Seminar on Financial Management for Aided Schools

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Seminar on Financial Management for Aided Schools
16 January 2004
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Agenda
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Presentation materials can be found at

• EMB Homepage (http//www.emb.gov.hk)
• School School Finance
• Accounting and Financial
  Management Training Materials

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Tendering and Purchasing Procedures in Aided
Schools
EMBC 30/1999
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Basic Principles

• Fairness
• Equal chance
• No privilege
• Reasonable
• Openness
• Right to know
• Disclosure of information at right time
• Full documentation

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Basic Principles

• Value for Money
• Competitive price
• Compliance with specification
• Economical
• Proper procedures

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Declaration of Conflict of Interest

• Staff responsible for procurement should -
• Avoid conflict of interest in carrying out his
  duties
• Declare to the SMC any current or future
  connection they or their families have with
  suppliers e.g. being relatives, owners,
  shareholders, close personal friends etc.

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Declaration of Conflict of Interest

• Staff involved should be notified annually of the
  requirement by means of a circular. They are
  required to sign to indicate that they have read
  and understand it

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Warning against Bribery

• Schools should not permit their staff to receive
  advantages (including payment of commission) from
  suppliers and contractors

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Warning against Bribery

• Schools should inform all suppliers and
  contractors in writing (e.g. by incorporating a
  statement in the order form or the terms of
  quotation/tender) that the offer of advantages to
  school staff in connection with their official
  duties is illegal

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Calculation of Procurement Sums

• Stores/services of same category be grouped in
  the same purchase before inviting suppliers to
  bid
• Schools should not evade the financial limits by
  dividing procurement requirements into instalments

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Calculation of Procurement Sums

• Schools should consider to invite
  quotations/tenders for arranging term contracts
  for the required regular services such as
  cleaning

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Financial limits
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Quotations

• Schools should-
• Specify specifications of the goods/services
  required
• Specify the closing date and time for receipt of
  quotations
• Issue written invitations to invite suppliers to
  quote (except oral quotations)

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Quotations

• Purchase should be handled by staff at an
  appropriate level
• If submission of quotations by fax is permitted,
  designate a fax machine with lock for that
  purpose. The key should be kept by designated
  staff

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Quotations

• Alternatively, request the suppliers to notify
  the designated staff member by telephone before
  faxing in their quotations
• All quotations received should be properly locked

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Invitation to Quotation/Tender

• Select from the Standard List of Suppliers by
  rotation http//www.emb.gov.hk/supplier_list/
  home.htm
• Also invite last successful supplier with
  satisfactory performance
• Other possible sources of supply identified may
  also be invited to quote/tender

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Issue and Receipt of Tenders

• All tender documents should be sent to invited
  suppliers by registered mail. The receipts issued
  by Post Office should be maintained for audit
  purpose

Registered
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Issue and Receipt of Tenders

• Schools should advise suppliers to submit tenders
  in duplicate enclosed in sealed plain envelope
  marked TENDERS with the tender number and
  closing date and time and address of the location
  for receipt of tenders as specified by the school
  on the cover

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Issue and Receipt of Tenders

• Schools should advise tenderers not to disclose
  their identity on the tender cover or provide
  tenderers with pre-addressed envelopes for
  submitting their bids

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Issue and Receipt of Tenders

• Schools should place all tenders into the tender
  box with two locks immediately upon receipt. The
  key to each lock must be held by different school
  staff, one of whom should be at a supervisory
  rank

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Opening of Tenders

• Tenders should not be opened before the tender
  closing date and time
• A Tender Opening and Vetting Committee (TOVC)
  comprising 2 staff members will be appointed by
  the school principal at least 3 working days
  before the tender opening date

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Opening of Tenders

• TOVC chairperson and member should be of ranks
  not lower than a substantive Assistant
  Master/Mistress and Clerical Assistant
  respectively or equivalent
• The two staff members of TOVC should be appointed
  by rotation, whenever possible

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Opening of Tenders

• TOVC should -
• Open the tender box at the specified tender
  closing date and time
• Open the tenders immediately upon the tender
  closing time and sort tenders in a locked-up room

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Opening of Tenders

• Tenders with closing date later than the date of
  collection should be date-chopped and signed by
  all members of TOVC, and then re-deposited into
  the tender box until it is re-opened

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Opening of Tenders

• On opening tenders which are due for opening,
  TOVC should initial, date-stamp and check all
  tenders to see if both the original and duplicate
  copy of the tenders are identical

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Opening of Tenders

• TOVC should then enter all tenders received in
  the Tender Summary and Approval Record to show
  the number of offers and non-offers

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Late Tenders

• Late tenders should not be opened and their cover
  should clearly marked LATE TENDER, RECEIVED BY
  THE TENDER OPENING AND VETTING COMMITTEE ON
  _Year_Month_Date and initialed by all member of
  TOVC

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Late Tenders

• The late tenders would be referred to Tender
  Approving Committee (TAC) to decide on their
  validity

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Late Tenders

• In principle, late tenders should not be
  considered
• Late tenders not to be considered further by TAC
  should be returned under a covering letter to the
  tenderer

Out
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Tenders Approval
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Tenders Approval

• TOVC and TAC must be made up of different staff
  members

?
TOVC
TAC
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Records

• School staff should complete the
  Purchase-by-Quotation Form/Tender Summary and
  Approval Record

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Records

• An explanatory note should be made on the
  purchasing record if the minimum number of
  suppliers to give quotations/tenders is not met
  and it should be endorsed by

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Records

• The lowest offer to specification should be
  accepted. School staff should record the reasons
  for not selecting the lowest quotation/tender
  (i.e. as to how it deviates from the stipulated
  specifications)

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Internal Control

• All communications regarding quotations/tenders
  must be classified as RESTRICTED DOCUMENTS until
  the award of the successful quotation/tender
• Segregation of duties among inviting/obtaining
  and approving quotations/tenders and checking the
  goods received

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Internal Control

• If the purchases by tender is of higher value,
  two staffs should be arranged for checking the
  goods received
• The procurement records should be checked at
  random from time to time by a senior staff who
  should date and initial on the records, and
  report to the school head when split orders are
  detected

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Monitor Suppliers Performance

• Schools have to monitor performance of suppliers
• When suppliers performance is not satisfactory,
  school must notify the supplier in writing and
  invite him to explain the reasons and make
  improvements. School must also step up monitoring

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Monitor Suppliers Performance

• School should bring to EMBs attention those
  suppliers with poor performance

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Retention of Records

• Schools should retain the following
  documents/records for three calendar years for
  audit purposes
• All original written quotations/tenders received
• Price comparison table
• All Purchase-by-Quotation Forms/Tender Summary
  and Approval Record

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Sharing of Audit Experience (I)
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Common Audit Findings

• Split requirement for procurement action
• Quotation record not prepared
• Provide non-identical quotation/tender
  specification to suppliers invited to
  quotation/tender
• No random checking of records by senior staff

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Common Audit Findings

• Cannot obtain the required number of quotations
  without explanation and endorsement
• Reject the lowest quotation without explanation
• TOVC and TAC comprising the same staff member

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Annex VII (EMBC 30/1999)
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Annex III (EMBC 30/1999)
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Break