************************************************************
The Commerce and Economic Development Bureau (CEDB) today (July 9) responded to the Report of the Legislative Council (LegCo) Public Accounts Committee (PAC) on Report No. 62 of the Director of Audit on the Results of Value for Money Audits relating to the Chapter on the Mega Events Fund (MEF) as follows:
Since its establishment in 2009, the MEF has earmarked a total of about $100 million to support 24 mega events organised by local non-profit organisations. These events have enriched the travel experience of visitors to Hong Kong. Some of them have attracted tens of thousands of local residents and visitors and received positive feedback. A number of events were broadcast or widely reported by the international media, which increased the exposure of Hong Kong overseas. In all fairness, the MEF-supported events have contributed to reinforcing Hong Kong's status as a world-class travel destination and the events capital of Asia.
The Administration attaches great importance to the proper use of public money. The Tourism Commission (TC) has been monitoring and evaluating all the MEF-supported events in a serious and earnest manner. A system with consistent and appropriate standards for the vetting and assessment of applications for the MEF as well as the evaluation of the performance of MEF-supported events was devised to select events which could enrich our event calendar and ensure that they could be successfully implemented.
While the Administration will carefully examine the relevant parts concerning the MEF under the Report of the PAC on Report No. 62 of the Director of Audit on the Results of Value for Money Audits released today, we do not agree to some of the wording in the PAC Report. As for the overall and specific comments of the PAC Report, our responses at this stage are set out below.
First of all, we need to point out in particular that the PAC Report stated that the Administration did not mention the letter issued by the Corruption Prevention Department (CPD) of the Independent Commission Against Corruption (ICAC) to the TC in November 2010, where the views of some members of the Corruption Prevention Advisory Committee (CPAC) were conveyed, in the Administration's submission to the LegCo Finance Committee (FC) to extend the operation of the MEF in 2012, and this might have hindered the FC from making an informed decision on whether or not to support the funding proposal. We need to emphasise that the CPD of the ICAC has pointed out in its letter dated May 20, 2014, to the Clerk of the PAC (Appendix 22 to the PAC Report) that when the CPD of the ICAC submitted its report to the CPAC for endorsement in 2010, a member mentioned that the MEF was a one-off funding scheme set up during the time of financial difficulties and doubted the need for its continuation as the economic situation had changed. Echoing this member's view, another member added that the TC's staff might try to dish out the funds loosely in order to use up the funds within the period of three years. The member suggested that the TC should consider returning the unused funds to the Government. This letter of the CPD confirmed the view of the Administration at the time that the view of members of the CPAC set out in the CPD's letter to the TC back in 2010 was not directly related to corruption prevention but was more a policy question. The TC has taken the relevant policy view into account when reviewing the way forward of the MEF in 2011. The conclusion of the review was that Hong Kong's economic situation had indeed changed, but Hong Kong was facing fierce competition from neighbouring cities in seeking to host mega events. In view of this, the TC considered that the operation of the MEF should be extended, but that the scheme should be revised to help bring internationally acclaimed mega events to Hong Kong. The Administration has explained in our submission to the FC on the conclusion of the review on way forward of the MEF and related proposals. Our judgement at that time was that there was no need to mention the CPD's report or its letter in the paper submitted to the FC. Thus, the Administration does not agree with the description of the CPD's letter as contained in paragraph 1.11 of the Report of the Director of Audit (Audit Report) concerned nor the views of PAC members.
In addition, the PAC Report considered that the Administration failed to draw sufficient lessons from the experience from the Hong Kong Harbour Fest. We need to point out that the Government had duly taken note of the experience gained from the Harbour Fest at the time when we established the MEF. For example, the funding agreement signed with the organiser of an MEF-supported event would set out the specified use of the MEF funding as well as relevant terms and conditions to govern the use of the funding. The organiser is also required to observe the relevant financial control measures as specified under the funding agreement and to keep the project accounts and relevant books and records relating to the event for inspection by the MEF Assessment Committee (MEFAC) Secretariat. Upon the completion of the event, the organiser is also required to submit the post-event reports, including the final audited accounts prepared by an independent registered Certified Public Accountant in accordance with the prevailing Hong Kong Accounting Standards. The audited accounts should include the auditor's opinion on whether there is any non-compliance by the organiser with any terms and conditions of the funding agreement; whether it is reasonably believed that the organiser has fully complied with the terms and conditions of the funding agreement; and an assurance that the MEF funding was spent in accordance with the terms and conditions of the funding agreement. The MEFAC Secretariat respects and accepts the work and advice offered by the accounting professionals. Notwithstanding this, the MEFAC and the MEFAC Secretariat also perform a supervisory role. The MEFAC Secretariat would cross-check the post-event evaluation report and the final audited accounts upon receipt. Should discrepancies be spotted, the organiser would be required to make clarifications and provide relevant supporting documents. The MEFAC Secretariat would also conduct random checks on individual income and expenditure items, and request the organiser to submit supporting documents or receipts as proof. To date, financial sanctions have been imposed on 10 events for failing to achieve the predetermined targets.
The PAC report also made reference to the appointment arrangements for the MEFAC. We need to point out that the Chairman and all members of the MEFAC have since the establishment of the Committee been performing their duties diligently. As pointed out in the Audit Report, it is essential to ensure that the objectives and assessment criteria of the MEF remain consistent. To this end, we have taken the Director of Audit's recommendation on board and appointed an additional suitable member for the new term of the MEFAC which commenced in June 2014 while reappointing all incumbent members including the Chairman. The new member has rich knowledge of the tourism sector, as well as profound professional accounting knowledge which will help enhance the effectiveness of the operation of the MEF and the representativeness of the MEFAC, as well as facilitate its consolidation of multi-disciplinary professional advice.
With a view to further enhancing the overall operation of the MEF, the TC has set in train a series of improvement measures and more will be introduced in the near future, including the deployment of staff with accounting knowledge to the MEFAC Secretariat. Details are set out in Appendix 32 to the PAC Report. We will also carefully examine the views of the PAC. If any substantial increase in work procedures and checking involving additional resources is envisaged, we will consider this carefully and strive to find a right balance.
The Administration will adopt a positive and forward-looking attitude to the recommendations of the Audit Commission and the PAC, and will review and consider the way forward of the MEF before its expiry in March 2017.
Ends/Wednesday, July 9, 2014
Issued at HKT 18:17
NNNN
