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									   Best Practice Module


 Management of Catering Operations

   Introduction                                      1
   Code of Conduct                                   1
   Conflict of Interest                              1
   Acceptance of Advantages and Entertainment        2
   Handling of Confidential Information              2

   Introduction                                      3
   List of Suppliers / Service Providers             3
   Purchase Requisitions                             4
   Quotations                                        4
   Tenders                                           4
   Term Contracts                                    5
   Petty Cash Purchases                              5
   Receipt of Goods and Making Payments              5

   Introduction                                      7
   General Control Measures                          7
   Daily Purchases of Fresh Food from Markets        7
   Purchases and Handling of High-value Food Items   8
    Introduction                                              11
    Operational Guidelines                                    11
    Recording of Customers' Bills                             11
    Cash Register                                             11
    Day-end Checking                                          12
    Control Over Buffet Bills                                 12
    Waiver of Charges                                         12
    Closing of Daily Sales                                    12
    Management Monitoring                                     13
    Handling of Credit Card Information                       14
    Internal Audit                                            14

    Introduction                                              15
    Company Policy and Guidelines                             15
    Segregation of Duties                                     15
    Receipt and Issue of Stores                               15
    Physical Security                                         16
    Independent Stock Checks                                  16
    Disposal of Stocks                                        17

ADVISORY SERVICES GROUP                                       19
APPENDIX (Sample Code of Conduct)                             21
    Form A (Report on Gifts Received)                         25
    Form B (Declaration of Conflict of Interest)              26
    Annex (Extracts of the Prevention of Bribery Ordinance)   27

                      PROBITY REQUIREMENTS

          Hong Kong is an internationally renowned tourist centre and part of its attraction is the
          quality cuisine which provides a wide range of gourmet dishes to the tourists. Dining out is
          also an activity well liked by the local people. Hence, the catering industry plays an
          important role in serving both the local community and visitors to Hong Kong. To sustain the
          industry's development and international reputation, it is imperative for catering operators
          to maintain a high standard of professionalism and adopt good practices in their operations.

          This document aims to provide a checklist of good practices in the management of a
          catering business. As there are a variety of catering operations ranging from hotel
          restaurants, café, fast food restaurants, and other restaurants and eateries of different sizes,
          it is expected that individual operators would make adaptations to the recommended
          practices and procedures in this booklet to suit their own operational needs.

              Code of conduct
          Commitment to ethical practice is crucial to good governance in the running of a
          business. It is advisable for catering operators to issue a Code of Conduct to staff,
          stating the company’s commitment to ethical practice and setting out the ethical
          standards required of them.

          In appointing term service providers or suppliers, catering operators could require them
          to issue a similar Code of Conduct to their employees.

          The Code (a sample code is at the Appendix) should include the following key elements:

          • rules on acceptance of advantages;

          • rules on acceptance of entertainment;

          • requirements to declare any conflict of interest when performing their duties (e.g. in
            making procurement) and the procedures for handling such declarations; and

          • requirements to protect confidential or commercially sensitive information obtained
            through work.

              Conflict of Interest
          What is conflict of interest and how should a conflict be handled?

          A conflict of interest situation arises when the private interest of a staff member
          competes or conflicts with the interest of the company. The staff should be advised to
          avoid any actual or perceived conflict of interest and to report to their supervisors when
          such a situation arises.
                                               Management of Catering Operations   Chapter 1

It would be helpful to the staff if examples of conflict of interest could be provided in
the Code of Conduct. The following are some examples of conflict of interest situations
that may arise from procurement activities, staff administration and works supervision:

• A staff member involved in the procurement process has financial interest in a company
  which is being considered by the catering operator in the selection of a supplier.

• A candidate under consideration in a recruitment exercise is a relative of the staff
  member responsible for the recruitment.

• A staff member invests in the business of a food supplier who supplies food to his
  own restaurant.

• A staff member responsible for the maintenance of restaurant equipment engages the
  selected contractor to carry out maintenance work in his home at a discounted price.

    Acceptance of Advantages and Entertainment
Employees, in particular those responsible for procurement of food items, may be
offered specimens of food which may be expensive items like abalone, sharks’ fins etc.
or even commission by suppliers. As such offers may be bribes in disguise, catering
operators should have a policy prohibiting employees from accepting advantages
which include any gift, loan, commission, employment, contract, services etc., from
persons with whom they have official dealings. If the employees are allowed to accept
token gifts, the permissible value should be specified.

