As a Government-subvented institution, the University's teaching, research and other activities can be broadly divided by funding source into University Grants Committee (UGC)-funded and non-UGC-funded. As a general principle, costs that can be directly attributed to UGC-funded activities or non-UGC-funded activities should be charged directly to the respective votes. To avoid hidden subsidy to non-UGC-funded activities, the University should, as a matter of principle, levy overhead charges on such activities, including projects funded by other Government departments / agencies and projects / programmes conducted by their self-financing subsidiaries or associates. The University is required to follow the cost allocation practices and methods set out in the Cost Allocation Guidelines for UGC-funded and non-UGC-funded Activities ("CAGs") and Notes on Procedures ("Notes on Procedures") of the UGC. Details of guidelines are available at:
https://www.ugc.edu.hk/doc/eng/ugc/note/Annex3B.pdfFurthermore, where the University is operating fee paying clinic or services center, fees shall be set at full cost recovery.
In compliance with the Notes on Procedures and CAGs, all direct costs, such as staff costs, general expenses, travelling expenses and direct charges that are separately identifiable, such as consumables equipment, direct premises space utilization cost related to either UGC-funded or non-UGC-funded activities, shall be accurately accounted for in the respective accounts accordingly. Indirect costs (i.e. costs that are not directly accountable to a cost object) will be fully recovered from non-UGC-funded activities through the overhead recovery mechanism.
University overhead cost will be fully recovered from non-UGC-funded activities, including projects funded by other Government departments/agencies and any self-financing projects/programmes while maintaining simple mechanism at standard rates on income.
The current central recovery rates of overhead charges applicable to the major non-UGC-funded activities are set out below:-
| Non-UGC-funded Activities | Recovery Rates |
|---|---|
| Non-UGC-funded research grants/contracts | 15% on gross project sum |
| Consultancy projects/service contracts | 15% on gross revenue |
| Self-financing taught postgraduate programmes | 23% on gross tuition fee |
| Note: | The methodology and charging mechanism will be subject to review by the UGC. |
The University has sought to recover the indirect premises cost occupied by Academic Departments, such as office space, by applying a uniform premises overhead of 3.5% for all non-UGC funded activities, with effect from July 1, 2018.
September 2019
