HKUST Annual Report 2023-2024

68 Appendices Appendix V Summary of Internal Control and Measures HKUST continues to adopt a system of internal control that is based on a five-component framework issued by the Committee of Sponsoring Organizations of Treadway Commission to ensure the effectiveness of its governance. This five-component framework consists of Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. The following measures are in place to provide assurance about the effectiveness of internal controls to HKUST’s Council and Senior Management: a. Whistleblowing Policy is in place and operating to provide a safe and protective means by which staff, students, and other stakeholders of the University are able to raise concerns with the appropriate University authorities against any malpractice in the University. b. Internal Audit Office is responsible to prepare annual risk-based audit plans and perform independent reviews to assess adequacy of the design and operating effectiveness of internal controls as well as to provide recommendations to streamline processes and procedures for efficiency enhancement. Co-sourced external service providers are engaged whenever necessary to supplement in areas that require deep industry expert knowledge such as cybersecurity, campus development, etc. c. External Auditors are engaged to carry out statutory annual audit of HKUST’s financial statements and provide an independent assurance on the University’s compliance with guidelines, terms and conditions imposed by the Government’s University Grants Committee. External Auditors also perform review of HKUST’s tax exemption status under the Hong Kong Inland Revenue Ordinance’s section 88. Audit Committee of the University Council approves the annual audit plan, supervises the scope of work performed by Internal Audit Office, and reviews internal audit reports and concerns on internal controls raised by the internal and/or external auditors. Furthermore, the Audit Committee has an oversight role on the appointment and performance of both internal and external auditors to ensure the independence and objectivity of their work. HKUST Strategic Risk Management 2023/24— External Report Risk management is integral to sound governance. Following a risk management framework review in 2023, the risk categories expanded from three to six, providing deeper insights into the risk profile. Risk owners evaluate and address high-priority risks, while the Council oversees risk assessment and the University’s Strategic Risk Register. Over the past year, the University continues to face a dynamic and complex environment. The risk assessment involves all units to review the principal risks faced by the University. To ensure effective risk management in all operations, dedicated risk owners are assigned to develop risk mitigating measures that are regularly monitored. A risk officer is assigned to oversee the adequacy and effectiveness of the risk management framework. The following summarizes key aspects of the 2024-25 risk categories: Reputation Reputation is one of the most valuable assets for long-term success and sustainability. HKUST cultivates a strong culture of integrity, accountability, diversity, and inclusiveness. The University is committed to sustainability, with initiatives like the Net-Zero Action Plan, aimed at achieving net zero emissions by 2045, and the solid progress made on the measurable targets of the 2028 Sustainability Challenge. Through the “Unified HKUST, Complementary Campuses” framework, collaboration and integration with the HKUST(GZ) campus are enhanced, enriching student’s academic experiences and supporting talent development for the Greater Bay Area and beyond. Financial As a publicly-funded university, HKUST is committed to financial sustainability by aligning budget allocations with strategic priorities and seeking non-University Grants Committee (non-UGC) funding to enhance financial resilience. The University employs a robust investment strategy with a diversified investment portfolio to manage volatility. Professional external investment consultants are engaged to provide ongoing advice, while the Finance Committee monitors investment performance and recommends the Council on strategy and risk-return parameters. Operational The University’s continued growth and success rely on effectively managing operational resources and infrastructure. To address limited campus space, HKUST invests strategically in expanding and upgrading research infrastructure while exploring flexible working arrangements and workspace design to enhance collaboration and productivity. The University streamlines processes and IT systems to improve efficiency. Academic The University is committed to maintaining educational quality and research integrity while upholding academic excellence and reputation. To adapt to a rapidly changing environment, HKUST has expanded offshore learning opportunities, embraced the use of technologies such as generative artificial intelligence (AI), augmented reality (AR), virtual reality (VR) to improve pedagogies and student learning experiences. By investing in people, fostering international partnerships, and employing innovative teaching methods, HKUST is well positioned to navigate academic challenges and reinforce its status as a global leader in education and research. Compliance and Regulation Upholding integrity and compliance are fundamental responsibilities and HKUST is fully committed to adhering to all applicable legal, regulatory and internal standards. The University ensures academic and research quality through adherence to established guidelines, fostering a culture of trust and accountability. Robust procedures and open channels further reinforce our commitment to a safe and equitable environment. People A key component of HKUST strategic objectives is attracting and retaining exceptional talent. The University prioritizes health, safety, and inclusivity, fostering respect and opportunity. The University actively conducts global searches and enhances reward systems to remain competitive. HKUST aims to be an employer of choice by recognizing outstanding contributions, thereby elevating its education, research, and innovation.