While entertainment is an acceptable social activity, extravagant or frequent
entertainment offered to the staff may be a calculated act to “sweeten” them in order to
build up a store of goodwill for future demand of favouritism (e.g. in the selection of
suppliers). Catering operators should issue guidelines, advising the staff to avoid
accepting meals or entertainment that are excessively lavish or frequent.

    Handling of Confidential Information
Some staff may have access to confidential information such as the customers’ data and
other commercially sensitive information relating to the catering operator’s business.

To protect the interest of the operator and to prevent abuse, the classification of
information should be made known to the staff concerned. The restriction on access to
confidential information should be clearly defined. While individual staff are held
responsible for the protection of the confidential information in their possession, the
management should ensure that there are adequate safeguards to protect data integrity
in the computer and sufficient physical security in the office.

                       PROCUREMENT PRACTICES

          Procurement of goods and food items (e.g. fresh and dried food, consumables and
          kitchen equipment) is a core activity in the running of a catering business. An effective
          and competitive procurement system helps to protect the operator’s interest and ensure
          the purchases made are value for money.

          A sound procurement system should have the following checks and balances:

          • segregation of duties (e.g. different staff should be assigned to source suppliers,
            evaluate quotations/tenders, issue orders, accept the goods upon delivery and certify
            payments as far as possible);

          • approval authorities at the right level for purchases of specified financial limits;

          • procurement methods for different types and values of purchases (e.g. by verbal or
            written quotations, tenders, or petty cash);

          • special approval for exceptional purchases with justifications (e.g. urgent purchases
            or single source procurement); and

          • proper documentation and supervisory checks in the procurement process.

              Lists of Suppliers/Service Providers
          Where practicable, a catering operator should compile separate lists of suppliers for
          commonly used items/services. This would help minimize the time required for
          sourcing bidders for every purchase and ensure that only eligible suppliers are invited to

          The following points should be taken into consideration in keeping the suppliers lists:

          • The considerations for inclusion or deletion of suppliers should be consistent and
            made known to the suppliers as appropriate (e.g. size of companies and years of
            experience for inclusion, and poor performance for deletion).

          • The listed suppliers should always be invited to bid on a fair share principle (e.g. by
            rotation), even though other suppliers may be nominated by individual staff or the users
            based on their personal knowledge. Any deviations from this practice should be
            justified and approved by a designated authority.

          • The list should be periodically updated with a view to admitting new suppliers and
            removing the inactive ones or those who have under-performed.

                                               Management of Catering Operations   Chapter 2

    Purchase Requisitions
There should be a procedure for raising purchase requisitions. A standard requisition
form could be used to provide an audit trail, showing details such as the description,
quantity and place of origin of the goods or food items required, the expected date of
delivery, the name of the requesting person, and the approval authority as appropriate.

Goods or food items are usually purchased through the invitation of bids from a number
of selected suppliers.

The following arrangements help enhance control and minimize the risk of
• The minimum number of bidders to be invited for quotation for different values of
  purchases and the authority to approve the selection of bidders should be specified.

• All quotations, whether obtained verbally or by fax, should be protected from
  tampering or leakage before the deadline. Verbal quotations should be recorded or
  confirmed in writing. A designated fax machine installed in a secure area or by a
  computer terminal with password control should be used for receiving faxed
  quotations. All written quotations should be sealed and kept securely, preferably by
  a staff member not involved in the procurement process.

• To prevent false quotations, a supervisor may randomly call the bidders to confirm
  the genuineness of the quotations received or contact the invited suppliers who have
  failed to return any quotation to see whether they have actually been invited to bid.

To enhance competitiveness, open or restricted tendering may be conducted to procure
high value goods or food items (e.g. term supplier contracts) beyond a specified cash
threshold. The process should be competitive and transparent to the bidders.

The following arrangements are recommended for procurement by tender:

• Detailed specifications such as the description of goods or food items, the selection
  criteria (e.g. whether price is the only consideration or the criteria in broad terms),
  and other relevant conditions (e.g. delivery schedules and payment terms) should be
  provided in the tender invitation to facilitate the bidders in preparing their tenders.

• The tender invitation should include a warning against offer of advantages to the
  catering operator’s staff.

                                                 Management of Catering Operations   Chapter 2

• All bidders should be given the same information and any tender briefing may be
  conducted for them on the same occasion as far as possible.

