In July 2025, Think International School in Kowloon Tong told parents it was closing at the end of the month. Around 200 families held HK$200,000 debentures, and the school said it couldn't repay them any time soon. Twenty-two years of operation, gone in a letter, and the story that lingered wasn't about the curriculum. It was about the balance sheet.
Most Hong Kong school finances never end that way. But every private school and kindergarten in the city runs on the same underlying shape: money arrives before the teaching does, some of it is refundable years later, and the regulator has opinions about all of it. That shape is an accounting problem, and it's worth being precise about.
The money arrives before the teaching does
Start with ordinary tuition. The EDB controls what a school may charge through its Fees Certificate, and the standard conditions keep collection close to delivery: fees are collected monthly, and at most one month ahead of the course starting without written permission. Fee changes themselves need EDB approval, applied for months before the school year begins.
Under HKFRS 15, that timing gap has a name. Fees collected before teaching happens are deferred revenue, a liability, recognized as income only as the teaching is delivered. For a school billing termly, that's a recognition schedule per term and per intake. Then the awkward cases arrive on top: enrolment deposits, mid-term withdrawals, pro-rata refunds, sibling discounts, scholarships netted against billings. Each one changes what has been earned versus what is merely held. We've written before about how HKFRS 15 shapes Hong Kong tax filings; schools are one of the cleanest examples of the rule doing real work.
The quiet balance sheet
Tuition is the small half of the story. Hong Kong's international schools also hold parents' capital, and the sums are not small. HKIS charges an annual capital levy of HK$24,500 per student and offers debentures at HK$3 million to HK$5 million. Kellett requires every student to be covered by a debenture or a HK$40,000 annual levy, with its debenture ladder reaching HK$20 million. Harrow charges a HK$60,000 capital levy per pupil per year. ESF sells individual nomination rights at HK$500,000. And the entity associated with HKIS has built up HK$2.8 billion in reserves.
The accounting isn't one-size-fits-all, which is the point. A refundable debenture is a liability until it's redeemed, sometimes fifteen years later. A non-refundable levy or nomination right needs a recognition policy the auditor will accept. Get it wrong and the school looks richer or poorer than it is, which matters to the board, the bank, and, as Think International's parents learned, to the families whose money it actually is.
The EDB put a clock on it
For years this corner of school finance ran on loose practice. Then the Ombudsman criticised the EDB's oversight in 2020, and in August 2023 the bureau built a permanent mechanism. Under EDB Circular 15/2023, debentures, capital levies, and nomination-right fees at private schools all need EDB approval, applied for at least six months before collection, nine if the money goes to a related party like the sponsoring body. Approvals normally last six school years. Every transitional approval granted since 2020/21 expired at the end of the 2024/25 school year, so schools are already living inside the new regime.
The mechanism also added a reporting duty that lands directly on the ledger: schools must tell parents the amounts, the payee, the redemption arrangements, and the use of proceeds, and report on how the money was deployed at least annually. "We collected it and it went into the pot" no longer answers the question.
What this asks of the ledger
Line the obligations up and the accounting system's job description writes itself. Deferred revenue schedules per term and per intake, adjusted for withdrawals and refunds. Each debenture and levy carried as what it is, refundable or not, with redemption dates that outlive several finance managers. Proceeds traceable from collection to spending, because a use-of-proceeds report is due every year. And locked periods behind all of it, so the numbers in front of the auditor, the EDB, and the parents are the numbers that were actually posted.
In NetSuite, the recognition schedules run from the billing itself, the instruments sit on the balance sheet per school and per entity, and closed periods can't be quietly edited. One honest caveat: no system decides your recognition policy. Whether a levy is income this year or spread over a student's enrolment is a judgment for your accountants and auditor. What the system owes them is a record that makes the judgment defensible.
Where to start
If your school or group holds fees in advance, debentures, or levies, and the annual use-of-proceeds report involves a spreadsheet archaeology project, that's fixable. Our education industry page covers how we configure NetSuite for Hong Kong schools, kindergarten groups, and tuition chains, and our implementation page walks through what a project involves. The starting point is mapping what you hold: every instrument, every school, every redemption date.
Parents' money deserves books that can answer for it. Since 2023, the EDB agrees on a schedule.
PS Global is an Oracle NetSuite partner implementing financial systems for Hong Kong schools, kindergarten groups, and tuition chains. Talk to us about your fee structure.
