44 Head 50 - Miscellaneous Services. Subhead 121. Rent for Government leased accommodation. Failure on the part of the Accommodation Division of the Civil Service Branch of the Government Secretariat to re-allocate a leased non- departmental quarter when it became vacant in March 1976, resulted in its remaining unoccupied for eleven months. During that time rent of over $40,000 was paid for the quarter, but the actual cost of the oversight to Government funds was more in the region of $50,000, being the approximate cost of maintaining a family in a hotel for the period during which the quarter was available but unused. I have been offered no explanation of how the oversight occurred, but I have been assured by the Quartering Officer that he has introduced checks to guard against a recurrence of incidents of this
nature.
45 Head 50 - Miscellaneous Services. Subhead 123. Subsidies for students travelling in public transport. In 1971, as part of the general policy of assistance towards education, the Government initiated a scheme to subsidise students' travel by paying to public transport companies a contribution in respect of each student pass or ticket issued. When devising the scheme it was intended that it should be broadly equitable, should not be subject to abuse, should not overpay the companies and should be simple to administer and check. It seems open to doubt whether these objectives have in fact been achieved, for in response to audit observations on the operation of the scheme I have recently been advised by the Deputy Financial Secretary that one of its fundamental problems has always been that it is extremely cumbersome to administer and that there are all too many avenues for possible abuse. Moreover a survey of students' travel under the scheme conducted in 1975 by the Research and Development Section of the Transport Department, with the purpose of re-assessing the monthly value of the concession, indicated a substantial level of overpayment, not only in respect of the frequency of travel, but also because the number of days for which the student passes were valid was less than that assumed in the original calculation.
46 Whilst conceding that the position was clearly unsatisfactory, the Secretary for Economic Services nevertheless considered that the survey was unreliable and lacked a sound statistical basis, and he was not prepared to accept its findings as necessarily indicative of the true position. I noted that the Secretary had himself requested the survey and I expressed my concern that, in the light of his views on its inadequacies, he did not contest its findings until I had invited his attention to them and furthermore that he had not then commissioned a fresh survey on more acceptable lines. In this respect I have suggested that it might be desirable to seek the advice of the Statistical Adviser of the Census and Statistics Department on suitable sampling methods which might be adopted in any future survey considered necessary. I have also pointed out that if the survey was indeed as invalid as was suggested, together with the possibility that its findings exaggerated the level of overpayment there must exist the equal possibility that they underassessed it. Whatever the true position may be, it seems clear that having regard to the high level of expenditure, which in the academic year 1975-76 totalled $25.9 million, the method by which it is monitored must be regarded as less than adequate, and I understand that consideration is now being given to the desirability of changes in the mode of subsidy.
47 Head 53 - Pensions. It is a basic principle that the Director of Audit should not undertake any examination of accounts partaking of the nature of pre-audit, which involves the acceptance of a responsibility precluding him from fully and freely commenting on the accounting transactions after they have been duly recorded in the accounts. A long standing exception to this rule is the audit verification, prior to their formal approval and payment, of all grants of retirement benefits under the terms of the Pensions Ordinance as well as all claims from Government officers for compensation under the Workmen's Compensation Ordinance following personal injury by accident in the course of employment. The provision under these exceptional arrangements of a certificate of correctness on each and every proposed grant or claim engages a considerable amount of staff time, but unfortunately the level of queries which arises on the computations precludes the abandonment of the detailed pre-award examination in favour of normal post-facto sample checks. In the case of the claims to workmen's compensation, where my examination has brought to notice the incorrectness of a number of proposed awards, it has recently been necessary to request that action be taken to improve the standard of processing of the claims before their submission for audit.
48 An award under the terms of the Pensions Ordinance is calculated on the basis of an officer's emoluments at the date of his retirement, provided he has held the same office for a period of three years prior to that date. Where he has trans- ferred from one office to another within his final three years, it is normally necessary to average his emoluments, with the result that the award made to him may be lower than might otherwise be the case. In the year under review a number of offices, particularly in general grades, were restructured and many of the holders of those offices accepted the options given to them to convert to higher salary points on new scales in broadly similar offices in the restructured grades. However it was observed in audit that when such officers left the service shortly after the restructuring exercises, their retirement benefits had been computed without averaging, apparently on the grounds that they were occupying the same offices but with different titles. I suggested that the effect of the restructuring arrangements for pension purposes was in fact to transfer those officers from one office to another; if this was not so, immediate increases in retirement awards of as much as 25% could result. It has now been agreed that the provisions of the law for averaging emoluments apply in these circumstances.
49 In paragraph 39 of my 1974-75 report I referred to what I considered to be the unsatisfactory consequences of the concession given to certain officers to take periods of no pay leave immediately prior to their dates of retirement, and further observations have more recently been raised on the effect on retirement benefits of no pay leave granted at the end of officers' service in times of rising salaries. The provisions of the Pensions Ordinance require account to be taken in the computation of retirement awards of any revision of salaries to the date of retirement, even where an officer was on no pay leave from a date prior to the effective date of the revision, did not resume duty prior to retirement, and did not
14
Page 150Page 151