• The bidders should be required to submit tenders in duplicate, with the copies kept
  by a person not involved in the procurement to prevent tampering of tenders.
  Tenders should be deposited into a double-locked tender box with the keys held by
  separate staff members.

• A deadline should be set for tender submission. Late tenders should normally not be
  accepted unless there are justification and endorsement from the managerial staff.

• Tenders should be opened after the deadline by an opening team comprising at least
  two persons.

• If price is not the only consideration, tenders should be evaluated in accordance with
  the pre-determined criteria by a tender assessment team.

    Term Contracts
If frequent and repeated purchases of certain goods or food items are necessary, the catering
operator may appoint term suppliers to save the time and resources spent on obtaining
quotations for each purchase. This could also help minimize the risk of favouritism to a
single supplier if purchases are made directly by the users.

    Petty Cash Purchases
Petty cash purchases should only be permitted for small and miscellaneous purchases.
The maximum expenditure on an item to be procured by petty cash should be
specified, beyond which approval from the supervising staff should be required. Cash
payment should only be made against invoices.

    Receipt of Goods and Making Payments
Acceptance of goods upon delivery is an area prone to abuse. Compromised staff could
cover up short delivery, or accept sub-standard goods/food items, or unduly certify
payments. To deter malpractice, the following control measures are recommended:

• Goods delivered should be inspected and counted against the quantity specified in
  the delivery note, cross-referencing the purchase order if any.

• The acceptance should be certified by a staff member not involved in the purchase if

                                             Management of Catering Operations   Chapter 2

• Defective or short delivered goods or food items should be properly recorded and
  followed up promptly (e.g. ask the supplier to make good the shortfall or notify the
  accounts unit to deduct payment).

• Random supervisory checks should be conducted on the quality and quantity of the
  accepted goods, especially those of high value.

• Payment for goods should be made against duly certified invoices, purchase orders
  and/or delivery notes.

• Internal time limits should be set for effecting payment to the suppliers to avoid
  undue delay because those who have a cash flow problem may resort to improper
  means to expedite payment.

• Records of payment comprising full particulars of the items and supporting
  documents should be kept to provide audit trail.

                      FOOD PURCHASE

          Food cost is a major item of expenditure in a catering business. To maximize business
          profit and to maintain the quality of food, it is important for the catering operators to
          ensure that the food purchased is value for money and the quality is of the required
          standard. This chapter focuses on food purchases and should be read jointly with the
          last chapter on general procurement.

              General Control Measures
          To prevent unscrupulous staff from engaging in malpractice in procurement and
          handling of food items, the following general control measures are recommended:

          • A central procurement unit should be set up for sourcing food suppliers and
            maintaining the suppliers list. A shortlist of suppliers should be kept for each food
            item to facilitate selection of suppliers for invitation to bid.

          • For foodstuff regularly required in bulk (e.g. rice, cooking oil, frozen meat), term
            suppliers could be sourced centrally.

          • The food suppliers should be advised to approach the management if they have any
            promotional activities instead of the kitchen staff.

          • The kitchen staff should, as far as practicable, take up an advisory role (e.g.
            suggesting the types of food items and periodic changes of menus) instead of an
            executive function in the selection of suppliers and negotiation of prices.

          • The types of food to be purchased directly by the kitchen staff should be restricted
            (i.e. fresh food), supplementing the major food supplies arranged by the central
            procurement unit.

              Daily Purchases of Fresh Food from Markets
          For small catering business, the procurement of fresh food items including fresh meat, fish,
          vegetable and fruit is usually handled by the chef on a daily basis. Very often, the chef
          would go to a nearby market stall of his choice to make purchases. As the prices of fresh
          food could vary from stall to stall, depending much on the type and quality, it is difficult for
          the operator to monitor such purchases.

                                               Management of Catering Operations   Chapter 3

To reduce the risk of dishonest chefs accepting kick-backs from the patronized stalls and
conniving at short delivery or substandard food, the following control measures are

• The central procurement unit could source a few market stalls, for the supply of
  different types of fresh food, in the vicinity of the restaurant and require the chef to
  purchase food items from them. The central unit should also conduct price
  comparisons on a regular basic to ensure the prices quoted are reasonable.

• The selected market stalls should be advised of the operator’s policy that acceptance
  of advantage by any staff is prohibited.

• A supervisor should randomly check the qualities, quantities and market prices of
  the foodstuff accepted by the chef before certifying the receipts for payment.

