82
HKUST 2015-2016
Annual Report
83
CONSOLIDATED BALANCE SHEET
As at 30 June 2016
As at 30
June 2016
$ MILLION
As at 30
June 2015
Restated
$ MILLION
As at 1
July 2014
Restated
$ MILLION
NON-CURRENT ASSETS
Property, Plant and Equipment
Intangible Assets
Held-to-Maturity Financial Assets
Available-for-Sale Financial Assets
Financial Assets at Fair Value through Profit or Loss
Interest in an Associate
Interest in a Joint Venture
4,976
7
71
18
5,275
73
0
4,813
6
71
22
4,171
64
(1)
4,551
21
108
19
4,295
66
0
10,420
9,146
9,060
CURRENT ASSETS
Held-to-Maturity Financial Assets
Inventories
Accounts Receivable and Prepayments
Bank Deposits with Original Maturity over Three Months
Cash and Cash Equivalents
0
1
187
716
888
37
0
202
1,661
687
5
1
257
1,375
787
1,792
2,587
2,425
CURRENT LIABILITIES
Accounts Payable and Accruals
Provision for Staff Benefits
Deferred Income
Tax Payable
700
165
687
1
660
163
659
1
547
154
604
2
1,553
1,483
1,307
NET CURRENT ASSETS
239
1,104
1,118
TOTAL ASSETS LESS CURRENT LIABILITIES
10,659
10,250
10,178
NON-CURRENT LIABILITIES
Provision for Staff Benefits
Deferred Capital Funds
29
3,835
22
3,730
22
3,656
3,864
3,752
3,678
NET ASSETS
6,795
6,498
6,500
UGC FUNDS
2,355
2,383
2,437
RESTRICTED FUNDS
1,177
932
914
OTHER FUNDS
3,263
3,183
3,149
TOTAL FUNDS
6,795
6,498
6,500
Note: The consolidated financial statements have been prepared in accordance with the new Statement of Recommended
Practice issued by UGC, whereby the presentation of the consolidated financial statements has changed and certain comparative
figures have been reclassified to conform with current year’s presentation. According to the required accounting standard, three
years’ figures have been presented.
APPENDIX IV: INTERNAL CONTROL AND RISK MANAGEMENT
SUMMARY OF INTERNAL CONTROL AND MEASURES
The University has developed a system of internal control
comprising both IT application based and manual controls as
well as management reporting. In order to receive assurance
that the system of internal control is effective and operating
satisfactorily, the following arrangements are in place:
(a) AControl Self-Assessment Program requires individual
units to self-review periodically the controls for which
they are responsible and communicate the results to
Management for follow-up action. This Program aims
to raise awareness of internal control throughout the
University and helps to assess the adequacy of the
University’s control processes.
(b) A consulting firm is appointed as the University’s
internal auditors to perform risk based independent
reviews on the adequacy and effectiveness of the
University’s system of internal control and recommend
areas for improvement.
(c) In addition to the statutory annual audit of the
University’s financial statements, the external auditors
also carry out an independent assurance engagement
on the University’s compliance with the guidelines,
terms and conditions imposed by the Government’s
University Grants Committee.
(d) The Audit Committee of the University agrees
a program of work for the internal auditors; receives
reports and considers control issues raised by the
internal auditors and the external auditors. The
program of audit work provides assurance that
Management has put in place and upholds an
effective internal control system.
(e) A Whistle Blowing Policy provides a safe and
protected means by which employees and students
of the University are enabled to raise concerns with
the appropriate University authorities against any
malpractice within the institution.
RISK MANAGEMENT
The University faces a number of principal risks and these are
summarized below with associated mitigation. The University
has various sources of assurance that its mitigation is effective.
(a) Academic risks:
The University strives to be a leader in education and research
and it is essential it maintains an excellent reputation in these
areas and is able to attract and retain the best global talents
including students, faculty and staff. The University has broad
and robust risk mitigation and assurance in academic areas
including the quality of its faculty and UGC’s direct review and
assessment. In particular, the University undergoes periodic
exercises such as Academic Development Planning (ADP),
Research Assessment Exercise (RAE) and Quality Assurance
Council (QAC) audits, each containing a broad range of
topics including SWOT analysis. Some of the academic
endeavors, such as research and growing parts of knowledge
transfer, services and education, are also open to international
benchmarking and peer review.
(b) Financial risks:
The University is dependent on funding from the Government
and is therefore exposed to a substantial one off reduction
in funding or sustained reduction of a significant part of its
funding. The University also derives significant income from
non-Government sources, such as its self-financed teaching
courses where it is dependent on the competiveness of its
offering both locally and internationally. The key mitigations
for funding risks are maintaining a high academic reputation
in both teaching and research and the amount of cash
reserve available. The University is also exposed to financial
risks, mainly market risks on its investments. Investment risk
is mitigated by a diversified investment strategy with acceptable
risk and return objectives approved by the Council and the
employment of external advisors and investment managers.
The Financial Statements contain further information about
financial risks and their mitigation.
(c) Health & Safety:
The University operations require the use of hazardous
materials, which can cause serious injury or death if notmanaged
correctly. The University has a comprehensive Environmental
Health & Safety (EHS) management program designed
to manage this risk. The University is a complex campus where
staff and students, live, work and study with continuous activity
to maintain and expand campus facilities. The University
has an on-campus medical facility able to respond to any
situations. All contractors on site must comply with Hong Kong
Healthy and Safety standards. University sports facilities are
suitably supervised with users receiving appropriate training
if necessary.
(d) Operational:
It is essential that the University up-holds the standards
expected of a publicly funded institution. The University has a
comprehensive code of conduct policy that all itsmembersmust
comply with. Student welfare, on and off campus, is paramount
and the University has implemented various measures to
identify and manage any concerns of students. These include
confidential access to team of professionally trained counselors
if required. TheUniversity is also aware of student sentiment on a
variety of political topics. Whilst supporting the right to freedom
of speech, the University will remind students of the need to
respect the law and that it will not tolerate any activities on
our campus which degenerate into offensive tirades, advocacy
of violence, or violence itself. The University has set itself high
academic and non-academic standards, consistent with those
of a world-class institution. Ensuring the buy-in of all staff to
performance expectations and the related change program
and maintaining staff morale during this time is a key risk. This
is mitigated by a performance incentive for academic staff
and broad staff engagement to communicate the rationale
of strategies. Despite all planning and risk management,
the University is vulnerable to a disaster whether naturally
occurring or deliberately instigated. The University has the key
components of a disaster recovery plan already developed,
including tested emergency response procedures and
restoration of back-up IT systems if necessary.
(e) Regulatory Compliance:
The University places high importance on full compliance with
all relevant requirements, whether academic, operational,
accounting, legal, tax, environmental, building code or the
specific requirements of funders. It would not knowingly breach
any requirements. The key mitigations are the employment
of seasoned and qualified staff to ensure compliance, use
of professional advisers whenever required, internal control
procedures and independent audit.
(f) Technology:
As an open community, the University is vulnerable to
unauthorized penetration of its IT networks, applications and
data with potentially serious consequence. The University has
a comprehensive cyber security policy and has implemented
a variety of security measures including a dedicated team
monitoring compliance with policy and any incidents. The
University is also undertaking changes to some of its key
administrative applications. It has invested in improved project
management capability to ensure that changes to its key
administrative systems do not cause any operational difficulty.
The University uses external service providers to perform
intensive IT audits periodically.
