errors arose from defects in administration, which he has now rectified, and he has terminated the existing agreements and reissued them at the correct rate of charge.
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Revenue from Properties and Investments Rents. Subhead 100. Buildings and furniture - Government quarters and Head 11 – Reimbursements other than Appropriations-in-Aid. Subhead 100. Widows' and Orphans' pension contributions. The Government payroll system is now fully computerised and to supplement the normal audit checks, special computer interrogation programs have been developed in conjunction with the Director of Accounting Services, to ascertain from the computer master file specific information which could not be readily determined by other methods. The use of these programs has brought to notice underdeductions from some 70 officers of quarters rentals and Widows' and Orphans' pension contributions amounting to over $80,000, some of which had remained undetected for several years and which might otherwise have continued indefinitely. Appropriate recoveries are now being made and the Director of Accounting Services has taken action to endeavour to avoid similar errors occurring in the future.
16 Head 10 - Land Sales. Subhead 010. Sales by public auction and tender – Urban area. In paragraph 15 of my previous report I referred to circumstances which arise from time to time in which successful bidders at sales of Crown land are unable to meet their resultant contractual obligations and are released from their contracts, against a liability to make good any deficiency between the resale price and the original price, and I invited attention to a case in which no attempt had been made to recover such a deficiency of $5.3 million until the failure to do so had been brought to notice in audit. It would seem that the possibility of collecting this sum is now remote and it is therefore disturbing to have to report a further case in which a similar sequence of events has occurred and in which, again until it was brought to notice in audit, no action had been taken to recover a shortfall of $1.6 million between the resale price of the land concerned and the price at which it was first sold. Although in this later case the potential loss is mitigated by the forfeiture by the original purchaser of $1.5 million previously paid by him, it is to be hoped that the procedures designed to ensure appropriate follow-up action in future cases, which have now been introduced, will prove effective.
17 Head 10 - Land Sales. Subhead 060. Modification of existing leases, exchanges and extensions – New Territories. Following audit inquiries into the premium charged for a contemporaneous exchange of land in Tai Po District, it was accepted by the Secretary for the New Territories that several aspects of the transaction were unsatisfactory. Correspond- ence on the matter is still continuing, but my calculations show that based on comparable values for similar types of development in the area, the premium was underassessed by at least $1.5 million. It has been agreed not only that the information on which the New Territories Valuation Conference approved an originally proposed premium was inadequate, but that a revised premium arising from a modification of the terms of the exchange requested by the developer, was not referred for ratification by that Conference prior to its submission in December 1975 for the approval of the Government Secretariat. The Secretary for the New Territories has commented that when the transac- tion originated in 1974, this type of development was rather novel and that practical experience of dealing with it was very limited. He considers that little can now be done in this particular case, but has said that the experience gained will be put to use in ensuring that other similar cases are dealt with much more carefully.
18 I have frequently referred to failures on the part of District Officers in the New Territories to comply with the procedures prescribed in departmental land instructions for the extension of building covenant periods and to the loss of revenue which may arise when premia are not demanded before the expiration of those periods. I have equally frequently been advised that steps had been taken to improve the situation. That these steps have not been fully effective may be judged from the fact that, as a result of only a limited audit check, further cases were brought to notice in which errors in assessments, or failures to assess, resulted in undercharges of over $200,000. Recoveries in most of these cases have now been made or are being sought.
EXPENDITURE AND APPROPRIATIONS-IN-AID
19 Government Computer Installations. It is now generally recognised that the continued development of electronic data processing offers considerable scope for sophisticated fraud and for the abuse of computerised information and for that reason the security of the equipment, of its operation and of the data itself must be accorded a high degree of importance. I was greatly concerned therefore that an audit review of the computer installation at the Data Proces- sing Division of the Government Secretariat brought to notice what in my opinion were serious deficiencies in that regard. Noteworthy was the lack of a completed set of operational standards prescribing the rules and procedures which data processing staff should observe in routine operations, including basic operational controls to prevent possible computer abuse. The desirability of promulgating such standards was brought to the notice of the Data Processing Manager more than three years ago, when I suggested that their absence had contributed to a number of shortcomings which were even then apparent, but although a start on the compilation of a Working Manual was made at that time, the task remained largely unfinished and the Data Processing Manager contended that there was little point in com- pleting it as the present equipment was due to be phased out in mid-1978 and replaced by a new configuration. I regard it as unfortunate that no adequate manual has been produced whilst the present computer has been in operation and consider that the production of a Working Manual for the new equipment, which is now in progress, should be treated as a matter of some urgency.
20 Possibly the greatest weaknesses in security within the Data Processing Division were the insufficiency of the system for authorising and recording jobs for processing, particularly for those done out of normal office hours, the inadequate segregation of duties, and the inadequate limitations placed on access to records and equipment. There appeared to be little restriction on the use of computer time by programming staff and little instruction to project
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