• Payment to the market stalls should be made through bank account as far as

• The catering operator should periodically conduct food-tasting exercises on a surprise
  basis and collect feedback from customers on the quality of the food provided.

• When considering whether or not to continue patronizing the selected market stalls,
  the central procurement unit should conduct price reviews and take into account any
  adverse feedback from the kitchen staff and the customers.

    Purchases and Handling of High-value Food Items
Procurement of high-value food items such as sharks’ fins, birds’ nests, dried scallops
and abalone must be carefully handled and monitored. The prices of such food items
may vary a great deal depending on their quality and place of origin, and detection of
poor quality often requires the expertise of experienced staff or chefs. Hence, there is
room for manipulation by unscrupulous staff/chefs who may collude with the suppliers
to defraud the operator. There are also concerns about theft or swapping of such
expensive food items, resulting in losses to the operator.

The catering operators may adopt the following safeguards to prevent malpractice:

• To centrally purchase high-value food items and distribute to individual restaurants in
  the chain for use.

                                               Management of Catering Operations   Chapter 3

• To appoint a few fresh seafood suppliers with whom individual restaurants could
  place orders, and designate a team comprising a restaurant manager, and the store
  and kitchen staff to closely monitor the quality and quantity (including weight) of

• To assign a supervisor not involved in the procurement to witness and monitor the
  acceptance of food items, recording any substandard or short-delivered items for
  remedial actions.

• To closely monitor the consumption of these items by the kitchen staff and conduct
  periodic comparisons of the gross profit margins among the restaurants in the group
  to detect anomalies.

• To conduct surprise food-tasting exercises and obtain customer feedback on the
  quality of such food items.

• To establish a mechanism for conducting stock checks on these items shortly after
  delivery to detect and deter malpractice such as bogus orders and short delivery, etc.

Sometimes, the suppliers may offer samples of food items to the purchasing staff for
tasting as a sales tactic. The offer of expensive samples like abalone or wine may also
be a bribe in disguise to the staff in return for business. Moreover, such samples have a
resale value. The operator should establish a system for handling of food samples,
incorporating the following safeguards:

• The catering operator should have a policy prohibiting the acceptance of food
  samples by individual staff, unless otherwise authorized.

• The receipt and disposal of food samples with a commercial value should be properly
  recorded in a register and subject to the supervisor’s random checks.

• The evaluation of the quality of food/wine samples should be conducted by a team
  of managerial staff together with the chef or bartender. Preferably the food tests
  should be conducted without revealing the supplier’s identity to the evaluators.

                      SALES TRANSACTIONS

          In the setting of catering business, customers’ bills are usually settled in cash or by
          credit card. The common malpractice found in this area includes non-recording or
          cancellation of bill items to pocket the sales income, under-billing to favour friends,
          credit card fraud, pilfering of cash collection, and waiver of charges etc. Some of these
          abuses are tantamount to criminal offences warranting reports to the Police but an
          effective control system could help prevent their occurrences.

           Operational Guidelines
          To ensure consistency in practice, the staff should be issued with procedural guidelines
          covering the receipt of customers’ payments, recording of transactions, handling of cash
          registers, placing and registering of food orders, etc. The levels of staff and their
          responsibilities in handling such matters should be set out in the guidelines and the authority
          for approving certain sales transactions (e.g. waiver of charges) should also be specified.

          Apart from the guidelines, it is advisable to design standard forms to be prepared and
          signed by the staff responsible (e.g. daily sales receipt reports) for the handling of the
          above activities as this could provide an audit trail and enhance the accountability of staff.

           Recording of Customers’ Bills
          All transactions should be recorded promptly and supported by receipts or vouchers.
          An automated food ordering system should preferably be used whereby food orders
          placed by waiters in the system are electronically captured in the kitchen records for
          food production and in the cashier records for billing.

          If it is a manual system, it is advisable to use pre-printed food order forms with serial
          numbers for the placing of orders from customers. The head portion of the order form
          should be retained for day-end reconciliation to prevent evasion of payment.

           Cash Register
          To ensure accountability and safe custody of cash/credit card vouchers, only designated
          staff members should be allowed to operate the cash register.

          It is advisable to require the designated staff to pay in the bank during the day any cash
          collection which has accumulated to a specified amount.

          If necessary, CCTV with tape recording facilities could be installed to monitor cash
          handling at the cashier counters.

