The Government announced today (May 7) detailed proposals to improve its annual financial reporting through the introduction of accrual accounting in preparing its Annual Accounts.
The Financial Secretary said in the 2001-02 Budget Speech that starting from the accounts for fiscal year 2002-03, two separate sets of Annual Accounts of the Government would be published, one under the existing cash accounting convention and the other prepared on an accrual basis.
"The move aims to increase the Government's transparency in and accountability for financial performance and enhance cost-control and cost-effectiveness", the Director of Accounting Services, Mr Shum Man-to, said.
The proposals are made by a Task Force chaired by the Secretary for the Treasury established to review the Government's financial reporting policy. The Task Force has taken into account international accounting practice and overseas experience. It has also taken into account suggestions that have been made by LegCo Members and the local accounting profession for the Government to introduce accrual accounting in preparing its accounts.
"We have also organised a symposium with the accounting profession and the academics to seek their views," Mr Shum said.
He explained that under the proposals, the existing set of cash-based Government accounts would continue to be published to demonstrate compliance with the budget as approved by the legislature. In parallel, financial statements prepared on an accrual basis will be published.
"The addition of these accrual-based financial statements will more fully present the Government's financial position and financial performance and demonstrate the accountability for resources employed," he said.
The main recommendations of the Task Force include preparation and publication of (i) a set of accrual-based annual Consolidated Financial Statements to report on the overall financial performance and position of the Government; (ii) an annual Departmental Service Cost Statement to report on the full cost of service delivery for each department and bureau; and (iii) an annual Stewardship Statement to provide non-financial information on major physical assets (i.e. land, buildings, roads, drains, etc.) employed by the Government for service delivery.
"Moreover, the accrual accounts will capture the Government's activities including those of the public sector organisations in which it has full or major ownership interest. The Government's share of the accumulated net worth of companies such as the MTR Corporation Limited and the reserves of the Exchange Fund will be incorporated," Mr Shum said.
The Task Force's proposals will be implemented starting from the accounts for 2002-03, except that for the reporting of fixed assets. Fixed assets will be included in the accounts of 2004-05 after they have been identified and valued. A post-implementation review is planned for 2006-07 to assess the results achieved and the need for further changes.
The proposals are detailed in the Task Force's report published today as a public consultation document. The consultation document can be obtained during office hours from the Government Publications Centre (G/F, Low Block, Queensway Government Offices, 66 Queensway) and the Treasury's Financial Management Services Division (31/F, Immigration Tower, 7 Gloucester Road, Wan Chai).
The report can also be accessed at the following websites:
Finance Bureau website: www.info.gov.hk/fb
Treasury website: www.info.gov.hk/tsy
Government Information Centre website: www.info.gov.hk
Members of the public and interested parties are invited to forward their comments to the Treasury by fax (2802 4052) or by e-mail (email@example.com) within the consultation period from May 7 to June 30.
End/Monday, May 7, 2001