Hong kong aided school accounting and auditing
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Hong Kong Aided School Accounting and Auditing Prepared by: Wendy Fung Outline of Presentation Comparison of company statutory audit and school audit General introduction to aided school audit Audit procedures for school audit Peachtree accounting application

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Presentation Transcript

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Outline of Presentation

  • Comparison of company statutory audit and school audit

  • General introduction to aided school audit

  • Audit procedures for school audit

  • Peachtree accounting application


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Comparison of company statutory audit and school audit

  • Management

    • School supervisor vs Board of directors

  • ED vs IRD

  • Standard format


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Comparison of company statutory audit and school audit

  • Code of Aid for Primary/Secondary Schools(ED) vs Statement of Standard Accounting Practice (HKSA)


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General introduction to aided school audit

  • Various types of schools

    • Aided primary/secondary school

    • Private primary/secondary school

    • Caput school

    • Bought place school

    • Direct subsidy scheme school


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Our Clients

  • Kindergarten

  • Aided Primary School

  • Aided Secondary School


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General introduction to aided school audit

  • Reference materials issued by Education Department (ED)

    • circulars

    • guidelines

    • letters


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General introduction to aided school audit

  • Individual grant

  • Grant income (Government Fund Accounts)

  • Non-recurrent grants of fixed assets

  • Other income (School and Sponsor Fund Accounts)


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Audit procedures for school audit

  • ED current Circular of Annual Accounts of Aided Primary/Secondary School

    (any update or change?)

  • Last year ED Observation


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Audit procedures for school audit

  • Opening balance checking between last year audited financial statements and current year accounting records


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Audit procedures for school audit

  • Closing balance checking between client’s financial statements and accounting records

  • Preliminary assess the completeness of accounting records prepared by client


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Audit procedures for school audit

  • Audit standard documents

    • engagement letter

    • letter of representation

    • audit planning

    • bank confirmation

    • inventory and cash confirmation

      (samples are saved in P:/Schools/Documents)


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Audit procedures for school audit - Income

  • Monthly source documents for grants received from Government (Government Fund Accounts)

    • remittance advice

    • ED letters

  • Classify grants received into appropriate Grant Audit Schedule


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Audit procedures for school audit - Income

  • Compare the Grant Audit Schedule with client’s accounting records to find out discrepancies

  • Make audit adjustments (if any)


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Audit procedures for school audit - Income

  • Other income (not received from Government) is classified in General Funds account or Income and Expenditure account (School and Sponsor Fund Accounts)


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Audit procedures for school audit - Expenditure

  • Verify the proper approval from ED

    • general guideline

    • approval letter

  • By materiality


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Audit procedures for school audit - Salaries Grant

  • Material item

  • Grants received (completeness)

    • monthly paylist from ED

    • remittance advice

    • ED letter


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Audit procedures for school audit - Salaries Grant

  • Salaries expense (valid and proper approval)

    • bank autopay list or statement

    • forms submitted to ED with proper authorization


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Audit procedures for school audit - Government Fund Accounts

  • Year-end balances

    • surplus

    • deficit

  • Follow specific treatment of respective fund


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Audit procedures for school audit - School and Sponsor Fund Accounts

  • Make sure in the school and sponsor fund

    • no grant income from Government Fund Account

    • no expenditure of Government Fund Account

    • no secret accounting record or bank accounts


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Audit procedures for school audit - School fees and tong fai

  • Objective : completeness

  • Source document

    • bank autopay list

    • statement of local education allowance scheme


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Audit procedures for school audit - School fees and tong fai

  • Source document

    • ED circular to check the rate per pupil or per class and calculate the total amount should be received

  • Compare our calculation with client’s accounting records


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Audit procedures for school audit

  • All account balances of grants appear in Balance Sheet

  • Deficits are absorbed in General Funds Account or Income and Expenditure Account


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Audit procedures for school audit - Balance Sheet

  • Fixed assets

    • funded by Government Fund : under Non-recurrent Grants section

    • funded by School Fund : under Accumulated Fund


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Audit procedures for school audit - Balance Sheet

  • Bank accounts

    • Government fund

    • School fund

  • ED Grant surplus balances

  • Other debtors and creditors


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Audit procedures for school audit - Notes

  • Breakdowns and explanations in Notes per requirements of the financial statements and ED circular


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Audit procedures for school audit

  • http://www.ed.gov.hk/ednewhp/html_circulars.html

  • doubtful accounting treatment: check against ED circular


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Audit procedures for school audit

  • Final procedures

    • complete financial statements and check up-to-date wordings

    • review outstanding matters

    • review audit adjustments


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Audit procedures for school audit

  • Final procedures

    • prepare confirmation for necessary balances

    • prepare audit completion package

    • prepare covering letter submitted to ED


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Peachtree accounting application

  • Chart of Accounts

    • samples prepared by Eddie Leung

  • Asset type accounts

  • Liability type accounts

  • Profit-and-loss type account


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Peachtree accounting application

  • Grants account under

    • General domain

    • Special domain

    • Grant outside Operating Expenses Block Grant (OEBG)


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Peachtree accounting application

  • School and class grant

  • Salaries grant

  • Administration grant

    Balance sheet type and Profit-and-loss type account


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Peachtree accounting application

  • Review chart of accounts

  • Enter opening balance and compare with last year’s audited financial statements

  • Prepare entries to arrive at the balances of items stated on the ED Observation


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Peachtree accounting application

  • General journal entry : record transactions

  • Grant account (balance sheet type account)

    • income received and expenditure incurred record directly in the grant account


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Peachtree accounting application

  • Special treatment on the following three grants

    • School and class grant

    • Salaries grant

    • Administration grant


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Peachtree accounting application

  • These three grants have both balance sheet type account and profit-and-loss type account in Chart of Accounts

  • Entries should be entered into profit-and-loss type account first (instead of balance sheet type account)


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Peachtree accounting application

  • Grant received:

    • Debit to bank account or receivables

    • Credit to the the income of appropriate grant (profit-and-loss account)


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Peachtree accounting application

  • Expenditure incurred

    • Debit to appropriate type of grant expense (profit-and-loss account)

    • Credit to bank account or payables


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Peachtree accounting application

  • At year-end, eliminate the balance of income and expense (profit-and-loss type account) under the same type of grant and transfer to corresponding balance sheet type grant account

  • Obtain grant surplus or deficit carried forward to next year or transferred out


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Peachtree accounting application

  • Classify and input data into the detailed profit-and-loss type account instead of balance sheet type account

  • Efficient to prepare the breakdowns and explanations in Notes to the financial statements


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Peachtree accounting application

  • Amount shown as surplus (deficit) for the year in the “Income Statement” of Peachtree Accounting

    = Total income less total expenditures in the General Fund or Income and Expenditure Account only


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Peachtree accounting application

  • Fixed assets

    • Additional entries for capitalizing grant expenditures as fixed assets

    • Check ED letter or supporting documents for proper treatment of capitalization


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Peachtree accounting application

  • Fixed assets

    • Debit to appropriate type of fixed assets (e.g. buildings, furniture and equipment)

    • Credited to corresponding Non-recurrent Grants (funded by Government Fund) or Accumulated Fund (funded by School Fund)


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Peachtree accounting application

  • Check up-to-date ED circular and letter to make necessary adjusting entries



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