                                                  Management of Catering Operations    Chapter 4

 Day-end Checking
A way to deter and detect abuses in the handling of food orders and bills is to designate
a responsible staff member, e.g. the restaurant manager, to conduct day-end
reconciliation of copies of customers’ bills and food order forms. Any cases of missing
food order forms should be looked into and brought to the attention of more senior
managerial staff. Random checks could also be made on selected transactions against
the till roll records of the cash register. Any cancelled food order forms should be filed
for record.

If a cash register is used, a copy of the till receipt should be attached to the copies of
customers’ bills copy to certify the amount received. A copy of the till roll records
should be kept for random checking against the customer bills at the end of the day.

 Control Over Buffet Bills
During buffet meals, customers tend to move around and it may be difficult to count
them for the purpose of billing. A common malpractice is that waiters may use
repeatedly the same bill of buffet charges to pocket the cash paid by customers. The
following safeguards are recommended to prevent manipulation:

• Make it a rule that once the customers are seated, a bill should be prepared and
  initiated by the waiter/waitress serving them, recording also the time.

• The supervisor should randomly check the bills held at the payment counter against the
  tables of guests with a view to detecting irregularities (e.g. no bill has been prepared for a
  table or a bill prepared has been outstanding for a long time).

 Waiver of Charges
The catering operator should have a procedure for waiving charges (e.g. parking fee,
promotional food offers by credit card companies) which should be authorized by
designated staff. A waiver of charges on each occasion should be recorded for audit

 Closing of Daily Sales
Closing of daily sales accounts helps managers to detect fraud or malpractice, such as
misappropriation of sales income, abuse of discount policy, and delay in recording
customers’ bills. The following are some control measures recommended for closing of
daily accounts.

                                                  Management of Catering Operations   Chapter 4

At the end of the day, the cashier should print a till roll report from the cash register
and perform the following duties:

• tallying of the sales income with the till roll report;

• reconciliation of the opening and closing cash flow;

• batching of sales documents (i.e. customer bills, credit card vouchers, cancelled bills
  etc.) in sequential order; and

• dispatching of the daily income report, any banking receipts, and sales documents to
  the accounts department with a copy retained at the restaurant.

Before endorsing the daily income report and passing it to the accounts department, the
restaurant manager should randomly check the following:

• the sales income and the till toll report;

• the sequential order of the sales documents as shown on the daily income report;

• proper approval for food order cancellation in the order forms and waiver of charges;

• the cash flow balance.

 Management Monitoring
An effective management monitoring system could help to deter and detect malpractice.
The catering operator may consider requiring the staff concerned to submit management
reports, such as reports showing the food cost, sales income, and gross profit by activities
(e.g. lunch, beverage, banquet functions), or analyses on promotional activities (e.g. use of
cash coupons and complimentary food vouchers).

The catering operator or his representative should also conduct surprise checks on the
cash registers, bills etc.

                                                Management of Catering Operations   Chapter 4

Handling of Credit Card Information
The handling of customers’ credit cards is an area vulnerable to malpractice. Some
unscrupulous restaurant staff may accept bribes from criminal syndicates in return for
capturing customers’ credit card information for producing counterfeit cards. They may
also corruptly condone the use of counterfeit cards. Such illicit activities are not easy to
detect and if there is any suspicion of malpractice, the catering operator should report
the case to the ICAC or Police as appropriate.

Nonetheless, the risk of malpractice could be mitigated if the catering operators adopt
the preventive measures as recommended below:

• Briefing sessions may be arranged for staff to raise their awareness of the criminality
  of such activities, the offences and penalties under the law, and the company’s
  disciplinary action if such illicit activities are discovered.

• Clear instructions should be given to staff on the handling of credit card transactions,
  e.g. requiring the designated staff to sign on the credit card payment slips to hold
  them accountable for the transactions.

• Effective security measures should be adopted to minimize the risk of information
  leakage, e.g. to keep the credit card payment slips in a secure place with restricted

• The staff should be informed of the channels for reporting approaches by a criminal
  syndicate and incidents of corrupt practices.

 Internal Audit
Sales operations should be subject to internal audit to ensure compliance with
established sales policies and procedures. If necessary, “mystery customers” may be
engaged to observe the floor operations and sales activities, and report the findings to
the catering operator.

                      STORES MANAGEMENT

          In the catering industry, stock control is important because the food items (e.g. birds’
          nests, sharks’ fins and abalone) and goods (e.g. fine-dining table sets) in store may be
          expensive and have a re-sale value. Besides, control of fresh food items could be
          difficult because of their perishable nature.

