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| Report of the Treasurer to the Council on the
Institute's Financial Statements for the Financial Year from 1 July
2003 to 30 June 2004 Overview The financial year 2003/04 was a significant milestone in the history of the HKIEd, marking 10 years since its creation in 1994. Over this decade, the Institute has continuously evolved whilst maintaining its strong focus to promote quality teacher education. The climax of the year came with the self-accrediting status granted by the Executive Council of the HKSAR Government in May 2004. Well before the University Grants Committee ("UGC") announced its funding cut to the 2004/05 recurrent grants (and possibly for the subsequent years), the Institute had already prudently and proactively started to implement productivity enhancement initiatives since 2002. These initiatives, coupled with further tightening up of cost control measures in 2003/04, resulted in an overall surplus of $142 million, which was transferred to the General Development Reserve Fund ("Reserve"). The Reserve has now been built up to $536 million, which is equivalent to roughly 8 months of UGC-funded expenditure. Upon the recommendation of the Council's Focus Group on Resources, some administrative units had restructured and various business re-engineering initiatives are still underway. A Voluntary Departure Scheme ("VDS") for all non-academic staff was successfully completed in November 2003 and resulted in significant cost savings, at an annualised level of around $65 million in 2004/05 and the years onwards. Opportunities in further out-sourcing have also been identified and are being implemented, in the areas of cleaning and security services as well as the internal audit function. Other areas of savings included the deferred maintenance and replacement of premises and equipment, utilities, general departmental/office expenses, etc. Academic Programmes and Student Number In 2003/04, the Institute continued to develop and offer new programmes to students. Two newly validated and launched courses were the Bachelor of Education (Honours) (Special Needs) Programme, and the Professional Development Course for Teachers (Catering for Diverse Learning Needs), both of which admitted the first cohorts of students in 2004/05. The total UGC-funded student number, in Full-Time Equivalent ("FTE") terms, was 5,417 as at 30 June 2004. 66% of this student population was at the degree or above level, and among them 698 students (in FTE terms) were university graduates taking our post-graduate programmes. The Institute has also implemented its first student exchange programme in 2003 and our first exchange partner was a renowned normal university on the mainland. In regard to the self-funded programmes, language benchmark courses for in-service teachers (762 FTE students) and the Yi Jin programme (394 FTE students) were the most popular ones. With the reducing funding support from the UGC, the Institute is launching a number of self-funded professional development courses for school principals and school teachers to support their upgrading needs. The signing of the memorandum on mutual recognition of degree qualifications should also help in attracting self-funded students from the mainland, or in developing collaborative programmes with China institutions. Income and Expenditure Since the financial year 1997/98, the Institute has been adopting the Statement of Recommended Practice for UGC-funded institutions in Hong Kong ("SORP") in the preparation of its financial statements. In recognition of the development of the generally accepted accounting standards in Hong Kong and internationally in recent years, the Director of Finance Group under the Heads of Universities Committee of the 8 UGC-funded institutions had come together and made extensive changes to the SORP. The revised SORP, effective from the financial year 2003/04, is more in line with the accounting practice in the private sector and most of the universities internationally. The most significant changes are the recognition of expenditure on accruals basis against the previously adopted commitment basis and the capitalisation (and depreciation) of capital projects and fixed assets. The presentation and classifications of income and expenditure items as well as fund balances have also been revised. Income and expenditure are now categorised according to the nature of the underlying business activities, irrespective of whether they are funded from the UGC or otherwise. In the light of the changes in the revised SORP, the Institute has restated some of the balances from the financial statements of the year 2002/03 for comparison purpose. For more details in relation to the changes in accounting policies, please refer to Note 2 of the Financial Statements. |
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