Chapter 38 : Accountability

38.1 As we explained in Chapter 4, more than 90% of the public funds devoted to higher education are spent on the UGC institutions. Although there is a good deal of informal contact between government departments and the HEIs, particularly over the provision of courses or training to meet specific manpower needs, direct formal contact is limited to land matters, changes to ordinances and contracts for services. All other areas, including funding, are dealt with by and through the UGC, although government is ultimately responsible for salary scales, which are linked to those of the civil service, and student fees. The route of accountability for the correct and efficient expenditure of public funds subvented to the institutions is thus from the institutions to the UGC and from the UGC to government.

38.2 The final responsibility for assuring government and the taxpayer that their money has been used properly, effectively and (hopefully) wisely rests with the Chairman and members of the Grants Committee, but on a day-to-day basis the Committee's secretariat necessarily undertakes this task. The secretariat itself is staffed entirely by civil servants and constitutes a government department responsible to the Chief Secretary through the Secretary for Education and Manpower. The Secretary-General of the UGC is the Controlling Officer for almost all the public funds, both recurrent and capital, subvented to the institutions listed in paragraph 2.2.

38.3 Partly because of the route of accountability described in paragraph 38.1, but also because of the UGC's protective role (see paragraph 5.1), the secretariat has in practice to answer public questioning not merely about its own activities, but also about those of the institutions as well. The Secretary-General may have to respond orally or in writing to queries from the Legislative Council or may have to brief the Secretary for Education and Manpower to do so. Additionally, there are many questions from within the civil service and, increasingly, from the public and the media. The work load involved in this form of accountability, particularly when it requires detailed enquiry of institutions, is considerable.

38.4 As part of its monitoring of the institutions' use of block grant, the UGC requires annual returns on staff, students and finance in a standard format (the Common Data Collection Format or CDCF). The Committee checks these returns against approved student numbers, academic development proposals and other policy guidelines and advice, and considers whether individual institutions are meeting their commitments and whether any variation of funding may be appropriate. On a shorter time scale, the UGC Secretariat receives and reviews monthly financial statements. Although the Grants Committee strongly subscribes, on the grounds of efficiency, to the freedoms described in paragraphs 4.4 and 5.2-5.7, all variations to agreed triennial development plans do need eventually to be justified to the UGC, if they are to be funded.

38.5 In addition to the information obtained through the CDCF and other formal returns, the UGC visits each of its institutions at least once each triennium to gain some understanding of developments on the ground, to talk with students and both junior and senior staff, and to get a first hand impression of the quality of education and the effectiveness of the use of resources (responsibility for which lies utimately with the institutions' Councils). All sub-committees of the UGC, although they visit institutions for their own specific purposes, extend this knowledge. In particular, however, the UGC set up in January 1995 a Resource Planning Sub-Committee with the specific aim of encouraging more output-orientated planning and cost-consciousness within its institutions. Results so far include an inter-institutional project on total quality management and subsequent training of staff in finance offices, and an intention by the Grants Committee to conduct Management Reviews, starting in 1997. It must be emphasised that the Committee has no wish or capacity to micro-manage (its current staff is less than 40). Its concern is that each institution should have in place resource allocation, planning and financial management processes which can be readily observed and reviewed not just by the UGC but, more importantly, by the internal participants.

38.6 Most UGC institutions operate decentralised systems of budgetary allocation and control. The block grant, after some "top-slicing" for specific purposes, is divided between the spending departments on the basis of their bids for resources, their activity and performance, and policy considerations for the institution as a whole. Each department gets a "one-line budget" - its own block grant. There are sometimes restrictions placed on the spending of departmental budgets, particularly where there is future commitment, as in staff appointments, but generally there is considerable freedom in the deployment of money. Detailed allocation and control then usually rests with the head of the unit concerned, and can be a time-consuming business except perhaps in large departments or faculties which may have their own finance staff. Accountability is to the central administration, which will usually undertake periodic budget reviews.

38.7 Auditing, in a formal sense, is comprehensive. All UGC institutions have to produce annual accounts which are audited by independent auditors. The Grants Committee then studies these accounts and raises its own questions about anomalous or inappropriate expenditure. The Director of Audit has access to the books and records of both the institutions and the UGC itself, and can ask different and separate questions. This formal financial auditing is largely concerned with propriety. It is, of course, important, but far more important is the informal "auditing" which goes on continuously between the UGC and the institutions, and between central administrations of institutions and departments, to try to ensure that agreed academic objectives are achieved at high quality and reasonable cost. In fact, the real accountability in higher education, which falls equally on government, its advisory bodies and the institutions, is in trying to ensure that the "delicate balancing act" of paragraph 4.7 is maintained in such a way that the aspirations of the people of Hong Kong and of the academic community are both satisfied, not only efficiently, but also imaginatively.

38.8 Accountability in the non-UGC subvented institutions is largely concerned with providing to government and Legislative Council an annual report on the previous year's activities, a statement of accounts, and the report of an independent auditor (although in the case of the VTC, the auditor is the Director of Audit). Shue Yan College, which is registered as a Post-Secondary College, is required to keep accounts which are open to inspection by the Director of Education.

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