          Malpractice such as pilfering of food items/goods or improper disposal of usable items will
          result in financial loss to the catering operators. Corruption also arises if such malpractice
          is covered up by compromised or colluding supervisors. This chapter aims to help
          catering operators to set up an effective store control system to prevent malpractice.

           Company Policy and Guidelines
          The catering operator should make known to all staff the company policy that any
          misuse or misappropriation of the company’s assets and resources will not be tolerated,
          and any such incident will be reported to the ICAC or Police as appropriate and
          disciplined by the company.

          There should be clear guidelines on the handling of stores for staff compliance,
          covering the procedures for acceptance, issue, replenishment and disposal of stock.
          The different levels of authority for various store control functions should be specified.

           Segregation of Duties
          To provide checks and balances, the duties for ordering stocks, receiving and issuing
          food items/goods, and stocktaking should be assigned to different staff members as far as

           Receipt and Issue of Stores
          The following safeguards are recommended to ensure that only food items/goods of the
          quantity and quality specified in the purchase orders are accepted:

          • Random counter-checks on the stocks received against the purchase orders should be
            conducted by a supervisor or a staff member not involved in the placing of orders
            before authorization of payment.

          • Procedures should be clearly laid down for reporting and handling poor quality food
            items/damaged goods, as well as any short-delivery and over-delivery.

                                                Management of Catering Operations   Chapter 5

• Serially numbered receipts recording the receipt of goods (e.g. description of the food
  item/goods and quantity or weight) should be issued to the supplier and copied to the
  accounts section.

• All issues of stores should be supported by properly approved vouchers and
  acknowledged by both the storekeeper and the recipient. The storekeeper should be
  required to issue items on a “first-in-first-out” basis, in particular those items with a
  specified consumption date or shelf life.

 Physical Security
To prevent theft or pilfering, store items should be kept in a secure place with restricted
access to authorized staff only. Items of high value should be kept under lock and the
key holders should be held accountable for the stock. CCTV may be installed to
monitor access to the stores of expensive food items.

 Independent Stock Checks
Stock checks could help detect and deter malpractice in stores management. An
independent checker or team could be assigned to conduct periodic stocktaking exercises
whilst the supervisor should make regular surprise stock checks. A effective stocktaking
mechanism should include the following safeguards:

• A master inventory record of all stock items should be compiled to facilitate stock

• The results of stock checks should be reconciled with the inventory records.

• Procedures should be established to handle the discrepancies identified in the stock
  checks, including documentation, investigation and reporting to the appropriate

• Staff at the appropriate level should be designated to approve any amendment of
  stores records as a result of the stock checks.

                                               Management of Catering Operations   Chapter 5

 Disposal of Stocks
The disposal of stock items should follow established procedures including inspection,
certification and disposal. The approving authorities and the methods of disposal (e.g.
for re-sale or disposal as waste) should be specified.

Disposal of items by dumping should be handled by at least two persons, with a more
senior staff member acting as a witness. Disposal records should be kept and certified
by the staff responsible.

If the stocks are put up for sale, the estimated re-sale value, method of sale (e.g. by
auction or direct sale to staff or external buyers), and the selection of buyers should be
endorsed by the catering operator or a designated senior staff member. The staff
involved in the process should be asked to declare any conflict of interest.


Apart from this Best Practice booklet, there is a series of Best Practice modules
on systems such as staff administration, administration of maintenance and
repair works etc. They can be obtained from the Advisory Services Group
of the Corruption Prevention Department of ICAC which also provides free,
confidential, and tailor-made corruption prevention advice to private organizations on
request. For further information, please contact the Group at telephone no. 2526 6363
or fax no. 2522 0505 or email address: asg@cpd.icac.org.hk.

                                                                          Management of Catering Operations


(Company Name)
Sample Code of Conduct
The Company believes that honesty, integrity and fair play are important company
assets in business. All staff have to ensure that the Company’s reputation is not
tarnished by dishonesty or corruption. This Code sets out the basic standard of conduct
expected of all staff and the company policies on acceptance of advantages and
declaration of conflict of interest by staff in connection with their official duties.

 Prevention of Bribery Ordinance
2.   Under Section 9(1) of the Prevention of Bribery Ordinance, an employee who solicits
     or accepts an advantage in connection with his work without the permission of his
     employer may commit an offence. The term “advantage” is defined in the Ordinance
     and includes money, gift, loan, fee, reward, employment, contract, service and
     favour. The person offering the advantage may also commit an offence under Section
     9(2) of the Ordinance.

