HKUST Annual Report 2024-2025

76 HKUST ANNUAL REPORT 2024-25 Appendix V Summary of Internal Control and Measures Effective internal control is essential for maintaining data integrity, promoting accountability, safeguarding assets, managing complex operations, and ensuring compliance with the University’s internal policies and external statutory requirements. The following measures are in place to assure HKUST’s Council and Senior Management of the effectiveness of internal controls: a. Internal Audit Office conducts independent reviews to assess the adequacy and effectiveness of internal controls and provide recommendations to streamline processes for efficiency. This Office also performs follow-up assessments to ensure the implementation of audit recommendations. To maintain independence, the Internal Audit Office functionally reports to the Audit Committee of the University Council. b. External Auditors are engaged to conduct statutory annual audit of HKUST’s financial statements and provide independent assurance on compliance with guidelines set by HKSAR Government’s University Grants Committee. The External Auditors also review HKUST’s tax exemption status under section 88 of the Hong Kong Inland Revenue Ordinance. c. Whistleblowing Policy provides a safe and protective means for staff, students, and stakeholders to raise concerns about any malpractice with the appropriate University authorities. Audit Committee of the University Council approves the annual audit plan, supervises the Internal Audit Office’s scope of work, and reviews internal audit reports and concerns raised by the internal or external auditors. The Audit Committee has an oversight role on the appointment and performance of both internal and external auditors to ensure their independence and objectivity. The Committee also reviews and recommends for Council approval the University’s Statement of Risk Appetite, Risk Management policy and process, Strategic Risk Register, and risk mitigating actions. HKUST Strategic Risk Management HKUST’s risk management framework remains integral to institutional governance and aligns with the enhanced six-risk category structure adopted in 2023. Governed by the Council-approved Strategic Risk Management Policy, this framework facilitates the identification, assessment, and mitigation of risks across the University. The latest risk assessment process engaged all academic and administrative units through targeted questionnaires and in-depth interviews, ensuring comprehensive identification and evaluation of both current and emerging key risks. Strategic risks are actively managed by dedicated risk owners with senior management oversight, supported by a Risk Officer who ensures the adequacy and effectiveness of the risk management framework. The Council provides governance oversight through regular reviews of the University’s Strategic Risk Register. The following summary highlights key aspects of the latest annual risk assessment results: Reputation HKUST is dedicated to enhancing its reputation while effectively navigating the competitive landscape. Through high quality education, research and knowledge transfer endeavours, the University actively contributes to national goals such as talent development and technological innovation, fostering synergies that benefit the Greater Bay Area and beyond. HKUST’s research excellence and strength in technology development is evidenced by major funding achievements including the RAISe+ Scheme, reflecting commitment to advancing knowledge, fostering interdisciplinary collaboration, and accelerating commercialization of breakthroughs. The University also prioritizes sustainability by integrating it into its research and operations, positioning itself as a leader in global sustainability initiatives. Financial The University actively manages and maintains its financial sustainability. Alongside continued management and control of the cost base, the University proactively explores diverse funding sources to enhance its financial resilience. Efforts to secure external funding, grow student numbers and fee income are crucial in preserving the University’s financial health. A robust investment strategy, supported by professional consultation, has been consistently implemented to manage volatility and ensure the viability of critical projects while aligning with the University’s long-term objectives. Operational To demonstrate its commitment to operational excellence, HKUST consistently enhances its administrative and academic systems through continuous improvement and upgrades to create a more efficient environment for teaching, research, and administration. At the same time, HKUST is proactively addressing challenges stemming from space constraints and land utilization by continually refining its Campus Development Plan and updating its Campus Renewal Plan, to ensure the optimal use of space and land resources to support its growing needs. Academic HKUST is committed to advancing academic excellence by fostering innovation, inclusion, and global collaboration to strengthen educational leadership. A key initiative is the pioneering adoption of AI technology, to enrich teaching and learning with tailored and multilingual support. The University champions cultural diversity through inclusive policies, practices, workshops, and engagement initiatives that promote mutual understanding across its global community. HKUST also actively expands international research partnerships, leveraging strategic outreach and diversified collaborations to sustain its global academic impact. Compliance and Regulation Upholding regulatory compliance is fundamental to HKUST’s commitment to institutional integrity and academic excellence. The University maintains rigorous adherence to all applicable legal and regulatory requirements, ensuring both academic standards and community trust are safeguarded. Structured policies and clear accountability mechanisms enable the University to not only meet but exceed these standards, fostering a culture where compliance aligns seamlessly with educational and research missions. People Attracting, nurturing, and retaining high calibre talent is critical to HKUST’s strategic objectives and future success. To achieve this, the University has implemented a comprehensive people strategy featuring targeted global recruitment in strategic disciplines, alongside improved processes. In parallel, structured leadership development programs are organized to enhance management capabilities and foster high- performance culture. Through competitive compensation frameworks tied to merit-based recognition and clear career progression pathways, HKUST effectively addresses both talent acquisition and retention challenges while reinforcing its standing as a global hub for world-class talent.