Presentation on theme: "Audit Findings on Kindergarten Inspections Internal Audit Section Finance Division November 2014."— Presentation transcript:
Audit Findings on Kindergarten Inspections Internal Audit Section Finance Division November 2014
2 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
3 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
4 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)
5 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 initial) Petty cash holder approved his own claim of expenses
6 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
7 Audit Findings – Tendering and Quotation Procurement procedures were not established or documented. Schools 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.
8 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
9 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)
10 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. 142/2014 (EDBCM No. 142/2014 – Submission of 2013/14 Annual Audited Accounts by Kindergartens and Kindergarten- cum-Child Care Centres)
11 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.
12 Special Audit Findings (2) Personal bank accounts were used for collecting kindergarten’s income or effecting payment
13 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.
14 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
15 Special Audit Findings (5) Investment losses were noted in kindergarten’s accounts EDBC No. 2/2003 – 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.
16 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