3.   An employee who, with intent to deceive his employer, falsifies documents or
     furnishes false accounting records may be guilty of an offence under Section 9(3) of
     the Ordinance. Section 9 of the Ordinance and the definition of “advantage” are
     detailed at the Annex.

 Acceptance of Advantages
4.   It is the company policy that staff should not solicit or accept any advantage from
     any persons having business dealings with the Company (e.g. clients, suppliers,
     contractors). However, staff are allowed to accept (but not solicit) the following
     gifts offered voluntarily:

     (a) advertising or promotional gifts of a nominal value; or

     (b) gifts given on festive or special occasions subject to a maximum limit of $
         in value.

5.   Staff should decline an offer of a gift if the acceptance could affect their objectivity in
     conducting the company’s business, or induce them to act against the interest of the
     company, or lead to allegations of impropriety. If a staff member wishes to accept a gift
     not covered in paragraph 4, he should seek permission in writing (via Form A) from
     (name and/or post of a senior staff).

                                                Management of Catering Operations   APPENDIX

6.   As defined in Section 2 of the Prevention of Bribery Ordinance, “entertainment”
     refers to food or drink provided for immediate consumption on the occasion, and
     of any other entertainment provided at the same time. Although entertainment is
     an acceptable form of business and social behaviour, staff must not accept lavish or
     frequent entertainment from persons with whom the company has business
     dealings (e.g. suppliers or contractors) to avoid placing themselves in a position of
     obligation to the offerer.

 Conflict of Interest
7.   A conflict of interest situation arises when the private interest of a staff member
     competes or conflicts with the interest of the company. Private interest includes both
     the financial and personal interests of the staff member and those of his connections.
     Connections include family members, relatives, and close personal friends.

8.   Staff should avoid situations which may lead to an actual or perceived conflict of
     interest situation, and should make a declaration in writing (via Form B) to (name
     and/or post of a senior staff) when such a situation arises. Failure in doing so may give
     rise to criticism of favouritism, abuse of authority or even allegation of corruption.

9.   Some common examples of conflict of interest include:

     (a) A staff member involved in the procurement process is closely related to or has
         beneficial interest in a company which is being considered by the Company in
         the selection of a supplier or service provider;

     (b) one of the candidates under consideration in a recruitment or promotion
         exercise is a family member, a relative or a close personal friend of the staff
         member responsible for the recruitment or promotion;

     (c) a staff member involved in the selection of a supplier for the Company engages
         in frequent or excessive gambling with one of the suppliers under

     (d) a term contractor whose contract is about to be renewed grants a personal loan to
         the staff member responsible for contract negotiation; or

     (e) a staff member responsible for evaluating tenders is a part-time consultant of
         one of the tenderers.

                                            Management of Catering Operations   APPENDIX

 Handling of Confidential Information
10. All staff are prohibited from disclosing any information classified by the company
    to anybody without authorization. Those who have access to or in control of such
    information should at all times ensure its security and prevent any abuse or misuse
    of the information. Examples of misuse include disclosure of information in return
    for monetary rewards, or use of information for personal gains.

  Compliance with the Code
11. It is the personal responsibility of every staff member to understand and comply
    with the Code. Managers should also ensure that their subordinates understand
    well and comply with the standards and requirements stated in the Code.

12. Any staff member who is in breach of the Code will be subject to disciplinary
    action, including termination of employment. In cases of suspected corruption or
    other criminal offences, a report will be made to the ICAC or the appropriate

13. Any enquiries about the Code or reports of possible breaches of this Code should
    be channeled to (name and/or post of a senior staff) for advice and action.

(Name of Company)
Date :

                                                                                   Form A

(Company Name)
Part A       To be completed by Receiving Staff

To : (Approving Authority)

Description of Offeror :
      Name & Title of Offeror :
      Company :
      Relationship (Business / Personal) :

Occasion on which the Gift was / is to be Received :
Description & (Assessed) Value of the Gift :

Suggested Method of Disposal :                           Remark
( ) Retained by the Receiving Staff
( ) Retained for Display / as a Souvenir in the Office
( ) Share among the Office
( ) Reserve as Lucky Draw Prize at Staff Function
( ) Donate to a Charitable Organization
( ) Return to Offeror
( ) Others (please specify) :

