditures
- Assets / Investments
Internal Controls (cont’d)
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Segregation of duties
Approval
Supporting documents
Tendering; Purchase system
Revenue collection
Payment system
Reporting
Accounting System
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Accounting Records
Books of Accounts
Assets Register
Timely updated and accurately
maintained
Regular and Appropriate Review
Prepare an Effective Budget

Responsibilities; Approval
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School’s Overall Plan
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Income and Expenditures
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Cashflows
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Monthly Budgets
Prepare an Effective Budget (cont’d)
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Identify Major Revenue and
Expenditures
Income – own income; subsidies / grants
Recurrent and non-recurrent
expenditures
Timing
Contingency
Budget Formulation
Expenditure Budget for School Year 2003/04
Surplus b/f
Gov't Allocation
SY2003-04
$000
$000
(I)
(II)
Total Grant
Available
$000
(III)=(I)+(II)
Expenditure
Budget
SY2003-04
$000
(IV)
Surplus
c/f
$000
(V)=(III)-(IV)
General Domain
100
400
1,080
100
1,580
10
10
0
400
400
School and Class Grant
Revised Admin/Admin Grant
Suppl Grant for SBM
Sub-total (A)
1,680
480
800
40
1,320
360
500
500
510
510
510
510
0
0
200
0
200
200
400
600
200
400
600
0
0
0
Special Domain
Capacity Enhancement Grant
Sub-total (B)
Outside OEBG Grant
Composite F and E Grant
Non-Recurrent Grant for IT
Sub-total (C)
Total for A+B+ C
510
=========
Note: This is a simplified version.
2,280
===============
2,790
=============
2,430
==========
360
==========
Cashflow Projection and Management
Cashflow Forecast for 6 months ended 31 January 2004
August
Sept
Oct
Nov
Dec
Jan
$'000
$'000
$'000
$'000
$'000
$'000
90
90
90
90
90
90
90
90
90
90
(30)
(70)
(30)
(40)
(70)
(30)
(40)
(70)
(30)
(40)
(300)
(70)
(30)
(40)
(90)
(140)
(140)
(440)
(140)
(70)
(30)
(40)
(300)
(150)
(590)
Surplus/Deficit (A)-(B)
Balance b/f
Balance c/f
1,030
510
(50)
1,540
(50)
1,490
(350)
1,440
(50)
1,090
(500)
1,040
1,540
1,490
1,440
1,090
1,040
540
#
S & C Grant paid in Aug 02
Other Grants
Grant Received in Aug 02
$'000
230
800
1,030
Receipt
Receipt in advance
Admin Grant
Total (A)
Payment
Salaries Payment
-Clerical and Janitor Staff
-Teaching Assistant
Electricity Payment
Purchase of F & E
English tutorial course
Total (B)
1,030
90
1,120
(60)
==========
#
Actual Results vs Budget
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Monthly / Quarterly
Causes of the Variances
Timing Difference vs Permanent
Commentary
Revise Budget
Learning Process
Financial Management Reporting System
 Identify
Information Needs
 Monthly / Quarterly Reports
 Variance Analysis, together with
commentary
 Reports to School Management
Committee
Financial Report to SMC
Budget
SY2003-04
Actual Expenditure
up to 31 January 04
$000
$000
(I)
(II)
Revised Budget
SY2003-04
%
(III) = (II )/(I)
Change
+/(-)
$000
$000
(IV)
(I)-(IV)
General Domain
School and Class Grant
Revised Admin/Admin Grant
Suppl Grant for SBM
Sub-total School Based
Management (A)
480
800
40
1,320
200
200
30
430
42
25
75
33
480
600
40
1,120
0
(200)
0
(200)
510
510
150
150
29
29
610
610
100
100
200
400
600
0
200
200
0
50
33
300
400
700
100
0
100
2,430
780
32
2,430
0
Special Domain
Capacity Enahncement Grant
Sub-total (B)
Outside OEBG Grant
Composite F and E Grant
Non-Recurrent Grant for IT
Sub-total (C)
Total for A+B+ C
==========
==========
==========
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Financial Report to SMC (cont’d)
Note a: Administration Grant
As a result of the contracting out of classroom
cleaning services, the number of clerical and janitor
staff employed are less than that originally planned.
The Principal has approved under delegated
authority the transfer of half of the saving $100,000
to CEG and the other half to CFEG.
Financial Report to SMC (cont’d)
Note b: Capacity Enhancement Grant
With the transfer of $100,000 from the Administration Grant,
the English tutorial courses will increase from 15 to 25
lessons.
Note c: Composite Furniture and Equipment Grant
The additional funds transferred from the Administration
Grant will be used for the upgrading of IT equipment.
Assets Management
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Cash – placing surplus cash in savings
accounts or time deposit
Capital Assets – Fixed Assets Register
Financial Management of Schools
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Questions and Answers
Experience Sharing
Discussion
Financial Management of Schools
Thank you
Kennedy Tat-yin Liu
Telephone: 2289 1881
E-mail: [email protected]