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
outline of presentation
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
comparison of company statutory audit and school audit
Comparison of company statutory audit and school audit
  • Management
    • School supervisor vs Board of directors
  • ED vs IRD
  • Standard format
comparison of company statutory audit and school audit4
Comparison of company statutory audit and school audit
  • Code of Aid for Primary/Secondary Schools(ED) vs Statement of Standard Accounting Practice (HKSA)
general introduction to aided school audit
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
our clients
Our Clients
  • Kindergarten
  • Aided Primary School
  • Aided Secondary School
general introduction to aided school audit7
General introduction to aided school audit
  • Reference materials issued by Education Department (ED)
    • circulars
    • guidelines
    • letters
general introduction to aided school audit8
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)
audit procedures for school audit
Audit procedures for school audit
  • ED current Circular of Annual Accounts of Aided Primary/Secondary School

(any update or change?)

  • Last year ED Observation
audit procedures for school audit10
Audit procedures for school audit
  • Opening balance checking between last year audited financial statements and current year accounting records
audit procedures for school audit11
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
audit procedures for school audit12
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)

audit procedures for school audit income
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
audit procedures for school audit income14
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)
audit procedures for school audit income15
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)
audit procedures for school audit expenditure
Audit procedures for school audit - Expenditure
  • Verify the proper approval from ED
    • general guideline
    • approval letter
  • By materiality
audit procedures for school audit salaries grant
Audit procedures for school audit - Salaries Grant
  • Material item
  • Grants received (completeness)
    • monthly paylist from ED
    • remittance advice
    • ED letter
audit procedures for school audit salaries grant18
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
audit procedures for school audit government fund accounts
Audit procedures for school audit - Government Fund Accounts
  • Year-end balances
    • surplus
    • deficit
  • Follow specific treatment of respective fund
audit procedures for school audit school and sponsor fund accounts
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
audit procedures for school audit school fees and tong fai
Audit procedures for school audit - School fees and tong fai
  • Objective : completeness
  • Source document
    • bank autopay list
    • statement of local education allowance scheme
audit procedures for school audit school fees and tong fai22
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
audit procedures for school audit23
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
audit procedures for school audit balance sheet
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
audit procedures for school audit balance sheet25
Audit procedures for school audit - Balance Sheet
  • Bank accounts
    • Government fund
    • School fund
  • ED Grant surplus balances
  • Other debtors and creditors
audit procedures for school audit notes
Audit procedures for school audit - Notes
  • Breakdowns and explanations in Notes per requirements of the financial statements and ED circular
audit procedures for school audit27
Audit procedures for school audit
  • http://www.ed.gov.hk/ednewhp/html_circulars.html
  • doubtful accounting treatment: check against ED circular
audit procedures for school audit28
Audit procedures for school audit
  • Final procedures
    • complete financial statements and check up-to-date wordings
    • review outstanding matters
    • review audit adjustments
audit procedures for school audit29
Audit procedures for school audit
  • Final procedures
    • prepare confirmation for necessary balances
    • prepare audit completion package
    • prepare covering letter submitted to ED
peachtree accounting application
Peachtree accounting application
  • Chart of Accounts
    • samples prepared by Eddie Leung
  • Asset type accounts
  • Liability type accounts
  • Profit-and-loss type account
peachtree accounting application31
Peachtree accounting application
  • Grants account under
    • General domain
    • Special domain
    • Grant outside Operating Expenses Block Grant (OEBG)
peachtree accounting application32
Peachtree accounting application
  • School and class grant
  • Salaries grant
  • Administration grant

Balance sheet type and Profit-and-loss type account

peachtree accounting application33
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
peachtree accounting application34
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
peachtree accounting application35
Peachtree accounting application
  • Special treatment on the following three grants
    • School and class grant
    • Salaries grant
    • Administration grant
peachtree accounting application36
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)
peachtree accounting application37
Peachtree accounting application
  • Grant received:
    • Debit to bank account or receivables
    • Credit to the the income of appropriate grant (profit-and-loss account)
peachtree accounting application38
Peachtree accounting application
  • Expenditure incurred
    • Debit to appropriate type of grant expense (profit-and-loss account)
    • Credit to bank account or payables
peachtree accounting application39
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
peachtree accounting application40
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
peachtree accounting application41
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

peachtree accounting application42
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
peachtree accounting application43
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)
peachtree accounting application44
Peachtree accounting application
  • Check up-to-date ED circular and letter to make necessary adjusting entries
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