CONSTITUTION AND ADMINISTRATION
The Director functions independently of the administration and is free to report publicly.
Aside from auditing the government's accounts, the Director of Audit also audits the accounts of the Urban Council, the Regional Council, the Vocational Training Council, the Hong Kong Housing Authority, the ex-government hospitals under the Hospital Authority, five trading funds and more than 50 statutory and non-statutory funds and other public bodies. The Director also reviews the financial aspects of the operations of the multifarious government-subvented organisations in Hong Kong. Government auditing practised in Hong Kong falls into two main categories, termed 'regularity' audit and 'value-for-money' audit. Regularity audits, which are intended to provide an overall assurance of the general accuracy and propriety of the financial and accounting transactions of the government and other audited bodies, are carried out by means of selective test checks and reviews designed to indicate possible areas of weakness.
Value-for-money audits are carried out according to guidelines tabled in the Legislative Council by the chairman of the Public Accounts Committee in 1986. The audit is intended to provide independent information, advice and assurance about the economy, efficiency and effectiveness with which any branch, department, agency, other public body, public office or audited organisation has discharged its functions. This involves going beyond the normal accounting records. In line with contemporary developments in both government and commercial auditing elsewhere, it is also becoming increasingly relevant to ascertain whether efficient and economical practices are being followed in pursuing prescribed goals and whether these goals are being achieved.
After it has been submitted to the President of the Legislative Council and laid before the council, the Director of Audit's report is considered by the Public Accounts Committee. In 1995, the Director submitted three reports. The first report was tabled on April 26, covering the results of value-for-money audits completed, and the second and third reports on November 8, covering the audit certification of the government's accounts for the preceding financial year and the results of value-for- money audits completed.
The Director's reports on the accounts of other public bodies are submitted to the relevant authority in accordance with the legislation governing the operation of these bodies.
Foreign Relations
The Role of the British Government
Because of Hong Kong's status as a dependent territory, the Secretary of State for Foreign and Commonwealth Affairs is constitutionally responsible to the British Parliament for the actions of the Hong Kong Government and he has authority to give directions to the Governor of Hong Kong. However, such formal directions have not been issued in living memory, and Hong Kong conducts its affairs with a high degree of autonomy in all domestic matters.
The relationship between London and Hong Kong is essentially one of co- operation. One important task regularly undertaken by the Foreign and Common- wealth Office is to ensure that Hong Kong's interests and views (which are not always identical to those of the United Kingdom) are properly considered within the
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