42.
The Secretary for Lands and Works also supports the principle of charging outside clients for abortive work done by the Architectural Office, as he considers that such charging will act as a discipline upon the client which should reduce the amount of abortive work performed and hence make more effective use of the resources of the Architectural Office. Accordingly, the Director of Building Development has referred the matter to the Deputy Financial Secretary and suggested that the matter be taken up with both the Urban Council and the newly established Provisional Regional Council. The Deputy Financial Secretary has taken the view that as full statistics on the amount of time spent by the staff of the.. Architectural Office on abortive work for the Urban Council in the past are not available, the question of charging should be further considered once the statistics are available, say in two years' time.
43.
Head 11 Fees and Charges.
Subhead 042.
Electrical and Mechanical Services Department - (020). Services to the Urban Council. Under the Memorandum of Administrative Arrangements made with the Urban Council in 1973 the Council is required to pay to the Government the full cost of all staff, services and materials provided by the Government, unless otherwise specified. The provision of materials and services to the Council is charged either on an actual cost plus on-cost basis, or a fixed fee. For regular jobs which have been processed by the workshops of the Electrical and Mechanical Services Department the on-cost element is computed by reference to the workshop overhead absorption rate under the department's management information and cost accounting system. However it was noted that for a number of special jobs processed by the workshops on behalf of the Council, the on-cost was computed on the basis of a standard overheads charge of 20% instead of the workshop overhead absorption rate and based on the demand notes issued to the Council for the year 1984-85 there was an undercollection of $1.1 million.
44.
Government departments which supply services to the Urban Council are required to issue demand notes monthly to the Council in respect of all materials and services provided. In the Electrical and Mechanical Services Department the established accounting procedures provide that the estimate of the full year cost plus on-cost is initially recovered by equal monthly instalments with adjustments being made quarterly to actual costs, in order to recover as far as possible the actual cost plus on-cost incurred during each financial year. Audit checks revealed that in a number of cases the demand notes in respect of materials and services provided to the Council had not been issued promptly. I estimate that the revenue in 1983-84 and 1984-85 has suffered a loss of $277,000 by way of interest forgone.