                                                             (Name of Receiving Staff)
(Date)                                                                (Title)

Part B       To be completed by Approving Authority

To : (Name of Receiving Staff)

      The recommended method of disposal is *approved/not approved. *The gift(s)
      concerned should be disposed of by way of :

                                                          (Name of Approving Authority)
(Date)                                                               (Title)
* Please delet as appropriate

                                                                                       Form B

(Company Name)
Declaration of Conflict of Interest
Part A       Declaration (To be completed by Declaring Staff )
To : (Approving Authority)
       I would like to report the following existing/potential* conflict of interest situation
       arising during the discharge of my official duties :-
         Persons/companies with whom/which I have official dealings and/or personal

         Brief description of my duties which involved the persons/companies mentioned

                                                                   (Name of Declaring Staff)
(Date)                                                               (Title / Department)

Part B       Acknowledgement (To be completed by Approving Authority )
To :     (Declaring Staff)

                                Acknowledgement of Declaration
   The information contained in your declaration form of        (Date)   is noted. It has been
decided that :-
❑ You should refrain from performing or getting involved in performing the work, as
  described in Part A, which may give rise to a conflict.

❑ You may continue to handle the work as described in Part A, provided that there is no
  change in the information declared above.

❑ Others (please specify) :

                                                           (Name of Approving Authority)
(Date)                                                         (Title / Department)
* Please delet as appropriate

                                                                     Management of Catering Operations


Extracts of the Prevention of Bribery Ordinance

 Section 9
(1) Any agent who, without lawful authority or reasonable excuse, solicits or accepts
    any advantage as an inducement to or reward for or otherwise on account of his -
     (a) doing or forbearing to do, or having done or forborne to do, any act in relation
         to his principal’s affairs or business; or
     (b) showing or forbearing to show, or having shown or forborne to show, favour or
         disfavour to any person in relation to his principal’s affairs or business,
     shall be guilty of an offence.

(2) Any person, who, without lawful authority or reasonable excuse, offers any
    advantage to any agent as an inducement to or reward for or otherwise on account
    of the agent’s -
     (a) doing or forbearing to do, or having done or forborne to do, any act in relation
         to his principal’s affairs or business; or
     (b) showing or forbearing to show, or having shown or forborne to show, favour or
         disfavour to any person in relation to his principal’s affairs or business,
     shall be guilty of an offence.

(3) Any agent who, with intent to deceive his principal, uses any receipt, account or
    other document -
     (a) in respect of which the principal is interested; and
     (b) which contains any statement which is false or erroneous or defective in any
         material particular; and
     (c) which to his knowledge is intended to mislead the principal,
     shall be guilty of an offence.

(4) If an agent solicits or accepts an advantage with the permission of his principal,
    being permission which complies with subsection (5), neither he nor the person
    who offered the advantage shall be guilty of an offence under subsection (1) or (2).

                                                  Management of Catering Operations   ANNEX

(5) For the purpose of subsection (4) permission shall -
      (a) be given before the advantage is offered, solicited or accepted; or
      (b) in any case where an advantage has been offered or accepted without prior
          permission, be applied for and given as soon as reasonably possible after such
          offer or acceptance,
          and for such permission to be effective for the purpose of subsection (4), the
          principal shall, before giving such permission, have regard to the circumstances
          in which it is sought.

  Section 2
“Advantage” means :
(a) any gift, loan, fee, reward or commission consisting of money or of any valuable
    security or of other property or interest in property of any description;
(b) any office, employment or contract;
(c) any payment, release, discharge or liquidation of any loan, obligation or other
    liability, whether in whole or in part;
(d) any other service, or favour (other than entertainment), including protection from
    any penalty or disability incurred or apprehended or from any action or proceedings
    of a disciplinary, civil or criminal nature, whether or not already instituted;
(e) the exercise or forbearance from the exercise of any right or any power or duty;
(f)   any offer, undertaking or promise, whether conditional or unconditional, of any
      advantage within the meaning of any of the preceding paragraphs (a), (b), (c), (d)
      and (e),
but does not include an election donation within the meaning of the Elections (Corrupt
and Illegal Conduct) Ordinance (Cap. 554), particulars of which are included in an
election return in accordance with that Ordinance.

“Entertainment” means :
The provision of food or drink, for consumption on the occasion when it is provided,
and of any other entertainment connected with, or provided at the same time as, such

Corruption Prevention Department
Independent Commission Against Corruption

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