Study On The Improvement Of The Accounting Systems Of Hong Kong Public-Funded Universities

Hong Kong Public-funded universities which receive grants from the University Grants Committee ("UGC") are of non-profit-making organizations (or named as "non-governmental organizations). The operations and accounting systems of these institutions are subject to the regulations laid down by various authorities. The operations of these institutions must fulfill the requirements stipulated in the "Notes and Procedures" issued by UGC on one hand, and also should observe the requirements of the Statements of Accounting Practice (SSAPs) issued by the Hong Kong Society of Accountants on the other hand. Apart from these two regulatory documents, the institutions also have to follow the recommendations suggested in the document "Statement of Recommended Practice of UGC-funded institutions" ("SORP") in setting up their accounting systems and preparation of their financial statements. This SORP which was intended to provide recommendations on the best practice and guidance in respect of the specialized and unique transactions of universities was drafted by a task force formed by the financial personnel of the eight UGC-funded institutions. Due to the substantial difference in background factors (such as the mode of operations, sources of funding, and regulations to accounting systems, etc) between the universities and profit-making organizations; therefore, the university accounting systems have their uniqueness and are different from those of traditional ones. It is not possible for the universities to fully adopt the traditional accounting systems for their use. SSAPs were devised mainly for catering for the commercial transactions rather the specialized transactions of the universities, and also the SORP was not drafted by the experts of Hong Kong Society of Accountants; therefore, it is inevitable that the accounting systems of the universities have their inadequacy. The purpose of this thesis is, based upon the uniqueness of operations of the universities and the basic regulatory documents, to point out the inadequacy of the existing financial systems of the UGC-funded institutions and make recommendations on the improvement of them in order to enhance the quality of their financial statements for reflecting the truer and fairer view of their financial condition, as well as their readability, credibility, comparability and usefulness.This thesis concentrates only on the exploration of the financial accounting systems of the UGC-funded institutions, including those of UGC-funded activities, self-financed activities and fund-raising activities. The systems of cost accounting, budgeting, and management accounting of these institutions, as well as the accounting systems of private universities are outside the scope of discussion of this thesis.Moreover, although some parts of these institutions' financial accounting systems are different from the traditional ones of the ordinary commercial firms; however, most parts of them are similar and subject to the regulations of Hong Kong SSAPs. For those similar parts, this thesis will not discuss again. It concentrates and discusses on the parts which are dissimilar to the traditional accounting systems and delineate the inadequate areas appeared in certain accounting treatments and presentation of the financial statements, as well as make recommendations for improvement.A summary of recommendations for improvement is provided in chapter 9 of this thesis. These recommendations have been implemented in the revised presentation of the financial statements which is set out in the Appendix 2.